RESTRICTED  WORLD TRADE  
ORGANIZATION  G/TMB/R/106 
16 March 2004 
 (04-1167) 
Textiles Monitoring Body  
   
REPORT OF THE ONE HUNDRED AND SEVENTH MEETING 
  
1. The Textiles Monitoring Body held its one hundred and seventh meeting on 9 February 2004. 
2. Present at this meeting were the following members and/or alternates: 
Mr. Crippa/Ms. Miranda;  Messrs. Farahat/Dalela;  Ms. Huber;  Messrs. Ivan Lee;  Samosir;  Seppey; 
Sorensen;  Tagliani;  Yoshikawa;   Ms. Zhang/Mr. Khan/Ms. Lu.  
3. The TMB adopted the report of its one hundred and sixth meeting (G/TMB/R/105). 
Notification under Article 2.1 of the Agreement on Textiles and Clothing (ATC)  
4. The TMB received a communication from the Un ited States following the Body’s invitation, 
contained in the report of its one hundred and fourth  meeting, for the United States to reconsider its 
position with respect to the implementation of the growth-on-growth provisions of the ATC to the 
quantitative restrictions maintained on imports  from the Former Yugoslav Republic of Macedonia 
(FYROM) and to implement the full 27 per cent increase  in the respective growth rates applicable to 
Stage 3 also for the year 2003.
1 
5. In its communication, the United States stated the following with respect to the conclusions 
reached by the TMB: 
“The US has carefully reviewed the TMB's findi ng on this matter and has concluded that it 
cannot agree with the TMB's reasoning.  The US used the same methodology for FYROM as 
was used to calculate accelerated growth  for China after its WTO accession.  [The 
United States] continues to believe that this is the most appropriate methodology to use.” 
6. The TMB recalled that at its one hundred and fi rst meeting it had begun its examination of the 
notification received pursuant to Article 2.1 from the United States following the accession of 
FYROM to the WTO and had decided to seek  clarifications from the United States, inter alia , on the 
manner in which the growth-on-growth provisions fo reseen in Article 2.14 and also referred to in the 
accession instruments of the FYROM, had been impl emented with a view to providing the increase in 
the respective growth rates of the restrictions maintained.2  At its subsequent meeting, the TMB 
observed with concern that it had not yet receive d the clarifications it had sought from the United 
States and decided to remind the United States of that request.3  In response, the United States 
explained that the "'annual growth rate for 2004 quotas [would] be 2.54 per cent' and that, for the 
2003 limits, the effective annual growth  rate had been increased by pror ating the growth rate of 2.54 
per cent to reflect the number of days in 2003 that FYROM would be a Member of the WTO, 'resulting in a prorated growth rate for 2003 of 2.40241096 per cent.'"
4  Starting its examination of this 
response at its one hundred and third meeting, th e TMB recalled that "the Report of the Working 
Party on the Accession of FYROM stated, inter alia , that 'for the purposes of FYROM’s accession to 
                                                      
1 See G/TMB/R/103, paragraph 17. 
2 See G/TMB/R/100, paragraph 4. 
3 See G/TMB/R/101/Rev.1, paragraph 5. 
4 See G/TMB/R/102, paragraph 6. G/TMB/R/106 
Page 2  
 
the WTO, the phrase "day prior to the date of en try into force of the Agreement on Textiles and 
Clothing" shall be deemed to refer to the day prio r to the date of accession of FYROM to the WTO.  
To [the] base level [of the restrictions notifie d] the increase in growth rates provided for in 
Article 2.14 of the Agreement on Textiles and Clot hing shall be applied, as appropriate, in the 
Agreement on Textiles and Clothing from the date  of FYROM’s accession.'  In addition, the TMB 
recalled that it had already examined notifications  made under Article 2.1 by the United States where 
the growth-on-growth provisions had been reporte d to be implemented by the United States, with 
respect to the quantitative restrictions notified, in a similar way (i.e. by using proration).  Before 
proceeding further with the review of this elemen t of the notification by the United States, the TMB 
decided to bring the additional information provide d by the United States to the attention of the 
Former Yugoslav Republic of Mace donia.[original footnote omitted]”
5 
7. At its one hundred and fourth meeting, the TMB, noting that no observation or follow-up 
communication had been received from FYROM, ex amined in detail the additional information 
provided by the United States regarding the met hodology applied in implementing the growth-on-
growth provisions of the ATC in relation to  imports subject to restrictions from FYROM.6  The TMB 
found that once the United States had concluded that it had been appropriate to apply the provisions of 
Article 2.14(b) to FYROM for 2003 (since FYROM had become a Member in that year), the United 
States should have implemented in full the 27 per cen t increase in the respective growth rates for the 
year 2003, instead of prorating it for the period of  FYROM's actual membership during that year.  The 
TMB, therefore, invited the United States to rec onsider its position and implement the full 27 per cent 
increase in the respective growth rat es applicable to Stage 3 also for the year 2003.  It was expected 
that the United States would report back to the TMB on the results of this re-examination as soon as 
possible. 
8. In examining the present communication received from the United States, the TMB observed 
that in support of the conclusion that it could not  agree with the TMB's reasoning, the United States 
stated that it had used the same methodology for FY ROM as was used to calcu late accelerated growth 
for China after its WTO accession and the United Stat es continued to believe that this was the most 
appropriate methodology to use.  Since this was the only argument specifically mentioned in the 
communication received from the United States, the TMB observed that the United States had not provided any reason or consideration that had not alr eady been raised by it earlier or would have been 
ignored by the TMB during previous stages of its exam ination of the same matter either in relation to 
FYROM or to China. 
9. In light of the above, and in particular, the reference made by the United States to the 
methodology it had used in relation to China, the TMB noted that the detailed examination and analysis it had made with respect to the methodology applied by the United States vis-à-vis  China
7 
applied, mutatis mutandis , to the present case.  The TMB reiterated, inter alia,  its view that nothing in 
the language of the respective provisions of the Report of the Working Party on the Accession of 
FYROM8, including the term “as appropriate”, suggested  that the implementation of the increase in 
growth rates provided for in Article 2.14, according to which “the level of each restriction shall be 
increased annually  […]” (emphasis added) could be altered.  Therefore, in the view of the TMB, the 
provisions of the Working Party report did not provide  an authorization not to implement in full for 
the year 2003 the annual increase stipulated in Article 2.14(b). 
10. The TMB expressed its concern that the United States had not implemented for the year 2003 
the full 27 per cent increase in the respective growth rates applicable  to Stage 3.  Recalling that 
pursuant to the provisions of Article 8.1, the TM B was established "[i]n order to supervise the 
                                                      
5 Ibid. 
6 See G/TMB/R/103, paragraphs 4 to 15. 
7 See G/TMB/R/90, paragraphs 25 to 28;  and G/TMB/R/98, paragraphs 17 to 27. 
8 See paragraph 6 above.  G/TMB/R/106 
 Page 3 
 
 
implementation of this Agreement, to examine all measures taken under this Agreement and their 
conformity therewith, and to take the actions specifi cally required by it by this Agreement [...]", it was 
noted that in addressing the methodology used by the United States, the TMB had to rely on the 
applicable provisions of the ATC and the related pr ovisions of the Report of the Working Party on the 
Accession of FYROM.  The TMB had examined the re levant aspects of this matter, including the 
issue of conformity.  It was also recalled that t hough the matter had been brought to the attention of 
FYROM, no communication had been received from it.   Hence the Body confined itself to the 
mandate specified in the first sentence of Artic le 2.21 under which the specific action required from 
the TMB is to keep under review the implem entation of the provisions of Article 2.  
Notification under Articles 2.8(c) and 2.11 of the ATC 
11. The TMB reviewed, under Article 2.21, the notifi cations made pursuant to Articles 2.8(c) and 
2.11 by Canada (G/TMB/N/464), China (G/TMB/N /463) and the United States (G/TMB/N/466).  
Canada notified that “on 1 Janua ry 2005, Canada will integrat e into GATT 1994 all textile and 
clothing products to which the ATC applies, as listed in the Annex of the ATC, that were not 
integrated during the first three stages of integr ation under the ATC.  On this date, Canada will 
eliminate all remaining restrictions under the ATC on such products, and Canada  will have integrated 
into GATT 1994 all products listed in the Annex of  the ATC.”  China stat ed that “pursuant to 
Article 2.8(c) of the Agreement on Textiles and Clothing, China will integrate all the remaining 
products not covered by China's first, second a nd third integration programmes into GATT 1994 
on 1 January 2005.”  The United States for its part  notified that “on 1 January 2005 the United States 
will integrate into GATT 1994 all textile and clothing  products to which the ATC applies, as listed in 
the Annex of the ATC, that were not integrated dur ing the first three stages of integration under the 
ATC.  On this date, the United States will eliminat e all remaining restrictions under the ATC on such 
products, and the United States will have integrated into GATT 1994 all produc ts listed in the Annex 
to the ATC.” 
12. In reviewing the above-mentioned notifications  under Article 2.21, the TMB noted that the 
three Members confirmed that on the first day of the 121st month that the WTO Agreement would be 
in effect their respective textiles and clothing sector  would be integrated into GATT 1994.  The TMB, 
noticing that the three Members had not provided a de tailed list of the products that would, in effect, 
be integrated on 1 January 2005, observed that, in order to inject the necessary transparency in the 
implementation of the ATC, it would be useful to pr ovide such a detailed list of the products to be 
integrated on 1 January 2005 and invited all Member s concerned to provide such a list.  The TMB 
recalled, furthermore, that it had already remi nded Members of the notification requirements 
contained in Articles 2.8(c) and 2.11.9 
13. The TMB noted, furthermore, that in their respective notifications, both Canada and the 
United States had stated specifically that on the da te of full integration, i.e. on 1 January 2005, all 
remaining restrictions under the ATC would be  eliminated.  The TMB observed that these 
reaffirmations were fully in line with the provisions of  Articles 2.8(c) and 9.  It was also recalled that 
the quantitative restrictions maintained under Artic le 2 of the ATC were being implemented through 
additional procedures, such as the administrative arrangements agreed betw een Members and notified 
under Article 2.17.  The TMB recalled that these ad ministrative arrangements could only be deemed 
necessary in relation to the implementation of restrict ions applied under the ATC.  Therefore, with the 
elimination of all quantitative restrictions under th e ATC, all related administrative procedures and 
measures, including those specified in the ad ministrative arrangements notified pursuant to 
Article 2.17, shall also stand terminated. 
                                                      
9 See G/TMB/R/105, paragraph 7. G/TMB/R/106 
Page 4  
 
Preparation for the TMB’s 2004 comprehensive report under Article 8.11 of the ATC 
14. The TMB considered and agreed on a possible st ructure for the comprehensive report on the 
implementation of the ATC during its third stage, to  be transmitted to the Council for Trade in Goods 
in the context of the major review envisaged in Article 8.11 of the ATC.  Furthermore, the TMB 
decided to remind WTO Members of some of the notification requirements contained in the ATC, 
regarding which only a few or no notifications had been received, and also to seek additional 
information and comments from Members which they c onsider relevant in the context of the TMB’s 
preparation of its comprehensive report.
10 
_____________ 
 
                                                      
10 Issued as G/TMB/30.