WORLD TRADE G/TMB/N/282
22July1997
ORGANIZATION(97-3027)
Original: English Textiles Monitoring Body
AGREEMENT ONTEXTILES AND CLOTHING
Notification under Article 2.17
UNITED STATES
Administrative Arrangements withthePhilippines
TheTextiles Monitoring Body hasreceived anotification fromtheUnited States pursuant to
paragraph 17ofArticle 2.TheTMB iscirculating thisnotification toWTO Members fortheir
information.G/TMB/N/282
Page2
Executive Office ofthePresident
Office oftheUnited States Trade Representative
28February 1997
TheHonourable Ambassador András Szepesi
Chairman
Textiles Monitoring Body
World Trade Organization
RuedeLausanne
1211 Geneva
Dear Ambassador Szepesi,
Attached youwillfindmyGovernment 'snotification ofAdministrative Arrangements for
Brazil, Colombia, Costa Rica, Fiji,Haiti, Hungary, India, Indonesia, Korea, Macau, Malaysia,
Philippines1,Qatar, Romania, SriLanka, Thailand, UAE andUruguay made pursuant toArticle 2.17
oftheAgreement onTextiles andClothing.
Sincerely,
(signed) Ambassador RitaHayes
Chief Textile Negotiator
1Thisdocument contains theAdministrative Arrangements concluded withthePhilippines. Administrative
Arrangements concluded withtheother Members listed above willbecirculated asseparate documents.
Note: Annex Breferred tointhetextcontains thelistofrestrictions notified bytheUnited States pursuant to
Article 2.1andassuch itisnotpartoftheAdministrative Arrangements.G/TMB/N/282
Page3
PHILIPPINES
Thefollowing provisions aredrawn fromtheUnited States -Philippines bilateral textile and
apparel agreement of10March and19March 1994 andhavebeenagreed tobenecessary forthe
proper implementation ofrestrictions notified totheTextile Monitoring Body under Article 2.1ofthe
Agreement onTextiles andClothing.
Classification
3.(A) Tops, yarns, piece goods, made-up articles, garments andother textile manufactured products,
allbeing products which derive theirchief characteristics from theirtextile components of
cotton, wool, man-made fibre, silk-blends, andvegetable fibres other thancotton, orblends
thereof, inwhich anyorallofthose fibres, incombination, represent thechiefweight ofthe
product, aresubject tothisAgreement. Components ofanarticle which arenotconsidered
relevant totheclassification under thegeneral rules ofinterpretation orthelegal notes to
Section XIoftheHarmonized Commodity Code arelikewise tobedisregarded here.
(B) Forthepurposes ofthisAgreement, textile products covered byparagraph 2(A)2above shall
beclassified as:
(I) Man-made fibretextiles iftheproduct isinchiefweight ofman-made fibres, unless:
(a) theproduct isknitted orcrocheted apparel inwhich wool equals orexceeds
23percentbyweight ofallfibres, inwhich casetheproduct willbeawool
textile; or
(b) theproduct isapparel, notknitted orcrocheted, inwhich wool equals or
exceeds 36percentbyweight ofallfibres, inwhich casetheproduct willbe
awool textile;
(c) theproduct isawoven fabric inwhich wool equals orexceeds 36percent
byweight ofallfibres, inwhich casetheproduct willbeawool textile.
(II) Cotton textiles ifnotcovered by(I)andiftheproduct isinchief weight ofcotton,
unless theproduct isawoven fabric inwhich wool equals orexceeds 36percentby
weight ofallfibres, inwhich casetheproduct willbewool textile.
(III) Wool textiles ifneither oftheforegoing applies, andtheproduct isinchief weight
ofwool.
(IV) Silkorvegetable fibreother thancotton textiles, ifnoneoftheforegoing applies and
theproduct isinchief weight ofsilkornon-cotton vegetable fibre, unless:
(a) cotton withwool and/or man-made fibres intheaggregate equal orexceed
50percentbyweight ofthecomponent fibres thereof andthecotton
component equals orexceeds theweight ofeachofthetotalwool and/or
man-made fibre component, inwhich casetheproducts willbeacotton
textile;
2Paragraph 2(A), which isnotpartofthepresent Administrative Arrangements, covers therestrictions
notified bytheUnited States pursuant toArticle 2.1oftheATC.G/TMB/N/282
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(b) ifnotcovered by(IV)(a) andwool exceeds 17percentbyweight ofall
component fibres, inwhich casetheproduct willbeconsidered awool
textile;
(c) ifnotcovered by(IV)(a) or(b)andman-made fibres incombination with
cotton and/or wool intheaggregate equal orexceed 50percentbyweight
ofthecomponent fibres thereof andtheman-made fibrecomponent exceeds
theweight ofthetotalwooland/or totalcotton component, inwhich casethe
product willbeconsidered aman-made fibretextile.
(V) Notwithstanding theabove, garments which contain 70percentormore byweight
silk(unless theyalsocontain over17percentbyweight wool), andproducts other
thangarments which contain 85percentormore byweight silk,arenotsubject to
thisAgreement. Silkandnon-cotton vegetable fibresweaters, asdetermined above,
shallbedivided into"silk" sweaters and"non-cotton vegetable fibre" sweaters. For
thepurpose ofthisdivision, sweaters shall beclassified as"silk" ifthesilk
component exceeds byweight thenon-cotton vegetable fibre component (ifany).
Sweaters notclassified as"silk" sweaters inaccordance withtheforegoing shallbe
classified as"non-cotton vegetable fibre" sweaters. Garments containing 70percent
ormore byweight silkandover17percentbyweight wool shall beclassified as
wool textiles, under sub-paragraph (B)(IV)(b).
(C) Coverage under thisparagraph isintended tobeidentical withtheterms ofArticle 12ofthe
Arrangement Regarding International Trade inTextiles andinconformance withparagraph 24
ofthe31July1986, Protocol ofExtension. Intheevent ofaquestion regarding whether a
product iscovered bythisAgreement byvirtue ofbeing chief weight ofcotton, wool,
man-made fibre, silk,ornon-cotton vegetable fibre, thechief value ofthefibres maybe
considered.
Flexibility Adjustments
6.(A) (I) During anyagreement period theGroup IILimit setforth inAnnex Bmaybe
exceeded byseven percentswing, andfifteen percentspecial shift, provided a
corresponding reduction ismade inoneormore Specific Limits inGroup I.
(II) TheSpecific Limits setforth inAnnex Bdonotinclude anyadjustments permitted
under paragraph 6.
(III) During anyagreement period, anySpecific Limit maybeincreased bynotmore than
seven (7)percentswing, provided acorresponding reduction ismade toanother
Specific Limit and/or totheGroup IILimit.
(IV) Inaddition totheadjustments pursuant tosubparagraph 6(A)(III), during any
agreement period special shiftintoCategory 239shallbeavailable fromanyspecific
limit which currently includes infants 'wear. Thespecial shiftshall belimited to
85percentofthedonor category limit. Thedonor category(s) limitshallbereduced
byacorresponding amount.
(V) During anyagreement period thespecific limit forCategory 239maybeincreased
bynotmore than8,403,080 square metres provided thatacorresponding reduction
ismade intheGroup IIlimit.G/TMB/N/282
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(VI) During anyagreement period, special shiftshallbeavailable fortheremainder ofthe
Agreement asfollows:
(a) Special shift may betaken outofcategory 643, asavailable, upto
20percentofthebaselimitforthatcategory. Thatquantity, converted from
unitstodozens, maybeshifted tothelimits forcategories 633and647/648.
(b) Special shift may betaken outofcategory 335, asavailable, upto
30percentofthebaselimitforthatcategory. Thatquantity, calculated in
dozens, maybeshifted tothelimitforcategory 333/334. Thesub-limit for
category 333shallremain asstated intheAgreement.
(c) Special shiftofupto20percentshallbeavailable forcategory 634tobe
taken outofcategory 635; or,special shiftofupto30percentshall be
available forcategory 633tobetaken outofcategory 634. Thecombination
ofspecial shift intocategory 633andcategory 634shall notexceed
30percent. Thespecial shiftshall becalculated onthebaselimit ofthe
receiving category with anequal quantity indozens deducted from the
specific limitofthedonor category.
(d) Special shiftmaybetaken outofcategory 341/641, asavailable, upto
10percentofthebaselimitforthatcategory. Thatquantity, calculated in
dozens, maybeshifted tothelimitforcategory 340/640.
(e) Special shiftof15percentshallbeavailable between categories 338/339 and
638/639.
(f) Special shiftof10percentshallbeavailable between categories 347/348 and
647/648.
(g) Special shiftshall beavailable between categories 351/651 and350inthe
amount of10percent(calculated onthebaselevelofthereceiving category,
provided acorresponding quantity insquare metres equivalent isdeducted
from thedonor category).
(h) Special shiftshallbeavailable between categories 237and359-C/659-C in
theamount of20percent(insquare metres equivalent, tobecalculated
against thebaselevelofcategory 237).
(i) Special shiftshallbeavailable between categories 336and636intheamount
of20percent.
(j) Special shiftshallbeavailable between categories 331/631 and659-H inthe
amount of20percent(calculated onthebaselevelofthereceiving category,
provided acorresponding quantity insquare metres equivalent isdeducted
from thedonor category).
(k) Special shiftshallbeavailable between category 335andcategory 635inthe
amount of30percent.
(l) Special shiftshall beavailable between categories 347/348 and847inthe
amount of10percent.G/TMB/N/282
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(m) Special shiftshall beavailable between categories 333/334 and634inthe
amount of10percent.
(B) (I) Theextent towhich theGroup IIlimitsetforthinAnnex Bmaybeexceeded inany
agreement period bycarry forward and/or carryover iseleven (11)percent,ofwhich
carry forward shallnotconstitute more thansix(6)percent.
(II) Theextent towhich anySpecific Limit maybeexceeded inanyagreement period by
carry forward and/or carryover iseleven (11)percent,ofwhich carry forward shall
notconstitute more thansix(6)percent.
(III) Carryover andcarry forward shallbeavailable between the1993and1994agreement
periods. Nocarry forward shallbeavailable forapplication inthefinalagreement
period.
(IV) TheGovernment oftheUnited States mayapply flexibility under paragraphs 6(B)(I)
and(II)toanySpecific Limits ortheGroup IILimit whenever thatadjustment
appears appropriate tofacilitate theflowoftrade andthesound administration ofthe
Agreement. Totheextent thatsuchadjustments areactually utilized theywillbe
implemented bymeans ofcarryover andcarry forward inthatorder. Anyunused
flexibility willbere-credited tothedonor limit. Thisprocedure willnotprejudice
theoutcome ofanyconsultations between ourGovernments concerning theamounts
offlexibility available.
(C) Forthepurposes oftheAgreement, ashortfall inaSpecific Limit ortheGroup IILimit
occurs when textiles ortextile products ofthePhilippines exported totheUnited States during
anyagreement period arelessthantheapplicable Specific Limit orGroup IILimit assetout
inAnnex Bor,inthecaseofanylimitdecreased pursuant toparagraph 6(A)or6(B), when
suchexports arebelow theSpecific Limit orGroup IILimit, asdecreased.
Designated Consultation Levels
7. Intheevent theGovernment oftheRepublic ofthePhilippines wishes toexport tothe
United States ofAmerica textiles andtextile products inexcess ofanyapplicable Designated
Consultation Level, theGovernment oftheRepublic ofthePhilippines shallrequest thehigher levels
andtheGovernment oftheUnited States ofAmerica shallconsider therequest sympathetically and
shallrespond within 30days. If,because ofproblems ofmarket disruption, asdefined inAnnex A
oftheArrangement, intheUnited States ofAmerica, inacategory subject tosucharequest, the
United States ofAmerica isunable tocomply fully, theGovernment oftheUnited States willso
inform theGovernment ofthePhilippines andwillsupply datawhich form thebasis fortheposition
taken bytheGovernment oftheUnited States ofAmerica. Ifrequested bytheGovernment ofthe
Philippines, theGovernment oftheUnited States willconsult promptly respecting thepresence or
absence ofmarket disruption.
USAssistance inImplementation oftheLimitation Provisions
8.(A) TheGovernment ofthePhilippines shall administer itsexport control system under this
Agreement. TheGovernment oftheUnited States mayassist theGovernment ofthe
Philippines inimplementing thelimitation provisions ofthisAgreement bycontrolling imports
oftextiles andtextile products covered bythisAgreement.
(B) Products ofthePhilippines exported inexcess ofauthorized limits inanyagreement periodG/TMB/N/282
Page7
maybedenied entry intotheUnited States. Anysuch shipments denied entry maybe
permitted entry intotheUnited States andcharged totheapplicable limitinthesucceeding
agreement period.
(C) Products ofthePhilippines shipped inexcess ofapplicable limits inanyagreement period
will,ifallowed entry intotheUnited States during thatagreement period, becharged tothe
applicable limitinthesucceeding agreement period.
(D) Anyaction taken pursuant toparagraphs 8(A)and8(B)above, willnotprejudice therights
ofeither sideregarding consultations.
Spacing Provisions
9. TheGovernment ofthePhilippines shall useitsbestefforts tospace exports tothe
United States within eachcategory orproduct evenly throughout eachagreement period, taking into
consideration normal seasonal factors.
Exchange ofData
10.(A) TheGovernment oftheUnited States shallpromptly supply theGovernment ofthePhilippines
withdataonmonthly imports ofcotton, man-made fibre, andwool textiles andtextile
products andsilkblend andother vegetable fibre apparel intotheUnited States from the
Philippines.
(B) TheGovernment ofthePhilippines shallpromptly supply theGovernment oftheUnited States
ofAmerica withdataonmonthly exports ofcotton, man-made fibreandwool textiles and
textile products andsilkblend andother vegetable fibreapparel from thePhilippines tothe
United States ofAmerica.
(C) Each Government agrees topromptly supply anyother available statistical datanecessary to
theimplementation ofthisAgreement requested bytheother Government.
Mutually Satisfactory Administrative Arrangements
11. Mutually satisfactory administrative arrangements oradjustments maybemade toresolve
minor problems arising intheimplementation ofthisAgreement, including differences inpoints of
procedure oroperation.
Consultations onImplementation Questions
12. TheGovernment oftheUnited States andtheGovernment ofthePhilippines agree toconsult
upon therequest oftheother, onanyquestion arising intheimplementation ofthisAgreement.
VisaSystem
18. BothGovernments agree tomaintain thevisaandcertification system effected byexchange
ofletters dated 1Julyand7July1976, tobeamended toconform withtheprovisions ofthis
Agreement.
Cooperation inPrevention ofCircumvention
19. TheGovernment oftheUnited States andtheGovernment ofthePhilippines recognize andG/TMB/N/282
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acknowledge theseriousness oftheproblems facing each country indealing with illegal
transshipments. Both countries recognize thatsuchtransshipment isdetrimental totheeconomic
interests ofeachcountry andthatthecurrent process foraddressing individual cases oftransshipment
hasbeen tooslow. Inaneffort tospeed uptheprocess ofaddressing specific instances of
transshipment andtopromote greater cooperation andeffort toaddress transshipment, bothcountries
agree asfollows:
(A) TheGovernment oftheUnited States andtheGovernment ofthePhilippines agree totake
measures necessary toaddress, toinvestigate and,where appropriate, totakelegal and/or
administrative action toprevent circumvention ofthisAgreement bytransshipment, rerouting,
falsedeclaration concerning country oforigin falsification ofofficial documents oranyother
means.
(B) Bothparties agree tothespeedy implementation ofanelectronic visaverification system as
animportant means ofpreventing circumvention andtransshipment.
(C) Bothparties agree tocooperate fully, consistent withtheirdomestic lawsandprocedures, in
instances ofcircumvention oralleged circumvention oftheAgreement, toaddress problems
arising fromcircumvention andtoestablish therelevant factsintheplaces ofimport, export
and, where applicable, transshipment. Such cooperation, totheextent consistent with
domestic lawsandprocedures, willinclude investigation ofcircumvention practices; exchange
ofdocuments, correspondence, reports andother relevant information totheextent available;
andfacilitation ofimpromptu plantvisits, inaccordance withagreed procedures, andcontacts
byrepresentatives ofeither party, upon request andonacase-by-case basis.
(D) Ifeither party believes thatthisAgreement isbeing circumvented, itmay request
consultations toaddress thematter ormatters concerned withaviewtoseeking amutually
satisfactory solution. Eachparty agrees toholdsuchconsultations promptly, beginning within
30daysofarequest byaparty andconcluding within 90days, unless extended bymutual
agreement, andtocooperate fullyinterms oftheelements setoutinparagraph Cabove.
(E) Should theparties beunable toreach asatisfactory solution inthecourse oftheconsultations
called forunder paragraph D,thentheGovernments ofthePhilippines andtheUnited States
agree thatincases where clear evidence regarding circumvention hasbeen provided, the
United States maydeduct from thequantitative limits forthatagreement period amounts
equivalent totheamount oftransshipped products ofPhilippines origin. Inaddition,
consistent withtheirdomestic lawsandprocedures, theGovernments ofthePhilippines and
theUnited States agree thatdeductions from thequantitative limits established under this
Agreement maybemade inthose instances inwhich: a)theUSpossesses clear evidence
showing asubstantial likelihood thatcircumvention hasoccurred; b)theUShasrequested
from theGovernment ofthePhilippines cooperation orinformation relevant tothepossible
circumvention thatisofatypethatisavailable toorcould reasonably beobtained bythe
Government ofthePhilippines, andc)andtheGovernment ofthePhilippines hasnot
provided such information orcooperation within theperiod forconsultation outlined in
paragraph D.Anysuchaction shallbenotified totheTSBwithfulljustification.
(F) Should theUnited States choose toexercise itsrights under paragraph Etodeduct anamount
oramounts from thequantitative limits ofacountry where more thantwoinstances of
circumvention havebeendemonstrated within thecurrent orimmediately preceding agreement
year, thentheUnited States maydeduct fromthequantitative limitamounts uptothree times
theamounts transshipped, provided thatsuchdeductions aredistributed equally ineachofthe
three following years.G/TMB/N/282
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(G) Where there isclear evidence inaddition toinformation thatmayappear onfalsified visas
showing thatgoods originating inanother country havebeenshipped through thePhilippines
totheUnited States asthough theywereproducts ofthePhilippines, theGovernments ofthe
Philippines andtheUnited States agree totakeappropriate action. Such action mayinclude
theintroduction ofrestraints intherelevant category orcategories ordeducting theamount
ofgoods soshipped from thequantitative limits established forthecurrent agreement year
under thisAgreement forshipments originating inthePhilippines. Anysuchactions, together
withtheirtiming andscope, maybetaken afterconsultation heldwithaviewofarriving at
amutually satisfactory solution andshallbenotified totheTSBwithfulljustification. Such
consultations should beheldpromptly, beginning within 30daysofarequest byaparty and
concluding within 90days, unless extended bymutual agreement. Should theparties be
unable toreach asatisfactory solution, thentheGovernments ofthePhilippines andthe
United States agree thatinthose instances inwhich i)theUSpossesses clear evidence
showing asubstantial likelihood thatcircumvention hasoccurred; ii)theUShasrequested
from thePhilippines cooperation orinformation relevant tothepossible circumvention that
isofatypethatisavailable toorcould reasonably beobtained bytheGovernment ofthe
Philippines, andiii)theGovernment ofthePhilippines hasnotprovided suchinformation or
cooperation within theperiod forconsultations outlined above, theUnited States may
introduce arestraint or,where arestraint already exists, maydeduct from thequantitative
limits established under thisAgreement anamount equivalent totheamount ofproduct
transshipped through thePhilippines. AssoonasthePhilippines hassufficiently established
thatthegoods inquestion havenotbeentransshipped through thePhilippines, andthetrue
country oforigin hasbeendetermined anddeductions applied toitsquota, theUnited States
shallimmediately restore theamounts deducted totheircorresponding levels ofrestraint or
remove thenewrestraints introduced under thisprovision.
(H) Should theGovernment ofthePhilippines find thatgoods were imported intothe
United States using fraudulent visafalsely declaring such items tobeaproduct ofthe
Philippines, thentheGovernment ofthePhilippines shallnotify theGovernment oftheUnited
States. If,aftersixmonths from thetimeatwhich suchnotice wasgiven totheUnited
States, noaction hasbeentaken orconsultations sought withregard tosuchshipments, and
ifithasbeen established thatthegoods inquestion arenotofPhilippine origin, the
Government ofthePhilippines mayrequest consultations withtheGovernment oftheUnited
States withaviewtoseeking amutually satisfactory solution. Consistent withitsdomestic
laws andprocedures, theGovernment oftheUnited States shall agree tohold such
consultations promptly, beginning within 30days.
(I) Parties agree thatfalse declaration concerning fibre content, quantities, description or
classifications ofmerchandise alsofrustrates theobjective ofthisAgreement. Where there
isevidence thatanysuchfalsedeclaration hasbeenmade forpurposes ofcircumvention, both
parties agree totake appropriate measures, consistent with their domestic laws and
procedures, against exporters orimporters involved. Should either party believe thatthis
Agreement isbeing circumvented bysuch false declaration andthatno,orinadequate,
administrative measures arebeing applied toaddress and/or totakeaction against such
circumvention, thatparty should consult promptly withtheparty involved withaview to
seeking amutually satisfactory solution. Such consultations should beheldpromptly,
beginning within 30daysofarequest byaparty andconcluding within 90days, unless
extended bymutual agreement. Should theparties beunable toreach asatisfactory solution,
thentheGovernment ofthePhilippines andtheUnited States agree thatincases where
evidence regarding suchfalsedeclarations hasbeen provided, thentheUnited States may
deduct from thequantitative limits established forthecurrent agreement yearanamount
equivalent totheamount ofproduct subject tothefalsedeclaration orclassification. ThisG/TMB/N/282
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provision isnotintended toprevent parties from making technical adjustments when
inadvertent errors indeclarations havebeenmade.
(J) Theparties notethatsome cases ofcircumvention mayinvolve shipments transiting through
theRepublic ofthePhilippines withnochanges oralterations made tothegoods inthe
Republic ofthePhilippines. They notethatitmaybegenerally impracticable forthe
Government ofthePhilippines toexercise control oversuchshipments.