WORLD TRADE  
ORGANIZATION  G/TMB/N/478 
23 June 2004 
 (04-2719) 
Textiles Monitoring Body Original:   English 
   
AGREEMENT ON TEXTILES AND CLOTHING 
 
Communication from the European Communities
 
 
  The following communication, dated 10 June 2004, from the Delegation of the European 
Commission, is being circulated to WTO Members for their information. 
    
 
     
 
  G/TMB/N/478 
Page 2  
 
 European Commission
 
Permanent Delegation  
to the International Organizations in Geneva  
 
Head of Delegation 
 
Geneva, 10 June 2004 
  
 
 
Subject: Your letter dated 27 May  
Ref: TMB/100 
 
  
 
Dear Mr Szepesi,   Referring to your letter of 27 May (ref. TMB/100)  asking for clarifications and/or comments 
for the comprehensive report of the TMB on the impl ementation of the ATC, including in particular 
the submission by India on behalf of the ITCB,  dated 11 May (G/TMB/N/474), I would like to make 
the following observations: 
  As regards the elimination of quotas vis-à-vis  non-WTO countries, it is noted that the ATC 
itself constitutes a derogation from the MFN as, by defi nition, the existence of different quotas imply 
a different treatment.  It is also pointed out that the ATC does not contain any provision that would 
prevent restraining countries from adjusting the quotas applied vis-à-vis  non-WTO countries, or, if 
that were the case, this would mean that over th e period of validity of the ATC the quotas applied vis-
à-vis non-WTO countries would have to remain frozen .  In the absence of any clear criteria for 
interpretation as to what adjustments of such quot as may or may not be envisaged, the EU considers 
that it has a very wide margin of appreciation in conducting such adjustments, including their possible elimination, without any need to extend such benefits  to other countries, all the more since the EU has 
been granting such benefits to countries which have  entered into market a ccess commitments that go 
far beyond what most restrained countries have bound through tariffs in WTO.   The issue of carry-forward facilities in 2004 has already been examined or discussed on 
several occasions without any conc lusions being reached, lastly by the WTO General Council of July 
of last year.  The Community continues to be of th e opinion that this is not foreseen by the provisions 
of the ATC.  On the other hand, the last year of restraint is to be followed by liberalization upon 
expiry of the ATC, as already notified to the TMB by the Community on 17 March of this year.  G/TMB/N/478 
 Page 3 
 
 
 As to the observations contained in the third indent1 of your letter concerning implementation 
of integration programmes, the Community is on reco rd to have fully complied with the provisions of 
the ATC.  This finding was duly made against a llegations against restraining countries of back-
loading liberalization under the ATC.  The refere nce to the Commission's web site made by ITCB 
Members should duly be seen in this connection, si nce it is manifest that the Community consistently 
has held the possibility open to exporting countries to engage in talks of reciprocally increased market 
access.   With reference to administrative arrangeme nts and procedures for the management of 
restrictions mentioned in the fourth indent
2, attention should be drawn to the fact that, as concerns 
respect for annual restrictions, the date of shipment , and not the date of import, is the determining 
factor for imposition against quota.  Consequently, goods shipped before the end of 2004 but arriving 
early 2005 will therefore have to be set off against the quota for 2004.    Further, the Community is of the view, that contrary to the allegation made by ITCB as 
mentioned in the fifth indent
3 of the letter, the ATC does not prescribe an all out prohibition against 
recourse to anti-dumping procedures but, rather, it c ontains an invitation to moderation, which, 
however, must be judged on the merits of individual cases and circumstances.  This rule applies obviously to all Members and such moderation of u se of anti-dumping remedies is to be expected 
from all countries, some of which are now frequently invoking this remedy.  
                                                     
 
 1 The third indent of the TMB's letter states that:  "Furthermore, the ITCB communication has, inter 
alia, made an assessment of the integration programmes implemented by the European Communities 
so far, stating that '[t]he EU carried over 303 quotas ;  phased out 91 as of now;  and would abolish 212, 
or 70 per cent, on 1 January 2005.  The number 91 includes 13 quotas that the EU suspended in return 
for market access concessions that it secured from  two WTO Members.'  Consequently, according to 
the communication, the amount of restrained trade left to be integrated at the end of the process 
amounts to 68 per cent (the large bulk in each case, consisting of trade in apparel).  ITCB members also 
drew the TMB’s attention to the EC Commission web site, Trade in Goods, the textile sector, 
November 2000, which states that th e EC followed a policy in which it 'considered appropriate to retain 
control over quotas with a view to keeping the possibility of using them as a bargaining chip to obtain 
better market access in third countries.'" 
 
2 The fourth indent of the TMB's letter states that:  "In the same submission, it is also observed that the 
notification made by the European Communities pursuan t to the provisions of Articles 2.8(c) and 2.11 
of the ATC is silent with respect to the administra tive arrangements and procedures that have been in 
place with regard to the implementation and administ ration of quota restrictions, even though these 
restrictions will be eliminated on 1 January 2005.  ITCB members have referred in this respect to a statement made by the TMB in the context of its review under Article 2.21 of the above-mentioned 
notification that 'administrative arrangements could only be deemed necessary in relation to the 
implementation of restrictions applied under the ATC.  Therefore, with the elimination of all 
quantitative restrictions under the ATC, all related administrative procedures and measures, including 
those specified in the administrative arrangements notified pursuant to Article 2.17, shall also stand 
terminated.'"  
 
3 The fifth indent of the TMB's letter states that:  "ITCB members also state th at, during the third stage 
of the integration process, anti-dumping activity in the European Communities has continued, notably 
involving the import of bed linen in one form or the other, leading to continuing problems for exporters 
and the exporting countries concerned.  According to the communication, besides hampering the full utilization of quota access and thereby increasing the restrictiveness of relevant restrictions, these 
actions are in sharp contrast to the commitment under Article 7 of the ATC that 'Members shall take 
such actions as may be necessary to abide by GATT ru les an disciplines so as to ensure the application 
of policies relating to fair and equitable trading cond itions as regards textiles and clothing in such areas 
as anti-dumping rules and procedures …'".   
 G/TMB/N/478 
Page 4  
 
 Referring to the observation by the TMB about suspension of restrictions on imports from Sri Lanka, it is confirmed that this is the case equally du ring 2004 and that this also applies to imports 
from Brazil.   Your supplementary letter, da ted 1 June, referring to India's submission on behalf of the ITCB 
and concerning product classification, implying tran sfer to more sensitive categories and therefore 
increasing the level of restriction does not seem to  concern the Community's quota management.  If 
that is not the case, I would kindly ask for some c oncrete examples or evidence of such practices.  
   Sincerely yours, 
 
     ( Signed for)  
  Carlo Trojan 
  Ambassador     
Mr András Szepesi 
Chairman Textiles Monitoring Body WTO Centre William Rappard 
Rue de Lausanne 154 
1211 Geneva 21  
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