WORLD TRADE
ORGANIZATIONG/TMB/R/60
28 January 2000
(00-0349)
Textiles Monitoring Body
REPORT OF THE SIXTY-FIRST MEETING
1. The Textiles Monitoring Body held its sixty-first meeting on 13 and 14 December 1999.
2. Present at this meeting were the following members and/or alternates: Messrs. Ahn/Chung;
Grané; Hastjarjo; Kobayashi; Kumar; Radu; Richards; Tagliani; Wentzel/Moroz.
3. The TMB adopted the report of its sixtieth meeting (G/TMB/R/59).
Notification under Article 8.10 of the Agreement on Textiles and Clothing
Argentina/Brazil: imports of products of cate gories 218, 219/220, 224, 313/317 and 613/617/627
4. On 29 November 1999, the TMB received a communication from Argentina under
Article 8.10, following the examination by the TMB, on 18 to 22 October 1999, of the provisional
safeguard measure consisting of five quotas, introduced by Argentina on imports from Brazil of
woven fabrics of cotton and cotton mixtures of products of categories 218 (woven cotton and cottonmixtures fabrics of yarns of different colours), 219/220 (duck/special-weave cotton and cotton
mixtures fabrics), 224 (pile tufted cotton and cott on mixtures fabrics), 313/317 (sheeting/twill cotton
and cotton mixtures fabric) and 613/617/627 (sheeting fabrics/twill and satin/staple-filament fibre
combinations of cotton and cotton mixtures).  The measure had been introduced with effect from
31 July 1999 and for a duration of three years.
5. In this communication, Argentina conveyed  its inability to conform with the
recommendations the TMB had made
1 that the safeguard measures introduced by Argentina on
imports from Brazil of products of categories  218, 219/220, 224, 313/317 and 613/617/627 should be
rescinded.  Argentina considered that it was not in a position to accept fully the TMB
recommendations and considered it impossible to re scind the safeguard measures for the following
reasons:
- Argentina considered that it had complied with the provisions of Article 6 of the ATC
and that the elements demonstrating the existence of serious damage caused by an
increase in imports were contained in the presentation made at the time Argentina had
requested consultation with Brazil;
- the analysis made by the TMB of the grounds put forward by Argentina to justify the
application of a transitional safeguard measure did not satisfy the provisions ofArticle 8.5 of the ATC concerning the need to give the matter thorough consideration.
According to Argentina, the TMB's analysis  could be summarized to mean that the
TMB rejected the measure on the basis of "non-fulfilment of the requirements laid
down in Article 6, but without disputing the essence of the problem facing [the
relevant] industry in Argentina as a result of the increase in imports of like anddirectly competitive products from […] Brazil and Pakistan";
                                                     
1 For the TMB’s review of the transitional safeguard measures, pursuant to Article 6.11, see
G/TMB/R/58, paragraphs 4 to 45.G/TMB/R/60
Page 2
- the TMB, inter alia,  by suggesting that statistical information should have been made
available by Argentina in order to compare the data provided for the most recent
period available (i.e. May 1998-April 1999) to a similar preceding period, appeared to
impose a standard of requirement far beyond what was prescribed in Article 6 of the
ATC;
- the TMB’s recommendation seemed to entail an increase of the Member’s obligations
under the ATC, as it inferred that an absolu te increase in imports had to occur during
the period referred to in Article 6.8 in order to be in a position to apply a safeguard
measure pursuant to Article 6.  As a consequence, the TMB had concluded that there
was no increase in imports and had not, consequently, undertaken a determination of
the attribution of damage as caused by specific Members, or an analysis of the causal
relationship between increased quantities in total imports of the products ofcategories 218, 219/220, 224, 313/317 and 613/ 617/627 and the serious damage or
actual threat thereof caused to the domestic industry producing like and/or directly
competitive products.  According to Argentina, the period specified in Article 6.8 was
defined solely for the purposes of calculating the quantitative restriction should the
Member conclude that it was necessary to apply a transitional safeguard measure;
- in addition, in categories 313/317 and 613/617/627 where its analysis had been a little
more extensive, the TMB had preferred to attribute the damage caused to the
domestic industry to factors other than imports without giving Argentina the
opportunity to challenge this line of argument;
- Argentina’s recourse to the provisions of Article 6.11, which demand the existence of
"highly unusual and critical circumstances, where delay would cause damage which
would be difficult to repair" had been questioned by the TMB.  Argentina believed
that such a recourse had been justified by the circumstances, as it had been
substantiated by the information Argentina had provided.
6. The TMB invited both Argentina and Brazil, pursuant to Article 8.7, to participate in the
review of this matter.
7. The representative of Argentina stated, inter alia , the following reasons why Argentina
considered it impossible to rescind the measures:
- Argentina was of the view that the TMB had based its analysis of the safeguard
measures on an interpretation of Article 6.2 that imposed standards of requirements
much higher than those of the ATC.  In the view of Argentina, the increase in imports
set out in Article 6.2 did not have to be based on the level of imports during theperiod set out in Article 6.8 as compared to the imports in a corresponding previous
period.  Moreover, such imports could not be considered without taking into account
the magnitude of the increase over the period considered, and also in relation to the
factors enumerated in Article 6.3.  Argentina also noted that, in the past, the TMB had
not always used such strict criteria in its consideration of safeguard measures;
- with respect to categories 313/317 and 613/617/627, the analysis of the TMB had also
taken into account, inter alia , the effects of a general economic recession taking place
in Argentina.  In the view of Argentina, such a recession affected both domestic
production and imports, and was not a factor to be considered.  The duty to show that
the damage to the domestic industry was not caused by, among other factors, theeffects of an economic recession was an almost impossible task that the TMB seemed
to impose on Argentina;
- with respect to category 613/617/627, the TMB recognised the existence of increased
imports and of a situation of serious damage experienced by the branch of theG/TMB/R/60
Page 3
industry.  The TMB had come to the preliminary conclusion that the cause of the
damage "could arise from multiple reasons having a mutually reinforcing effect",
without taking a definitive view on this matter.   In the view of Argentina, this did not
constitute a "thorough … consideration of the matter", as required by Article 8.5;
- also, with respect to the attribution of the damage to imports from Brazil, Argentina
had taken into account the existence of a "sharp and substantial increase in imports …
from such a Member or Members individually", as well as other factors such as "the
level of imports as compared with imports from other sources, market share, and
import and domestic prices at a comparable stage of commercial transaction".  In any
event, it had been assumed, in accordance with Article 6.4, that "none of these
factors, either alone or combined with other factors, can necessarily give decisive
guidance";
- finally, with respect to the existence of "highly unusual and critical circumstances" as
referred to in Article 6.11, Argentina believed that account had to be taken of the
prudent attitude it had adopted, as could be seen by the high level of market
penetration reached by imports at the time the measures had been introduced.  The
fact that such a level had been reached at a time when the sector experienced aworldwide price deflation enabled Argentina to characterise the situation experienced
as "highly unusual and critical circumstances, where delay would cause damage
which would be difficult to repair".
8. The representative of Brazil stated, inter alia , that:
- the contention made by Argentina that the TMB had not, in accordance with
Article 8.5, made a "thorough and prompt consideration of the matter" before making
its recommendations completely bypassed the logical structure of Article 6.  That
Article, in essence, contained in its paragraphs 2, 3 and 4 four basic conditions which
followed a logical sequence and which each had to be met in order to allow for the
introduction of safeguard measures.  In its review, the TMB had correctly followedthis logical sequence in considering the safeguards applied by Argentina on imports
of the five categories originating in Brazil, ceasing its consideration of each specific
case at the appropriate point in the sequence.  Under the principle of judicial
economy, the lack of compliance with any of these basic conditions was enough to
allow the TMB to make its conclusions without going through the entire process;
- the procedures followed by the TMB were not only fully consistent with the letter and
spirit of Article 6 but also with the procedures followed by the TMB over the firstfive years of its work, and did not represent an interpretation of the ATC with higher
standards of requirement than those of the ATC;
- Brazil disagreed with the statement made by Argentina that it had been denied the
opportunity to present its view in full during the examination made by the TMB
under Article 6.11;
- with respect to the period when the increase in imports had to be taking place, Brazil
was of the view that Article 6.2 clearly established that the level of imports to be
considered was the level referred to in Articles 6.7 and 6.8, not that of the two
previous years;
- the interpretation by Argentina according to which the level of imports should not be
seen in absolute terms but in relation to the economic variables outlined in Article 6.3
would allow the introduction of safeguards in a situation of declining imports, a
situation envisaged in the MFA, not in the ATC.  Article 6.2 was very clear in this
respect;G/TMB/R/60
Page 4
- Article 6 provided for safeguard only if damage to the domestic industry was
attributable to an increasing level of imports.  Imports should not bear the cost of
adjustment to a recession that was affecting the entire economy;
- Brazil believed that the consideration given by the TMB on 18-22 October 1999 to
the safeguard measures introduced by Argentina had been thorough and consistentwith both the provisions of Article 6 and with past TMB practice.  The arguments put
forward by Argentina raised concerns si nce they would significantly undermine the
letter and the spirit of the ATC, as well as the very core of the Agreement’s purpose,
which was to "… facilitate the integration of the textiles and clothing sector into
GATT 1994" (Article 1.5).  Brazil was furt hermore concerned with the fact that
Argentina’s interpretation and application of certain provisions of the ATC had
permitted the maintenance in effect of transitional safeguards under the highlyunusual and critical circumstances clause of Article 6.11 for over four months,
despite the recommendations made by the TMB.  Brazil, therefore, requested that the
TMB confirm these recommendations.
9. In starting its examination of the matter referred to it, the TMB noted that the communication
of Argentina providing the reasons for its inability to conform with the recommendations of the TMBhad been submitted pursuant to Article 8.10.  The TMB recalled that, in accordance with Article 8.10,
it was required to give thorough consideration to the reasons given by the Member which considered
itself unable to conform with the TMB’s recomme ndation and issue any further recommendations it
considered appropriate forthwith.
10. The TMB noted that according to Argentina, "the TMB's interpretation is based on the
requirement laid down in Article 6.2 concerning the existence of an absolute increase in imports and
the fact that such an increase must be observed in a recent period (paragraphs 7 and 8 of Article 6)".
In the view of Argentina, the period specified in Article 6.8 was not defined for the purposes of
analysing the increase in imports referred to in the first part of Article 6.2, but solely for the purposes
of calculating the quantitative restriction should the Member conclude that it was necessary to apply atransitional safeguard measure.  Therefore, also in line with Article 6.8, the most recent period did not
necessarily have to be fixed in comparison with the corresponding previous period, as was
compulsory for the information for the analysis th ereof required under the Agreement.  Second, the
increase in imports cannot be considered without taking account of the magnitude and trend of the
variation in the whole period under analysis.  Third, the increase in imports may not be considered
solely in an absolute form, but also in relation to  the parameters for determining the damage set out in
Article 6.3. Furthermore, "[t]he TMB has also inferred that, in view of the foregoing, it should notcontinue the analysis provided for in Article 6.2 and more specifically in paragraph 3 [of Article 6]
concerning the existence of serious damage and the factors reflected in the set of economic variables
described in the above-mentioned Article 6.3".
11. The TMB observed that in its examination of the safeguard measures it had noted that whilst
imports of products of categories 218, 219/220 , 224 and 313/317 taken individually had increased
from 1995 to 1997 (from 1995 to 1996 for category 219/220), such imports had decreased in the
subsequent corresponding period(s), i.e. in the period closest to the time at which Argentina had
decided to introduce the safeguard measures provisionally and requested consultations with Brazil.
The TMB recalled in this regard that Article 6.2 of the ATC states that "[s]afeguard action may be
taken under this Article when, on the basis of a determination by a Member, it is demonstrated that aparticular product is being imported into its territory in such increased quantities as to cause serious
damage, or actual threat thereof, to the domestic industry producing like and/or directly competitiveproducts" (emphasis added).  It followed from this language that this condition had to be met at the
time which was close to the one when a Member was requesting consultations pursuant to Article 6.7
with a view to introducing a safeguard action (or when it decided to take the safeguard measures
provisionally pursuant to Article 6.11).  This appeared not to be the case for categories 218, 219/220,
224 and 313/317.  In emphasising, in its report (G/TMB/R/58), that a determination of serious damage
in the sense of Article 6 could not be based on developments that had affected the domestic industryG/TMB/R/60
Page 5
years before the actual determination was being made, the TMB had stated that in examining such a
determination, "… decisive guidance had to be provided by the developments which had occurred in
the most recent period".  In support of this statement, the TMB had referred to several provisions of
Article 6 as well as to the object and nature of the ATC itself.  The TMB continued to be of the view
that the position taken by it, reflected in paragraph 14 of G/TMB/R/58, had been the correct one, assupported by the relevant provisions of the ATC.  The first basic precondition for applying a
transitional safeguard measure as defined in Article 6.2 implied, in the view of the TMB, that imports
(that may have started to increase in the past) should have increased in the period which is close to the
time when the safeguard measure is being provisionally imposed or the request for consultations is
being made.  This also means that an absolute increase in imports is a necessary condition to be met.
As to whether such an increase has to be observed in the period referred to in Articles 6.7 and 6.8, the
TMB was of the view that it had not taken such a firm position as claimed by Argentina.  Inestablishing whether imports had increased, or not, in a recent period, the TMB had essentially relied
on data relating to the calendar year 1998, which was different from the time-period defined in
Articles 6.7 and 6.8.  The TMB observed, however, that  the best practical way to ascertain that the
products were being imported in increased quantities was to observe whether imports had increased
during the period referred to in Article 6.8.  To sum up, following its finding that total imports had notincreased in the recent period, the TMB could only conclude that these particular products were not
being imported into Argentina in increased quantitie s close to the time when Argentina had requested
consultations and introduced safeguard measures pursuant to Article 6.11.  It had, therefore, not been
demonstrated that products of those categories were being imported into Argentina in such increased
quantities as to cause serious damage to the domestic industry producing like and/or directlycompetitive products.  In light of the explanations above the TMB could not agree with Argentina that
the standards applied by it entailed an increase of Argentina’s obligations under the ATC.  In addition,
these standards corresponded to the ones adopted by the TMB in its previous examinations of
measures referred to it under Article 6.
12. As to the trend over a longer time-period, the TMB did not disagree with Argentina that the
ATC does not define the length of the period of investigation to be taken into account.  This had been
recognized by the TMB during the examination of the measures pursuant to Article 6.11, when it had
stated that "… providing data for a relatively longer time-period … could be useful for having a better
understanding of the trends characterising developments that occurred to the domestic industry.  Such
an approach was particularly helpful in identifying whether certain developments had reflected lasting
phenomena or rather had been of a temporary nature" (G/TMB/R/58, paragraph 14).  Therefore,
looking at the trends over a longer time-period was considered to be useful, provided that the basic
condition (i.e. that the particular product was being imported in such increased quantities in the recent
period) had been met.
13. Regarding the need to consider the increase in imports not only in absolute terms, but "also in
relation to the parameters for determining the damage mentioned in Article 6.3", as claimed by
Argentina, the TMB observed that the conditions defined in Article 6.2 did not allow for theapplication of transitional safeguard measures in cases where imports were declining, even though
their share in the apparent market were increasing.
14. As to whether the TMB was required, or not, to continue the analysis provided for in
Article 6.3 when it had established that imports had not been increasing in the recent period, the TMB
noted that a determination of serious damage caused by increased quantities of imports was a stagedprocess comprised of the following parts:
- verification of whether the product in question was being imported in increased
quantities;
- determination of serious damage caused to the domestic industry;
- establishment of the causal link between the increased quantities of imports and the
serious damage.G/TMB/R/60
Page 6
If any of the three conditions above had not been  met, the safeguard measures could not be found to
be justified in accordance with the provisions of Article 6 and, in such a case, the TMB, therefore,
was not required to make findings and conclusions on all the three parts.  This was in accordance with
the practice established by the TMB.
15. Notwithstanding the above, the TMB had gone beyond a "mere verification that during the
most recent period there was an increase or reduction in imported quantities", as stated by Argentina,
in its examination of several categories.  In the case of categories 218 and 224 the TMB had observed,
inter alia , the parallel evolution of imports and output.  With respect to category 313/317, the TMB
had briefly gone through the variables set out in Article 6.3, against a background where the imports
of the products of category 313/317 had decreased in 1998 as compared to 1997, the period for which
directly comparable data were available, closest to that when Argentina had decided to introduce a
safeguard measure on imports of the products of category 313/317 from Brazil.  The TMB had statedthat overall, in its view, "though some variables, in  particular output, domestic sales, inventories and
domestic prices, reflected unfavourable developments  and could point to a direction of an industry
being seriously damaged, others seemed to indicate the possibility of the existence of structural
problems or of the impact of a recession".  The TMB had concluded, in view of these considerations,
and in particular against the background of decreasing imports, that "it had not been demonstrated thatproducts of category 313/317 were being imported into Argentina at the time Argentina had decided
to introduce a safeguard measure pursuant to Article 6.11 in such increased quantities as to cause
serious damage to the domestic industry producing like and/or directly competitive products".
16. As regards category 613/617/627, after having observed that "there was an increase in the
quantity of total imports during the period for which comparable data had been provided and thistrend had been continuous since 1995", the TMB had examined in details the economic variables set
out in Article 6.3 and, on that basis, "recognized that the industry producing products of
category 613/617/627 had been affected by unfavourable developments, and that the difficulties
experienced did not seem to be over".  In reflecting on the possible explanation of the causes of the
problems identified as affecting the domestic producers of products of category 613/617/627, the
TMB had reached the preliminary conclusion that such difficulties could arise from multiple reasons
having a mutually reinforcing effect, as described in paragraphs 36 to 39 of G/TMB/R/58.  Concerns
had been expressed about the lack of possible evidence and information at the Body’s disposal that
would enable it to reach a definitive conclusion on whether imports were the primary reason for the
industry’s difficulties.  The TMB did not make a fi nal determination as to whether increased imports
of products of category 613/617/627 had caused se rious damage to the domestic industry producing
like and/or directly competitive products.  Notwiths tanding that fact, keeping also in mind that the
transitional safeguard measure had been implemented as from 31 July 1999 and that the TMB had to
make appropriate recommendations to the Members concerned, the Body, whilst not formally
examining the attribution of the serious damage to imports from Brazil made by Argentina pursuant to
Article 6.4, had noted that imports by Argentina of  products of category 613/617/627 originating in
Brazil had not increased "sharply and substantially" during the period referred to in Article 6.8 (on thecontrary, imports from Brazil had actually decreased by 20.8 per cent in 1998 compared to 1997, and
this declining trend seemed to continue during the period January-April 1999).  On that basis the
TMB had recommended that Argentina rescind the safeguard measure introduced against imports of
products of this category originating in Brazil.
17. Argentina referred to the statement the TM B had made in its Preliminary Observations
2
according to which although Argentina had provided data for the period referred to in Article 6.8, it
had been impossible to compare the information with the corresponding previous period (in this case,
May 1997 – April 1998) since this information had not been provided.  Argentina argued that "even
though this does not follow the letter of the Agreement, for each category or group of categories
information is attached in the Annex which enables this insubstantial omission from the originalpresentation to be overcome".  The TMB observed that it had explained in detail, in paragraph 13 of
                                                     
2 See G/TMB/R/58, paragraph 13.G/TMB/R/60
Page 7
G/TMB/R/58, why it considered that reliable indicatio ns could not be obtained but by comparing data
for identical time-periods.
18. The TMB noted that, in the view of Argentina, for categories 313/317 and 613/617/627 where
its examination had been more extensive, the TMB "adds elements into its analysis which refer to a
general economic recession in the Argentine economy".  In particular, with respect to the lattercategory, the TMB, while stating that a number of data presented by Argentina pointed to the
direction of serious damage caused by increased quantities in imports, resorted to using "arguments to
attribute the serious damage to multiple factors, neither proven nor analysed in depth, such as
concepts of recession and international crisis".  In so doing, according to Argentina, the TMB had not
given Argentina the opportunity to challenge this line of argument.  Argentina held the view that in
case of a recession, apparent consumption continued to be the same for both domestic and imported
goods and there was no a priori reason why the negative impact of the economic cycle should affectthe domestic market exclusively or primarily.  Therefore, in each period the actual apparent market
had to be taken into account in order to calculate the impact of imports on it.
19. The TMB observed that in the detailed factua l information provided by Argentina pursuant to
Article 6.7, references were made to the existence of an economic depression.  Also, in its
communication made under Article 8.10 Argentina itself stated that "the current convergence ofmarked penetration of imports in comparison with the apparent market and recession, combined with
global deflation of sectoral prices […impeded] the access of [Argentina’s] exports to the rest of the
world".  Thus, Argentina also recognized that concepts such as recession (affecting also the economic
performance of the Argentine industry) and marked  penetration of imports did co-exist and were
elements to be considered.
20. The TMB recalled that in its detailed examination of category 613/617/627 it had stated, in
essence, that the difficulties facing the Argentinian industry "could arise from multiple reasons having
a mutually reinforcing effect", these possible reasons being:
(a) a potential serious damage caused by increased quantities of imports;
(b) difficulties of a structural nature;(c) possible business decisions taken by the integrated industry, such as shifting the
production to other lines, reduced demand of further processed products, for which
the products of category 613/617/627 were an input;
(d) a general contraction of the economy resulting from a recession.
21. In light of the above, the TMB noted that a general contraction of the economy had been
identified by the TMB as only one of the possible elements that could have affected the domestic
industry.  The TMB also observed that in its communication, made pursuant to Article 8.10,Argentina had not provided arguments that would have refuted the possible role and effect of
difficulties of a structural nature and of possible business decisions.  Noting that Argentina recognized
that the due process had been observed during the TMB’s examination of the matter pursuant to
Article 6.11, the TMB expressed the view that, under Article 6, it was for the Member introducing a
provisional safeguard measure to demonstrate that the serious damage claimed had been caused byincreased quantities in total imports.  In the view  of the TMB, this statement also answered the
contention of Argentina that it had not been given the opportunity to challenge certain lines of
arguments adopted by the TMB.
22. The TMB noted the statement of Argentina that it had adopted a prudent position, and that
developments in total imports "would have fully justified taking action earlier according to[Article 6]".  The TMB understood that this stat ement was meant to justify the recourse to the
provisions of Article 6.11 which requires the existence of "highly unusual and critical circumstances,
where delay would cause damage which would be difficult to repair".  The TMB observed thatG/TMB/R/60
Page 8
Argentina’s contention that the changes in the economic variables had taken place over several years
was difficult to reconcile with the provisions requiring "highly unusual and critical circumstances".  In
this connection, the TMB continued to be of the view that in cases where the provision of Article 6.11
were to be invoked, the expectation was that the elements envisaged in Articles 6.2, 6.3 and 6.4 would
indicate as unambiguously as possible the highly unusual and critical nature of the circumstances.The TMB was of the view that unless such circumstances were met, any action taken under Article 6
should be preceded by consultations between the parties.
23. Argentina stated that it considered that it had co mplied with the provisions of Article 6 of the
ATC and that the elements demonstrating the existence of serious damage caused by an increase in
imports were contained in the information submitted in August 1999.  In particular, Argentina noted
that it had taken recourse to Article 6 action "as sparingly as possible", and that it had also taken into
account "the interests of exporting Members" as referred to in Article 6.6.  The TMB stated that in itsexamination of the measures, as contained in G/TMB/R/58, it had not challenged the compliance by
Argentina with the provisions of Articles 6.1 and 6.6, nor with the procedural requirements of
Article 6, but had examined the determination made by Argentina as to whether particular products
were being imported into its territory in such increas ed quantities as to cause serious damage to its
domestic industry producing like and/or directly competitive products.
24. The TMB noted the statement of Argentina that it considered that the analysis made by the
TMB of the grounds put forward by Argentina to justify the application of a transitional safeguard
measure did not satisfy the provisions of Article 8.5 of the ATC concerning the need to give the
matter thorough consideration.  The TMB observed in this respect that Argentina had notified the
safeguard measures under Article 6.11.  The TMB also observed that Article 8.5 referred to situationswhere there was an "absence of any mutually agreed solution in the bilateral consultations provided
for in this Agreement". Such situations were of  a more general nature than those specifically
envisaged in Article 6.11 where, in cases when the consultations envisaged in that same Article did
not produce agreement, the TMB shall "promptly conduct an examination of the matter, and make
appropriate recommendations to the Members concerned within 30 days".  The TMB was of the view,however, that in its prompt examination of the matter it had given thorough consideration to it, as
witnessed, inter alia , by the time it took to conduct and to conclude the examination and by the
detailed elements contained in the Body’s report of that examination.  Moreover, Argentina seemed to
attribute the perceived lack of thorough examination to the TMB’s decision not to continue the
detailed analysis pursuant to Article 6.3 in those categories where it had found that imports had not
been increasing.  In this regard the TMB referred to the observations made in paragraph 14 above.
25. Having given thorough consideration to the reasons presented by Argentina for its inability to
conform to the TMB's recommendation, the TMB concluded that these reasons did not lead it to
change the conclusions and recommendations arrived at by it during its examination of the measures
pursuant to Article 6.11.  The TMB recommended, therefore, that Argentina reconsider its position
and that the transitional safeguard measures introduced provisionally by Argentina on the imports
from Brazil of products of categories 218, 219 /220, 224, 313/317 and 613 /617/627 be rescinded
forthwith.
Communications received by the TMBUnited States/Turkey:  Introduction of a New Restriction
26. At its 55th meeting (19 May 1999) the TMB had a discussion in relation to the points raised in
a statement made on behalf of a number of WTO Members at the Informal Intersessional Meeting of
the General Council on 26 October 1998.  The TMB recalled that in the view of those Members
"concerns … remain[ed] in respect of measures adopted by an importing Member that [were] not
formally notified to the TMB, although these [were] published under the importing Member's
domestic procedures and [were], thus, widely known".  In the TMB's discussion, it was identified thatthis observation referred to the introduction by the United States of a new restriction on Turkey’sG/TMB/R/60
Page 9
exports of certain textile products, as part of a broader understanding reached between the two
Members.  The TMB decided to seek clarification from both Turkey and the United States as to
whether or not this measure was being applied pursuant  to the Agreement on Textiles and Clothing
and, if this was the case, under which provision of the ATC this restriction had been introduced.3
27. Following interim replies received from the United States in July and September 1999 4, the
latter indicating that the measure concerned Turkey’s exports of cotton and man-made fibre
underwear  (US category 352/652), in a joint co mmunication received on 29 September 1999, Turkey
and the United States stated, inter alia , that "this measure [affecting Turkey's exports of products of
US category 352/652], which was part of a broader agreement contributing to the objective of further
liberalizing trade, was mutually agreed between our [two] governments, was consistent with our rights
under the ATC, and was taken pursuant to a provision of the ATC which does not require notification
to the TMB".  The TMB decided to seek further information from Turkey and the United States on themeasure itself, as well as on the particular provision of the ATC under which the measure had been
agreed.  The TMB also decided, pursuant to Article 8.1, to examine the measure in question at a
further meeting and agreed to proceed with this examination as soon as possible.
5
28. As of 13 December 1999 no further information had been received from Turkey and/or from
the United States.  Against this background, and also since there was no indication that a furthercommunication from the two Members would be forthcoming, the TMB had  to examine the measure
in question, pursuant to Article 8.1, on the basis of the limited information available to it.
29. The TMB recalled that Article 8.1 requires the Body, inter alia , "… to examine all measures
taken under [the ATC] and their conformity therewith…"  In starting its examination the TMB also
recalled that in the joint communication referred to in paragraph 27 above, Turkey and the United
States had indicated that the measure "was taken pursuant to a provision of the ATC which does not
require notification to the TMB".  In view of the fa ct that no information had been provided as to the
particular provision of the ATC under which the measure had been agreed, the Body undertook to
examine briefly all the provisions of the ATC with a view to identifying under which provision such a
measure could have been agreed without requiring its notification to the TMB.
30. The TMB observed in this respect that Articles 1, 7, 8 and 9 do not provide the possibility of
introducing restraint measures on imports from other WTO Members.  Consequently, the measure in
question could not have been introduced in accordance with the provisions of these Articles.
Furthermore, restrictions maintained under Article 2 had to be notified, in detail, within 60 days
following the entry into force of the WTO Agreement.  A measure that had not been notified at all,
obviously could not fall under the provisions of Article 2.  Article 2.4 for its part states, inter alia , that
"[n]o new restrictions in terms of products or Members shall be introduced except under theprovisions of this Agreement or relevant GATT 1994 provisions", but no provision under Article 2
provides the possibility of introducing new restrictions.  The TMB noted, therefore, that the particular
measure subject to its examination could not have been taken pursuant to Article 2.  Since restrictions
other than those covered by the provisions of Article 2 also had to be notified within 60 days
following the date of entry into force of the WTO Agreement, the TMB observed that the restraintcould not have been agreed between Turkey and the United States under the provisions of Article 3.1
either.  Article 3.3 does not exclude the possibility, inter alia , of introducing new restrictions on
textile and clothing products.  However, it contains not only the requirement of "double" notification
(i.e. to the appropriate WTO body and also to the TMB, for its information), but also limits the
possibility of applying, inter alia , new restrictions to those cases where the measures were taken
under any GATT 1994 provision.  As to the restraint agreed between Turkey and the United States,
the TMB noted that, according to the joint communication submitted by the two Members concerned,
this measure had not been introduced under a GATT 1994 provision, but that it had been taken
pursuant to a provision of the ATC.  On this basis the TMB observed that the new restraint in question
                                                     
3 See G/TMB/R/54, paragraph 4.
4 See G/TMB/R/57, paragraph 8
5 See G/TMB/R/58, paragraph 47.G/TMB/R/60
Page 10
could not have been introduced pursuant to the provisions of Article 3.  Article 6 specifically provides
in its paragraph 1 the possibility of introducing "transitional safeguard" which, as stipulated in other
provisions of the same Article, takes the form of restraint measures.  However, the restraint measure
or measures taken under this Article have to be notified to the TMB, whether agreed or applied
unilaterally, as clearly set out in Articles 6.9, 6.10 and 6.11, so as to enable the TMB to examine themeasure(s) in question, as required by the provisi ons of Article 6.  Therefore, the measure agreed
between Turkey and the United States could not have been taken under Article 6 since that Article
requires notification and since both Members had stated to the TMB that the measure had been taken
"pursuant to a provision of the ATC which does not require notification to the TMB".
6  With respect
to Article 5, the TMB observed that it provides, inter alia , the possibility of taking certain actions,
after consultations had been held between the Members concerned with a view to arriving at a
mutually satisfactory solution between them.  Article 5.4 stipulates,  inter alia , that "… where there is
evidence of the involvement of territories of the Members through which the goods have been
transshipped, such action may include the introduction of restraints with respect to such Members.
Article 5.4 also states that "[t]he Members concer ned may agree on other remedies in consultation".
However, any action taken pursuant to Article 5.4 has to be notified to the TMB.  In case of evidence
that the ATC is being circumvented by false declaration concerning fibre content, quantities,description or classification of merchandise, Article 5.6 allows the Members concerned to consult
with a view to seeking a mutually satisfactory solution and the same Article does not require the
notification of such mutually agreed solutions to the TMB.  At the same time, the TMB observed that
Article 5 refers to situations of "circumventi on by transshipment, re-routing, false declaration
concerning country or place of origin, and falsification of official documents", and that neither Turkeynor the United States had invoked or reported such a situation. Without prejudice as to whether in
particular circumstances a new restriction can be introduced, or not, pursuant to the provisions of
Article 5, the TMB, on the basis of the information available to it, concluded that the provision of the
ATC referred to by both Turkey and the United States could not be Article 5.
31. Finally, turning to Article 4, the TMB observed that Article 4.1 deals with the administration
of "restrictions referred to in Article 2, and those applied under Article 6".  Article 4.2 states that
"Members agree that the introduction of changes, such as changes in practices, rules, procedures and
categorization of textile and clothing products including those changes relating to the Harmonized
System, in the implementation or administration of those restrictions notified or applied under this
Agreement should not:  upset the balance of rights and obligations between Members concerned
under this Agreement;  adversely affect the access available to a Member;  impede the full utilization
of such access;  or disrupt trade under this Agreement."  Article 4.4 provides,  inter alia , the
possibility to reach a "mutually acceptable solution regarding appropriate and equitable adjustment"
between Members when necessary changes, in the sense of Article 4.2, are introduced in the
implementation or administration of existing restrictions.  The TMB noted that, according to
Article 4.4, such mutually acceptable solutions did not have to be notified to the TMB.  The TMB
recalled its findings that the new restriction could not have been agreed pursuant to the provisions ofArticles 2 and 6. It was also observed that Article 4.4 does not provide explicit guidance regarding the
scope of the adjustment that can be agreed between the Members concerned in the framework of the
mutually acceptable solution.  A reading according to which the introduction of a new restriction, in
the sense of Article 2.4, can be agreed upon pursuant to Article 4.4 as an adjustment to balance
possible improvements in the implementation or administration of restrictions maintained pursuant toArticle 2 was, however, in the view of the TMB not consistent with the intention of the drafters of the
ATC, since Article 4 relates to the implementation or administration of the restrictions referred to in
Article  2, or applied under Article 6.  Also, the construction of Article 4 and its language seem to
suggest that when changes, in the sense of Article 4.2 are introduced, the appropriate and equitable
                                                     
6 The TMB was aware, however, that a restraint concerning US imports of cotton and man-made fibre
underwear (category 352/652) for the period 27 March 1995 – 26 March 1998 had been agreed upon between
Turkey and the United States and had been notified to it pursuant to Article 6.9.  This transitional measure hadexpired on 26 March 1998.  The new restriction had been introduced somewhat later.  The fact that imports ofthe same products had already been subject to a transitional safeguard measure pursuant Article 6.9, made iteven more important to examine the conformity of the new restriction with the provisions of the ATC.G/TMB/R/60
Page 11
adjustment referred to in Article 4.4 can only involve and affect the restrictions that have already been
in place and notified pursuant to Article 2 or Article 6.
32. The TMB regretted that, despite its repeated requests and given that almost seven months had
lapsed since it had first requested information on the measure, the parties had not provided the
information the Body had sought from them on the measure itself, as well as on the particularprovision of the ATC under which it had been agreed.  The TMB recalled in this regard that full
cooperation from the Members is indispensable for facilitating the Body’s task of examining, in
accordance with Article 8.1, the measures taken under the Agreement and their conformity therewith
and that failure to provide information by Members hampers the TMB's ability to discharge its
functions in accordance with the requirements of the ATC.
33. In concluding its examination of the measure mutually agreed between Turkey and the
United States, the TMB recalled that Article 2.4 of the ATC states that "[n]o new restrictions in termsof products or Members shall be introduced except under the provisions of this Agreement or relevant
GATT 1994 provisions".  After having considered the new measure against the different provisions of
the ATC on the basis of the information available to it (as detailed in paragraphs 30 and 31 above),
the TMB concluded that the measure agreed upon by Turkey and the United States, affecting imports
by the United States of category 352/652 products, had not been demonstrated to be in conformitywith the provisions of the ATC.
Pakistan/Argentina
34. The TMB took note of a communication by Pakistan informing the TMB that the
consultations held between Pakistan and Argentina on the transitional safeguard measures introduced
by Argentina on imports of woven fabrics of cotton and cotton mixtures from Pakistan had notproduced agreement.  While stating that under normal circumstances the review of the measures
should take place at the TMB's December 1999 meeting, Pakistan, due to certain difficulties
concerning its delegation's availability at that meeting, requested that this item be placed on the
agenda of the TMB's meeting scheduled for 17-19 January 2000.
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