WORLD TRADE  
ORGANIZATION  TN/MA/W/18/Add.12 
5 December 2005 
 (05-5770) 
Negotiating Group on Market Access Original:   English 
  
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
A View To Harmonize Textile, Apparel And Footwear Labelling Requirements
 
 
Communication from the United States 
 
Addendum  
 
 The following communication, dated 1 December 2005 is being circulated at the request of 
the Delegation of the United States. 
_______________ 
 
Overview  
 1. Multiple WTO Members have notified barrier s to Non-Agricultural Market Access (NAMA) 
negotiating group related to the la belling of textiles, apparel an d footwear products.  All WTO 
Members have the right to use labelling as a measure to provide needed information and/or to ensure 
the health and safety of its consumers.  WTO rul es exist in the TBT and SPS Agreements that protect 
against possible protectionist abuse of such labelling measures; these issues are not the subject of this 
paper.  However, legitimate la belling requirements do impose additional costs on trade - costs that 
ultimately get passed on to consumers.  Other barriers to trade exist in the form of differing legitimate 
labelling requirements in different markets.  The market segmentation created by these differing national or regional labelling requi rements adds further costs to the production and distribution 
process. NAMA negotiations may present an opportunity  to consider approaches to labelling in a way 
that could benefit textile expor ters and consumers by reducing these costs.  The United States 
suggests that interested WTO Members begin inform al discussions to identify common barriers of 
interest related to textiles, apparel and foot wear labelling, as well as possible solutions.   
 Issue
 
 2. WTO Members including Egypt, India, Korea, Mexico and the United States have identified 
barriers related to the labelling of textiles, apparel and footwear as part of the NAMA NTB 
notification process.  Most Members have at least  some requirements for the labelling of textile, 
apparel and footwear products put up for sale in their local markets.  For the most part, these requirements cover care instructions, fibre conten t, country of origin, manufacturer/distributor 
information and size information.  Other requirement s may include placement of labels and physical 
attributes such as font size and language.  Certain aspects of labelling are mandatory in some Member 
countries, while others are voluntary.   
 3. There are aspects of textile , apparel and footwear labelling requirements and guidelines that 
are quite similar among Member countries, and there is some regional harmonization.  The European 
Union has harmonized fibre content requirements for its members.  MERCOSUR Members have 
harmonized fibre content and care instructions.  Th e United States, Canada and Mexico are working 
toward agreement on common NAFTA care instructi on symbols and efforts are continuing in the 
International Organization for Standardization (IS O) to develop an international care labelling 
standard.   TN/MA/W/18/Add.12 
Page 2  
 
 4. The extent to which Members have differe nt labelling requirements increases processing time 
and costs for manufacturers that supply multiple  markets.  There are also certain labelling 
requirements that are overly burdensome and costly, and thus have the potential to distort trade.  
Exploring options for identifying more uniform and/or less burdensome approaches to labelling of 
textiles, clothing and footwear that provide the same information could reduce transactions costs, 
thereby facilitating trade and benefiting consumer s.  While efforts to pursue harmonization of 
labelling requirements are conducted within international standard- setting bodies, rather than the 
WTO, there may be opportunities for pursuing agreements to adopt less burdensome labelling 
methods in the NAMA context.   
5. One example of a burdensome requirement a pplied by a significant number of Members is 
that the label must include importer information.  The costs of compliance with such requirements 
may be small if this information is known in advance and if the ship ment destination and/or importer 
does not change during the delivery process.  However,  the costs can rise if shipments are required to 
arrive at the port of entry with labels that must  include information that may be unknown at the time 
of manufacture or that can change. Once in port, costs can rise again if the importer is not given a 
reasonable opportunity to adjust the label to comply  with local requirements.  A further complication 
arises when such labels are required to be permanen t, adding to the costs if the importer information 
changes.    Economic/Financial Impact of the Barrier
 
 
(a) Costs to the Industry  6. In the current global industry, it is typical  for one company to manufacture textile, apparel 
and footwear products for many different markets.  In many cases, the only differences in the products 
are the labels, which must meet the requirements of the final consumer market.  Because a permanent 
label is typically required, manufacturers must de termine the ultimate des tination of their products 
before or during the construction pr ocess.  Given the fast-paced and particular nature of the retail 
fashion world, predetermination of sales trends and timing is difficult, if not almost impossible, to predict with accuracy.   
7. Manufacturers typically measure the cost of multiple and diverse labelling requirements 
several ways.   When measured on a per article basis,  the marginal cost of the actual label is relatively 
insignificant, perhaps as little as $0.02 to $0.05 cents  per article, depending on the kind of label and 
the amount of the production run.  However, when  labelling changes are required with little advance 
notice or forced to occur at the border (for exampl e if a customs authority forces a relabelling), then 
the cost can be very significant.  Moreover, wh en measured over the many stock keeping units 
(e.g., sizes, styles, and colours) and many diverse co untry requirements, the costs rise further still. 
 8. Typical costs associated with labelling (whether done at the factory or at a different point in 
the supply chain) include the following:  
• the direct cost of adding labels after manufacturing (additional sewing time); 
• the costs of maintaining additional production lines (production planning, capacity allocation, 
cutting scheduling, sewing line allocation, com ponents control procedures, duplicate quality 
assurance procedures, special procedures at finishing and packing areas); 
• the cost of rehandling goods to change labels (additional handling and storage); 
• the cost of maintaining label inventory for each country (compliance costs); 
• the increased cost of labels due to low quantities of each label ( i.e., having to purchase more 
than the amount of labels actually required to meet minimums from the label supplier);  TN/MA/W/18/Add.12 
 Page 3 
 
 
 • costs related to administrative issues (including possible penalties equalling one to three times 
the value of the shipment) and held shipments due to incorrect labelling;  
• chargebacks from retail or wholesale customers due  to shipping goods with incorrect labels; 
and 
• the cost for delaying shipment of goods to customers, and the possibility of the retail 
customer cancelling orders. 
 
9. Industry experts estimate that diverse labe lling schemes can add approxi mately one dollar per 
article, an amount far higher than the actual cost of  the label itself.  When those changes are required 
after the article leaves the factory – for labels  changed in warehouse consolidation facilities, for 
example – the costs can be several times higher, especially if cust oms or other government fines are 
assessed.  
(b) Costs to Society 
 10. Additional labelling costs are usually passed di rectly on to the ultimate customer.  When 
subjected to various mark-ups, this cost can multiply several times over the course of the supply chain.  Thus, diverse labelling requirements, while  designed to provide consumers with specialized 
information, usually impose additional costs on those individuals.   
 11. Governments also bear additional costs as they confront diverse labelling schemes.  
Regulators are required to acquaint themselves with conflicting and often changing requirements.  In 
some cases, companies report in stances where inspectors in one port enforce one set of labelling 
requirements while inspectors in another port enfor ce another.  Such confusion increases the chance 
for non-compliance, while reduced  transparency increases opportunities for corruption.  In both cases, 
the costs associated with the article  increase, which translates into additional costs for the customer. 
 Conclusion
 
 
12. We see two principal ways to avoid the in creases in time and costs associated with diverse 
labelling schemes.  In the long term, one can work toward the harmonization of textile, apparel and 
footwear labels.  Conceptually, harmonization represen ts a "gold standard" in mitigating costs arising 
from differences in labelling standards, but is ofte n difficult and time-consuming to achieve.   WTO 
Members have stressed the importance of ensu ring transparency, openness, impartiality and 
consensus, effectiveness and relevance, cohere nce, and addressing the concerns of developing 
countries when engaging in international standards setting.      13. The second way – the way in which WTO Members in the NAMA negotiating group can have a direct impact – is to examine administra tive or other practices that are used to implement 
labelling programs in the textiles, clothing and foot wear industries.  What are the efficient methods 
that can be employed to ensure provision of desi red information without unduly imposing costs or 
delays on trade?  For example, Members could look at the procedures that are invoked when the 
destination of textile, apparel and footwear shipme nts is changed at the last minute and/or when 
mislabelled goods arrive at the customs port.   There may be other administrative aspects of labelling 
for which fully-acceptable yet less costly or less ti me-consuming approaches can be identified.  Such 
approaches could offer clear benefits to traders and consumers in many WTO Member countries.  
Accordingly, we invite interested Members to  join the United States in a discussion on common 
barriers of interest related to textiles, apparel and footwear labelling as pa rt of NTB negotiations.  
 
__________