WORLD TRADE
ORGANIZATIONG/C/W/325
22 October 2001
(01-5167)
Council for Trade in Goods Original:  English
SECOND MAJOR REVIEW OF THE IMPLEMENTATION OF THE AGREEMENT
ON TEXTILES AND CLOTHING BY THE COUNCIL FOR TRADE IN GOODS
Communication from Uruguay
At the request of the Permanent Mission of Uruguay on behalf of members of the ITCB1 that
are also Members or observers of the WTO, the text of the statement made at the meeting of the
Council for Trade in Goods on 27 September 2001, along with a set of tables provided at the meetingof 17 October 2001, are being circulated to Members.
                                                     
1 The ITCB members and observers of the WTO are Argentina; Bangladesh; Brazil; China; Colombia;
Costa Rica; Egypt; El Salvador; Guatemala; Honduras; H ong Kong, China; India; Indonesia; Republic of Korea;
Macau, China; Maldives; Mexico; Pakistan; Paraguay; Peru; Sri Lanka; Thailand, Uruguay and Vietnam.G/C/W/325
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Meeting of the Council for Trade in Goods
27 September 2001
Second Major Review of ATC Implementation
Statement by Mr. William Ehlers
Acting Chairman  ITCB
I have the honour to speak on behalf of 24 members (in fact we are 25 including the
Democratic Peoples' Republic of Korea) of the International Textiles and Clothing Bureau that are
also Members or Observers of the WTO, namely, Argentina; Bangladesh; Brazil; China; Colombia;
Costa Rica; Egypt; El Salvador; Guatemala; Honduras ; Hong Kong, China; India; Indonesia; Republic
of Korea; Macao, China; Maldives; Mexico; Pakistan; Paraguay; Peru; Sri Lanka; Thailand, Uruguayand Vietnam.
Let me say at the outset that my initial remarks are designed to offer our thoughts on the
importance that we attach to this major review, on the purpose of the review, and on how best to
conduct it in a methodical manner. Needless to say that these remarks may be complemented byindividual statements by our members.
I cannot over-emphasize that members of the ITCB, indeed developing countries in general,
attach the utmost importance to this major  review. It derives from the great significance that textile
and clothing occupies in our economies, both for exports, and for generation of investment and
employment opportunities. It also derives from our commitment to securing the full application of
GATT rules and principles to trade in the sector.
In this connection, I also wish to recall that the conclusion of the Agreement on Textiles and
clothing was seen as one of the major achievements of the Uruguay Round, owing to its promise to
contribute to the gains from the Round. In fact more than one third of the total benefits from the Round
were estimated to come from liberalization of quota restrictions. And might I add that the ATC wasalso hailed due to the immense systemic significance of the phase-out of quota restrictions for the rule-
based, non-discriminatory trading system, and for re-establishing developing countries' confidence in
its framework.
The ATC is a transitional agreement with a duration of ten years in which the textile and
clothing sector is to be fully integrated into the normal rules and disciplines of the GATT. In
accordance with Article IV of the WTO Agreemen t, the Council for Trade in Goods (CTG) is
responsible for overseeing the functioning of the Agreement. In addition, the ATC specifically
mandated the CTG to conduct three major reviews of its implementation during this period. The
second, i.e., the present, review is effectively the most important because it comes at a time when theintegration programmes for the final three years of the process have already been notified to the WTO
and, unless further steps are taken, these will cover the remaining period of transition. The last of the
three reviews will only be conducted shortly before the full and irreversible integration of the sector
into the GATT.
Let me stress that the ATC provided for these ma jor reviews for a purpose: i.e., to forestall
any problems along the way, and to take corrective steps to ensure that the process of integration is on
track. It is therefore critical that the CTG conduct a thorough review of all main aspects of ATCimplementation. We have the responsibility of doing so in a serious, comprehensive and open manner.
I can assure you that the members of the ITCB approach this review accordingly. I trust you will
agree with me if I also say that, due to our pre-occupations with so many meetings in this house, we
should ensure that our exercise is not only purposeful but also expeditious.G/C/W/325
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The ATC explicitly specifies the purpose of the major review. Article 8:12 of the Agreement
requires that, in light of its review, ‘the CTG shall take such decisions as it deems appropriate to
ensure that the balance of rights and obligatio ns embodied in [the] Agreement is not being
impaired’  (emphasis added). Therefore, besides being thorough, it is imperative that the CTG make
an assessment of whether there has been any impairment to rights and obligations under the ATC and,
in light of this assessment, take appropriate decisions to restore the balance.
Turning to the conduct of the review, the Textiles Monitoring Body has provided a
comprehensive report (G/L/459).  We apprecia te and commend the Body for its thorough and all-
inclusive approach. It makes a useful contribution to the review, although we feel that, in order for the
review to be efficient, it is important to sift, from extensive details contained in the report, the main
elements that are germane to the CTG’s assessment of whether the balance of rights and obligations
has or has not been impaired. We believe that such an approach is essential, to avoid losing sight of
the purpose of the review.
Moreover, useful as the TMB report is, it should not substitute for the CTG’s own review. In
view of its mandate pursuant to Article 8:12 of the ATC, the CTG review needs to be broader in scope
and focus, in particular, on making an assessment on whether the balance of rights and obligations
embodied in the ATC is being maintained.
We, on our part, have made a submission setting out our own assessment of the
implementation process thus far. I trust this submission has been circulated by the WTO Secretariat
and Members have had the opportunity to examine it. Our submission makes a systematic
presentation, generally following various articles and provisions of the ATC. We hope that you find
the structure of our submission useful in contributing to conducting the major review in a systematic
manner. As we proceed with the review of different elements of the implementation process, we alsopropose to make available self-explanatory tables to facilitate CTG's consideration of certain issues.
Before concluding, allow me to recall that the ATC is well into the seventh year of its
implementation. After less than four months, only three years would be left to complete the process. It
follows, therefore, that substantial advance should have been made towards the realization of its
objectives. Unfortunately, little meaningful progress can be shown to that end. On the contrary, for thereasons detailed in our paper, the balance of rights accruing under the Agreement to developing
country Members whose exports have long been restrained by quotas, has been seriously impaired.
Therefore somewhat later in the process, we might also submit certain suggestions for adoption by the
Council, pursuant to its mandate under Article 8:12 of the Agreement.
In closing, it remains for me to say that it  might also be useful to recall the Council's
conclusions and recommendations from its first major review and to see the extent to which these may
or may not have been implemented.
In all this I know that we can count on your patience, understanding and fairness: the
attributes for which you are so well known in these corridors. I thank you for your attention.G/C/W/325
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ANNEX
TABLE 1
IMPLEMENTATION OF ATC
(Pace of quota phase-out)
USA EU Canada Norway
Total number of quotas at start of ATCa757 219 295 54
Of which phased-outb:
(i) Stage 1
            By integration under Art. 2.6
           By early elimination under Art.   2:150
00
06
00
46
(ii) Stage 2
             By integration under Art. 2.8(a)
             By early elimination under Art. 2:153
10c14
023
00
8
(iii) Stage 3
            By integration under Art. 2.8(b) 43 38d25 0
Stages 1 + 2 + 3 56 52 54 54
Quotas to liberalize only on 1/1/2005e701 164 241 0
a Including specific limits and sub-limits.
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.d does not include another 3 quotas that EU has suspended in respect of one WTO Member.e. the comparable numbers in the TMB report are 701 for the US, 167 for EU, 239 for Canada.
Observation:
It may be noted from this table that, over the entire 10-year transition, only a few quotas are
being phased out. The large bulk still remains in place.
The ATC required the phase-out process to be “progressive”. The table demonstrates that the
restraining countries have failed to observe this requirement.G/C/W/325
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TABLE 2
INTEGRATION PROGRAMMES ANALYZED
UNITED STATES
1990 ATC Imports Of which: under specific restriction
Million square
meters ShareMillion square
meters% of 1990
Total% of
Restrained
Total 17,025 100% 10,239 60.14% 100%
Integration:
Stage 1 2,760 16.21% 0 0 0
Stage 2 2,899 17.03% 362 2.13% 3.54%
Stage 3 3,083 18.11% 1,636 9.61% 15.98%
Stages
1+2+3 8,742 51.35% 1,998 11.74% 19.52%
Last day 8,283 48.65% 8,241 48.41% 80.49%
EUROPEAN UNION
1995* Imports Of which: under specific restriction
Tons Share Tons% of 1995
total% of
restrained
Total 5,186,525 100.00% 3,026,892 58.36% 100.00%
Integration:
Stage 1 836,244 16.12% 0 0% 0%
Stage 2 887,262 17.11% 165,545 3.19% 5.47%
Stage 3 1,005,846 19.39% 469,533 9.05% 15.51%
Stages          1 +
2 + 3 2,729,352 52.62% 635,078 12.24% 20.98%
Last day 2,457,173 47.38% 2,391,814 46.12% 79.02%
* The year from which the EU membership expanded to EU-15.
Observation:
This table shows that only 20/21% of trade that was actually under quota restriction has been
integrated, a far cry from 51% shown as integrated.
The approach has turned the mechanics of integration (i.e., 16%, 17% and 18%) as if these
were the purpose of the Agreement. The objective of integration under the ATC was/is the
progressive phase-out of “restrictions” applied under the pre-ATC dispensation.G/C/W/325
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TABLE 3
THE SPREAD OF INTEGRATION PROGRAMMES
STAGE 1, 2 AND 3 COMBINED
Integration as Percentage of the Volume of 1990 Imports*
Restraining
MemberYarns Fabrics Made-ups Clothing Total
USA
EU*
1995
1990
Canada
Norway19.72
18.82
19.86
17.10
12.838.06
14.77
13.07
10.54
20.5317.12
9.76
9.71
18.63
19.756.45
9.27
8.75
6.87
11.8851.35
52.62
51.39
53.14
65.00
*  EU Data for 1995 is also shown because th e EU membership increased to EU-15 from that
year.
Observation:
It is apparent from this table that the restraining countries have concentrated their integration
programmes in low value-added products, i.e., yarns, fabrics and made-ups.G/C/W/325
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TABLE 4(a)
1996 QUOTA UTILIZATION*
FOR RESTRAINED PRODUCTS INTEGRATED IN STAGE 2
Category
Integrated Product DescriptionExporting Member
under QRsQuota
Utilization
US:
353/4/653/4 Down-filled coats Korea Rep. 12.23%
465 Floor coverings Romania 28.34%
632 Hosiery Korea Rep. 39.28%
EU:
19 Handkerchiefs Macao China 0.00%
46 Sheep/Lamb wool Argentina 7.01%
46 Sheep/Lamb wool Brazil 13.10%
61 Narrow woven fabrics Hong Kong China 1.55%
67 Crocheted clothing accessories Korea Rep. 19.58%
70 Panty hose Korea Rep. 4.58%
72 Swimwear Hong Kong China 35.54%
74 Women crocheted suits Hong Kong China 6.17%
77 Woven ski suits Hong Kong China 17.29%
77 Woven ski suits Korea Rep. 2.05%
86 Corsets Korea Rep. 2.66%
91 Tents Korea Rep. 31.06%
100 Coated fabrics Korea Rep. 46.45%
111 Camping goods Korea Rep. 5.35%
Notes:
1) Quota utilization is based on notified quota levels. The year 1996 has been chosen because
the second stage integration programmes were notified in that year.
Source:
USA: OTEXA publications, US Commerce Department.
EU: Eurostat.
Observation:
Tables 4A and 4B reveal that the products on which quotas have been abolished were not
commercially significant for developing countries. This is evident from low quota utilization rates.G/C/W/325
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TABLE 4(b)
(will take out the portion for Canada)
1999 QUOTA UTILIZATION*
FOR RESTRAINED PRODUCTS TO BE INTEGRATED IN STAGE 3
Category
integrated Product DescriptionExporting Member
under QuotaQuota
Utilization*
US:
222 Special fabrics Singapore 0.00%
350 Robes, dressing gowns Brazil 34.45%
350 Robes, dressing gowns Haiti 20.20%
350 Robes, dressing gowns Hong Kong China 105.06%
350 Robes, dressing gowns Korea Rep. 111.12%
350 Robes, dressing gowns Philippines 56.87%
350 Robes, dressing gowns Romania 0.71%
350 Robes, dressing gowns Turkey 103.91%
350/650 Robes, dressing gowns Indonesia 54.11%
350/650 Robes, dressing gowns Malaysia 23.87%
350/650 Robes, dressing gowns Sri Lanka 84.01%
350/850 Robes, dressing gowns Macao China 88.89%
359H Headwear Korea Rep. 17.23
369D Dishtowels Brazil 67.39%
369D Dishtowels India 100.15%
369D Dishtowels Sri Lanka 1.57%
369D Dishtowels Thailand 80.25%
369F Cotton dishtowel Pakistan 103.84%
431 Gloves Philippines 27.85%
607 Staple fibre yarn Brazil 0.27%
607 Staple fibre yarn Korea Rep. 3.04%
607 Staple fibre yarn Thailand 80.24%
649 Brassieres Hong Kong China 92.55%
649 Brassieres Philippines 21.95%
650 Robes, dressing gowns Hong Kong China 46.03%
650 Robes, dressing gowns Korea Rep. 61.24%
650 Robes, dressing gowns Philippines 72.14%
669P Polyethylene bags Brazil 7.18%
669P Polyethylene bags Korea Rep. 4.14%
669P Polyethylene bags Thailand 72.50%
834 Other MB coats Hong Kong China 18.35%
835 WG coats Hong Kong China 33.91%
835 WG coats Korea Rep. 39.56%
835 WG coats (Sub limit) Malaysia 0.09%
836 Dresses Hong Kong China 85.8%
840 Non-woven shirts Hong Kong China 83.22%
840 Non-woven shirts Sri Lanka 45.72%
842 Skirts Hong Kong China 11.27%
847 Trousers Bangladesh 28.76%
847 Trousers Hong Kong China 30.51%
847 Trousers Indonesia 39.19%G/C/W/325
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847 Trousers Philippines 3.27%
847 Trousers U. A. Emirates 22.42%
EU:
10 Knit gloves Hong Kong China 26.74%
10 Knit gloves Korea Rep. 28.89%
10 Knit gloves Philippines 15.88%
10 Knit gloves Thailand 50.71%
18 Woven pyjamas/bathrobes Hong Kong China 11.37%
18 Woven pyjamas/bathrobes Korea Rep. 8.15%
18 Woven pyjamas/bathrobes Macao China 30.55%
18 Woven pyjamas/bathrobes Pakistan 31.59%
21 Parkas, anoraks Hong Kong China 119.88%
21 Parkas, anoraks Indonesia 91.20%
21 Parkas, anoraks Korea Rep. 53.42%
21 Parkas, anoraks Macao China 132.43%
21 Parkas, anoraks Philippines 18.19%
21 Parkas, anoraks Sri Lanka 21.98%
21 Parkas, anoraks Thailand 34.84%
24 Knit pyjamas/bathrobes Hong Kong China 15.98%
24 Knit pyjamas/bathrobes India 86.01%
24 Knit pyjamas/bathrobes Korea Rep. 3.22%
24 Knit pyjamas/bathrobes Macao China 102.26%
24 Knit pyjamas/bathrobes Thailand 29.46%
27 Skirts Hong Kong China 21.97%
27 Skirts India 41.87%
27 Skirts Korea Rep. 37.42%
27 Skirts Macao China 27.69%
32 Woven pile fabric Hong Kong China 4.54%
32 Woven pile fabric Korea Rep. 23.56%
33 Synthetic filament yarn fabric Indonesia 2.10%
33 Synthetic filament yarn fabric Korea Rep. 17.20%
36 Continuous artificial fibre fabric Korea Rep. 61.14%
37 artificial staple fibre fabric Korea Rep. 33.74%
68 Baby garments Hong Kong China 48.10%
68 Baby garments Korea Rep. 50.71%
73 Knit track suits Hong Kong China 66.38%
73 Knit track suits Korea Rep. 36.77%
73 Knit track suits Macao China 27.43%
73 Knit track suits Philippines 13.62%
73 Knit track suits Thailand 50.00%
Notes:
1) Quota utilization is based on notified quota levels. The year 1999 has been chosen because
the third stage integration programmes were notified in that year.
Source:
USA: OTEXA publications, US Commerce Department.EU: Eurostat.G/C/W/325
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TABLE 5
INCREASE IN QUOTAS BY APPLICATION OF ENHANCED GROWTH FACTORS
(STAGES 1 AND 2 COMBINED)
WTO MemberAverage pre-ATC
growth ratesTotal access
increaseAnnual access increase 1995
– 2001
EU 3.44% 4.49% 0.73%
Canada 5.26% 7.53% 1.22%
USA 4.61% 6.36% 1.03%
Observation:
It may be noted that the additional yearly  access provided under the growth-on-growth
provisions of the Agreement has been extremely small.
And in any case, the increase in quotas cannot be a substitute for the elimination of quotas.G/C/W/325
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TABLE 6
QUOTA GROWTH RATES
FOR SMALL SUPPLIERS
Pre-ATC rate 6% (Assumed)
Growth rates applied by US and Canada:
Rate for (years)  As applied  by  
US and Canada  As should have been
1995, 1996, 1997: 6%x1.25=7.50%; 6%x1.16x1.25 =8.70%
(Stage 1)
1998 through 2001: 7.50%X1.27 = 9.53%; 8.70%x1.27=11.05%
(Stage 2)
2002,2003, 2004:
(Stage 3)
Should be: 9.53%X1.27=12.10%; 11.05%x1.27=14.03%
Difference in % per year:
For stage 1: 8.70%   minus   7.50%    =    1.20%
For stage 2: 11.05% minus   9.53%    =    1.52%
For stage 3: 14.03% minus 12.10%    =    1.93%
Observation:
It may be noted that the methodology employed by Canada and US consistently denied access
possibilities to small suppliers by significant percentages. In case of least developed countries, thesepercentages are yet more pronounced because they have not been extended even the small suppliers’
treatment.G/C/W/325
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TABLE 7
QUOTAS CONTINUE TO BITE*
Import
marketYear Total number of
quotas**Number of quotas in which imports
exceeded quota ceilings***
USA
1999 674 159
2000 674 167
EU
1998 183 41
1999 183 32
* Data are in respect of WTO Members only.
** The total number of quotas are different from those in table 1 because this table includes only self-
standing limits and sub-limits. limits on part categories of products, for which separate utilization dataare not available, could not be included.
*** Quota ceilings are those calculated by application of growth rates (including growth-on-growth) to the
respective base levels notified at the start of the implementation period.G/C/W/325
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TABLE 8
US SAFEGUARD ACTIONS UNDER THE ATC
Product/Country Ex ports affected
by action
US $ MillionTMB finding/outcome
Underwear 622.2
Category 352/652
Costa Rica A Dispute Panel and Appellate Body found that the measure violated US
obligations.
Honduras Although bilateral restraint agreed, the measure was on the same basis as wasfound to be inconsistent with US obligations in Costa Rica case.
Colombia - do -
Dominican Republic - do -
El Salvador - do -
Turkey - do -
Thailand US informed TMB of decision to rescind, as product was already undergroup limit.
Shirts and Blouses 3.2
Category 440
India A Dispute Panel and Appellate Body found that the measure violated US
obligations.
Hong Kong TMB found measure unjustified, as product was already under group limit.
Coats 11.6
Category 435
India TMB found no damage to US industry but could not r each consensus on
whether  actual threat of damage existed.  US decided to rescind the measure.
Honduras - do -
Suit-type coats 6.1
Category 434
Brazil US withdrew the call on its own.
India TMB found the measure unjustified.
Nightwear 55.6
Category 351/651
Honduras TMB found the measure unjustified.
Costa Rica US withdrew the measure on its own.
El Salvador - do -
Jamaica - do -G/C/W/325
Page 14
Luggage 243.6
Category 670-L
Thailand US withdrew the call on its own.
Philippines - do -
Sri Lanka - do -
Staple yarn 3.3
Category 603
Thailand - do -
Skirts 23.6
Category 342/642
Guatemala TMB found the restraint agreement justified, however only in overall terms.
Suits 4.9
Category 444
Colombia - do -
Philippines US withdrew the call on its own.
Skirts 17.2
Category 342/642
El Salvador TMB found measure to be justified.
Combed cotton yarn 9.0
Category 301-Part
Pakistan US withdrew the call on its own.
Staple yarn 6.1
Category 603
Thailand TMB declared the agreed restraint as justified.  (However in the following
case – category 301 Pakistan -- in which the measure was taken on the samegeneral grounds as in this case, a dispute panel and the Appellate Body foundthe measure unjustified.)
Combed cotton yarn 14.3
Category 301
Pakistan A Dispute Panel and Appellate Body found that the measure violated US
obligations.
Total calls 28
Exports affected $ 1020.7 Million
Note :  Amounts shown for categories 301-part and  607-L, correspond to the entire category
Source :  US Department of Commerce, Major Shippers Report
Observation:
This table demonstrates that, of the total of 28 safeguards, only three were found to be justified; that too by
stretching the interpretation of ATC provisions. In other words, virtually none of the actions was valid. Even so, theactions adversely affected $1020.7 million worth  of exports from the countries concerned.G/C/W/325
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TABLE 9
CHANGES IN SHARES IN EU IMPORTS
COUNTRIES SUBJECT TO ANTI-DUMPING ACTIONS
Product Before Following After
action action termination
Synthetic fabrics 1993 1995 1997
Value 50.24% 52.89% 56.53%
Volume 66.64% 63.57% 70.44%Investigation terminated in 1996;
India, Indonesia, Pakistan
Thailand
Cotton fabrics 1993 1998 2000
Value 55.83% 38.58% 42.36%
Volume 59.04% 37.60% 40.44%Duties withdrawn in 1998; China,
Egypt, India, Indonesia, Pakistan,Turkey
Bed linen
1993 1994 2000
Value 49.00% 47.56% 41.31%
Volume 51.84% 50.90% 44.65%Definitive duties continue; Egypt,
India, Pakistan, Thailand
Sacks and bags 1994 1997 2000
Value 52.86% 21.14% 28.82%
Volume 57.76% 22.93% 36.89%Definitive duties continue; India,
Indonesia, Thailand
Data source: Eurostat, Intra and Extra-EU trade.
Observations:
- This table demonstrates how access accruing to affected countries under the ATC had been
impaired by anti-dumping actions.
- It is also pertinent that WTO Appellate Body found the action on bed linen in the Indian case
to be inconsistent with EU obligations.
- Moreover, the Appellate Body faulted important  aspects of the methodology employed by the
EU in dumping determinations, raising serious questions about the validity of EU actions in
general.
__________