China and the United States are close to an agreement on the textile frictions, with hopes that the two-way textile trade situation will soon be stabilized.

Anonymous US officials were quoted by AP (Associated Press) as saying that the two countries had made agreements on certain principles at the seventh round of talks on this issue, held last week in Washington.

They said the deal, similar to the one between China and the European Union signed back in June, would govern China's textile exports to the United States in the following three years. It is likely to allow exports to increase by 8 to 17 per cent annually and confirmation of this is hoped to come today.

"China made concessions on the duration of the limits while the United States made concessions on the growth rate," said Sun Huaibin, the spokesman with China National Textile and Apparel Council.

He said an agreement, which would give textile dealers a clear environment, was much better than the safeguard measures the United States were adopting.

Under the safeguard measures, China's textile and garment exports to the United States are only allowed to increase annually by 7.5 per cent.

Meanwhile, Sun said that there were still two major problems facing the Chinese textile industry.

The agreement is expected to take effect from the beginning of next year, so China must be cautious about how to deal with exports in the ensuing months until then.

Millions of Chinese textile products piled up at European ports earlier this year, as companies spared no effort to export as much as possible during a "vacuum period" before the reached agreement took effect.

"It is also a serious problem to allocate quotas given by the United States to domestic textile exporters," he said.

China's commerce ministry, the trade watchdog, is adopting a bidding method in distributing some EU quotas and allocate the others to enterprises according to their shipment in the last year.

However, the revealed information does not include the base for calculation, said Cao Xinyu, vice- chairman of China's Chamber of Commerce for Import and Export of Textiles.

"The lack of a base figure made it difficult to valuate the possible agreement, as we cannot calculate the specific quotas for the coming years without this figure," he said.

Under the possible agreement, China's textile exports to the United States would be calculated according to a 12-month-textile-trade, which is regarded as a base figure, and the agreed growth rate. So far, no formal comments were available from the Chinese or the US Government.

The US Government launched safeguard measures against made-in-China socks late last year upon the request of its domestic industry.

After the decade-long global textile quota regime was eliminated in January this year, tension intensified between the two countries because the US side put in place more curbs on Chinese textile products.

The Chinese textile industry said the frictions were a big blow to them since their US customers declined to purchase from them the products under US restrictions and shifted orders to some Southeast Asian countries.