RESTRICTEDWORLD TRADE
ORGANIZATIONG/TMB/R/98
22 May 2003
(03-2738)
Textiles Monitoring Body
REPORT OF THE NINETY-NINTH MEETING
1. The Textiles Monitoring Body held its ninety-ninth meeting on 28 and 30 April 2003.
2. Mr. Ivan Lee (Hong Kong, China) appointed Mr . Tae-Yong Lee (Korea) to replace Mr. Gil-
Sou Shin (Korea) as his first alternate.  Mr. Hisashi Yoshikawa (Japan) appointed Mr. Hirohisa Soma
(Japan) to replace Mr. Shingo Yamagami (Japan) as his alternate.
3. Present at this meeting were the following members and/or alternates:  Messrs. Dalela/Lakhal;
I. Lee; Ms. Miranda/Mr. Alvarado/Mr. Gough; Messrs. Seppey; Sorensen; Tagliani; Ms. Ünal;
Mr. Yoshikawa;  Ms. Zhang.
4. The TMB adopted the report of its ninety-eighth meeting (G/TMB/R/97).
Notification received with reference to Articl e 8.10 of the Agreement on Textiles and Clothing
(ATC)
United States:  Methodology applied with a view to providing the increase, for Stage 2 of the
integration process, in the respective growth rates of the restrictions maintained on imports from
China
5. The TMB received a communication from the United States1, dated 28 March 2003, with
reference to the provisions of Article 8.10, following the recommendation of the TMB, included in thereport of its 96
th meeting that the United States implement the necessary adjustments in its
methodology applied in providing the increase for Stag e 2 of the integration process in the respective
growth rates of the restrictions maintained on imports from China.2
6. In its communication, the United States subm itted the following w ith respect to the
recommendation made by the TMB:
"In assessing whether WTO Members have complied with their obligations to China under
the ATC, due consideration has to be given to the applicable provisions of the Report of theWorking Party on the Accession of China to the WTO.  While appreciating the challenge
facing the TMB in this regard, it has to be recalled that the TMB also recognized that 'the
relevant provisions of the legal instruments of China's accession, in particular the term "as
appropriate" in the third sentence of paragraph 241 of the Report of the Working  Party on the
Accession of China, had not provided unambiguous guidance regarding some of the aspectsinvolved'.  In the view of the United States, this paragraph of the Working Party report not
only makes it clear that the increase in growth rates should be applied from the date of China's
accession, but the inclusion of the phrase 'as appropriate' also implies that this obligation
should be implemented in a manner that corresponds to the length of time of China's actual
WTO membership during the given stage of the ATC integration process.  This is why the
                                                     
1 See G/TMB/N/458.
2 See G/TMB/R/95, paragraph 10.G/TMB/R/98
Page 2
United States believes it is appropriate to apply an accelerated growth rate of 25 per cent pro-
rated for the period of time when China was a Member of the WTO in Stage 2.
In view of the above, the United States contin ues to be of the view that the methodology used
is consistent with paragraph 241 of the Working Party report and that, therefore, it would not
be appropriate to make any adjustment to the methodology applied.
On this basis, the United States considers itself unable to conform with the recommendation
contained in paragraph 10 of G/TMB/R/95 and requests that the TMB reconsider its
recommendation."
7. The TMB recalled that Article 8.10 states, inter alia , that "[i]f a Member considers itself
unable to conform with the recommendations of the TMB, it shall provide the TMB with the reasons
therefore not later than one month after receipt of such recommendations.  Following thorough
consideration of the reasons given, the TMB shall issue any further recommendations it considersappropriate forthwith.  […]"
8. It was observed that the communication from the United States, dated 28 March 2003, had
been received by the TMB on 31 March 2003.  The TMB's report containing the recommendation
made to the United States had been issued and circulated to WTO Members on 27 February 2003.  It
was noted that the date of the United States' communication, and even more so, the date of its actualreceipt by the TMB, fell outside the time-frame of one month after the circulation of the respective
recommendation to WTO Members.    However, the ATC does not specify what should be considered
as the date of receipt of such a recommendation.  It could be admitted, in any event, that the United
States perhaps had only received the report in question a few days after the date of its circulation.
Therefore, without prejudice to the respective rights and obligations of the Members concernedarising from the provisions of Article 8.10, including those related to the time-frame specified therein,
the TMB decided to proceed with the thorough consideration of the reasons presented by the United
States in its communication.  This decision was essentially motivated by the following:
• First, it had to be assumed that the United States had intended to act in good faith,
bearing in mind the need to meet the deadline.
• Second, and more importantly, the matter addressed in the TMB's recommendation
and in the subsequent United States' co mmunication was one of systemic importance,
having also an impact on market access opportunities.  Therefore, it appeared to be in
the interest of both China and the United States that the TMB fully comply with its
responsibilities as defined in Article 8.10.
9. It was recalled that according to Article 8.7, "[b]efore formulating its recommendations or
observations, the TMB shall invite participation of such Members as may be directly affected by the
matter in question."  The TMB noted that though it had the intention to act in full accordance with this
requirement, even before such an invitation could have been sent on the TMB's behalf, a further
communication had been received from the United States indicating,  inter alia , the following:  "[The
US] government believes that it has expressed fully in [its communication made under Article 8.10]
its reasons for not being able to  comply with the TMB's recommendation.  As a consequence, the US
will not be sending a representative to the TMB meeting where this issue will be discussed."  China
had been informed accordingly, and it had also been made clear that irrespective of the United States'
decision, should China so decide it was fully entitled to be represented during the TMB's
consideration of the matter.  Subsequently, China indicated that it would not send representatives to
participate in the TMB's deliberations.
10. Instead, China briefly reiterated its respective views in a written communication addressed to
the TMB.  In this written communication, China obs erved that "as[it had] stated in its previousG/TMB/R/98
Page 3
observations concerning the way the United States applied the second-stage growth factor to China,
China maintains its position that the United States is obliged to implement the full 25 per cent growth
factor to China under the Working Party report on China's accession to the WTO as well as the
ATC."3
11. Turning to the thorough consideration of the reasons given by the United States for its
inability to conform with the TMB's recommendation, also bearing in mind the observation made by
China in its respective communication, the TMB felt th at it would be appropriate first to summarize
the background of its recommendation, covering briefly all related developments.
(a) Background
12. China became a Member of the WTO on 11 December 2001.  Following its accession, the
United States provided a detailed notification on the quantitative restrictions it maintained with
reference to Article 2.1 on imports of certain textile and clothing products from China.  In its reply tothe TMB's request for further clarification, the United States stated, inter alia , the following:
"Pursuant to the Working Party Report [on the Accession of China to the WTO], which
requires that the provisions of the ATC regarding growth rates 'be applied, as appropriate,
from the date of accession,' it was determined to be appropriate to apply an accelerated
growth rate of 25 per cent pro-rated for that period of time (11 – 31 December 2001) whenChina was a Member of the WTO in Stage 2.  Thus, adjusted quotas for Stage 2 were to be
calculated using the pro-rated Stage 2 growth rate.  In order to determine China’s quota
growth rate for the years 2002-2004, we increase d the pro-rated Stage 2 growth rate used to
determine China’s notional 2001 quotas by 27 per cent, which is what is required for Stage 3
under the ATC."
4
13. China brought to the attention of the TMB under Article 2.2 specific observations which
addressed, inter alia , the application by the United States of the growth factor established in
Article 2.14(a) for Stage 2 of the integration process. 5
14. In a subsequent communication, provided in response to China's observations, the United
States quoted in full the language of paragraph 241 of the Working Party report and stated thefollowing:
"As required by the ATC and the Working Party report, we reiterate that the United States has
applied the appropriate increase to China's annual quota growth rates."
6
15. At its 91st meeting, the TMB held a focused discussion on the manner in which the growth-
on-growth provisions provided for in Articles 2.13 and 2.14 had to be implemented by the Members
maintaining restrictions under Article 2.1 on imports from China.7  Four Members notified such
restrictions:  Canada, the European Communities, Turkey and the United States.  The TMB's
discussion covered all the aspects involved, including the methodology to be applied in providing the
increase in the respective growth rates for Stage 2, pursuant to Article 2.14(a).8  In this connection, the
TMB "reached the conclusion that it had not been justified under the relevant provisions of the
accession instruments [of China] and the ATC to prorate the 25 per cent increase for the short periodof China's actual membership during Stage 2[…]".
9  In the summary conclusions of its discussion, the
                                                     
3 See G/TMB/N/460.
4 See G/TMB/N/63/Add.12/Suppl.1.
5 See G/TMB/N/445 and G/TMB/N/445/Add.2.
6 See G/TMB/N/63/Add.12/Suppl.3.
7 See G/TMB/R/90, paragraphs 5 to 34.
8 Idem , paragraphs 25 to 28.
9 Idem , paragraph 28.G/TMB/R/98
Page 4
TMB considered those minimum requirements which had to be implemented by the Members
concerned.  In the TMB's view, these minimum requirements could be summarized as follows:  "as
from 1 January 2002, the base levels in force on 10 December  2001 [i.e. on the day prior to the date
of China's accession] had to be increased by the respective growth rates applied for the year 2001
(prior to China's accession), increased by the full 25 per cent applicable to Stage 2 and furtherincreased by the 27 per cent applicable to Stage 3".
10  (underlining omitted)  On this basis, "[s]ince the
United States had reported an implementation wh ich did not meet the minimum requirements, as
defined above, the TMB decided to invite it to reconsider its respective position in light of the TMB's
comments, observations and conclusion and to implement the necessary adjustments in its respective
methodology applied".11
16. At its 96th meeting, the TMB reverted to this matter on the basis of an additional
communication received from the United States.12  In this additional communication, the United
States stated that "it ha[d] carefully examined the TMB's report analysing the application of the
growth-on-growth provisions of the ATC and conc luded that the methodology used by the United
States as reported in G/TMB/N/63/Add.12/Suppl.1 [was ] in line with the obligations of the United
States as provided for in the Working Party Repor t of the Accession of China to the WTO.  The US
reasoning on this matter, as expressed in G/TM B/N/63/Add.12/Suppl . 1 and 3, remains unchanged.  In
light of this conclusion, the US [was] of the view  that it would not be appropriate to make any
adjustment to the methodology applied".
17. In considering the additional communication received from the United States, referred to in
paragraph 16 above, the TMB made a number of observations and issued a formal recommendation as
follows:
• "The TMB observed that no specific arguments had been provided by the United
States to substantiate the reasons why it had concluded that the methodology used bythe United States was in line with its obligations, as provided for in the Working
Party Report of the Accession of China to the WTO.  Rather, the United States had
merely stated that its reasoning on this matter remained unchanged and that,
therefore, it was of the view that it would not be appropriate to make any adjustmentto the methodology applied.
• At its [95
th] meeting, the TMB had recalled that, in its in-depth examination of the
implementation of the growth-on-growth provisions by the Members concerned, it
had considered the relevant notifications received pursuant to Article 2.1 from the
Members concerned (Canada, the European Communities, Turkey and the UnitedStates), as well as the respective observations made by China with reference to
Article 2.2.  In order to discharge its responsibilities in this regard, the TMB also had
had to address provisions of the respective legal instruments of China's accession in
addition to those of the ATC.  Though the TMB had found that the relevant
provisions of the legal instruments of China's accession, in particular the terms 'as
appropriate' in the third sentence of paragraph 241 of the Report of the Working Party
on the Accession of China, had not provided an unambiguous guidance regardingsome of the aspects involved, it had been able to reach a conclusion on those
minimum requirements which, in its view, had to be implemented by the Members
concerned.  Since the United States had reported an implementation which did not
meet these minimum requirements, the TMB 'had decided to invite it to reconsider its
respective position in light of the TMB's comments, observations and conclusion andto implement the necessary adjustments in its respective methodology applied'.
                                                     
10 Idem , paragraph 32.
11 Idem , paragraph 33.
12 See G/TMB/N/63/Add.12/Suppl.5.G/TMB/R/98
Page 5
• It was observed that, despite the invitation to the United States to reconsider its
respective position in light of the TMB's comments, observations and conclusion and
to implement the necessary adjustments in its respective methodology applied, the
US' implementation remained unchanged and, therefore, continued to not meet what
the TMB had found to be the minimum requirements to be implemented.  The TMBobserving, once again, the absence of new or additional arguments by the
United States, reiterated its 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 applicable to Stage 2 for the short period of China's actual membership
during that stage.  It was recalled in this regard that this conclusion had been reached
by the TMB after careful consideration of the relevant provision of the Report of the
Working Party on the Accession of China and of the language of Article 2.14(a) ofthe ATC and that it was further supported by the fact that no WTO Member, not even
the United States, had ever in the past used prorated increase in the respective growth
rates in relation to any other Member.  Therefore, the TMB continued to be of the
view that, as regards the implementati on of the growth-on-growth provisions
provided for in Articles 2.13 and 2.14 with respect to China, the minimumrequirements that had to be implemented, inter alia , by the United States were, that as
from 1 January 2002, the base levels in force on 10 December 2001 had to be
increased by the respective growth rates ap plied 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.
• The TMB recalled that in two of its notifications made pursuant to Article 2.2, China
had made observations with respect to the implementation of the growth-on-growth
provisions by the United States.  These observations had also been addressed by the
TMB during its discussion of the implementation of the growth-on-growth
provisions, as reflected in G/TMB/R/90.  The TMB noted that according toArticle 2.2, the Body, inter alia , 'may make recommendations, as appropriate, to the
Members concerned'.  Noting that both China and the United States had had ample
opportunities to make their observations and respective arguments known and also
that the TMB's conclusion had been reached with full knowledge of the observations
and arguments presented in the respective notifications of the two Membersconcerned, the TMB decided to recommend to the United States to implement the
necessary adjustments in its respective methodology applied, with a view to bringing
it in line with the TMB's conclusion regarding the minimum requirements that had to
be met."13 (emphasis added;  footnotes omitted).
(b) Consideration of the reasons given by the United States for its inability to conform with the
TMB's recommendation
18. The TMB noted that in its communication made pursuant to Article 8.10, the United States
expressed the view that, "[i]n assessing whether WTO Members have complied with their obligations
to China under the ATC, due consideration has to be given to the applicable provisions of the Report
of the Working Party on the Accession of China to the WTO".  The TMB fully concurred with this
statement;  its respective position is reflected in paragraph 17 above.  Pursuant to Article 2.21, "[t]heTMB shall keep under review the implementation of [Article 2]" and specific provisions of this
Article (namely Articles 2.13 and 2.14) define the minimum rates by which the growth rate for the
respective restrictions had to be increased annually during the successive stages of the integration
process under the ATC.  Furthermore, China had provided observations under Article 2.2 that
addressed, inter alia , the methodology applied by the United States in providing the increase for
                                                     
13 See G/TMB/R/95, paragraphs 7 to 10.G/TMB/R/98
Page 6
Stage 2 of the integration process in the respective growth rates of the restrictions maintained on
imports from China.  Pursuant to Article 2.2, "[t]he TMB may make recommendations, as
appropriate, to the Members concerned".  Also, Article 8.1 requires the TMB "to examine all
measures taken under [the ATC] and their conformity therewith".
19. Against this background, the TMB had already stated the following:
• "[…] the TMB noted that the ATC does not contain any disposition that gives
guidance on how the growth-on-growth prov isions 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 specific staged
increases of the annual growth rates 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 Agreemententered into force.  Therefore, the restra int levels to which the increase in growth
rates shall apply, are defined in Article 2.13 as the 'level of each restriction under
MFA bilateral agreements 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.
• 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 beimplemented had been agreed between the WTO Members 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 respectiveprovisions of the ATC, including its Article 2;  (ii) the language regarding the
growth-on-growth provisions in the resp ective 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."14 (footnote omitted;  emphasis added).
20. Therefore, as demonstrated above, the TMB agreed with the United States that the
implementation of the provisions of Article 2.14(a) vis-à-vis  China could only be assessed by giving
due consideration to the applicable provisions (i.e. paragraph 241) of the Report of the Working Party
on the Accession of this Member to the WTO.  In fact, the methodology to be applied could only bedefined if the respective provisions of the ATC and those of the Working Party report were read in
conjunction.  The TMB emphasized that it had soug ht to reach an understanding on the modalities
agreed and guidance provided by Members in the accession instruments regarding this matter.
Reaching an understanding within the TMB concerning the likely intention of the Members in this
                                                     
14 See G/TMB/R/90, paragraphs 7 and 8.G/TMB/R/98
Page 7
regard was, of course, not tantamount to providing an interpretation of the respective language, which
is the exclusive authority of the Members that can be exercised through appropriate decisions of the
Ministerial Conference or the General Council.  It could, of course, happen that the understanding
reached by the TMB did not correspond to the reading provided to the same provisions by certain
Members (in the present case by the United States).
21. The TMB also noted that the United States' communication referred to the fact that the TMB
had also recognized the following:  "the relevant  provisions of the legal instruments of China's
accession, in particular, the term 'as appropriate' in the third sentence of paragraph 241 of the Report
of the Working Party on the Accession of China, had not provided unambiguous guidance regarding
some of the aspects involved".  It was observed that the United States quoted this statement from the
report of the TMB's 96th meeting15 (during which the recommendation addressed to the United States
had been adopted) and that the United States did not quote the entire sentence in question whichcontinued as follows:  "[the TMB, however,] had been able to reach a conclusion on those minimum
requirements which, in its view, had to be implemented by the Members concerned".  The TMB
recalled also that during its detailed discussion held at its 91
st meeting, in examining the methodology
to be applied in providing the increase in the respective growth rates for Stage 2, pursuant to
Article 2.14(a), which was, in fact, the matter covered by the TMB's subsequent recommendation and,consequently, by the United States' communication, the Body stated, inter alia , the following:
"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 2.14 of 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 definitive conclusion with regard tothe 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.  Howe ver, nothing in this reading suggested that it
would also provide an authorization 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."16 (emphasis added)
22. In light of the above, while it was true that the TMB could not reach a definitive conclusion
on the meaning of the notion "appropriate", the Body had found it unlikely that this notion could alsobe related to the manner in which the provisions of Article 2.14(a) had to be implemented by the
restraining Members.  It was this common understanding reached by the TMB that led to the adoption
of the recommendation addressed to the United States.  It was important to note that the United States,
on the one hand, did not disagree with the conclusion that, since China had become a Member during
Stage 2 of the integration process, an increase in the respective growth rates applied prior to the dateof China's accession had to be already provided for 2001 (which was the last year of the
implementation of Stage 2).  On the other hand, by relying on its own reading of the term "as
appropriate", the United States continued to be of the view that its methodology, i.e. prorating, was in
line with the provisions of the Working Party report.  The explanations provided by the United States
in support of this position are fully reflected in paragraphs 6, 12 and 14 above.
                                                     
15 See G/TMB/R/95, paragraph 8;  and also paragraph 17 above.
16 See G/TMB/R/90, paragraph 27.G/TMB/R/98
Page 8
23. The TMB had already been fully aware of the United States' arguments included in
paragraphs 12 and 14 when it examined the matter, reached its conclusions and, subsequently,
adopted its recommendation. Turning again to the communication by the United States received with
reference to Article 8.10, it was noted that the (only) substantive argument given by the US in support
of its methodology was the following:  "In the view of the United States, […] paragraph [241] of the
Working Party report not only makes it clear that the increase in growth rates should be applied from
the date of China's accession, but the inclusion of the phrase 'as appropriate' also implies that this
obligation should be implemented in a manner that corresponds to the length of time of China's actual
WTO membership during the given stage of the ATC integration process".  In examining this
argument, the TMB made the following observations:
• As regards the reference to "the length of time of China's actual WTO membership"
during Stage 2, the TMB did not disagree with the United States that this was an
aspect to be considered.  It could be argued that, in a sense, the condition defined bythe United States had been satisfied, irrespective of the methodology applied for
providing the increase in the respective growth rates for 2001, since China became
entitled to enjoy the benefits of ATC implementation only as from
11 December 2001.  An implementation that started from the date of China's
membership in the WTO provided also a reasonable meaning to the term "asappropriate":  once China became a Member, it was appropriate to increase the
growth rates taken over from the pre-ATC regime.
• At the same time, there was no justification, in the view of the TMB, to give such a
far-reaching reading to the relevant provisions of the Working Party report that would
have entitled the restraining Members to apply the 25 per cent increase in therespective growth rates prorated to the length of time of China's actual membership
during Stage 2.  As indicated earlier
17, the respective provisions of the ATC and those
of the Working Party report should be read in conjunction.  In examining the relevant
provisions of the two legal instruments together, the TMB could not find any element
or argument that would have supported the United States' position.  It was a clearobligation under the provisions of the Working Party report that, "[t]o [the] base
levels [applied on the date prior to China's accession], 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."  Nothing in this language, including the term "as
appropriate" suggested that the implementation of the obligations of Article 2.14,according to which "the level of each restriction shall be increased annually […]"
(emphasis added) could be altered.
• Therefore, the TMB continued to be of the view that the provisions of the Working
Party report did not provide an authorization not to implement in full for the year
2001 the annual increase foreseen in Article 2.14(a).  As already emphasized by the
TMB18, once the United States concluded that since China had become a Member
during Stage 2 of the integration process under the ATC, it had been appropriate toapply the provisions of Article 2.14(a) to China;  these provisions should have been
implemented in their entirety instead of prorating the 25 per cent annual increase for
the period of 21 days.
• In light of the above, the TMB confirmed its view that for the year 2001 China had
been entitled to benefit from the "full" 25 per cent increase in the respective growth
rates.
                                                     
17 See paragraph 20 above.
18 See paragraph 21 above.G/TMB/R/98
Page 9
24. The TMB recalled that based on the argument examined above, the United States took the
view that the methodology it used was consistent with paragraph 241 of the Working Party report and,
therefore, it would not be appropriate to make any adjustment to the methodology applied.  This is
why the United States considered itself unable to conform with the TMB's recommendation and
requested the TMB to reconsider its own recommendation.
25. It was observed that the TMB addressed in detail, in paragraphs 18 to 23 above, all the
elements included in the communication of the Un ited States.  Indeed, the United States did not
provide any reason or argument for its inability to conform with the TMB's recommendation that had
not already been raised by it earlier or would have been ignored by the TMB during previous stages of
its examination of the same matter.  It was also noted that in its communication China did not raise
any new argument either;  it simply referred to its previous observations.
(c) Conclusion and recommendation
26. Having given thorough consideration to the reasons presented by the United States for its
inability to conform with the TMB's recommendation, the TMB concluded that these reasons did not
lead it to change its recommendation adopted during its 96th meeting.  For the reasons detailed, in
particular, in paragraph 27 of G/TMB/R/90 and also in paragraph 23 above, the TMB continued to be
of the view that it had not been justified under the relevant provisions of the accession instrumentsand the ATC to prorate the 25 per cent increase for the short period of China's actual membership
during Stage 2.
27. The TMB recommended, therefore, that the United States reconsider its position and
implement forthwith the necessary adjustments in its respective methodology applied, with a view to
bringing it in line with the TMB's conclusion regarding the minimum requirements that had to be met.
Communication received by the TMB
28. The TMB took note of a communication by Canada (G/TMB/N/459), for the Body's
information, of the notification Canada had submitted to the Committee on Trade and Development
(CTD) on 5 February 2003
19 with respect to improvements to the Canadian preferential scheme for
least-developed countries (LDCs).  Canada stated that "[a]s it is indicated in the above-mentionednotification, effective 1 January 2003, Canada provides duty-free access for all products from LDCs,
with the exception of over-quota tariff items for dairy, poultry and egg products.  Canada also
introduced new rules of origin requirements that apply to the newly covered textile and apparel
products entering the Canadian market from LDCs.  Finally, in relation to Article 2.15 of the
Agreement on Textiles and Clothing, Canada's initiative provides for quota-free access for all
products covered by the Agreement."  Canada also  enclosed in the communication an "Introductory
Guide to the Market Access Initiative for the Least-Developed Country and the Least-DevelopedCountry Tariff"  providing more details on the initiative.
WTO Members' compliance with notification requirements
29. The TMB had a discussion on the Members' implementation of the notification and
information requirements embodied in the ATC.  The TMB recalled that, inter alia , Article 3.3 states
that "[d]uring the duration of this Agreement, Memb ers shall provide to the TMB, for its information,
notifications submitted to any other WTO bodies with respect to any new restrictions or changes in
existing restrictions on textile and clothing products, taken under any GATT 1994 provision, within
60 days of their coming into effect."  The TMB stressed the importance of the Members' adherence to
the notification requirements contained in the ATC.  It was also observed that measures or actions,
                                                     
19 WT/COMTD/N/15/Add.1.G/TMB/R/98
Page 10
other than those falling under the provisions of Article 3.3, having a bearing on the implementation of
other provisions of the ATC should also be brought to the TMB's attention, for its information.
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