China and Brazil have held talks over their textile disputes on the sidelines of the World Trade Organization meeting in Hong Kong, with reports that there will be future limits on China's exports to the South American country.

The two sides have reached preliminary agreement on this issue, according to a report from the news service AFX. China's Ministry of Commerce has not yet confirmed whether an agreement has been signed.

The development follows a complaint filed by a Brazilian industrial association with a view to initiating safeguard measures against Chinese textiles.

Luiz Fernando Furlan, Brazil's overseas trade minister, was quoted by AFX as saying that an agreement in principle had been reached. The two sides agreed to impose quantity restrictions on polyester thread, synthetic and silk fabric, velvet, waistcoats, pullovers, embroidered fabric and woven shirts that China exports to Brazil. It will affect exports over the next three years.

"The agreement is well on its way," Furlan said, as he left a meeting with his Chinese counterpart Bo Xilai.

If an agreement is signed, it will be China's third export quantity control deal after ones signed with the European Union and the United States.

The possible deal is not expected to largely affect China's textile exports, as South America is not a major market, said Sun Huaibin, spokesperson with the China National Textile and Apparel Industry Council.

If it is true, the agreement will be the first textile agreement China has signed with a developing country. It is not known whether other developing countries that have textile disputes with China, such as Cambodia and Turkey, will follow suit.

(China Daily December 20, 2005)