WORLD TRADE  
ORGANIZATION  G/C/W/526 
15 July 2005 
 (05-3156) 
Council for Trade in Goods Original:   English 
  
 
UNITED STATES -  REQUESTS FOR WAIVERS FOR THE  
CARIBBEAN BASIN ECONOMIC AND RECOVERY ACT (CBERA, AS AMENDED), THE  
AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA), AND THE 
ANDEAN TRADE PREFERENCE ACT (ATPA, AS AMENDED) 
 
Replies of the United States to comments and questions
 
from China and Pakistan  
  Comments and questions from China
 
 
1. With respect to delay in the submission of the waiver requests, we regret that the United 
States chose to wait for as long as over four yea rs in the case of CBERA and AGOA legislations and 
some three years in the case of ATPA legislation.   We do not find it convincing that such long 
departures from obligations could be ju stified by the US statement that th e US had felt it to be best to 
wait until all prospective changes are completed and to vet informally its submissions with its 
partners before the submission of the requests.   
 Paragraph 3 of the decision on renewal of the CBI waiver granted by the General Council in 
1995 (WT/L/104) provided that "the United States  shall promptly notify the General Council of 
any……modification being considered in the list of  eligible products and duty-free treatment 
thereof……". 
 
In accordance with this decision, will the Unite d States please clarify reasons why it could not 
notify the General Council of the modification in  duty-free treatment of apparel products imported 
from CBERA beneficiary countries when these modifications were  being considered? 
  With respect to China's question regarding notif ication to the General Council, as we noted in 
our responses contained in G/C/W/518, the 1995 d ecision WT/L/104 also requires annual reports on 
the operation of the CBI waiver.  Per this require ment, the United States submissions are WT/L/288, 
WT/L/329/, WT/L/373, WT/L/417, WT/L/498, WT/L/549 and WT/L/593.  We note that the report for 2001 contained the following information regard ing the eligible products in footnote 1: 
 
Many of these excluded products are now eligib le for preferential treatment under the United 
States – Caribbean Basin Trade Partnership  Act (CBTPA), Title II of the Trade and 
Development Act of 2000, which amended the CBERA.  The United States is analyzing what 
kind of waiver is required for these additional preferences . 
 
 Further, we note that WT/L/498 (2002) and WT/L/549 (2003) contain the following information: 
 
The CBTPA, effective 1 October 2000, enhanced  CBERA benefits by authorizing preferential 
tariff treatment for certain qualifying apparel articles.  The CBTPA also extended NAFTA-
equivalent duty treatment to a number of products previously excluded from the CBERA, 
including certain tuna, petroleum products, certain footwear, and some watches and watch G/C/W/526 
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 parts.  The Trade Act of 2002, passed on Augus t 6, 2002, further amended the CBERA to 
expand the type and quantity of textile and apparel articles eligible for the preferential tariff 
treatment accorded to designated beneficia ry CBTPA countries.  Among other benefits, the 
Trade Act of 2002 expands the duty-free treatmen t available for clothing made in beneficiary 
countries from US and regional inputs, and in creases the quantity of clothing made from 
regional inputs that regional producers can ship duty-free to the United States annually. 
 
 With respect to China's question as to notifyi ng the General Council when these modifications 
were being considered, we would note that the pro cess in the executive and legi slative branches in the 
United States involves many opportunities for modifica tions to be introduced, considered, altered, and 
altered again by many different actors.  We do not know with any certainty at any point the final 
terms of any modification until the process is comple te.  We respect the notification process in the 
WTO and work at all times to meet our reporting obl igations.  We also respect the value of economy 
in matters brought before the General Council.  These programs had been updated and refined on 
several occasions in recent years to improve their effectiveness.  As a practical matter of logic and 
economy, combined with the sense that coordi nating the three requests would provide a more 
effective view of U.S. preference programs, we wa nted our submissions to reflect all of these recent 
changes and to be tabled together.    
2. The data supplied by the United States in reply to the fourth question from China indicates the 
following progression of US imports from be neficiary countries under these programmes: 
Imports in Million $ 
Programme 
   1983   2000   2004  
CBTPA          0      159  6,483 
CBI          0       75  4 
AGOA          0        0  1,613 
             ATPA          0        2  1,156  
A footnote to these data states that they may d iffer from data supplied by the US Office of 
Textile and Apparel. 
 
Could the US please clarify in w hat manner these data are different? 
 
 There are different definitions used for tran sforming data into "textiles and apparel" using 
tariff line data that originates from the US Census Bu reau trade statistics.  The Office of Textiles and 
Apparel in the US Department of Commerce (O TEXA) uses a more detailed commodity-specific 
definition than that used for the presentation contained in G/C/W/518.  Please note, however, the 
numbers are relatively close in value.  
3. Replies by the United States confirm that dut y-free treatment granted by the United States to 
apparel imports from the beneficiary countries are c onditional on the use of US-produced materials 
(including yarns and fabrics), except when relevant  materials are not available in the US in 
commercial quantity.  Data published by the USA s howed that a significant amount of US textile 
exports went to the beneficiary countries since th e entry into force of th ese programmes whereas duty-
free imports from the beneficiary countries into the US in the exceptional  cases of commercial 
unavailability of US materials are very insignificant .  Such provisions granti ng special privileges to 
the U.S. textile industry are not available for other sectors. 
 
 Could the United States please comment on our c oncern that the revenue foregone by the US 
on import of apparel under these programmes (on the condition that these imports contain, e.g. US 
yarns and fabrics) effectively confers an advantage on U.S. yarn and fabric  producers and constitutes  G/C/W/526 
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 a specific subsidy to US textile industry?  Meanw hile could the United States also comment on our 
concern that such provisions effectively confinin g the beneficiary countries to  use US-produced yarns 
and fabrics which are not competitive vis-à-vis yarns and fabrics from other sources seriously impair the export competitiveness of the beneficiary countries? 
 
 We would note that China’s concerns appear to be based on certain assumptions regarding the 
competitive situation in the yarn and fabric sectors an d the effect of use of certain yarns and fabrics on 
the export competitiveness of beneficiary countr ies.  Frankly, these assumptions do not have a 
foundation.  In our view, the preference programs do not constitute specific subsidies to the US 
textiles industry.   
 
 The "revenue foregone" results from the duty-free treatment accorded imports from beneficiary counties under these preference program s.  These countries can choose whether to take 
advantage of the textile and apparel aspect of th e programmes.  The existence of these programmes 
does not itself confer a benefit on U.S. textile producers. 
 
 We further note that the actual effect of  this programme is to increase imports from 
beneficiary countries and we would encourage China to speak directly to those countries regarding 
those effects.  Doing so would al so enable China to appreciate furt her the importance these countries 
attach to these programs, and to understand the positive impact these programmes have had on their 
economies.     4. In replying to the question why the United St ates also seeking waivers from Article XIII of the 
GATT 1994, the United States stated that "in some cases, the duty-free treatment is subject to 
quantitative restrictions (QRs)".  We find it difficult to understand such QRs given the aim of the preferences is to develop the textile and clothing industry of the beneficiary countries.  Moreover, 
Article XIII seems to be related to exceptions to Article XI. 
 
 Would the United States please explain the rationale behind such QRs?  
 
 As China notes, the United States has a tradition of implementing tariff preference programmes for the purpose of encouraging economic growth and development in beneficiary 
counties.  Many WTO members use the preferential a ccess to the US market to grow their economies.  
In some cases, preferential access is limited to a certain quantity or value of goods.  These limits 
permit the United States to offer preferential acces s on more products than would otherwise be the 
case.   Since duty-free access under the relevant programmes, including for the products subject to quantitative limits on such access, is available onl y to beneficiary countries, we believe that 
Article XIII is relevant.  
  
 The United States is unsure to what China refers  in its statement that "Article XIII seems to 
be related to exceptions to Article XI."  Article  XIII calls for non-discriminatory administration of 
QRs.  These targeted concessions are subject to QR s on a small number of products, and are available 
to some countries but not others.  Hence the waiver request. 
 
5. The draft decision on CBERA and AGOA prepared by the United States draw consideration 
to the 1994 Decision on Measures in Fa vour of Least-developed Countries. 
  Could the United States please clarify which part of the provision in that 1994 Decision 
provides for discrimination among least-developed countries? 
 
 The objective of the United States in drawi ng consideration to the 1994 Decision on Measures 
in Favour of Least-developed countries in the draft decisions was simply to indicate that the following 
principles were paramount in the development of these programmes:  G/C/W/526 
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 "Recognizing the plight of the least-developed count ries and the need to ensure their 
effective participation in the world trading sy stem, and to take further measures to improve 
their trading opportunities;  
 Recognizing the specific needs of the least-devel oped countries in the area of market 
access where continued preferential access rema ins an essential means for improving their 
trading opportunities;   Reaffirming their commitment to implement fully the provisions concerning the least-
developed countries contai ned in paragraphs 2( d), 6 and 8 of the Decision of 28 November 
1979 on Differential and More Favourable Treatment , Reciprocity and Fuller Participation of 
Developing Countries;…" 
 
 We are seeking a waiver from our Article I obligations for targeted concessions for 
developing countries, including many LDCs. 
 
6. We note that the AGOA legislation will expire in 2015 while the third-country fabrics 
provision will expire in 2007.   
 Could the United States please explain the ra tionale for such discrepancy? Also whether the 
uncertainty about the continuation of third-country fabr ic provision would not already start affecting 
the AGOA beneficiary Members’ export prospects? 
 
 As described in our earlier submission,  G/C/W/509, the special provision of AGOA 
permitting use of third-country fabric in qualifyi ng apparel exports was designed as a transitional 
mechanism for lesser developed AGOA beneficiary co untries, to provide them time to attract new 
investment for their relatively undeveloped textile and apparel sectors.  The longer-term objective is 
to promote greater value-added production in A frica, including in the textile sector.  The 2007 
expiration of the third-country fabric provision is in tended to provide an incentive for a shift to greater 
use of African regional fabric in AGOA production.  The prospective impact that the end of the third-
country fabric provision might have on beneficiar y country apparel exports will depend on the extent 
to which African producers make the transition to greater use of African regional fabric before 
expiration of the third-country fabric provision.  Comments and questions from Pakistan
 
 1. With respect to delay in the submission of these waiver requests, i.e. four years in the case of  
CBERA and three years in the case of AGOA and ATPA, th e US merely states that it "felt" to be best 
to wait until all changes had come in.                                                                                                                                 
  In any event, could the US please recall that paragraph 3 of the decision on renewal of the CBI waiver granted in 1995 (WT/L/104) provided t hat "the United States shall promptly notify the 
General Council of any… modification being considered in the list of  eligible products and duty-free 
treatment thereof…", and clarify reasons why it coul d not notify the General Council promptly of the 
modification being considered in duty-free treatm ent of apparel products imported from CBERA 
beneficiary countries when these modifications were  being considered?  Especially, when it was 
required to do so per its obligati on contained in the said waiver.  
 
 We refer Pakistan to our response to China's question 1. 
 
2. In response to Pakistan’s question No. 3, the US stated "That waivers are being sought does 
not in it self mean that any WTO Member has been denied benefits to which it is entitled".  G/C/W/526 
 Page 5 
 
 
  
 Could the United States please clarify that if th e US believes that it has been in compliance 
with its obligations in these cases, then why do es it now feel the need to secure waivers from its 
obligations?  
 If on the other hand, the answer is in the negati ve, then could it state whether it will provide 
compensation for impairment of bene fits to non-beneficiary Members? 
 
 The US response to Pakistan's original ques tion conveys our view that requesting a waiver 
does not require a decision as a matter of legal certainty on whether the Members is or is not in 
compliance with its obligations.   Thus, any assertion of inconsistency would be  a hypothetical matter 
and this is not an appropriate forum for consideri ng the question of whether impairment, in particular 
hypothetical impairment, of benefits exists.   
 
3. In reply to Pakistan’s question No. 4, the United States has stated that: 
 
 "Apparel assembled in beneficiary countries with fabric formed in the United States, but using 
yarn imported into the United States, is  not eligible for duty-free treatment"; 
                                                and that  
 "Other than fabrics designated under the comme rcial availability provisions of the CBERA 
and ATPA, preferential treatment is not available to  apparel articles made from third-country 
fabric"”.   That being the cases, the relev ant provisions of all three legisl ations appear to be contrary to 
the United State's obligation to provide equal condi tions of competition to imported yarn and fabric. 
In this connection, we recall that  Article 3.4 of GATT states that the imported products "be accorded 
treatment no less favourable than that accorded to like products of national origin in respect of all 
laws, regulations and requirements affecting their internal sale, offering for sale, purchase, 
transportation, distribution or use".  
 How does the United States intend to justify  this deviation from its GATT commitments? 
 
 Given that the situation described above relat es to a grant of preferential access, the United 
States does not accept that this situation constitut es a deviation from GATT commitments (other than 
from Article I, for which the United States is reque sting a waiver).   The United States have made 
every effort to maximize the scope of duty-free access to beneficiary countries.  (Note:  Pakistan 
refers to the US obligation to pr ovide "equal conditions of competition"  for imported yarn and fabric.  
It is the beneficiary countries, however, not the Unit ed States, which are importing yarn and fabric to 
use in assembling eligible apparel.)  
 
4. In Pakistan's question No. 5, it was pointed out that according to data available on US 
Government websites, US exports of yarns and fabri cs to CBI countries relative to its export to the 
world had increased 1718.2% and 814.4% respectively.  And it was inquired whether, in light of the data, the US could please comment if the underlying obj ective of the legislation was to provide export 
advantage to US yarn and fabric makers?  
In reply, the United States has merely stated that "with respect to the impact on US industry, 
in fact, these programmes increased the pace of adjustm ent in the US industry just as it was facing the 
end of ATC quotas". 
 G/C/W/526 
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 We request the US to please clarify as to which portion of existing CBI waiver decision was 
meant to facilitate the adjustment of US industry? 
 
 No portion of the existing CBI waiver decision was meant to facilitate the adjustment of US 
industry.   The US response simply contained an observation of a coincident fact.   
 
5. Under AGOA, the United States has established a criterion of per capita gross national 
product of up to $1,500 for sub- Saharan African countries to be d esignated as lesser-developed and 
therefore eligible for duty free treatment of their ap parel exports, regardless of the source of fabric or 
yarn.  In addition, in some cases, exceptions have also been made so that even certain countries with 
per capita GNP of more than $1,500 have been d esignated as lesser-developed for purposes of this 
benefit.   Would the US please clarify the basis for treating some countries with per capita GNP of $1,500 and over as lesser developed and therefore elig ible for duty free treatment, but not treating 
many other developing WTO Members and LDCs with  much lower GNP per capita in the same 
manner? 
 
 As described in the 1 March submission by the United States,  G/C/W/509, AGOA was 
intended to address the specific and unique deve lopment challenges facing sub-Saharan African 
countries.  The extension of the special third country fabric provision to lesser developed countries, as 
defined in AGOA, is consistent with this inte nt.  The Trade Act of 2002 extended lesser developed 
country status, for the purposes of AGOA, to Bots wana and Namibia in recognition of the special 
circumstances of these two countries, which – wh ile possessing per capita incomes of more than 
$1,500 – have very limited industrial bases and shar e many of the development challenges of sub-
Saharan African countries with lower per capita incomes.   
 6. In Pakistan's question No. 7, the United States was requested to explain the reasons 
preventing it from achieving its policy objectives by measures consistent with  its GATT obligations. 
The US seems to have overl ooked this question. 
  Could the US please explain why its objectives cannot be met by GATT consistent measures? 
 
 We stated that the primary GATT-consistent way in which we are seeking to achieve our 
objectives is through improved market access in the D oha Development Agenda.  As we indicated in 
our earlier response, the market access provided by these programmes could not be extended in a 
manner consistent with GATT 1994 in  the short term.  Over the longer term, we are seeking to 
achieve our policy objectives in a GATT-consis tent manner, primarily through multilateral 
liberalization.  
7. In Pakistan's question No. 8, it was noted that the draft decisions submitted by the United 
States with the waiver requests were considerably d ifferent in their language than the existing waiver 
decision in respect of the CBERA in G/L/104 and the decision in respect of ATPA in WT/L/184 that 
expired on 4 December 2001, and a request was ma de if the US could explain the proposed changes 
and the reasons for those changes?   Since the issues involved in th ese cases are many and complex, ther efore to facilitate efficient 
consideration, may we ask if the Secretariat coul d draw up a comparison of the proposed draft 
decisions for CBERA and ATPA and the related provisions  of existing/previous decisions in G/L/104 
and WT/L/184? 
 
        The United States defers to the Secretariat in responding to this request. 
__________