WORLD TRADE
ORGANIZATIONG/C/W/404
26 July 2002
(02-4140)
Council for Trade in Goods Original:  English
DOHA MINISTERIAL DECISION ON IMPLEMENTATION-RELATED ISSUES
AND CONCERNS:  CTG EXAMINATION OF PROPOSALS CONTAINED
IN PARAGRAPHS 4.4 AND 4.5 RELATING TO THE
AGREEMENT ON TEXTILES AND CLOTHING
Communication from Hong Kong, China
The text of the statement made by the representative of Hong Kong, China at the meeting of
the Council for Trade in Goods on 23 July 2002 is being circulated to Members, as requested.G/C/W/404
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Council for Trade in Goods, 23 July 2002
Agenda Item 4:  Paras 4.4 and 4.5 of the Doha Implementation Decisions
Statement made by Hong Kong, China
• At the last CTG meeting on 13 June the US, for the first time, gave detailed comments on the
two implementation proposals mandated by Minist ers at Doha to this Council to examine and
make recommendations to the General Council for appropriate action by 31 July 2002.  I gave
my immediate reaction at that meeting, and I would now like to add some more considered
reflections.
• The arguments made by the US, and also to a greater or lesser extent by the two other
restraining Members, rest essentially on three points: that the two proposals would require a
modification of ATC provisions; that the ATC has allowed imports to grow, hence
implementation is on track; and that the proposals would result in significant changes in the
substantive economic provisions and disrupt the balance of the ATC.  I would like to respond
to these three arguments one by one.
• First, on re-opening of the ATC.  The proposal in paragraph 4.4 simply asks Canada and the
US to apply the same methodology in calculating growth in quota levels for small suppliers as
already used by the EC in implementing the same provision under the ATC.  Unless the EC is
wrong, how could this require any change in the ATC? Furthermore, Articles 2.13 and 2.14 of
the ATC clearly prescribe only the minimum level for increases in growth rates.  The specific
language is “not less than” under both paragraphs.  They do not prescribe any ceilings, orprohibit any further increases.
• Secondly, on the purported increases in imports.  I have already pointed out at the last
meeting that the share of restrained Members in textiles and clothing imports into the USdropped from 76.6% in 1994 to 65.9% in 2000, while that in the EC decreased from 45.6% to
43.1%.  The figures for clothing alone show the trend even more clearly.  Our import share inthe Canadian market stagnated during the same period.
• In passing, let me note that as regards the EC, we may now be worse off under the ATC than
we would have been under the MFA.  The EC w ould not have been able to justify continuing
all these restraints under the MFA over a period in which unrestrained exporters, including
non-WTO Members, have greatly expanded their trade to well over half the share of imports.Restrained exporters should perhaps consider if their legal rights more broadly under the
WTO give them the same protection as the old MFA would have done.
• Let me now cite another set of figures.  A ccording to the data in WTO document G/C/W/366,
US T&C global imports have been increasing by 9.5% per year.  But if one looks more
closely, one discovers that the annual growth from restrained Members was only 6.8%, whilethat from unrestrained suppliers was 16.6%.  For clothing imports, the comparable
percentages are 6.3% for restrained Members, 21.5% for unrestrained suppliers.  These
differences are startling, as they have already taken into account the effect of enhanced quota
growth factors for restrained members under the AT C. It appears that the traditional suppliers
to the US, who have patiently put up with GATT inconsistent restraints for decades, are still
being heavily penalized for their early but now historic market successes.
• This phenomenon has allowed the US of its own volition to expand greatly its preferential
trade, which is tied closely to its domestic industry through highly restrictive rules of origin.G/C/W/404
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So be it – but please do not blame all the resultant increases in imports on Hong Kong, China
and other exporters in a similar position.
• All the figures point to one conclusion: not only has progressive liberalization under the ATC
not taken place, but also the adjustment now faced by the domestic industries in the
restraining countries is clearly due to factors other than implementation of the ATC.
• Finally, on the purported disruption to the balance of the ATC.  Developing exporting
members have repeatedly cited instances under which their market access has been seriously
impaired by new restrictions in violation of the provisions of the ATC, unjustified anti-
dumping actions on products already under quota restrictions, and other
customs/administrative formalities including changes in rules of origin.  A 16 page document
prepared by ITCB members in the context of the Second Major Review – G/C/W/304 –
comprehensively made the case that the balance in the ATC has indeed been impaired, to thedetriment not of the restraining Members but on the contrary of the developing exporting
Members.
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