WORLD TRADE
ORGANIZATIONG/TMB/N/63/Add.12/Suppl.2
29 May 2002
(02-2930)
Textiles Monitoring Body Original:  English
AGREEMENT ON TEXTILES AND CLOTHING
Notification under Article 2.1
UNITED STATES
Supplement
The Textiles Monitoring Body has received a second supplement to the notification made by
the United States pursuant to Article 2.1.
The TMB, in accordance with Article 2.2, is circulating this notification to WTO Members
for their information.G/TMB/N/63/ Add.12/Suppl.2
Page 2
Permanent Mission of the United States
to the World Trade Organization
Geneva
13 May 2002
The Honorable András Szepesi
ChairmanTextiles Monitoring Body
World Trade Organization
Rue de Lausanne 154
1211 Geneva
Geneva, Switzerland
Dear Mr. Chairman,
I appreciate the opportunity to respond to the comments noted in G/TMB/SPEC/488
1 of
9 April 2002 by the Permanent Mission of the People’s Republic of China.  In responding, I note that
the United States has fully and faithfully applied the relevant provisions of the Agreement on Textiles
and Clothing (ATC) as shown in our notification, contained in G/TMB/N/63/A dd.12.  I also note that
the Government of the People’s Republic of China was provided a copy of the draft notification in
advance of its submission, and had the opportunity to review the notification and provide comment.Indeed, the draft notification was reviewed in bila teral consultations between our two governments in
Beijing in December, 2001.
1. "Application of growth-on-growth provisions:"  The Report of the Working Party on China’s
accession provides that 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 accession."  The claim made by the Permanent Mission of the People’sRepublic of China concerning the retroactive application of WTO benefits to a period of time
when China was not a Member of the WTO is in contradiction to the relevant language of the
Working Party report.  The United States has applied the appropriate increase to China’s
growth rates required by the ATC.   The United States has provided information concerning
the growth rate increases to the Textil es Monitoring Body under separate cover.
2
2. "Interaction between Specific Limits and Group Limit:”  Under Article 2.1, the obligation is
on the United States to notify “quantitative restrictions within bilateral agreements ... in force
on the day before the entry into force of the WTO Agreement ... including the restraint
levels."  The Working Party Report on China’s accession provides that the phrase "day priorto 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 accession."  Accordingly, the
notification for the specific limits and the Group limit for Group I are reflect the base levels in
effect on 10 December 2001.  These base levels, and the associated growth rates and
flexibility provisions, reflect a negotiated balance of mutual concessions acceptable to the
                                                     
1 See G/TMB/N/445.
2 See G/TMB/N/63/Add.12/Suppl.1G/TMB/N/63/ Add.12/Suppl.2
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People’s Republic of China and the United States and will henceforth be governed by the
provisions of the ATC.
3. "Downward adjustment in quota levels of partia lly integrated products:"  As provided for in
Article 4.3, the quotas that were affected by partial integration have been reduced to reflectthe more limited product coverage.  As with other WTO Members, the United States applied a
standard methodology for adjusting specific and group limits to reflect partially integrated
products.  The U.S. practice is to adjust group and specific limits affected by partial
integration by reducing them by the average amount of volume trade in the integrated product
for the previous two calendar years, specifically, 1999 and 2000 in this instance.
4. "Specific Limit on category 239PT:"  The U.S.  treatment the limit for Category 239 pt is, if
anything, a significant benefit to China. Trade in the integrated portion of this category in
1999 and 2000 averaged 3,326,612 kg., even though the total base limit for 2001 was
3,203,733 kg.  Since the integration of most of this category by the U.S. resulted in an
adjustment exceeding the base level, the U.S. opted to drop the entire specific limit for China
for this category.  Thus, while China will no longer be subject to a specific limit on thenon-integrated portion of Category 239, the non-integrated portion will still be subject to the
Group I limit.  A reduction was made the Group I limit as a result of product integration, in
order to reflect the more limited product coverage.  The United States has provided data
detailing the specific calculations for the reduction to the Group I limit, including with respect
to category 239, to China in the consultations noted above, and to the TMB under separatecover.
3
Sincerely,
(Signed)
David M. Spooner
Special Textile Negotiator
_______________
                                                     
3 See G/TMB/N/63/Add.12/Suppl.1.