WORLD TRADE
ORGANIZATIONG/TMB/R/40
19 March 1998
(98-1108)
Textiles Monitoring Body
REPORT OF THE FORTY-FIRST MEETING
1. The Textiles Monitoring Body held its forty-first meeting in three sessions, on 16 and
17 February, 24 February and 3 March 1998.
2. Mr. Morgan Karinge Githinji (Kenya) was appointed as the non-participating observer from
Africa, in replacement of Mrs. Usha Chandnee Dwarka-Canabady (Mauritius).  Mr. Kobayashi
appointed Mr. Tomochika Uyama (Japan) as his alternate as from 3 March 1998.
3. Present at this meeting were the following members and alternates:
Mr. Da Costa/Ms. Gervasi/Mr. Grané; Messrs. Khalil/Mukerji; Kobayashi; Malik/Ms. Morais;Messrs. Moroz/Wentzel;  Rey/Gr čar;  Richards/Babajide; Tadpitakkul/Hastjarjo;  Tagliani;
Tong/Kim.
4. The TMB adopted the report of its fortieth meeting (G/TMB/R/39).
Honduras/United States:  Notification Pursuant to Articles 8.5 and 8.6 of the Agreement on Textiles
and Clothing (ATC)
5. On 5 February 1998, Honduras addressed a communication to the TMB requesting it,
pursuant to Articles 8.5 and 8.6 of the ATC, to make a specific determination under Article 6.9
whether the restraint maintained by the United States on imports of category 352/652 products was
justified.
6. This restraint previously agreed between Honduras and the United States in respect of exports
of cotton and man-made fibre underwear (category 352/ 652) from Honduras had been notified to the
TMB under Article 6.9 on 15 September 1995.
7. In accordance with the provisions of Article 8.7,  the TMB invited the participation of both
Honduras and the United States to its review, initially scheduled for 16 and 17 February 1998.  It was
informed that Honduras would participate at the meeting on 16 and 17 February, whereas the
United States sent a written communication presenting its views on the matter raised by Honduras.
Subsequently, the United States decided to send a representative, who participated in part of theTMB's review of this issue.
8. The representative of Honduras stated that he had requested the TMB to make a specific
determination under Article 6.9 whether the restraint maintained by the United States on imports of
category 352/652 products was justified for the following main reasons:
- the restraint measure agreed between Honduras and the United States, notified to the
TMB pursuant to Article 6.9, had been raised before the TMB on a number of
occasions, including at its previous meeting.  The TMB had not, however, determined
whether this agreement was justified under Article 6;
- despite the TMB’s reviews and Honduras’ requests to the United States, the restraint
measure was still in force;G/TMB/R/40
Page 2
- as a result, the industry of Honduras producing cotton and man-made fibre underwear
remained adversely affected by the maintenance of the restraint and was
disadvantaged vis-à-vis  other suppliers in the US’ market for cotton and man-made
fibre underwear;
- Honduras was concerned with the US’ statement that the Textiles Monitoring Body
had, at its previous meeting, declined to make a recommendation;
- the whole process had been detrimental to Honduras’ interests under the ATC
since 1995.
9. The representative of the United States stated that her country would not participate in a
de novo  review by the TMB, as requested by Honduras under Article 6.9, of the agreed restraint
measure.  Such a review was neither necessary nor appropriate, in particular since it would take place
almost three years after the restraint had been notified and reviewed, pursuant to Article 6.9, by the
TMB.  The appropriate procedures had not been properly followed either by Honduras, since theconsultations contemplated by both Articles 8.5 and 8.6, invoked by Honduras, had not taken place
between the parties on the matter that was the subject of Honduras’ request.  She informed the TMB
that the United States was at that time considering the invitation made by the TMB as set out in
paragraphs 27 and 28 of G/TMB/R/39.  In so doing, the United States had closely monitored imports
of category 352/652 from Honduras, and found that no detriment was being caused to Honduran firmsproducing such products, the rate of quota utilization being about 20 per cent.  Furthermore, in
response to Honduras’ request, the United States had approved the use of carryover by Honduras for
category 352/652 in addition to the existing restraint level.
10. The TMB recalled that at its meeting in January 1998, it had reviewed a previous
communication from Honduras, submitted also under Articles 8.5 and 8.6, expressing the view thatthere was no justification for the United States to maintain the above-mentioned restraint measure.  In
these proceedings, Honduras had contended that the continuation of the restraint was detrimental to its
interests under the ATC, and consultations held with the United States had failed to produce a
mutually satisfactory solution.  Therefore, Honduras had requested the TMB, pursuant to Articles 8.5
and 8.6 of the ATC to promptly consider the matter and recommend that the United States withdrawthe measure forthwith.  The TMB had concluded its review
1  as follows:
The TMB, bearing in mind its December 1995 review of the agreed measure as
described in paragraph 22 [of G/TMB/R/39],  the evolution of impo rts from Honduras into
the United States of products of categor y 352/652 and the corresponding level of the
restraint, the fact that the restraint was due to expire at latest on 26 March 1998, and thestatement and arguments by Honduras that it s maintenance was detrimental to Honduras’
interests, invited the United States to reconsider the necessity to maintain the restraint in
force until its scheduled expiration date.
The TMB noted that until the expiration of the measure positive consideration can be
given by the United States to any possible concern that would be brought to its attention by
Honduras, so as to avoid future exports of this  product to the United States from Honduras
being adversely affected.
11. The TMB noted that, subsequent to its consideration at its meeting in January 1998 of the
issue raised by Honduras, Honduras had communicated a written request to the United States,
requesting the United States to take action to either remove the Article 6 restraint on category 352/652
                                                     
1The full report of the TMB’s consideration of this issue is contained in G/TMB/R/39,
paragraphs 16 to 28.G/TMB/R/40
Page 3
products or eliminate the US Customs entry requirements for that category.  The TMB also noted that
the United States was reviewing this request in light of the TMB’s 22 January statement and indicated
that it would respond to Honduras when this review was completed.
12. In light of further clarifications provided by the representative of Honduras, the TMB
understood that the concerns brought to its attention, at the present meeting, by Honduras were
twofold: (i) the absence of determination by the TMB, pursuant to Article 6.9, of the justification ofthe restraint in accordance with the provisions of Article 6;  and (ii) the lack of positive reaction from
the United States following the consideration by the TMB of the previous communication made by
Honduras.
13. With regard to the former issue, the TMB recalled, once again, that the measure referred to it
by Honduras had been agreed with the United States for a period of three years ending on
26 March 1998;  it would end at latest on that date and, in accordance with Article 6.12, could not be
extended.  The TMB reiterated that during its review of this measure in December 1995, it hadrecalled that, at its second meeting, when reviewing the action taken by the United States against
imports of category 352/652 products from Hondur as under Articles 6.2 and 6.3, it had found that
serious damage, as envisaged in these provisions, had not been demonstrated.  The TMB had not,
however, reached consensus on the existence of actual threat of serious damage (G/TMB/R/2,
paragraph 16).  The TMB had not, therefore, determined whether the agreement was justified inaccordance with the provisions of Article 6.
14. In reviewing the request by Honduras to make, pursuant to Articles 8.5 and 8.6, a specific
determination under Article 6.9 of the justification of the restraint, the TMB addressed a number of
issues, including (i) the procedural requirements for invoking and re-invoking, respectively, the
provisions of Articles 8.5 and 8.6 and (ii) whether a reference to Article 8.5 or 8.6, or to both articles,could trigger the resumption of the review of an agreed restraint measure that had been notified
pursuant to Article 6.9 and had already been reviewed.  The TMB noted the statement of the
representative of the United States that, in her view, the consultations contemplated in both
Articles 8.5 and 8.6, invoked by Honduras, had not taken place between the two Members on the
particular matter, the subject of the communication by Honduras on 5 February 1998.  The TMB alsonoted the view of the representative of Hondura s according to which this matter had already been
raised with the United States on a number of occasions and was also inherent in the latest exchange of
letters that had taken place subsequent to the January 1998 meeting of the TMB.  Furthermore, the
TMB considered that the ATC did not provide for the re-reviewing, pursuant to Article 6.9, of agreed
restraints, reviews of which had already been completed by the Body.  The TMB recognized, on theother hand, that during its review of the agreed restraint in 1995 it had not been able to make a
determination on the justification of this measure, a situation which was not foreseen in the ATC.
Considering the legal, procedural and substantive elements involved, and keeping also in mind the
timing of the request of Honduras, the TMB considered that, under Articles 8.5 and 8.6, it was not in a
position to make a specific determination under Article 6.9 whether the restraint maintained by the
United States on imports of category 352/652 products was justified.  The TMB observed that such a
determination would have, in any event, been of limited practical purpose, since the restraint was dueto expire in about 30 days.
15. Turning to the other aspect of  Honduras' concern, the TMB recalled that at its previous
meeting, as noted in paragraph 8 above, based on a number of considerations, it had, inter alia ,
invited the United States to reconsider the necess ity to maintain the rest raint in force until its
scheduled expiration date, i.e. 26 March 1998 (G/TMB/R/39, paragraph 27).  Bearing in mind, inparticular, the fact that the restraint was due to expire on 26 March 1998, the TMB considered that
this invitation called for a quick and thorough follow-up by the United States.  In these circumstances,
the TMB had concerns that neither Honduras nor the Body had yet been informed by the
United States of the outcome of its consideration of  the matter.  The TMB noted that the United States
had stated that positive consideration was being given by the United States to concerns brought to itsG/TMB/R/40
Page 4
attention by Honduras, by ensuring the use of carryover in addition to the existing restraint level by
Honduras.  The TMB observed, however, that Hondur as was entitled to have recourse to the
flexibility provisions forming part of the agreement reached pursuant to Article 6.8.  The TMB also
noted that, according to the latest indications regarding developments of imports by the United States
of products of category 352/652 from Honduras, it was unlikely that the restraint level could be fully
utilized by Honduras before its expiration.
16. The TMB decided to extend its meeting and to resume the consideration of the issue on
24 February 1998.  During this resumption, the TMB was informed by the United States that it was in
the process of revising its customs entry requirements for category 352/652 products from Honduras,
in order to alleviate pressure on the specific limit on such imports.  The details of this action would be
communicated to the TMB shortly. In view of th is, and mindful of the fact that Honduras had, on
28 January 1998, requested the United States to take action to either remove the Article 6 restraint on
category 352/652 or to eliminate the US Customs entry requirements for that category, the TMBdecided to postpone its consideration of the matter until 2 March 1998 by which time, the TMB
understood, the details of the US’ action would have been communicated to it.
17. In reaction to the communication by the United States, referred to in paragraph 14 above,
Honduras stated in a letter dated 27 February 1998 that it understood that the United States would
"implement [the revision of its customs entry requirements] on the basis of the same precedentestablished by it when the entry status had been changed for two categories shipped from two
Members who had challenged an Article 6 restraint".   Honduras further stated that it was important
that there should  be no further delay in the US' action.
18. As a follow-up to the communication by the United States referred to in paragraph 14 above,
the United States, in a further letter dated 2 March 1998, stated  inter alia that "the TMB's decision on
22 January 1998 concerning Honduras category 352/652 no ted that the United States can give positive
consideration to concerns brought to its attention by Honduras.  The United States later received a
letter from Honduras requesting the implementation of flexibility available for this category. The U.S.
[had] given this flexibility to Honduras through a notice published in the Federal Register.  The letter
also stated that U.S. companies were contacting H onduras with requests for additional specific limit
quota for shipments scheduled before the expiration of the restraint on 26 March 1998.  The
United States would like to facilitate this reque st from Honduras in the following way. In order to
prevent disruption to shipments chargeable to the category 352/652 specific limit, the authorities in
Washington will charge to the 352/652 GAL
2 shipments in excess of the specific limit.  As the TMB
is aware, the GAL for this category is quite large and can easily accommodate this".
19. Honduras responded to the above-mentioned letter with a further letter dated 2 March 1998,
stating that this technical proposal to charge spec ific limits shipments to the GAL would violate the
US' own rules regulating quota merchandise and that it would expose Honduras to charges of
circumvention.
20. Furthermore, Honduras was of the view that th e US' proposal threatened to set a precedent. It
believed that such an action would not inspire confidence among the importers and the exporters
concerned.  Honduras could not support actions that would undercut the commitment of both thegovernment and the private sector to strictly abide by the legal requirements.  Therefore, the
Government of Honduras requested the TMB to recommend to the United States to rescind the
restraint or to remove the entry requirements for this category in accordance with the procedure that
                                                     
2Guaranteed Access Levels (GALs) are quantities of products of a category that a country can export to
the United States without being subject to quantitative limitation, provided the actual product shipped qualifies
for such treatment, inter alia , by being made of "US components".G/TMB/R/40
Page 5
had been established in the case of two previous restraints regarding Costa Rica and India, involving
actions under Article 6 of the ATC.
21. In resuming its consideration of the matter on 3 March 1998, the TMB considered the
additional communications received from Honduras and the United States.  The Body understood
from the follow-up communication of the United States that while the United States would maintain
the restraint in place until its scheduled expiration date, i.e. 26 March 1998, it had decided as from2 March 1998 to implement this measure in such  a way that exports from Honduras would not, in
practical terms, be embargoed.  The TMB considered that, although the United States had not
removed the Article 6 restraint on category 352/652 products or eliminated the US Customs entry
requirements for that category, as requested by Honduras, it had taken steps to ensure that the
practical concerns raised by Honduras, in particular during the January 1998 meeting, had been
responded to positively.
22. The letter by Honduras, dated 2 March 1998, confirmed that it requested the TMB to
recommend to the United States to either rescind th e restraint or to remove the entry requirements for
this category in accordance with the procedure that had been established in the case of two previous
restraints with regard to Costa Rica and India, involving action under Article 6 of the ATC.  With
respect to the first option, the TMB recalled that, as  noted in paragraph 12 above, it considered that,
under Articles 8.5 and 8.6, as requested by Honduras, it was not in a position to make a specificdetermination under Article 6.9 whether the restraint maintained by the United States on imports of
category 352/652 products was justified.  With respect to the second option, the TMB understood that
though the US' revision of its customs entry requ irements would not meet all the concerns of
Honduras, it had responded to most of the practical concerns Honduras had expressed.
23. The TMB considered that it was not within its jurisdiction to ascertain whether the US' action,
notified in the letter from the United States on 2 March 1998, would violate the US' own rules
regulating quota merchandise, as stated by Honduras.  The TMB noted the concerns expressed by
Honduras, as set out in paragraph 18 above.  Th e TMB observed, however, that in view of the low
utilization rate of the specific limit and of the fact  that the restraint was due to expire in 23 days, it
was unlikely that, in practice, the United States would have to charge to the 352/652 GAL shipments
in excess of the specific limit.  In these circumstances, the concerns expressed by Honduras would,
therefore, be unlikely to materialize.  For the same reasons, the TMB did not consider it appropriate to
discuss the possibility of taking further action on this particular matter.
24. Bearing in mind all the elements mentioned above, the TMB took note of the communications
made by both Honduras and the United States, as well as of the action taken by the United States, andconsidered that it had completed its review of the matter.
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