WORLD TRADE
ORGANIZATIONG/C/W/387
17 June 2002
(02-3339)
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 the United States1
The following communication, dated 13 June 2002, has been received from the Permanent
Mission of the United States of America.
                                                     
1 The statement by the United States at the meeting of the Council for Trade in Goods on 13 June 2002
was based on this communication.G/C/W/387
Page 2
Examination of Proposals Affecting Agreement on Textiles and Clothing Referred to
the Council for Trade in Goods by  the Doha Ministerial Conference
June 13, 2002
1. The United States appreciates the opportunity to contribute to the discussion on the proposals
affecting the Agreement on Textiles and Clothing (ATC) that have been referred to the Council for
Trade in Goods by the Doha Ministerial Decision on Implementation-Related Issues and Concerns.
2. We thank the Chairman for his efforts to organize the work before us so as to ensure that our
deliberations are conducted in an open and transparent manner, and a manner which permitsmaximum participation by all interested Members, rather than limit the discussion to major textile
producers and consumers.  We intend to fully participate in these discussions, so that the Chairman
may ensure that the required examination of ATC issues can be completed and concluded on or before
the Ministerial deadline.
3. The entry into force of the ATC was a watershed event for production and trade in textiles
and apparel, as it established an irreversible schedule for the phased elimination of the quota regime
that regulates a significant portion of world trade in the sector.  Equally important, it established
binding commitments requiring all WTO Member c ountries to open their own markets to increased
competition.  The ATC is a very important agreement for the United States, and the United Statestakes very seriously its commitment to ensure that the provisions of the ATC, in its entirety, are fully
and faithfully implemented.
4. Industries around the world, in both “restraini ng” and “restrained” Members, including small
suppliers and least developed countries, are beginning to anticipate the challenges of increasedcompetition in preparation for the final elimination of ATC quotas on January 1, 2005.  These textile
implementation proposals would accelerate the increase in competition in export markets and in home
markets in advance of that date, and therefore, it is vitally important that all Members carefully focus
on these proposals and their impact, and provide their views to the CTG.
5. The two proposals in tirets 4.4 and 4.5 of the Decision have, of course, been discussed at
some length.  Indeed, there is a record that some elements of these proposals have been discussed atleast since 1990, during the actual negotiations that led to the ATC.  To a significant degree, these
tiret proposals actually represent exporting Member and group proposals that were considered and
dismissed in the ATC negotiations.  If adopted, these proposals would result in significant changes in
substantive economic provisions of the ATC itself that would subvert the carefully negotiated balance
of the Agreement.
6. Furthermore, it is of concern to us that among the Members who have been most vocal about
these tiret proposals are those that do not provide market access to developed or developing country
exporters in this sector.
7. We hope to use this submission to respond to some of the comments made by our colleagues
in the exporting country community during the course of this debate on two other points, in order to
inform and provide context for the discussion.G/C/W/387
Page 3
8. In this submission, we wish to respond to the point that has been made repeatedly that the
implementation of the ATC has “failed to come up to developing countries’ legitimate expectations.2”
The second point to which we want to respond in this submission is the point, again made frequently,
that at least one major restraining Member has “hindered rather than ‘allowed for’ the process of
autonomous adjustment in [its] market.3”
9. As an initial note, we wish to thank the Secretariat for the data that has been supplied in
response to our request and the requests made by others.   This is very useful and we look forward to
receiving additional material that has been requested for these discussions, and will provide further
comments once it has been received and analyzed.
10. The argument that the ATC has failed to live up to the expectations of developing and
exporting country Members has perplexed us since the beginning because it is entirely unsupported by
facts.
11. Even with some significant gaps in exporting country reporting, the Secretariat’s data show
substantial growth in world trade in this sector:
- Textile and clothing imports into the U.S., the EU (15) and Canada increased
48 percent from 1994 to the year 2000.
- Imports into the U.S. during that time increased by 72 percent while imports to
Canada and the EU increased by 44 percent and 27 percent, respectively.
- WTO Members’ exports of textiles and clothing globally increased 41 percent from
1994 to the year 2000, while at the same time U.S. imports from all WTO Member
countries increased 72 percent.
- Also of note is the fact that this increased competition has lowered costs, as has been
noted by the Secretariat.  Indeed, this trend is supported by information from the U.S.
market, where the average unit value of apparel imports has been declining since
1998.
12. We would also like to call to the CTG’s attention some of our own data analysis, with a focus
on apparel, as that has been cited as of critical importance for developing countries.  These data show:
- In current dollars,  U.S. imports of apparel increased 75 percent in value from1994 to
2001, or from $38.7 billion to $67.3 billion.  The growth rate for apparel imports
exceeds the growth rates of all U.S. goods imports of 71.6 percent between 1994 and2001, notwithstanding the existence of the quota regime.  In volume terms, imports of
apparel into the United States have increased over 90 percent between 1994 and
2001.
- Further, despite some rationalization of apparel production and trade expansion
between Mexico and the United States following enactment of  NAFTA and the
Caribbean Basin trade preferences, countries other than Mexico and those of the CBI
accounted for over 61.3 percent of the U.S. apparel import increase between 1994 and
2001.
                                                     
2 G/C/W/368, paragraph 5.
3 G/C/W368, paragraph 8.G/C/W/387
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13. ITCB countries, in particular, have benefitted from the growth in trade in textiles and apparel
vis-a-vis the U.S. market.  According to data on the ITCB web site:
- The value of U.S. imports of textiles and apparel from ITCB members since the
inception of the ATC grew faster than total imports.  Imports from ITCB membersincreased 91 percent from 1994 to 2000, while total imports of textiles and apparel
increased 79 percent during the same period. The quantity of U.S. imports from ITCB
members, measured in square meter equivalents, grew by 107 percent from 1994 to
2000 while textile and apparel imports from the world grew by 90 percent during the
same period.
- The value of U.S. imports of textiles and apparel between 1994 and 2000 increased
by $31.7 billion.  The value of U.S. imports from restrained countries and from ITCB
members increased by $24.5 billion and $22.2 billion, respectively, while the value of
CBI and NAFTA imports increased by $14.8 billion.
- Even though the percent increase in the value of U.S. textile and apparel imports from
the CBI and NAFTA countries was larger between 1994 and 2000 – which was to be
expected since their 1994 level was relatively low – the dollar value increase from the
ITCB countries, and all restrained sources, was nearly 50 percent larger, and nearly
65 percent larger, respectively, than the dollar value increase from the CBI and
NAFTA countries.
- Finally, the share of U.S. imports of textiles and apparel from ITCB members, on a
value basis, increased from 61 percent in 1994 to 65 percent in 2000.
14. The ATC has also extended similarly impressive benefits to small suppliers, least developed
countries, and cotton-producing textile exporting countries.  According to U.S. statistics, under the
ATC (1994 - 2001):
- U.S. textile and apparel imports from our 22 “small supplier” partners increased
63 percent in volume terms and 64 percent in value terms,
- U.S. textile and apparel imports from our only least developed country trading partner
under ATC restraints, increased by 140 percent in volume and 137 percent in value (it
is the 4
th largest supplier of apparel to the U.S. market, accounting for $2 billion of
such imports),
- U.S. textile and apparel imports from cotton-producing exporting countries increased
240 percent in volume and 204 percent in value.
15. We would like to make the following observations about the data provided by the Secretariat
in response to a request from Hong Kong, China.  These data are helpful, as they clearly demonstrate
that ATC benefits have accrued to restrained suppliers:
- Between 1994 and 2000, the value of total textile and apparel imports into the U.S.,
EU, and Canada increased by $51.9 billion.  Although the percent increase in the
value of non-restrained textile and apparel imports into the U.S., EU, and Canada was
greater than the percent increase in the value of imports of restrained imports, aswould be expected, the increase in the dollar value of restrained imports, at
$26.7 billion, was actually greater than the increase in value of unrestrained imports,
at $25.2 billion.G/C/W/387
Page 5
- This difference in dollar value increase is even more apparent in examining U.S.
textile and apparel import data.  The value of U.S. textile and apparel imports
between 1994 and 2000 increased by $34.8 billion.  The value of U.S. non-restrained
imports increased by $15.4 billion, while the value of U.S. restrained textile and
apparel imports increased by $19.4 billion.
- U.S. imports under restraint increased 52 percent from 1994 to 2000, compared to
45 percent in Canada and 23 percent in the EU.
16. Expectations aside, therefore, there can be no doubt about the results of the implementation of
the ATC.  The ATC has led to tremendous benefits, real and tangible, for exporting Members.
17. We have reviewed data that demonstrate that the ATC has allowed imports to restrained
markets to grow extremely rapidly and attain significant volumes.  We are not sure which major
restraining Member has acted to hinder adjustment in the view of the ITCB.  In the U.S. market, the
increase in imports has led to intense structural adjustment for the textile and apparel sectors
throughout the transition period, as anticipated by the Agreement.  The fact that adjustment isdeepening is reflected in data for the year 2001, which was an extremely difficult year for U.S. textile
manufacturers (indeed, its worst year in recent times).
18. Structural adjustment in the U.S. textile and apparel sector is strikingly evident in data on
employment.  Textile employment in 2001, at 583,100 workers, was 19 percent below the 1994 level.The textile employment decline between 2000 and 2001 was especially steep, with a job loss of 9
percent (54,300 workers).  Apparel employment has fallen even more precipitously.  Apparel
employment in 2001, at 419,400, was 51 percent below the 1994 level and 13 percent below the 2000
level.  Textile and apparel industry employment declined 37 percent between 1994 and 2001, for a
total job loss of 581,500, and by 10 percent between 2000 and 2001,  for a total job loss of 117,900.
19. Adjustment is also clearly reflected in poor industry conditions, shown in virtually all of the
significant economic indicators:
- The industrial production index for textiles declined 22 percent between 1994 and
2001, and by 12 percent between 2000 and 2001.  The apparel index fell to 93.3 in
2001 (1992 = 100), 8 percent below the 2000 level, and 12 percent below the 1994level.
- Corresponding declines are seen in capacity utilization.  Textile capacity utilization
fell to 74.2 percent in 2001, 17 percentage points below the 1994 level and
8 percentage points below the 2000 level.  Apparel capacity utilization fell to69.2 percent in 2001, sharply lower than any level previously recorded and a sharp
reduction from the 83.6 percent recorded in 1994.
- Textile shipments were down by 11 percent between 1997 and 2001, from $90 billion
to $80 billion; shipments declined 7 percent between 2000 and 2001.  At the sametime, inventories in December 2001 fell by 11 percent compared to the December
2000 level.  Apparel shipments fell by 8 percent between 1997 and 2001, from
$68 billion to $62.7 billion, and by 4 percent between 2000 and 2001.  Apparel
inventories in December 2001 were down 15 percent compared to the December
2000 level
4.
                                                     
4 Shipment and inventory data collected by the U.S. Bureau of the Census, beginning in 1997, are
based on the new North American Industrial Classificatio n System (NAICS), and are not directly comparable to
prior years data.G/C/W/387
Page 6
- Apparel production, which had been increasing, on a value-added basis, just prior to
the entry into force of the WTO, fell by 20 percent and apparel productivity, which
had been rising prior to the WTO showed even higher gains after 1995.
- Corporate textile sales declined for the fifth consecutive year in 2001, dropping
5 percent to $55.1 million.
- After suffering the first annual loss for the industry in 2000, the U.S. textile industry
returned to marginal profitability.  However, profits were a modest $280 million in
2001 which, excluding last year’s loss, were the lowest since the early 1960s.
- Over 100 textile plants closed from 1997 to 2000, and a further 116 plants closed in
2001 alone due to pressure from imports, or because the operations were moved to a
foreign country.  Plant closings occurred in all parts of the country, but were
concentrated in the south.  Data is not collected on apparel plant closures, but based
on press reports, it is clear that there have been a significant number.
- Finally, these conditions have persisted despite a robust economy in the late 1990s
and into 2000.
20. So, in fact, there is abundant evidence that the industries in the United States have undergone
continuous industrial adjustment as a result of increased competition, which itself is a result of a
policy of the United States Government to fully and faithfully implement its commitments under the
ATC.  Again, the ITCB assertion does not withstand scrutiny.
21. Continuous autonomous industrial adjustment and increased competition are, as has been
pointed out, important objectives, but as the ITCB has failed to note, these are objectives which are tobe promoted by all Members.  There is a very real question of whether our trading partners could
make the same statement, in respect of continuo us industrial adjustment in their own industries.
Throughout the transition period, we have seen numerous instances where our exporting country
trading partners have raised new barriers to market access.
22. Where appropriate, we have exercised our WTO rights to address these measures.  We
initiated WTO dispute settlement proceedings against one Member’s illegal import prohibitions on
consumer goods (primarily textiles), and prevailed in that case through the Appellate Body.  In
addition, the United States pursued and reached an agreement requiring that Member to establish and
notify long-overdue WTO tariff bindings on a wide range of textile and apparel products of
importance to U.S. exporters.  Further, we participated in a WTO dispute settlement case against
discriminatory import financing requirements, and have initiated cases where we believe customsvaluation violations exist.
23. Just in the last year, we have witnessed new protective measures such as stratospheric specific
duties (which appear to violate WTO bindings), subsidy schemes, use of minimum import reference,
implementation of excessively burdensome standards testing, application of additional import taxesand surcharges, and import bans, all in response to actual or anticipated increases in competition.
24. We will have further comments and observations to make on this issue after we have had a
chance to examine the additional material that the Secretariat will supply.  However, actions by
exporting countries to raise barriers to their own markets undermine implementation of the ATC forall countries, including the least developed, and delay and impair the process of autonomous industrial
adjustment in the global context.G/C/W/387
Page 7
25. The United States has carefully reflected on the matter which is the subject of the tiret
proposals for a number of years.  We continue to come to the same conclusion: we should maintain
the ATC as it was negotiated and as it was adopted by all Members.  The ATC is a carefully balanced
agreement.  It should not be re-opened by the tiret proposals in its final years for a number of reasons,
including the following:
- The proposals lack justification based on the negotiating history of the ATC and the
plain reading of the text.
- The proposals have been mis-characterized from the beginning as “implementation”
concerns.  Instead, the tiret proposals would, if adopted, result in significant changes
in substantive economic provisions of the ATC.
- The proposals would subvert the carefully negotiated balance of the ATC.- The economic arguments that have been advanced in support of the tiret proposals do
not withstand scrutiny.
- The proposals would disrupt the schedule that industries around the world are
anticipating as they focus their efforts on completing their adjustment process for the
final implementation of the ATC.
- The cost to the United States of these two proposals in terms of additional access is
extremely high, indeed each separate prop osal would be worth over $1 billion by
itself.
26. We all recognize that the quota regime under the ATC has provided guaranteed market share
for suppliers who otherwise might have difficulties in competing with larger, more established
producers.  As a result, the ATC provides preferential treatment for specific Members.  As somewhat
of a side issue, and clearly an issue that ITCB members need to resolve among themselves, we
wonder if there is not a fundamental inconsiste ncy between the economic elements of the tiret
proposals, to the extent that liberalizing for all members could erode the preferences for specific
members that were already negotiated in the ATC.  According to our own analysis, there are real
questions about who would have less access as a result of these proposals, which could particularlydisadvantage our partners in the Western Hemisphere and in Africa.
27. The change that is ahead for all Members upon expiration of the ATC is unprecedented in
scope.  In light of the impending changes, and given the importance of this vital sector, all Members
should reaffirm their commitment to the ATC and move  forward to meet the challenges of increased
competition and adjustment.
__________