RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/M/29
3 March 1998
(98-0829)
Council for Trade in Goods
16 February 1998
MINUTES OF THE MEETING
Held in the Centre William Rappard
on 16 February 1998
Chairperson:  Mr. T. Johannessen (Norway)
1. The meeting was convened by Airgram WTO/AIR/771 to conclude the major review of the
implementation of the Agreement on Textiles and Clothing (ATC) during the first stage of theintegration process, pursuant to paragraph 11 of Article 8 of the Agreement.
2. The Chairman recalled that the major review  process had been carried out over six Council
meetings in 1997:  on 6, 16 and 20 October, 7 and 13 November and 8 December.  At these meetings
Members had conducted a very wide and detailed examination of the implementation, as reported in
the minutes of these meetings in documents G/C/M/23 to 28.  In spite of determined efforts bydelegations, it had not been possible in December to arrive at sufficient common ground for him to
propose to the Council a summary of the review or a set of conclusions that would attract consensus.
Accordingly, the work carried out and the situation as it then stood was reported to the General
Council on 10 December 1997.
3. The Chairman further recalled that, in mid-January and on the basis of informal contacts, he
had reopened consultations with a number of delegations.  The work carried out in 1997 and the
amount of progress achieved was quite substantial and it was felt by Members that an additional effort
should be made to arrive at a positive conclusion to the review.  In consequence, a number of informal
consultations were held in the period 19 January to 10 February 1998.  As a result of the spirit of
compromise and flexibility demonstrated by the Members who participated actively in these
discussions, he was in a position on this occasion to inform the Council that it had been possible to
reach substantive agreement on a text, as set out in document G/C/W/105.  This text summarized thediscussions held during the review according to the main subject areas and included observations or
conclusions by the Council relative to the subjects.  He recognized in this regard the effort, the
understanding and the sense of compromise which had been made by all participants in these
consultations.  This had resulted in a text which clearly set out the concerns and the points of view of
the various delegations.
4. He proposed that the Council take note of the text in document G/C/W/105 containing the
outcome of the major review of the implementation of the ATC in the first stage of the integration
process.
5. The Council so agreed.
6. Delegations extended their appreciation to the Chairman for his determination and
perseverance in bringing this first major review to a successful conclusion.G/C/M/29
Page 2
7. The representative of Colombia, speaking on behalf of the WTO Members that are members
of the ITCB, commented that, from an institutional po int of view, the current review had established
an important benchmark in terms of technical and analytical rigour with which the reviews prescribed
in the ATC and in other agreements in the WTO system should be conducted.  This was apparent in
the documents presented, the debates put forward, and the final report.  This final report was a
comprehensive document which contained all the elements of the review including a series ofconclusions;  the development of which had required flexibility and a spirit of compromise.  While the
exporting Members would have preferred some of the conclusions to be more substantive, they
considered that the report clearly reflected the fact that their expectations of a more straightforward
implementation process and elimination of MFA restrictions, consistent with the objectives of the
ATC, in order to contribute to the liberalization of trade in this sector, had not been fulfilled.  He
recalled the fact that export earnings from textiles and clothing were of great importance for
developing country Members, hence their frustration over the timid fulfilment of the objectives andprinciples of the Agreement and the reason for their repeated calls for the elimination of restrictions
and protectionist practices.
8. He stressed the importance of the conclusions embodied in document G/C/W/105 and
considered that it would be useful and timely to restate them, as follows:
• The Council reiterated the commitment by Member s to the full and faithful implementation of
all provisions of the Agreement on Textiles and Clothing.  The Council noted that, as specified in
Article 9, the ATC and all restrictions thereunder shall stand terminated on 1 January 2005, on which
date the textiles and clothing sector shall be full y integrated into GATT 1994 and that there shall be
no extension of the ATC (paragraph 8).
• The Council noted that, subject to certain corrections, the legal requirements for integration of
textile and clothing products into GATT 1994 in the first two stages had been fulfilled.  The Council
noted, however, that the integration programmes of the major importing Members during the first
stage, and as announced for the second stage, included only a small number of products which had
actually been under quota restrictions, therefore, leaving a large number of products for which quota
restrictions would need to be eliminated during the remainder of the transition period (paragraph 13).
• The Council recalled the importance attached by Ministers in their Declaration at the first
Ministerial Conference in Singapore to the implementation of the ATC so as to ensure an effective
transition to GATT 1994 by way of integration, which is progressive in character.  It also welcomed
that two Members had applied the provisions of Article 2.15 for the early elimination of quantitative
restraints and encouraged Members to continue to have recourse, where appropriate, to the provisionsof Article 2.15, and to Article 2.10 on advanced integration (paragraph 14).
• The Council recalled that Members should allow for continuous autonomous industrial
adjustment and increased competition in their markets in order to facilitate the integration of the
textiles and clothing sector into GATT 1994.  The Council noted that further information in this
regard would facilitate the review of progress (paragraph 15).
• The Council observed that recourse to safeguard actions under the Agreement had been made
by two Members.  It noted the concerns expressed by exporting Members and the panel decisions withrespect to two of these safeguard actions by one Member, and the guidance that these decisions give
when taking such actions.  Recognizing the right of Members to use the safeguard provisions of the
ATC, the Council recalled the Ministerial Declaration at Singapore that such use, in accordance with
ATC provisions, should be as sparing as possible (paragraph 23).
• The Council noted the concerns of some Member s on issues involving rules of origin under
Article 4 of the ATC.  It called on Members to use the mechanisms available in the WTO, includingG/C/M/29
Page 3
those under the ATC providing for consultations, with a view to reaching a mutually satisfactory
solution regarding appropriate and equitable adjustments when addressing matters on rules of origin,
so that the balance of rights and obligations between the Members concerned is not upset
(paragraph 28).
• As part of the integration process and with reference to the specific commitments undertaken
by the Members as a result of the Uruguay Round, the Council recalled the provisions of Article 7.1of the ATC and called on all Members to take such actions as may be necessary to abide by
GATT 1994 rules and disciplines so as to, inter alia, achieve improved market access to markets for
textile and clothing products or through such measur es as tariff reductions and bindings, reduction or
elimination of non-tariff barriers, and facilitation of  customs, administrative and licensing formalities
(paragraph 36).
• Recalling the concerns of some Members regarding the use of trade measures in respect of
textile and clothing products, including those which were already under restraint, the Council called
on Members to observe the relevant WTO provisions so as to ensure the application of policiesrelating to fair and equitable trading conditions regarding textile and clothing products in areas
including, inter alia , dumping and anti-dumping rules and procedures (paragraph 40).
• The Council noted the concern of exporting Members in relation to the proposal of a Member
to maintain visa requirements on textile and clothing products which would be integrated into
GATT 1994 (paragraph 43).
• The Council noted the initiatives announced by Members to positively address the concerns
expressed by least-developed country Members at the High Level Meeting on Least-Developed
Countries held in Geneva in October 1997 (paragraph 51).
• The Council recalled the provisions of the ATC in favour of small suppliers, new entrants,
least-developed country Members and cotton-producing exporting Members, and reiterated theimportance of the full implementation of these provisions (paragraph 55).
• The Council noted the concern of some Members with regard to issues relating to
circumvention and reiterated the importance of full observance of the provisions of this Agreement
(paragraph 58).
• To ensure maximum transparency in the implem entation of the ATC and to facilitate the work
of the Textiles Monitoring Body, the Council ca lled upon Members to comply, in a complete and
timely manner, with all notification obligations of the ATC (paragraph 61).
• The Council emphasized the importance of its overseeing and of regularly evaluating the
progress, in accordance with Article IV:5 of the WTO Agreement and Article 8 of the ATC, of the
functioning of the ATC, whose implementation is being supervised by the TMB (paragraph 63).
9. The representative of Colombia also noted that the report contained an unequivocal reiteration
of the commitment by Members to implement the ATC fully and faithfully in the prescribed
time-span.  It also reaffirmed the message from the Singapore Ministerial Declaration to guarantee theeffective transition of the sector into GATT 1994 in a progressive manner.  He considered that the
Council had accomplished an important task and it was significant that it had also decided to continue
in the future to supervise, and to evaluate regularly, the implementation of the Agreement.
10. The representative of Japan expressed his satisfaction with the meaningful conclusions of the
major review, especially the commitment by Members to the full and faithful implementation of all
provisions of the ATC.  While the consensus-building process leading to this conclusion had been
very difficult, it had strengthened Members' confidence not only in the full implementation of the
ATC but also in the non-discriminatory WTO system as a whole.  He was pleased to have been ableG/C/M/29
Page 4
to participate actively in the major review and wo uld continue to contribute to strengthening the
multilateral trading system.
11. The representative of the United States commented that her delegation did not agree with
everything in document G/C/W/105 and that th ere had been a wide gap of perception among
Members in respect of many areas of the ATC.  On the other hand, the report did show that, with
respect to the important issues, a degree of consensus did exist.  This was very important and it washer expectation that, as time passed, the issues that divided Members would dwindle and the areas of
agreement would expand.
12. The representative of Thailand, speaking for the ASEAN WTO Members, observed that
despite Members' differences of views and opinions, they had demonstrated the capability to bridge
such differences in order to uphold the integrity of the multilateral trading system.  He noted that, in
December, the major review process had come to a halt, not due to a lack of willingness to work
towards consensus, but due to time limitations.  He was pleased, therefore, that the process had beenrevived leading to the successful results now before the Council.  He said that the conclusions that had
resulted from the process reflected the overall picture of what had happened during the
implementation in the past three years.  These paragraphs must be read "between the lines" as the
paragraphs also reflected the problems and the frustrations resulting from the implementation of the
Agreement.  Although the ASEAN Members were far from being satisfied with what was containedin the first major review;  nevertheless, they were satisfied that a compromise position had been
reached and the agreed first major review would serve as an important milestone for this Organization
into the next millennium.  In closing, he urged all Members to implement the Agreement on Textiles
and Clothing which was so important to many exporting, developing Members, as well as to
developed country Members, in accordance with the letter and the spirit of the Agreement.
13. The representative of Pakistan noted that his country, being a major textile exporter, attached
utmost importance to the completion of this revi ew.  He welcomed the commitment by Members to
the full and faithful implementation of all provisions of the Agreement on Textiles and Clothing and
their reaffirmation that all restrictions thereunder shall stand terminated on 1 January 2005 and that
there shall be no extension of the ATC.  He said that the outcome of the major review as set out indocument G/C/W/105 represented, at best, a compro mise outcome and it had both strong and weak
points.  Nevertheless, he was pleased to note that it  confirmed Pakistan's point of view that all was not
well with the implementation of the ATC.
14. He considered that the review had demonstrated that the implementation of the ATC had
faltered on many counts.  Firstly, the integration programmes of the major importing Members hadnot contributed to actual liberalization of trade in the sector as over 96 per cent of the restrained
products would remain to be integrated during the final stages of the integration process.
Paragraph 13 of the review confirmed the fact that only a small number of products under quota
restrictions were integrated in the first and second stages of the integration programmes of some
importing Members which applied restrictions under th e MFA.  Secondly, the review recognized that
recourse to safeguard actions had been excessive and had violated obligations under the Agreement.
Thirdly, in dealing with the use of other trade measures in respect of textile and clothing products, thereview recognized the need to comply with the relevant WTO provisions so as to ensure that the
application of such measures did not limit market access for textile exports.  It was obvious that
measures like changes in the rules of origin, visa arrangements for integrated products and
anti-dumping actions acted as market access limiting measures and could frustrate the basic purpose
of the ATC, to progressively integrate the sector into the GATT.
15. He further noted that, due to these shortcomings in the implementation of the Agreement, the
Council had emphasized the importance of its role to oversee and regularly evaluate the progress inG/C/M/29
Page 5
the implementation of the ATC.  Pakistan would, therefore, look forward to the development of
modalities by the Council in order to perform such regular evaluation of further progress in the
implementation of the Agreement with a view to ensuring a smooth and effective transition to
GATT 1994.
16. The representative of Egypt expressed his satisfaction that the process of the review of the
implementation of the ATC had been concluded and that an acceptable compromise had been reached.
He hoped that the future would witness the full and smooth implementation of the  Agreement which
covered items of great importance to many Members, whether importers or exporters, developed or
developing.  He particularly hoped that all Members would use the tools and mechanisms of the
Agreement for the purposes for which they were set and not misuse them to impede the flow of trade
from all sides, especially in areas like anti-dumping.
17. The representative of Mexico observed that the review had been a long process, with many
difficulties.  However, it had been possible to reach a conclusion whereby all participants during the
course of the consideration of this subject had shown flexibility and understanding and together had
managed to show the political will to reach this ag reement.  For all of this, his delegation joined the
declarations of other delegations in the congratulations to all participants in this review.
18. The representative of Peru recognized that the major review of the ATC had been a very
complex undertaking and her delegation was pleased that the Council had managed to conclude it,
thanks to the efforts and the input from many Members.  As Peru had indicated during the course of
the review, for many countries which were small suppliers in the context of this Agreement, textiles
was an important component of the national income even though the volumes involved were not
highly significant in terms of world trade for the time-being.  She wished to emphasize that this
reflected the present situation, since in recent years these Members had increased their trade and theycertainly hoped that this would be the picture for the future.  She recalled that this was the purpose of
the special provisions of the ATC for this category of Members and, therefore, she expressed the
satisfaction of her delegation with the review of the implementation of the Agreement and specifically
that the Council had reiterated the importance of the full implementation of the provisions in favour of
small suppliers, least-developed country Members and cotton-producing exporting Members.
19. The representative of Canada agreed with others that the report was based on a very delicate
and balanced consensus reflecting the wide range of views and perceptions of the ATC that needed to
be bridged.  The report was achieved on the basis of cooperation, flexibility, compromise and a
willingness to listen to each others' views.  Others had indicated that they were not necessarily fully
satisfied with all the elements of the report and the same could be said of Canada.  The dissatisfactionon the part of some Members, however, reflected their perceptions and expectations that went beyond
the provisions of the ATC.  He considered that a key point was that there had been a full reaffirmation
of Members' commitment to live up to the full oblig ations of the Agreement and to fully implement it.
Furthermore, in the coming years, Members would be continuing the regular evaluation and
overseeing of this Agreement, in accordance with Article IV:5 of the WTO Agreement and Article 8
of the ATC, and Canada would participate in the regular evaluation called for under the ATC.
20. The representative of Brazil considered that the report, while conveying a series of diverging
views, sent a clear signal which Brazil believed would be useful for future work of this Organization
in the textiles and clothing sector as well as for the perception of the trading sector, because it
identified clearly where the differences lay and where there was common ground for the future work.
21. The representative of Norway expressed his pleasure that the extended consultations on the
major review of the implementation of the ATC in the first stage of integration had led to tangible
results.  He was particularly pleased that the results were meaningful, not merely reproducing theG/C/M/29
Page 6
views of different Members, but including a number of pointed observations and assessments.  One
particularly important aspect of the discussion was the collective will, reconfirmed during the review,
to abide by all provisions of the ATC.  He cons idered that the flexibility and goodwill shown during
the process was promising for future cooperation on the effective implementation of the ATC leading
to the final termination of the Agreement and the full integration of textiles and clothing into
GATT 1994.
22. The representative of Hong Kong, China endorsed the conclusions of the first major review of
the ATC but stressed that this did not mean that it was fully satisfied with them, nor that they met
what Hong Kong, China had considered at the outset to be reasonable expectations.  He noted that
there was no overall assessment of progress towards meeting the ultimate objective of completeintegration by 2005 and, therefore, no indication as to whether the Council considered the
implementation to date to be satisfactory or whethe r the concerns identified threatened the attainment
of the ATC's objectives.  Nevertheless, given the difficulties that the Council had faced last year in
reaching any conclusions, the outcome before it in document G/C/W/105 represented a considerable
achievement.
23. In this regard, Hong Kong, China considered that there were a number of points worth
highlighting.  The first was that the Council had been seen to fulfil its responsibility for overseeing thefunctioning and implementation of the ATC;  to have failed to conclude the major review would have
brought the oversight system and regulation of the WTO into disrepute with damaging repercussionsfor the global economic system.  There were also points contained in the consensus conclusions
themselves to be highlighted.  While the legal requirements for integration had been fulfilled, a large
number of quota restrictions remained to be eliminated by 2005.  Also, while Members should allow
for continuous autonomous industrial adjustment and increased competition in their markets, further
information on this topic would have facilitated a review of progress.  The panel decisions on twosafeguard actions provided guidance for such matters, use of which should be as sparing as possible.
Concern about maintaining visa requirements for integrated products was also noted.  He also referred
to the importance of full implementation of the provisions for small suppliers, new entrants and
least-developed country Members which had been reit erated and that the provisions of the ATC were
to be used and observed in regard to issues such as rules of origin and circumvention.
24. He was also pleased to note that the report's conclusions emphasized the importance of the
Council overseeing and regularly evaluating the progress of the ATC.  While the ATC provided forbilaterally agreed arrangements, it must always be remembered that what might be agreed bilaterally
was constrained by the multilateral rules and it was the responsibility of the Council to ensuremultilateral surveillance.  This had not always been apparent to interests outside the WTO and it did
no harm to remind others of this as well as of the axiomatic point that the textiles and clothing sector
shall be fully integrated into GATT 1994 on 1 January 2005 and also that there shall be no extension
of the ATC.  Until that date, his delegation would look forward to playing its part in assisting the
Council to discharge its responsibilities in relation to the implementation of the ATC.
25. The representative of India stressed that the ATC was an important Agreement and textiles
and clothing was an important sector for India.  Acco rdingly, what was at stake in this review was the
credibility of the Council and the significance of its conclusions transcended the importance of this
particular sector.  He agreed with remarks made earlier by another delegation to the effect that it didnot agree with everything that was contained in the document which the Council had adopted.
26. While not wishing to repeat the details of the debate, he noted some concerns of India.  The
ATC was a transitional arrangement aimed at bringing to an end the discriminatory regime which had
governed international trade in textiles and clothing for over 40 years.  The objective was to ensurethat as of 1 January 2005, this sector would be completely integrated into GATT disciplines.  The
main method of achieving this objective was through the route of integration and, in this regard, he
shared the concern of Pakistan that the bulk of restricted products would be integrated only at the endG/C/M/29
Page 7
of the transition period.  He was pleased that paragraph 13 of the document adopted by the Council
took note of this concern.  Stated in another context, he noted that during the past three years, the
WTO had been heralded as the engine of trade liberalization in many new areas.  The major
demandeurs  for such liberalization had been those very Members which were also the major textiles
and clothing importing Members.  It was unfortunate that these Members found no virtue in trade
liberalization arguments when it came to protecting their textiles and clothing markets through quotas
and bilateral arrangements which were marked by their discriminatory nature and by their non-MFN
character.
27. He expressed concern at the possibility of protectionist elements in the markets of importing
Members taking advantage of specific provisions such as the transitional safeguard provisions in
coming years.  The global market place was undergoing momentous changes and this included
changes in the textiles and clothing sector, with significant socioeconomic ramifications.  He urged
the importing Members not to succumb to protectioni st pressures, rather, to fully respect all the
provisions of Article 6 of the ATC and to use it in a sparing manner.  He recalled that this had been
reaffirmed by Ministers at Singapore in 1996 and reiterated by the Council in the current review.  He
was also concerned at reports regarding changes to the rules of origin of one major importing Member
and also regarding the reported proposal of that Member to maintain visa arrangements even for
integrated products.  While India would endeavour to clarify its concerns with the Member involvedin this matter, the fact that the Council's review had addressed the concerns of Members on these
issues would hopefully caution this Member to follow the provisions of the ATC and GATT in letter
and spirit when addressing these issues.  In this context, he particularly referred to paragraphs 28
and 43 of the document just adopted by the Council.
28. He also said that the use of two tools of protectionism, namely quotas and anti-dumping
measures to protect one product had to be controversial in an organization such as the WTO, which
was built on the vision of free trade.  When the use of such double protectionism by another major
importing Member turned into trad e harassment, then the issue became more than a controversy and it
was likely to result in disputes, given the value and volume of trade involved in these products.  In
this context, he highlighted the recommendation contained in paragraph 40 of the report.  He alsocommented that this matter had been noted by the review, and, for the record, he expressed the
intention to revert to it as often as required during subsequent meetings.
29. India was pleased that the Textiles Monitoring Body, which was responsible for supervising
the ATC, had become more transparent in its functioning, especially after the clear direction given to
the Body by Ministers at Singapore.  The Council s hould endeavour to use this transparency, and also
the invaluable guidance Members had derived from the WTO dispute settlement panel cases involving
the ATC, to encourage trading partners to live up to  their commitment with regard to full and faithful
implementation of the provisions of the ATC in  the remaining portion of the transition period.
30. He also expressed satisfaction with the fact that paragraph 63 of the report had committed the
Council to keeping the implementation of the ATC under regular review especially because, as the
present review had revealed, exporting Members we re facing many problems with regard to its
implementation.  He considered that it would be wrong for Members to think that with the adoption ofthe report, they had come to the end of the process.  The review contemplated at the end of the first
stage of integration was only one element of the implementation of the ATC.  The review process had
enabled Members to highlight their concerns and worries.  The major review of the ATC was not a
mere ritual;  something positive should come out of it.  He trusted that all Members would endeavour
to achieve the full and faithful implementation of the ATC.
31. The spokesman for the European Community welcomed the conclusion of the major review
of the first stage of integration of the Agreement on Textiles and Clothing by the Council.  The review
had begun with the comprehensive report of the TMB and had ended with the adoption of theG/C/M/29
Page 8
important document together with its conclusions.  Given the differences of perception, particularly at
the outset of the debate, the outcome was considered to be a good one even if no-one was satisfied
with everything.  He noted the main outcome of the review which was the commitment of all
Members to the full and faithful implementation of the ATC.
32. The European Community noted that certain elements of the debate went beyond the
provisions of the ATC and Members had invited the Council to make pronouncements on mattersfalling under other WTO agreements under which, in effect, no complaints had been made.  It was
also commented that one of the Members that ha d criticized the EC in respect of anti-dumping
measures was itself in the process of initiating anti-dumping proceedings against acrylic fibre from
the European Community and one other Member.  That Member's import duty for such products was
32 per cent, while the EC's duty was 6 per cent.
33. The Council took note of the statements made.
__________