(Updates with U.S.-Chinese talks, paragraphs 10-12, amount of toothpaste, paragraph 19) BEIJING, May 23 (Reuters) - China called for cooler heads to prevail in a widening scandal over product safety on Wednesday, accusing critics of exploiting concerns about specific cases to erect barriers to its exports in general. In the latest incident, the Dominican Republic has banned the sale of two brands of Chinese toothpaste for containing a lethal chemical responsible for dozens of poisoning deaths in Panama last year. A company under investigation for exporting the toothpaste, Danyang Household Chemical Company, defended its product. "Toothpaste is not something you'd swallow, but spit out, and so it's totally different from something you would eat," one company manager, who declined to be identified, said by telephone from the eastern province of Jiangsu. China said on Wednesday it had called on customs officials and directors of its food and quality watchdogs to form an investigative team to probe the toothpaste case. "Investigations in Beijing and Jiangsu province have been launched into the relevant companies and parties," a notice posted on the Web site of the General Administration of Quality Supervision, Inspection and Quarantine said. Consumers in the United States have been alarmed by a spate of pet deaths blamed on tainted wheat gluten and rice protein exported from China, as well as reports of toxins and disease in other Chinese exports. That has helped make food safety the latest flashpoint in often tense trade ties between the nations, who have sparred over everything from piracy to China's currency regime. Vice Premier Wu Yi is in Washington this week for the latest round of dialogue aimed at finding long-term solutions to trade and economic irritants, in particular the United States' frustration over its huge trade deficit with China. But senior U.S. officials who took part in the talks singled out the safety of Chinese food and medicine as among Washington's "top concerns." "The Chinese government clearly understands the world marketplace will swiftly disadvantage any nation or economy or firm that is not able to establish a sense of confidence and reliability," Agriculture Secretary Mike Johanns said at the conclusion of two days of high-level talks. But with U.S. officials pressing for more transparent regulation and for Beijing's permission to send U.S. auditors to China, food safety talks will continue throughout the week. BUNGLING IN BEIJING The government-run China Daily, often used by Beijing to get its message across to the outside world, said on Wednesday that Chinese products were generally safe and cheap, but admitted that authorities had bungled the crisis. "Our quality watchdogs have an obligation to demonstrate that Chinese exports are safe," it said. But the daily urged "all beneficiaries of Chinese exports to maintain cool heads amid possibly unfair allegations against Chinese exports." "Stricter monitoring by destination countries is only part of the headache for Chinese food exporters. Their (exporters') greater concern is what they call groundless categorization, or a tendency to discriminate against all products from China." Sun Jiong, director of the China Food Industries Production Promotion Center, told Reuters he believed the main issue was one of trade protection, rather than any inherent problems with the country's quality controls. "We have many agricultural products so we want to sell them," Sun said. "Then other countries try to practice trade protection and set up trade barriers. How do they do that? By saying they're raising standards." In the Dominican Republic case, authorities have confiscated some 200,000 tubes of the toothpaste, imported from Panama and sold under the brand names Excel and Mr. Cool, said Eduardo Rodriguez, a senior Dominican Customs official. Panama pulled thousands of toothpaste tubes from stores last week after tests showed they contained high levels of diethylene glycol, a toxic chemical used in engine coolants.
