WORLD TRADE  
ORGANIZATION  G/L/725 
10 December 2004 
 (04-5450) 
Council for Trade in Goods 
  
 
  
THE MAJOR REVIEW OF THE IMPLEMENTATION OF THE AGREEMENT 
ON TEXTILES AND CLOTHING IN THE THIRD STAGE 
OF THE INTEGRATION PROCESS 
  INTRODUCTION   
1. In carrying out its mandate to oversee the implementation of the Agreement on Textiles and 
Clothing (ATC), the Council for Trade in Goods is required, by Article 8.11, to conduct a major review before the end of each stage of the integration process.  The third stage, which began on 1 January 2002, ends on 31 December 2004, hence, the need to conduct the third major review before 
the end of 2004.    
2. Article 8.11 of the ATC requires that, at least five months before the end of each stage, the 
Textiles Monitoring Body (TMB) shall provide a comprehensive report on the implementation of the 
Agreement during the stage under review.  The review was, therefore, assisted by the "Comprehensive Report of the Textiles Monitoring Body to the Council for Trade in Goods on the 
Implementation of the Agreement on Textiles and Clothing during the Third Stage of the Integration 
Process", contained in document G/L/683, dated 30 July 2004.  A "Background Statistical 
Information with respect to Trade in Textiles and Clothing", prepared by the WTO Secretariat at the 
request of the TMB, was circulated in document G/ L/692, dated 20 September 2004.  Furthermore, a 
communication contained in document G/C/W/495, was circulated on 29 September 2004 at the request of India, on behalf of 21 members of th e International Textiles and Clothing Bureau (ITCB), 
which are also WTO Members or Observers (hencefo rth ITCB Members).  This report should be read 
in conjunction with these documents.   
3. At the start of the review process on 1 Octo ber, Members provided overall initial comments 
following the introduction of the Report by the TMB Chairman.   Thereafter, as agreed, the Council met in dedicated sessions on 25 October and 11 Nove mber 2004.  The minutes of these meetings will 
be issued in documents: G/C/M/75, G/C/M/76 AND G/C/M/77.  Informal consultations have also 
been held on aspects of the review.
1    
4. At the CTG meeting on 1 October 2004, the Chairman of the TMB introduced the Body’s 
Report.  He provided updated information on developments that had occurred since the Comprehensive Report had been adopted.  He underlin ed that the report placed particular emphasis on 
matters with regard to the integration process, the application of the transitional safeguard mechanism, 
and relating to the application of GATT 1994 rules and disciplines, as defined in Articles 2, 3, 6 and 
7, respectively.  In compliance with the mandate co nferred on the TMB, the report did not deal with 
possible issues or aspects which would fall outside the framework of ATC implementation during the 
period under review, or would go beyond the duration of the implementation of the ATC.  The 
Council noted the substantial information contained in  that Report and considered that it would make 
a useful contribution to the review.     
                                                     
 
1 25 October, 8 and 18 November and 6 December 2004. G/L/725 
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GENERAL STATEMENTS   
 
5. The representative of India introduced document G/C/W/495 on behalf of all its co-sponsors.  
In doing so, he stressed several points.  He said th at agriculture and trade in textiles and clothing had 
long remained outside of the mainstream of WTO rules and principles.  The completion of the process 
of integration of textiles and clothi ng into the normal rules and disciplines of GATT 1994 would be of 
great systemic value to the strengthening of the multi lateral trading system and a step in fulfilling the 
promise of the Uruguay Round.  The representative of India also stressed that the final major review 
of ATC implementation was significant in more than  one way.  It was critical to ensuring that all 
requirements of the Agreement would have been full y and faithfully met and it was important in terms 
of the lessons to draw from the process.  He noted that in successive Ministerial Conferences, Ministers emphasised the need to ensure full and faithful implementation of WTO Agreements.  Thus, 
at the very first WTO Ministerial meeting in Singa pore, Ministers had confirmed their commitment to 
such implementation specifically with respect to  the "provisions of the ATC".  He, therefore, 
emphasised the importance of a thorough and purposeful review and expressed the hope that all 
Members would engage in the review exercise "for a genuine and comprehensive appraisal of the implementation process".  This would be the spirit in which the ITCB would approach the review.
 2  
6. With respect to the data circulated by the Secretariat in document G/L/692, ITCB Members 
noted, firstly, that the coverage for the purposes of these data was SITC Divisions 65 and 84 for 
textiles and clothing respectively, which was signifi cantly different from the product coverage of the 
ATC – the implementation of which was the subject of  consideration in this major review.  Secondly, 
some data did not include data on intra-EU which was a significant portion of trade in the sector.  
Therefore, they hoped that in discussing the da ta, Members would avoid unnecessary confusion.   
7. Document G/C/W/495 was presented by ITCB Members to highlight a few pertinent aspects 
of the implementation process.  First, to highlig ht specific examples of the introduction of new 
restrictions or intensification of existing restri ctions to the detriment of exporting developing 
Members.  Second, to highlight additional issues from ATC implemen tation in general, including the 
way the integration programmes had been implemented.  In light of the above, he drew attention to 
the seven recommendations3 in which ITCB Members proposed that the CTG: 
"(i) Take note of the TMB report.  
(ii) Express its regret over the introduction and maintenance of certain measures by EU, 
Turkey and the United States in disregard of the disciplines of the ATC.     
(iii) Express disappointment over the mann er in which the major restraining Members 
implemented their integration programmes dur ing the integration process, especially 
(a) by postponing the elimination of the bulk of quota restrictions until the end of the 
implementation process, and (b) by not giving meaningful effect to ATC provisions 
with regard to special and differential tr eatment of small suppliers, least-developed 
Members and cotton-producing exporting Members. 
(iv) Reaffirm the TMB observation that "the process of integration in the sense of the 
ATC will only become complete if the admini strative requirements that were related 
to the administration of quota restrictions are also abolished". 
(v) Express disappointment that the rest raining Members have not yet responded 
positively to concerns about potential redu ction in market access opportunities due to 
denial of carry-forward quotas in 2004 and reiterate the TMB's hope that an 
                                                      
2 G/C/W/495 paragraphs 1 to 4 and Statement by India, on behalf of the ITCB.   
3 G/C/W/495 paragraph 54 and Statement by India on behalf of the ITCB.   G/L/725 
 Page 3 
 
 
appropriate solution will be found and adopted by the Ge neral Council in the near 
future. 
(vi) Recall the Doha Ministerial decision that Members will exercise particular 
consideration before initiating investigations  in the context of anti-dumping remedies 
on textiles and clothing exports from deve loping Members previously subject to 
quantitative restrictions under the ATC for a period of two years following full 
integration of the textiles and clothing se ctor into the WTO, establish appropriate 
procedures to operationalize the decision. 
(vii) Exercise close oversight of the proces s until full and faithful implementation of the 
ATC in all its aspects." 
8. Restraining Members disagreed with the pres entation by ITCB Members.  Some Members 
also provided initial reactions to the submission pr esented by India on behalf of ITCB Members.   
9. Restraining Members noted that they had fully and faithfully complied with ATC provisions 
and their obligations under the Agreement, including with respect to the integration programme set 
forth in Article 2.  One restraining Member stated that the ten-year phase-out of quota restrictions was 
designed to give importing Members an opportunity to adjust to unrestrained import competition.  The 
acceleration of quota growth rates under the ATC gave exporting Members progressively greater 
access to importing Member markets.  Although serious doubts had been expressed at the beginning 
of ATC implementation that this restraining Member would be in a position to completely eliminate 
all its quota restraints, by the end of the ATC, yet it was now evidently clear that the concerned 
restraining Member would continue to abide by a ll its commitments under th e ATC.  Furthermore, 
while some exporting Members had expressed c oncerns that importing Members should have 
liberalized at a faster pace than required under the ATC, the concerned restraining Member would 
continue to reject this contention.  Its cons istent position throughout the course of ATC 
implementation was that its domestic industry was entitled to the predictable pace of liberalization 
contained in the ATC.  The restraining Member stated that it had its own concerns about ATC 
implementation.  It considered that the degree of  market access provided by exporting Members in the 
sector had not matched their commitments under th e ATC.  Developing Member markets for textile 
products remained highly protected.  However, despite the dissatisfaction on both sides, with the imminent expiry of the ATC, Members could be proud in what had been accomplished.  The phase-
out of ATC expiry was one of the major accomplishments of the Uruguay Round.  This proved that 
even in the most difficult issues, a multilateral approach could produce an ambitious result.  
Regarding the TMB, its job was not an easy one.  The interests of exporting and importing Members 
were both widely divergent and contentious.  In some instances, this restraining Member had not 
agreed with the conclusions of the TMB, but it had always respected the TMB's serious and reasoned 
approach to the issues before it.   
10. These restraining Members stated that the Comprehensive Report of the TMB on the 
Implementation of the Third Stage of Integration un der the ATC revealed the complexity of the task 
of fulfilling the obligations of the ATC before its expiry.  They noted that it was inevitable that there 
would be different perceptions a nd interpretations of several ques tions such as growth-on-growth, 
carry-forward, etc.  These Members, in noting and responding to the statement by the ITCB, stated 
that whatever the considerations and positions, only three months re mained before ATC expiry.  It 
stressed that ATC compliance was not a one-way traffic.   G/L/725 
Page 4  
 
11. Detailed examination in the dedicated sessions of the major review was organized, as agreed 
by Members, around six indicative topics.  These were:  
(i) The ATC integration process:  
- Implementation of the third stage of integration  
- Notifications by recently acceded Members in the integration process  
- Fourth/Final stage of integration  
- Overview of ATC integration  
(ii) New restrictions  
(iii) Carry-Forward  
(iv) Administrative arrangements for quota administration and implementation  
(v) Use of Transitional Safeguard Mechanism  
(vi) Article 7 – Abiding by GATT 1994 rules and disciplines so as to achieve 
improved market access, ensure the application of policies for fair and 
equitable trading conditions (AD, CVD, IP), avoid discrimination against 
textiles in general trade policies.   
12. In the course of the dedicated discussions of th e six areas identified, delegations specifically 
referred to and echoed their expressed views, pos itions taken and facts pres ented to the TMB, as 
contained in the TMB Report.   
ATC Integration Process
  
 
13. The ATC integration process was considered to gether with its four sub-topics, namely:  
- Implementation of the third stage of integration  
- Notifications by recently acceded Me mbers in the integration process  
- Fourth/Final stage of integration  
- Overview of ATC integration  
14. ITCB Members recalled the observation in paragraph 47 of the TMB Report that the 
integration process was the main pillar of AT C implementation; however, contrary to the 
requirements of the ATC and its preamble, the inte gration process had not been implemented in a 
progressive manner.  The restraining Members had pursued a deliberate policy of back-loading the 
process, maintaining the bulk of quota restrictions throughout the ten-year period.   
15. ITCB Members recalled that the third stage of integration was immediately preceded by the 
Doha Ministerial Conference, at which implementation issues and concerns were considered by 
Ministers.  ITCB Members further recalled that the Doha Ministerial Conference had decided that4:  
                                                      
4 WT/MIN(01)/17, paragraph 4.   G/L/725 
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 "[It] reaffirms the commitment to full and faithful implementation of the Agreement on 
Textiles and Clothing, and agrees:  
 
• that the provisions of the Agreement relating to  the early integration of products and the 
elimination of quota restrictions should be effectively utilised.   
• that Members will exercise particular consideration before initiating investigations in the context 
of antidumping remedies on textiles and clothing exports from developing Members previously 
subject to quantitative restricti ons under the Agreement for a period of two years following full 
integration of this Agreement into the WTO.   
• that without prejudice to their rights and obligations, Members shall notify any changes in their 
rules of origin concerning products falling under the coverage of the Agreement to the Committee 
on Rules of Origin which may decide to examine them.   
Requests the Council for Trade in Good s to examine the following proposals:  
• that when calculating the quota levels for small suppliers for the remaining years of the 
Agreement, Members will apply the most favourab le methodology available in respect of those 
Members under the growth-on-gr owth provisions from the beginning of the implementation 
period; extend the same treatment to least-de veloped Members; and, where possible eliminate 
quota restrictions on imports of such Members;  
• that Members will calculate the quota levels fo r the remaining years of the Agreement with 
respect to other restrained Members as if impl ementation of the growth-on-growth provision for 
stage 3 had been advanced  to 1 January 2000;  
and make recommendations to the General Council by 31 July 2002 for appropriate action".   
16. ITCB Members took the position that prior Ministerial decisions on early integration and 
elimination of quotas had not been implemented by restraining Members.  They noted that the 
absence of consensus prevented the CTG from maki ng recommendations to the General Council in 
respect of paragraphs 4.4 and 4.5 of the Doha  Mi nisterial Decisions.  ITCB Members expressed their 
regret that the repeated pattern of implementa tion by restraining Members of their obligations 
revealed implementation in a technical sense, w ith little progress to wards effective integration by 
eliminating quota restrictions progressively.  ITCB Members noted that consequently, the majority of 
quotas had been back-loaded:  
- Of a total of 937 quotas notified by the United States on imports of textiles 
and clothing products from WTO Members under the MFA, it has thus far 
phased out only 103, or less than 11% of restricted quotas;  
- Of a total of 303 quotas carried over by the EU, it had phased out only 91, 
leaving 212, or 70 per cent, still in place;  
- Likewise of a total of 368 quotas carried over by Canada, it has so far phased 
out 76, leaving 292, or over 79%, still in place.   
17. They, therefore, requested the CTG to express disappointment over the manner in which the 
major restraining Members had implemented their in tegration processes during the integration period, 
in particular by postponing the elimination of the bulk of quota restrictions until the end of that 
integration process, and also by not giving meaningful  effect to ATC provisions with regard to special 
and differential treatment of small suppliers, least-developed and cotton-producing exporting 
Members.   G/L/725 
Page 6  
 
18. They noted, however, that for the final stage of integration at the end of the 10
th year of the 
transitional process, all the four restraining Member s had already notified that on 1 January 2005, they 
would integrate into GATT 1994 all textiles and clothing products to which the ATC applies, which 
had not been integrated into the first 3 stages.  A nd that furthermore, on 1 January 2005, they will 
eliminate all remaining restrictions under the ATC on  such products; and thus have integrated into 
GATT 1994 all products listed in the Annex to the ATC.  ITCB Members expressed appreciation that 
Norway had already abolished all 54 quotas that it had carried over from the MFA at the start of the 
ATC (46 before the end of 1997 and the remaining 8 at the beginning of 2001).   
19. Restraining Members disagreed with the presentation of the issues by the ITCB.  In 
responding to the issues of progressive liberalization, back-loading and the Doha Ministerial Declaration, restraining Members stated that they  had implemented its integration obligations as 
agreed.  While they did not dispute the statement by  previous speakers that the integration programme 
had been backloaded, the fact was that their inte gration programmes were in accordance with the way 
in which the ATC had been written.  The negotiating  history clearly showed that when Annex C was 
agreed, it was provided that integration would cover not only restrained products, but the entire universe of products.  The implication was clear that  restrained products, for the most part, would not 
be integrated until the end of the ATC.  It was also clear that importing Members would not "step off 
the cliff" and absorb large adjustments in one go.  The solution by negotiators was for the acceleration 
of existing growth rates through each stage of th e ATC.  This solution had worked.  Therefore, 
restraining Members were firmly convinced that  not only had they fulfilled its obligations a propos  
integration, but negotiators had in fact designed a system that was progressive, paced adjustment, and 
was successful. 
20. Some Members pointed out, in addition, that as  expressed by the TMB in its Comprehensive 
Report, the timely and full implementation of the ATC would bring about important trading 
opportunities but also challenges WTO Members would have to meet.  These Members also referred 
to the integration of all textile and clothing prod ucts into GATT 1994 by 1 January 2005 and to the 
very different pattern revealed by the third stage of integration, with a dr amatic transformation of 
global production and sourcing patterns.  As a consequence, these Members expressed the view that 
caution was essential in assessing the last phase of integration.  The point was also made that the 
major review should strictly focus on ATC implementation.     
21. Restraining importing Members underscored their position that they had complied in full with 
the provisions of the ATC and that quotas would end on 1 January 2005.  They stressed that the perceived back-loading of ATC implementation shou ld not have come as a surprise, since the ATC 
had precisely been written that way and since, togeth er with the integration, negotiators had included 
in the ATC the staged acceleration of existing annual growth rates.  In response to comments by Restraining Members, ITCB Members disputed the assertion by restraining Members as though 
backloading of quota elimination had been intended or provided for in the ATC.  They also rejected the contention as if increased growth rates under the ATC were meant to be a substitute for meaningful integration and recalled TMB observa tion that growth-on-growth would not be a 
substitute for quota elimination.   
22. ITCB Members noted the failure of an importing restraining Member to apply the minimum 
requirements on growth-on-grow th provision as recommended by the TMB.  The concerned 
restraining Member stated that it had fully comp lied with its obligations in that regard.  The 
restraining Member concerned stat ed its position that the benefits of that exporting Member's WTO 
membership should have started from the point at which that exporting Member acceded to the WTO 
and not before.   G/L/725 
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Carry-Forward  
 23. The ITCB Members stated that they attached considerable importance to the use of the carry-
forward provision this year.  They argued that, in view of the non-availability of carry-forward in 
2004, market access in some instances would be reduced, contrary to the WTO objective in general 
and ATC in particular to liberal ize trade and to increase market  access opportunities and not to 
decrease them.  It was hoped that the restraining Members could accept the recommendation made by 
the TMB in paragraph 260 and 261 of its Comprehensiv e Report for appropriate solutions to be found 
in order to avoid the potential reduction in market access in 2004.   
24. Restraining Members did not agree with the reque st, as the non-availability of carry-forward 
in 2004 had been a well-known and well-established fact for years, and since carry-forward would 
only be available in case there would be a quota to borrow from, which would not be the case in 2004.  
One restraining Member also stressed that while it was correct that the ATC was silent on the question 
of whether "carry-forward" would be provided in the last year of the ATC, it was also correct that the 
Administrative Arrangements provided by the concer ned Member to the TMB explicitly provided that 
"carry-forward" would not be provided in the last year  of the ATC.  In response to a question, it was 
confirmed that that flexibility for carry over was available in 1995 in the first year of ATC 
implementation.   
25. One exporting Member, supported by several others, proposed, inter alia , that urgent informal 
consultations be convened to discuss this matter.  On e restraining Member observed that this exercise 
did not appear promising but did not oppose it.   
26. Informal consultations on carry-forward were  conducted on 25 October and on 8 November 
2004.  The situation remained unchanged.  ITCB Members expressed regret that in spite of the best 
efforts of the Chairman and the recommendations by the TMB, exporting Members are being denied 
the use of the carry-forward flexibility provision in 2004.   
New Restrictions
 
 
27. ITCB Members underlined that the topic of ne w restrictions underscored their systemic 
concerns with ATC implementation.  They highlig hted three instances where, in their view, new 
restrictions had been introduced in violation of th e ATC.  The cited instances were: new restrictions 
introduced following the enlargement of the European Union in May 2004; the continuation of quota 
restrictions by Turkey despite Panel and A ppellate Body rulings; and, changes to product 
classifications by the United States.  ITCB Member s requested that the CTG express its regret over 
the introduction and maintenance of these measures by the European Communities, Turkey and the 
intensification of restrictions by change in produc t classification by the United States in disregard of 
the disciplines of the ATC.  Restraining Members disagreed with the presentation of these three issues 
by ITCB Members.   
28. On EC Enlargement, ITCB Members stated th at following accession of 10 new Member 
States from May 2004, the EC extended its quotas  on textiles and clothing to include the newly-
acceded States and unilaterally de termined quota levels.  ITCB Members recalled that a dispute panel 
and the Appellate Body had ruled that similar rest rictions imposed by another restraining Member 
were inconsistent with ATC Artic le 2.4 and were not justified by  reference to GATT Article XXIV.  
They further recalled paragraphs 325 and 334 of th e report of the TMB, which concluded that the 
measures by the EC constituted new restrictions  and could not be justified under the ATC.   
29. ITCB Members responded that even the short-term duration of these restrictions did not make 
them consistent with EC legal obligations under th e ATC.  Nor could the claim about special efforts 
to accord unspecified unilateral consideration for goods in transit justify these new restrictions.  
Responding to the statement by the EC, ITCB Members recalled that the TMB had considered all G/L/725 
Page 8  
 
these arguments and still ruled the restrictions unju stified.  The European Communities noted in reply 
that the TMB conclusions were not surprising having re gard to the fact that the ATC was not designed 
to take account of a very specific situation lik e EU Enlargement.  In fact, EU Enlargement was 
outside the remit of the ATC.  The Communities maintained that it had fully complied with its 
obligations under the ATC.  In response to EC  comments, one Member questioned whether WTO 
Members could substitute the ATC with EU Enlargemen t; i.e. whether one set of obligations could be 
substituted for another set of obligations.   
30. The European Communities maintained that the restrictions referred to were not new 
restrictions but rather existing ones adjusted to take into account the EU’s Enlargement.  The 
European Communities did not consider the geogra phical extension of the application of existing 
restrictions as constituting new restrictions in the sense of Article 2.4 of the ATC.  Linked to this 
point was that the question of restrictions applying  to geographical parts of the Communities (where 
they had not been applied before) were of a shor t-term nature, since all quota restrictions would 
disappear by 1 January 2005.  Furthermore, in th e hand-over period of 1 May 2004, the Communities 
had made every effort to lean in favour of th e exporting Members with goods in transition.  The 
Communities responded to the question of whether the Turkey/India Panel addressing the issue of a customs union and the introduction of quotas constituted a precedent, which by analogy was valid and 
comparable to the specific situation of EU Enlargement.  The Communities took the position that the 
two situations were qualitatively different.  The Communities stated that the accession process, on the 
one hand, and the Enlargement process, on the othe r, were different, w ith Enlargement (which 
extended membership from 15 to 25) being a deeper process than the elements of a customs union.  Finally, the Communities considered that relevant GATT 1994 provisi ons, as mentioned in Article 2.4 
of the ATC, provided legal justific ation for the measures taken.   
31. ITCB Members stated that the second restraining Member, following the establishment of a 
customs union with the European Communities, had imposed quota restrictions on textiles and 
clothing imports from other trading partners on wh ich the Communities also imposed the restrictions 
in question.  Following a challenge by one exporting Member, a WTO dispute panel had found that the measures adopted by the concerned restraining Member were inconsistent with the provisions of 
Articles XI and XIII of GATT, and ATC Article 2.4.   The Panel and the Appellate Body had also 
rejected the claim by the restraining Member that these restrictions were compatible with Article 
XXIV of the GATT.  The concerned Member later withdrew the restrictions from selected Members, 
but still continued to maintain these restrictions on imports from a number of ITCB Members.   
32. In response, the restraining Member, stated th at its measures were in compliance with the 
policies of its Customs Union Partner.  It also stated that, at the time, a mutually agreed solution had 
been reached with the exporting Member that bro ught the challenge.  However, ITCB Members stated 
that a mutually agreed solution reached with one Member did not justify the maintenance of these 
restrictions on other Members nor the maintenance of such restrictions as it knew that the maintenance of such restrictions was not in confor mity with the full and faithful implementation of 
that Member's obligations.  The concerned restrain ing Member firmly maintained that it had complied 
with its obligations.   
33. ITCB Members stated that in the course of AT C implementation, a third restraining Member 
substantially changed its rules of origin relating to the import of textiles and clothing products, 
creating significant adverse effects on trade.  Of particular relevance for the ITCB in this context, was the change in the classification of certain products enlarging the scope and in cidence of restrictions 
under the ATC to the disadvantage of exporting Members.  ITCB Members stressed that what was at 
issue was not the changes in rules of origin, whic h the restraining Member had referred to, but the 
change in the classification of certain product s which had led to the intensification of quota 
restrictions. G/L/725 
 Page 9 
 
 
34. The concerned restraining Member stated that the facts were clear.  It recalled that its 
measures had neither been challenged by one exporting Member in the TMB nor under the ATC, but 
under the Agreement on Rules of Origin.  The conc erned restraining Member had won the case.  It 
was self-evident that no Member was arguing that the concerned restraining Member had violated its 
obligations under the ATC.  The concerned restraining Member was within its rights and that was the 
end of the matter.   
Administrative Arrangements  
 35. With respect to administrative arrangements fo r quota administration and implementation, the 
ITCB Members stated that the administrative arrangements had existed only for the purpose of implementing and administering the restrictions main tained under the ATC.  They should, therefore, 
be dismantled on the expiry of the ATC on 1 January 2005.  They recalled the observation by the 
TMB that the process of ATC integration woul d only become complete if the administrative 
arrangements that were related to the administratio n of quota restrictions were also abolished and 
proposed that the CTG should re-affirm the observation by the TMB.  They stressed that by their very nature, these arrangements were inconsistent with the basic GATT rule of MFN treatment as they applied only to certain Members.  ITCB Members recalled that Canada had notified that it would 
dismantle its administrative arrangements with ATC expiry.   
36. One restraining Member argued that it was inco rrect to affirm that the restraining Members 
had an obligation to eliminate all administrative pr ocedures that were notified to the TMB under the 
ATC.  Only those that could not be justified by other WTO provisions would have to be eliminated.  Restraining Members pointed to the fact that quotas  would have to be enforced until the very end of 
the ATC and that this enforcement would have to be monitored on the import side as well.  In this 
regard, the administrative arrangements necessarily will also have to apply to the management of 
2004 shipments arriving in 2005.   
Transitional Safeguard Mechanism
 
 
37. On the use of the Transitional Safeguard Mechanism, the ITCB Members observed that, after 
24 safeguard actions had been taken in 1995, only two were taken in 2002, and none in 2003 and 
2004.  ITCB Members suggested that the Council may want to express its satisfaction with respect to 
the restraint exercised by  Members in the invocation of safeguard actions in the third stage of the 
integration process, and record its appreciation of the manner in which the TMB had conducted its 
examination of safeguard actions, especially after guidelines had been established by dispute panels and the Appellate Body.   
38. One restraining Member drew the attention of the Council to the fact that it had not had 
recourse to the provisions of Article 6 of the ATC.   Another restraining Member stated that it had 
invoked Article 6 provisions in cases it thought were justified.  In some cases, the TMB had 
concurred, in some cases it had not.  In other inst ances, it had withdrawn the action.  Subsequently, it 
had not faced the circumstances that required it to invoke the provisions of Article 6.    
Article 7 – Abiding by GATT rules and disciplines  so as to achieve improved market access, 
ensure the application of policies for fair and equitable trading condition and avoid 
discrimination against textiles in general trade policies  
 
39. As regards Article 7 issues, restraining Member s stated that Article 7 was an element of 
balance in the ATC for the removal by the restrainin g Members of the restraints they maintained, over 
a ten-year period.  It was believed that the exporting Members had incurred the obligation as stated in 
Article 7 in spite of the situation that, many had remained quite closed to  imports of textiles and 
apparel products, thereby foregoing so me of the benefits that woul d have accrued from liberalizing 
the sector.  They noted that this was an element of unfinished business under the ATC, which would G/L/725 
Page 10  
 
have to be addressed within the Non-Agricultu ral Market Access (NAMA) negotiations.  A Member 
noted the improvement in overall market access brought about by the customs union it had formed 
with another restraining Member, while many expo rting Members had not sufficiently fulfilled their 
Article 7 obligations.  Because of this, there had been substantial trade imbalances between that 
restraining Member and exporting Members.   
40. ITCB Members pointed out that the TMB ha d unambiguously observed that Members 
continued to implement their specific commitments undertaken as a result of the Uruguay Round and 
no particular problem related to such implementa tion, affecting products covered by the ATC had 
been brought to the attention of the TMB by any WTO Member.  Moreover, while the restraining 
Members had not reduced their tariffs over and above their commitments under the Uruguay Round, many exporting Members had implemented significan t tariff reductions in addition to their Uruguay 
Round commitments.  Consequently, claims about any non-fulfilment of obligations in this regard 
were neither well founded nor established by fact s.  They requested the CTG to pronounce itself 
accordingly.   
41. In the context of Article 7.1(b), ITCB Members raised the issue of the improper recourse to 
trade remedy actions such as anti-dumping actions on products under restraint.  They pointed out that several aspects of the methodology used by the Member concerned in dumping determination had 
been faulted by a WTO Panel and the Appellate Body.  In this context, they also noted the possible 
downward pressure on prices that could ensue from the abolition of all quota restrictions on 1 January 
2005 was mentioned, and the pressure that might  result for introducing alternate methods of 
protection on imports from developing Members.  Th ey drew attention to the decisions taken by 
Ministers in Doha in this regard and the Council wa s urged to recall the Doha decisions in its report 
and to establish appropriate procedures  to operationalize this decision.   
42. Another exporting Member drew attention to its example as a liberal market in this sector.  It 
was suggested that the CTG should take note of the relevant observations made by the TMB in its 
Comprehensive Report and conclude accordingly, namely that the concerns expressed by the 
European Communities and other importing restraining Members in relation to market access commitments in the context of Ar ticle 7, were not justified. 
Conclusions 
 
 43. The Major Review of the Implementation of the Agreement on Textiles and Clothing (ATC) 
in the Third Stage of Integration in accordance with Article 8.11, is the final review of the ATC.  The 
review was initiated at the Council for Trade in Good s on 1 October.  Dedicated Sessions were held 
on 25 October and 11 November.  Several informal consultations were held on 25 October, 8 and 
18 November and on 9 December.  There were also direct contacts amongst delegations, facilitated by 
and with the assistance of the Secretariat.  The major review exercise, which was organized around 
the six agreed topics, was systematic, purposeful and thorough.  In the course of the review, there was 
an extensive exchange of views by Members on the six topics in both formal and informal settings.   
44. Having regard to the foregoing, the Council for Trade in Goods hereby decides to:   
(i) take note of the TMB
5 Report, which provided a basis for the major review;   
(ii) take note of all statements made by Members in formal sessions in the course 
of the major review, which shall be re flected in the records of the CTG;  
                                                      
5 Pursuant to ATC Article 8, the TMB consists of a Chairman and 10 Members.  TMB Membership is 
balanced and broadly representative of the Membership, with provision for rotation at appropriate intervals.  
Members discharge their functions on an ad personam  basis.   G/L/725 
 Page 11 
 
 
(iii) take note of the repeated unanimous re-affirmation of all CTG Members of 
the expiry of the ATC on 1 January 2005 in accordance with ATC Article 9;  
and,  
(iv) agree that the CTG shall maintain acti ve oversight and continue to monitor 
the implementation of the ATC until 31 December 2004.   
 
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