WORLD TRADE G/TMB/R/31
30June1997
ORGANIZATION(97-2680)
Textiles Monitoring Body
REPORT OFTHE THIRTY-SECOND MEETING
1. TheTextiles Monitoring Body helditsthirty-second meeting on4to6June1997.
2. Present atthismeeting were thefollowing members and/or alternates: Mrs. Berrig/
Messrs. Tadpitakkul; DaCosta/Kravetz; Kim/Tong; Lam; Mukerji/Ms. Shahin; Messrs. Richards;
Rey/Urkan; Saeki; Saint-Jacques/Wentzel; Tagliani.
3. TheTMB adopted thereport ofitsthirty-first meeting (G/TMB/R/30).
Notifications under Articles 2.8(a) and2.11oftheATC
4. TheTMB reviewed under paragraph 21ofArticle 2thenotification made, pursuant to
paragraphs 8(a)and11ofArticle 2,byNorway (G/TMB/N/210, Adds.1 and2).Itnoted that,in
accordance withparagraph 8(a)ofArticle 2thevolume ofimports oftheproducts tobeintegrated
amounted to24.26 percent1ofthetotalvolume ofimports intoNorway in1990oftheproducts falling
under thecoverage oftheAgreement. Products from each ofthefourgroups referred toin
paragraph 8(a)ofArticle 2would beintegrated, which would represent thefollowing percentages of
thevolume ofimports in1990 inNorway: topsandyarns (6.58 percent); fabrics (2.38 percent);
made-up textile products (11.14 percent); andclothing (4.16 percent). TheTMB observed thatthe
notification contained noproduct forwhich restrictions werecurrently maintained byNorway. Inthis
regard, theTMB noted thestatement byNorway thatit“iscommitted toacontinuation ofapolicy
ofgradual liberalization andexpects tobeabletonotify laterthisyeartotheTMB (andtheWTO
Members directly concerned) further stepstaken pursuant toArticle 2,Section 15,oftheATC”.The
TMB alsonoted, however, thatoneoftheproducts (HSNo.6210) hadbeenintegrated, forwhich
therestrictions, affecting 16WTO Members, hadbeeneliminated asfrom 1January 1996 pursuant
toparagraph 15ofArticle 2(G/TMB/N/130).
5. TheTMB reviewed under paragraph 21ofArticle 2thenotifications made, pursuant to
paragraphs 8(a)and11ofArticle 2,byPakistan (G/TMB/N/241/Rev.1). During thisreview theTMB
noted that,inaccordance withparagraph 8(a)ofArticle 2,thevolume ofproducts integrated amounted
to17.75 percent1ofimports fromJuly1990toJune1991 oftheproducts falling under thecoverage
oftheAgreement. TheTMB alsonoted thatinaccordance withparagraph 8(a)ofArticle 2,theproducts
integrated included products from eachofthefourgroups: topsandyarns, fabrics, made-up textile
products andclothing. With regard tofactthatthecalculation oftheshare oftheproducts integrated
hadbeenmade onthebasis ofthefiscal yearof1990, theTMB wasassured thatnobetter datawere
available andnoted thatPakistan hadfollowed thesame approach asforthenotification ithadmade
pursuant toparagraphs 6and7(b)ofArticle 2.
1Theshares indicated mayhave toberevised upwards (seeG/TMB/R/29, paragraphs 43to45).G/TMB/R/31
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Notifications under Article 2.17oftheATC
6. TheTMB resumed andconcluded itsreview, pursuant toparagraph 21ofArticle 2,ofthe
notifications made bytheUnited States regarding theadministrative arrangements agreed between the
United States andBangladesh, Brazil, Colombia, Costa Rica, theDominican Republic, Egypt, Fiji,
Guatemala, Haiti, Hungary, India, Indonesia, Jamaica, Kenya, Korea, Macau, Malaysia, Mauritius,
Pakistan, thePhilippines, Poland, Qatar, Romania, SriLanka, Thailand, Turkey, the
United Arab Emirates andUruguay, respectively (G/TMB/N/264-268, 269andAdds.1 &2,270,
271andAdd.1, 272-281, 149,282-290).
7. Theintroductory paragraph ofeachofthese notifications stated thattheprovisions notified
hadbeendrawnfrompreviousbilateralagreementsconcludedbetweentheUnitedStatesandtheMembers
concerned andthatthese provisions hadbeenagreed between theUnited States andtheMembers
concerned asbeing necessary fortheproper implementation ofrestrictions notified totheTMB under
paragraph 1ofArticle 2oftheATC. Recalling thataccording toparagraph 17ofArticle 2,
"administrative arrangements deemed necessary inrelation totheimplementation ofanyprovision of
[Article 2],shallbeamatter foragreement between theMembers concerned", theTMB noted that
theadministrative arrangements notified bytheUnited States hadbeenbilaterally agreed between
United States andtherespective Members.
8. TheTMB observed thattheapproach taken bytheUnited States andtheMembers concerned,
namely keeping inforce certain provisions oftheprevious bilateral agreements inorder toconstitute
theprovisions oftheadministrative arrangements inthesense ofparagraph 17ofArticle 2,resulted
insome respects intextswhich arenoteasily understood, andalsoinsome instances, appear togive
theimpression thatsome oftheprovisions oftheadministrative arrangements arenotfullyconsistent
withothers. Thewritten replies oftheUnited States totheTMB'srequests forclarification provided
some guidance inthisregard.
9. While thestructure andlanguage oftheadministrative arrangements notified differed from
eachother, theyalladdressed thesame issues andadopted thesame oraverysimilar approach, apart
fromafewexceptions where differences insubstance could alsobeidentified. Thearrangements dealt
withissues suchas:product coverage andrelated issues ofclassification; flexibility adjustments;
overshipment charges; spacing provisions; exchange ofdataandinformation; USassistance in
implementingthelimitationprovisions;consultationonimplementationquestions;"mutuallysatisfactory
administrative arrangements"; andcooperation intheprevention ofcircumvention. Themajority of
these arrangements alsocontained provisions related toacorrect category/quantity visasystem and
tocommercialsamplesandpersonalshipments.Somearrangementsalsocontainedprovisionsconcerning
thetreatment ofimports ofhandloom products.
10. TheTMB observed thattheadministrative arrangements agreed withBrazil, theDominican
Republic, Egypt, Haiti, India, Indonesia, Jamaica, Korea, Macau, Mauritius, Malaysia, Pakistan,
thePhilippines, Poland, Qatar, Romania, SriLanka, Thailand andtheUnited Arab Emirates covered
abroad range ofproducts included inAnnexes totherespective arrangements which appeared tobe
identical totheproducts covered under theMFA. TheTMB, therefore, sought clarification regarding
thecorrect understanding oftheproduct coverage ofthese administrative arrangements. Ittooknote
oftheprecision provided bytheUnited States according towhich onlyproducts subject torestraints
under paragraph 1ofArticle 2were subject totheadministrative arrangements.
11. With respect totheadministrative arrangements concluded withBangladesh, Colombia,
Costa Rica, Fiji,Guatemala, Hungary, Kenya, Turkey andUruguay, theproduct coverage wasmore
narrowly defined, andtheTMB understood thatthestatement bytheUnited States thatonlyproductsG/TMB/R/31
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subject torestraints under paragraph 1ofArticle 2were subject totheadministrative arrangements
would apply whenever acoverage orclassification problem occurred.
12. TheTMBnotedthatseveraladministrativearrangementscontainedspecificprovisionsregarding
merged categories, i.e.categories based ontheproduct classification oftheUnited States which, as
agreed withtheMembers concerned, weremerged andtreated assingle categories, inparticular cases
withappropriate sub-limits. Theconversion factors applicable tothemerged categories were also
specified inthese provisions. TheTMB observed thatmerged categories hadalready beennotified
bytheUnited States pursuant toparagraph 1ofArticle 2,butthattheinclusion ofthese positions in
theadministrative arrangements waspresumably made inorder tospecify therelated conversion factors.
13. TheTMB observed thattheadministrative arrangement agreed between theUnited States and
Guatemala foresaw thepossibility forbothparties "toagree toputupnewcategories under quota".
TheTMB requested clarification astowhether theTMB'sunderstanding wascorrect totheeffect that,
without prejudice torecourse toprovisions ofArticle 6oftheATC, thispossibility which hadapplied
tothebilateral agreement concluded between theUnited States andGuatemala under theMFA, was
nolonger applicable. Inresponse theUnited States stated that"where provisions ofthebilateral
agreement [i.e.theadministrative arrangement] areinconsistent withtheATC, theprovision ofthe
ATC willapply. Thisiswithout prejudice torecourse totheprovisions oftheATC". TheTMB took
noteofthisstatement.
14. TheTMB alsoobserved thatthearrangements withtheDominican Republic, Guatemala and
Haiti included provisions regarding guaranteed access levels (GALS), providing, interalia,forthe
possibility fortheMembers concerned toapply fornewguaranteed access levels. TheTMB sought
clarification astowhether itsunderstanding wascorrect thatthese provisions hadbeenapplied tothe
bilateral agreements between theUnited States andtheMembers concerned, but,without prejudice
torecourse totheprovisions ofArticle 6oftheATC, theywerenolonger applicable, sinceinaccordance
withparagraph 4ofArticle 2oftheATC "nonewrestrictions interms ofproducts orMembers shall
beintroduced except under theprovisions ofthisAgreement [i.e.theATC] orrelevant GATT 1994
provisions". Inreply theUnited States stated itsposition according towhich "when provisions ofthe
bilateral agreement [i.e.theadministrative arrangement] areinconsistent withtheATC, theprovisions
oftheATC willapply. Thisiswithout prejudice torecourse totheprovisions oftheATC". The
TMB tooknoteofthestatement oftheUnited States.
15. TheTMB noted thatanumber ofadministrative arrangements contained specific provisions
orreferred toacorrect category/quantity visasystem orvisaarrangement inforce ortobeagreed
uponbetween theUnited States andtheMembers concerned, while thetextofthesevisaarrangements
hadbeennotified asanAnnex totheadministrative arrangements onlyinafewcases. TheTMB
understood thatinallthese cases thevisaarrangements werepartoftheadministrative arrangements
andthattheUnited States would notify thetextofthose visaarrangements which hadnotyetbeen
made available.
16. TheTMBobservedthatmostoftheadministrativearrangementsnotifiedenvisagedtheexchange
ofrespective export andimport datacovering abroad range ofproducts, including those which were
notsubject tothearrangements themselves, astheywerenotsubject toquantitative restrictions notified
bytheUnited States pursuant toparagraph 1ofArticle 2oftheATC (seeparagraph 10above). As
theexchange oftrade datainproducts notsubject torestrictions could notbedeemed necessary in
relation totheimplementation ofanyprovision ofArticle 2oftheATC, theTMB understood that
theapplication ofthisprovision would belimited totheproducts included intherespective notification
made bytheUnited States pursuant toparagraph 1ofArticle 2.G/TMB/R/31
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17. Most ofthearrangements included aprovision inthecontext offlexibility adjustments which
enabled theUnited States to"supply adjustments ...toanyspecific limitwhenever thatadjustment
appears appropriate tofacilitate theflowoftrade andthesound administration" oftheadministrative
arrangement. TheTMB, noting that,inaccordance withArticle 4oftheATC, thequantitative
restrictions were administered bytheexporting Members, sought clarification astothejustification
under theATCandthereasons astowhysuchaprovision wasnecessary. Initsreply theUnited States
stated that"this provision isnotdesigned todetract from theexporting country 'sresponsibility to
administerquantitativerestrictions.ThisprovisionauthorizestheUnitedStates,incaseswhereacategory
isclose tofilling andflexibility adjustments areavailable, toautomatically apply these adjustments".
18. TheTMB recalled thataccording toparagraph 17ofArticle 2,Members canagree on
administrative arrangements asdeemed necessary inrelation totheprovisions ofthisArticle. The
TMB noted thatanumber oftheprovisions intheadministrative arrangements notified wererelated
totheimplementation oftherestrictions notified pursuant toparagraph 1ofArticle 2and,thus,were
qualified forinclusion intothearrangements agreed uponunder paragraph 17ofArticle 2.TheTMB
observed, however, thatsome oftheprovisions inthese arrangements could havebeenaddressed in
some Articles other thanArticle 2oftheATC. Thisapplied inparticular totheprovisions related
tocooperation intheprevention ofcircumvention.
19. TheTMB sought information fromtheUnited States astohowprovisions related tocooperation
intheprevention ofcircumvention were deemed necessary inrelation totheimplementation ofany
provision ofArticle 2oftheATC. Italsoasked forexplanations astohowsuchprovisions, inparticular
thatenabling theimporting Member toimpose inparticular circumstances, triple charges onquotas,
would fitwithin theprovisions oftheATC. Inreply, theUnited States stated thatcircumvention often
damages acountry 'slegitimate trade bymaking itimpossible toadminister effectively its
Article2.1quotas.TheUnitedStatesandtheMembersconcerneddeemedthecircumventionprovisions
tobenecessary totheimplementation ofthese quotas. Triple charging, which wasagreed upon in
mostoftheadministrative arrangements, hadalsobeendeemed bytheUnited States andtherespective
Members tobeanecessary deterrent tocircumvention. Since itsapplication would affect therestraint
levels contained intheUS'Article 2.1notifications, these particular provisions were, intheviewof
theUnited States, appropriately included intheadministrative arrangements.
20. Inassessing thestatement asabove made bytheUnited States andnoting thatalltheprovisions
oftheadministrative arrangements, including those related tocooperation intheprevention of
circumvention hadbeenagreed between theMembers concerned, theTMB observed thatArticle 5
oftheATC contained detailed descriptions oftherules andprocedures tobefollowed. Itappeared
totheTMB thatsome aspects oftherelated provisions included intheadministrative arrangements
could gobeyond what wasspecified inArticle 5.TheTMB noted, interalia,thatparagraph 4of
Article 5oftheATC seemed toprovide some flexibility interms ofremedies oragreed actions that
could beforeseen incases when circumvention hasoccurred. Itobserved, however, thatArticle 5
contained nomention ofthepossibility fortheimporting Member toimpose triple charges onquotas,
asadeterrent tocircumvention. TheTMB noted inthisregard thatthisprovision hadnotbeenutilized
bytheUnited States.
21. TheTMB recalled thattheUnited States hadstated thatwhen provisions oftheadministrative
arrangements were inconsistent withtheATC, theprovisions oftheATC would apply. TheTMB
understood thatthisstatement applied toeachandevery provision ofthearrangements notified. The
TMB expected, therefore, thatalltheprovisions ofthese administrative arrangements would be
implemented bytherespective Members inconformity withtherelevant provisions oftheATC.
22. With theabove observations theTMB tooknoteoftheadministrative arrangements agreed
between theUnited States andBangladesh, Brazil, Colombia, Costa Rica, theDominican Republic,G/TMB/R/31
Page5
Egypt, Fiji,Guatemala, Haiti, Hungary, India, Indonesia, Jamaica, Kenya, Korea, Macau, Malaysia,
Mauritius, Pakistan, thePhilippines, Poland, Qatar, Romania, SriLanka, Thailand, Turkey, the
United Arab Emirates andUruguay. Thiswaswithout prejudice totherights andobligations ofWTO
Members arising from theATC.
23. TheTMB decided tocirculate these administrative arrangements toWTO Members fortheir
information.
Honduras/United States: Imports ofWomen 'sWool Coats andJackets (USCategory 435)
24. TheTMB reverted tothematter raised byHonduras initscommunication under paragraphs 6
and7ofArticle 8,asagreed atitsmeeting on21to23April 1997 (G/TMB/R/28, paragraph 17).
25. TheTMB received acommunication fromtheUnited States according towhich ithadreviewed
therestraint onHonduran exports ofproducts ofUScategory 435. Asaresult ofthisreview, the
UnitedStateshaddecidedtorescindthisrestraintnolaterthan31October1997,andwouldcommunicate
theexact timing totheTMB inearly July1997.
26. TheTMB tooknoteofthiscommunication, andexpected thattheUnited States would rescind
therestraint assoonaspossible, andthatitwould communicate thedateinquestion totheTMB at
thelatest by10July1997. TheTMB decided torevert tothisissueduring thelatter partofitsmeeting
scheduled for7to11July1997, towhich bothMembers areinvited.
Preparation forthe1997 Comprehensive Report under Article 8.11oftheATC
27. TheTMB started theconsideration ofcertain parts ofadraftofitscomprehensive report on
theimplementation oftheATC during itsfirststage, tobetransmitted totheCouncil forTrade in
Goods inthecontext ofthemajor review envisaged inparagraph 11ofArticle 8oftheATC. Italso
considered inthiscontext thecommunications received fromEgypt, Mauritius, NewZealand, Pakistan
andPeruinresponsetotherequestforinformationtheTMBhadsenton14February1997(G/TMB/11),
anddecided toseekclarification fromsome other Members withrespect tocertain statements contained
inthese communications.
Observations withRespect toLateNotifications
28. With respect tonotifications addressed totheTMB aftertherespective deadlines foreseen in
theATC, theTMB reiterated thatitstaking noteoflatenotifications waswithout prejudice tothelegal
status ofsuchnotifications.