RESTRICTED
WORLD TRADE G/C/W/103
21November 1997
ORGANIZATION(97-5126)
Original: English Council forTrade inGoods
ELEMENTS FOR CONSIDERATION INMAJOR REVIEW OFTHE IMPLEMENTATION
OFTHE AGREEMENT ONTEXTILES AND CLOTHING (ATC)
Communication from Colombia1
Thefollowing communication hasbeenreceived from thePermanent Mission ofColombia
onbehalf ofmembers oftheITCB thatarealsoMembers oftheWTO forcirculation toMembers.
_____________
AssessingtheTreatmentofSpecialCategoriesofSuppliersandCertainOtherIssuesUndertheAgreement
onTextiles andClothing (ATC)
Small Suppliers
- Article 1.2oftheATC provided that"Members agree tousetheprovisions ofparagraph 18
ofArticle 2andparagraph 6(b)ofArticle 6insuchawayastopermit meaningful increases
inaccess possibilities forsmall suppliers".
- Itiscleartherefore thattheimplementation ofArticle 2.18hastobeseeninlightoftheguiding
principle thatitshould provide for"meaningful increases inaccess possibilities" forthese
countries.
- Article 2.18hasbeenimplemented bythreeimporting Members applying restrictions against
imports from small suppliers onthebasis ofdifferent methodologies.
- TheEuropean Community implemented theprovision ofArticle 2.18byincreasing
therespective growth ratesforindividual small suppliers andcategories ofproducts,
firstby16percent, andthenby25percent.
- Canada andtheUnited States, however, implemented thesameprovision byincreasing
therespective growth ratesby25percentonly.
- Asshown inTable 1,themethodology chosen byCanada andtheUnited States doesnotfulfil
therequirement ofArticle 1.2,asitdoesnotresult inanygreater access forsmall suppliers.
1Circulated initially asanon-paper intheCouncil forTrade inGoods meeting of13November 1997.G/C/W/103
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Application ofIncreased Growth Factors under Article 2.18
(Comparative Increases inAccess)
YearNormal Increase under ATC Increase Allowed byCanada and
US*Difference in
Access
(%perYear)
Growth Rate Base Quota Growth Rate Base Quota
1994 6.0% 100 6.0% 100
1995 6.96% 106.96 7.5% 107.50
1996 6.96% 114.40 7.5% 115.56
1997 6.96% 122.37 7.5% 124.23
Total 3Years 343.73 347.29 0.52%
*Under Article 2.18
- Itistherefore clear thatCanada andtheUnited States havenotfulfilled theirobligation to
provide meaningful increases inaccess within themeaning ofArticle 1.2oftheATC. We
aresurprised thattheTextiles Monitoring Body (TMB) didnotfinditso.
- TheCouncilforTradeinGoodsshouldrecommendthatthesetwoMembersrectifythesituation.
- Asregards theapplication ofsafeguard measures, theUnited States 'actions during thefirst
stage, alsoinvolved exports fromanumber ofWTO Members considered tobesmall suppliers.
- Hereagain, theUnited States didnottakeintoaccount thespecific requirement ofproviding
differential treatment tothese small suppliers asrequired under Article 6.6(b).
Least-developed Countries
- Afootnote toArticle 1.2provided that"totheextent possible, exports fromaleast-developed
country Member mayalsobenefit fromthisprovision", i.e.,thatArticle 2.18beimplemented
insuchawayastopermit meaningful increases inaccess possibilities forthem.
- Nodoubt, thisformulation hadnotbeencastinthesense ofanecessary obligation. Yetit
could nothavebeenmeant tobewithout anysubstance.
- AccordingtothecomprehensivereportoftheTMB,incertaincasesofleast-developedcountries,
bothCanada andtheUnited States haveadvanced thegrowth factors byonestage inthesense
ofArticle 2.18.
- Weareconcerned that,inthecaseofBangladesh, theprovision hasbeenaltogether ignored
byCanada andtheUnited States. Besides being discriminatory asbetween different least-
developed countries, itisnotconsistent withtheobjective oftheATCasspecifically recognized
intheAgreement aswellasbyother decisions under theWTO.
Administrative Arrangements
- Anumber ofadministrative arrangements maintained toimplement restrictions under Article 2
oftheATC havenotbeenfound bytheTMB tobefullyinconformity withitsprovisions.G/C/W/103
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Some ofthese arrangements contained obligations going beyond whatwould benecessary to
implement these restrictions.
- BoththeEuropean Community andtheUnited States haverecognized theinconsistencies and
assured theTMB that,when theprovisions ofthearrangements were inconsistent withthe
ATC, theprovisions oftheATC would apply.
- Weareconcerned thattheTMB didnotpronounce itself clearly onsuchinconsistencies, and
expressed onlyanexpectation "thatthesearrangements would beimplemented bytherespective
Members inconformity withtherelevant provisions oftheATC". Webelieve thatthisis
contrary totheclearmandate given bytheATC totheTMB tosupervise theimplementation
oftheAgreement andexamine theconformity ofmeasures taken therewith.
Other Issues
- Wearealsoconcerned that,when requested, theTMB didnotconfirm thatsafeguard actions
inrespect ofproducts already under group limits contravened theATC.
- Likewise, theTMB didnotclearly statewhether some mutually agreed arrangements under
Article 6.9werejustified under theATC especially afteradispute settlement panel hadruled
thatasafeguard action against thesame product under similar circumstances hadbeentaken
inconsistently withtheUnited States 'obligation oftheATC.
- Faithful adherence toprovisions oftheAgreement isnecessary topreserve itsintegrity.
Conclusion
- Today wehaveestablished thattheprovisions infavour ofsmall suppliers andleast-developed
countries hadnotbeenimplemented consistently withtheprovisions andobjective oftheATC.
- Wehavealsobrought outother shortcomings intheimplementation oftheATC, suchasin
theareaofadministrative arrangements andfulladherence totheprovisions oftheAgreement.