RESTRICTED  WORLD TRADE  
ORGANIZATION  G/C/M/75/Add.1 
13 September 2005 
 (05-3989) 
Council for Trade in Goods  
  
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS  
1 OCTOBER 2004  
 
Chairman:  H.E. Ambassador Chiaradia (Argentina
) 
 
Addendum  
 
V. MAJOR REVIEW OF THE IMPLEM ENTATION OF THE AGREEMENT ON 
TEXTILES AND CLOTHING (ATC) IN THE THIRD STAGE OF THE INTEGRATION PROCESS PURSUANT TO  ARTICLE 8.11 OF THE AGREEMENT 
(G/L/683, G/L/692) 
5.1 The Chairman
 recalled the specific mandate for the review, in Article 8.11 of the ATC, which 
provides that “In order to oversee the implementation of this Agreement, the Council for Trade in Goods shall conduct a Major Review before the end of each stage of the integration process.”  He 
noted that the end of the third stage of the integration process, which covered the years 2002-2004, was close, and that the Agreement itself would expi re, as provided, on the first day of the 121st month 
of which the Agreement has been in force, namely 1 January 2005.  He drew Members’ attention to 
three documents relevant for the consideration of this item.  The first was the Comprehensive Report 
of the Textiles Monitoring Body to the Council fo r Trade in Goods (G/L/683), prepared by the TMB 
and transmitted to the CTG on 30 July 2004.  The second was Background Statistical Information 
with respect to Trade in Textiles and Clothing (G/L/6 92), prepared by the Secretariat at the request of 
the TMB.  The final document was a communication ci rculated at the request of India on behalf of 
21 Members of the International Textiles and Clot hing Bureau (ITCB), which are also WTO Members 
or Observers, in the context of the Major Review of the Implementation of the Agreement on Textiles 
and Clothing in the Third Stage of the Integration Process (G/C/W/495). 
5.2 He underlined that Article 8.11 also provided that "To assist in this review, the TMB shall, at 
least five months before the end of each stag e, transmit to the Council for Trade in Goods a 
Comprehensive Report on the implementation of th is Agreement during the stage under review, in 
particular in matters with regard to the integr ation process, the applica tion of the transitional 
safeguard mechanism, and relating to the appli cation of GATT 1994 rules and disciplines as defined 
in Articles 2, 3, 6 and 7 respectively.  The TMB's Comprehensive Report may include any recommendation as deemed appropriate by the TMB to the Council for Trade in Goods.” 
5.3 The Chairman proposed that the Council begin its second Major Review of the 
Implementation of the ATC with the introduction of the report prepared by the TMB.  He then invited 
Members to make broad overall comments on the Repor t.  Thereafter, he offered suggestions on how 
to proceed with the substantive detailed discussions on issues at subsequent meetings.  He then called 
upon the Chairman of the TMB, to introduce the report. 
5.4 The Chairman of the TMB
, introducing the Comprehensive Report on behalf of the TMB, 
stated that the TMB had devoted part of several m eetings to the preparation of the Report, which was 
adopted by consensus at the Body's meeting on 21 July 2004.  The Comprehensive Report dealt with 
implementation of the ATC during the third stage of  the integration process.  Following the mandate 
specified in Article 8.11 of the ATC, the Report covered all matters relate d to ATC implementation G/C/M/75/Add.1 
Page 2  
 
 during the period considered, which were either referre d to the Body or brought to its attention, or 
were raised in higher WTO fora.  In so doing, while addressing the implementation of all of the 
operational provisions of the ATC, it placed partic ular emphasis on matters with regard to the 
integration process, the application of the trans itional safeguard mechanism, and relating to the 
application of GATT 1994 rules and disciplines, as define d in Articles 2, 3, 6 and 7 respectively.  On 
the other hand, and also in compliance with the mandate conferred on the TMB, the report did not 
deal with possible issues or aspects which would fall outside the framewor k of ATC implementation 
during the period under review or would go beyond th e duration of the implementation of the ATC.  
The Comprehensive Report was essentially based on notifications submitted by WTO Members to the 
TMB and on the actions taken by the Body with respect to these notifications.  In addition, 
contributions and replies received from WTO Member s to the TMB's request for notifications or 
information, made with reference to  Article 8.3 in the context of the preparation of the report, together 
with the replies received to subsequent specific requests for clarification and comments, were also 
reflected as fully as possible.  Al so, in accordance with Article 8.3, relevant notifications to, and 
reports from, other WTO bodies had been considered by the TMB in preparing the Comprehensive 
Report.  Part One of the report was a brief in troduction and Part Two summarized the relevant 
background.  Part Three addressed in detail the im plementation of the ATC during the third stage of 
the integration process, covering the period 1 January  2002 to 21 July 2004, th e date of the adoption 
of the report.  Finally, Part F our contained elements for an overall assessment of the implementation 
of the ATC, with particular emphasis on developments during the stage under review. 
5.5 With a view to providing an update on deve lopments that had occurred since the adoption of 
the report, the Chairman of the TMB informed th e Council that during its meeting of 16 September, 
the TMB had reviewed, pursuant to Article 2.21 of the ATC, two further notifications, notably those 
received, respectively, from Colombia and Sri Lanka, re garding their final stage of integration, to be 
implemented on 1 January 2005.  With these two notifications, the number of Members having 
submitted a notification under Article s 2.8(b) and 2.11 regarding the final stage of integration had 
increased to 16. 
5.6 Without entering into any detail, the Chairman of the TMB pointed out also that in drawing 
up the report, the TMB had gone much beyond simply putting together the different pieces of information at its disposal and the contributions  received from WTO Members, by offering additional 
comments, observations and, if applicable, assessment s with respect to each of the important matters 
examined or issues raised.  As a result, the re port highlighted the relevant facts and related 
developments, the major concerns and important per ceptions of various WTO Members, together with 
the related comments, observations and assessments ma de by the TMB.  He was confident that the 
elements included in the TMB's Comprehensive Repor t would assist the Council in its conduct of the 
Third Major Review, enabling WTO Members to have an overall assessment of ATC implementation and, perhaps, also to draw appropria te lessons from this implementation. 
5.7 Since this was not only the third, but at the same time, also the last Major Review of the 
Implementation of the ATC, and that just in thr ee months from that day the ATC was going to expire, 
the Chairman of the TMB believed that it was not in appropriate to offer some related remarks of a 
more general nature in the concluding part of the Comprehensiv e Report.  He concluded by referring 
to some elements of the TMB's remarks.  The Chairm an of the TMB recalled that "[a]lso as part of a 
broader assessment, it should be borne in mind that the ATC [...] is an integral part of the results of 
the negotiations conducted in the framework of the Uruguay Round.  It had been presented and also 
perceived as one of the most important elements of the Uruguay Round results for several Members, 
in particular exporting developing countries and terr itories, both in terms of potential short and longer 
term economic benefits and also in terms of syst emic importance.  During the ten-year transition 
period for the integration of the textiles and clot hing sector into GATT 1994, Members have had very 
divergent assessments regarding the quality of ATC implementation, a continuous source of real or 
potential problems and, very ofte n, hardly veiled frustrations."  G/C/M/75/Add.1 
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 5.8 The Chairman of the TMB went on to state that "[a]gainst this background it is a welcome 
fact that in the respective official notifications , repeated assurances have been recently provided 
regarding the timely and full implementation of the ATC.  The Agreement will be fully implemented as scheduled and provided for in Article 9.  Thus the ATC and all restrictions thereunder shall stand 
terminated on 1 January 2005, on which date the te xtiles and clothing sector shall be fully integrated 
into GATT 1994, thereby putting an end to a special  and discriminatory regime that has been in 
application for more than four decades."   
5.9 In conclusion, the TMB expressed the view that  "[t]he timely and full implementation of the 
ATC will bring about, without any doubt, importa nt trading opportunities and also challenges WTO 
Members will have to meet.  This timely and full implementation of the ATC should be also regarded 
as a renewed manifestation of WTO Members to thei r commitments undertaken in the framework of 
the multilateral trading system, thereby also strengthening the credibility of this system." 
5.10 The Chairman
 expressed his appreciation to the Chairman of the TMB for his introductory 
statements on the TMB's Report. 
5.11 The representative of India  introduced document G/C/W/495 on behalf of all its co-sponsors, 
Members of the ITCB, as well as Members or observe rs of the WTO, namely Argentina, Bangladesh, 
Brazil, China, Colombia, Costa Rica, Egypt. Gu atemala, Hong Kong China, India, Indonesia, 
Republic of Korea, Macau China, Maldives, Paki stan, Paraguay, Peru, Sri Lanka, Ireland, Uruguay 
and Viet Nam.  This Major Review of ATC impl ementation came just three months before the 
termination of the ATC.  The ATC and all restric tions maintained under it, shall stand terminated on 
1 January 2005, and the sector would be fully inte grated into normal GATT and WTO disciplines.  
Yet it was important that this review was both thorough and purposeful.  Article 8.11 of the ATC 
required it to be so.  Additionally, it was essentia l that, pursuant to the specific mandate under the 
ATC and its oversight function under the WTO Agreem ent, the CTG ensure that all requirements of 
the Agreement would have been fully implemented.   The co-sponsors believed that the exercise was 
also important in terms of the lessons to be drawn from the implementation process.  They therefore 
hoped that all Members would engage in this exercise with the purpose of a genuine and 
comprehensive appraisal of the implementation e xperience.  He assured that the co-sponsors would 
approach this review in that spirit. 
5.12 The representative of India stated that th e conclusion of the ATC as part of the single 
undertaking of the Uruguay round had been universally hailed as a major achievement.  Beside  the 
systemic importance of bringing the Textiles and Cl othing sector back into the normal disciplines of 
the WTO, the implementation of the ATC was estim ated to contribute as much as one third of the 
entire gains of the Uruguay Round.  The Agreement provided for a long ten-year transition process to 
progressively eliminate all quantitative restrictions that had long been maintained by developed 
countries, primarily on imports from developing economies under the ATC's predecessor regimes, 
namely the Multifiber Arrangement, the Long-Term  Arrangement and the Short-Term Arrangement. 
He hardly needed to remind all Members that the MFA alone had remained in effect for 21 years 
before the commencement of the ATC at the start of  1995.  Given such a long adjustment period, it 
would have been expected that the process of implementation of the ATC would have proceeded 
smoothly with full regard for all its provisions a nd disciplines.  Disappointingly, however, it had gone 
to a rather rocky start giving rise to widespread c oncerns.  Throughout the ten-year period thereafter, 
significant resources had had to be devoted in keeping the process on track.  Ministerial meetings had 
to be seized of the implementation issues and c oncerns, especially with respect of textiles and 
clothing.  The co-sponsors believed that the time and e ffort thus expended had not been in vain.  Yet, 
their appraisal of the implementation process was per force  tempered by the fact that despite serious 
concerns consistently expressed by developing count ries and solemn decisions and declarations by 
their Ministers, the restraining Members could not improve on the implementation of their ATC 
commitments.  The representative of India went on to say that there had been several issues of G/C/M/75/Add.1 
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 concern with respect to the implementation of the ATC.  The Comprehensive  Report of the TMB to 
the CTG provided a complete catalogue.  The Bo dy deserved CTG appreciation for its extremely 
useful contribution and they would like to th ank the Chairman of the TMB for his detailed 
presentation on the Comprehensive Report.  On thei r part, the co-sponsors had submitted a somewhat 
shorter contribution, designed to focus only on a few, yet pertinent, aspects that they believed 
deserved specific attention of the CTG in this  final Major Review.  In introducing the joint 
contribution, the representative of India highlighted  the structure of the paper.  As Members might 
recall, at successive Ministerial Conferences of th e WTO, Ministers had been stressing the need for 
full and faithful implementation of the provisions of the ATC.  For ease of CTG's reference, Annex 1 to the paper brought together pertinent aspects from their decisions and declarations.  The Annex also 
provided relevant excerpts from statements made by the restraining Members at various meetings of 
the General Council and CTG, as well as some of thei r notifications to the TMB.  As for the specific 
issues that the paper sought to present for CTG's assessment of the implementation process, its first 
section of the paper brought out certain examples rela ting to the introduction of new restrictions or 
intensification of existing ones to the detrimen t of exporting developing countries.  The second 
section was intended to highlight certain additional i ssues from the implementation process in general.  
The final section contained some specific proposals for consideration of the CTG. 
5.13 Turning to the specific issues, the representa tive of India stated that Members might recall 
that, in view of the expression of widespread concerns about the implementation of the ATC, at the Ministerial Conference in Singapore in 1996, Ministers "affirmed their commitment to full and faithful implementation of provisions of the Agr eement on Textile and Clothing".  Regrettably 
however, there had been instances of not only the in troduction of new restrictions in violation of ATC 
provisions but also their maintenance even after th e Appellate Body, a dispute settlement panel or the 
TMB had ruled them to be inconsistent with the respective restraining Members’ ATC obligations.  
The EU had introduced restrictions following the accession of new Member States to the Union and was maintaining them even as the TMB had declared  them to be unjustified.  As the TMB's Report 
noted, Turkey had maintained its restrictions, intr oduced after its custom's union agreement with the 
EC, on several Members and continued them even  after the Appellate Body had ruled them 
unjustified.  The United States enlarged the scope  of certain restrictions by changing the product 
coverage of relevant products. 
5.14 The representative of India further explained th at Section II of the paper highlighted the back-
loading of the elimination of quotas restricti ons by the restraining Members and consequent 
difficulties for the immediate aftermath of the ATC;  the reduction in effective quota access due to the 
denial of carry-forward in the final years of the ATC; the lack of effective implementation of the provision relating to preferential treatment of least developed countries, smaller suppliers and cotton-producing countries and the issue of administrative arrangements that had been in place only for the 
implementation and administration of quota restrictions.  In section III, the co-sponsors of the joint 
contribution proposed that the CTG takes note of the TMB's Comprehensive Report; expresses its 
regret over the introduction and maintenance of certai n measures by EU, Turkey and the United States 
in disregard of the disciplines of the ATC; expr esses disappointment over the manner in which the 
major restraining Members implemented the integr ation programs during the integration process, 
especially by postponing the elimination of the bulk of quota restrictions until the end of the implementation process and by not giving meaningful e ffect to ATC provisions with regard to special 
and differential treatment of small suppliers, least develope d countries and cotton-producing 
exporting countries; reaffirms the TMB's observation th at "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 abolis hed", expresses disappointment that the restraining 
Members had not yet responded positively to con cerns about potential reduction and market access 
opportunities due to denial of carry-forward quotas in 2004, and reiterates the TMB's hope that an 
appropriate solution would be found and adopted by the General C ouncil in the near future; recalls the 
Doha Ministerial Decision that Members would ex ercise particular consideration before initiating  G/C/M/75/Add.1 
 Page 5 
 
 
 investigations in the context of antidumping remedies on textiles and clothing exports from 
developing countries previously subject to quantitativ e restrictions under the ATC for a period of two 
years following full integration of the textiles a nd clothing sector into the WTO, and establishes 
appropriate procedures to operationalize the Decision; and exercises close oversight of the process until full and faithful implementation of the ATC in al l its aspects.  The representative of India further 
stated that the co-sponsors were looking forward to the Chairman’s ideas and suggestions as to how to 
structure the discussions at the CTG for this final Major Review and would be ready to discuss these 
ideas.  Finally, with reference to the background  statistical information on trade in textiles and 
clothing that had been made available in docum ent G/L/692, while appreciating the Secretariat's 
efforts in compiling these data on the evolution of trade during the period of the ATC, the co-sponsors 
noted that the coverage for the purposes of these data  was SITC Divisions 65 and 84 for textiles and 
clothing respectively, which was significantly different from the product coverage of the ATC, the implementation of which was the subj ect of consideration by the CTG in this Major Review exercise.  
Also, except for Tables 5 and 16, which showed the evolution of trade under certain selected regional 
trade arrangements, the rest of the document did not include data on intra-EU trade, which was a 
significant portion of trade in the sector.  At last, si nce data with respect to exports of textiles and 
clothing from individual countries and economies, in tables 2 and 13, were compiled on the basis of reports from the respective countries and economies,  consequently, in some cases, they differed from 
data on imports from these same countries as show n by the major restraining countries and included 
in the relevant tables of the document.  Apart fro m this, the representative of  India also wished to 
recall that in previous discussions in this Council,  the three major restraining countries had opted to 
use their own data on imports.  All this differences gave rise to some confusion during the course of 
discussions in the CTG.  It was hoped that Members would try avoiding this confusion this time. 
5.15 The Chairman
 said that some clarifications would be  provided by the Secretariat at a later 
date with regard to the doubts expressed by the re presentative of India on the statistical information. 
5.16 The representative of Norway  welcomed the report of the Textiles Monitoring Body and the 
confirmation through this report that the restricti ons maintained  under the ATC would be abolished 
as set out in Article 9 of the Agreement.  The termination of the ATC would imply the strengthening of the multilateral trading system.  It was to be hope d that the termination of the ATC would not lead 
WTO Members to replace the terminated restricti ons by alternative means (such as safeguard or 
antidumping measures) to restrict access to their markets. 
5.17 The representative of Pakistan
, as one of the co-sponsors of document G/L/495, associated 
himself with the statement made by the representative of India.  He also supported the statement made 
by Norway, since replacing the quotas by some ot her protective means would defeat the purpose of 
their elimination.  He commended the TMB for the hard work that had gone into the comprehensive 
and balanced report on the final review of th e ATC implementation.  He also endorsed the 
recommendations proposed by the ITCB.  The process of integration of unfair quota restrictions had 
been anything but smooth and implementation of the ATC had been the subject of concern both 
within and outside the WTO.  The fear of th e restrained Members became a reality when the 
restraining Members neglected their obligations in  spirit and failed to implement their commitments 
faithfully.  The ATC provided for a 10-year trans ition period and that the process of integration 
should be progressive in character.  The major restra ining Members did not adhere in letter and spirit 
to the explicit objectives of a progressive phasing-out  and an overwhelming bulk of quotas had been 
left for the last stage of elimination, on 1 January  2005.  The restraining Members maintained that 
they had the full period of time for adjustment and therefore, back-loaded the elimination of the bulk 
of quotas to the end of the phase-out process.  This had proved to be counterproductive this year.  The 
plight of the exporting Members had further wor sened because of new developments during the 
implementation period, as highlighted by the repr esentative of India, such as changes in product 
classification by the United States, the continuation of  quota restrictions by Turkey despite panel and 
Appellate Body rulings, the introduction of new rest rictions by the EU following its enlargement from G/C/M/75/Add.1 
Page 6  
 
 May 2004, the denial of carry-forward for quotas in 2004.  The effect and significance of these 
developments had been described within some de tail in the ITCB submission and in the TMB report 
itself.  There were lessons to be learnt from the implementation of the ATC.  And by and large the 
membership had learnt some, which would be ev ident in the process and substance of the ongoing 
negotiations in the various bodies of this Organizati on.  He was  looking forward to the completion of 
the process of integration of the textiles sector in to the normal rules and disciplines of GATT 1994, 
with the elimination of quotas and related administ rative arrangements.  This would give the much 
needed credence to the multilateral trading system and would be another step towards fulfilling the 
promise of the Uruguay Round.  He also wished to reiterate Pakistan’s supp ort to the conclusion and 
proposals contained in the ITCB submission and urged the Council for Trade in Goods to adopt them. 
5.18 The representative of China
 expressed thanks to the TMB for timely submitting its report on 
the 3rd stage of implementation of the ATC and to Mr. Szepesi, Chairman of the TMB, for his 
presentation.  He extended his great appreciation to him, to TMB Members and to the Secretariat for their hard work in the past few months to prepare this report.  China highly appreciated the strong 
sense of responsibility of the TMB, under the able leadership of its Chairman.  The Comprehensive 
Report gave a very clear picture of the implementa tion of the ATC, in particular the integration 
process, which served as a good assistance to the Counc il in its review of the ATC implementation.  
As a co-sponsor of the ITCB paper introduced by India, China fully supported the views and points presented in his statement on behalf of the co-sponsor s of the paper.  Like other co-sponsors, China 
attached great importance to the notifications submitted to the TMB by the remaining importing 
restraining Members, that is, the United States, Canada, the European Community and Turkey, on 
their last stage integration programmes, in wh ich these Members confirmed that on 1 January 2005 
they would eliminate all remaining quota restricti ons against other Members and integrate the entire 
textiles and clothing sector into GATT 1994 rules and disciplines.  In this regard, the intervention by 
Norway and its advanced elimination of its quotas restrictions against textiles and clothing products 
was greatly appreciated. 
5.19 The representative of China stated that, desp ite the empirical evidence that this sector served 
as an essential first step in the process of industria lization of many developi ng economies which have 
comparative advantages in this area, production and trade of textiles and clothing had been disrupted 
and distorted by the quantitative restrictions app lied by the major importing markets over 40 years.  
Hence the completion of the process of integrating the sector into the normal rules and disciplines of 
GATT 1994 in 3 months' time in accordance with the ATC, which was a result of hard negotiations 
and part of the single undertaking of the Uruguay Ro und, would definitively increase the credibility of 
the multilateral trading system and send a positive si gnal to the participants of the current world 
liberalization negotiations under the Doha Work Programme.  Once again, the TMB should be 
commended for its role in supervising the impl ementation of the ATC.  The ITCB paper had 
highlighted several issues for this Council's review , including the introduction of new restrictions and 
maintenance of restrictions despite the DSB ruli ngs, changes to product classification which led to 
effectively enlarging the scope and incidence of relevant restrictions, back-loading of quota 
elimination, denial of carry-forward quotas in 2004 and trade remedial action.  The paper, after a 
careful analysis, put forward 7 proposals for the Council's consideration.  It was hoped that the 
Council would give a positive consideration to these proposals and conduct its Major Review of the 
ATC implementation smoothly and successfully.  
5.20 The representative of Honk Kong, China
 also expressed thanks to the TMB, in particular to its 
Chairman, for the hard work over the past months  in coming up with a comprehensive report.  The 
report provided useful weapons to assist this C ouncil in undertaking its Major Review as mandated 
under Articles 8.11 and 8.12 of the ATC.  He was of  the view that Norway had also made a very 
pertinent intervention that all should bear in mind.  He recalled the purpose of this Major Review of 
the implementation of the ATC: first, to ex ercise the Council's responsibility of overseeing the 
functioning and the implementation of the ATC; and second, to take appropriate decisions to ensure  G/C/M/75/Add.1 
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 that the balance of rights and obligations embodied in  the ATC was not being impaired.  As one of the 
co-sponsors of document G/C/W/495, Hong Kong, Chin a fully endorsed the statement made by India 
on behalf of ITCB members.   This document hi ghlighted a number of issues for the Council to 
consider, such as the introduction of additional rest rictions despite clear panel and A ppellate Body 
rulings in a similar earlier case, changes to product classification which had a significant impact on 
trade and other aspects of ATC implementation such as the issue of administrative arrangements 
maintained for implementation and administration of  quota restrictions.  Following some detailed 
analyses, the ITCB paper had made 7 recommendations  for the Council's consideration.  Hong Kong, 
China looked forward to a structured debate and constructive dialogue.   
5.21 The representative of Indonesia  associated himself with othe r speakers and fully endorsed the 
statement by India on behalf of the ITCB members.  He extended his high appreciation for the TMB 
members for their hard work in preparing the Comprehensive Report on the implementation of the 
ATC during the 3rd stage of the integration process.  He assu med that that was the last report to be 
made by the TMB until the ATC is terminated at the end of December 2004.  And there would be no 
more ATC as well as TMB.  In assisting the CTG in conducting the Major Review, the TMB had 
successfully done its work by preparing its Compre hensive Report.  As a Member which had a great 
interest in trade in textiles and clothing, Indonesia wa s very concerned with respect to trade in textiles 
and clothing and the implementation of the ATC, as there had been no political will to fully and 
faithfully implement the Agreement.  Commenting on so me elements of the repor t, he noted that, with 
respect to administrative arrangements, the eliminati on of all quota restrictions at the beginning of 
2005 shall be done automatically together with  the abolition of administrative arrangements 
previously used to administer and control the e xports or imports of textiles and clothing products 
under quota regime.  In the TMB report it was stated , however, that a restraining Member had notified 
that all quota restrictions together with admini strative arrangements would expire unless justified 
under other applicable provisions of the WTO Agreement, including GATT 1994.  Indonesia was 
concerned that there was an indication of the co ntinuing use of a categorization system in the 
importation of textiles and clothing products.  This  requirement would be imposed discriminatorily 
only to those Members whose exports had been previous ly under quota.  He was of the view that this 
situation would create a new burden for developing countries such as his.  On the issue of carry-
forward, he reiterated his delegati on’s concern about the denial of carry-forward for 2004.  He also 
referred to paragraph 256 of the TMB comprehensive report where it was explained that the General 
Council had provided no positive resolution to th e request by developing Members, including 
Indonesia, with respect to the potential loss of carry-f orward in 2004.  Indonesia was of the view that 
the availability of carry-forward in 2004 could be  considered as part of the ATC implementation 
process.  There were no sufficient efforts on the part  of the General Council to solve this problem in 
the absence of the provision of the ATC governing the carry-forward.  The loss of carry-forward had 
very adversely affected Indonesia’s exports of textiles and clothing, particularly since the mid-2004, 
as the use of this flexibility should have started as from June.  He concluded from this situation that 
there was no political will to fully and faithfully implement the ATC in letter and spirit. 
5.22 With regard to trade defence, the represen tative of Indonesia had no doubt that the elimination 
of the bulk of quota restrictions only at the end of the transitional period would create a substantial 
increase in imports and a sudden downward pressure on export prices.  This situation would have a 
negative impact on domestic producers in importing countries.  If that was the case, the resulting 
proliferation of anti-dumping actions would become  a new pattern of protection in the post-quota 
restrictions era.  In order to avoid the problem s that may occur in the post-quota regime, Indonesia 
stressed the importance of the renewal of the Decisi on taken by Ministers in Doha that "Members will 
exercise particular consideration before initiating investigations in the context of antidumping  
remedies on textile and clothing exports from devel oping countries previously subject to quantitative 
restrictions under the Agreement for a period of two years following full integration of this 
Agreement into the WTO".  This would help avoi ding unnecessary protection for textiles and clothing 
products in the post-ATC era.  He also wanted to draw the attention of the CTG on other issues such G/C/M/75/Add.1 
Page 8  
 
 as the US Rules of Origin with relation to the ch ange of product classifications of textiles products, 
that could also create a serious obstacle to trade in textiles and clothing; small suppliers; and the 
interest of cotton producing countries. 
5.23 The representative of Turkey
 thanked the TMB for its serious efforts in preparing such a 
Comprehensive Report.  He was confident that this  report would contribute to the Council's review.  
In this respect, he also wanted to be grateful to  the Secretariat for the detailed statistical information 
that provided a substantial background information before the review.  The Comprehensive Report 
clearly set out important facts and related developm ents, as well as the major concerns and important 
perceptions of the various WTO Members.  The te xtiles and clothing sector played a crucial socio-
economic role in a great many of countries' de velopment efforts by offering opportunities in their 
employment, investments and exports which resulte d in income generation.  When one looked at 
Turkey from this perspective, the textiles and clothing sector took an outstanding place in the export sales and in the economy.  It constituted the larg est industry and accounted for 10% of the GDP, 23% 
of the manufacturing output and 21% of the employment in the manufacturing sector.  Turkey's exports of textiles and clothing pr oducts constituted almost 35% of to tal merchandise exports in 2003.  
The EU had traditionally been the main market fo r both textiles and clothing, followed by the United 
States.  He pointed out that WTO Members had di fferent perceptions and experiences regarding the 
last stage of the integration of the ATC.  Count ries had witnessed major developments in global 
textiles and clothing trade, quite different from their original aspirations.  The statistical data for the 
last 2 years also confirmed this.  It was obvious th at the integration of the textiles and clothing sector 
into the GATT system would dramatically change the trading environment.  Many countries like 
Turkey, in which the textiles and clothing sectors constituted a significant share in their economies 
and exports, were highly concerned on the sustainability of their development efforts.  This final 
Major Review was extremely important as it came at a critical juncture, a few months before the end 
of the ATC.  In this final review, Members should seek a common understanding to identify the market conditions with a view to making an overall assessment of the integration process.  In this 
regard, Turkey shared the view that the post-ATC period would bring about opportunities and 
challenges that WTO Members would have to meet.  However, at the current stage, the very strong 
indications of market dominance limited the opp ortunities only for a few, whereas the great 
challenges were left to the rest.  Therefore, the CTG should give particular emphasis to the challenges 
for the WTO Members in its report.  He also under lined the importance and urgency of the issue and 
Turkey’s expectation for the timel y and successful conclusion of the review by the CTG.  He finally 
referred to the report circulated by the ITCB, whic h contained important aspects that Members should 
all be aware.  However, he had to clarify that the CTG report would not be complete unless a missing fact should be addressed in detail, i.e. that th e Panel and Appellate Body decisions were fully 
respected by Turkey and that Turkey fulfilled its  obligations stemming from those decisions in the 
framework of a compensation mechanism, which me chanism as a resolution was mutually agreed and 
adopted between India and Turkey. 
5.24 The representative of Tunisia
 was grateful to the TMB for its re levant report, as well as to the 
Secretariat for the useful information it had provide d.  The prospects of the complete implementation 
of the ATC and its integration into the WTO w ould undoubtedly have a negative impact on the 
economies of a large number of countries.  That was something which the Council should take a look 
at and consider in terms of the challenges to take up.  In 1995 the signatories of the ATC had 
undertaken, under the provisions of Article 7, to set up fair and equitable conditions for trade, 
particularly in terms of dumping and intellectua l property.  The philosophy which ran over this 
Agreement was that the abolition of the quotas syst em should go hand in hand  with an improvement 
of the conditions of competition.  He questione d whether these commitments had been fulfilled and 
whether, 10 years later, the rules of the game were  now fair, equitable and balanced, as practices such 
as dumping or the counterfeiting of trademarks and d esigns and models continue d to be prevalent, not 
to mention the lack of respect of the fundamental rules and principles contained in the international 
labour convention.  He believed that the commitment undertaken must be strict ly respected and this  G/C/M/75/Add.1 
 Page 9 
 
 
 was a sine qua non  condition for the textiles and clothing sector  to continue to prosper.  He would 
refer to what could be proposed for that purpo se under the following item on the Council’s agenda.  
5.25 The representative of the United States  welcomed this opportunity to conduct the 3rd and final 
review of the ATC.  The past 10 years had been a trying time to the US textile industry.  US imports of textiles products over the life of the ATC ha d increased by 120%.  Over the same period, 
employment in the sector had decreased by 60%.  For the most part, the ATC had operated as 
intended.  The 10-year phase-out of quota restric tions was designed to give importing countries an 
opportunity to adjust to unrestrained import competition.  The acceleration of quota growth rates under the ATC gave exporting countries progressively  greater access to importing country markets.  
The success of this approach was demonstrated most clearly by the fact that exporting countries had 
abandoned their concerns about the “cliff”.  At th e beginning of the ATC, serious doubts had been 
expressed that the US would be in a position to comple tely eliminate its quota restraints at the end of 
the ATC.  As should be evident to all, the US  had, and would continue to abide by all its 
commitments under the ATC.  Some exporting countries had expressed concerns that importing countries should have liberalized at a pace faster than required by the ATC.  The US continued to 
reject this contention.  The United States’ consis tent position throughout the life of the ATC had been 
that its industry was entitled to the predictable pa ce of liberalization contained in the ATC.  To 
liberalize at a pace faster than that, faster than required by the ATC, would have placed an additional 
and unfair burden on the US industry.  The US had had its own concerns  by ATC implementation 
over the last 10 years, and considered that the degree of market access provided by exporting countries in this sector had not matched their commitments under the ATC.  Developing country 
markets for textile products remained highly prot ected.  This had been a disappointment to US 
exporters and forwent the gains from trade  that co uld have been reaped by developing countries in 
this sector.  This was an issue that the United St ates intended to address in the NAMA negotiations.  
Despite the dissatisfaction on both sides, as one look ed towards the expiration of the ATC, one could 
be proud in what had been accomplished.  The pha se-out of restraints provided for in the ATC was 
one of the major accomplishments of the Uruguay Round.  It  proved that even for the most difficult 
issues, a multilateral approach can produce an amb itious result.  As regards the TMB, its job was 
never going to be an easy one.  The interests of exporting and importing countries were both widely divergent and contentious.  At times the US had not agreed with conclusions reached by the TMB, but 
it had always respected the TMB's serious and reasone d approach to the issues before it.  One needed 
to look no further that the TMB's third-stage report to  find evidence for this.  This report demonstrated 
the amount of work that had come before the TMB in its lifetime and the professional manner with 
which it had approached it.  In particular, he  acknowledged the contribution made by the TMB 
Chairman.  Although the Chairman, by definition, h as no view, every page of this third-stage report 
bore the stamp of his intellect and dedication to the task given to him.  Finally, as regards the paper 
which had recently been submitted from the ITCB c ountries, his government was in the process of 
reviewing it, would react to it and looked forward to discussing its details in future presentations on 
this issue.  
5.26 The representative of the European Communities
 said that the Comprehensive Report to the 
CTG on the implementation of the 3rd stage of integration under the ATC revealed the complexity of 
the task of fulfilling the obligations of the ATC no w coming to an end.  And in that regard, he 
congratulated the TMB and its Chairman for havi ng compiled it and having done so with such great 
care.  In overall terms, the Community was satisfied by the contents of the report which in detail set 
out the issue and difficulties encountered in meeting the requirements of the ATC.  It was inevitable 
that there were different perceptions and interp retations on the questions, for example on growth on 
growth and carry-forward.  He wanted to touch upon  3 points.  Firstly, he took note of the statement 
made by the representative of India on behalf of the ITCB members, in particular on the question of 
the EU enlargement.  He first referred in this rega rd to the letter from the EC to the Chairman of the 
TMB which had been circulated as G/TMB/N/477, whic h set out all their arguments on this particular 
question.  In addition, firstly, the whole question of  restrictions applying to geographical parts of the G/C/M/75/Add.1 
Page 10  
 
 Community where they had not applied before was by definition of a very short-term nature.  There 
remained only 3 months before all quota restrictions  disappear.  Secondly, in the hand-over period of 
what had been done this year, the Community had ma de every effort to lean in favour of exporting 
countries with goods in transit.  So, all in all, the EU was of the view that the approach followed was 
based on very sound considerations, striking the right balance between the special and complex 
situation prompted by the enlargement of the cu stoms union and the legitimate concerns of the 
exporters of the new Members States.  Also, he emphasised that during the transitional period, the Community had not had recourse  to the safeguards measures authori zed under Article 6 of the ATC.  
Finally, he stated that the EC considered it ha d faithfully complied with the provisions of the ATC 
and had already notified to the TMB that the remaining restrictions vis-à-vis  the WTO Members were 
to be eliminated on schedule by the end of the y ear.  However, compliance with the ATC provisions 
should not be one-way traffic.  Article 7 of the AT C clearly put an obligation on all Members to abide 
by GATT rules and disciplines so as to achieve improved access to markets for textile and clothing 
products through such measures as tariff reductions and bindings, reduction or elimination of non-
tariff barriers.  The European Communities continue d to have the clear impression that improvements 
in market access to certain countries were still pending. 
5.27 The Chairman
 proposed that the preliminary reactio ns and comments to the TMB’s report be 
recorded in the minutes of the meeting.  It was so agreed . 
5.28 Turning to the organization of future wo rk, he said that comments from delegations had 
brought to light several substantive issues wh ich might require more focussed discussions.  
Delegations had requested such detailed discussions , in particular following the statement made by 
India on behalf of members of the ITCB.  In the light of this, he proposed that further detailed 
discussions proceed under a series of topics, such as:  the overall integration process in the context of 
the ATC; the implementation of the 3rd stage of integration; recent accessions and effects on 
integration; the enlargement of the EU; the use of the transitional safeguards mechanism; carry-
forward and administrative arrangements for quota administration and implementation.  These were 
just some of the very broad areas on which more detailed discussions could be held. 
5.29 With respect to the organization of the m eetings, the Chairman believed that the Council 
should plan at the most two additiona l meetings, the dates of which woul d be  indicated at a later time. 
These additional meetings would give an opportunity for a more focused consideration of the issues 
identified. 
5.30 The Council agreed  with the Chairman's proposals. 
5.31 The Chairman  further explained that the Secretariat would distribute a list of the main 
subjects and sub-subjects he had proposed and that the Council would have to consider at a future 
meeting.  Delegations should inform the Secretaria t should they have suggestions with respect to the 
specific order in which the sub-subjects would be taken up.   
5.32 The representative of Hong Kong, China  asked whether he had understood the process 
correctly and that, if delegations had comments on the list of subjects, the Secretariat would hold 
consultations in the following days.  
5.33 The Chairman  clarified that in case there were preferences by delegations with respect to the 
order in which the items would be considered at  the following meeting, the Secretariat would note 
these preferences and he would accommodate them.  
5.34 The representative of the European Communities  asked whether he had understood it 
correctly, that the list mentioned was indicative, because he had thoughts about additional points that 
would be raised in this context.  G/C/M/75/Add.1 
 Page 11 
 
 
 5.35 The Chairman  confirmed  in response that the list of subjects he had outlined was indicative 
and that, should there be a specific matter whic h he had left out, this could be corrected. 
VI.  POST-ATC ADJUSTMENT-RELATED ISSUES 
6.1 The Chairman  explained that he had included this item  on the agenda on the basis of a former 
request by the delegations of Ma uritius, Madagascar, and Uganda.  Since that request, a submission 
had been made in relation to this item by Bangladesh, Dominican Republic, Fiji, Madagascar, 
Mauritius, Sri Lanka and Uganda.  The submissi on was contained in document G/C/W/496.  He 
invited its co-sponsors to present it. 
6.2 The representative of Mauritius  stated that the submission was now made on behalf of two 
further Members: Jamaica and Nepal.  He expressed  his appreciation to the Chairman for agreeing to 
include this item on the agenda of the Council.  He  also wished to thank his trading partners in 
supporting this initiative.  The co-sponsors looked forward to a fruitful discussion leading to a 
satisfactory outcome to this problem.  They had had the opportunity of sharing their position and 
approach during informal consultations with a range of Members.  In order to allow Members to have 
a better understanding of their concerns on this matte r and to enable them also to engage in an 
effective and frank exchange of views, th ey had circulated the joint document. 
6.3 He noted that they were now practically on the eve of the phasing-out of the ATC and of the 
full integration of the textiles a nd clothing sector in the multilateral trading system.  The Agreement 
on Textiles and Clothing had been concluded in the Uruguay Round with the expectation of 
addressing the trade restrictions in the sector a nd of ensuring that the textiles industries in the 
developing countries would benefit from an increase d participation in the system.  The TMB had 
accordingly been set up with a view to overseeing th e implementation of the Agreement.  What had 
come out of this expectation was explained in the submission.  A good deal of literature was now 
available on this sector and the implementation of the ATC.  Some studies had suggested that the 
elimination of quotas and the further liberalization of the sector might be beneficial to developing 
countries as a whole.  But they also clearly indicat ed that there would be more losers along with the 
winners in the process.  The co-sponsors were among the losers, which had not only found out to their 
disillusionment that they had not benefited but we re also now very concerned with the prospects 
ahead if nothing was done to rectify the situation.   Their motivation therefore was geared towards 
collectively finding effective ways and means to addr ess the adverse impact faced by their countries, 
which included a vast number of LDCs and small, weak and vulnerable countries.  He gave only a 
few examples, as he was sure that his colleagues woul d raise all these concerns in their intervention.   
6.4 African countries, mainly South Saharan, a nd other developing countries currently enjoying 
trade preference would be the biggest losers with a c ontraction of their market share by almost 70%.  
These realities on the ground in Mauritius for exampl e were quite preoccupying.  There had been a 
deceleration of growth in the textiles sector in anticipation of the quota phase-out.  The textiles and 
clothing sector played a vital role in the economy .  It accounted for 61% of domestic exports, around 
9% of the GDP and over 15% of the labour force.  It was thus the single largest employer and export 
earnings generator.  For example, there was a total of 361 firms in the textiles and clothing sector in 1990.  By the end of 2003, a total of approximately 89 firms had shut down, representing a 25% fall.   
6.5 The representative of Mauritius  highlighted th at empirical evidence globally had shown that 
for every job in the textiles sector , job creation in other formal and informal sectors were multifold.  
In Mauritius for example, for every job created in th e textiles sector, there were as many as three jobs 
indirectly created in other sectors of the economy.  Hence, it was obvious that one job lost in the 
textiles sector would induce many more losses else where.  And the impact on gender issues was 
severe, especially if one recognized that the textil es sector was the prime activity with the highest 
propensity to create jobs for women.  Alternative employment in other sectors was quasi inexistent.  G/C/M/75/Add.1 
Page 12  
 
 In addition, a recent report by the IMF had shown th at Mauritius would be the biggest loser in terms 
of erosion of preferences.  The fact was that some sectors were seriously threatened in Mauritius.  The 
situation in the textiles sector would only compound the problems with the ensuing devastating socio-
economic consequences.   
6.6 During the last 3 years a declining trend in exports had been noted.  In both 2002 and 2003, 
the value of exports had dipped by around 5%.  Th e sector had, thereby, recorded negative growth 
rates estimated at around 5.5% in both years.  Employment in the sector had dropped by 24%.  Since female labour represented the bulk of the employees, at around 70%, the first casualty resulting from the contraction on the sector and job losses was wo men, who represented an important source of 
income in the family.  The analytical work done so  far had focused mainly on the global effects of the 
liberalization of trade in the textiles and clothing sector.  A more focused and disaggregated analysis 
at country level would be important to assess the magnitude of the adjustment process in affected developing countries.  In view of the desperate s ituation in which the LDCs, the weak and vulnerable 
economies found themselves and the devastating impact  on women in particular, it was imperative for 
the WTO and other international institutions con cerned to address this situation with all the 
seriousness that it deserved.  It was, therefore, th e considered view of the co-sponsors that the WTO, 
through the work of the CTG, should undertake an in -depth impact analysis on the adjustment-related 
issues and costs that would arise in various developi ng countries that were affected as a result of the 
quota phase–out.  There was a need to ensure a smooth transition and minimize the disruptions 
resulting from the adjustment process. 
6.7 Accordingly, Mauritius had made some propo sals, which he would explicit in some more 
details.   First, the WTO Secretariat should carry out a study aiming at identifying the adjustment-
related issues and costs that may arise with the phase-out of the ATC, including recommendations on measures to address such issues.  This study should lo ok at the global impact of the phasing out of the 
ATC in a disaggregated manner at country level fo r the LDCs and other small, weak and vulnerable 
economies who were the losers in this process.  Second, the CTG should establish a work programme 
to discuss, with a view to finding solutions, the problems raised in the submission as well as those 
raised by Members in relation to the adjustment -related issues and costs concerning the ATC phase-
out.  The work programme should identify appropri ate mechanisms to expe ditiously address this 
issue.  Time was not on Members’ side.  Memb ers needed to act as promptly as the situation 
warranted.  Thirdly, the work programme should fu rther clearly identify solutions, of an explicitly 
trade-related nature, that would help mitigate th e trade-related impact of the quota phase-out.  These 
trade-related solutions and the adjustment measures s hould be applied side by si de to achieve the most 
optimal result.  The co-sponsors were looking forw ard to the solidarity of the Members in this 
difficult time and for their full support on these proposals.  
6.8 The representative of Madagascar
 joined Mauritius in thanking the Members for showing 
flexibility with respect to the inclusion of this item on the agenda.  He extended Madagascar’s full 
support to the proposal contained in the submission.  In effect, the textiles and clothing industry had 
been flourishing in Madagascar and it had a non-neg ligible place in the economy, notably with the 
development of industries in export processing zones.   This was an important source of employment 
and social stability for the 180 operating free-trade z ones.  Many had been involved in the clothing 
and textiles industry over the past 10 years.  Mada gascar’s exports had more than doubled and this 
performance could be explained by new goods being introduced on the market, mostly by the free-
trade zones to the detriment of traditional products such as fishing industries.  A significant share 
(45%) of total exports had been taken up by these fre e-trade zones, contributing to a large part of GDP 
and providing indirectly 15,000 jobs, mainly women.  For Madagascar’s economy, this sector was very important and had a great potentia l to grow and develop.  It was one  of the strategic axes that had 
been adopted by the Government in order to reduce poverty.  Nevertheless, the end of the ATC raised 
concern about the impact it could have on trade and employment for the textiles and clothing industry.  
That would have a serious impact on the level of competitiveness of the textiles and clothing industry  G/C/M/75/Add.1 
 Page 13 
 
 
 and would affect various producing areas.  Madag ascar therefore thought that an in-depth study 
should be undertaken before eliminating the quotas.  The transition should be undertaken in a way that 
was favourable to the textiles and clothing industry, with fair, open and equitable conditions.  And in 
line with the commitments of WTO Members after 2005, that there might be harmful effects for several countries, especially the LDCs and small a nd vulnerable countries.  That would create a de-
structuring of the global market, a loss of more than  30,000 jobs directly as well as a loss of industrial 
capacity.  LDCs such as Madagascar could not face this situation.  Those countries had made 
significant efforts and that should  not be undermined.  They were convinced that their partners were 
aware of this and would be availabl e to continue discussions in order to find appropriate solutions to 
their problem.   
6.9 The representative of Jamaica
 joined in co-sponsoring the submission which had just been 
introduced by Mauritius on behalf of a number of countries.  Jamaica believed that the issues 
addressed in document G/C/W/496 were very important  for a large number of developing countries.  
The document introduced by Mauritius outlined quite  clearly the difficulties that many developing 
countries, especially  LDCs and small and vulnera ble economies would face upon the phasing-out of 
the ATC, scheduled for 1 January 2005.  Some of t hose adverse effects had already been felt.  Jamaica 
was among those countries affected and the situatio n required adjustment measures to alleviate the 
impact of the transition and to ensure that the af fected countries were able to retain a share of 
production entry in this sector, which was very importa nt and which was indeed in some cases vital to 
the continued development and even to the survival  of some of the affected economies.  Jamaica 
believed that the proposals made in paragraph 13 of  the document were very important as a starting 
point in addressing those concerns. 
6.10 The representative of the Dominican Republic , referred in particular to the last phase of the 
integration process under the ATC, which would take  place on 1 January 2005 and eliminate all the 
remaining quantitative restrictions with regard to te xtiles and clothing.  Overall, the products affected 
were sensitive textile products a nd represented a significant share of the Dominican market in this 
sector.  This elimination would have a significant impact on the global flow of trade.  Competition 
would be further intensified once quotas had been elim inated.  Price and quality would continue to be 
key factors for consumers but there were other fact ors involved, such as transit and entry time and 
additional services that added value to products.  This would become increasingly important.  The 
main textiles and clothing importing countries ha d taken the strategic decision in 1995 not to 
eliminate quotas for sensitive clothing products un til the end of the process.  That decision had 
prevented the gradual transition that many WTO Members, including the Dominican Republic, had 
expected from a global regime, highly distorted by  quantitative arrangements which lasted for over 
40 years, to a highly liberalized trade regime where offer and demand were determined by free-market forces.  The Dominican Republic recognized the need to find alternatives to the challenges that had 
been caused by this phasing out of quotas.  It had b een working very hard over the past years in order 
to increase competitiveness of its te xtiles industry, and tried to take  measures in order to safeguard 
itself from the potential impact that this would have.  For example, the Dominican manufacturing 
industries had undertaken joint operations with Ha iti with the aim of obtaining advantages of the 
latter's low costs of production.  Nevertheless, ther e was serious concern that it would not be able to 
safeguard this industry.  It was expected that textiles exports from the Dominican Republic to the 
United States would decrease by 25% over the 2 years following the elimination of quotas.  This 
would cause a loss of about 50,000 jobs or about 35% of current jobs within the textile industry.  
Textile exports had already droppe d by 12.4% in the first five months of 2004.  Some studies had 
indicated that exports of products towards th e United States had fallen by 39% between 2001 and 
2003.  This included a reduction of 55% of expor ts from the Dominican Republic, 58% for Nepal and 
45% for Sri Lanka, among other countries.  The te xtile industry was of vital importance for the 
Dominican Republic.  Dominican textiles producers employed over 140,000 employees, a significant 
portion (4%) of domestic industry employment.  This sector represented about 40% of Dominican exports.  She stated that the Dominican Republic was currently facing economic difficulties due to a G/C/M/75/Add.1 
Page 14  
 
 crisis in the finance sector and was also experi encing significant difficulties in terms of jobs 
displacement which would probably result from the full elimination of textiles quotas.  For those 
reasons, it was hoped that the CTG could look into ot her opportunities in order to help the textiles 
industry to be able to compete successfully on the global market, once quotas had been eliminated.  
This situation in the Dominican Republic and othe r textiles-producing countries should be reviewed 
very carefully.  As was stated in the submission, the Dominican Republic hoped that it would be 
possible to entrust the WTO Secretariat to undertak e a study and for the CTG to decide on a work 
programme, as proposed. 
6.11 The representative of Tunisia
 fully supported the spirit of th e presentation made by Mauritius 
for document G/C/W/496.  Tunisia shared the same c oncerns.  In 3 months there would be a new deal 
in the multilateral trading system.  On 1 January 2005 the dismantling of quot as would be completed. 
This date was crucial in view of the importance of  the sector for developing countries and for Tunisia 
in particular.  This was an essential activity in vi ew of its contribution to socio-economic stability, 
growth, employment, trade and prosperity for his coun try.  In 2002, the third phase of integration of 
textiles and clothing products within the WTO had brought a spectacular increase in trade volume, but 
had also brought about a decrease in prices by ab out 55%, on average.  The immediate consequence 
of this had been a reduction in the share of Tuni sia in its traditional market and a slowdown in the 
pace of growth of exports and investment.  With the last stage that would take place on 1 January 2005, affecting the remaining 49% of tex tiles and clothing trade, the consequences would of 
course be much more severe for economies such as Tunisia.  What was at stake for his country was to be in a position to continue to strengthen this sector  so that it could carry on contributing strongly to 
their development objectives and allow for the c ontinuation of the implementation of reforms, 
liberalization and openness policies, necessary in or der to integrate Tunisia into the world trade 
system.  This dismantling of quotas should not, howe ver, impede the achievement of the objectives 
that had been mentioned.  With this in view, th e Ministerial Conference on the Future of the Textiles 
Sector in the Euro-Mediterranean Area, which had b een held in Tunisia at the beginning of the week, 
had considered ways and means to strengthen what ha d been achieved in this sector, in order to take 
advantage of its potential for growth and developmen t.  This Conference had led to the adoption of a 
declaration, the Tunis Declaration, which had been ma de available to the Secretariat for information.  
This statement, which had been adopted unanimous ly at the Conference by Ministers and Heads of 
Delegations of the Euro-Mediterranean countries,  showed the commitment of these countries to 
promote partnership, co-operation and the competitiv eness of this sector through a voluntary approach 
of support to training, research and development, technological innovation, the dissemination of good 
practices and exchange of information on markets.  Moreover, this statement focused on the need to 
ensure that there would be fair and equitable implementation of related international rules and 
disciplines, and to also endorse and promote social  and environmental standards.  In order to 
strengthen what had been achieved in the sector and to preserve its prospects of development, it was 
crucial to favour investments, partnership, co operation and competitiven ess in the sector through 
training and strengthening of human potentialities.  It was also fundamental to implement an ambitious development programme to create and innovate, in order to promote a migration to 
partnership activities that would help them move to  high value-added products.  It was also necessary 
to strengthen logistics, in transportation for ex ample, and speed up the Doha work programme to 
facilitate trade and rationalize customs procedures, w ith a view to having a better flow of trade for 
textiles and clothing products.  Finally, it was necess ary to find appropriate solutions to the issue of 
the erosion of tariff preferences among members of the Euro-Mediterranean zone, including Tunisia, 
which could result from the non-agricultural market access negotiations.  Therefore, Tunisia invited 
all international institutions and agencies such as the WTO, the ITC, the World Bank, the IMF and 
UNIDO to draw from their experience and th eir financing mechanisms, as well as from new 
mechanisms that could be set up for the financing of the above-mentioned measures.  Any action that 
could be undertaken in favour of the textiles a nd clothing sector with the assistance of the referred 
international organizations would be effective only if it was well applied and its implementation 
closely monitored. That was why Tunisia called for the adoption of a multi-annual programme that  G/C/M/75/Add.1 
 Page 15 
 
 
 would associate all the organizations and agencies invol ved.  Tunisia requested that this question be 
put on the agenda of further meetings of the CTG and invited the CTD to consider this question and report to the next session of the CTG. 
6.12 The representative of Nepal
 emphasized the importance that his delegation attached to the 
post-ATC adjustment-related issues, in view of th e far-reaching implications of the expiry of the 
ATC.  Nepal co-sponsored the submission made by Mauritius in document G/C/W/496.  It attached 
importance to this sector for several reasons.  First,  the sector occupied an important place in Nepal’s 
economic activities because of the investment that had been put into it over the years. Second, a large 
number of people were employed in this sector, in th e organized and in the subsidiary type of work.  
The people employed were often women and from the lowest strata of society.  Therefore, the sector 
had social, economic and poverty-rela ted dimensions to it.  In most  cases the whole family depended 
on the income of one person employed in this sect or.  It had strong chain reactions, whose effects 
reverberated around many other areas.  Third, because of the strong forward-linkage effects, a lot of 
economic activities had been generated by the rapid growth of this sector in the last 15 years.  Fourth, textile exports contributed to over 40% of Nepal’s exports earnings.  The development of this sector 
had been made possible because of the MFA that had provided for quotas.  Over the period, Nepal 
had tried to make this sector as competitive as po ssible.  Now it was worried about the adjustment 
costs, dislocations, loss of employment and possibl e revenue shortfalls that were likely to happen 
following the end of the ATC.  He also stressed that his country had tried its best over the last 
10 years of the transition period to make the tex tiles and clothing sector as competitive as possible, 
and also to diversify the export base of the country.  But, due to the lack of alternative opportunities, 
low level of economic status, and other structural cons traints, Nepal had not been able to diversify its 
trading activities into other areas.  Nepal could not switch to other areas immediately.  Besides being a 
LDC, Nepal was also a land-locked country, which ma de its products even less  competitive than those 
of many other countries in a similar situation, becau se of the high transportation costs.  His delegation 
had studied with interest many studies done by various institutions, as well as the Discussion 
Paper N° 5 which had been recently released by WT O on the implications of the post-ATC situation 
on various countries.  Based on the dynamic genera l equilibrium model of the world economy, this 
paper clearly stated that the end of the ATC would have direct and far-reaching implications for quota-dependent countries with a narrow export base.  The simulation of the impact of the phasing-
out of quotas, while taking into account the dyna mic effects, irrefutably showed the exponential 
growth of this sector.  The representative of Nepal sai d that they applauded this development, but how 
that growth would be distributed was what had ma de them worried, because of the imbalance in the 
welfare gains from this sector.  Likewise, the doc ument also discussed the determinants of the 
bilateral trade flows on the basis of the gravity m odel, which stressed the importance of the tariff 
level, quality, and timeliness as the principal dete rminants for the success in  the post-ATC phase.  
There was no need to report here that in all these areas Nepal faced many bottlenecks.  In its 
conclusion, the report also stated that the countries that were most likely to lose market shares were 
those which were located far from the major mark ets and which had quota dependent access to the US 
or EU markets.  It was not surprising that ma ny other studies had also come out with similar 
conclusions.  Specific measures for countries like thei rs should be looked at favourably, in order to 
deal with the massive dislocation that all the studi es done by either WTO or other institutions had so 
clearly pointed out.  These studies had unanimously found that there would be large scale upheavals 
and also that there would be a direct negative impact on small and vulnerable economies which had 
been dependent on the quota regime for so long.  What was only disputed was how severe such 
impact would be upon individual countries.  For Nepal,  on the basis of the most recent trend analysis, 
it was clear that the impact would be severe and far-reaching.  There were other countries with a 
similar situation.  Therefore, he urged the Counc il to integrate this issue into its agenda on a 
continuous basis, to monitor developments and al so to come up with recommendations for solutions 
to mitigate the adverse impact of the full liberali zation of the textiles and clothing industry on the 
countries with extreme vulnerabilities. G/C/M/75/Add.1 
Page 16  
 
 6.13 Finally, the representative of Nepal stressed th at it was because of the nature of the textiles 
and clothing industry and its specific historical deve lopment that it deserved a particular focus and 
special remedial measures.  This sector had histor ically been labour intensive, offering entry level 
jobs for unskilled women.  At a time when one was talking about the solemn commitment to make the 
WTO responsive to the needs and interests of all countries, especially the poor and downtrodden 
around the world, by placing the development issue at the heart of the international trading regime, it 
was pertinent and incumbent to make sure that one did not lose sight of the massive dislocation that 
the end of the ATC would bring, leaving dependen t people in countries like Nepal with no effective 
mechanism to deal with its adve rse consequences.  Therefore, this was a time to convince people 
around the world that liberalization of trade lifted all the boats and also took them towards a common 
destination of growth, equity and prosperity for all.  
6.14 The representative of Sri Lanka
 explained that, as had clearly been pointed out by Mauritius, 
a number of studies, including those undertaken by the IMF and the WTO, had concluded that there would be adverse implications of the quota phase- out for a number of countries.  Some of the 
countries identified in these studies as vulnerable to quota phase-out, including Sri Lanka, were highly 
dependent on clothing exports.  For example, Sri La nka's exports of textile and clothing accounted for 
more than 50% of the total merchandise exports.  The IMF document on "Fund Support for Trade-Related Balance of Payment Adjustments" introdu ced in this very room during the General Council 
Meeting in May, had identified three possible areas of  adverse implications from trade liberalization.  
These were: the adverse impact of preference er osions  on a small group of preference-receiving 
countries;  the adverse impact from the higher prices for food imports on the terms of trade of 
NFIDCs;  the impact of the expiration of textile quotas on a small number of countries.  The first two 
areas had already been incorporated into the WTO work programme.  In the same way, it was 
essential that negotiators should address the issue rela ted to expiration of quotas under the ATC, as its 
adverse implications would be even greater on a number of small countries.  On 1 January 2005, 
three months from now, the ATC would complete its te n-year transition period, bringing an end to the 
40-year long restricted system in the textiles a nd clothing sector.  The transition period had been 
provided by the Uruguay Round negotiators to ensu re a smooth, orderly and progressive transition 
process.  Unfortunately, this objective had not been realized, as the main importers had decided to 
backload the integration to the very end of the transition process.  The Chairman of the TMB had 
stated that the end of the ATC would create oppor tunities and bring challenges to WTO Members.  
Sri Lanka did not want to see a situation that would result in opportunities for a few Members and 
challenges for many.  There were 15 WTO Members or  observers, whose textiles and clothing exports 
amounted to more than 50% of their merchandise exports and who were extremely vulnerable to 
quota phase-out.  Most of these countries were sma ll economies.  The reductions of exports of 
clothing products due to quota phase-out would lead to unemployment, disinvestments and de-
industrialization in these countries.  Therefore, it w as essential, at this juncture, for WTO Members to 
consider measures which would prevent any such a dverse developments.  The proposals contained in 
the joint paper submitted by Mauritius, Madagascar , the Dominican Republic, Fiji, Uganda and Sri 
Lanka were drafted with these difficulties in mi nd.  That was why it was proposed that the WTO 
Secretariat should carry out a study aiming at identifying the adverse impact and the social and economical costs that might arise with the ph ase-out of the ATC.  The study should make 
recommendations on measures which would limit any ad verse implications of the quota phase-out on 
weak and vulnerable economies.  It should look at the global impact of the phasing-out of the ATC in 
a disaggregated manner, at country level, for weak and vulnerable economies which might become 
losers from trade liberalization.  Sri Lanka also be lieved that a work programme should be established 
in order to find solutions to the problems identif ied by Members in relation to the ATC phase-out.  
Finally, the representative of Sri Lanka appealed the major importers and a ll exporters of textile 
apparel to ensure that no unfair trade practices wo uld take place in the global textiles and clothing 
trade, once the quotas would be phased-out.  If not , the transition would be extremely harsh on 
smaller and more vulnerable economies.   G/C/M/75/Add.1 
 Page 17 
 
 
 6.15 The representative of Bangladesh  noted that his country was associated with the submission 
G/C/W/496 introduced by Mauritius on behalf of a number of countries.  With the phasing-out of the ATC, countries would have to adjust to a differe nt environment and might have to substantially 
reorganize.  Given the established pattern regarding some items for which the quota had been lifted in 
the recent past, there was a strong apprehension that  many small countries engage d in this trade would 
lose out to the larger countries.  Clearly, there w ould be gainers and losers.  The export base of many 
LDCs, like Bangladesh, was very narrow, relying heavily on two or three sectors for their export 
earnings.  For instance, in Bangladesh the garment sector accounted for nearly 80% of exports and 
more than 90% of these exports went to mark ets under quotas.  Moreover, close to 50% of 
Bangladesh clothing exports went to one single mark et, the United States.  Therefore, Bangladesh was 
highly vulnerable to any dislocation.  Forecasts fro m several studies estimated that Bangladesh could 
lose as much as a major portion of the share of exports .  There did not seem to be any avenue to make 
up for these potential losses.  As a labour-intensive  sector, the textiles and clothing sector assumed a 
critical importance for employment generation.  Employing close to two million workers directly, 
most of whom were women, another 15 million be ing indirectly dependent upon it, this sector had 
emerged as vital for Bangladesh.  Should there be unusual disruption in exports, a large number of 
workers, mainly female, would go unemployed, w ith grave social and economic consequences.  
Although Bangladesh had been able to secure a mark et share in textiles and clothing, it had been 
operating under many structural handicaps.  Bangl adesh was a country without adequate linkages, 
leaving fewer opportunities for vertical integration.  It was at a disadvantageous position in terms of 
proximity to major export markets and the infrast ructure necessary to su rvive to competition was 
absent.  The preferential market access was also be ing eroded due to the gradual lowering of tariffs.  
Therefore, without an appropriate cushion, the free play of market forces would not ensure a positive 
sum game. 
6.16 In view of these serious concerns, Banglad esh sought the intervention of the WTO.  The 
representative of Bangladesh said that the WTO should undertake appropriate studies on this issue, 
particularly on the impact of the phasing out of qu otas of selected items in the last 2 years, the 
potential problems that may arise for the small c ountries and small suppliers , and consider options 
that may help the countries that are likely to be a dversely affected.  The CTG would then discuss the 
study and consider options.  Until then, Bangladesh ur ged all countries to ensure that the market was 
not disrupted.  Moreover, he stressed that Ba ngladesh was committed to the multilateral trading 
system and that it had been its endeavour to ensure that the system worked for the benefit of all, and 
that there were strong foundations in equity.  Tr ade policy in textiles and clothing was vital for 
countries like Bangladesh.  There was a need for positiv e efforts designed to ensure that LDCs were 
able to retain their share in textiles and clothing trade and could also participate in the growth in 
international trade of textiles and clothing.  
6.17 The representative of Haiti
 shared the concerns expressed about the end of the ATC and 
referred to document G/C/W/496, presented by several countries.  Haiti would find many difficulties 
in adjusting to the disappearance of the quota syst em.  In view of the state of its textiles and 
manufacturing sectors and of its economy in gene ral, if this was done without accompanying 
measures, Haiti would see negative effects on its ec onomy, which already had many socio-economic 
difficulties.  The representative of Haiti also wished to firmly support paragraph 13 of the document. 
6.18 The representative of Lesotho  stated that, in view of the fact that Lesotho's economy 
depended on its textiles and clothing industry, an industry whose sustainability, especially for LDCs, 
depended on several preferential trade agreements, as well as the ATC, he wished to pledge its full support to the document submitted by Mauritius and ot her co-sponsors.   He further supported the 
proposal that the post-ATC adjustment-related issu es should be further discussed in this Committee 
with a view to coming up with appropriate solu tions.  Furthermore, he expressed his delegation's 
appreciation to the Secretariat for holding a regi onal workshop on post-ATC matters in Maseru, which 
had been held on 21-23 September this year.  G/C/M/75/Add.1 
Page 18  
 
 6.19 The representative of Uganda
, as a co-sponsor of the paper on post-ATC adjustment-related 
issues, associated himself with the statement made by Mauritius and th e various other statements that 
had been made so far.  As highlighted by Maur itius, the phasing-out of the ATC did present both 
opportunities and challenges.  There was no doubt that the elimination of quotas and further 
liberalization of the textiles and clothing sector w ould produce global efficiency gains and consumer 
welfare.  However, it was equally true that ther e would be losers and winners.  The existing studies 
indicated, in general terms, that there would be a significant negative impact on most LDCs and small 
and vulnerable economies in terms of economic a nd social disruptions.  It was against this 
background that the sponsors of the paper had wish ed to request the CTG to concur that a more 
focused and disaggregated analysis at country leve ls be carried out, to assess the magnitude of the 
disruptions and address the necessary adjustments to mitigate the likely negative effects on the 
affected countries.  At this stage, he did not wi sh to pre-empt the specifics of the study the co-
sponsors were calling for.  However, at an approp riate time, Uganda would present its case in this 
respect.  He pointed out that the sponsors had been  modest and realistic in their demands and limited 
their request to merely a call for a study and a call for the establishment of a work programme.  
6.20 The representative of China  observed first that it had been evident from the very beginning of 
the multilateral trading system that in virtually ev ery sector covered by the WTO trade liberalization 
would inevitably require Members to make the releva nt domestic structural adjustment.  Even though 
the extent of adjustment might vary from one Member to another, all were required to make 
adjustments in order to meet their commitments and to benefit from improve ments in market access 
opportunities.  He understood, therefore, that some Members might encounter difficulties in the post-
ATC adjustment process.  Second, there was a princi ple that had to be borne in mind when dealing 
with this item.  With the termination of the ATC, the textiles and clothing sector would be integrated 
and, consequently, subject to the same multilateral trading rules as other industrial goods.  In other 
words, they should be integrated into the nor mal GATT rules and disciplines, the functioning of 
which was overseen by the CTG.  Developing Memb ers, for whom the textiles and clothing sector 
was one where they had comparative advantage, ha d not been allowed to enjoy their comparative 
advantage because of over 40 years of discrimination and distortion.  So he did not quite understand 
why the multilateral trading system should seek to turn  back the hands of time and continue to treat 
the sector as separate from the normal rules and princi ples, which was contrary to the aim of the ATC 
and deviated from the aim of trade liberalization un dertaken in the WTO as a whole.  It would not 
only cause fundamental systemic difficulties in  the WTO but would also affect the ongoing 
negotiations in NAMA, agriculture, services and other areas of the Doha agenda.  Third, as pointed 
out by Mauritius and the co-sponsors of the propos al, he believed that the item before the Council 
underlined the urgent multilateral imperative to  implement the coherence mandate agreed by 
Ministers in Marrakech in 1994 regarding adjustme nt issues.  China's experience in adjustment, 
including adjustment of the textiles and clothing s ector, had demonstrated that lack of resources, 
including human and financial resources, was one of the important obstacles to the adjustment 
process.  He noted that work under the coherence item on the General Counc il agenda could be one 
possible way for addressing the issue.  He hoped that the entire WTO membership would make 
further efforts to strengthen the coherence manda te among multilateral ins titutions.  Fourth, many 
studies had shown that certain trad e policy constraints imposed by the developed importing Members, 
such as preferential rules of origin, had substan tially impeded these Members' competitiveness in the 
textiles and clothing sector.  In this regard, the "W orld Trade Report" recently published by the WTO, 
had provided a detailed analysis and given a typi cal example.  Removal of such trade policy 
constraints and further improvement of the preferential schemes of the preference-giving Members for the benefit of developing Members could surely play a positive role in assisting the concerned 
Members to go through the adjustment process.  Fina lly, China considered that  there was also a role 
for South-South co-operation.  So far, China ha d had extensive cooperati on with other developing 
Members in all continents and would continue to  encourage its enterprises to do so within its 
capabilities and available resources.    G/C/M/75/Add.1 
 Page 19 
 
 
 6.21 The representative of China concluded that his country was fully committed to defending the 
basic general principles and rules of the WTO a nd ensuring the smooth functioning of the multilateral 
trading system.  China was prepared to engage and offer support to address issues that were raised in 
accordance with a systemic and cro ss-cutting imperative.  But he did not see the tenable rationale for 
the CTG to do more to address the adjustment issue.  
6.22 The representative of Pakistan  observed that the paper entitled "Initial submission on post-
ATC adjustment related-issues" had just been received and he was waiting for and official response to 
it from his capital.  He offered, however, some pr eliminary comments.  Pakistan would not like the 
integration of quotas to create any serious problems for anyone and he shared the view of many  earlier speakers that adjustment-related issues needed  to be addressed and that there was a need to 
ensure a smooth transition and minimize any disr uptions resulting from the adjustment process.  It 
was clear that the Agreement could not be amended,  while at the same time there would be some 
transitional adjustment problems because of integrat ion.  So Members should do at least two or three 
things.  The first issue that Members needed to  address was to reduce the problems arising out of 
preferential as well as non-preferential rules of orig in.  This problem was fa ced by everyone, whether 
they were using preferences or not.  Members co uld also urge the international financial donor 
agencies, such as the Word Bank and the IMF, to he lp such countries to b ecome more competitive.  
Members also needed to address  the issue of tariff peaks existing in the textiles sector in the NAMA 
negotiations.  Pakistan attached the utmost impor tance to the implementation of the Uruguay Round 
commitments and obligations and considered that  the ATC was the pinnacle of the resultant WTO 
Agreements.   Pakistan reserved its right to come back at a later stage to the submission he had 
mentioned. 
6.23 The representative of Brazil
 said that his country shared many of the concerns that had been 
raised in the present meeting.  Brazil had undergone in recent years major, and in many ways painful 
restructuring in this sector, and was also asking itself how to deal with a more competitive environment after 1 January 2005.  Most devel oping countries had had experiences with significant 
adjustment programs or similar autonomous economic measures.  It was strange how often one forgot 
that the reallocation of productive resources was not simply a change of coefficients in a production 
matrix. In the short-term there were costs relate d to idleness of production sectors.  And this was 
indeed the economic justification for safeguards.   Members should probably devote more time to 
discussing trade-adjustment issues on a broad basis and in a practical way, possibly by means of an exchange of national experiences.  He found it some what intriguing, however, that this issue should 
be raised in a discussion about textiles as this was no t the first sector that w ould come to his mind.  
The costs associated with trade adjustment coul d only be understood as losses in the short-term.  And 
the last time that the expression "short-term" had been  used with regard to te xtiles was in the 1950's.  
Since then, the textiles sector had remained outside the multilateral trading system, to the detriment of 
both the sector and the system.  He pointed out that there seemed to be some parallels between textiles 
and the negotiations on climate change.  The first a nd most obvious one was that the liberalization of 
textiles trade and climate change were measured on the same time scale, i.e. on decades.  The second, 
which he wanted to emphasize, was the risk of mi staking correlations for causes, of barking at the 
wrong tree, of spending energy fighting the wrong enemies and thereby of missing the opportunities 
for addressing the real problems.  In climate change , for instance, there had been attempts to blame 
developing countries for whatever economic growth th ey had managed to achieve, deviating attention 
from the accumulated distortions caused by others.  In the case of textiles, Members would incur in 
the same mistake if they were to consider trade lib eralization in general, and the end of the ATC in 
particular, as problems in themselves.  This would distract from the very significant concrete problems that would continue to haunt textiles after 1 January 2005, such as tariff peaks and 
restrictive and ever-changing rules of origin.  He sai d that one must also bear in mind the systemic 
implications of any attempt to depict trade liber alization as an evil.  The textiles sector was very 
important but it was not essentially different from other sectors.  Therefore, if Members were to look G/C/M/75/Add.1 
Page 20  
 
 into adjustment, they should do it horizontally.  And if they were to go along that path, they must do it 
in a manner that did not undermine the f oundations of the multilateral trading system. 
6.24 The representative of Jordan
, while associating himself with the spirit of the presentation 
made by Mauritius, also mentioned the fact that Jord an had participated in the Ministerial Meeting of 
the Euro-Mediterranean region which had been highlight ed by Tunisia.  Most of Jordan’s concerns 
had been expressed in those statem ents.  Textiles and clothing was a major export item for Jordan.  It 
constituted almost one third of its to tal exports,  80% of which went to the US market, the majority of 
products out of this 80% being under quota.  This  showed how severe Jordan’s situation would be, 
and how the phasing-out of the ATC quotas would have a deep impact on Jordan's economy.  Almost 500 SMEs would be affected negatively.  The nega tive socio-economic consequences for Jordanians 
would be very serious.  Sixty-thousand jobs, mo stly women, would be lost, which was very 
significant for the small Jordanian labour market.  The level of poverty would certainly increase, at 
least initially.  This would be in contradiction with the commitment of  the international community to 
reduce poverty by half by 2015. Jordan, like all Members, believed in the liberalization of the 
international trading system, as was shown by the multilateral commitments undertaken.  Paramount 
among those was the commitment to development as part of the single undertaking.  This 
commitment had made the propositions of a contro lled globalization an accepted part of the process 
which the WTO was supervising.  Jordan subscribed  to most of what other speakers from LDCs and 
other vulnerable countries had said.  Therefore, it hoped that the CTG would look more seriously at 
the issue and that a balance between the opportuniti es and challenges, germane to this new phase in 
the multilateral trading system, would be achieved.  More specifically, he suggested the following 
initial thoughts for the consideration of the CTG.  Fi rst, he asked that the issue be kept as a standing 
agenda item until some kind of understanding was work ed out.  Second, a comprehensive study, as 
requested by many others, on the effects of the phasing-out of the ATC on exports should be conducted by the Secretariat, at the request of the CTG.  This study would take into account issues 
such as erosion of preference, competitiveness, target trade preference, the reciprocal opening of third 
markets, including shares in the major markets and other relevant factors that would alleviate the 
serious implications for many countries, including Jord an.  Some actions also must be done in order to 
give to the countries that would face most of the challenges emanating from the phasing-out of the quotas, the possibility to cope with this in the context of their commitment under the liberalization 
approach.   
6.25 The delegate of Romania
 wanted to share with the membership some of the concerns of 
Romania in relation with the post-ATC adjustment issues.  Textiles and clothing raised serious 
concern for Romania, as exports of textiles and clothi ng represented more than 25% of its exports.  At 
the same time, Romania’s share in world exports of  textiles and clothing stood at 2.5%, ranking his 
country among medium exporters.  As a steady suppo rter of the multilateral trading system, Romania 
had already notified the TMB on its decision to fully implement the ATC on 1 January 2005.  
Romania wished to put on record its concern, hope and request that all WTO Members would do the 
same and fully observe all their WTO commitments.  After 1 January 2005, Romania’s main concern 
regarded the fair competition conditions which s hould prevail for textiles and clothing.  Romania 
considered that it was very important that the opening of the main importing markets be real and 
effective, not restricted through other measures th an quotas and that these ma rkets remained open for 
those competing in a fair manner.  At the same ti me, it was concerned about the exporters’ manners of 
competing on the newly opened markets and consid ered that it was also appropriate for governments 
to make sure that their commitments to observe WTO rules and commitments were totally fulfilled.  
Members had had a period of 10 years to adjust, to prepare for the moment when all textiles quotas would be removed. This exercise had been unequally  carried out by different Members.  Under these 
circumstances, and taking into consideration the ser ious concerns of many Members on the subject of 
trade in textiles after 1 January, Romania suggested that the CTG use the actual TMB to monitor this 
specific trade and all of its aspects for a transitional period of 1 or 2 years.  The experience and skill 
of the TMB had been recognized, so it appeared as being the appropriate body to carry out such  G/C/M/75/Add.1 
 Page 21 
 
 
 monitoring.  Nevertheless, should the CTG reco mmend to the General Council another solution for 
the process of examining the way trade in textiles wo uld develop after 1 January  2005, all delegations 
should consider this positively. 
6.26 The representative of Turkey  observed that textiles and clothing, one of the most global 
industries in the world today, was a significant source of income and exports for many countries.  This 
was especially true for the developing ones.  Moreover, the textiles and clothing sector played a 
crucial socio-economic role by offe ring entry-level jobs for unskilled labour, particularly for women.  
The size of businesses operating in this sector varied  from small and medium sized enterprises to high 
tech large scale units.  Nevertheless, the sector w as dominated by small and medium sized enterprises 
with a labour-intensive production structure.  The in tegration of textiles and clothing sector into the 
GATT system has been one of the hardest-fought issues during the Uruguay Round.  In this regard, 
the ATC was considered as one of the biggest achieve ments of that Round.  During the last 40 years, 
the textiles and clothing sector had received a comp rehensive and persistent protection with the 
support of quotas, unlike any other industrial sector.  Originally, the rationale of the quota system had 
been to provide a relief to the quota-imposing count ries' industries against competition from imports.  
However, with time, the system turned out to be a market regulator for many developing countries as 
they advanced in their export sales and integrated in  the world economy.  He stressed the fact that, by 
today, many developing countries were deeply con cerned about the consequences of the elimination 
of quotas.  Numerous credible studies on the implic ations of the quota phase-out had shown that the 
textiles and clothing trade would be dominated by  very few countries.  As a result of such 
concentration, it had been estimated that more th an 30 million jobs around the world would be lost in 
a short time.  This was an inevitable outcome as examples showed that annual imports had increased 
by some 800%, combined with a unit price decline by around 60%, in some lately liberalized categories in the US market.  This was also true fo r the EU which, together with the US, absorbed the 
lion’s share of the world textiles and clothing imports.  He said that even if competition would be the 
name of the game in the post-ATC era, compe tition among countries, however, should take place in 
the framework of fair trade practices and comply with market economy rules.  Textiles and clothing 
exporting countries, including Turkey, were aware of the risk of being swept away from their traditional export markets.  The complexity of th e problem was mainly due to the dependence on the 
two larger markets, the EU and the US.  He observe d that if it was obvious, on the one hand, that the 
WTO rules provided the necessary tools to protect do mestic markets, on the other hand, the sustained 
development of exports was also vital, especially for developing countries. There was a strong need 
for the establishment of new mech anisms to sustain that performan ce.  That was why Members should 
find an urgent and collective solution, so that liber alization would benefit all parties to the extent 
possible.  In this respect, it was extremely important  to maintain this agenda  item in order to find 
remedies and secure a smooth transition.  Turkey thanked  Mauritius, Banglad esh and Nepal and other 
countries for their efforts and initiative that made  discussions at the meeting possible.  In sum, 
Members should work harder to set up new mechanis ms that would ensure the smooth transition to 
the quota-free trade environment, in order for interna tional trade to remain the engine of sustainable 
development.  The new mechanis ms should make Members more flexible while responding to the 
needs of their industries timely and efficiently.  Th is would definitively enhance the credibility of the 
WTO system.  In this context, there was no doubt th at the only place where to start and conclude this 
work was the WTO. 
6.27 The representative of El Salvador 
stressed the importance of the textiles and clothing sector in 
his country, which represented over 50% of manufact uring exports.  Moreover, this sector generated 
about 90,000 direct jobs, of whic h most were taken by women, who we re also heads of households.  It 
was also worthwhile pointing out that over 100,000 indirect jobs were linked to the textiles and clothing industry in the country.  Obviously, this  increased the importance of the sector in El 
Salvador’s economy.  In this context, and in vi ew of the finalization of the ATC by 2005, it was 
worthwhile to note that one of the objectives of this Agreement was the liberalization of existing 
restrictions, the aim being that all developing coun tries which were exporters would benefit from the G/C/M/75/Add.1 
Page 22  
 
 increased participation in global exports under eq uitable market conditions.  Nevertheless, two 
months before this deadline, th ere was increased concern on the part of small producing countries, 
such as El Salvador, that this could result in a reduc ed level of exports in the sector.  This was based 
on recent import statistics which indicated that tex tiles exports of one single country to the US had 
increased by 77% between 2000 and 2003.  Moreover,  calculations which had been put forward by 
NGOs on trade of liberalized categories to the Unite d Stated during the third phase of the integration 
process, showed that exports from one group of sma ll suppliers, including El Salvador, had decreased 
by 39% for these products between 2001 and 2003.  In the particular case of El Salvador, taking into 
account the fact that the sector made up a fundame ntal part of its exports, and recognizing the 
importance of this activity for sustaining employme nt on a national level, the representative of El 
Salvador expressed concern with the possible loss of jobs, production and investment that would 
follow the expiry of the ATC.  Certain practices ha d been pointed out to cau se distortion to trade in 
this sector.  While it was true that to counter these effects, El Salvador was working domestically to 
create strategies to reinvest industrially and attract  new investments, it still considered that the 
concerns with respect to the post-ATC adjustment , expressed by various developing countries, should 
continue to be discussed within the WTO, with the aim of finding practical solutions to this issue.  
There was a need for the WTO to set up a mon itoring body to ensure the full compliance of 
commitments undertaken by all Members in the tex tiles and clothing sector and to put into practice 
the agreed mechanisms in order to be in a pos ition to react in case of non-compliance with those 
commitments.  Moreover, the Secr etariat of the WTO should undertake a detailed in-depth study on 
the basis of recent data to establish the possible re percussions of doing away with the ATC for each 
exporting country, including making recommendations  to increase competitiveness of small supplier 
countries.  Lastly, El Salvador welcomed the proposal  for financing that had been made in order to 
help countries that had balance-of-payments problem s because of the liberalization of this sector and 
stressed the need for finding other complementar y measures for technical assistance and capacity-
building, which would enable the sectors invol ved to address the problems resulting from and 
increasingly competitive market.  El Salvador was of course fully committed to participating in future 
consultations in order to address this issue in the most transparent manner possible and was also fully 
committed to constructively participate in seeking solutions that would be satisfactory for all 
Members involved. 
6.28 The representative of Nicaragua
 supported the statement just made by El Salvador, its 
message and its substance.  Nicaragua wanted to do away with discrimination among Members in this 
sector.  Nevertheless, in so doing, competition should be taking place in fair conditions and on a level 
playing field.  Members must continue the process of opening up trade. 
6.29 The representative of Guatemala  stated that the textile and clothing sector was one of the most 
important sectors for Guatemala.  It employed many people and provided high returns.  Guatemala 
continued to believe that Members must continue to  liberalize this sector, eliminate distortion in this 
area and fully integrate it within GATT 1994;  that wa s crucial, and had to be accomplished.  This did 
not mean that Guatemala did not have fears or con cerns on the possible negative impacts that this full 
integration and elimination of quotas could bring about  to its markets and its exports.  Guatemala, a 
developing country and a small economy, expressed its  full interest with regard to discussing this 
subject, whether through the creation of a coherent  programme within inte rnational organizations, 
such as the WTO, UNCTAD and the ITC, through specific country studies for all developing 
countries or by examining that specific developm ent issue in the Council for Trade in Goods.  
Guatemala was interested in participating in any discussion on the subject. 
6.30 The representative of Israel joined other Memb ers in thanking Mauritius for putting this issue 
on the agenda and for the joint paper it had presente d.  The textile and clothing sector was not only 
important for Israel's economy, but also for regional co-operation and developmen t.  As others, Israel 
had concerns regarding the question of post-ATC adjust ment.  In this regard, he felt that a number of 
legitimate concerns had been raised, not only in the joint paper presented by Mauritius, but also by  G/C/M/75/Add.1 
 Page 23 
 
 
 others in their statements.  At this stage Israel felt that the CTG must continue to work on this issue in 
order to find a way to ensure that the full inte gration of textiles and clothing into the multilateral 
trading system was done in such a manner that, at the end of the day, all Members would benefit.   
6.31 The representative of Hong Kong, China  said that textiles and clothing was one of those 
subjects which he had a tendency to get a little bit emotional about.  The present agenda item referred 
to adjustment and one needed to be clear that th ere were two sorts of adjustment.  There was the 
natural and continuous process of adjustment, which went on within any economy in response to 
market forces, regardless of its state of developmen t.  And there was the wholly unnatural process of 
adjustment which WTO Members must all endur e as that monstrous derogation from multilateral 
rules, the ATC, finally came to an end.  Several de legations had referred to the fact that the first day 
of the 121st month was approaching fast and that this  was an important day for all textile and clothing 
producing Members.  But it also had huge systemic importance for the WTO as a whole.  It marked the closure of a chapter in which rules had been ho noured only in the breach.  He was pleased to see 
this latter point recognized in a recent UNCTAD pa per on the implications of ATC termination, 
which stated that "the end of the ATC would thus contribute to the upholding and safeguarding of an 
open, non-discriminatory, predictable, rules-based  and equitable multilateral trading system".  He 
noted in passing that this report was very positive about the overall consequenc es of ATC termination 
for developing country producers.  Hong Kong, China regarded the ATC as one of the key 
achievements of the last Round.  Hong Kong, China ha d fought for it with its eyes open.  It knew that 
there would be a price to pay in terms of a radical restructuring of its own industry and the process of 
adjustment had been painful.  Since 1996, the numbe r of persons employed in the sector had shrunk 
by more than 60%.  But it had also been bene ficial to Hong Kong, Chin a’s economy as a whole, 
assisting its transformation from a predomin antly manufacturing economy to one based 
predominantly on services.  He men tioned he would be happ y to share this experience with others.  Of 
course, not everybody was happy, and he noted from recent press reports that the same sad old 
industry voices had been raised in Europe and Nort h America resisting economic realities.  More than 
40 years after the Short-Term Cotton Agreement tho se voices still needed just a little more temporary 
protection.  Fortunately, they appeared to be gettin g short shrift from their governments.  He had been 
delighted to hear Commissioner Lamy say "the end of quotas is not renegotiable" when he had appeared before the European Parliament's Commit tee on International Trade the previous month.  
The representative of Hong Kong, China had been d eeply pleased to hear both EC and US delegates 
reiterate at the present meeting their commitmen t to ATC termination.  But the opponents had not 
stopped trying.  The usual suspects were still lobbyi ng in Washington and Brussels and even here in 
Geneva where they appeared to be attempting to divide developing economy producers against one 
another.  One should recognize them for what they were.  Their motives were transparent.  As he had 
noted earlier, there were various reports which had demonstrated that the benefits of integration 
should not be viewed as a zero sum game.  Neverthel ess, in order to minimize the pains of adjustment 
and to maximize the benefits, particularly for developing countries, Members needed to avoid 
unintended and unnecessary suffering.  Just as when the tide went out the rocks and reefs might be 
revealed, so with the end to major discrimination, minor preferences took on a wholly new significance.  One example which came to mind was th e difference between the rules of origin applied 
by the US and the EC in qualifying for preferentia l market access.  Where only single transformation 
was required under the US African Growth Opportun ities Act, double transformation was required by 
the EC for its schemes. With the removal of quot as that discrepancy became more significant and 
could well lead to unnatural distortions to investment  and trade.  He argued that insisting on double 
transformation, which in effect insists on vertical integration, flew in the face of globalization and 
industry trends and he hoped that requirement could be  removed.  Lest anyone considered this a trivial 
point, he referred Members to pages 39-40 of the WTO World Trade Report 2004, which clearly 
illustrated how more liberal rules of origin under no n-reciprocal schemes affect trade flows, and in 
particular the utilization rate of preferential access.   He thanked Mauritius and the other sponsors of 
the paper.  He appreciated that many Members would have concerns over the impact of the quota 
phase-out, and was happy to engage with them in constructive discussion.  The paper, however, had G/C/M/75/Add.1 
Page 24  
 
 only just reached Hong Kong, China and they would need time to reflect further on it.  He offered 
only two preliminary comments.  The first was that quota was only one of many factors which affected global trade in textiles and clothing.  Va rious studies had highlighted that factors such as 
distance from market, response time, tariff differen tials and preferential trade agreements had an 
increasingly significant impact.  Secondly, as he had suggested earlier, the greater flexibility for rules 
of origin for preferential arrangements could well f acilitate and take some of the pain out of the 
adjustment process.  Beyond that, he had only one word of caution.  Hong Kong, China would have 
serious systemic concerns over any suggestion of a new and separate ins titutional arrangement to 
oversee the textiles and clothing sector post-ATC.  Such would be inconsistent with the spirit of 
integration and would risk sending the wrong signal to the outside world that this sector was somehow 
different from all other sectors and for some reason deserved separate treatment. 
6.32 The representative of Mexico
 said that he had no doubt that the elimination of import quotas 
as of 1 January 2005 represented a landmark in the history of multilateral trading relations.  Mexico 
believed that the elimination of quotas was a solid step forward towards an open liberal trading 
system.  However, Members had to be aware of the fact that this liberalization would have a 
significant impact on exporting countries of these goods.  Mexico reiterated its interest in the effect 
that this elimination of quotas might have on its i ndustry.  For example, the Mexican industry had had 
contacts with its government in order to express concern as to what was going to happen once quotas 
had been eliminated.  In virtue of this, he wished to make three points.  First of all, Mexico supported 
the initiative presented in this forum for an extensive study on the imp act of the elimination of textile 
quotas.  He did not consider it possible to con front specific problems unless one knew how far it was 
possible to do so.  There was evidence that the elimination of quotas would affect countries in 
different ways according to their market structure a nd the products they specialized in.  So he asked 
the WTO and other international organizations to ca rry out studies so as to direct them or channel 
their efforts and try to achieve the best policies.  Second, Mexico believed that this subject should be 
the object of an on-going discussion in the WTO.  All countries should contribute with ideas in 
conformity with the principles of multilateral trade, in  order to be able to create the conditions so as to 
strengthen the actors on the international level of all those participating in the textiles trade and 
industry.  Third, Mexico believed that liberaliza tion would undoubtedly benefit some Members, but 
one had to bear in mind that there was a need to monitor trade practices in th e textile industry because 
there would be challenges, as had been mentioned by the Chairman.  It was important to minimize the 
possible negative effects which might occur for some WTO Members.  
6.33 The representative of Indonesia  joined others in making some very brief comments on this 
agenda item.  He extended his appreciation and great sympathy to the proposal from a group of 
countries introduced by Mauritius.  He fully unders tood the difficulties that may be encountered by 
some Members in the textiles and clothing trade in the post-quota regime.  No doubt, many developing countries, including Indonesia, had a great interest in this sector as this contributed very 
positively to their economy.  The ATC had been rec ognized as an instrument to fully integrate this 
sector.  Indonesia believed that if this sector was fully integrated it would contribute more and more to its economy.  This was the assumption when this sector had been strongly proposed to be on the 
agenda of the Uruguay Round in 1986.  The ATC would only be terminated in the next three months i.e. 31 December 2004, and after that the quota restrictions would be fully phased out.  The question was whether now was the right time to discuss the po st-ATC adjustment.  Indonesia was of the view 
that the ATC had provided 10 years of transitional period for Members to adjust before the phasing-
out of the restrictions.  Nevertheless, as this sector had a different character in nature from other issues 
in the WTO, it might be appropriate to see how this  issue could be handled in the post-ATC regime. 
Adjustment was actually taking place in every sector, not only in the textiles and clothing sector.  However, since it was very sensitive and many developing countries had a great interest in it, 
Indonesia saw the merit of making a study on the impact of liberalization of trade in textiles and 
clothing.  In this context, the role of other in ternational organizations such as the ITC, UNCTAD, 
IMF and the World Bank were of importance.  He was of the view that close co-operation of the  G/C/M/75/Add.1 
 Page 25 
 
 
 WTO with those organizations could be strengt hened to assist Members by providing technical 
assistance to developing countries, especially that related to the adjustment problems.  Indonesia 
would highly appreciate it if the WTO Secretariat co uld provide a non-paper on this issue for further 
consideration. 
6.34 The representative of Kenya  welcomed the submission regarding post-ATC adjustment-
related issues introduced by Mauritius on behalf of  several countries and associated himself with it.  
He stated that the textile and clothing sector was an important sector in the industrial development of 
many developing countries, including Kenya.  A main objective of the ATC was to ensure that developing countries benefited from increased partic ipation in the multilateral trading system.  The 
effect of further liberalization, as identified in pa ragraph 3 of this submission, would not only affect 
LDCs and other small vulnerable economies, but also  low-income countries like Kenya.  He agreed 
with the co-sponsors of this paper that measures s hould be put in place to address the concerns of the 
losers and to avoid the negative economic impact after the expiry of the ATC.  He commented that the 
definition of countries should be revisited to include countries like Kenya and welcomed an 
opportunity to further discuss this issue. 
6.35 The representative of Nigeria
 welcomed the initial submission by a group of developing 
countries on post-ATC adjustment-related issues cont ained in document C/G/W/496, which had been 
introduced by Mauritius on behalf of several Member s.  Nigeria also joined other delegations in 
expressing support for the submission and was of the vi ew that the issues raised therein were quite 
valid and merited serious consideration and acti on by the Membership.  He fully supported the 
proposals in paragraph 10 of this submission, relati ng to a study aimed at identifying the adjustment 
issues and costs and establishing a work programme by  the CTG to discuss the issues with a view to 
finding practical solutions to them.  Nigeria was w illing to participate in any process that would lead 
to finding a lasting solution to the problems. 
6.36 The representative of Chinese Taipei  reiterated that maintaining the credibility of the WTO 
was one of the fundamental cornerstones to ensure  the integrity of the norms of this multilateral 
trading system.  The phase-out of quota restrictions  would integrate textiles and clothing trade into 
GATT, which was also an important step made by Members to improve the operation of this 
multilateral institution.  However, just as indicated in  paragraph 4 of the proposal made by Mauritius, 
Chinese Taipei shared the view that the prospect of the LDCs and vulnerabl e economies in particular 
would worsen by the end of the phase-out in the coming months.  After preliminary reviewing the 
proposal he thought that it deserved attention si nce it met the spirit as mandated by the Doha 
Ministerial Declaration.  He hoped that through Me mbers' collaborative efforts, the negative impact 
could be reduced to a minimum.  He also suggest ed that the proposed work programme should look 
into cross-cutting issues rather than  the textiles sector itself.  He appreciated the efforts done by the 
proponents for this proposal which, he believed, would help to pave the way for a smooth post-ATC 
adjustment for all WTO Members. 
6.37 The representative of India  thanked the representative of Mauritius for introducing document 
C/G/W/496 on behalf of all its seven co-sponsors.  He had listened very carefully to the many 
interesting statements that had been made by Memb ers.  He offered some initial thoughts on the issues 
that had been raised.  As a developing country, I ndia approached the issues under consideration with 
the utmost sympathy and concern.  At the same ti me, it believed in the legal and political sanctity of 
negotiated agreements.  India could not support an y ideas and suggestions which would introduce new 
distortions, even as one sought the removal of the old.  In this light, he took note with appreciation of 
the categorical disavowal by India's developing count ry partners of any intention on their part to 
question or reopen Members’ common commitments.  It was clear that the integration of international 
trade in textiles and clothing presented countries with  continuing challenges and this should cause no 
surprise.  The process of trade reform had seldom been free from the pain of restructuring and 
adjustment.  It was also worth mentioning that the cost of adjustment to the phasing-out of G/C/M/75/Add.1 
Page 26  
 
 quantitative restrictions in the international textil es trade had been aggravated by the back-loading of 
the reform process in the major restraining countries.  This had certainly been violative of the spirit of 
the ATC, if not of its letter.  The imminent end of  quantitative restrictions in the textiles and clothing 
trade had triggered a new dynamic in many economi es.  What shape the global textile industry would 
take once this churning would be over was hard to for esee with any certainty at this stage.  In his own 
country, the design and architecture of the tex tiles and garment industry was undergoing a major 
transformation.  There had been a resource-intens ive consolidation of a fragmented industry with 
major new investments and the government itself ha d had to take tough reforms in the fiscal duty 
regime.  As textiles contributed to 4% of GDP an d 21% of total exports, this process had a vital 
bearing on India’s overall growth.  The textiles sect or was the second largest employer in the Indian 
economy following agriculture, accounting for 34 million jobs directly and for a further 47 million in 
allied activities.  Those figures underlined the economic , social and political sensitivity of the sector.  
Any uncertainty or questioning over the underlyi ng expectations of the emerging regime of 
international trade in textiles and clothing could cau se enormous damage to the Indian economy.  It 
was a systemic imperative that agreements once ente red into were adhered to scrupulously by all.  
Failure to do so would lead to undermining multilatera lism and hurt all Members.  It was also useful 
to remind the membership of the history of th e negotiations over the Agreement on Textiles and 
Clothing in the Uruguay Round.  For developing c ountries, the ATC represented the one major gain 
from a difficult round and balanced the onerous obligati ons they had to undertake in some other areas, 
notably in TRIPs.  Simultaneously, the completion of the textiles and clothing quota phase-out and the 
kicking in of the TRIPs regime for product pate nts for developing countries, both scheduled for 
1 January 2005, underlined this linkage.  A nu mber of developing countries had called for a WTO 
study on the impact of textiles and clothing quota phase-out on their economies.  Some immediate questions arose.  Would the study be conceived to be merely an academic exercise or would it suggest 
specific remedies for the difficult transition confron ting some countries?  Were the problems to be 
addressed amenable to solutions at the WTO or  did they call for domestic policy adjustment, 
restructuring, diversification and so on?  If Member s were looking for technical or financial resources 
to ease the pain of adjustment, did the WTO itself ha ve a central role to play?  Similar questions and 
systemic concerns arose with the proposal for th e development of a programme of work on a sectoral 
basis at the WTO.  It might perhaps be more profitable if in some of these areas at least coherence between multilateral institutions could be promoted.  As a devel oping country, India could not be 
unconcerned or unresponsive to the issues that had been  raised in that discussion.  India was ready to 
discuss further with the concerned developing coun tries to obtain a better understanding of their 
problems and India would be open to all constructiv e and productive suggestions, but it was clear that 
any such dialogue would have to be conducted on the basis of adherence to legal commitments and 
would have to steer clear of introducing new dist ortions or revisiting agreed parameters of on-going 
negotiations.  The representative of India also wanted  to flag another post-ATC issue – one that had 
been raised by Norway earlier in the discussion on the Major Review – that is, the threat of 
protectionist action in the major importing market s, also being a post-ATC issue.  India would 
strongly urge developed co untry partners to refrain from recour se to any trade-defence action until the 
global trade in textiles post-ATC had settled down. 
6.38 The representative of Thailand
 observed that there had been a number of studies on the 
impact of the phase-out of quota restrictions.  Generally, those studies had shown great promise 
following the elimination of quota restrictions.  In  fact, a whole host of developing countries had 
worked together for securing the integration of this  sector into the normal rules of the WTO for more 
than 40 years.  All had shared similar concerns and aspirations.  Unfortunately, a more recent study 
had, however, cast doubt about the impact on indivi dual exporting countries.  Thailand understood the 
concerns of Mauritius and other developing countr ies which supported the proposal.  However, there 
was no denying that adjustment was bound to take place as a result of the implementation of a 
multilateral agreement.  Thailand recalled that, keepi ng in view this reality, the ATC had provided for 
a long phase-out period of 10 years.  This long tran sitional period had been given with a view to 
helping developed, develo ping and least-developed countries to adjust themselves and be ready to  G/C/M/75/Add.1 
 Page 27 
 
 
 compete fairly in the world trading system.  It was time now for WTO Members to show that they 
were ready to uphold the underlying principles of the WTO and allow comparative advantage to work 
and meanwhile, to keep in mind the real problem s and difficulties faced by least-developed countries 
and prepare themselves to find ways and means to  assist those countries to benefit from this 
liberalization process at an appropriate forum.  Member s needed to deal with th is issue carefully so as 
not to send the wrong signal to the business community  that the liberalization process could be stalled 
or even reversed.  In closing, Thailand again em phasized that it was the Members’ responsibility to 
ensure a predictable environment for business by confirming a full-fledged liberalization of the 
textiles and clothing sector by the agreed date. 
6.39 The representative of Cuba  thanked Mauritius and other countries for the document they had 
presented.  In view of the fact that it had only been received on the day of the present meeting, his 
comments would be preliminary.  Cuba recognized  the concerns as legitimate problems arising 
because of the situation in the textiles sector, but di d share what China, Brazil and others had said to 
the effect that the textiles sector should be incorp orated into the disciplines existing for industrial 
products in the WTO, as the ATC itself stated.  One solution in order to confront and to diminish the 
negative effects of adjustment would be for the developed countries to give free access on their 
markets for textiles and clothing products from the least-developed countries, as well as tariff 
preferences to developing countries dependant on these products.  In his delegation’s view, those 
aspects should be taken up in the framework of the non-agricultural negotiations.  Cuba believed that 
Members should continue searching for a satisfactory solution to this matter. 
6.40 The representative of Morocco  stated that textiles and clothing was of primordial importance 
for Morocco.  This sector was the first employer an d exporter, with more than 20,000 people working 
in the sector, representing a great percentage of the industrial base and accounting for € 1 billion of 
exports.  It occupied 61% of the industrial base in the region and carried out more than 50% of 
exports.  Morocco had participated in the Euro-M editerranean Meeting mentioned by Tunisia and was 
certain that on 1 January 2005 there would be a pr ofound change in the trade of this sector at the 
world level.  He wished to stat e Morocco’s concern on this deadlin e and its hope that Members would 
get all the necessary conditions in order to ensu re homogenous development of this sector for all 
WTO Members within the strict respect of all obligations, in particular, fair business practices.  Morocco supported the proposal in document G/C/W/ 496, presented by Mauritius, for the setting-up 
of a study which would examine the impact of the ATC phase-out and search for the necessary solutions. 
6.41 The representative of the United States
 thanked Mauritius, Uganda and Madagascar for 
raising this important topic.  The US reiterate d that it stood by its commitments under the ATC to 
eliminate quota restraints at the end of 2004.  As always, though, the United States was willing to look 
into the concerns of developing countries.  Certai nly, the elimination of quota restraints would cause a 
substantial shift in production patterns towards la rge exporting countries.  His country’s experience 
after the third stage of the ATC integration show ed a sharp drop in trade for many exporters of 
integrated products.  The recent discussion paper on th is subject published by the WTO predicted that 
a similar shift would occur after a ll remaining restraints had been e liminated at the end of 2004 and 
noted, in particular, the effects of such shifts on employment in developing countries.  The US had 
long tried to help developing nations to anticipate the changes that would occur at the end of this year 
and just the previous week had participated in a regional conference in Lesotho organized by the 
WTO Secretariat to discuss the effect of quota elim ination on African countries.  He believed that 
large textiles and apparel exporting countries had a responsibility to look be yond their own borders on 
this issue and to work with developing nations to  ease the transition.  The United States was open to 
further discuss the difficulties faced by small expor ting countries and how those difficulties might be 
addressed, and to participate in further discussions an d consultations on this ma tter.  He observed that 
it was a bit difficult to say much regarding documen t G/C/W/496 at this stage because it had just been 
received and he would need to consult his government. G/C/M/75/Add.1 
Page 28  
 
 6.42 The representative of Panama
 also thanked Mauritius and other delegations for the 
preparation and presentation of document G/C/W/496.  Panama believed that this was important for 
small countries such as Panama, since the integrati on of the ATC would have a great impact on the 
generation of employment, on maintaining stabili ty and generating investments in the textiles 
industry.  For this reason, this subject was one of concern and Panama urged all Members present to 
support the proposals in paragraph 13 because they were a good starting point for future discussions 
on the integration of the ATC.  Panama wanted to put on record that it was most interested in participating in any future discussions on this subject  with a view to finding responses to the concerns 
raised by the various delegations during the course of the debate.  
6.43 The representative of Namibia
 joined other delegations who had spoken and fully associated 
itself with the proposal made by Mauritius.  In Nami bia the industrial revolution had started with the 
textiles industry and, to date, this industry rema ined strategic and a catalyst for growth and 
development for many countries.  The change of structures in textiles and clothing would affect 
different countries in different ways.  The adjustme nt challenges faced in th e textiles and clothing 
industry in developing countries we re enormous, especially the vulne rability of suppliers located in 
small and least-developed countries th at had specialized in the final assembly of clothing for exports 
while quotas existed.  The need for adjustment in the post-ATC not only lied in the private sector, but 
also on governments to ensure that the privat e sector took advantage of the new market access 
opportunities.  In this regard, there was a need  to ensure smooth transition and minimize the 
disruptions from the adjustment process. 
6.44 The representative of the European Communities  sated that he had the growing feeling that 
during the current wide-range discussion, notwith standing considerable words of sympathy and 
support, the Council would not be in a position at th e meeting to collectively endorse the conclusions 
set out in paragraph 13 of the document submitted by  Mauritius.  Nor, in fact, any of the other 
interesting ideas that had been put forward in the course of the discussions, some of them referring 
back to the CTD, some of them referring to the coherence debate.  He t hought that Members had had 
a stimulating discussion on a subject of considerab le importance and concern to a large number of 
delegations which would, therefore,  have to be taken forward in so me way or another.  He would 
support any way the Chairman would c onsider this should be carried out. 
6.45 The representative of Costa Rica stated that his country had registered significant exports in 
the textiles sector and therefore expressed his interest  in participating in any discussions that might be 
conducted on this matter.  From a broader perspective, he believed it was very interesting to note that 
reactions were so different  from one delegation to the next with re gard to the elimination or erosion of 
preferential treatment and the integration of tex tiles, or access to markets for agriculture or non-
agricultural products in the current round of negotia tions.  The delegation of India had mentioned the 
sacrosanct nature of the commitmen ts within the WTO and in this regard, this was related to the 
commitment.  Costa Rica felt that Members needed to  respect the integration of textiles as well as the 
commitment of the Round to improve access to ma rkets for agriculture and non-agricultural products, 
and the commitment was for better liberalization. 
6.46 The representative of Colombia  supported the statement made by Costa Rica. Colombia’s 
situation was very similar to that of Costa Rica.  He stated that Colombia whished that Members 
would fulfil international commitments along these lin es so that its exporters could have access to 
products of interest to them. 
6.47 The representative of Rwanda  fully supported the statement made by Mauritius on behalf of a 
number of countries in document G/C/W/496.  The doing-away with the ATC would indeed make 
winners and losers, and even if this represented a loss, albeit not very significant, for Rwanda, his 
country, in a spirit of solidarity, supported the request made by these countries.  Members were 
committed in negotiations to win, not to lose.  But the estimated losses might have disastrous  G/C/M/75/Add.1 
 Page 29 
 
 
 consequences for some countries economically speaking,  and in this regard and in order to save the 
credibility of the WTO, Rwanda begged Members to ta ke the concerns that had been expressed by the 
losing Members seriously and to support the pr oposals made under paragraph 13 of document 
G/C/W/496.   
6.48 The representative of the World Bank  welcomed the opportunity to comment on the 
implications of the expiry of the ATC.  He belie ved that 1 January 2005 would be remembered as an 
important date in the history of the multilateral trading system.  After more than 40 years of "temporary" quantitative restrictions to trade in te xtiles and clothing, the phase-out of quotas heralded 
the return to normality of this important component of world trade.  Accordingly, he supported full 
compliance with the agreed schedule for quota elimin ation, one of the main accomplishments of the 
Uruguay Round.  The post-ATC world would be characterized by a much more competitive 
environment.  Many of the trade distortions that masked competitive weaknesses would be eliminated 
and there was no doubt this would bring adjustments in  the different segments of the industry.  At this 
meeting, he wished to address three basic issues.  Firs t, with respect to adjustment, he pointed out that 
many of the analyses consistently showed that the ATC reforms would bring significant global 
welfare gains.  But it was true that estimates were often biased upwards in view of simplifying 
assumptions concerning the process of adjustment.  For example, even though most OECD countries 
expected to benefit from lower consumer prices a nd better allocation of resources over the long-term, 
it was important to recognize that there would be adjustment costs in those markets.  And the 
calculation of the welfare impact for exporters had to  consider not only the expansion of markets, but 
also the resulting losses in quota rents.  Second, th e main beneficiaries of the ATC phase-out in terms 
of global market share – no surprise here – would be  the People's Republic of China and India, simply 
reflecting their comparative advantage, particularly  in clothing, and the degree of restrictiveness 
imposed by existing quotas.  Third, many develo ping countries that had benefited from preferential 
access to OECD markets would experience preferen ce erosion as the phase-out was implemented.  
One should, however, keep in mind that both general- equilibrium analysis (as the ones relying on the 
global trade analysis project (GTAP) model) and partial-equilibrium estimates tended to overplay the 
role of relative prices in explaining the adjustment  in the textiles and clot hing industry.  In this 
context, the implications of time and distance, as well as potential transaction costs hindering supply 
response, were poorly captured in those models.  Moreover, the growing array of preferences 
associated with unilateral programmes and/or regi onal arrangements further qualified those results, 
since most data sets utilized in the analysis had im perfect coverage of preferences.  In short, one 
should take these estimates with a pinch of salt but it was true, however, that they illustrated the 
direction of the expected adjustment trends that the phase-out would promote.  He pointed out that it was advisable, in the current circumstances, to consid er alternatives to cope with labour dislocation, 
as well as financing options for adjustment.  He stre ssed that it was also important to recognize that 
some characteristics of the industry, for example, its  heavy reliance on female workers, particularly in 
the clothing sector, added to the complexity of the social implications of the adjustment process.  
Trade-related solutions may play a role in fac ilitating the adjustment.  For example, the main 
exporters benefiting from the quota phase-out could unilaterally liberalize their own markets on an 
MFN basis and/or extend preferen tial access to least developed countries.  On the other hand, it was 
important to avoid the temptation to replace quantitati ve restrictions by managed trade interventions, 
in the guise of anti-dumping actions or in the cont ext of discriminatory safeguards.  He underscored 
that the World Bank stood ready to discuss, on a case by case basis, financing needs associated with 
ATC-related adjustment and that those discussions could be conducted in the context of Country 
Assistance Strategies or Poverty-Reduction Strategies.   The World Bank was also ready to help with 
analyses of the implications of the ATC phase-out in  the context of economic sector work driven by 
requests from client countries (as illustrated by activities that the Bank was conducting at present in 
countries like Pakistan and Bangladesh), or in supporting relevant work of other agencies (as 
underscored by their participation in WTO-sponsored  regional workshops on the ATC).  Last, but not 
least, the World Bank was ready to support trade facilita tion efforts.  It believed that this would be an 
area of great importance in helping with the compe titiveness of the sector in the developing countries.  G/C/M/75/Add.1 
Page 30  
 
 It was worth mentioning that in the fiscal year 2004 the World Bank had approved 16 new projects 
with trade facilitation components for total commitm ents of more than 560 million dollars.  And the 
Bank’s “pipeline” of projects in this area was expect ed to continue to grow, particularly in Sub-
Saharan Africa.  He look forward to the opportunity  of further discussing with  the Members how best 
the World Bank could contribute to a smooth transition in the post-ATC era. 
6.49 The representative of the International Monetary Fund
 (IMF) stated that the IMF had been a 
regular observer in the Council for Trade in Goods a nd he welcomed this opportunity to participate in 
this discussion of post-ATC issues.  He would brie fly discuss how the IMF could contribute towards a 
smooth implementation of the Agreement on Textiles and Clothing.  This contribution was centred 
around some of the core activities of the IMF in terms of surveillance, financial assistance and 
research.  As it had already been pointed out by many speakers, the ATC was a critical component of 
the Uruguay Round and the IMF had been following the implementation of that Agreement closely.  
At the global level, while developing countries as a group stood to gain from the elimination of quota 
restrictions, not all developing countries were expected  to benefit, as production tended to shift to and 
become concentrated in more efficient producers.  Indeed, the elimination of a relatively modest share 
of ATC quotas in 2002 had forced large adjustment s in textiles and clothing production in many 
developing countries.  The back-loading of liberalization under the ATC would not make 
implementation of the last phase any easier and si gnificant shifts in production were expected from 
2005 onwards.  Obviously, this had been of major co ncern to several member countries and had been 
given careful consideration in IMF's staff discu ssions with country authorities.  The ATC quota 
phase-out had been an increasingly prominent subject of analyses and dialogue in the context of IMF 
surveillance, as part of annual consultations with Me mbers (the so-called Artic le IV consultations).  
During these consultations, the IMF reviewed w ith the authorities economic developments and 
prospects and discussed policies to address macroeconomic vulnerabilities.  While estimates of the ATC's impact were often subject to large uncertain ties, as pointed out by the representative from the 
World Bank, it became clear, relatively early on, that  in a number of countries the prospect for textiles 
and clothing exports in a post-ATC world would be greatly assisted by efforts to improve 
competitiveness.  This might involve supply-si de measures aimed at eliminating unnecessary 
constraints and lowering production costs and administ rative interference.  Ba ngladesh, to name just 
one country, was a case in point where positive steps had been taken recently to that effect.  When 
necessary, the IMF stood ready also to support countri es in difficulties with financial support for their 
balance of payments.  As had been pointed out  by the representative of Sri Lanka, the Fund had 
introduced a Trade Integration Mechanism (TIM) in April this year, precisely with the objective of 
assisting Member countries to meet balance-of-payme nts shortfalls that might result from multilateral 
trade liberalization.  As Members would recall, this new policy was presented and discussed at the 
General Council meeting in May 2004 .  In short, the TIM aimed at mitigating concern among some 
developing countries that their balance-of-payme nts position could temporarily suffer as multilateral 
trade liberalization changed their competitive pos ition in world markets.  Chief amongst those 
concerns had been preference erosion and the phasing -out of textile quotas, together with the changes 
in terms of trade as a result of the elimination of agricultural export subsidies.  Bangladesh had become the first country to receive additional suppor t in accordance with the TIM.  A number of other 
Member countries were currently considering this op tion.  IMF policy research in the trade area was 
guided in a large measure by the challenges set out  in the DDA.  Accordingly, a number of recent 
IMF research papers had been devoted to the issue of preference erosion in middle income countries 
and the impact of textiles quota phase-out.  The IMF had stepped up its outreach activities, in cooperation with the WTO, to disseminate its recen t policy initiatives and research work in the trade 
area.  For instance, the IMF had participated activ ely in the two regional workshops sponsored by the 
WTO in Asia and the Pacific and in Africa on the challenges posed by the expiry of the ATC and 
related opportunities in the post-ATC world.  Before he concluded, he highli ghted that, in parallel 
with the various efforts aimed at developing the supply side of the ATC vulnerable economies, there 
were a number of trade-related initiatives that coul d be undertaken to ease problems of transition and 
mitigate adjustment shocks in developing countries.  Suggestions to this effect had been made in a  G/C/M/75/Add.1 
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 paper on market access issues discuss ed by the Executive Board of the IMF in 2002.  The paper noted 
that, first, the quota removal could be accompanied by tariff reductions in industrial countries and 
other large markets for developing country textiles and clothing exports.  Second, while preference for 
LDCs was certainly not a long-term solution to problems of competitiveness, schemes that provided 
LDCs with duty- and quota-free market access could be generalized, especially if combined with 
liberal rules of origin. Third, developed countries could usefully refrain from using antidumping 
actions and other similar trade remedies in the pos t-ATC period.  In conclusion, he emphasized that 
the contribution of the IMF in dealing with the ATC should be seen in the broader context of the 
actions taken by the Bretton Woods Institutions and other development pa rtners in support of 
economic development and poverty reduction.  The forthcoming General Council meeting on 
coherence would provide an opportunity for the h eads of the IMF and the World Bank to express their 
views on recent developments in those areas and continue their c oordination and co-operation with 
the WTO. 
6.50 The representative of Mauritius was appreciative of Members agreeing to include this item on 
the agenda.  He thought that the sheer number of de legations which had spoken on this issue reflected 
the importance and urgency that this problem had.  He was also grateful to those who had spoken in 
support of the paper that he had circulated, all of  them having insisted on the need to address this 
issue in one way or another.  Some had supported th e approach that had been taken in the document, 
others had proposed some other course of action.  He stood ready for further consultations on this 
issue and to engage with Members and the Chai rman on how best to bring the matter forward. 
6.51 The Chairman  expressed his thanks to the representative of Mauritius for his statement.  First 
he informed Members that Jamaica and Nepal ha d joined as co-sponsors to the proposal.  Other 
delegations should inform the Secretariat if they wish ed to join as well.  He noted that 38 delegations 
had taken the floor on this subject, in addition to th e important presentations made by the IMF and the 
World Bank.  Undoubtedly, this was an important is sue for the Council and it had been receptive to 
the proposals presented by some delegations.  Many had expressed their thanks and their support and 
others, while not fully supporting the proposal, had nevertheless recognized and sympathized with the 
circumstances that the expiry of the Agreement brought about.  Without a doubt what was at stake 
now, what was important in this exchange of views,  was the conflict of values.  Members had seen the 
difficulties that some countries faced, but had also seen the difficulty that was involved in addressing 
this problem since this systematically impacted the rules of this Organization and the commitments 
that had been made.  It was within this context th at this discussion had been very rich and valuable, 
and at the same time without a doubt this had made  it clear that the Council was having difficulties in 
making progress.  As a delegation had pointed out, th e Council could not move forward at this time, 
but the Chairman had also noted a willingness to conti nue consultations on this ma tter.  In this regard, 
perhaps the most reasonable way to move forwar d, as the representative of Mauritius had proposed, 
given the importance and the urgency involved in this matter, was to continue in informal, transparent 
and open consultations.  This had been suggested by some delegations and, if this was reasonable and 
acceptable to all delegations, that was what the Chai r would do.  He would look at the best way to 
undertake these consultations as soon as possible and he would, therefore, be in contact with 
delegations in order to proceed in that regard.   It was so agreed . 
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