WORLD TRADE
ORGANIZATIONG/TMB/N/444/Add.1
14 June 2002
(02-3309)
Textiles Monitoring Body Original:  English
AGREEMENT ON TEXTILES AND CLOTHING
Notification under Article 2.17
EUROPEAN COMMUNITY
Administrative Arrangements with China
Addendum
The Textiles Monitoring Body has received a further notification from the
European Community pursuant to Article 2.17  The TMB is circulating this notification to WTO
Members for their information.G/TMB/N/444/Add.1
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European Commission
Permanent Delegation
to the International Organizations in Geneva
Head of Delegation
Geneva, 10 June 2002
Subject :Clarifications on the Notification of th e administrative arrangement between China
and the European Community notified under Article 2(17) of the Agreement on
Textiles and Clothing
Dear Mr. Szepesi,
Following the accession of the People’s Republic of China to the WTO and the Notification of the
administrative arrangement made by the European Community under Article 2(17) of the Agreement onTextiles and Clothing (ref: European Community's email dated 8 April 2002
1), I have the honour to
hereby submit a Note on clarifications of several points in the said Notification, as requested in your
Note n° 703340 dated 26 April 2002.
I would ask you to forward this notific ation to the Textiles Monitoring Body.
Sincerely yours,
(Signed for)
Carlo TROJAN
Ambassador
                                                     
1 G/TMB/N/444.G/TMB/N/444/Add.1
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CLARIFICATION NOTE
Concerning the Notification of the administ rative arrangement between China and the
European Community and notified under Article 2(17) of the Agreement on Textiles and Clothing,
please find below the following remarks:
As was stated in its last note on clarifications, th e EC can confirm that the industry reserve quotas are
increased each year according to the same growth ra tes as in the respective main category, since the
amounts constitute a percentage of the main category. These amounts are reflected in the so called
"footnotes", meaning Appendix A to Annex I, part 1 of the notification of quantitative limits made by
the EC under Article 2(1) of the Agreement on Te xtiles and Clothing (re f: G/TMB/N/60/Add. 5 of
16 January 2002). The quotas remain a priority for industry during a certain amount of time (180 days)
from the beginning of the year. The EC Member St ates have to submit to the European Commission
their applications for industry reserve quotas each year before the 31 December. Then, Chinese
exporters holding an authorization to export textile products under quota restrictions are entitled to apply
for the industry reserve quotas to the relevant Chin ese foreign trade administrative bodies, after signing
sales contracts with EC industry users. After the sales contracts have been submitted to the respectiveadministrative bodies within the time  limit the industry reserve quotas are reserved, China then allocates
the quotas to the respective operators  according to its planning. If th e total quantity applied for in a
certain category is less than the remaining quantity of industry reserves for that category, all the
application are satisfied. On the contrary, if the to tal quantity applied for exceeds the remaining quantity
available, the allocation is made on a pro rata basis.
The EC can confirm that "the footnotes to the notific ation" referred to in Article 4.1 of the notification of
the administrative arrangement are in fact the same  footnotes as mentioned above and are omitted in this
notification.
Furthermore, the wording "within the limits" of Article 5 of the administrative arrangement refers to the
limits of the "separate additional amounts" which are the separate quantitative limits for China used at
the European Fairs.
In addition, the EC can inform that  the "Protocol B of the MFA Agreement", mentioned in Article 8 of
the administrative arrangement, refers to the ex emption of quantitative limits in respect of cottage
industry products.
The EC can further confirm that the reference in Article 11.5 of the administrative arrangement should
read "Article 9" instead of "Article 8".
As to the question whether provisions about circumven tion have been invoked the answer is that this has
not been the case after China's accession to the WTO.  However, since Article 5 of the ATC explicitly
deals with this question, information about this possi bility is not irrelevant from the point of view of
transparency. Information about the period preceding accession is not required under ATC.
Article 14 of the administrative arrangement underlin es the advantage derived from the establishment of
the internal market within  the European Union, by which regional restrictions were abolished. In return
this provision aims at avoiding excessive concentr ation of exports to specific regions implying radical
changes in traditional trade patterns.
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