WORLD TRADE  
ORGANIZATION  G/C/W/495 
29 September 2004 
 (04-4084) 
Council for Trade in Goods Original:   English 
  
 
THIRD MAJOR REVIEW OF THE IMP LEMENTATION OF THE AGREEMENT  
ON TEXTILES AND CLOTHING BY THE COUNCIL FOR TRADE IN GOODS  
 
Communication from Argentina;  Bangladesh;  Brazil;   China;  Colombia;  Costa Rica;  Egypt; 
 
Guatemala;  Hong Kong, China;  India;  Indonesia;  Republic of Korea;  Macao, China;  Maldives;  
Pakistan;  Paraguay;  Peru;  Sri Lanka ;  Thailand;  Uruguay;  and Vietnam  
  
 In the context of the major review of the implementation of the Agreement on Textiles and 
Clothing in the third stage of the integra tion process, the following communication, dated 
28 September 2004, is being circulated at th e request of the above-mentioned delegations. 
 
_______________ 
 
 Introduction
 
 
1. Together with agriculture, trade in textiles and clothing has long remained outside the mainstream of WTO rules and principles.  Therefor e, the completion of the process of integration of 
textile and clothing sector into the normal ru les and disciplines of GATT 1994 in another three 
months’ time is of great systemic value to the stre ngthening of the multilateral trading system.  At the 
same time, it will be another step toward s fulfilling the promise of the Uruguay Round. 
 2. To be certain, however, the 10-year long process of winding down the complex regime of 
quota restrictions inherited from the Multi-fibr e Arrangement (MFA) into the Uruguay Round 
Agreement on Textiles and Clothing (ATC) has not b een smooth or free of problems.  Indeed, ever 
since the coming into effect of the WTO, the impl ementation of the ATC has been a constant concern 
and the subject of consideration both within and out side the WTO.  Numerous meetings and countless 
hours have had to be devoted to considering the issues involved and to keeping the process on track. 
 3. Although in a few months, the ATC and all rest rictions under it shall stand terminated, the 
final major review of its implementation by the Co uncil for Trade in Goods (CTG) is significant in 
more than one way.  For one thing, it is critical to  ensuring that all requirements of the Agreement will 
have been fully and faithfully met.  For another, it is important in terms of the lessons to draw from 
the process.  4. In this connection it may be recalled that, in accordance with Article IV of the Marrakesh 
Agreement Establishing the World Trade Organizat ion, the CTG is responsible for overseeing the 
functioning of all Agreements in the area of trad e in goods including the ATC.  In addition, the ATC 
specifically mandates the CTG to conduct a major revi ew of its implementation before the end of each 
stage of the integration process.  Finally, in successive Ministerial Conferences (barring the 
unsuccessful ones in Seattle and Cancun), Ministers emphasised the need for en suring full and faithful 
implementation of WTO Agreements.  More significantly, at the very first WTO Ministerial 
Conference held in Singapore, they confirmed thei r commitment to such implementation specifically 
with respect to all "the provisions of the ATC", not  with respect to implementation in some general G/C/W/495 
Page 2  
 
 way; this, given the widespread concerns e xpressed by developing countries regarding the 
implementation of a number of provisions of the Agreement.  For ease of reference, relevant excerpts from various Ministerial declarations and decisions are provided in Annex 1
 to this paper.  Also 
included in the Annex are decisions of the General Council and th e CTG germane to ATC 
implementation.  Finally, as a further context for CT G’s consideration, also provided in the Annex are 
statements at the meetings of these Councils an d notifications to the TMB by the restraining 
Members.  5. To assist the CTG in its review, the Textiles Monitoring Body has provided a comprehensive 
report (G/L/683).  The report embodies a wealth of deta iled information with regard to all the various 
aspects of implementation and is a highly useful c ontribution to the major review.  We offer our 
commendation for the Body’s hard work.  6. This paper is being pr esented to bring to light  only a few pertinent aspects of the 
implementation process and is intended to assist the CTG in its consideration, especially against the 
background and objectives mentione d in paragraph 3 above.  First, it seeks to highlight certain 
specific examples of the introduction of new restrictions  or intensification of existing restrictions to 
the detriment of exporting developing countries.  Second, it is followed by some additional issues 
from ATC implementation in general.  The fina l section contains some specific proposals for 
consideration by the CTG.  
New restrictions: some examples
 
 
Introduction of new restrictions by the EU  following its enlargement from May 2004 
 
7. As mentioned in  Annex 1 , at the very first Ministerial Conference in Singapore, Ministers 
declared as follows:  "We confirm our commitm ent to full and faithful implementation of the 
provisions  of the Agreement on Textiles and Clothing" (emphasis added). 
 8. The issue under reference has been discussed by  the TMB in its comprehensive report to the 
CTG in paragraphs 325 through 334, and 588.  
9. In a nutshell, with the enlargement of th e EU following the accession of ten new member 
States from May 2004 (namely, the Czech Republic, Cy prus, Estonia, Hungary, Latvia, Lithuania, 
Malta, Poland, the Slovak Republic and Slovenia), th e EC extended its quotas on textiles and clothing 
to include these newly acceding States, and also determined the levels of these quota limits 
unilaterally. 
 
10. The ten newly acceding states, WTO Members in their own rights, did not apply any quota 
restrictions before their accession to the EU.  Indeed, despite the fact that prior to this accession they 
have had Free Trade Area agreements with the EU, n one of them were obliged to, or felt the need to, 
do so.  
11. The imposition of these quotas by the EU is incompatible with Article 2.4 of the ATC 
according to which "no new restrictions in terms of  products or Members shall be introduced except 
under the provisions of [the ATC] or relevant GATT 1994 provisions". 
 12. It may be recalled in this connection that a dispute panel and the A ppellate Body had ruled 
that similar restrictions imposed by Turkey foll owing its customs union with the EC violated 
Article 2.4 of the ATC.  Both had further ruled that  those restrictions were not justified by reference 
to GATT Article XXIV either.  The following fi nding by the Panel is especially noteworthy: 
  G/C/W/495 
 Page 3 
 
 
 "The prohibition on 'new restrictions' must  be interpreted taking into account the 
preceding sentence [in Article 2.4 of the ATC]:  'The restrictions notified under paragraph 1 shall be de emed to constitute the totality of such restrictions  
applied by the respective Members on the da y before the entry into force of the 
WTO Agreement'.  The ordinary meaning of the words indicates that WTO 
Members intended 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 simp ly be increased and not constitute a 
'new restriction', would defeat the clear purpose of the ATC which is to 
reduce the scope of such restrictions, starting from 1 January 1995 ....  Thus, 
we consider that, setting aside the possi bility of exceptions and justifications 
mentioned in Article 2.4 of the ATC, any increase of an ATC compatible quantitative restriction notified under Article  2.1 of the ATC, constitutes a 'new' 
restriction.  
On 28 February 1995 (therefore within the 60-day period of Article 2.1 of the 
ATC), the European Communities notified its previous restrictions maintained 
under the MFA.  This notificat ion referred to restricti ons applicable only to EC 
territory.  After the period of 60 days (u nder Article 2 of the ATC) the European 
Communities is prohibited from notifying any new restrictions or changes to 
existing and notified restrictions , except if adopted in compliance with the ATC 
or any other provisions of GATT 1994.  Apart from these special cases the 
European Communities is not entitled to  notify any increase of its MFA-derived 
restrictions …"
1 (Emphasis added) 
 
13. It is equally clear that the action was contrary to the solemn commitments made by Members 
in successive Ministerial declarations with resp ect to "faithful implementation" of the ATC. 
 14. In reply to a question from the TMB, the EU took the position that "the Community does not 
consider its extension of the geographical applic ation of existing restrictions to constitute new 
restrictions in the sense of Article 2:4 of the ATC".  
15. After a thorough examination of this EU contention, the TMB concluded that the measures 
taken by the EC constituted "new restrictions" and that the "actio n could not find justification under 
the provisions of the ATC". It is un-necessary to  reproduce the details of TMB's analysis and 
arguments in this regard, as these are availa ble in its comprehensive report to the CTG.
2 
 
16. Regrettably, the EU  has chosen not to give any creden ce to the TMB findings, leaving the 
restrictions in question to remain in effect a pparently in the knowledge that dispute settlement 
proceedings were both time-consuming and costly for the developing countries concerned to pursue.  
 
Continuation of quota restrictions by Turkey despite Panel and Appellate Body rulings 
 
17. This matter is referred to in para graphs 408 through 410, 413 and 420 – 421  of the TMB 
report.  18. Following the establishment of its customs union with the EU, Turkey imposed quota 
restrictions on textile and clothing imports fro m countries on which the EU also imposed these 
                                                     
 
1 Panel Report, Turkey – Restrictions on Imports of Textiles and Clothing Products , WT/DS34/R, adopted on 
19 November 1999, paragraphs 9.71 and 9.72 
2 G/L/683, paragraphs 325 through 334 (hereinafter the Report). G/C/W/495 
Page 4  
 
 restrictions.  Later, it withdrew these restricti ons vis-à-vis the Czech Republic, Hungary, Poland, 
Romania, the Slovak Republic, Bulgaria, Malta, Morocco and Tunisia.  19. On a challenge by India, a WTO dispute panel found that the measures adopted by Turkey 
were inconsistent with the provisions  of Articles XI and XIII of GATT and Article 2.4 of the ATC .  
The Panel rejected Turkey’s claim that these restrictions were compatible with Article XXIV of the 
GATT.  The Panel concluded that Turkey’s action nullif ied or impaired the benefits accruing to India.  
The Appellate Body upheld the Panel conclusion and ruled that Article XXIV did not allow Turkey to 
adopt these GATT-inconsistent measures.  The Dis pute Settlement Body adopted the Appellate Body 
and Panel reports
3. 
 
20. As the TMB report to the CTG notes (paragraphs 408-410 and 421  of G/L/683), Turkey 
continues to maintain these restrictions on imports from Argentina;  Brazil;  China;   Egypt;  Hong 
Kong, China;  India;  Indonesia;  Korea;  Macao, Ch ina;  Malaysia;  Pakistan;  Peru;  the Philippines;  
Singapore;  Sri Lanka;  Chinese Taipei;  and Thailand. 
 
21. It is obvious that Turkey's action is inconsistent  with its obligations and that it also amounts to 
a disregard of the disciplines of the ATC and various declarations and decisions of Ministers, especially as the Panel and the Appellate Body ruled them to be unjustified. 
 
Changes to product classification by the United States 
 22. It is well known that during the implementation  of the ATC, the US substantially changed its 
rules of origin relating to the import of textile  and clothing products, cr eating significant adverse 
effects on trade.  
 
23. In the process of these changes, US also enla rged the coverage of certain cotton made-up 
products.  Thus, it is now specified that these products  are of cotton even if they contain as little as 16 
per cent of cotton by weight.  (Prior to this, these pr oducts were considered to be that of cotton only if 
they contained cotton as their chief weight).  I ndeed this was the disposition under the pre-ATC 
bilateral agreements between the United States a nd the respective developing countries which were 
the basis of restrictions carried over from the MF A and notified to the TMB under Article 2 of the 
ATC. 
 24. Notwithstanding that a dispute panel ruled in a case brought by India that the complainant did 
not succeed in establishing that the changes had been  effected in violation of obligations under the 
Agreement on Rules of Origin , the change in classification of cott on products enlarged the scope and 
incidence of restrictions on these products under the ATC to the disadvantage of the exporting 
Members concerned.  25. Lest it is misconstrued, the point that we seek to highlight in connection with the CTG’s major 
review is specifically the one relating to the wideni ng of the coverage of some cotton products in the 
context of quota access under the ATC, not  the changes to rules of origin per se . 
 
26. It is apparent that the change in the defin ition and coverage of these products led to more 
exports being classified and counted as those of cotton than was the case previously.  Thus, for example, products which were exported under US Ca tegory 666 (Other man-made fibre furnishings) 
now came to be classified and counted under Categories 360, 361, 362 (cotton pillowcases, cotton 
                                                     
 
3 Appellate Body Report, Turkey – Restrictions on  Imports of Textile and Clothing Products , WT/DS34/AB/R, 
adopted 19 November 1999 and Agreement under Article 21.3(b) of the DSU, WT/DS34/10 dated 18 January 
2000.  G/C/W/495 
 Page 5 
 
 
 sheets and bedspreads respectively), etc., in which a number of exporting Members had high rates of 
quota utilization.  27. Unfortunately, with respect to this issue, the TM B report simply states as follows:  "[…] while 
noting the concerns expressed in this regard, the TMB observes that none of the Members has referred 
any such specific matter to the TMB …" under its dispute resolution functions
4. 
 28. While that might well be the case, the real questi on to highlight for CTG's consideration, as in 
the case of the two issues mentioned above (i.e., EU's  introduction of new restrictions in the territories 
of the newly acceding member states and Turkey’s maintenance of restrictions despite the Panel and 
Appellate Body rulings about their being inconsistent with Turkey’s WTO obligations), is the neglect 
by the restraining countries of their obligations and the failure to implement their commitments 
faithfully, leaving the developing countries concerned with the burden of expensive recourse.  The change resulted in effective diminution of access (or,  to put it differently, in enlarging the scope and 
incidence of relevant restrictions) in violation of  Article 2.4 of the ATC, and causing disruption to 
established trade. 
 Additional aspects of ATC implementation
 
 29. In the same way, the integration programmes in general have been implemented in such a 
way as to leave a host of consequences to contend with. 
 
Integration process in general 
 
30. This issue is dealt with in a number of paragraphs in the TMB re port spread over several 
sections.  
31. The ATC provided for a ten-year transitional period to accomplish the phase-out of quota 
restrictions.  This long period was intended to  facilitate a smooth and progressive process. 
 32. Against this objective and purpose of the Ag reement, it should be instructive to see how 
major restraining countries did actually phase out the quot a restrictions.  In this connection, a table at 
Annex 2 to this paper summarises the process of actual elimination of quotas by the three major 
restraining countries.  In its report to the CTG, the "TMB observes that in terms of the total number of 
specific restrictions applied by restraining Members, the information at the Body’s disposal is either 
identical with or very close to the pict ure presented by ITCB members in [Annex 2]"
5. In a nutshell: 
• Of a total of 937 quotas applied by the Unite d States on imports of textiles and clothing 
products from WTO Members under the MFA, it phased out only 103 quotas up until now.  
This number includes 17 quotas on Kenya and Ma uritius which were lifted only under the 
AGOA legislation.  The United States will thus a bolish 834 quotas, or 89 per cent of the total, 
at the end in one go. 
• The EU carried over 303 quotas; phased out 91 as of now; and would abolish 212, or 70 per 
cent, on 1 January 2005.  The number 91 includes 13 quotas that the EU suspended in return for market access concessions that it secured from two WTO Members. 
• Likewise, out of a total of 368 quotas carried over by Canada, it has so far phased out 76. 
Consequently, it will abolish 292, or over 79 per cent, at the end of the process. 
• Contrary to the above three, Norway had alr eady abolished all 54 quotas (46 before the end of 
1997 and the remaining eight at the beginning of 2001).  
 
                                                     
 
4 Paragraph 479 of the Report 
5 Paragraph 640 of the Report G/C/W/495 
Page 6  
 
 33. Looked at from a different angle, and taking as the basis the portion of 1990 import trade that 
was actually under quota restriction, the United Stat es has thus far integrated less than 20 per cent, 
while the EU, based on 1995 imports when its memb ership increased to 15, only 32 per cent.   
Consequently, the amount of restrained trade left to be integrated by the two at the end of the process 
is 80 per cent and 68 per cent respectively (the large bul k in each case, consisting of trade in apparel).   
Unfortunately, for lack of necessary information, it is not been possible to assess similar percentages 
in respect of Canada and Turkey.  34. The above, despite the fact that (i) Ministers repeatedly reaffirmed their commitment to full 
and effective implementation of the process, and ( ii) at Doha, they had also decided that "the 
provisions of the [ATC] relating to the early inte gration of products and the elimination of quota 
restrictions should be effectively utilised"
6. 
 35. Regrettably, the major restraining Members di d not accord any deference either to the explicit 
objective of phasing out the quota restrictions "progressively" or to the Ministerial decision at Doha to 
facilitate this by using "the provisions of the [ATC ] relating to the early integration of products and 
the elimination of quota restrictions …".  They main tained that they had the full period of ten years 
for adjustment and therefore back-loaded the elimin ation of the bulk of quotas to the end of the phase-
out process. 
 
Denial of carry forward quotas in 2004 
 36. Due to the  inflexible stance on the part of the ma jor restraining Members, the CTG and the 
General Council have also been kept  from providing a positive resoluti on to the issue of decrease in 
quota access in the final year of the ATC ( 2004) due to non-availability of so-called carry forward  
quotas.  This matter has been the subject of discussi on in several General Counc il meetings and is also 
dealt in the TMB report in paragraphs 256 to 261, 589 and 643. 
 37. It may be pertinent in this regard to r ecall the TMB’s observation that although "the ATC 
does not contain any explicit disposition concerning th e matter [relating to carry forward in 2004], the 
denial of this flexibility would run counter to the basic concept of  progressive  liberalization embodied 
in the ATC. In fact, it would be absurd  if a more restrictive application of the flexibility provisions 
had been foreseen for the last year of ATC impl ementation compared to the preceding years. In 
addition, what would justify such an approach in economic terms, since all th e restrictions will have 
to be eliminated on 1 January 2005?"
7 
 38. The TMB goes on to "express its hope that appr opriate solution to this matter, addressing the 
concern about potential reduction in market access opportunities in 2004, will  be found and adopted 
by the General Council in the near future"
8 adding that "the TMB believes that [such] appropriate 
solutions to avoiding potential reduction in ma rket access in 2004 can be sought by relying on a 
number of different mechanisms or combination thereof"9. 
 
Trade remedy actions 
 39. In addition, stemming from the manner in wh ich the major restraining Members and Turkey 
chose to implement their obligations under the ATC l eaving the bulk of quota restrictions only at the 
end of the transitional period, is the fact that it leaves another significant problem to contend with: 
                                                     
 
6 WT/MIN(01)/17, paragraph 4.1. 
7 Paragraph 260 of the Report. 
8 Paragraph 261 of the Report. 
9 Paragraph 643 of the Report.  G/C/W/495 
 Page 7 
 
 
 that of the sudden downward pressure on export  prices following the abolition of all quota 
restrictions.  40. Under the quota regime, trade transactions in textiles and clothing have not been driven by 
normal commercial considerations alone.  Quota consid erations have been an important component of 
pricing decisions and arrangements.  Most business ope rators therefore believe that the elimination of 
quota restrictions will exert downward pressure on prices.  The deliberate policy of postponing the elimination of most quota restrictions at the end of ten years in one go therefore is liable to exacerbating the situation and encouraging the prot ection seeking interests to cry dumping and spark 
political pressures for alternate methods of protection. 
 
41. Developing Members have repeatedly brought this problem to the attention of the WTO including by presenting a proposal for a specific short term disposition to allow time for trade to find 
its normal course, especially as allegations about du mping in the immediate aftermath of the abolition 
of quotas could not be reasonably evaluated unless th ere was sufficient opportunity for businesses to 
adjust to normal pricing
10. 
 42. It is worth noting in this regard that th e Ministers in Doha decided that "Members will 
exercise particular consideration before initiating investigations in the context of anti-dumping 
remedies on textile and clothing exports from devel oping countries previously subject to quantitative 
restrictions under the Agreement [on Textiles and Cl othing] for a period of two years following full 
integration of this Agreement into the WTO"
11.  The precise disciplines for giving effect to this 
decision however are yet to be established.  43. Unfortunately, as in the case of the carry fo rward issue, the major developed countries 
continue to refuse to shoulder their responsibility resulting from the manner in which they chose to 
implement their commitment to phase out the quota re gime, despite the fact that Ministers in Doha 
had "pledge[d] to reject the use of protectionism"
12. 
 
Implementation of ATC provisions rela ting to specific categories of suppliers 
 
44. The ATC established guiding principles as well as specific provisions for preferential 
treatment of certain categories of exporting countri es.  Thus it required that, in the implementation of 
quota growth rates, small suppliers and new entrants shall be so tr eated as to permit  meaningful 
increases in their access po ssibilities "at the entry into force of  WTO Agreement and for the duration 
of this Agreement [i.e., ATC]" and that "such impr ovements shall be notified to the TMB". Likewise, 
it was provided that "special treatment should be  accorded to the least-developed country Members"13 
and they may also "benefit from meaningful improvements in access possibilities as for small 
suppliers".  And a separate Ministerial decision on measures in favour of least-developed countries 
adopted at the conclusion of the Uruguay Round  provided that the various agreements and 
instruments should be applied in a flexible and supportive manner for the least-developed countries 
and that, to this effect, sympathetic consideration shall be given to specific and motivated concerns 
raised by them14.  Finally, the ATC envisioned that "the particular interests of cotton-producing 
exporting Members should, in consultation with them, be reflected in the implementation the 
provisions of [the ATC]"15. 
 
                                                      
10 WT/GC/W/502. 
11 Op. cit.  paragraph 4.2. 
12 WT/MIN(01)/DEC/1, paragraph 1. 
13 Article 2.18 of the ATC. 
14 Decision on Measures in Favour of Least-Developed Countries. 
15 Article 1.4 of the ATC. G/C/W/495 
Page 8  
 
 45. In this connection, it is pertinent to refe r to TMB's final comments in paragraphs 520–522. 
The following observations are worthy of considera tion in particular.  They succinctly bring out the 
fact that despite repeated exhortations and decisions  at various levels, restraining countries either 
ignored these provisions or failed to give them any meaningful effect.  
• With regard to least-developed countries :  "Noting the statement of the United States that 
'virtually all LDCc are small s uppliers not subject to quotas', it should be noted that that at 
least there is one important exception (Bangl adesh) whose imports into the United States 
continue to be subject to restrictions under the ATC.  Furthermore, the reference by the 
United States to significant preferences grante d to LDCs through regional trade preference 
programmes is duly noted.  However these progr ammes have not yet been notified to the 
WTO; therefore, the TMB has no b asis to assess their possible impact"
16. 
• With regard to small suppliers:   "Regarding the implementation of the provisions of 
Article 2.18 in favour of small suppliers a nd new entrants, the TMB recalls that the 
methodology chosen by the respective restra ining Members for the implementation during 
stage 1 predetermined the possible impact of the implementation of the same provisions during the successive integration stages.  The TMB notes with regret  that, as a follow-up to 
the Doha Ministerial Decision, the Council for Trade in Goods was not in a position to make 
recommendations to the General Council in the matt er.  It is also observed that, despite the 
TMB’s respective comments made in the previous comprehensive reports, Members have made no attempt to implement Article 2.18 by implementing 'at least equivalent changes as may be mutually agreed with respect to a di fferent mix of base levels, growth rates and 
flexibility provisions'"
17.  
• With regard to cotton-producing exporting countries:  "… while noting the statement of the 
United States according to which some considera tion had been given in establishing 'the base 
levels of quotas […] [to] parameters appropriate [ inter alia ] for cotton-producing countries', it 
should be observed that (i) there is no expl anation regarding what were 'parameters 
appropriate' to these Members and that (ii) Ar ticle 1.4 appears to address the particular 
interests of such Members throughout the period of ATC implementation and is not limited to 
the process of establishing the base levels (prior to the beginning of the implementation of the 
ten-year transition period)"18. 
 
The issue of administrative arr angements maintained for implementation and administration of quota 
restrictions 
 46. This issue is discussed in the TMB report over several paragraphs.  Re ference in particular 
may be made to paragraphs  137 and 366 through 370. 
 47. Together with the quota restrictions, ther e have existed arrangements for the purpose of 
implementing and administering these restrictions, containing such aspects as product classification, 
export licenses/visas, procedures for exchange and r econciliation of information pertaining to the use 
of quotas, arrangements for treatment of shipments in excess of quotas, and so forth.  With the 
termination of quota restrictions (and the ATC), it is essential that these administrative arrangements 
should also expire.  
48. Earlier this year, the three major restra ining Members notified their final integration 
programmes to the TMB, indicating that with the integration of remaining ATC products they will 
also eliminate all remaining quota restrictions
19.  These notifications however remained silent with 
                                                      
16 Paragraph 520 of the Report. 
17 Paragraph 521 of the Report. 
18 Paragraph 522 of the Report. 
19 G/TMB/N/465, 464, 469 and G/TMB/R/110.  G/C/W/495 
 Page 9 
 
 
 respect to the administrative a rrangements and procedures that, as noted above, have been in place 
only for the implementation and administration of quota restrictions.  49. In examining the above integration progra mmes from the three major restraining Members, 
the TMB remarked as follows:  "… in view of the importance attached to the administrative 
arrangements under the ATC regime, the TMB believes that it has made a useful contribution by 
pointing out that with the elimination of all quan titative restrictions maintained under the ATC, all 
related administrative procedures, including thos e specified in the administrative arrangements 
notified pursuant to Article 2.17, shall stand terminated.  In fact, the process of integration in the 
sense of the ATC will only become complete if the administrative requirements that were related to 
the administration of the restrictions are also abolished."
20. (Emphasis added) 
 50. Most importantly, these arrangements have not been applicable to all WTO Members; only to 
those whose exports have been under quota restriction.   Exporters of the same products, particularly 
those from developed countries, are not required to  carry the burden of fulfilling the requirements of 
these arrangements.  These arrangements are thus in consistent with the fundamental GATT obligation 
of MFN treatment for all.  It may be recalled in this connection that according to Article I of the 
GATT, "[…] with respect to all rules and formalities  in connection with importation […], any 
advantage, favour, privilege or imm unity granted by any [Member] to any product originating in […] 
any other country shall be accorded immediately and unconditionally  to the like products originating 
in … the territories of all other [Members]". (Emphasis added) 
 
51. The administrative arrangements are also in consistent with the restraining countries' 
obligations under GATT Articles XI and XIII.  Besides,  they add to the cost of export transactions and 
are contrary to the avowed purpose of trade facilita tion so forcefully advocated by the restraining 
countries, in particular. 
 
52. When commenting on views conveyed to the TMB by different Members (in response to its 
general request for any comments/views), the Body  noted "the statement by Canada according to 
which the administrative arrangements undertaken pursua nt to Article 2.17 were used to administer 
the provisions of the ATC and [that they] will expire, along with the ATC, on 31 December 2004".
21  
However, the TMB went on to state as follows:  "Regarding comments made [by the United States] 
with respect to the period following the termina tion of the ATC, the TMB observes that with the 
expiry of the ATC on 1 January 2005, all the pr ovisions of the Agreement will expire and the 
measures notified pursuant to those provisi ons will have to cease to be applied, unless justified under 
other applicable provisions of th e WTO Agreement, including GATT 1994 ."22 (Emphasis added) 
 
53. In regard to the above (highlighted) rema rk in the TMB observations, it is difficult to see 
what, if any, in these administrative arrangement s can be justified under the other applicable 
provisions of the WTO Agreement, including GATT 1994.  Conclusion
 
 
54. In light of the above, and given that in another three months time the process of full 
integration of the sector would have been complete d, we propose that the Council for Trade in Goods: 
 
(i) Take note of the TMB report. (ii) Express its regret over the introduction a nd maintenance of certain measures by EU, 
Turkey and the United States in disregard of the disciplines of the ATC.     
                                                     
 
20 Paragraph 137 of the Report. 
21 Paragraph 368 of the Report. 
22 Paragraph 370 of the Report.  G/C/W/495 
Page 10  
 
 (iii) Express disappointment over the manner in which the major restraining Members 
implemented their integration programmes during the integration process, especially 
(a) by postponing the elimination  of bulk of quota restrictions until the end of the 
implementation process, and (b) by not giving meaningful effect to ATC provisions  
with regard to special and differential tr eatment of small suppliers, least-developed 
countries and cotton-producing exporting countries. 
(iv) Reaffirm the TMB observation that "the  process of integration in the sense of the 
ATC will only become complete if the administrative requirements that were related to the administration of quota restrictions are also abolished". 
(v) Express disappointment that the restraining Members have not yet responded 
positively to concerns about potential re duction in market access opportunities due to 
denial of carry forward quotas in 2004 and reiterate the TMB's hope that an 
appropriate solution will be found and adopt ed by the General Council in the near 
future. 
(vi) Recall the Doha Ministerial decision  that Members will exercise particular 
consideration before initiating investigations  in the context of anti-dumping remedies 
on textile and clothing exports from devel oping countries previously subject to 
quantitative restrictions under the ATC for a period of two years following full integration of textile and clothing sector into the WTO, establish appropriate procedures to operationalize the decision . 
(vii) Exercise close oversight of the process  until full and faithful implementation of the 
ATC in all its aspects.  G/C/W/495 
 Page 11 
 
 
 ANNEX 1 
 
ATC Implementation 
Declarations/Decisions over the years 
 
 
Agreement on Textiles and Clothing  
 
"There shall be no extension of th is Agreement". (ATC Article 9) 
 Ministerial Conference
 
 
Singapore,  Declaration, 13 December 1996   
                            
"We confirm our commitment to full and faithful impl ementation of the provisions of the Agreement on 
Textiles and Clothing (ATC)". (W T/MIN(96)/DEC, paragraph 15) 
 
Geneva, Declaration, 25 May 1998 
 
"We reaffirm the commitments and assessments we made at Singapore…." (WT/MIN(98)/DEC/1, 
paragraph 2) 
 
"Full and faithful implementation of the WTO Agre ement and Ministerial Decisions is imperative for 
the credibility of the multilateral trading system…" (Paragraph 8) 
 
"…we decide that a process will be established….to ensure full and faithful implementation of existing 
agreements…" (Paragraph 9) 
 
Doha, Declaration, 14 November 2001  
"We attach the utmost importance to the implementation related issues and concerns raised by 
Members and are determined to find appropriate so lutions to them." (WT/MIN(01)/DEC/1, paragraph 
12) 
 
Doha, Decision on Implementation-Re lated Issues and Concerns, 14 November 2001 
 
"[The Ministerial Conference] reaffirms the commi tment to full and faithful implementation of the 
Agreement on Textiles and Clothing, and agrees: 
 
• that the provisions of the Agreement relating to the early integration of products and the 
elimination of quota restrictions should be effectively utilised. 
• that Members will exercise partic ular consideration before in itiating investigations in the 
context of antidumping  remedies on textile a nd clothing exports from developing countries 
previously subject to quantitative restrictions under the Agreement for a period of two years 
following full integration of this Agreement into the WTO. 
 
• that without prejudice to their rights and obligations, Members shall notify any changes in 
their rules of origin concerning products falling under the coverage of the Agreement to the 
Committee on Rules of Origin which may decide to examine them. G/C/W/495 
Page 12  
 
 Requests the Council for Trade in Goods to examine the following proposals:  
• that when calculating the quota levels for sm all suppliers for the remaining years of the 
Agreement, Members will apply the most fa vourable methodology available in respect of 
those Members under the growth-on-growth provisions from the beginning of the 
implementation period; extend the same treatment  to least-developed countries; and, where 
possible, eliminate quota restrictions on imports of such Members;   
 
• that Members will calculate the quota levels fo r the remaining years of the Agreement with 
respect to other restrained Members as if impl ementation of the growth-on-growth provision 
for stage 3 had been advanced to 1 January 2000; 
and make recommendations to the General Counc il by 31 July 2002 for appropriate action. 
(WT/MIN(01)/17, paragraph 4)  
General Council 
 
 
Meetings held on 8 and 31 July 2002; Agen da item: Proposal relating to advancing the 
implementation of growth-on-growth referred by the Ministerial Conference  Statement by the European Commission 
 
"The process of integration of the textiles and clot hing sector under the normal rules of the WTO was in 
its seventh and a half year, and all Members were committed to the full and faithful implementation of 
the ATC, which included the termination of th e ATC on 1 January 2005." (Minutes of meeting, 
WT/GC/M/75, paragraph 207)  
Statement by the United States 
 
"Despite the hardship to its industry resulting from the ATC, the Unite d States was faithfully 
implementing its requirements and remained comm itted to its full integration" (paragraph 218) 
 
Statement by Canada 
 
"Canada remained committe d to the full integration of the tex tile and clothing sector into GATT 1994 
disciplines by 1 January 2005, as provided for in th e ATC, and for the elimination of all remaining 
quotas by that date." (Paragraph 219)  
Meeting held on 24 – 25 July 2003; Agenda item: Co nsideration of proposal to allow use of carry 
forward quotas in 2004 
 Statement by the United States  
"…his delegation appreciated the comments from several Members concerning the final year of the quota phase-out programme.  The United States urged th ese Members not to lose sight of the fact that 
the important watershed event of the completion of the quote phase-out programme required by the 
ATC was nearly at hand…The United States had continua lly reaffirmed to its trading partners that it 
would fully and faithfully implement the ATC as sche duled, and did so again at the present meeting." 
(Minutes of meeting, WT/GC/M/81, paragraph 47) 
Council for Trade in Goods (CTG)
 
  G/C/W/495 
 Page 13 
 
 
 First Major Review of ATC Implementation, 1997/98  
 
"The [CTG] reiterated the commitment by Members to the full and faithful implementation of all 
provisions of the Agreement on Textiles and Clothing. The Council noted that, as specified in Article 9, 
the ATC and all restrictions there under shall sta nd terminated on 1 January 2005, on which date the 
textiles and clothing sector shall be fully integrated  into GATT and that there shall be no extension of 
the ATC."(Report adopted on 16 February 1998,  G/L/224)  
Second Major Review of ATC Implementation, 2001/02 
 
"Based on the discussions, which are set out in detail in the reports on the meetings, the 
Council…arrived at certain conclusions, [ inter alia ], the reaffirmation by all Members of their 
commitment to achieve the full and faithful impl ementation of the ATC by 1 January 2005." (Report 
adopted on 23 July 2002,  G/L/556)  
 
Meeting held on 13 June 2002, Agenda item consid eration of proposal to advance growth-on-growth 
referred by the Ministerial Conference 
 Statement by the United States  
"The entry into force of the ATC … established an irreversible schedule for the phased elimination of 
the quota regime that regulates a significant portion of world trade in the sector...  The ATC is a very 
important agreement for the United States, and it took very seriously its commitm ent to ensure that the 
provisions of the ATC, in its entirety, are fully and faithfully implemented." (Minutes of the meeting 
held on 13 June 2002, G/C/M/62, page 3)  
Statement by Canada  
 "As had been indicated on numerous occasions and re-a ffirmed by Ministers in Doha, Canada remained 
fully committed to the full implementation of th e Agreement on Textiles and Clothing, which will 
occur only two and a half years from now....  In conc lusion, that Canada remained firmly committed to 
the full implementation of the ATC, and to the removal of the quota restrictions by no later than 1 January 2005." (G/C/M/62, page 6)  Statement by European Commission 
 
"The spokesman for the European Union re-state d its position that it had fully complied with the 
obligations of the ATC, would continue to do so, and would respect the deadline of the end of 2004." 
(G/C/M/62, page 7) 
 
Textiles Monitoring Body (TMB)
  
 
Final implementation notifications 
  By the United States (11 February 2004) 
 
"I have the honour to notify that on 1 January 200 5 the United States will integrate into GATT 1994 all 
textile and clothing products to which the ATC appli es, …, that were not integrated during the first 
three stages of integration under the ATC.  On this  date, the United States will eliminate all remaining 
restrictions under the ATC on such products, and the United States will have integrated into GATT 
1994 all products listed in the A nnex to the ATC." (G/TMB/N/465) 
 G/C/W/495 
Page 14  
 
 By Canada (11 February 2004) 
 
"I have the honour to notify that on 1 January 200 5, Canada will integrate into GATT 1994 all textile 
and clothing products to which the ATC applies, …, that were not integrated during the first three 
stages of integration under the ATC.  On this date , Canada will eliminate all remaining restrictions 
under the ATC on such products, and Canada will ha ve integrated into GATT 1994 all products listed 
in the Annex of the ATC." (G/TMB/N/464) 
 
By the European Union (16 March 2004) 
 "I have the honour to notify that  on 1 January 2005, the European Community will integrate into GATT 
1994 all textile and clothing products to which the ATC applies, …, that were not integrated during the 
first three stages of integration under the ATC.  On  this date, the European Community will eliminate 
all remaining restrictions under the ATC on such produ cts, and thus the European Community will have 
integrated into GATT 1994 all products listed in the Annex of the ATC". (Notification to the TMB, 
G/TMB/N/469)  
 
"The Community’s notification to the TMB of 17 March about the elimination of restrictions on 
schedule as foreseen by the ATC by the end of 2004 re mains valid also for the enlarged Community of 
25 members." (TMB report of on its  meeting dated 21-22 June 2004 , G/TMB/R/110) 
 
  G/C/W/495 
 Page 15 
 
 
 Annex 2 
 
Pace of Quota Abolition 
  
USA  
EU  
Canada  
Norway 
 Total number of quotas at start of ATC
a  
937 
303 
368 54
 Of which phased-out
b: 
(i) Stage 1 (from 1995): 
      By integration under Art. 2.6 
     By early elimination under Art. 2:15  
0 
0  
8 
 0
46
(ii) Stage 2 (from 1998): 
       By integration under Art. 2.8(a)        By Art.2.8(a) and Art.4 
       By early elimination under Art. 2:15  
3 2 
10
c 
21 
  
26 
 
 0
8
(iii) Stage 3 (from 2002): 
      By integration under Art. 2.8(b) 
      By Art.2.8(b) and Art.4   
      Under bilateral agreements         Under AGOA  
69 
2 
 
17 
57 
 
 
13 
42 
 
  0
 
Total number of quotas abolished as of March 2004  
 
103 
 
91 
 
76 54
 Quotas to be abolished on 1 Jan. 2005 834 212 
292 0
 
a. Including specific limits and sub-limits notified under Art.2 of the ATC. b. Numbers do not include product categories on which quotas have been eliminated 
only partially. 
c. Eliminated only for Romania, not for any other restrained Member.  
 
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