The United States and China reached a three-year agreement on Tuesday to rein in China's booming clothing and textile shipments to the United States, solving an issue that had threatened to cool ties.
US Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai announced a deal that covers over 30 clothing categories including socks, T-shirts and bras at a joint news conference in London.
Both sides hailed the accord as a success but China warned that free trade in textiles was inevitable.
"I believe the textile agreement shows our ability to resolve tough trade disputes in a manner that benefits both countries," Portman said.
The deal follows a similar accord between China and the European Union signed in September, as industrialised countries grapple with China's emergence as an economic superpower.
Bo described the outcome as a "win-win result," though he later said the agreement was "a far cry" from Beijing's original expectations.
Thanks to its cheap and deep pool of labour, China's clothing exports surged following the abolition of global textile quotas on January 1, but Washington later slapped emergency curbs on array of goods to protect manufacturing jobs.
The accord was reached after seven rounds of negotiations over five months and at some points Bo said the two sides had been "almost at the edge of a cliff."
"Developed countries should be aware that textile integration is an inevitable trend and to have quotas is not correct," Bo said after signing the deal. "I am aware of the pressure given by the US (textile) industry but it doesn't mean who shouts loudest is most reasonable," said Bo, who announced the deal as Chinese President Hu Jintao headed for London on an official visit.
The accord is aimed at smoothing over a rough spot in the US-China trade relationship before President George W. Bush visits Beijing in the middle of this month.
"It will enable us to maintain jobs and even add jobs," Portman said.
US textile groups hailed the agreement, which they said was much better than one the EU negotiated with China earlier this year. The US agreement contains lower growth rates than the EU pact for the most sensitive clothing imports and lasts one year longer, they said.
"The US industry will know with certainty that China will not be able to flood the US market during the next three years," Jim Chestnut, chairman of the National Council of Textile Organisations, said in a statement.
The agreement comes as negotiators intensify efforts to reach a new global trade deal before the 148-member World Trade Organisation meets in Hong Kong between December 13 and 18.
That prompted US textile producers to seek protection under a "safeguard" provision of China's 2001 entry into the World Trade Organisation.
The Bush administration has imposed safeguard curbs on billions of dollars of Chinese clothing imports this year.
But because the curbs have to be renewed annually, textile groups have pushed for a comprehensive agreement that would limit imports until 2008 when the safeguard provision expires. The accord allows hundreds of thousands of Chinese garments piled up in US ports to be sold, a US negotiator said.
The deal restricts growth in 14 core categories including trousers, shirts, knits, underwear and bras to 5.5 percent in 2006, 7.8 percent in 2007 and 10.3 percent in 2008 compared to 7.5 percent annually under the safeguard mechanism.
Growth rates in some 20 other categories including socks, sweaters, swimwear, wool suits, cotton towels and blinds would average about 10-12 percent in 2006, 12-15 percent in 2007 and 15-16 percent in 2008, the US negotiator said.