If approved by EU members, the deal will allow 80 million items of blocked goods to be released from ports around the EU. The items will be counted against 2006 quotas.
The talks preceded a summit that began today, led by Prime Minister Tony Blair and Chinese president Hu Jintao.
The deal will allow products through that are stuck in customs warehouses and in mid-journey, but under the agreement half of them will go against next year's quotas.
However, this still needs to be agreed by the 25 EU member states, which are split over the effects of the quotas.
Chinese Prime Minister Wen Jiabao told reporters that Europe and China would 'eventually find a solution that is beneficial to both sides'.
France, Italy, Portugal and Spain, all of which have large domestic textile industries, have been most opposed to any change in the quotas.
In contrast, several northern European states, including Germany and Sweden, are backing their retailers' calls for the garments to be allowed through.
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