WORLD TRADE
ORGANIZATIONG/TMB/N/405/Add.1
8 August 2001
(01-3930)
Textiles Monitoring Body Original:  English
AGREEMENT ON TEXTILES AND CLOTHING
Communication from the United States
Addendum
The Textiles Monitoring Body has received a further communication from the United States
in reply to its request for additional information in the context of the preparation of the Body's
Comprehensive Report on the implementation of the ATC during its second stage, in accordance with
Article 8.11.
The TMB is circulating this communication to WTO Members for their information.G/TMB/N/405/Add.1
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Executive Office of the President
Office of the United States Trade Representative
Washington, D.C. 20508
29 June 2001
The Honourable András Szepesi
ChairmanTextiles Monitoring Body
World Trade Organization
Geneva, Switzerland
Dear Ambassador Szepesi
Thank you for the opportunity to provide further information for consideration in the TMB's
report on the second stage of integration.  Answers to the questions you have posed in this respect in
your letter of 11 May follow.
Customs Report
Customs is considering whether to update the report, but has not made a final decision on a
subsequent edition at this time.
Customs Entry Regulations
Customs entry regulations are based on the informed compliance standard, under which US
importers are required to ascertain the veracity of claims related to the entry of goods.  On occasion,
Customs may require that information and documentation be presented to demonstrate the veracity of
claims.  In contrast to the ITCB statement that these requirements create a presumption ofcircumvention, in fact, requests for additional documentary evidence are only invoked where there is
a reason to suspect circumvention.  In addition, it should be noted that very few of the companies on
the "Customs Administrative List" are listed because of a failure to provide documentation to support
entry claims.  The overwhelming majority of companies listed are there because they were found to be
closed or to be actually engaged in illegal transs hipment.  Of the companies that are listed because
they were actually engaged in illegal transshipment, some are listed because they were the subject of
enforcement efforts by our trading partners, including those that were prosecuted and convicted in
courts or otherwise penalized.  The companies that were listed as a result of US-initiated enforcement
activities were listed only after the following steps occurred:  (a) an actual verification visit to the
factory by US Customs officials with the authorities of the exporting country, (b) reporting of resultsof the verification visit to the authorities of the exporting country, (c) follow-up reporting of results to
the exporting party, with a specific request to provide details on their enforcement efforts, pertaining
to the companies at issue, and then, only if the United States remained dissatisfied that adequate
enforcement efforts were being undertaken.  It should also be noted that the United States has
registered strong concern with several of our exporting country trading partners that export visas havebeen issued to companies without adequate verification, on their own responsibility, of actual
production, and indeed visas have, in some instances, been issued in respect of goods produced in
factories that have been closed for a number of years.G/TMB/N/405/Add.1
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Trade and Development Act of 2000
The United States intends to seek from a waiver from WTO Members for the operation of
various aspects of the Trade and Development Act of  2000, and will provide full information to the
WTO at that time.  In the interim, detailed inform ation concerning the TDA, including the text of the
statute, may be found at the following web site:  "http://otexa.ita.doc.gov/Trade_Act_2000.stm."
"Restrictive Nature of Quota Restrictions"
In contrast to the statement of the ITCB, I would reiterate that, as said in our submission, US
imports of textiles and apparel have increased by over 90 per cent (in volume) since the WTO came
into effect, or by an average rate of 11.3 per cent each year (in square meters equivalent).  In valueterms, imports of textiles and apparel increased absolutely by 79.4 per cent, or by an average rate of
10.2 per cent each year since the WTO has entered into force.  US imports of textiles and apparel
from ITCB members have increased even faster , or by 104.3 per cent in absolute terms or by
12.65 per cent each year (in square meters equivalent) since the WTO entered into force.  In value
terms, imports of textiles and apparel from ITCB members have increased by 90.1 per cent absolutely,or by an average annual rate of 11.3 per cent since the WTO entered into force.  Over the last
five years, even with quota arrangements in place, US  imports of textiles and apparel grew at a faster
rate than US non-oil imports (60.7 per cent versus 59.5 per cent in absolute terms, or 9.95 per cent
versus 9.79 per cent average annual growth).
Interests of Cotton Producers
The United States consulted with cotton producing countries before the entry into force of the
ATC and reached agreements that were done with the provisions of Article 1.4 in mind.  We have
subsequently engaged in consultations with cotton producing countries to resolve issues raised bythem.  These consultations were also conducted with an eye to Article 1.4 and have been considered
successful by all participants.
Adjustment of Quotas
As provided for in Article 4.3 and 4.4, the adjustment of quotas pursuant to the second stage
of integration was conducted in such a way as to ensure that the balance of rights and obligationsbetween Members was scrupulously maintained.  Article 4.4 requires that Members be notified in
advance of such action, rather than the TMB, and the United States fully complied with the
notification requirement.  Of course, any individual  exporting Member was free to refer any disputes
arising from the adjustment of quotas to account for the implementation of our second stage
integration commitments to the TMB in the event of  a dispute, but no exporting country chose to do
so.
Notification Under Article 7
First, while the point made by the ITCB is true as far as it goes, it cannot be concluded from
the lack of notifications under Article 7 that there is no problem with compliance with market access
commitments under WTO agreements.  Indeed, the United States has made one of its most important
priorities the enforcement of textile market access commitments, and we have included information
on several relevant initiatives in our submission.  We have taken note of the ITCB's comment
regarding an additional notification under Article 7 and will review our position on the merits of thissuggestion.  As to the second comment, we are un aware of any demands for additional market access
commitments from restrained Members as a condition for the implementation of the ATC.  However,
the ATC itself in Article 7 strongly encourages additional market opening efforts, and to the extent
that requests may be made in connection with demands by restrained Members for additional accessG/TMB/N/405/Add.1
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over and above the scheduled ATC liberalization, that would seem entirely appropriate and fully
within the scope of the Agreement.
Thank you again for the opportunity to provide this additional information to the TMB.
Sincerely,
(Signed)
Caroyl Miller
Acting Chief Textile Negotiator
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