RESTRICTEDWORLD TRADE
ORGANIZATIONG/TMB/R/95
27 February 2003
(03-1175)
Textiles Monitoring Body
REPORT OF THE NINETY-SIXTH MEETING
1. The Textiles Monitoring Body held its ninety-sixth meeting on 27 January 2003.
2. Following the decision adopted by the General Council on 20 December 20011 on the
composition of the TMB for the period 1 January 2002 to 31 December 2004, and the appointment of
new members and alternates, the composition of the TMB at the beginning of 2003 was as follows:2
MEMBERS ALTERNATES SECOND ALTERNATES
Mr. Frédéric Seppey (Canada) Mr. Otto Wentzel (Norway)
Ms. Liping Zhang (China) Mr. S.I.M Nayyar (Pakistan) Ms. My Yen Lu (Macao, China)
Mr. Benny Berg Sorensen (EC) Ms Liana Simopoulos (EC)
Mr. Ivan Lee (Hong Kong, China) Mr. Gil-Sou Shin (Korea) Mr. Badrul Hassan (Bangladesh)
Mr. Sudhakar Dalela (India) Mr. Elyes Lakhal (Tunisia)Mr. Hisashi Yoshikawa (Japan) Mr. Shingo Yamagami (Japan)
Ms. Milagros Miranda (Peru) Mr. Evelio Alvarado Romero (Guatemala) Mr. Philip Fox-Drummond Gough (Brazil)
Ms. Yelda Ünal (Turkey) Mrs. Sarah Huber (Switzerland) Ms. Tatyana Petrova (Bulgaria)
Mr. William Tagliani (United States)
3. Present at this meeting were the following members and/or alternates: Messrs. Dalela; Lee;
Ms. Miranda/Mr. Gough; Seppey;  Sorensen;  Tagliani;  Ms. Ünal/Petrova; Mr. Yoshikawa;
Ms. Zhang/Mr. Nayyar/Ms. Lu.
4. The TMB adopted the report of its ninety-fifth meeting (G/TMB/R/94).
Notifications under Article 2.1 of the Agreement on Textiles and Clothing (ATC)
5. The TMB reverted to its examination of a notification received pursuant to Article 2.1 from
Turkey following the accession of China to the WTO3, in particular based on additional information
received pursuant to Article 2.1 from Turkey  (G/TMB/N/422/Add.4 and G/TMB/R/422/Add.5) which
was provided in response:   (i) to the TMB's request for official documentation, relevant observationsor comments that would help in clarifying and be tter understanding the growth rates which had been
applied by Turkey on 10 December 2001
4 (i.e. on the day prior to the date of China's accession to the
                                                     
1 See WT/L/443.
2 No appointment had yet been received from the ASEAN Members.
3 See G/TMB /R/86, paragraph 4;  G/TMB/R/88, paragraph 4;  G/TMB/R/90, paragraph 49;
G/TMB/R/91, paragraphs 15 to 17, G/TMB/R/93, paragraphs 12 to 14, G/TMB/R/94, paragraph 5.  See also
G/TMB/R/88, paragraph 8.
4 See G/TMB/R/93, paragraph 14.G/TMB/R/95
Page 2
WTO);  and  (ii) to China's notification (G/T MB/N/447/Add.4), to which the TMB had drawn the
attention of Turkey.5  It was observed, inter  alia, that the methodology used by Turkey for calculating
the growth rates was based on the "agreed 1994 gr owth rate (G/TMB /N/422/Add.4)", presumably first
applied in 1996, increased by 16 and subsequently by 25 per cent in 2001, whereas China's view was
that the growth rates applied on 10 December 2001 shou ld be equal to the growth between the "agreed
quota levels" in 2000 and 2001 (G/TMB/N/447/Add.4).  It was also observed that the quota levels
mentioned by both China and Turkey for the years 2000 and 2001 were the same, and that, according
to Turkey, the differences in the growth rates calcul ated on that basis were the result of the fact that
Turkey had "rounded the quota levels calculated […] mostly to the upper number for its application
and that the Chinese calculations had been based on those rounded quota levels.  Thus, in most cases
applied (published) quota levels [were] higher than calculated levels and this result[ed] in a difference
between the Turkish methodology and growth rate calculated according to published quota level".The TMB decided to draw China's attention to these additional notifications provided by Turkey.
Furthermore, in order to be able to fully assess the situation in the light of the statements made by
both Turkey and China with respect to the growth rates applied on 10 December 2001, it was agreed
to ask Turkey to provide a copy of the agreement(s) concluded between Turkey and China referred to
in the Turkish notification, as well as a copy of relevant document(s) reflecting any possiblesubsequent developments that could have been agreed between the two Members in this regard.  Both
China and Turkey were also advised that it would be particularly helpful if information could be
provided as to whether there were any official document containing an agreement between China and
Turkey on the growth rates to be applied by Turkey specifically for the year 2001.
6. As agreed at its ninety-fifth meeting
6, the TMB reverted to its examination of a notification
received pursuant to Article 2.1 from the United States following the accession of China to the WTO7,
also based on an additional communication received from the United States
(G/TMB/N/63/Add.12/Suppl.5) in response to the TMB's invitation to the United States to reconsider
its position with respect to the implementation of the appropriate increase to the annual growth rates
of the quotas maintained on imports from China a nd to implement the necessary adjustments to its
respective methodology applied.8 In this additional communication, the United States stated that it
"ha[d] carefully examined the TMB's report analyzing the application of the growth-on-growth
provisions of the ATC and concluded that the met hodology used by the United States as reported in
G/TMB/N/63/Add.12/Suppl.1 [was] in line with the obligat ions of the United States as provided for in
the Working Party Report of the Accession of China to the WTO.  The US reasoning on this matter,
as expressed in G/TMB/N/63/Add.12/Suppl. 1 and 3, remain[ed] unchanged.  In light of this
conclusion, the US [was] of the view that it would not be appropriate to make any adjustment to themethodology applied".
7. 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 by the 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 remainedunchanged and that, therefore, it was of the view that it would not be appropriate to make any
adjustment to the methodology applied.
                                                     
5 See G/TMB/R/94, paragraph 5.
6 See G/TMB/R/94, paragraph 9.
7 See G/TMB/R/86, paragraph 5;  G/TMB/R/88, paragraph 5;  G/TMB/R/90, paragraph 50;
G/TMB/R/91, paragraphs 7 to 14, G/TMB/R/93, paragraphs 15 and 16 and G/TMB/R/94, paragraphs 6 to 9.
8 See G/TMB/R/90, paragraph 33.G/TMB/R/95
Page 3
8. At its previous meeting9, the TMB had recalled that, in its in-depth examination of the
implementation of the growth-on-gr owth 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 United States), as well as the respective observations made
by China with reference to Article 2.2.  In order to discharge its responsibilities in this regard, theTMB 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 regarding some 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 theseminimum requirements, the TMB had "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".
9. 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 necessaryadjustments 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 TMB observing, 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 theshort period of China's actual membership during that stage.
10  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) of the
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 otherMember.
11  Therefore, the TMB continued to be of the view that, as regards the implementation of the
growth-on-growth provisions provided for in Ar ticles 2.13 and 2.14 with respect to China, the
minimum requirements 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 applied 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.
10. 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.12  These observations had also been addressed by the TMB during its discussion of the
implementation of the growth-on-gr owth provisions, as reflected in G/TMB/R/90.  The TMB noted
that according to Article 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 tomake 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 Members concerned, the TMB decided to recommend to the United States to
implement the necessary adjustments in its respectiv e methodology applied, with a view to bringing it
in line with the TMB's conclusion regarding the minimum requirements that had to be met.
                                                     
9 See G/TMB/R/94, paragraph 7.
10 See G/TMB/R/90, paragraph 28.
11 See G/TMB/R/90, paragraph 27.
12 See G/TMB/R/90, paragraph 13.G/TMB/R/95
Page 4
11. The TMB further recalled that at its eighty-seven th meeting, in starting its review of the
notification received pursuant to Article 2.1 from the United States following the accession of China
to the WTO, the Body had decided to seek clarifications and additional information from the
United States with respect to a number of other specific aspects of its notification, inter alia , also in
light of the related observations made by China with reference to Article 2.2.  In particular, at itsninety-second meeting
13, the TMB had considered in detail a number of issues involved, also on the
basis of additional information received from the United States (G/T MB/N/63/Add.12/Suppl.3) in
response to the observations contained in a notification provided by China pursuant to Article 2.2
(G/TMB/N/445/Add.2). The TMB had considered th e following elements: th e interaction between
specific limits and group limits, the downward adjust ment of quota levels for partially integrated
products and the cap maintained by the United States on the combined use of carryover and carry
forward.  On the same occasion, the TMB had also considered and addressed the relevantobservations made by China pursuant to Article 2.2.  Furthermore, during its ninety-third meeting, the
TMB had noted that the United States had made an administrative correction to certain group-limits
notified, in order to correct an inadvertent error.
14  In view of above and noting that all the relevant
issues had been addressed by it, the TMB considered that, keeping in mind the recommendation with
respect to the implementation of the growth-on-growth provisions it had made to the United States asreflected in paragraph 10 above, it was in a position to take note of the notification made by the
United States pursuant to Article 2.1.
_____________
                                                     
13 See G/TMB/R/91, paragraphs 7 to 14.
14 See G/TMB/R/92, paragraph 5.