RESTRICTED  WORLD TRADE  
ORGANIZATION  G/TMB/R/110 
12 July 2004 
 
 (04-2994) 
Textiles Monitoring Body Original:   English 
 
  
REPORT OF THE ONE HUNDRED AND ELEVENTH MEETING 
 
 
1. The Textiles Monitoring Body held its one hundred and eleventh meeting on 21 and 
22 June 2004. 
2. Mr. Mirko Zambelli (Switzerland) was appoin ted member to replace Ms. Sarah Huber 
(Switzerland).  Mr. Zambelli appointed Ms. Tatyan a Petrova (Bulgaria) as his first alternate and 
Mr. Şahin Yaman (Turkey) as his second alternate.  Mr. Keiya Iida (Japan) was appointed member to 
replace Mr. Hisashi Yoshikawa (Japan). 
3. Present at this meeting were the following memb ers and alternates:  Messrs Crippa;  Dalela; 
Iida; Lee/Kim; Samosir/Ekawat; Seppey/Wen tzel; Sorensen; Tagliani; Zambelli/Yaman; 
Ms. Zhang/Ms. Lu. 
 
4. The TMB adopted the report of its one hundred and tenth meeting (G/TMB/R/109). 
Communication received by the TMB 
 
5. The TMB reverted, pursuant to Article 2.21, to  its examination of a communication received 
from a number of its members, pursuant to paragraph 3 of the TMB’ s working procedures.
1  This 
communication requested that the TMB review, pursuant to Article 2.21, the “[i]ntroduction by the 
European Union of quota restrictions in the markets of ten newly acceding states, Members of the 
WTO.”  Copies of EC Council Regulations No. 260/2004 and 487/2004 were attached to the communication.  In order for the TMB to discharge its functions pursuant to Article 2.21 and also 
with a view to providing a useful contribution in the context of the preparation of the comprehensive 
report to be submitted to the Council for Trade in Go ods, pursuant to Article 8.11 of the Agreement 
on Textiles and Clothing (ATC), the TMB decided to  request the European Communities to provide, 
in time for consideration at its subsequent mee ting, any related notification and, as appropriate, 
information in respect of the restrictions intr oduced by the European Communities on 1 May 2004.
2 
 
6. In its response3, the European Communities stated the following: 
"Referring to your letter [...] concerning the deliberations of the TMB during its meeting on 
17-18 May about EU enlargement as of 1 May, I would like to inform you of the following: 
As from 1 May 2004, the European Union includes ten new member States. The Act of 
Accession establishes in Article 6 (7) that the new member States must apply the common 
trade policy concerning textiles and that the al ready existing quantitative restrictions applied 
by the Community on imports of textile and cl othing products are to be adjusted to take 
                                                      
1 Paragraph 3 of the working procedures provide, inter alia , that “[i]t shall be open to any WTO 
Member and to any member of the TMB to suggest items for inclusion in the proposed agenda up to, and not including, the day on which the convening notice is to be issued.” 
2 See G/TMB/R/109, paragraph 6. 
3 See G/TMB/N/477.  G/TMB/R/110 
Page 2  
 
 account of the accession of the new member States to the Community. These quantitative 
restrictions, already notified to the TMB, appli cable to imports of certain textile products 
from third countries into the enlarged Community have consequently been adjusted so as to 
cover equally imports into the ten new memb er States, and the Council Regulation (EEC) 
No. 3030/93 on common rules for imports of certa in textile products from third countries has 
been amended accordingly. The new Council Regulation amending Council Regulation (EC) 
No. 3030/93 has been published under Council Re gulation No. 487/04 in the Official Journal 
of the European Union, No. L79 on 17 March 2004. […]
4  
It is pointed out that the Community does not consider this extension of the geographical 
application of existing restrictions to constitute new restrictions in the sense of Article 2.4 of 
the ATC.  This extension was necessary to rea lize the enlargement process whilst ensuring the 
maintenance and unhampered functioning of the expanded internal EU ma rket in the interest 
of all economic operators, including exporters.  The option of maintaining the import regime 
into the new member States unchanged but without allowing free ci rculation within the 
Community was not considered to be in the ge neral interest of neither exporters, Community 
operators nor consumers. On ove rall terms, the general incidenc e of enlargement has to be 
considered in the longer term and can as such not be considered more restrictive than the 
situation prior to 1 May. The Community's notification to the TMB of 17 March about 
elimination of restrictions on schedule as foreseen by the ATC by the end of 2004 remains 
valid also for the enlarged Community of 25 members. 
When adjusting and increasing the quantities from EU 15 to EU 25 the European 
Communities have used a methodology which takes into account the traditional imports into 
the new member States, using a formula consisti ng of the average of the last three years’ 
imports into the ten new member States or iginating in third countries, adjusted pro rata 
temporis ." 
7. In beginning its consideration of this matter, the TMB noted that the issue in question had 
already been raised in other WTO bodies and, to the best of TMB's knowledge, no substantive information had been provided there by the European Communities.  It was noted, furthermore, that 
the response of the European Communities does no t refer to any other relevant notification or 
communication addressed to other WTO bodies on th e same subject-matter and also that the TMB 
was unaware of any such possible notification or communication. 
8. Since the matter had been referre d to it with the request that the TMB review, pursuant to 
Article 2.21, the "[i]ntroduction by  the European Union of quota restrictions in the markets of ten 
newly acceding states, Members of the WTO", the TMB recalled that Article 2.21 states the 
following: "The TMB shall keep under review the im plementation of this Article.  It shall, at the 
request of any Member, review any particular matt er with reference to the implementation of the 
provisions of this Article.  It sh all make appropriate reco mmendations or findings within 30 days to 
the Member or Members concerned, after inviting th e participation of such Members."  It was noted 
that the review was to be conducted not "at the request of any [WTO] Member" and that, therefore, 
"inviting the participation of such Members" wa s not warranted.  Thus the review had to be 
essentially governed by the provisions of the first sentence of Article 2.21. 
9. Recalling that it had requested the European Comm unities to provide "any related notification 
and, as appropriate, information" in respect of th e measures introduced, the TMB observed that the 
response received from the EC contained informa tion to the Body.  Also, in the response, the 
European Communities itself referred to it as a communication.  In the view of the TMB, this 
communication did not constitute, in a formal sense, a notification made with specific reference to an 
                                                     
 
4 Council Regulation (EC) No. 487/04 was attached to the EC's response.  G/TMB/R/110 
 Page 3 
 
 
 applicable provision of the ATC.  It could be observed, however, that the communication spoke of 
"the extension of the geographical application of existing restrictions" that "[had been] already 
notified to the TMB" and that the ATC was th e only multilateral trade agreement included in 
Annex 1A of the WTO Agreement that was specific ally mentioned in the EC's communication.  It 
could be established, therefore, that the European Communities consid ered that the restrictions in 
question were falling under the prov isions of the ATC under which th ey had been previously notified 
by the EC and that the European Communities did not invoke any other provision of the WTO 
Agreement, including GATT 1994, as a possible justification for the restrictions. 
10. Recalling the mandate entrusted to it in Article 2. 21 and also that, pursuant to Article 8.1, the 
Body has to examine all measures taken under the ATC and their conformity therewith, the TMB proceeded to the examination one by one of the main arguments and explanations provided by the 
European Communities. 
11. The TMB first observed that the European Communities considered, inter alia , that the action 
taken by it on 1 May 2004 did not constitute the in troduction of new restric tions in the sense of 
Article 2.4 of the ATC, but that this was merely  an extension of the ge ographical application of 
existing restrictions.  These existing restrictions had already been notified to the TMB and had been 
adjusted as from 1 May 2004  to take into account equally imports of the ten new member States.  The 
TMB observed in this regard that the Europe an Communities had notified to the TMB "existing 
restrictions" pursuant to the provisions of Article 2.1. 
12. The TMB noted that, in essence,  the European Communities used  the argument that at the 
level of the EC the totality of the restrictions applied had affected the same WTO Members and the 
same products as notified earlier.  On this basi s the European Communities held the view that the 
"extension of the geographical application of ex isting restrictions" could not be considered to 
constitute new restrictions in the se nse of Article 2.4.  It was noted that, on the one hand, the language 
of the ATC does not contain an explicit prohibition of implementing changes in the geographical 
application of the restrictions previously notified and that the EC might have assumed that this lack of 
explicit prohibition could be claimed as  a legal justification for the measures in question.  It was also 
noted that, on the other hand, the lack of such an  explicit prohibition does not necessarily confer the 
right of implementing any action that is not specifically prohibited.  The ATC (like most of the 
multilateral trade agreements) lays down the basic rules and disciplines to be applied, but does not 
address particular situations, such as the impact of the enlargement of the European Communities.  
The TMB noted in this regard that the restrictions in question as notified previously had been applied 
by the European Communities composed of 15 member States, while the ten new member States had not previously maintained any restrictions under Article
 2.1.  Seen in this light, there was no doubt 
that access to the markets of the ten new member States has become subject to restrictions as from 1 May 2004, resulting from the application of the restrictions notified by the European Communities 
in 1995 which had encompassed, at this point in time, 15 and not 25 Member States.  Therefore, for the ten new member States, also Members of the WTO prior to the enlargement of the European 
Communities and having already undertaken well defined obligations vis-à-vis  other WTO Members, 
inter alia , under the ATC, the measure taken by the EC amounted to the introduction of "new 
restrictions in terms of products or Members ", as referred to in Article 2.4. 
13. Keeping also in mind the above, the TMB returned  to the argument of the EC that, at the level 
of the European Communities, the action taken could not be considered to constitute new restrictions 
in the sense of Article 2.4.  The TMB recalled that Article 2.4 states, inter alia , that “[t]he restrictions 
notified under paragraph 1 [of Article 2] shall be deemed  to constitute the totali ty of such restrictions 
applied by the respective Members on the day before  the entry into force of the WTO Agreement.  No 
new restrictions in terms of products or Members shall be introduced except under the provisions of 
this Agreement or relevant GATT 1994 provisions.”  As regards the implementation of this provision, 
the TMB observed that, in its report, the Panel on Turkey – Restrictions on Imports of Textile and G/TMB/R/110 
Page 4  
 
 Clothing Products had, inter alia , examined the question of how to interpret the prohibition of new 
restrictions as contained in Article 2.4.  The Panel had stated in this regard  that: "[t]he prohibition on 
'new restrictions' must be interpreted taking into account the preceding sentence:  'The restrictions 
notified under paragraph 1 shall be deemed to constitute the totality of such restrictions  applied by the 
respective Members on the day before the entry into force of the WTO Agreement'.  The ordinary 
meaning of the words indicates that WTO Members in tended that as of 1 January 1995, the incidence 
of restrictions under the ATC could only be reduced.  We are of the view that any legal fiction 
whereby an existing restriction could simply be incr eased and not constitute a 'new restriction', would 
defeat the clear purpose of the ATC which is to re duce the scope of such restrictions, starting from 
1 January 1995 (but for the exceptional situations re ferred to in Article 2.4 of the ATC).  Thus, we 
consider that, setting aside the possibility of excepti ons and justifications ment ioned in Article 2.4 of 
the ATC, any increase of an ATC compatible quantit ative restriction notified under Article 2.1 of the 
ATC, constitutes a 'new' restriction."
5 
14. The TMB was aware that the consideration of the Panel mentioned above could not be 
applied, mutatis mutandis , in the present case.  It noted, however, that the Panel's consideration was 
made in response to Turkey's claim, according to which the restrictions applied by it were not new, 
since the European Communities had similar restric tions in place when Turkey and the European 
Communities formed their customs union.6  Therefore, without prejudice to other possible legal 
considerations regarding similar ities or differences betw een the case examined by the Panel and the 
one reviewed the TMB, this aspect of the Panel's co nsideration appeared to be  relevant to the present 
review in the sense that the Panel provided a helpful contribution to a better and fuller understanding of Member's rights and obligations arising from the provisions of Article 2.4. 
15. In light of the above, and recalling that, acco rding to Article 2.4 "[n]o new restrictions in 
terms of products or Members shall be introduced  except under the provisions of this Agreement or 
relevant GATT 1994 provisions [footnote omitted]" the TMB, while noting that, in the view of the 
EC, the European Communities had acted in confor mity with its respectiv e obligations under the 
ATC, was of the view that the extension of the ge ographical application of the existing restrictions 
constituted new restrictions in the sense of Article 2.4.  Accordingly, these new restrictions could not 
find a justification under the ATC. 
16. The TMB observed, furthermore, that the European Communities had also notified to the 
TMB in the past restrictions purs uant to Article 3.1 of the ATC, and provided for the progressive 
phase out of such restrictions.  According to th e information provided by the European Communities 
in response to the TMB, the geographical coverage of these restrictions had also been extended to include the ten new member States.  The Body observed in this regard that Article 3 does not provide 
for the possibility of introducing new restrictions or  changes in existing restrictions on the products 
covered by the ATC, except under relevant GATT 1994 provisions.  According to Article 3.3, 
notifications submitted to any other WTO bodies with respect to such actions had to be provided to the TMB, for its information, within 60 days of their coming into effect.  No such notification had been received by the TMB from the European Comm unities.  The Body was of  the view, therefore, 
that these restrictions as extended to cover the te n new member States of the European Communities 
could not find justification under the ATC. 
17. The TMB also recalled that, as indicated in the response received from the European 
Communities, according to the Act of Accession "the ten new member States must apply the [EC's] common trade policy concerning textiles."  This implied that the new member States had to take over the trade regime of the European Communities in this area.  Such a takeover co uld raise, in the view 
                                                     
 
5 See WT/DS34/R, paragraph 9.71. 
6 Ibid., paragraph 9.67.  G/TMB/R/110 
 Page 5 
 
 
 of the TMB, further related issues in the context of the implementation of the ATC, such as those 
related to the implementation of integr ation programmes under the Agreement. 
18. The European Communities also stated that "[ t]his extension was necessary to realize the 
enlargement process whilst ensuring the maintenance and unhampered functioning of the expanded 
internal EU market in the interest of all econo mic operators, including exporters. The option of 
maintaining the import regime into the new memb er States unchanged but without allowing free 
circulation within the Community was not considered to  be in the general interest of neither exporters, 
Community operators nor consumers."  The TMB noted that the European Communities itself 
recognized that it could have had recourse to opti ons other than "the extension of the geographical 
application of existing restrictions."  It was point ed out in this regard that practically the same 
objective could have been fulfilled through alternativ es to the imposition of quantitative restrictions.  
The TMB also observed that the enlargement proces s had taken place only eight months before the 
full elimination of all existing quota restrictions resulting from the full integration of the textiles and 
clothing sector into GATT 1994, and that the European Communities had confirmed in the 
communication that the notification to the TMB of 17 March 2004 about elimination of restrictions on 
schedule as foreseen by the ATC by the end of 2004 remained valid also for the enlarged Community 
of 25 members. 
19. The TMB noted that the European Communities st ated that "[w]hen adjusting and increasing 
the quantities from EU 15 to EU 25 the Europe an Communities [had] used a methodology which 
takes into account the traditional imports into the new member States, using a formula consisting of 
the average of the last three years’ imports into the ten new member States originating in third countries, adjusted pro rata temporis. "  Without prejudice to the conclusions reached as reflected in 
paragraphs 15 and 16 above, the TMB observed in this  regard that it appeared that in so doing the 
European Communities had not taken into account  the growth provisions embodied in the ATC to 
calculate the amount by which the level of the re spective quantitative restrictions had already been 
increased by the EC. 
20. Another argument put forward by the European Communities was that, on overall terms, the 
general incidence of enlargement had to be considered in the longer term and could, as such, not be 
considered more restrictive than the situation prio r to 1 May 2004.  The TMB recalled in this regard 
that, according to Article 8.1, its mandate was to supervise the implementation of this Agreement, to 
examine all measures taken under this Agreement and their conformity therewith, and to take the 
actions specifically required of it by this Agreem ent.  The TMB could not, therefore, take into 
consideration the possible – and allegedly positi ve – incidence of measures taken under the ATC 
outside the ATC framework and beyond the duration of  the ATC.  In this respect the TMB observed 
that under the ATC the extension of the geographical  application of existing restrictions to Members 
which until then had not applied such restrictions co ntributed to creating a situation more restrictive 
after 1 May 2004 than before. 
21.  In view of all the reasons outlined in paragraphs 11 to 20 above, the TMB found that the 
action by the European Communities could not find justification under the pr ovisions of the ATC. 
Preparation for the TMB’s 2004 comprehensive report pursuant to Article 8.11 of the ATC 
22. The TMB continued its consideration of the draft of its comprehensive report on the 
implementation of the ATC during the third stage of  the integration process, which will be transmitted 
to the Council for Trade in Goods in the context of the major review envisaged in Article 8.11.  It also 
started to consider the responses received from se veral Members to the request for notifications and 
information sent in that context to WTO Members
7 and to questions it had put to certain Members, or 
                                                      
7 See G/TMB/30.  G/TMB/R/110 
Page 6  
 
 comments they had been invited to make with resp ect to some of the elements contained in the 
responses received.  The TMB also co nsidered in this context relevant information and clarifications it 
had sought from certain Members regarding various sp ecific issues that are to be addressed in the 
comprehensive report.
8 
_____________ 
 
                                                      
8 See G/TMB/R/109, paragraph 7.