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China Agrees to Limit Textile Exports to Brazil

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Feb. 9 (Bloomberg) -- China agreed to limit textile exports to Brazil, where the government says the products are threatening local industry. The two countries will sign an agreement tomorrow, the Brazilian Trade Ministry said.

The accord, to be signed in Beijing between Brazil's Trade Secretary Ivan Ramalho and China's Trade Vice-Minister Gao Hucheng, will set quotas for eight types of Chinese textile exports to Brazil, according to the ministry's Web site. The products account for 60 percent of Brazil's textile imports.

China controls more than a quarter of the world's $400 billion market for textiles and apparel, according to the American Manufacturing Trade Action Coalition. Chinese exports surged last year after the expiration of a global regime that limited trade in clothing and fabric. China has reached accords with the European Union and the U.S., while developing nations from Argentina to Turkey put in place caps on Chinese imports.

``These show China is overwhelming the world's markets and now people are responding and saying, `We can't take this much upheaval in such a short amount of time,''' said Lloyd Wood, a spokesman for the Washington-based coalition that represents U.S. makers of textiles, said in an interview.

Silk

Under the agreement with Brazil, Chinese exports of silk, for example, can't grow more than 9 percent in 2007 and more than 70 percent in 2008, the ministry said. A spokeswoman for Brazil's Trade Ministry said all officials able to comment on the agreement are in China.

``The agreement wasn't ideal but we considered it positive since it affected eight categories of products that have suffered a lot with Chinese imports in the past year,'' said the Brazilian Association of Textile Makers in a statement sent by e-mail.

Brazilian Chief of Staff Dilma Rousseff said in September the government planned to restrict Chinese textiles and shoes after a surge of imports threatened to force factory closures and job cuts.

Brazilian imports of textiles from China, the world's fastest growing economy, rose five-fold in the past three years to $149 million in 2005 from $28 million in 2002, according to Brazil's trade ministry. Toymakers have also been hurt by rising textile imports, the government has said.

Despite the unilateral caps by the Bush administration and then the negotiated system of limits on Chinese products, imports from China were up 56 percent for the first 11 months of 2005 to $21 billion, according to Commerce Department data.

The U.S. and China reached an agreement on Nov. 8 to limit exports of Chinese products through 2008 for 34 product categories including cotton pants, knit shirts and brassieres. The caps began Jan. 1 and range from 10 to 16 percent depending on the item.
 

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