RESTRICTEDWORLD TRADE
ORGANIZATIONG/TMB/R/90
20 September 2002
(02-5035)
Textiles Monitoring Body
REPORT OF THE NINETY-FIRST MEETING
1. The Textiles Monitoring Body held its ninety-first meeting on 29 and 30 July  2002.
2. Mr. Otto Wentzel (Norway) was appointed member to replace Mr. A.R. Moroz (Canada).
Mr. Wentzel appointed Mr. Moroz as his alternate.  Mr. Hisashi Yoshikawa (Japan) was appointed
member to replace Mr. Shingo Yamagami (Japan).  Mr. Yoshikawa appointed Mr. Yamagami as his
alternate.  Mr. S.I.M. Nayyar (Pakistan) was appointed member to replace Ms Liping Zhang (China).Mr. Nayyar appointed Ms Zhang as his first alternate and Ms My Yen Lu (Macao, China) as his
second alternate.
3. Present at this meeting were the following members and/or alternates:
Messrs. Alvarado/Gough; Dalela; Ekawat; Karapinar; Moroz;  Nayyar/Ms Zhang/Ms Lu;
Messrs. Shin/Lee; Ms. Simopoulos; Messrs. Tagliani; Yoshikawa.
4. The TMB adopted the report of its ninetieth meeting (G/TMB/R/89).
Implementation of growth-on-growth provisions of the Agreement on Textiles and Clothing
(ATC) with respect to recently acceded Members
(a) Background and Preliminary considerations
5. Also keeping in mind the preliminary exchange of views that had taken place during some of
its previous meetings, the TMB considered it necessary to address, in a focussed discussion, the cross-
cutting issue of the manner in which the growth-on- growth provisions provided for in Articles 2.13
and 2.14 had to be implemented with respect to recently acceded Members, such as China and
Chinese Taipei.  Reaching a common understanding was a pre-condition to completing, as soon as
possible, the review of several notifications that had been received by the TMB pursuant to
Articles 2.1 and 2.2.  Consequently, the TMB was of the view that the conclusions to be reached on
this matter would have to be brought to the attention of the Members concerned, independent ofcertain other aspects that could require further clarifications, before completion of the review,
pursuant to Article 2.21, of the notifications concerned.
6. The TMB recalled that four Members – Canada , the European Communities, Turkey and the
United States - had provided separate, detailed notifications on the quantitative restrictions they
maintained with reference to Article 2.1 on imports of certain textile and clothing products,respectively from China and Chinese Taipei.  It was observed that none of the original notifications
had contained information on how growth-on-growth provisions had been implemented, but
subsequently the relevant information had been provided by the four Members concerned in reply to
the TMB's request for clarifications.  It was also observed that China had brought specific
observations to the attention of the TMB under Article 2.2 with respect to this aspect of thenotifications in three of the four cases, wherea s the observations by Chinese Taipei pursuant to
Article 2.2 had not addressed this issue at all.
7. In starting its discussion, the TMB noted that the ATC does not contain any disposition that
gives guidance on how the growth-on-growth provisions should be implemented in relation to
Members acceding to the WTO several years after the entering into force of the WTO Agreement.Articles 2.13 and 2.14 of the ATC, providing for spec ific staged increases of the annual growth ratesG/TMB/R/90
Page 2
of the respective quantitative restrictions taken over from the former MFA regime and notified
pursuant to Article 2.1 of the ATC, were essentially designed to provide clear rules applicable in
relation to those exporters under restraint that became Members at the time when the WTO
Agreement entered into force.1  Therefore, the restraint levels to  which the increase in growth rates
shall apply, are defined in Article 2.13 as the "level of each restriction under MFA bilateralagreements in force for the 12-month period prior to the date of entry into force of the WTO
Agreement".  There is no provision in the ATC regarding the base levels and the related increase in
growth-rates to be applied in cases of restrained exporters that acceded to the WTO only during the
second or the third stage of the integration process.
8. In the latter cases referred to above, the relevant issues such as the definition of the base
levels to which the provisions of Article 2 of the ATC should apply and the manner in which to these
base levels the increase in growth rates  should be implemented had been agreed between the WTOMembers and the new Members concerned as part of the respective negotiations upon accession to the
WTO.   In most cases, these agreed terms and modalities were included in the reports of the respective
accession working parties.  The TMB noted that (i) these matters had been agreed during the
accession negotiations for the purpose of application of the respective provisions of the ATC,
including its Article 2;  (ii) the language regardin g the growth-on-growth provisions in the respective
working party reports contained explicit references to the application of the relevant articles of the
ATC (notably, Articles 2.13 and 2.14);  (iii)  pursuant to Article 2.21, the TMB was mandated to keep
under review the implementation of Article 2.  Therefore, in order to discharge its responsibilities, the
TMB was also required to examine and to reach an understanding on  the modalities agreed and
guidance provided by Members in the respective legal instruments of accession vis-à-vis  the
implementation of the growth-on-growth provisions  of the ATC.  Only such a common understanding
could provide a basis and serve as a benchmark for the TMB, enabling it to verify if the actual
implementation had been effected in compliance with the requirements established by the Members.
9. The TMB recalled that China had become a Member of the WTO on 11 December 2001,
which was still during the period of implementation of the Stage 2 integration process of the ATC,whereas the membership of Chinese Taipei had become effective on 1 January 2002, coinciding with
the first day of the implementation of  Stage 3 integration process.  Thus, their respective membership
had come into effect during different stages of the ATC even though only 21 days separated the
accessions of these two Members.  Furthermore, though the relevant provisions in the respective
working party reports were similar, they were not identical.  Based on these two considerations, the
TMB came to the view that it was preferable to consider the growth-on-growth provisions  applicable
to these two Members individually.
(b) China
10. Paragraph 241 of the Report of the Working Party on the Accession of China reads as
follows.
"Some members of the Working Party proposed and the representative of China accepted that
the quantitative restrictions maintained by WTO Members on imports of textiles and apparel productsoriginating in China that were in force on the date prior to the date of China's accession should be
notified to the Textiles Monitoring Body ('TMB') as being the base levels for the purpose of
application of Articles 2 and 3 of the WTO Agr eement on Textiles and Clothing ("ATC").  For such
WTO Members, the phrase 'day prior to the date  of entry into force of the WTO Agreement',
contained in Article 2.1 of the ATC, should be deemed to refer to the day prior to the date of China's
                                                     
1 Under the provisions of the ATC, the required increases are related to the respective growth rates
taken over from the former MFA regime.  During Stage 1 (1995-97), the original annual growth rates notifiedwere to be increased by not less than 16 per cent (Article 2.13).  During Stage 2 (1998-2001), the level of eachremaining restriction was to be increased by not less than the respective growth rate applied during Stage 1,
increased by 25 per cent (Article 2.14(a)), while during Stage 3 (2002-2004), the growth rate for the respective
restrictions during Stage 2 has to be increased by not less than 27 per cent.G/TMB/R/90
Page 3
accession.  To these base levels, the increase in growth rates provided for in Articles 2.13 and 2.14 of
the ATC should be applied, as appropriate, from the date of China's accession.  The Working Party
took note of these commitments."2
11. The TMB noted that the penultimate sentence of the provisions quoted from the report of the
Working Party addressed the implementation of the growth-on-growth provisions of the ATC.
Furthermore, the TMB recalled that the informati on provided by the restraining Members on how they
had implemented these obligations could be summarized as follows:
• Canada reported that it had "increased the growth rate on the remaining restraint
levels with China by 25 per cent and then by 27 per cent on 1 January 2002".3
• The European Communities stated that it had "increased the growth rate on the
remaining restraint levels with China by 25 per cent and then by 27 per cent on
1 January 2002".4
• Turkey had initially reported5 that it had increased the growth rate on the remaining
restraint levels on 1 January 2002 in the same manner as indicated both by Canadaand the European Communities.  However, in a subsequent communication, Turkey
stated that it had "increased the growth rates on the remaining restraining levels with
China by 16 per cent, 25 per cent and then 27 per cent in order to calculate the quota
levels of 2002".
6
• The United States, replying to the TMB's request for further clarification, stated that:
"Pursuant to the Working Party Report, which requires that the provisions of the ATC
regarding growth rates 'be applied, as appropriate, from the date of accession,' it wasdetermined to be appropriate to apply an accelerated growth rate of 25 per cent
pro-rated for that period of time (11 – 31 December 2001) when China was a Member
of the WTO in Stage 2.  Thus, adjusted quotas for Stage 2 were calculated using the
pro-rated Stage 2 growth rate.  In order to determine China’s quota growth rate for
the years 2002-2004, we increased the pro-rated Stage 2 growth rate used todetermine China’s notional 2001 quotas by 27 per cent, which is what is required for
Stage 3 under the ATC.  […]".
7  It was also implicit in the information provided by
the United States that these increases had been implemented on 1 January 2002.
12. On the basis of the indications at the TMB's disposal, it could be established, therefore, that
the four Members maintaining restrictions with re ference to Article 2.1 had implemented the growth-
on-growth provisions on the same date, i.e. on 1 January 2002.  However, of the four Members, only
Turkey had increased the growth rates applicable to the base restraint levels by 16 per cent, which was
the growth factor provided for in  Stage 1 of the integration process and foreseen in Article 2.13.  For
their part, Canada and the European Communities had adopted an identical approach by providing the
25 per cent increase in the respective growth rates in its entirety and then applied the additional27 per cent growth factor which was due for Stage 3.  The United States had followed a more
restrictive approach by prorating the 25 per cent increase in the respective growth rates for the period
of time (21 days) when China became a Member during the second stage of the ATC and had applied
a further 27 per cent increase on the already prorated Stage 2 growth rates.  This methodology had,
obviously, an effect on the level of restraints established for the year 2002.
                                                     
2 See WT/ACC/CHN/49.
3 See G/TMB/N/62/Add.3/Corr.1.
4 See G/TMB/N/60/Add.5/Suppl.1.
5 See G/TMB/N/422/Add.1.
6 See G/TMB/N/422/Add.2.
7 See G/TMB/N/63/Add.12/Suppl.1.G/TMB/R/90
Page 4
13. The TMB also recalled that in some of the no tifications made pursuant to Article 2.2, China
had offered comments and observations with respect to the implementation of the growth-on-growth
provisions by the restraining Members concerned:
• As regards Canada, China had stated that:
"The growth rates of 16 per cent, 25 per cent and 27 per cent shall apply to
China in turn at appropriate dates as specified in accordance withparagraph 241 of the Report of the Working Party on the Accession of China,
or at least a growth rate of 25 per cent shall apply to China on
11 December 2001, which shall be increased by another 27 per cent on1 January 2002."(emphasis added)
8
• Concerning Turkey, the notification by China contained the following:
"Paragraph 241 of the Report of the Working Party on the Accession of
China reads as follows:  'For such WTO Members, the phrase 'day prior to
the date of entry into force of the WTO Agreement', contained in Article 2.1of the ATC, should be deemed to refer to the day prior to the date of China's
accession.'  Therefore Turkey should treat China as if China joined the WTO
on 1 January 1995 and the trade benefits under the ATC shall apply to China
equally." (emphasis added)9
• With regard to the United States, the first set of observations received from China10
contained the same formulations as those submitted in relation to Turkey.  In a
subsequent notification offering observations on the methodology adopted by the
United States, China stated as follows:
"With respect to the application of the second and third stage growth factors,
China maintains that the 25 per cent and 27 per cent growth factors shall be
fully applied with the following calculation methodology:
2002 Quota Level = 2001 Quota Level x [1 + original annual growth rate x (1+25%)]
x [1 + original annual growth rate x (1+25%) x (1+27%)].
China urges that the United States apply the growth factors in this way."11
14. It was also noted that China had not made any observations on how the European
Communities had implemented the growth-on-growth provisions, though the European Communities
had applied the same methodology as Canada.  China had only presented comments with respect to
the latter.
15. On the basis of the notifications provided by the four restraining Members pursuant to
Article 2.1, it could be established that in conformity with the first sentence of paragraph 241 of the
Report of the Working Party of the Accession of China, in each of the four cases, the level of the
restraints that had been applied on 10 December 2001 (i.e. on the date prior to the date of China's
accession) had been notified and that these restraint levels had constituted the base levels for the
purpose of the application of Article 2 of the ATC, including for the implementation of the growth-
on-growth provisions.  As regards the implementation of these latter provisions, the TMB noted that
Canada, the European Communities, Turkey and the United States had implemented the requirements
specified for Stage 3 in Article 2.14(b) in the same way:  the increased growth rates calculated (not
                                                     
8 See G/TMB/N/437.
9 See G/TMB/N/447.
10 See G/TMB/N/445.
11 G/TMB/N/445/Addd.2.G/TMB/R/90
Page 5
necessarily in the same manner) for the purpose of Stage 2 had been further increased, on
1 January 2002, by 27 per cent in order to establish the respective restraint levels for the year 2002.
16. Having considered the background and overview reflected in paragraphs 10 to 15, the TMB
came to the view that in order to reach a comm on understanding on all aspects of the requirements
related to the implementation of the growth-on-grow th provisions, it was necessary to consider three
distinct issues, which were the following:
• whether the restraining Members were also required pursuant to the terms of the
accession instruments, to apply the not less than 16 per cent increase in the original
growth rates as provided for Stage 1 in Article 2.13;
• what was the methodology required for providing the increase in the respective
growth rates for Stage 2 (Article 2.14(a));
• on which date the growth-on-growth provis ions had to be actually implemented by
the restraining Members.
 (i) Whether the restraining Members were also required to apply the not less than 16 per cent
increase as provided for Stage 1 in Article 2.13
17. The third sentence of paragraph 241 of the Report of the Accession of the Working Party of
China states that "[t]o these base levels [i.e. to those in force on 10 December 2001], the increase in
growth rates provided for in Articles 2.13 and 2.14 of the ATC should be applied, as appropriate, from
the date of China's accession".  The TMB observed that if one were to read this sentence by omitting
the expression "as appropriate" the respective obligations would not be ambiguous and equivocal:  on11 December 2001, the growth rates taken over from the pre-ATC regime should have increased, first,
by not less than 16 per cent as provided for in Article 2.13 and, second, by a further increase of not
less than 25 per cent as foreseen in Article 2. 14(a).  Following this, on the first day of the
implementation of Stage 3, i.e. on 1 January 2002, a further increase of not less than 27 per cent had
to be implemented, in conformity with the provisions of Article 2.14(b).  In light of theseconsiderations, the TMB decided to reflect on the ordinary meaning of the term "as appropriate" and
to see whether the possible ordinary meaning that could be given to it could affect (and if so, in what
sense) the reading of the whole sentence and the respective legal obligations contained therein.  It was
noted that dictionaries
12 provide the following definitions for the word "appropriate":  suitable, proper
[to occasion and circumstances];  especially suitable or compatible;  fitting.  By replacing theexpression "appropriate" with these definitions, a full reading of the whole sentence would suggest
that the increase in growth rates provided for in Articles 2.13 and 2.14 of the ATC should be applied
to the base levels taken over from the pre-ATC regime, as it is (especially) suitable, or proper, or fits
to the (particular) occasion and the (given) circumstances, from the date of China's accession.  In light
of this, it appeared to the TMB that the term "as appropriate" could inject an element of flexibility intothe sentence (and hence into the legal commitments reflected therein).  This notion of possible
flexibility could not be defined with more precision;  it seemed to be designed to respond to the
particular occasion or the prevailing circumstances.  In any event, the inclusion of the term "as
appropriate" into the language could also imply that not necessarily everything provided for in this
sentence should be implemented in the way, or within the time-frame, it should have been
implemented,  without having this term or qualification attached thereto.  In the view of the TMB, this
observation could raise another question as to which part of the sentence the term "as appropriate"referred to.  It was noted that there seemed to be no unambiguous answer to this question either.  One
possible reading was that the notion "as appropriate" was related to the very last part of the sentence,
i.e. to the portion indicating that the respective co mmitments had to apply "from the date of China's
accession".  Had this been the only possible reading, the inclusion of the term "as appropriate" would
                                                     
12 The Shorter Oxford English Dictionary, Third Edition.  The Pocket Oxford Dictionary, Fourth
Edition.  Webster's New Collegiate Dictionary.G/TMB/R/90
Page 6
not have any effect on any other elements in the sentence, including that related to the obligation to
apply the increase in growth rates provided for in Article 2.13.  It was recognized, however, that
another possible reading could also be envisaged, according to which "as appropriate" could refer to
any or to all the elements (and, therefore, also to  commitments) listed in the sentence, including to
Article 2.13.
18. In summarizing its consideration of the relevant language of paragraph 241 of the Report of
the Working Party of the Accession of China, the TMB came to the view that this language in itself
did not provide a clear answer nor an unambiguous guidance as to whether the restraining Members
were also required to apply the not less than 16 per cent increase in the original growth rates as
provided for in Article 2.13 of the ATC.  By using the term "as appropriate", the drafters had not only
injected the possibility for some flexibility and adjustments to be made in the actual implementation
but had also left an important element of ambiguity in the respective language.
19. In spite of the lack of clear guidance from the above cited provision of the accession
instruments, the TMB was of the view that it was necessary to continue its consideration of the  matter
by reflecting further on the possible arguments in the context of the ATC in favour of one reading or
another of the respective provision.  By doing  so, however, the relevant formulations of
paragraph 241 of the Working Party report had to be kept in mind.
20. The TMB recognized that it was possible to provide a reading of paragraph 241 in such a way
that it would also encompass the requirement of implementing the increase by not less than
16 per cent of the original growth rates as provided for in Article 2.13 for Stage 1.  The possible
arguments supporting such a reading could be summarized, as follows:
• Article 2.13 is explicitly mentioned in the language of the Report of the Working
Party of China, which was adopted by  WTO Members in November 2001, almost
four years after the completion of the Stage 1 integration process.  If it had been the
intention of the Members not to apply the 16 per cent growth factor, the drafters
could have simply deleted the specific reference to Article 2.13 from the text.
• As from 11 December 2001, the day of its accession to the WTO, China has the same
obligations as other WTO Members and should, therefore, also enjoy the same rights
and benefits under the ATC, as any other WTO Member.  In the same vein, sinceChina has had to implement its respective integration programmes for Stages 1, 2 and
3 at the same time, practically in one step, the benefits accruing from all aspects of
the implementation of the first stage of the integration process should also be
extended to China.  In the absence of doing so, the balance of rights and obligations
would be upset:  China would assume the same obligations as any other WTOMember but would enjoy less benefits.
• The above is all the more true since none of the restraining Members denied China
the right of benefiting from the implementation of their respective Stage 1 (and 2)
integration programmes.  As a consequence, quantitative restrictions affecting ATC
products that had been integrated in earlier stages had also been eliminated on
imports from China as a result of its accession to the WTO.  It would not be a
consistent approach to extend certain benefits to China (full implementation of the
integration programmes), while denying others (the benefit of the 16 per cent increasein growth rates, applied for Stage 1).
• In this reasoning, the notion "as appropriate" is simply designed to indicate that by
becoming a Member on 11 December  2002, China was entitled to immediately
enjoy the benefits of the increase in growth  rates provided for in Stages 1 and 2 but
not (yet) those applicable for Stage 3, since their application became "appropriate"
only as of 1 January 2002.G/TMB/R/90
Page 7
• It can also be argued that this would be the only reasonable reading of the terms
established in paragraph 241 of the Working Party report in their context and in lightof the object and purpose of the accession instruments.  According to this argument,
these instruments define the terms and conditions of China's accession and the
resulting rights and obligations, respectively, of China and other Members of the
WTO.  The ATC is part of the WTO Agreement, its purpose is to ensure the fullintegration of products of the textiles and clothing sector into the general rules and
disciplines of GATT 1994 through trade liberalization, and this applies to all
Members including China.  The context in which the provisions of paragraph 241
were drafted and should be read is related, in a broader sense, to the full
implementation of the ATC  in trade between China and all other WTO Members.   In
a more narrow sense, it is  related to the implementation of the growth-on-growth
provisions and Article 2.13 is explicitly mentioned in this regard.
21. The TMB also recognized that a reading different to that reflected in paragraph 20 could also
be provided.  This would consist of the following main elements:
• When a Member joins the WTO, it is entitled to receive the benefits as from the date
of its accession and, of course, those benefits that are applicable at that point in time.Following this reasoning, China may be entitled to enjoy the benefits that are
applicable during Stage 2 under the ATC, but not those that had been provided in theperiod prior to its membership, such as the growth factor provided for in Article 2.13
during Stage 1.  Though it is true that paragraph 241 of the Working Party report also
mentions Article 2.13, but with the qualifying term "as appropriate". If the intention
of the Members had been that the 16 per cent incremental growth foreseen in
Article 2.13 should also apply, this would have been stated unequivocally in thelanguage.  However, a reading of this provision together with the notion "as
appropriate" suggests that it was appropriat e to provide the benefits of Article 2.14 to
China because it became a Member on 11 December 2002, but that it was not
appropriate to extend the benefits of Article 2.13 which were applicable years before
China's accession.  In fact, the explanations provided by Canada and the EuropeanCommunities in reply to the clarifications sought by the TMB were based on this
reasoning.  Canada stated that "[s]ince China's accession took place on 11 December 
2001 during the second stage of integration, the appropriate growth-on-growth
provisions in China’s case are those stipulated for the second and third stages of
integration under the ATC".
13  The European Communities said that by extending to
China the same benefits of "the full 25 per cent increase inherent in the second stage
of integration", followed by 27 per cent applicable for the third stage, the
Communities was "well within the boundaries of application of the pertinent criteria
'as appropriate' stipulated in paragraph [241 of the Working Party report]".14
• China is all the less entitled to claim the benefits of Article 2.13, since the obligations
deriving from the ATC had not been assumed by it as from 1 January 1995, whichwas the starting-point of the implementation of the Stage 1 integration process.
China assumed these obligations only from 11 December 2001 and this timing shouldalso be kept in mind in establishing the proper balance of rights and obligations.
• Though it is true that China had to implement its respective Stage 1, 2 and 3
integration programmes in one step, this does not confer the right to benefit from the
implementation of the growth factor which was applicable for Stage 1.  The
corresponding right received as a result of implementing the integration programmes
                                                     
13 See G/TMB/N/62/Add.3/Corr.1/Suppl.1.
14 See G/TMB/N/60/Add.5/Suppl.2.G/TMB/R/90
Page 8
is that China has become entitled to invoke the provisions of the transitional
safeguard mechanism, as defined in Article 6.
• According to this reasoning, it would not be justified to establish a kind of parallelism
between the fact that China received all the benefits of the implementation of therestraining Members' respective integration programmes and the claim that, similarly,
the benefits of Article 2.13 should also be extended to it.  Integration is a uniquefeature of the ATC which cannot be "divided" or subjected to selective
implementation (i.e. it cannot be implemented only in relation to some, but not to all
WTO Members).  Once a product becomes integrated, it is taken out of the scope of
application of the ATC and is subjected to the general rules and disciplines of
GATT 1994.  Since trade in integrated products will not be governed any more by the
ATC (and, specifically, restrictions will not continue to be maintained on such
products under any provision of the ATC), the "benefits" of integration that wereimplemented prior to the accession of a new Member, need also to be extended
immediately to the newly acceded Member.  In this light, integration is a completely
different concept that cannot be mixed up or put on a parallel track with the
application of increased growth rates that affects products still subject to restraint
under the ATC.
• Following the same reasoning, a brief examination of the respective provisions of the
Working Party report in their context and in light of the object and purpose of theaccession instruments would also confirm that this reading is the correct one.  The
object and purpose of these legal instruments were to define the terms and conditions
of China's accession, including to what extent and under what conditions different
specific provisions of the WTO Agreement and related agreements, such as the ATC,should apply to or be implemented by China.  The particular context of the language
specified in paragraph 241 of the Working Party report is related to the modalities in
which the ATC should be implemented in relation to China.  These modalities foresee
that the benefits of the growth-on-growth provisions should be extended to China
only at the appropriate stage of its accession.
22. The TMB noted, furthermore, that one of the arguments raised by China in some of its
observations that had been made pursuant Article 2.2, had not as yet been appropriately addressed in
the discussion reflected in paragraphs 20 and 21.  As indicated in paragraph 13 above, China had
argued that since the second sentence of paragraph 241 of the Working Party report stated that for
restraining Members, the phrase "day prior to th e date of entry into force of the WTO Agreement"
should be deemed to refer to the day prior to the date of China's accession and that, therefore, China
should be treated as if it had joined the WTO on 1 January 1995, and that the trade benefits under the
ATC should apply to China equally.  Recalling that in paragraph 20, the TMB had already recognized
the possibility of a reading that would also enable  China to claim the benefits of the application of
Article 2.13, the TMB observed that this particular argument put forward by China did not seem to
substantiate this position.  First, the definition pr ovided in paragraph 241 of the Working Party report
for the day prior to the date of entry into force of the WTO Agreement was designed to specify that
that day had to be used for the purpose of notifying the quantitative restrictions maintained on imports
from China.  It did not follow from this specificati on that China should be treated as if it had joined
the WTO as of 1 January 1995.  Second, had Members treated China as if it had joined the WTO as of
the first day of the entering into force of the WT O Agreement, the trade benefits extended to China,
had the respective provisions been literally implemented, would have resulted in a situation wherebythose which had been actually Members on 1 January 1995 would enjoy less benefits and would be
accorded less favourable treatment compared to those benefiting the newly acceded Member.  This
would have stemmed from the fact that the base levels of the respective restraints would have been
those which had been applied on 31 December 1994 for Members of 1 January 1995, whereas for
China, the base levels to be applied would have be those in force nearly seven years later (as ofG/TMB/R/90
Page 9
10 December 2001) and these latter levels would have already reflected the implementation of seven
times the annual growth rates agreed bilaterally for the period 1 January 1995 to 10 December 2001.
23. In summing up the consideration of this aspect of the matter, the TMB came to the view that,
since the relevant provision of the Working Party report did not provide an unambiguous guidance, it
was not possible to reach a clear and unquestionable conclusion on the issue of whether therestraining Members were also required to apply the not less than 16 per cent increase provided for in
Article 2.13, to the growth rates taken over from the pre-ATC regime.  The TMB noted that
arguments could be presented in favour of a reading of the relevant provision that this increase should
be implemented, as it had been done by Turkey.  However, the TMB also noted that arguments could
also be found  in support of a reading to the contrary which corresponded to the position taken by
Canada, the European Communities and the United States, respectively.  It was also noted that the
observations made by China pursuant to Article 2.2, seemed to recognize or, at least, to reflect theuncertainties related to the correct understanding of the legal obligations incorporated in the language
of paragraph 241 of the Working Party report.  The European Communities had not applied the
growth factor provided for in Article 2.13 and China had remained silent in this regard, unlike in the
case of other restrained Members.  In its observations made in relation to Canada's notification, while
also claiming the need of providing the 16 per cent increase, China itself had provided an alternativereading by stating that "at least a growth rate of 25 per cent shall apply to China on 11 December
2001 […]".  Similarly, in the first observations offered in relation to the notification submitted by the
United States, China had stated, inter alia , that "the United States should treat China, as if China had
joined the WTO on 1 January 1995 and the trade benefits under the ATC shall apply to China
equally".  In a subsequent communication, however, which had offered comments with respect to theapplication of the second and third stage growth factors as reported by the United States, China had
presented a formula that should be followed by the United States.  This formula had taken the "2001
quota level" as the basis for the calculation, but had completely omitted the application of the
16 per cent growth factor.
24. The TMB expressed its concern that Members had left an important element of ambiguity in
the language of the respective provision of the Report of the Working Party on the Accession of
China, which did not enable the Body to take a firmer position regarding the methodology to be
applied.
 (ii) The methodology to be applied in providing the increase in the respective growth rates for
Stage 2, pursuant to Article 2.14(a)
25. The TMB recalled that irrespective of the positions taken in respect of Article 2.13, each of
the four Members maintaining restrictions with reference to Article 2.1 had reported that they hadprovided an increase in the respective growth rates ap plicable for Stage 2.  However, this increase had
not been implemented in the same manner:  while Canada, the European Communities and Turkey
had increased the respective growth rates by the "full" 25 per cent stipulated in Article 2.14(a), the
United States prorated this 25 per cent for the period (altogether 21 days) during which China had
been a Member in the second stage integration process under the ATC.
15  Since this prorating had
resulted in much lower increases in the respective growth rates and the corresponding restraint levels,
the way in which the United States had applied the provisions of Article 2.14(a) had had an important
impact on the restraint levels calculated for Stage 3 of the ATC implementation.
26. The TMB decided to consider whether the applic able provisions of the legal instruments of
China's accession and those of the ATC had entitled the United States to adopt the methodologydescribed above.  Recalling its detailed reflections on the possible ordinary meaning of the term "as
appropriate" included in the third sentence of paragraph 241 of the Working Party report, the TMB
noted that it had already recognized that in one poss ible reading, the term "as appropriate" could refer
                                                     
15 See also paragraphs 11 and 12.G/TMB/R/90
Page 10
to any or to all the elements (and, therefore, commitments) listed in the sentence in question.16  I n
making this analysis, however, the TMB's discussion had been focussed on the existence of a clear
legal requirement, or the lack thereof, of implementing a specific ATC provision (i.e. Article 2.13) in
its entirety and had not addressed the aspect involved in the way the United States had actually
implemented another specific provision of the ATC, notably its Article 2.14(a).  As regards this latteraspect, the TMB had to turn, therefore, to the consideration of whether the term "as appropriate" could
provide a justification for an implementation that ha d significantly altered the modality prescribed in
the respective provision of the ATC.
27. In examining this matter, the TMB made the following observations:
• The provision inscribed in paragraph 241 of the Working Party report states that "[t]o
these base levels, the increase in growth rates provided for in Articles 2.13 and 2.14of the ATC should be applied, as appropriate, from the date of China's accession".  As
indicated earlier, the TMB did not have sufficient information to reach a definitiveconclusion with regard to the meaning of the notion "as appropriate".  However, the
TMB was of the view that the notion "as appropriate" was related to one or to both of
the following two matters:  (i) which of the articles enumerated should apply in the
given circumstances;  (ii)  what should be the date of their actual implementation or
application.  However, nothing in this reading suggested that it would also provide anauthorization not to implement in full any of the articles listed, once its application
had been found to be "appropriate" for the purpose of application of the ATC.  In
other words, once the United States concluded that since China had become a
Member during Stage 2 of the ATC, it had been appropriate to apply the provisions of
Article 2.14(a) to China;  these provisions should have been implemented in full (i.e.for the entire year of China's accession) and the language did not seem to imply or
allow for any further flexibility in this regard.  Therefore, in the view of the TMB, to
"determine to be appropriate to apply an accelerated growth rate of 25 per cent pro-
rated" for the period of 21 days, as reported by the United States, did not appear to be
substantiated by the relevant provisions of the Working Party report.
• The above conclusion was also supported by the clear language included into
Article 2.14(a), which does not provide for any flexibility or discretion including thatof prorating, in terms of its implementation.  Moreover, prorating, as such is not a
basic concept embodied or inherent in the ATC.  The only provision which explicitly
or implicitly enabled Members to adopt a prorated approach, was Article 6, in the
context of which recourse to prorating of restraint levels may be required solely forthe purpose of implementing or administer ing the respective transitional safeguard
measure (in cases when their period of application does not coincide with an entire
calendar year).
• Canada, the European Communities and Turkey had extended the benefit of the full
25 per cent increase in the respective growth rates to China.  More importantly, no
other Member, the United States included, had ever in the past used prorated increase
in the respective growth rates in relation to any other WTO Member.  The
United States had not applied this prorated methodology in 1995 or early 1996 withrespect to exporters that had become Members only months after the date of the
entering into force of the WTO Agreement, nor had it relied on such an approach
even in relation to those suppliers that had joined during the second stage of the
integration process (in some cases with provisions similar to those included in the
Report of the Working Party of China).
                                                     
16 See, in particular, paragraph 17.G/TMB/R/90
Page 11
28. In light of the considerations reflected in paragraphs 25 to 27, the TMB:
• noted, once again, that Canada, the European Communities and Turkey had
implemented in full the 25 per cent increase applicable for Stage 2 in the respective
growth rates as provided for in Article 2.14;
• reached the conclusion that it had not been justified under the relevant provisions of
the accession instruments and the ATC to prorate the 25 per cent increase for the
short period of China's actual membership during Stage 2 and observed also that thisapproach had not been in conformity either with the established practice of ATC
implementation by the United States.
 (iii) The date on which the growth-on-growth provisions had to be actually implemented by the
restraining Members
29. The TMB recalled that according to the formulation of paragraph 241 of the Report of the
Working Party on the Accession of China, the respective increase in the growth rates "should be
applied, as appropriate, from the date of China's accession".  Recalling also that the date of China'saccession had been 11 December 2001, it was noted that the four Members maintaining restrictions on
imports from China with reference to Article 2.1 had actually implemented the growth-on-growth
provisions only on 1 January 2002.  This raised the issue as to whether the applicable provisions of
the accession instruments allowed for the implem entation of the growth-on-growth provisions on
1 January 2002 only.
30. In considering this aspect of the subject-ma tter, the TMB noted that the increase in the
respective growth rates, as far as, when applicable, Stage 1 and in any event, Stage 2 were concerned,
should have been ideally implemented on 11 December 2001.  At the same time, the TMB recalled
that it had already accepted that in any possible reading of the third sentence of paragraph 241 of the
Working Party report, the term "as appropriate" could (also) be related to the very last part of thesentence which indicated that the respective commitments should be applied "as from the date of
China's accession".  Based on this flexibility inherent in the formulation, practical considerations
could also be raised in support of why an actu al implementation starting on 1 January 2002 could be
found to be appropriate.  In terms of the administration of restraints under the ATC, the beginning of a
new calendar year has always been a turning-point, since it represented the start of a new "quota-year", inter alia , by establishing the new annual restraint levels, also as a result of the application of
the respective annual growth rates.  Since the time difference between China's accession and the start
of the implementation of the new annual restraint levels for the year 2002 did not exceed three weeks,
this delayed actual implementation could  be explained by practical administrative considerations and
the time-lag could  not be considered to be too excessive.
31. In light of the above considerations, the TMB concluded that though some of the measures in
question could have already been implemented as from 11 December 2001, they had to be
implemented at latest by 1 January 2002, and this had been done by Canada, the European
Communities, Turkey and the United States.
(iv) Summary conclusions
32. After having carefully considered all the aspects involved, the TMB came to the conclusion
that since the relevant provisions of the legal instruments of China's accession did not provide anunambiguous guidance, it was not possible to provid e a clear answer to the question of whether the
restraining Members had also been required to apply the not less than 16 per cent increase in the
respective growth rates, as provided for in Article 2.13, for the Stage 1 integration process.  The lack
of a clear answer regarding this aspect had led the TMB to consider those minimum requirements
which had to be implemented by the Members concerned.  These minimum requirements could be
summarized in the following: as from 1 January 2002, the base levels in force on 10 December 2001G/TMB/R/90
Page 12
had to be increased by the respective growth rate s applied for the year 2001 (prior to China's
accession), increased by the full 25 per cent applicable to Stage 2 and further increased by the 27 per
cent applicable to Stage 3.
33. Since the United States had reported an implementation which did not meet the minimum
requirements, as defined above, the TMB decided to invite it to reconsider its respective position inlight of the TMB's comments, observations and conclusion and to implement the necessary
adjustments in its respective methodology applied.
34. The TMB noted that during its detailed discussion it had addressed the relevant aspects of the
respective notifications received from China pursuant to Article 2.2 and had reflected on  them to the
extent possible.  Therefore, the Body considered that the examination of these particular aspects of the
Article 2.2 notifications which touched upon the methodology of implementation of  the growth-on-
growth provisions had been concluded.
(c) Chinese Taipei
35. Paragraph 167 of the Report of the Working Party on the Accession of the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu states as follows:
"The representative of Chinese Taipei stated that the quantitative restrictions on
imports of textiles and clothing products originating in Chinese Taipei underarrangements between Chinese Taipei and WTO Members that were in force on the
date prior to the date of accession of Chinese Taipei to the WTO would be notified to
the Textiles Monitoring Body (TMB) as be ing the base levels for the purpose of
application of Article 2 of the Agreement on Textiles and Clothing. The
representative of Chinese Taipei stated that for the purpose of Chinese Taipei'saccession to the WTO, the phrase 'day prior to the date of entry into force of the
WTO Agreement' contained in Article 2.1 of the Agreement on Textiles and Clothing
would be deemed to refer to the day prior to the date of accession of Chinese Taipei
to the WTO.  To these base levels the increase in growth rates provided for in Articles
2.13 and 2.14 of the Agreement on Textiles and Clothing would be applied, in stages,from the date of accession of Chinese Taipei to the WTO."
17
36. The TMB recalled that the information provid ed by the Members maintaining restrictions
with reference to Article 2.1 on imports from Chines e Taipei regarding the way they had implemented
the growth-on-growth provisions could be summarized as the following:
• Canada reported that: "With respect to the quota 'growth-on-growth' provisions
stipulated in paragraphs 13 and 14 of Arti cle 2 of the ATC, Canada increased the
growth rate on the remaining restraints with Chinese Taipei by 27 per cent on
1 January 2002."18  In a subsequent communication, Canada stated the following: "As
regards Canada’s application of the growth-on-growth provisions, […..] paragraph
167 of the Report of the Working Party stipulat es that 'the increase in growth rates
provided for in Articles 2.13 and 2.14 of the ATC would be applied, in stages, from
the date of accession of Chinese Taipei.'  Since Chinese Taipei only became a
Member of the WTO on 1 January 2002, the relevant stage is the third stage ofintegration under the ATC.  Therefore Canada applied the third stage
growth-on-growth provision and increased the growth rates of the remaining
restraints on imports from Chinese Taipei by 27 per cent on 1 January 2002."
19
                                                     
17 See WT/ACC/TPKM/18.
18 See G/TMB/N/62/Add.4/Corr.1.
19 See G/TMB/N/62/Add.4/Corr.1/Suppl.1.G/TMB/R/90
Page 13
• The European Communities stated that: "With respect to the quota 'growth-on-
growth' provisions stipulated in paragraphs 13 and 14 of Article 2 of the ATC, the EUincreased the growth rate on the remaining restraint levels with the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu, by 27 per cent on
1 January 2002."
20  Furthermore, in a subsequent communication21, the European
Communities provided the same word-for-word explanation as that which had beenprovided by Canada.
22
• Turkey explained that:  "With respect to the quota 'growth-on-growth' provisions
stipulated in paragraphs 13 and 14 of Article 2 of the ATC, Turkey increased the
growth rate on the remaining restraint levels with Chinese Taipei by 16 per cent,
25 per cent and then by 27 per cent on 1 January 2002."23
• The information provided by the United States contained the following:  "The
Working Party report on the accession of Chinese Taipei provides that the increase in
growth rates provided for in Articles 2.13 and 2.14 of the ATC are to be applied from
the date of accession, as appropriate.  Chinese Taipei acceded to the WTO on
1 January 2002.  Accordingly, the growth rates were increased by 27 per cent."24
Though the TMB had requested an explication by the United States as to why it haddecided to implement the growth-on-growth provision in this manner, no further
reply was provided.
37. The TMB recalled that the notifications provided by Chinese Taipei pursuant to Article 2.2
had not contained any observation with respect to the implementation of the provisions of growth-on-
growth.  The TMB also recalled that Chinese Taipei had become a WTO Member on 1 January 2002.
Therefore, on the basis of the notifications provided by the restraining Members, it could be
established that, in conformity with paragraph 167 of the Working Party report, each of the four
Members concerned had notified the restrictions in place on 31 December 2001, i.e. the date prior tothe date of Chinese Taipei's accession.   Moreover, it was also noted that the restraint levels applied
on 31 December 2001 had constituted the respective base levels for the purpose of the application of
Article 2 of the ATC, including that of implemen tation of the growth-on-growth provisions.  The
TMB further noted that Canada, the European Communities, Turkey and the United States had
implemented these provisions on the same day, i.e. on 1 January 2002, and that they were in line withthe respective language of the Working Party report ("as from the date of accession of Chinese
Taipei").  Nevertheless, it was observed that:
• while Canada, the European Communities and the United States had increased the
growth-rates taken over from the pre-ATC regime by only 27 per cent provided forStage 3 under Article 2.14(b), Turkey had increased the respective growth rates first
by 16 per cent, then by 25 per cent (as provided for in Articles 2.13 and  2.14(a),respectively), and by a further 27 per cent applicable for Stage 3;
• the United States, in its notification, had misquoted the relevant provisions of the
Working Party report, which (unlike that of China) do not include the term "as
appropriate". Instead, they state that the relevant increase in growth rates would be
applied, in stages, from the  date of Chinese Taipei's accession.
38. On the basis of the information at its disposal (summarized in paragraphs 35 to 37), the TMB
was of the view that in order to reach a common understanding on the matter considered, it had to
                                                     
20 See G/TMB/N/60/Add.6./Suppl.1.
21 See G/TMB/N/60/Add.6/Suppl.2.
22 See previous bullet point of paragraph 36.
23 See G/TMB/N/432/Add.1.
24 See G/TMB/N/63/Add.13/Suppl.1.G/TMB/R/90
Page 14
address the issue of whether restraining Members were also required, according to the terms of the
legal instruments of Chinese Taipei's accession, to apply the not less than 16 percent followed by the
not less than 25 per cent increase in the respective growth rates as provided for Stages 1 and 2 of the
integration process in Articles 2.13 and 2.14(a).
 (i) Whether the restraining Members were also required to apply the not less than 16 per cent
followed by the not less than 25 per cent increase as provided for Stages 1 and 2 in Articles
2.13 and 2.14(a)
39. Paragraph 167 of the Report of the Working Party on the Separate Customs Territory of
Taiwan, Penghu, Kinmen and Matsu states, inter alia , that "[t]o these base levels [i.e. those in force
on 31 December 2001], the increase in growth rates provided for in Article 2.13 and 2.14 of the ATC
would be applied, in stages, from the date of accession of Chinese Taipei to the WTO".  In the same
way as the respective language of  the accession instruments of China had been considered25 it could
be observed that with the deletion of the term "in stages" from the sentence, the respective obligations
would be unambiguous;  implying that on 1 January 2002, the growth rates taken over from the pre-
ATC regime should have been increased, first, by not less than 16 per cent (Article 2.13), second, by a
further not less than 25 per cent (Article 2.14(b) and third, by another not less than 27 per cent
(Article 2.14(b)).  In light of the above, the TMB proceeded to consideration of the meaning of theterm "in stages" and to clarify the extent to which the meaning of these words, in the context of the
whole sentence above, could affect the reading of this specific provision and the respective legal
obligations contained therein.  The term "stage" is defined
26 as one of the phases or periods of a
development;  a period or a step in a progress or activity;  division of a process;  one of a series of
positions one above the other;  one of the parts into which a journey (or a process) is divided by"stopping   places".  The TMB noted that, in addition to the possible definition of the ordinary
meaning of the word, another dimension also had to be addressed, namely whether the drafters'
intention had been to use "stage" as a simple common noun or, rather, that they had in mind the well
specified connotation this word had in the context of the ATC (referring to the stages of the
integration process).  The TMB was of the view that though this latter question could not be answeredwith certainty, it could be assumed that this c onnotation had probably been kept in mind when this
portion of report had been drafted.
40. After deliberating on all possible options, the TMB recognized that the sentence in
paragraph 167 of the Working Party report could be read in a manner that would require restraining
Members to implement the increase in the respective growth rates for all three stages at the same time,
as had been done by Turkey.  Such a reading could be supported by the fact that Articles 2.13 and
2.14 are explicitly mentioned in the text.  Since the term "in stages" appears to refer to the respectiveintegration stages, the use of this term in plural coul d be designed to indicate that the increase in the
growth rates has to be implemented for all the relevant stages.  Also, one  meaning of the term "stage"
refers to a process that consists of a series of steps in which one step is built above the other.
Furthermore, it was also noted that even if it could be argued that these provisions required the
implementation of each of the subsequent increases specified in Articles 2.13 , 2.14(a) and 2.14(b),the language remained unclear as to whether this ha d to be done in one step, at the same time, or in
successive steps ("stages") which could be distinct from each other regarding their respective timing
(and if this applied, what should be the duration of each step).  Reflecting further on this particular
aspect, the TMB considered it unlikely that the intention was to extend only the benefits of the not
less than 16 per cent increase applicable for St age 1 for an unspecified period of time, following
which, first, the not less than 25 per cent and second, the not less than 27 per cent increases should be
provided again for unspecified time-periods.
41. Notwithstanding the considerations above, the TMB recognized that there could also be a
completely different reading of the same provision where the respective increases had to be applied
                                                     
25 See ,in particular , paragraph 17.
26 See footnote 12.G/TMB/R/90
Page 15
only for that stage or those stages (of the integration process) when Chinese Taipei was actually a
Member of the WTO.  Following this reasoning, integration and all related measures under the ATC
had to be implemented "in stages" according to a clearly defined time-frame, irrespective of whether
Chinese Taipei was already a Member or not.  Chinese Taipei was entitled to receive the respective
benefits only from the date of its accession and only those benefits that were applicable to the "stage"when it became a Member.  Since Chinese Taipei became a Member on the first day of the
implementation of Stage 3 of the integration process, the respective growth rates had to be increased
by not less than the 27 per cent applicable to that stage pursuant to Article 2.14(b), as done by
Canada, the European Communities and the United States.  It was inherent in this reasoning that had
Chinese Taipei become a Member earlier, i.e. during  the implementation of the second stage, it would
have benefited from the application of the provisions of Articles 2.14(a) and 2.14(b) "in stages":  from
the application of the Stage 2 growth factor as from the date of its accession, while the increaseapplicable for Stage 3 was only due from 1 January 2002.  On the other hand, Chinese Taipei could
not claim the benefits that had been extended prior to its accession, since it had not assumed the
obligations arising from the implementation of the ATC prior to the date of its accession.
42. The TMB noted, furthermore, that a careful examination would also require it to address
additional aspects, such as the proper balance of rights and obligations under the ATC or providing areading of the relevant provisions in their context, in light of the objective and purpose of the legal
instruments involved.  It was observed, however, that these and some other aspects had already been
examined in the context of the consideration of the terms of China's accession, and that this
examination had not enabled the TMB to reach a clear-cut understanding.  It was noted that the
possible arguments or counter-arguments would be either the same or very similar in the case ofChinese Taipei.
 (ii) Summary conclusions
43. After careful consideration of the matter, the TMB came to the conclusion that, since the
relevant provisions of the legal instruments of Chinese Taipei's accession did not provide
unambiguous guidance in this regard, it was not possible to give a clear answer to the question ofwhether restraining Members had also been required to apply the not less than 16 per cent, followed
by the not less than 25 per cent increase in the respective growth rates, as provided for in Articles 2.13
and 2.14(a) for Stages 1 and 2, respectively.  The lack of a clear reply regarding this aspect led the
TMB to consider those minimum requirements which had to be implemented by the Members
concerned.  The TMB concluded that these minimum requirements implied that on 1 January 
2002,
the base levels in force on 31 December 2001 had to be increased by the respective growth rates
applied in 2001,  as further increased by 27 per cent which was applicable for Stage 3.
44. The TMB noted that the manner in which Canada, the European Communities, Turkey and
the United States had implemented the respective provisions met these minimum requirements.
Notifications under Article 2.1 of the ATC
45. The TMB took note of a notification received pursuant to Article 2.1 from the European
Communities following the accession of Chinese Taipei to the WTO (G/TMB/N/60/Add.6,Add.6/Suppl.1 and Add.6/Suppl.2).  Having sought clarification and information from the European
Communities
27 and after consideration of the observations made by Chinese Taipei regarding this
notification28, the TMB observed that the notification, as supplemented, contained the quantitative
restrictions on imports of textile and clothing produc ts originating in Chinese Taipei under arrangements
between Chinese Taipei and the European Communities that were in force on the date prior to the date
of accession of Chinese Taipei to the WTO, including the respective growth rates and flexibility
provisions.  The notification contained, in addition, the restraint levels, respective growth rates and
                                                     
27 See G/TMB/R/85, paragraph 6 and G/TMB/R/87, paragraph 5.
28 See G/TMB/R/87, paragraph 12.G/TMB/R/90
Page 16
flexibility provisions implemented as of 1 January 2002.  As regards the implementation of the
growth-on-growth provisions provided for in Articles 2.13 and 2.14, the TMB, having sought
clarification from the European Communities, noted that the European Communities had stated, inter
alia, that "paragraph 167 of the Report of the Working Party stipulates that 'the increase in growth
rates provided for in Articles 2.13 and 2.14 of the ATC would be applied, in stages, from the date ofaccession of Chinese Taipei.'  Since Chinese Taipei only became Member of the WTO on
1 January 2002, the relevant stage is the third stage of integration of the ATC.  Therefore the
European Community applied the third stage grow th-on-growth provision and increased the growth
rates of the remaining restraints on imports from Chinese Taipei by 27 per cent on 1 January 2002."
The TMB observed that this was not questioned by Chinese Taipei and that it was in line with the
conclusion reached by the TMB regarding the minimum requirements applicable to the
implementation of the growth-on-gr owth provisions of the ATC with respect to Chinese Taipei.
29  In
taking note of the notification received from the European Communities, the TMB also observed that
the observations made by Chinese Taipei pursuant to Article 2.2 (G/TMB/N/439) had been taken into
account by the European Communities in the supplementary communication it had provided to the
original notification.
46. The TMB took note of a notification received pursuant to Article 2.1 from Turkey following
the accession of Chinese Taipei to the WTO (G/TMB /N/432 and Add.1).  Having sought clarification
and information from Turkey30 and after having considered the observations made by Chinese
Taipei31 as regards this notification, the TMB observed that the notification contained the restrictions
applied by Turkey on the imports of certain textile and clothing products taken over from Turkey's
bilateral agreement with Chinese Taipei that was in force on the day before the accession of ChineseTaipei to the WTO, including the respective growth rates and flexibility provisions. The notification
also contained, inter alia , information on the product categories integrated under Stages 1, 2 and 3 on
1 January 2002. As regards the implementation of th e growth-on-growth prov isions provided for in
Articles 2.13 and 2.14, the TMB, having sought clarification from Turkey, noted that Turkey had
"increased the growth rate on the remaining restraint levels by 16 per cent, 25 per cent and then by27 per cent on 1 January 2002."  In taking note of the notification provided by Turkey, the TMB also
observed that the observations made by Chinese Taipei pursuant to Article 2.2 (G/TMB/N/446) had
been taken into account by Turkey in the addendum it had submitted to the original notification.
47. The TMB took note of a notification received pursuant to Articles 2 and 3 from Canada,
following the accession of China to the WTO (G/TMB/N/62/Add.3, Add.3/Corr.1,
Add.3/Corr.1/Suppl.1 and Add.3/Corr .1/Suppl.2).  Having sought cl arification and information from
Canada
32 and after consideration of the observations made by China on the Canadian notification33,
the TMB also took note of the statement by Canada that "all the quantitative restraints with China had
been maintained under Article 4 or notified under Articles 7 or 8 of the MFA, and therefore, were all
being notified pursuant to Article 2 of the ATC only".34  The TMB also observed that the notification,
as corrected and supplemented, contained details including the relevant restraint levels in force on the
day prior to China's accession to the WTO, as well as the relevant growth rates and flexibilityprovisions.  It also contained information on the effect of the implementation of the integration
programmes on the restrictions notified, in particular the fact that, as for other WTO Members,
Canada did not adjust downwards the levels of those restraints on imports from China when products
were removed from the coverage of these restraints during the third stage of integration.  As regards
the implementation of the growth-on-growth prov isions provided for in Articles 2.13 and 2.14, the
TMB, having sought clarification from Canada, noted that Canada had reported that it had "increased
the growth rate in the remaining restraint levels with China by 25 per cent and then by 27 per cent on
                                                     
29 See paragraph  43 above.
30 See G/TMB/R/87, paragraph 7.
31 See G/TMB/R/87, paragraphs 7 and 12.
32 See G/TMB/R/85, paragraph 7, G/TMB/R/86, paragraph 6 and G/TMB/R/87, paragraph 8.
33 See G/TMB/R/87, paragraph 11 and paragraph  13.
34 See G/TMB/R/87, paragraph 8.G/TMB/R/90
Page 17
1 January 2002".  The TMB further observed that, as China had stated that "[t]he growth rates of
16 per cent, 25 per cent and 27 per cent shall apply to China in turn at appropriate dates as specified in
accordance with paragraph 241 of the Report of the Working Party on the Accession of China, or at
least a growth rate of 25 per cent shall apply to China on 11 December 2001, which shall be increased
by another 27 per cent on 1 January 2002" and that Canada, having reviewed this statement, hadremained of the view that its implementation of  the growth-on-growth provisions fulfilled the
requirements of paragraph 241 of the Report on the Working Party on the Accession of China.  The
TMB further observed that Canada's implementatio n of the growth-on-growth provisions met the
minimum requirements described by the TMB in its examination of the implementation of the
growth-on-growth provisions of the ATC with respect to China
35 and also the lesser requirement as
described by China. In taking note of the notification received from Canada, the TMB also observed
that the other observations made by China pursua nt to Article 2.2 (G/TMB/N/437) had been taken
into account by Canada in the corrigendum it had provided to its original notification.
48. The TMB took note of a notification received pursuant to Articles 2 and 3 from Canada,
following the accession of Chinese Taipei  to the WTO (G/TMB/N/62/Add.4, Add.4/Cor.1,
Add.4/Corr.1/Suppl.1 and Add.4/Cor r.1/Suppl.2).  Having sought clarification and additional
information from Canada36 and having considered the observations made by Chinese Taipei on the
Canadian notification37, the TMB also took note of the statement by Canada that "all the quantitative
restraints with Chinese Taipei had been maintained under Article 4 or notified under Articles 7 or 8 of
the MFA, and therefore, were all being notified pursuant to Article 2 of the ATC only".38  The TMB
also observed that the notification, as corrected and supplemented, contained details including the
restraint levels in force on the day prior to Chinese Taipei's accession to the WTO, as well as therelevant growth rates and flexibility provisions.  It  also contained information on the effect of the
implementation of the integration programme for the third stage on the restrictions notified, in
particular the fact that, as for other WTO Members, Canada did not adjust downwards the levels of
those restraints on imports from Chinese Taipei when products were removed from the coverage of
these restraints during that stage of integration.  As regards the implementation of the growth-on-growth provisions provided for in Articles 2.13 and 2.14, the TMB, having sought clarification from
Canada, noted that Canada had reported that it had "applied the third stage growth-on-growth
provision and increased the growth rates of the remaining restraints on imports from Chinese Taipei
by 27 per cent on 1 January 2002".  The TMB observed that this was not questioned by Chinese
Taipei and that it was in line with the conclusion reached by the TMB regarding the minimum
requirements applicable to the implementation of the growth-on-growth provisions of the ATC with
respect to Chinese Taipei.
39  In taking note of the notification received from Canada, the TMB also
observed that the observations made by Chinese Taipei pursuant to Article 2.2 (G/TMB/N/438) had
been taken into account by Canada in the corrigendum it had provided to the original notification.
49. The TMB reverted to its examination of a notification received pursuant to Article 2.1 from
Turkey following the accession of China to the WTO, also on the basis of an additional notification
provided by Turkey (G/TMB/N/422/Add.2) follow ing the Body's examination of the additional
notification received by the TMB from China pursuant to Article 2.2.40  The TMB decided to draw
China's attention to the clarifications or observations contained in the additional notification provided
by Turkey, in particular those related to the growth rates notified by Turkey pursuant to Article 2.1.
                                                     
35 See paragraph 32.
36 See G/TMB/R/85, paragraph 8, G/TMB/R/86, paragraph 7, G/TMB/R/87, paragraph 9 and
G/TMB/R/88, paragraph 7.
37 See G/TMB/R/87, paragraph 12.
38 See G/TMB/R/87, paragraph 9.
39 See paragraph  43.
40 See G/TMB/R/88, paragraph 8.G/TMB/R/90
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50. The TMB reverted to its examination of a notification received pursuant to Article 2.1 from
the United States following the accession of China to the WTO.41  In the absence of replies to the
questions put by the TMB from either Members, the TMB started a preliminary discussion on the
issue of the cap placed by the United States on the combined use of carryover and carry forward by
China, contained in the original notification.
51. The TMB reverted to its examination of a notification received pursuant to Article 2.1 from
the European Communities following the accession of China to the WTO, also on the basis of
additional information received from the European Communities in response to clarifications sought
by the TMB42 (G/TMB/N/60/Add.5/Suppl.2). The TMB de cided to bring the answers contained
therein, in particular that related to the quotas for European Fairs, to the attention of China.  The TMB
also decided to seek further clarification from the European Communities regarding one of the
observations made by China [in document G/TMB/N/436] regarding the growth rates for certainproduct categories which, according to China, should have been specified in the notification received
pursuant to Article 2.1 from the European Communities.
43
Notifications under Article 2.17 of the ATC
52. The TMB reverted to its review, pursuant to Article 2.21, of the notification made by the
European Communities of administrative arrangements agreed between the European Communitiesand China (G/TMB/N/444 and Add.1), also on the basis of responses received from the European
Communities (G/TMB/N/444/Add.2) and China (G/TMB/N/451/Add.1) to a further request for
clarifications.
44  The TMB decided to seek confirmation from the European Communities that the
provisions contained in the administrative arrangements concluded with China, including those
related to regional concentration, were not intended to constitute a derogation from the provisions ofthe ATC and would, therefore, be implemented by  the respective Members in conformity with the
relevant provisions of the ATC.
53. The TMB reverted to its review, pursuant to Article 2.21, of the notification made by the
United States of administrative arrangements agreed between the United States and Chinese Taipei
(G/TMB/N/449), also on the basis of the information provided by Chinese Taipei in response to the
clarifications sought by the TMB (G/TMB/N/454).
45  Mindful of the fact that it had sought similar
clarifications from the United States which had not as yet been provided, the TMB started to examine
the additional information provided by Chinese Taipei.
54. The TMB reverted to its review, pursuant to Article 2.21, of the notification made by the
United States of administrative arrangements agreed between the United States and China
(G/TMB/N/450).46  Mindful of the fact that it had sought clarifications with respect to a number of
specific issues from both Members, which had not as yet been provided, the TMB decided to seekclarifications from the United States in relation to an additional aspect, i.e. the product coverage of a
product category.
Notifications under Articles 3.1 and 3.2 of the ATC
55. The TMB considered a notification made under Article 3.1 by Poland, following Chinese
Taipei's accession to the WTO (G/TMB/N/452).  Acco rding to this notification, Poland maintained a
safeguard measure on imports of synthetic fabrics originating in Chinese Taipei.  At the same time,
Poland informed the TMB that the measure would be withdrawn on 15 September 2002.  The TMB
                                                     
41 See G/TMB/R/86, paragraph 5 and G/TMB/R/88, paragraph 5. See also G/TMB/R/87, paragraph 10
and G/TMB/R/89, paragraphs 4 and 5.
42 See G/TMB/R/87, paragraph  4.
43 See G/TMB/R/87, paragraph 10.
44 See G/TMB/R/89, paragraph 14.
45 See G/TMB/R/89, paragraph 16.
46 See G/TMB/R/89, paragraph 15.G/TMB/R/90
Page 19
observed that the measure had been notified more than 60 days after the accession of Chinese Taipei
to the WTO, and that the withdrawal of the measure on 15 September 2002 fulfilled the requirements
of Article 3.2.  The TMB took note of this notification.
56. The TMB considered a notification made under Article 3.2(b) by Brazil of the phase-out
programme of the quantitative restriction maintained by Brazil on imports from Chinese Taipei ofcertain man-made knitted or crocheted fabrics (G/TMB/N/453).
47  According to the notification, the
quantitative restriction will be dismantled on 14 September 2003.  Additionally, for the quota year
that begins on 15 September 2002 and runs until 14 September 2003, the quota level will be increased
by 6 per cent.  The TMB took note of this notification.
Notifications under Articles 2.6 and 2.7(b), 2.8(a), 2.8(b) and 2.11 of the ATC
57. The TMB reviewed, under Article 2.21, the notifications made pursuant to Articles 2.6 and
2.7(b), 2.8(a), 2.8(b) and 2.11 by China (G/T MB/N/441/Rev.1, Rev.1/ Add.1 and Rev.1/Add.2;
G/TMB/N/442/Rev.1 and G/ TMB/N/443/Rev.1).  During its review the TMB noted that, in
accordance with Articles 2.6, 2.8(a) and 2.8(b), the volume of imports of the products integrated
amounted to 20.79, 17.07 and 18.10 per cent, respectively of the volume of imports in 1992 of the
products falling under the coverage of the Agreement.  The TMB also noted that, in accordance with
Articles 2.6, 2.8(a) and 2.8(b), the products integrated for each stage included products from each ofthe four groups: tops and yarns, fabrics, made-up textile products and clothing.  With regard to the
fact that the calculation of the share of the products to be integrated had been made on the basis of
imports in 1992, the TMB noted the statement by China that this was the first year for which data
were available on the basis of the Harmonized System.  Furthermore, the TMB observed that the
integration programme for Stage 1 contained three HS lines falling under an "ex HS line" in theAnnex to the ATC, and noted the statement by China that with respect of two of these lines only the
imports corresponding to the respective product definition under the ATC had been counted, and that
for third line, since the products that were covered by the ATC could not be separated, the whole tariff
line had been incorporated in the integration programm e.  The TMB observed in this regard that if the
imports of this "ex HS line" were not counted in the volume of imports of the products integrated forStage 1, that volume would still amount to not less th an 16 per cent of the total volume of China's
1992 imports of the products in the Annex, as required by Article 2.6.
Notification under Articles 2.8(b) and 2.11 of the ATC
58. The TMB reviewed, under Article 2.21, the notification made pursuant to Articles 2.8(b) and
2.11 by Venezuela (G/TMB/N/431 and Add.1).  During its review the TMB noted that, in accordance
with Article 2.8(b) the volume of imports of the products integrated amounted to 20.46 per cent the
volume of imports in 1990 of the products falling under the coverage of the Agreement and that theproducts integrated included products from each of the four groups: tops and yarns, fabrics, made-up
textile products and clothing.  The TMB observed that the integration programme contained six
HS lines falling under an "ex HS line" in the Annex to the ATC, and noted the statement by
Venezuela that the percentage notified for theses sub-headings did not necessarily correspond to that
specified in the ATC Annex.  The TMB observed in this regard that if the imports of these"ex HS lines" were not counted in the volume of imports of the products integrated for Stage 3, that
volume would still amount to not less than 18 per cent of the total volume of Venezuela's 1990
imports of the products in the Annex, as required under Article 2.8(b).
__________
                                                     
47 See G/TMB/R/87, paragraph 16.