WORLD TRADE
ORGANIZATIONWT/GC/W/405
29 June 2000
(00-2674)
General Council
Special Session on Implementation
22 June and 3 JulyOriginal:  English
COMMUNICATION FROM HONG KONG, CHINA
The following statement made by Hong Kong, China at the Special Session of the General
Council on 22 June, on behalf of ITCB Members that are also Members or Observers of the WTO, is
being circulated at the request of that delegation.
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1. I speak not only for Hong Kong, China but also in my capacity as Chairman of the
International Textiles and Clothing Bureau, on behalf of its 23 members (we have 24 including DPR
Korea) which are also Members or Observers of the WTO.
2. Allow me, Mr. Chairman, to recall your remarks on the occasion of the adoption of the
General Council decision on Implementation–Relat ed Issues on May 3rd 2000. You very rightly
emphasized that the purpose of this exercise is to resolve implementation issues and concerns; and
that, in addressing these issues, the General Council will assess the existing difficulties, identify ways
needed to resolve them, and take decisions for appropriate action.
3. It is also important to recall the wide-spread recognition, within this house and outside, that
the implementation of some WTO agreements has given rise to serious concerns among many
developing country Members, and that progress in addressing these implementation concerns wouldenhance confidence in the multilateral trading system.
4. Few agreements have given rise to as many concerns as the Agreement on Textiles and
Clothing.  This is because of the great importance of trade in textiles and clothing for developing
countries. The sector accounts for about 20% of their exports of manufactured products. For some
developing countries, especially the least developed among them, its share in their export earnings iseven larger. Manufacture of clothing is a labour-intensive activity. The sector is, therefore,
particularly important for the creation of employment opportunities in these economies.
5. Unfortunately, implementation of the Agreement on Textiles and Clothing (the ATC) has
failed to come up to developing countries’ legitimate expectations. During the process leading up to
the third Ministerial Conference, members of the ITCB devoted considerable time and effort, pursuantto paragraph 8 of the Geneva Ministerial Declaration, to producing a detailed, factual critique of
implementation of the ATC.  This was presented to the Council in early August last year in document
WT/GC/W/283. The main elements were incorporated in  the draft ministerial text in square brackets.
But, interestingly, they were never discussed either before or at Seattle.  More mysteriously, a
“Chairman’s text” suddenly appeared towards the end of the third Ministerial Conference,incorporating a greatly diluted version and including a clause which was quite contrary to the views
and interests of the ITCB members.
6.  Mr. Chairman, genuinely and deeply held views, based on fact, should not have been treated
in this fashion.  The impression was given that some of those who oppose our views wanted to avoidWT/GC/W/405
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any real engagement.  Indeed, it can justifiably be said that the whole Seattle process simply ignored
paragraph 8 of the Geneva Ministerial Declaration in failing even to attempt a meaningful collective
evaluation of implementation of this symbolically and commercially significant agreement.
7. I take it that we have now turned over a new leaf in this respect; and that a genuine dialogue
is now possible.  It is in that spirit that I approach the matter today.
8. The ITCB evaluation paper (WT/GC/W/283) should have been made available in the room.
If not, an outline is certainly included in the Secretariat compilation.  I ask also in passing that
WT/GC/W/283 be derestricted.  Members may re-read it at their leisure and I only need at this
juncture to make some key points.
9.  Essentially, the Agreement has now been in effect for almost six years, yet the committed
progressive liberalization of quotas has not materialized. In summary:
(i) Although 33% of trade in the sector has been “integrated” by the restraining countries
in a narrow technical sense, this comprises mainly imports of products which were
not under restriction. This has resulted in the elimination of only a few quota
restrictions (13 out of 750 by the US; 14 out of 219 by EU; and 29 out of 295 by
Canada), leaving the great bulk of restrictions still in place.
(ii) Additional access granted by the restraining Members has been limited to the
minimum increases in quota growth rates under the Agreement, and has not resulted
in any lessening in the restrictive nature of quotas.
(iii) Developing countries, including small suppliers and least-developed countries, have
not received meaningful increases in their access possibilities.
(iv) Consequently, despite solemn commitments, the process of liberalization has failed to
be progressive in character. It has not allowed developing countries to benefit from
strong consumer demand in major developed country markets. Indeed they havemade little effort to facilitate increased competition in their markets.
(v) On the other hand, major developed restraining Members have resorted to a number
of trade restrictive measures, including, (i) a large number of unjustified safeguard
actions for new restrictions, involving also exports from small suppliers for whom the
ATC in fact envisages more favourable trea tment; (ii) changes in rules of origin; (iii)
unduly cumbersome customs and administrative procedures; and (iv) anti-dumpingactions targeting particularly products that were already under quota restrictions.
10. Based on this evaluation, which remains as accurate today as it was when produced, the ITCB
members also developed some practical suggestions for improving the implementation of the
Agreement.  These are contained in document WT/GC/W/357 dated 12 October 1999, which shouldalso have been made available today.  I ask that this document too be derestricted.
11. Let me emphasize that these suggestions fall within the existing framework of the ATC and
do not require any modification or changes to the Agreement.
12. The suggestions we have made are specific, and address the problems identified in the earlier
paper on evaluation.  I can present our full arguments when we come to discussing these suggestionsin detail – which presumably we shall have the opportunity to do soon. In the meantime however, I
wish to highlight our proposal that at least 50% of import of products that were under specific quota
limits be liberalized by the start of the next stage of implementation on 1 January 2002. We believe
that it is not unrealistic or unreasonable to expect liberalization of 50% of restrictions in what would
amount to 70% of the transitional period of the Agreement.WT/GC/W/405
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13. Likewise, we propose that the provisions of growth-on-growth should be applied so as to
contribute to meaningful increases in access possibilities for developing countries. Accordingly, we
suggest that the restraining countries: (i) apply th e methodology employed by the EU in implementing
the growth-on-growth for small suppliers and extend the same treatment to least developed countries;
(ii) advance the implementation of the growth -on-growth for stage 3 to 1 January 2000 from
1 January 2002; and (iii) increase any resulting growth rates lower than 6% to that percentage.
14. There are other specific proposals contained in our paper (W/357), relating for example to the
use of anti-dumping, safeguard measures, administrative procedures and rules of origin.
15. I must take this opportunity to point out that, probably in the rush before Seattle, the draft
Ministerial text contained in Job(99)/5868/Rev.1 dated 19 October 1999 mixed up the sequence of
ITCB suggestions for improving implementation of the ATC. Furthermore in some instances the
drafting does not reflect accurately the ITCB language.  This has caused some confusion and I wish,therefore, to request that the presentation be re-arranged by the Secretariat, so as to facilitate more
efficient consideration. I can be more specific in discussions with the Secretariat after the meeting.
16. Developing countries have made tremendous sacrifices in accepting to live under quota
restrictions for a long period of time. They also had to offer significant concessions in the Uruguay
Round to secure an end to these restrictions, in a phased and progressive manner, even though therestrictions were never GATT-consistent. Our members expect that the major restraining countries
live up to their promise and fulfil their leadership responsibilities. The case for immediate action, to
deliver some credible and meaningful liberalization is overwhelming. Besides assisting the
developing economies, it can bring huge benefits for businesses and consumers in the restraining
countries themselves. All analyses attest to that. Indeed a recent study commissioned by the SwedishMinister of Trade concludes that EU import restrictions on textiles and clothing cost European
consumers almost 25 billion Euro a year – i.e., 270 Euro per family of four.
17. Unfortunately, it is a matter of regret that, recently, a major restraining Member has
announced its decision to demand additional market  opening from developing countries as a pre-
condition for meaningful liberalization of its own quota restrictions, even during the third stage of theimplementation of the ATC. In this connection, allow me to inform the General Council that the ITCB
members considered this demand at the recent sess ion of ITCB Council of Representatives held in
Guatemala. They rejected attempts by some importing developed countries to demand additional
market access concessions from developing countries as a condition to fully comply with their
obligations under the ATC. They further emphasized that the importing developed countries should
live up to their commitments under the ATC and act in accordance with its provisions. The ITCB’s
Guatemala Communiqué has been circulated and copies are  available in the room.
18. As an aside, let me speak for one moment just as the representative of Hong Kong, China.
The notion of reciprocal market access in trade in textiles and clothing is totally without a shred of
credibility, as our experience demonstrates. We have not been able to export one single extra piece of
clothing, or been given a fraction of a percentage point of extra growth as a result of our completely
open import regime. Developing countries, rightly in our view, regard the rhetoric about reciprocity asinsubstantive and purely tactical.
19. In closing, Mr. Chairman, let me say that some ITCB members may wish to add further
comments on their own behalf. It is our earnest hope and expectation that the restraining developed
countries engage in a constructive discussion on identifying ways to improve their implementation of
the Agreement on Textiles and Clothing. This challenge is seen as the litmus test of whether they trulycare about raising standards of living in developing countries. If they cannot respond meaningfully, if
not today then in the immediate future, the appropriate conclusions will be drawn and the cause of the
WTO will be set back significantly.
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