WORLD TRADE
ORGANIZATIONWT/GC/W/502
14 July 2003
(03-3809)
General Council
24-25 July 2003Original:  English
ANTI-DUMPING ACTIONS IN THE AREA OF TEXTILES AND CLOTHING
Proposal for a Specific Short-Term Dispensation in Favour of Developing Members
Following Full Integration of the Sector into GATT 1994 from January 2005
Communication from Costa Rica; Guatemala;  Hong Kong China; India; Indonesia;
Macao, China; Maldives; Pakistan; People’s Republic of China;
Thailand and Vietnam
The following communication, dated 11 July 2003, has been received from the above-
mentioned delegations.
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Introduction
1. In January 2003, 18 developing Members that are also members of the International Textiles
and Clothing Bureau (ITCB) submitted a paper to the Negotiating Group on Rules on “Anti-dumping
Actions in the Area of Textiles and Clothing: Developing Members’ Experiences and Concerns”
(TN/RL/W/48/ Rev.1).
2. The paper brought out their experience as regards the anti-dumping activity affecting their
exports of textiles and clothing – a very large industrial sector for them – and the disruptive effects of
these actions.  The paper concluded that a particularly important aspect of the anti-dumping regime
responsible for such disruptive effects was the very initiation of investigations into allegations of
dumping, often prompted by protection-seeking interests.
3. The main conclusions of the paper, based on a detailed factual analysis of anti-dumping
actions by two major developed Members, were generally acknowledged when the Negotiating Group
on Rules considered the submission in its meeting on 6 – 7 February 2003.
Experience with anti-dumping actions on textiles and clothing
4. It may be recalled that due to the long legacy of quota restrictions, trade in textiles and
clothing remains ever vulnerable to disproportionate protectionist pressures.  Thus, besides quota
restrictions, the sector has also seen a large number of anti-dumping actions especially  affecting
exports from developing countries and economies.
5. A survey of these actions during the last several years revealed that, during 1994 – 2001, the
sector was targeted by one major restraining Member for as many as 53 new initiations ofinvestigations into allegations of dumping placing it the 3
rd among all sectors.  The only other sectorsWT/GC/W/502
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witnessing higher numbers of initiations by this Member were iron and steel, and chemicals.
Significantly, of these 53 initiations, 46 or 87% involved imports from developing countries.
6. The other salient features deriving from in-depth review of 29 of the 46 cases noted above
may be summarized as follows:
(a) Most often, the investigations were prompted by motivated complaints lodged by
industry associations.
(b) That a series of complaints were lodged at the same time targeting the lion’s shares
(60%) of total imports in the products concerned carried an apparent protectionist
purpose.
(c) Reinforcing the protectionist motivation was also the fact that, in several instances,
investigations into the same products were revived back-to-back, extending over long
periods.  In the case of one product (cotton fabrics), these were continued for fiveyears.  In the case of another (bed linen), these have been going on in one form or the
other since January 1994.
(d) The investigations resulted in significant disruptions for the exporting countries
concerned, causing large declines in their import shares: In one product from 59%
before the initiation of investigations to  38% when the investigations were finally
dropped; in another from 52% to 45%.
(e) In virtually all cases, the investigations or measures adopted proved to be unjustified
because these were either dropped by the investigating authorities themselves or the
very methodology used by the importing Member in its dumping determinations was
found by a dispute Panel and the Appellate Body to be inconsistent with its WTOobligations.
(f) As another glaring reality, the cases revealed that the exporting firms from
developing Members were generally small or medium-sized.  They accounted for
small export volumes, raising a question as to whether such small enterprises could at
all be capable of dumping.  It is difficult to conceive that these small enterprisescould muster the economy of scale to engage in price discrimination.
7. Although the anti-dumping activity involving textile and clothing products in the other major
importing Member had been less pronounced, the measures adopted by it have remained in place for
long periods (11 to 19 years) even when, in the meantime, there had been no imports in the product
from the exporting Member concerned.
8. For factual details and analysis of anti-dumping investigations and actions cited in
paragraphs 5 – 7 above, reference is invited to the paper in TN/RL/W/48/ Rev.1.
9. It needs to be re-emphasized that these anti-dumping actions were pursued despite the
products being under severe quota restrictions.
Implications from the legacy of quota restrictions
10. With respect to quota restrictions on textiles and clothing, it may be recalled that international
trade in the sector has been virtually excluded from the normal rules and disciplines of the
GATT/WTO for some four decades.  To correct this anomaly, the Agreement on Textiles and
Clothing (ATC) was negotiated in the Uruguay Round.  Its purpose was to bring about theWT/GC/W/502
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reintegration of the sector into the same mainstre am of multilateral rules as for any other industrial
sector,  by a progressive phase-out  spread over a transitional period of ten years commencing from the
coming into effect of the WTO.
11. Unfortunately, in implementing the ATC, the developed restraining Members have left the
bulk of quota restrictions to be eliminated only at the end of the transitional period.  Thus, even after 8½ years of implementation, the following numbers of quotas still remain in place: 851 out of 932 in
the United States, 222 out of 303 in the EU, and 292 out of 368 in Canada.
12. Consequently, firstly, when the remaining quotas are finally abolished at the end of 2004, it is
bound to exert downward pressure on prices.  A sudden fall in prices is feared in turn to  encourage the
domestic industry to cry dumping and spark political pressures for greater recourse to alternate forms
of protection, especially anti-dumping, exacerbating the problem created by the postponement of any
effective liberalization of the sector to the very end of transitional period.  In this context, it may benoted that the industry interests are prone to equating any declines in prices with dumping.
13. Secondly, under the quota regime, trade transactions have not always been driven by normal
commercial considerations alone.  Quota considerati ons have been an important component of pricing
decisions and arrangements.  After the abolition of all quotas, it will be some time before trade in the
sector finds its normal course.
14. Thirdly, in view of the distortion of pricing decisions under the quota regime, allegations
about dumping in the immediate aftermath of th e abolition of quotas could not be reasonably
evaluated unless there was sufficient opportunity for trade to find its normal course.
The need for action
15. It is widely acknowledged that the very initiation of investigations into alleged dumping cause
considerable adverse effects on exporters and businesses concerned.  As witnessed from experience
with the spate of investigations in the field of textiles and clothing referred to in this paper, these
investigations are often prompted by interested parties to preserve their corner of the market.
16. In the event, it is in the interest of both exporting and importing Members as well as the
efficiency of the multilateral trading system that an  appropriate period of time is provided for business
operators to compete in the market in a meaningful  way and to allow trading conditions to adjust to
the normal business environment.  It is also important that developing countries are protected against
un-warranted recourse to trade remedy actions, so that market access so painstakingly secured is not
undermined.
17. In this context, it is worth recalling that in  recognition of the problem brought about in this
paper, the Ministers in Doha decided that “Members will exercise particular consideration beforeinitiating investigations in the context of anti-dumping remedies on textile and clothing exports from
developing countries previously subject to quantitative restrictions under the Agreement [on Textiles
and Clothing] for a period of two years following fu ll integration of this Agreement into the WTO”.
1
They also “pledged to reject the use of protectionism”.2
18. The precise parameters for giving effect to the above decision are however yet to be
established.  Nor have the restraining Members spelled out the manner in which they propose giving
effect to it.
                                                     
1 Ministerial Decision on Implementation-Related Issues and Concerns, (WT/MIN(01)/17),
paragraph 4.2.
2  Ministerial Declaration, (WT/MIN(01)/DEC/1), paragraph 1.WT/GC/W/502
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19. It may be noted in this respect that Ministers have repeatedly emphasized the need for
developing countries to benefit from increased opportunities that the multilateral trading systems
generates.  Besides pledging to reject the use of protectionism, they also affirmed their will to
continue to make positive efforts designed to ensure  that developing countries secure a share in the
growth of trade commensurate with the needs of their economic development and that, in this context,enhanced market access and balanced rules have important roles to play
3.
The proposal
20. In light of:
• the considerations brought out in this paper;
• the lack of progressivity in phasing out quota restrictions by the restraining Members;
• various Ministerial decisions and declarations referred to in this paper; and
• the need to take into account the interests of developing Members especially with regard
to providing them with the security of market access and protection against wrongfulrecourse to trade remedy actions;
it is proposed that the General Council recommend to the Ministerial Conference to decide
that:
“With a view to allowing trade in textiles and clothing to adjust to normal trading conditions
free of the influence of the long-standing quota regime following the full integration of the
sector into the WTO in accordance with the Agreement on Textiles and Clothing, developed
Members shall implement a grace period of two years during which no investigations in thecontext of anti-dumping remedies on imports of  textile and clothing products from developing
countries shall be initiated”.
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3  Ministerial Declaration, (WT/MIN(01)/DEC/1), paragraph 2.