WORLD TRADE
ORGANIZATIONG/TMB/N/403/Add.1
8 August 2001
(01-3927)
Textiles Monitoring Body Original:  English
AGREEMENT ON TEXTILES AND CLOTHING
Communication from Uruguay
Addendum
The Textiles Monitoring Body has received a further communication from Uruguay, on
behalf of members of the ITCB that are also Members or observers of the WTO, in reply to its request
for additional information in the context of the preparation of the Body's Comprehensive Report on
the implementation of the ATC during its second stage, in accordance with Article 8.11.
The TMB is circulating this communication to WTO Members for their information.G/TMB/N/403/Add.1
Page 2
Permanent Delegation of Uruguay
Geneva
23 May 2001
Mr. Andràs Szepesi
Chairman
Textiles Monitoring BodyWorld Trade Organization
Centre William Rappard
Rue de Lausanne 154
CH-1211 Genève 21
Subject: Request for information for the comprehensive report of the TMB
on the implementation of the Agreement on Textiles and Clothing
Dear Mr. Szepesi,
I am pleased to acknowledge receipt of your letter referenced TMB/100 dated 10 May 2001
on the above subject and to provide, on behalf of the members of the ITCB that are also Members or
observers of the WTO, further clarifications as requested in your letter.
With respect to the elimination of quota restrictions on non-WTO Members while keeping
them in place for WTO Members, we note that restrictions previously applied by the EU on imports
of certain textile and clothing products from Russi a, Ukraine, Bosnia-Herzegovina, etc. have been
eliminated.  Extracts from relevant Official Journals of the European Communities (Annex 1through 5) showing the prior existence of quota restrictions on these countries and their subsequent
elimination are attached.  There might be other si milar instances, information about which, we hope,
the TMB would be able to obtain and detail in its report.
The basic principle of MFN (as, e.g., in Article I of GATT 1994) relates to imports from all
countries, whether WTO Members or non-WTO Members, i.e., any favour accorded by a
WTO Member to any country, whether or not it is a WTO Member, must also be accorded to all
WTO Members.  If this is not done and non-WTO Members are treated more favourably than
WTO Members, the balance of rights and obligations under the WTO is lost.  Such more favourable
treatment is inconsistent with the MFN principle, which cannot be departed from unless specificallyprovided for in the ATC.
As requested in our submission of 11 April, we expect the TMB to assess the consistency of
elimination of such restrictions on non-WTO Members.  We believe that, ATC being an integral part
of the WTO Agreement, such elimination is not cons istent with EU's obligation as to Article XIII of
GATT 1994 in as much as it is not excepted from the ATC by virtue of its Article 1.6.
With regard to the elimination of restrictions vis-à-vis  some of these countries that have since
joined the WTO, the issue of conformity arises by virtue of the last sentence of ATC's Article 2.15.G/TMB/N/403/Add.1
Page 3
Absent any notification to the TMB that, in consid ering the elimination of those restrictions, the
treatment of similar exports from other WTO Members had been taken into account, it is apparent that
this was not the case.
As for changes in rules of origin, we are please d to attach a note (Annex 6) highlighting the
further changes effected by the US pursuant to the Trade and Development Act of 2000.  Also
attached (Annex 7) on the subject is an article entitled "Rules of origin:  the textile mess gets messier"
that appeared in the US Journal of Commerce on 7 July 2000 and is illustrative of the problems
generated by these changes.
With respect to the rule permitting a single visa for multiple shipments only from the member
States of the European Union, we confirm the reference to document WT/DS151/10 of 31 July 2000.The discriminatory treatment entailed by this provision vis-à-vis  other WTO Members does not
appear to be justified under the fundamental WT O principle of non-discrimination which, as stated
earlier, is not derogated or excepted from the ATC by virtue of Article 1.6 thereof.
As regards changes in classification of products/categories, we would urge the TMB to
ascertain the necessary information from the restraining Members. By way of illustration, we are
pleased to attach a list of selected changes effected by the US (Annex 8).
As to the issue of transshipment, we are oblig ed to comment that the US statement attached
with your letter under reply does not establish widespread circumvention of quotas, as alleged.  Wewish to reiterate that, based on US Customs own report relating to the year 1999, shipments seized as
transshipped, including those detained as suspected  transshipments, amounted to only 0.068 per cent
of its total imports in the year.  The report also showed that this percentage was a drop from0.125 per cent in 1997 and 0.105 per cent in 1998.  In any event, it follows that the extent of
circumvention is greatly exaggerated.  And the measures put in place, ostensibly to preventcircumvention, appear to be far in excess of being "necessary" or proportionate.  In this connection,
we attach a US regulation (Annex 9) pursuant to  which excessive documentation requirements from
exporters have been prescribed.  Also attached is a listing of such documents (Annex 10).
With respect to the issue of market access, we wish to emphasize that developing countries
have implemented all specific commitments undertaken as a result of the Uruguay Round.  In this
regard, it may be interesting to quote from the European Commission's own report dated 12 July 2000to the EC Council pursuant to Council Regulation 3030/93.  The Commission stated, inter alia , that
"Article 7 underlines the need to achieve improved market access generally" and that "in the specific
context of Article 7 of the ATC, most WTO Members are generally complying with their specific
commitments and with the relevant GATT 1994 rules and disciplines".
Aside from the above, the EU and US submission s attached with your letter do not reveal in
any manner if they themselves took any action to provide additional access to their markets.  On the
contrary, as pointed out in our submission of 11 April 2001, a number of actions have been adoptedby them which have had a negative bearing on the balance of rights otherwise accruing to restrained
Members under the ATC.  In this connection, we wish to reiterate our concerns regarding, amongother things, the singling out of textile and clothing products for general trade policy reasons, such as
for changes in rules of origin, using quotas as bargaining chip for demanding increased access in
developing countries, etc., contrary to Article 7.1(c), and the targeting of restrained products for
repeated and unjustified anti-dumping actions contrary to Article 7.1(b).
In closing, as a general matter, we wish to clarify that the ITCB submission sent with my
letter of 11 April 2001 provided our 'comments' in response to TMB's invitation in G/TMB/24 and
should be treated as such.  Secondly, since the TMB is required to provide a "comprehensive report"
to the CTG, the Body is expected to collect all relevant information necessary for its preparationG/TMB/N/403/Add.1
Page 4
pursuant to TMB's general or specific mandate under the ATC, particularly from the restraining
Members.  On our part, we have been glad to provide some comments, and the information available
with us, to facilitate the TMB's task.
Sincerely yours,
(Signed)
William Ehlers
Minister Counsellor
Permanent Mission of Uruguay to the WTO
and
Acting Chairman, International Textiles and Clothing BureauG/TMB/N/403/Add.1
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Annex 1
AGREEMENT
between the European Community and Bosnia and Herzegovina on trade in textile products
THE EUROPEAN COMMUNITY,
of the one part,andBOSNIA AND HERZEGOVINA,of the other part,
DESIRING to promote, with a view to permanent cooperation and in conditions providing every
security for trade, the orderly and equitable development of trade in textile products between the
European Community (hereinafter referred to as 'the Community') and Bosnia and Herzegovina:
HAVE AGREED AS FOLLOWS:
Article 1
This Agreement establishes the regime applicable to trade in textile products originating in Bosnia
and Herzegovina as listed in Annex I.
TITLE 1
QUANTITATIVE REGIME
Article 2
1. The classification of the products covered by this Agreement is based on the tariff and
Statistical nomenclature of the Community (hereinafter called the 'Combined Nomenclature' or in
abbreviated form 'CN') and any amendments thereto.
Where any decision on classification results in a change of classification practice or a change of
category of any product subject to this Agreement the affected products shall follow the trade regime
applicable to the practice or category they fall into after such changes.
Any amendment to the Combined Nomenclature (CN) made in accordance with the procedures
in force in the Community concerning categories of products covered by this Agreement or any
decision relating to the classification of goods shall not have the effect of reducing quantitative limits
introduced pursuant to this Agreement.
2. The origin of the products covered by this Agreement shall be determined in accordance with
the rules in force in the Community.
Any amendment to these rules of origin shall be communicated to Bosnia and Herzegovina
and shall not have the effect of reducing any quantitative limit established pursuant to this Agreement.G/TMB/N/403/Add.1
Page 6
The procedures for control of the origin of the products referred to above are laid down in
Appendix A.
Article 3
1. Subject to the provisions of this Agreement, exports from Bosnia and Herzegovina to the
Community of products listed in Annex I and originating in Bosnia and Herzegovina shall, at the time
of entry into force of this Agreement, be free from quantitative limits and measures of equivalent
effect.  Quantitative limits may subsequently be introduced under conditions specified in Article 8.
2. Should quantitative limits be introduced, exports of the textile products made subject to
quantitative limits shall be subject to a double-c hecking system as specified in Appendix A.G/TMB/N/403/Add.1
Page 7
Annex I (cont'd)
SECTION II
79
Table 76: REP. OF BOSNIA-HERZEGOVINA, CROATIA
Categories under quota in 1998
QUANTITATIVE LIMITS FROM JANUARY 1st TO DECEMBER 31, 1998
CATEGORIE
(*)UNITE
(**)U.E.
1 T 6,926
2 T 8,545
2A T 1,931
3 T 935
5 000 P 1,986
6 000 P 1,048
7 000 P 602
8 000 P 2,664
9 T 877
15 000 P 772
16 000 P 575
67 T 722
(*) For the designation of goods according to categories see page 101 and following.
(**) T:  tonnes;  000 P:  thousand pieces;  000 prs: thousand pairsG/TMB/N/403/Add.1
Page 8
Annex 2
AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS
between the European Community and Ukraine concerning the extension and amendment of
the Agreement between the European Economic Community and Ukraine on trade in textile
products initialled on 5 May 1993, as last amended by the Agreement in the form of an
exchange of Letters initialled on 15 October 1999
A. Letter from the Council of the European Union
Sir,1. I have the honour to refer to the negotiations held on 3 and 4  July 2000 between our
respective Delegations with a view to renewing the Agreement Between the European Economic
Community and Ukraine on trade in textile products including its annexes and agreed minutes ('the
Agreement') initialled on 5 May 1993, as last amended and last extended by an agreement in the formof an Exchange of Letters initialled on 15 October 1999.
2. During these negotiations both Parties restated their long-term objective of enhancing textiles
and clothing trade between their countries.  For this purpose it was agreed to further liberalise trade in
textiles and clothing products by modifying abovementioned Agreement in accordance with theprovisions of this Letter.
3. The Parties agreed to amend the following provisions of the Agreement:3.1 Annex II of the Agreement, that sets out the quantitative restrictions for exports from Ukraine
to the European Community, shall be replaced by Appendix 1 to this Letter.
3.2 Upon confirmation by Ukraine to the Community that the provisions of Paragraph 4.2 of this
Exchange of Letters have been implemented, Annex II of the Agreement shall be replaced by
Appendix 2 to this Letter.
3.3 Upon confirmation by Ukraine to the Community that the provisions of Paragraph 4.3 of this
Exchange of Letters have been implemented, Annex II of the Agreement shall from 1.1.2001 be
replaced by Appendix 3 to this Letter and Annex III of the Agreement, listing products not subject to
quantitative limits but under double-checking, shall be replaced by Appendix 4.
3.4 In Article 2(1) of the Agreement the following subparagraph shall be added:
'At the latest six weeks before the end of every Agreement year the Commission and Ukraine
shall hold consultations on the necessity of maintaining the categories listed in Annex III
under double-checking, with a view to pos sible suspension of categories from double-
checking'.
3.5 The Annex to Protocol C of the Agreement, which sets out the quantitative restrictions for
exports from Ukraine to the European Community after OPT operations in Ukraine, shall be replaced
by Appendix 5 to this Letter.
3.6 The second and third sentence of Article 20(1) shall be replaced by the following text:
'It shall be applicable until 31 December 2004'G/TMB/N/403/Add.1
Page 9
4. The Parties agreed that the provisions of paragraph 4 of the Exchange of Letters initialled
on 15 October 1999, concerning tariff rates applicable to imports into Ukraine of textile products
(products covered by chapters 50 to 63 of th e Harmonized System) originating in the Community,
shall be replaced by the following:
4.1. Tariffs applicable to imports into Ukraine of textile products originating in the
Community shall not exceed the rates applied by Ukraine on 1 July 2000 as listed Appendix 6
to this Letter.
4.2. Before 15 October 2000, Ukraine shall lower its tariffs applicable to EC exports for
all products covered by HS chapters 57 to rates that will not exceed 17 per cent and tariffs for
products covered by HS chapters 61, 62 and 63 to rates that will not exceed 13 per cent.
4.3. From 1 January 2001, and in addition to the provisions of Paragraph 4.1, the tariff
rates applied by Ukraine to exports of EC origin of products of HS chapters 50 to 56 and 58 to
63 shall not exceed the rates the EC has bound as Schedule CXL in the World Trade
Organization (WTO), as contained in Appendix 7.  Accordingly, for any given year of theperiod 2001 to 2004, the tariff rates applied by Ukraine shall not exceed the rates the EU has
bound for that year.G/TMB/N/403/Add.1
Page 10
Appendix 3 (1)
ANNEX II
(The full product description of the categories listed in this Annex is to be found
in Annex I to the Agreement)
Category UnitQuota level
2000Quota level
2001Quota level
2002Quota level
2003Quota level
2004
Group IA
1 tonnes 1,873 Free Free Free Free
2 tonnes 2,595 Free Free Free Free
3 tonnes 879 Free Free Free Free
Group IB
4 1,000 pieces 2,226 Free Free Free Free
5 1,000 pieces 4,312 Free Free Free Free
6 1,000 pieces 5,120 Free Free Free Free
7 1,000 pieces 2,330 Free Free Free Free
8 1,000 pieces 1,187 Free Free Free Free
Group IIA
9 tonnes 560 Free Free Free Free
20 tonnes 893 Free Free Free Free
23 tonnes 555 Free Free Free Free
39 tonnes 451 Free Free Free Free
Group IIB
12 1,000 pairs 8,879 Free Free Free Free
13 1,000 pieces 3,197 Free Free Free Free
15 1,000 pieces 1,532 Free Free Free Free
16 1,000 pieces 315 Free Free Free Free
21 1,000 pieces 445 Free Free Free Free
24 1,000 pieces 1,023 Free Free Free Free
26/27 1,000 pieces 2,620 Free Free Free Free
29 1,000 pieces 494 Free Free Free Free
Group IIIA
36 tonnes 1,145 Free Free Free Free
37 tonnes 1,388 Free Free Free Free
50 tonnes 729 Free Free Free Free
Group IIIB
67 tonnes 369 Free Free Free Free
90 tonnes 904 Free Free Free Free
Group IV
115 tonnes 334 Free Free Free Free
117 tonnes 828 Free Free Free Free
118 tonnes 527 Free Free Free Free
                                                     
1 Will apply upon implementation by Ukraine of the provisions of paragraph 4.3 of the present
Exchange of Letters.G/TMB/N/403/Add.1
Page 11
Annex 2 (cont'd)
Prior notification of a concentration
(Case COMP/M.2363 – BHP/Caemi)
(2001/C92/04)
(Text with EEA relevance)
1. On 12 March 2001 the Commission received notification of a proposed concentration
pursuant to Article 4 of Council Regulation (EEC) No 4064/89(1) , as last amended by Regulation
(EC) No 1310/97(2), by which the undertaking BHP Limited, Australia, acquires, within the meaning
of Article 3(1)(b) of the Regulation, control of the whole of Caemi Minera ςão e Metalurgia SA,
Brazil, by way of purchase of shares.
2. The Business activities of the undertakings concerned are: _ BHP:  production and distribution of iron ore, operations in a variety of metals and minerals,
as well as petroleum,
 _ Caemi:  production and distribution of iron ore and other metals and minerals, logistics
services.
3. On preliminary examination, the Commission finds that the notified concentration could fall
within the scope of Regulation (EEC) No 4064/89.  However, the final decision on this pointis reserved.
4. The Commission invites interested third parties to submit their possible observations on the
proposed operation.
Observations must reach the Commission not later th an 10 days following the date of this publication.
Observations can be sent by fax (No (32-2) 296 43 01 or 296 72 44) or by post, under reference
COMP/M.2363 – BHP/Caemi, to:
European Commission,
Directorate-General for Competition,
Directorate B-Merger Task Force,
Rue Joseph II/Jozepf II-Straat 70,B-1000 Brussels.
                                                     
(1) OJ L 395, 30.12.1998, p.1;corrigendum:  OJ L 257, 21.9.1990, p.13.
(2) OJ L 180, 9.7.1997, p.1; corrigendum:  OJ L 40, 13.2.1998, p. 17G/TMB/N/403/Add.1
Page 12
Annex 2 (cont'd)
Lifting of quotas on textiles and clothing imports from Ukraine
(2001/C 92/05)
The agreement on trade in textiles and clothing signed by the European Community and Ukraine on
19 December 2000 in Brussels (1), requires Ukraine to implement tariff reductions for European Union
exports of textiles and clothing products.  It has been established that these tariff reductions have been
implemented with the adoption of Cabinet Decree No 170 of 23 February 2001.
In accordance with paragraph 3.3 of the agreement, the European Community will lift all quantitative
restrictions (quotas) on imports of textile and clothing products from Ukraine from 26 March 2001.
Surveillance (licensing without quotas) will be main tained until further notice for the following textile
product categories (see Appendix 4 of the agreement): 2, 4, 5, 6, 7, 8, 12, 13, 15, 16, 21, 24, 26/27, 29,
83, 50, and 117.
The maximum tariff rates applicable to Community exports of textile and clothing products to
Ukraine can be consulted in Appendices 6 and 7 of the agreement.  Between 2001 and 2004 Ukraine
will reduce its maximum tariff rates in parallel with the reduction schedule notified by the EU to the
WTO.  Under this schedule the maximum rates in 2004 will in general be the following:  4 per cent
for yarns and fibres, 8 per cent for fabrics, 12 per cent for clothing and made-up textile products.  Forcarpets the following rates will be implemented:  12 per cent in 2001, 10 per cent in 2002 and EU
maximum rates (8 per cent in general) from 2003.
                                                     
(1) Council Decision 2001/33/EC of 19 December 2000 authorising the signing and provisional
application of the 'Agreement in the form of an exchange of letters between the European Community andUkraine concerning the extension and amendment of the agreement between the European Community andUkraine on trade in textile products initialled on 5 May 1993, as last amended by the agreement in the form ofan exchange of letters initialled on 15 October 1999' (OJ L 16,18.1.2001).G/TMB/N/403/Add.1
Page 13
Annex 2 (cont'd)
SECTION II
86
Table 83: Ukraine-Categories under quota in 1998
QUANTITATIVE LIMITS FROM JANUARY IST TO 31 DECEMBER 31 1998
CATEGORY
          (*)UNIT
(**)E.U.
1 T 1,393
2 T 1,928
2A T 536
3 T 653
4 000 P 1,638
5 000 P 1,310
6 000 P 1,201
7 000 P 546
8 000 P 874
9 T 413
12  000 prs 6,505
13 000 P 2,387
15 000 P 437
16 000 P 97
20 T 664
21 000 P 328
23 T 404
24 000 P 750
26/27 000 P 655
29 000 P 162
36 T 835
37 T 1,018
39 T 331
50 T 309
67 T 270
90 T 662
115 T 245
117 T 606
118 T 386
(*)  For the designation of goods according to categories see page 101 and following.
(**)  T:  tonnes;  000 P:  thousand pieces;  000 prs:  thousand pairs.G/TMB/N/403/Add.1
Page 14
Annex 3
AGREEMENT
between the European Community and the Russia n Federation on trade in textile products
(initialled in Brussels on 28 March 1998)
THE COUNCIL OF THE EUROPEAN UNIONof the one part, and
THE GOVERNMENT OF THE RUSSIAN FEDERATION
of the other part,DESIRING to promote, with a view to permanent cooperation and in conditions providing for
predictability of trade, the mutual expansion and orderly and equitable development of trade in textile
products between the European Community (hereinaft er the 'Community') and the Russian Federation
(hereinafter 'Russia').
RESOLVED to take the fullest possible account of the serious economic and social problems at
present affecting the textile industry in both the Community and Russia.
HAVING REGARD to the objectives and provisions of the Partnership and Cooperation Agreement
between the European Communities and their Member States and the Russian Federation (hereinafter
referred to as the 'Partnership and Cooperation Agreement') which entered into force on1 December 1997,
BEARING IN MIND Russia's process of accession to the WTO,HAVE DECIDED to conclude this Agreement and to this end have designated as their
plenipotentiaries:
THE COUNCIL OF THE EUROPEAN UNION
THE GOVERNMENT OF THE RUSSIAN FEDERATIONWHO HAVE AGREED AS FOLLOWS:
Article 1
1. The Parties confirm that the provisions of the Partnership and Cooperation Agreement shall
apply to trade in the textile and clothing products (hereinafter referred to as 'textile products') listed in
Annex I save where this Agreement makes specific provision concerning such products.
2. The cooperation between the textile and clothing industries in the Community and in Russia
and the elimination of the quantitative restrictions in trade in textiles and clothing is the fundamentalobjective of this Agreement.
3. All quantitative restrictions currently applied to trade in textile products originating in either
Party shall be eliminated on 1 May 1998.G/TMB/N/403/Add.1
Page 15
4. The Parties hereby agree that no new quantitative restrictions on trade between the
Community and the Russian Federation in the textile and clothing products listed in Annex I shall be
introduced save as is provided in this Agreement.
Article 2
1. The classification of the products covered by this Agreement and imported into the
Community is based on …G/TMB/N/403/Add.1
Page 16
Annex 3 (cont'd)
SECTION II
96
Table 93:  RUSSIAN FEDERATION
Categories under quota in 1997
NB: QUANTITATIVE LIMITS FROM JANUARY 1ST TO JUNE 30, 1997
CATEGORY
         (*)UNIT
(*)E.U.
1 T 2,614
2 T 7,238
2A T 556
3 T 1,016
4 000 P 1,440
5 000 P 914
6 000 P 1,604
7 000 P 452
8 000 P 1,376
9 T 946
12 000 prs 2,256
13 000 P 2,990
15 000 P 572
16 000 P 416
20 T 1,372
21 000 P 680
22 T 736
24 000 P 700
29 000 P 318
33 T 266
37 T 910
39 T 450
50 T 282
74 000 P 306
83 T 236
90 T 486
115 T 244
117 T 818
118 T 482
(*) For the designation of goods according to categories see page 119 and following.
(**) T:  tonnes;  000 P: thousand pieces;  000 prs: thousand pairs
NB: This six-month autonomous arrangement is to be replaced by a bilateral agreement, currently being
negotiated between the European Commission and the Russian Federation.G/TMB/N/403/Add.1
Page 17
Annex 4
AGREEMENT
between the European Community and the Republic of Croatia on trade in textile products
THE EUROPEAN COMMUNITY,
of the one part, andTHE REPUBLIC OF CROATIA,
of the other part,
DESIRING to promote, with a view to permanent cooperation and in conditions providing every
security for trade, the orderly and equitable development of trade in textile products between the
European Community (hereinafter referred to as 'the Community') and the Republic of Croatia(hereinafter referred to as 'Croatia');
HAVE AGREED AS FOLLOWS:
Article 1
This Agreement establishes the regime applicable to trade of textile products originating in Croatia
listed in Annex I.
TITLE I
QUANTITATIVE REGIME
Article 2
1. The classification of the products covered by this Agreement is based on the tariff and
statistical nomenclature of the Community (hereinafter called the 'Combined Nomenclature', or inabbreviated form 'CN') and any amendments thereof.
Where any decision on classification results in a change of classification practice or a change of
category of any product subject to this Agreement the affected products shall follow the trade regime
applicable to the practice or category they fall into after such changes.
Any amendment to the Combined Nomenclature (C N) made in accordance with the procedures in
force in the Community concerning categories of products covered by this Agreement or any decision
relating to the classification of goods shall not have the effect of reducing quantitative limits
introduced pursuant to this Agreement.
2. The origin of the products covered by this Agreement shall be determined in accordance with
the rules in force in the Community.
Any amendment to these rules of origin shall be communicated to Croatia and shall not have the
effect of reducing any quantitative limit established pursuant to this Agreement.
The procedures for control of the origin of the products referred to above are laid down in
Appendix A.G/TMB/N/403/Add.1
Page 18
Article 3
1. Subject to the provisions of this Agreement, exports from Croatia to the Community of
products listed in Annex I and originating in Croati a shall, at the time of entry into force of this
Agreement, be free from quantitative limits and measures of equivalent effect.  Quantitative limits
may subsequently be introduced under conditions specified in Article 8.
2. Should quantitative limits be introduced, exports of the textile products made subject to
quantitative limits shall be subject to a double-c hecking system as specified in Appendix A.G/TMB/N/403/Add.1
Page 19
Annex 4 (cont'd)
SECTION II
79
Table 76: REP. OF BOSNIA-HERZEGOVINA, CROATIA
Categories under quota in 1998
QUANTITATIVE LIMITS FROM JANUARY IST TO DECEMBER 31, 1998
CATEGORIE
         (*)UNITE
(**)U.E.
1 T 6,926
2 T 8,545
2A T 1,931
3 T 935
5 000 P 1,986
6 000 P 1,048
7 000 P 602
8 000 P 2,664
9 T 877
15 000 P 772
16 000 P 575
67 T 722
(*)  For the designation of goods according to categories see page 101 and following.
(**) T:  tonnes;  000 P: thousand pieces;  000 prs: thousand pairsG/TMB/N/403/Add.1
Page 20
Annex 5
Termination of double-checking for textile imports from Estonia, Latvia and Lithuania
(2001/C 13/06)
Following consultations in the context of Agreed Minute No 5 Protocol 1 of the Association
Agreement (1), the European Community and Estonia have agreed to terminate, from 1 January 2001,
the application of the double-checking (licensing) system specified in Appendix A to the Protocol to
imports into the Community of textiles and clothing products from Estonia.
The application of double-checking requirements for imports into the Community of textiles and
clothing products from Latvia and Lithuania has also been terminated on 1 January 2001 upon expiry
of the Textiles Protocols to the respective Association Agreements.
                                                     
(1) OJ L 68,9.3.1998, p.3.G/TMB/N/403/Add.1
Page 21
Annex 6
Changes in US rules of origin for textiles and clothing products
The US changed its rules of origin with respect to textiles and clothing products as part of its
Uruguay Round Agreements Act.  These changes became effective from July 1996 and introduced
substantial alterations in the pre-ATC rules.
The EU challenged these changes.  Follow ing a bilateral deal between the two, the US
rectified the situation mainly with respect to products of export interest to the EU through Section 405
of its Trade and Development Act 2000 enacted on 18 May 2000.  Thus
(a) For processed fabrics, the origin reverted to the pre-1996 rule.  Consequently, such
fabrics are conferred origin of the country where they are both dyed and printed and
undergo two or more of the following finishing operations:  bleaching, shrinking,
fulling, napping, decating, permanent stiffening, weighting, permanent embossing or
moireing.
However the same rule does not apply to fabrics made of wool.  In other words, for fabrics of
wool, origin remains where the basic fabric is formed.
(b) For made-up articles:  For 16 specified categories of made-up articles, the 1996
change established the origin as the country where the constituent greige fabric was
formed by weaving or knitting, regardless of any further processing such as dyeing
and printing of fabric, and subsequent conversion of fabric to made-up articles.
With respect to some of these 16 articles, the origin rule has been changed by the Trade and
Development Act 2000.  The products concerned are listed in an Appendix to this note.  The
new changes are summarized below:
(i) For non-cotton and non-wool made-up articles (i.e., only for those of silk,
MMF or other vegetable fibres), the rule now recognizes dyeing and printing as
origin conferring.  Accordingly the origin is the country where the constituent
fabric is dyed and printed and undergoes two or more finishing operations(regardless however of where it may be further processed).
But, if these same products are made from cotton or wool fabric, the origin continues
to be deemed the country where the basic cotton or wool fabric is formed.
(ii) What is more, the definition of cotton made-ups has been enlarged.  Now an
article containing 16 per cent or more by weight of cotton is considered as that
of cotton.
(iii) And for all made-up articles, contrary to pre-ATC rules, the new rule continues
to disregard processing operations such as designing, cutting, hemming,
sewing, etc., that may be undertaken on the fabric to convert it to made-up
articles.
(c) For apparel products, no further modification has been effected.  Consequently, origin
continues to be determined on the basis of rules as modified and implemented with
effect from July 1996.G/TMB/N/403/Add.1
Page 22
Appendix to Annex 6
Changes in US rules of origin for textile and clothing products
US rules of origin
Treatment of 16 specified categories of made-up articles
Products for which
rules were changed
in 1996Whether affected under the
Year 2000 changes
HTS No. Brief Description
1. 5609 Twine, cordage, ropes No change
2. 5807 Labels, badges, not embroidered No change
3. 5811 Quilted products No change
4. 6209.20.5040 Diapers of cotton No change
5. 6213 Handkerchiefs Changed
6. 6214 Shawls, scarves, mufflers Changed
7. 6301 Blankets, travelling rugs No change
8. 6302 Bed, table, toilet, kitchen linen Changed with respect to
HTS 6302.22, 29, 52, 53,
59, 92, 93, 99
9. 6303 Curtains, bed valances Changed with respect to
6303.92, 99
10. 6304 Other furnishing articles Changed with respect to
6304.19, 93, 99
11. 6305 Sacks and bags No change
12. 6306 Tarpaulins, tents, camping goods No change
13. 6307.10 Floor and dish cloth, dusters, etc. No change
14. 6307.90 Other made up articles No change
15. 6308 Sets consisting of fabric and yarn for making
into rugs, tapestries, etc.No change
16. 9404.90 Quilts, cushions, comforters Changed with respect to
940490.85, 95
--- 6117.10* Shawls, scarves, mufflers, knit Changed
* This HTS number has been included only in the 2000 legislation.
Note:  These 16 product categories are those for which the 1986 rule established origin as the country
in which the constituent fabric is made in its basic greige form.G/TMB/N/403/Add.1
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Annex 7
JOC online  – 10 July 2000
Rules of Origin:  The textile mess gets messier
By John Peterson
John Cleese once explained the rationale for Monty Python's Flying Circus thusly.  'A non-sequitur
needs something not to follow from'.  An exquisite statement.
It's a phrase that comes to mind after a recent examination of Section 405 of the new Sub-Saharan
Africa/Caribbean  trade bill, which amends, yet again, the United States' already bizarre rules of
origin for textile and apparel products.  Rules that were previously illogical are now virtually
incomprehensible.  The regulations needed to implem ent the new rules will need to feature twists and
turns worthy of the Minister of Silly Walks himself.
It all started in 1996, when Congress, for the first tim e, decided to prescribe the rules of origin for a
group of imported products, in this case, textiles and apparel.  Section 334 of the Uruguay Round
Agreements Act turned the former test of 'substantial transformation' on its head, as new and
sometimes peculiar origin rules were laid down.  Apparel products, formerly deemed to originate in
the country where their constituent parts were out, were now deemed to originate in the country where
the garment parts were assembled together by sewing, perhaps the most sensible of the changes.
Other rule changes, however, spawned ou trage, disbelief-and trade disputes.
For example, the Section 334 origin rules deemed al l fabrics to originate in the country where they
were formed in the 'greige' state by weaving or knitti ng.  That's all fine and well, but 'greige' fabric is
not a useful article of commerce.  Dyeing, pr inting and other finishing operations ordinarily
performed to turn 'greige' cloth into commercially usable fabrics, were disregarded by the new rules.
The change had a devastating impact on Europe's textile converting industry which for many years
had converted 'greige' cloth formed in Asian nations into high quality fabrics used in many apparel
manufacturing operations.  These products, formerly considered to originate in Europe (and thus not
subject to quotas), now were deemed products of the Asian countries where they were formed and
subject to quota.
Equally outrageous was Section 334's origin rules for a wide range of non-apparel textile products,
ranging from silk scarves and woollen blankets, to assembled products like pillow cases and down-
filled comforters.  Customs interpreted the law to require that these products also be deemed to
originate in the country where their constituent fabric s were formed in the 'greige' state.  This rule
disregarded fabric finishing, cutting, sewing and many other operations which formed the imported
good and which, in many cases (i.e. down-filled comforters), accounted for as much, as 90 per cent of
an article's cost.
The trade-distorting origin rules quickly aroused the ire of several US trade partners who challenged
Section 334 before the World Trade Organization.  The US anxious to preserve the rules, essentially
'bought off' certain of the complaining parties (mos tly Asian countries) by increasing some of their
quota allocations.  The European Union, however, whose products are not subject to quota, was not so
easily mollified.  It pressed its case in the WTO, pointing, by way of example, to the damage which
the Section 334 rules had inflicted on their fabric converting, silk-scarf producing and beddingindustries.  Facing a likely defeat in the WTO, US negotiators settled the matter by agreeing to change
the most offensive of the textile origin rules.G/TMB/N/403/Add.1
Page 24
Instead of focusing on an overall solution, however, the US concentrated on making selective
changes, dealing only with the products that were the subject of the EU's most vocal complaints, and
leaving the other origin rules intact.  Section 405 of the recent African/Caribbean trade bill carries out
the agreement with the EU.
And what a mess the rules are now!  Lets look at a few examples.  But before we do, check your sense
of logic at the door.  It won't be of much help to you.
Let's start with fabrics.  Section 405 restores the pre-URAA rule of origin, under which fabrics are
deemed to originate in the country where they are dyed and printed, and subjected to at least two other
named finishing operations.  This answers the compla ints of the EU's textile converting industry.
Except, however, in the case of wool fabrics (that is, fabrics wholly or in chief weight of wool, such
as a 55 per cent - 45 per cent wool-polyester blend).  Wool fabrics are excluded from the change.
Thus, the origin of these fabrics will continue to be the country where they are formed in the 'greige'
state.  What makes the process of weaving wool ya rns into fabric different from weaving cotton, silk
or man-made fibre yarns into fabric?  Politics, apparently.  The difference certainly isn't a technicalone.
Let's take a look at non-apparel textile articles.  (Perhaps the reader should be sitting down before we
do).  Some of these articles, like blankets (which involve little assembly) and comforter shells (which
involve extensive assembly) will continue to have their origin determined according to the country
where their constituent fabrics are formed in the greige state.  Other non-apparel products, however,
like bed valances and quilts, can be deemed to orig inate in the country where their constituent fabrics
were finished, that is, dyed, printed and subjected to two or more named finishing operations.  Except
in cases where the constituent fabric is wholly or in chief weight of wool or cotton, or contains more
than 16 per cent by weight.  Got that?
No?  Maybe an example will help to explain.  Let's assume that an 80 per cent polyester, 20 per cent
cotton fabric is woven in the greige state in Country A and then sent to Country B, where it is dyed,
printed and subjected to two or more finishing operations.  The fabric, if imported into the US would
be considered a product of Country B for tariff, quota and marking purposes.
Now, let's send that fabric from Country B to Country C, so it can be cut and sewn to form a bed
valance, which is then imported into the United St ates.  What's the country of origin of the bed
valance?  Well, because the fabric contains more than 16 per cent cotton by weight, the country of
origin of the product would be Country A, where the fabric was formed in the greige state.
How, you wonder, can the origin of a manufacture d product 'predate' the origin of its constituent
materials?  Hey, we told you to check logic at the door.
Now, of course, if the fabric used to make the bed valance had been an 85 per cent polyester,
15 per cent cotton blend, the valance would have been deemed to originate in Country B, where the
fabric was finished.  What, you may ask, is the difference between cutting and sewing an 80/20 blendfabric and an 85/15 blend fabric?  A political difference, apparently.  None of the textile industry
experts we've consulted can think of a single practical difference.  And of course, under either of the
above circumstances, the country of origin rules give no credit whatsoever to operations performed in
Country C, where the bed valance is actually manufactured.
With its crazy-quilt amendments to the textile rules of origin, the US may have dodged the bullet of
the EU's complaint to the World Trade Organization.  But the new rules certainly seem to be far more
motivated by a desire to protect US wool and cotton producers, than by any desire to create genuinelyG/TMB/N/403/Add.1
Page 25
logical changes to rules of origin.  A WTO challenge to the new rules, from foreign producers of wool
and cotton products, is almost certainly on the way.
Moreover, the adoption of such bizarre origin rules undermines other efforts at trade facilitation.  The
Uruguay Round Agreement on Rules of Origin called for a three-year study, to be performed by the
World Customs Organization, aimed at devising uniform rules of origin for goods moving in
international trade.  The three-year study is now in its fifth year, and more than 500 technical areas of
dispute on origin rules remain unresolved.  The WTO has gotten directly involved, and will conduct
an evaluation later this year to determine whet her to continue the study, or abandon it.  The
implementation of even stranger textile origin rules by the US adds fuel to the fire of discord in
perhaps the most sensitive industry area, and threatens the entire WTO effort to harmonize origin
rules.
Section 405 of the Africa/ Caribbean trade bill shows once again the shortcomings of fashioning
purely political responses to technical trade issues.
Monty Python once performed a marvellous spoof of  British Parliamentary elections, in which the
Silly Party opposed the Sensible Party at the polls.  If the adoption of the new US textile origin rules
was a political exercise, then the Silly Party appears to be the clear winner.
John Peterson is a partner with Neville, Peterson & Williams in New York.G/TMB/N/403/Add.1
Page 26
Annex 8
US Changes in Classification of Products/C ategories, and Technical requirements Effected
During the ATC Transitional Period
During the year 1995:
1. US Customs modified its previous rulings to request the country of origin to be noted as the
country where the fabric was woven for flat sheets.  The product used fabric woven in
country A, cut and hemmed, with piping or capping added in country B and shipped to the
US.  Previously, the origin was conferred to where the fabric was altered.
2. US Customs detained importer's goods (women's  cotton boxer-style briefs) and determined it
as women's woven cotton shorts in HTSUS 6204624055 and quota category 348 instead of
HTSUS 61082100 and quota category 352 as declared by the importer in early 1995.  Court
of International Trade (CIT) upheld the declaration by the importer because of the physicalcharacteristics of the product and the evidence educed at trial that they are designed and
marketed as underwear.
3. 1995 Correlation  amended to include 5 changes relating to textiles and clothing.
4. US Customs classified colour ink sheet rolls used in colour thermal transfer printers as
typewriter and similar ribbons in HTSUS 96121090.  Importer declared it as parts of printers
in HTSUS 84733040.  CIT agreed with the importer that the products are not typewriter
ribbons.
During the year 1996:
1. Committee for the Implementation of Textile Agreements (CITA) issued a notice reminding
interested parties that shipments made in one year exceeding the quota level for that year are
in violation of the terms of the agreements.  It has been the practice of CITA to charge the
excess to the quota for the immediate following quota period.  CITA now says it reserves the
right to deny entry permanently to these excess shipments.
2. CITA changed certain HTSUS classification numbers of all import controls for goods entered
in categories  647W and 669P.
3. The US Customs changed its 1996 harmonized tariff schedule, affecting products under
HS No. 6117, 6217 and 6307.
4. The Consumer Product Safety Commission is seeking to reinstate information collection
requirements for regulations implementing flammability standards for rugs and carpets.
5. 1996 Correlation contained changes affecting categories 229, 611, 618 and 629.
6. The Consumer Product Safety Commission modified the flammability standards for children's
sleepwear in September.
During the year 1997:
1. US Customs implemented minimum bond requirement, for all companies importing textiles,
of 2 per cent of the value of their world-wide imports of textiles.G/TMB/N/403/Add.1
Page 27
2. 1997 correlation was modified affecting category 301.  CITA amended the correlation
effective 23 June 1997.  The products affected are classified under HS No. 5205.
During the year 1998:
1. CITA announced revision to the 1998 correlation for textile-covered cooler bags affecting
categories 369, 670, 859 and 870.
2. Some HTSUS classification numbers were changed for products in part categories 369L 
and 670L.
3. CITA made change to 1998 Correlation affecting categories 222 and 362.G/TMB/N/403/Add.1
Page 28
Annex 9
AMENDMENT TO THE REGULATIONS
Part 12, Customs Regulations (19 CFR  pa rt 12), is amended as set forth below.
PART 12-SPECIAL CLASSES OF MERCHANDISE
1. The authority citation for part 12 continues to read in part as follows:
AUTHORITY   5 U.S.C.301;  19 U.S.C.66, 1202 (General Note 20, Harmonized Tariff Schedule of
the United States (HTSUS)), 1624.
*                  *                    *                  *                   *
Sections 12.130 and 12.131 also issued under 7 U.S.C. 1854;
*                  *                    *                  *                   *
2. Section 12.131 is amended by designating the existing text as paragraph (a), and by adding a
heading to newly designated paragraph (a), and adding a new paragraph (b) to read as follows:
§ 12.131 Entry of textiles and textile products.
(a) General    *    *    *
(b) Denial of entry pursuant to directive.  Te xtiles and textile products subject to section
204 of the Agricultural Act of 1956, as amended (7 U.S.C.1854), whether or not the requirements set
forth in § 12.130 have been met, will be denied entry where the factory, producer or manufacturer
named in the entry documents for such textiles or textile products is named in a Directive published in
the Federal Register  by the Committee for the Implementation of Textile Agreements as a company
found to be illegally transhipping, closed or unable to produce records to verify production.  In these
circumstances, no additional information will be a ccepted or considered by Customs for purposes of
determining the admissibly of such textiles or textile products.
(Signed)
Commission of Customs
Raymond W. Kelly
Approved:  20 August, 1999
(Signed)
Deputy Assistant Secretary of the Treasury
John P. Simpson
CERTIFIED COPY
CERTIFIED TO BE A
TRUE COPY OF THE ORIGINAL
(Signed) Joseph W. ClarkG/TMB/N/403/Add.1
Page 29
ANNEX 10
List of documents demanded by US Customs from importers
(In connection with regulation in Annex 9)
1. Factory production records demonstrating that the raw materials were obtained by the factory
and were available for production;
2. Bills of lading and Customs clearance records, if raw materials or parts are moved between
countries.
3. Mill certificates.
4. Cutting records for products assembled from cut components.5. Assembly or production records maintained  on the factory floor by production manager.
6. List of number and types of machinery available for production.7. Time records and salary records to show that employees identified were actually working
during the time period.
8. Electricity bills.9. Documentation from the subcontractor in the case of outward processing assembly work and
subcontracting.
________________