RESTRICTED  WORLD TRADE  
ORGANIZATION  G/C/M/76 
24 January 2006 
 
 (06-0321) 
Council for Trade in Goods  
  
 
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS 
25 OCTOBER 2004 
 
Chairperson:  H.E. Ambassador Choi (Korea
) 
 
I. ELECTION OF THE CHAIRMAN OF THE CTG. .............................................................1  
II. MAJOR REVIEW OF THE IMPLEMENTATION OF THE ATC IN THE 
THIRD STAGE OF THE INTEGRATION PROCESS PURSUANT TO ARTICLE 8.11 OF THE ATC.................................................................................................2
 
1. The ATC integrat ion process...................................................................................................2  
2. Carry Forward.................................................................................................................. ......15  
3. New Restrictions ............................................................................................................... ......23  
4. Administrative Arrangements for Quota Administration and Implementation...............31  
5. Use of Transitional Safeguard Mechanism...........................................................................36  
6. Article 7 – Abiding by GATT 1994 rules and disciplines so as to achieve 
improved market access, ensure the applicat ion of policies for fair and equitable 
trading condition (AD, CVD, IP), avoid discrimination against textiles in general 
trade policies................................................................................................................. ...........37  
 
This dedicated session of the Council for Trad e in Goods (CTG) had been convened by 
Airgram WTO/AIR/2403 in order to continue the major review of the implementation of the 
Agreement on Textiles and Clothing (ATC) in the th ird stage of the integrat ion process, pursuant to 
Article 8.11 of the ATC.  The Chairman designate , before focusing on substance, wished to recall 
that, after the review had begun on 1 October 2004, the Chairman of the Council, Ambassador 
Chiaradia, had returned to Buenos Aires, which had made it impossible for him to chair the present 
meeting.  Due to his immediate departure it had not been possible for him to propose the formal 
appointment of his successor.  The Chairman designate, therefore, sought the Council’s understanding 
that he had called this meeting to order as Chairm an designate.  In these circumstances, he proposed 
that, as the first item of business, the Council formally revise the formal agenda to take up, as the first 
item, election of the CTG Chairman. It was so agreed .  The provisional agenda as revised was 
adopted . 
I. ELECTION OF THE CHAIRMAN OF THE CTG. 
1.1 The Chairman  designate recalled that, at its meeti ng on 20 October 2004, the General Council 
had taken note of the statements made by the Ge neral Council Chairman regarding the consultations 
on a number of appointments of officers to WTO bodies, as well as of the consensus on the names emerging from his consultations, including his ow n appointment as CTG Chairman designate.  
Accordingly, he proposed that, taking into account the agreement at the General Council on 
20 October, the CTG agree formally to his electi on as Chairman of the CTG.  It was so agreed
.  The G/C/M/76 
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  Chairman expressed his gratitude to Members for his el ection and paid tribute to the work done by the 
former Chairman, Ambassador Alfredo Chiaradia. 
II. MAJOR REVIEW OF THE IMPLEMENTATION OF THE ATC IN THE THIRD 
STAGE OF THE INTEGRATION PROCESS PURSUANT TO ARTICLE 8.11 OF THE ATC 
2.1 The Chairman
 recalled that on 1 October 2004 the CTG had commenced with the major 
review of the implementation of the ATC during the third stage of integration.  Members had 
provided overall and initial comments after the Chairman of the TMB had introduced the TMB comprehensive report.  Members had welcomed the TMB report as professional, factual and comprehensive.  All the statements made had been noted and would be reflected in the records of the 
meeting.  He further recalled that Members had also agreed with the suggestion made by the 
Chairman for having a more focused and subjective examination of the indicative list of issues he had identified in his summary conclusions in the de dicated sessions of the Council, on the understanding 
that any Member could suggest any additional items.  Against this background, he suggested that the 
dedicated session focus on the list of issues contai ned in the Airgram convening the present meeting.  
It was so agreed
. 
2.2 The Chairman informed the Council that, in light of the congested calendar of WTO 
meetings, what could reasonably be expected in terms of dedicated session for the present major 
review of the ATC consisted of the present sessi on and, if necessary, another session of the Council 
on 11 November.  Members needed to bear in mi nd that the final CTG session for the year had 
already been scheduled for 25 November.  Th at CTG session would encompass all items on the 
agenda of the CTG.  At that session, the CTG A nnual Report would be adopted  and forwarded to the  
General Council meeting in December.  The Council, therefore, needed to be  as focused and efficient 
in order to use  the dedicated sessi ons to the best possible advantage.   He suggested that the Council 
proceed on the basis of the order listed in the Airg ram, with the exception of carry forward, which 
Indonesia had asked to be discussed, immediately after the issue on the ATC integration.  It was so 
agreed . 
2.3 Before opening the discussion, the Chairman drew the Council’s attention to the document 
circulated, before the 1 October CTG, by certain members of the International Textile and Clothing 
Bureau, contained in document G/C/W/495.  He re minded Members that the sponsors of the paper 
proposed in paragraph 54 seven recommendations for action by the CTG.  These recommendations 
were linked, directly and indirectly, to the issu es that the Council was about to examine.  He 
suggested that in their statements and interventi ons, Members might express a view or take a position, 
if they so wished, directly or indirectly , on the seven recommendations contained in 
document G/C/W/495.  This approach would assist in  whatever decision, if any, the Council would 
take at the end of the major review process.  
1. The ATC integration process  
2.4 The representative of Egypt , speaking on behalf of the ITCB members, recalled that in 
another 67 days from this meeting, the textile and clothing sector shall be fully integrated into GATT 
1994 as per Article 9 of the ATC.  Consequently, all restrictions under the ATC shall also stand 
terminated.  There could, therefore, be a temp tation to approach this major review as only an 
academic or pro forma  exercise.  That would not, however, be very useful.  As the representative of 
India, speaking as Chairman of the ITCB, had stated when introducing the ITCB submission in 
document G/C/W/495 in the CTG meeting of 1 Octobe r, it was important that the review be both 
thorough and purposeful.  On the one hand, Article 8.11 of the ATC required it to be so, and on the 
other, and perhaps more importantly because it w as essential that the CTG ensure that all the 
requirements of the Agreement shall have been fully implemented.  If this were not done, there could  G/C/M/76 
 Page 3 
 
 
  be a risk of unwittingly leaving certain things in pl ace that could,  raise problems to the detriment of 
the multilateral trading system.  The CTG had the responsibility of doing a thorough job, both pursuant to its specific mandate under the ATC and pursuant to its general oversight function under 
Article IV of the WTO Agreement.  It was, theref ore, hoped that all Members would engage in this 
exercise with the seriousness it deserved.  He i nvited all WTO Members to actively participate in 
these discussions.  Such Members might find the expe rience interesting and relevant for the lessons 
that could be drawn for the multilateral trading system from a systemic point of view.  It could also help avoiding the schisms that had continued to  divide the developed a nd the developing Members 
over implementation issues and concerns to a void clouding discussions on Doha Round issues. 
2.5 The representative of Egypt stated that the ITCB submission had intende d to highlight only a 
few yet very pertinent aspects of ATC implementation.   These deserved the particular attention of the 
CTG in this final major review.  The final section of the submission contained seven specific proposals for adoption by the CTG.  These were ba sed on some un-controvertible facts drawn from 
experience with ATC implementation.  He hoped and trusted that all Members would give them full 
consideration.  On his part, he would be glad to offer whatever further elaborations Members or the 
Chairman, may wish.  As to the question of the ATC integration process, he noted that, as the TMB 
report also observed in paragraph 47, this process wa s the main pillar of the ATC implementation.  In 
this respect, he proposed to take all four  sub-headings under this heading together. 
2.6 It should be recalled  that the start of the third stage of the ATC integration process had been 
immediately preceded by the Doha Ministerial C onference, at which the implementation issues and 
concerns had been on top of the Ministers' consider ation.  With respect to textiles and clothing, he 
reminded Delegations that the D oha Ministerial Conference had "reaffirm[ed] the commitment to full 
and faithful implementation of the Agreement on Textiles and Clothing, and agree[d]:  
• that the provisions of the Agreement relating to the early integration of products and the 
elimination of quota restrictions should be effectively utilised; 
• that Members will exercise particular considerati on before initiating investigations in the context 
of antidumping remedies on textile and clothing  exports from developing countries previously 
subject to quantitative restrictions under the Agree ment for a period of two years following full 
integration of this Agreement into the WTO; 
• that without prejudice to their rights and obliga tions, Members shall notify  any changes in their 
rules of origin concerning products falling und er the coverage of the Ag reement to the Committee 
on Rules of Origin which may decide to examine them. 
• And request[d] that the Council for Trade in Goods to examine the following proposals: 
• that when calculating the quota levels for small suppliers for the remaining years of the 
Agreement, Members will apply the most favour able methodology available in respect of these 
Members under the growth-on-growth provisions from the beginning of the implementation 
period;  extend the same treatment to least-d eveloped countries;  and, where possible, eliminate 
quota restrictions on imports of such Members; 
• that Members will calculate the quota levels for the remaining years of the Agreement with 
respect to other restrained Members as if implemen tation of the growth-on-growth provision for 
stage three had been advanced to 1 January 2000; 
• and make recommendations to the General Council by 31 July 2002 for appropriate action." G/C/M/76 
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  2.7 He was of the view that these decisions repr esented a further important context for the CTG 
review of the integration process in stage three of the ATC implementation. 
2.8 The representative of Egypt noted that the comprehensive report of the TMB, catalogued at 
considerable length, the implementa tion of integration in stage three, including with reference to the 
implementation or otherwise of the Doha Ministeria l decisions.  He observed that,  unfortunately, the 
integration programmes of the major restraining Members had continued th e pattern established 
during the two previous phases of integration.  Thus, the third stage had also seen a repetition of emphasis by the restraining Members on the implemen tation of their obligations in a narrow technical 
sense, with little progress towards effective integr ation by eliminating quota restrictions.  He 
appreciated that Norway had already abolished a ll 54 quotas carried over from the MFA at the start of 
the ATC (46 of those before the end of 1997 and remaining eight at the beginning of 2001). 
2.9 He did not want to go into the details of wh at the other restraining Members had done.  It was 
sufficient to say that the majority of such quotas ha d been backloaded.  But, if one looked at this from 
a different angle, and taking as a basis the portion of 1990 imports that had actually been restricted by quotas, the United States had thus far integrated less than 20 per cent, and the EC, based on 1995 
imports when its membership had increased to 15, only 32 per cent.  Unfortunately, it had not been 
possible to calculate similar percentages in respect  of Canada and Turkey, due to lack of necessary 
information and transparency on the part of those Members. 
2.10 Thus, it was clear that none of the restraini ng Members had accorded de ference to the explicit 
ATC objective of phasing out the quota restrictions progressively.  Nor had they implemented the solemn agreement by Ministers at Doha that "the provisions of the Agreement relating to the early 
integration of products and the elimination of quota restrictions should be effectively utilized". Sadly, 
Article 2.10 of the ATC had remained a dead lette r during stage three.  The representative of Egypt, 
therefore, expected that the CTG would take serious note of the disregard of an important  Ministerial 
Agreement. 
2.11 The Egyptian delegate observed, in add ition, that as in previous stages of the ATC 
implementation, ATC provisions with respect to the specific special treatment of small suppliers, 
least-developed Members or cotton-producing exporti ng Members had failed to receive any concrete 
effect (in all three instances by the United States  and Canada; in relation to  cotton producing exporters 
by the EC).  And as the TMB report had noted at  great length (in its pa ragraphs 208 to 226), the 
United States had declined to implement the TMB recommendation with respect to the minimum 
requirement that it had to meet in terms of quota in creases for China for the y ear China acceded to the 
WTO.  The inflexible approach by the restra ining Members had kept the CTG from making any 
recommendations to the General Council in regard to  the Doha Ministerial decisions relating to the 
calculation of growth rates.  The General Council likewise had failed to adopt any decision on the 
matter forwarded to it by Ministers for appropriate action by the deadline of 31 July 2002 .  Nor had 
any resolution been allowed  of the very reasonabl e suggestion made by developing Members that the 
restraining Members would avoid any reduction of e ffective quota access in the final year of the ATC, 
namely 2004, by denial of carry forward.  On th e contrary, there were case s where new restrictions 
had been introduced and maintained in contraven tion of the concerned restraining Members' ATC 
obligations.  He did not propose to dwell on those cases at the present meeting.  The structure of the 
work laid out by the Chairman in  the Airgram for the meeting offered the possibility of doing so at a 
later stage in this review exercise. 
2.12 As for the final stage of integration at the e nd of the tenth year of the transitional process, he 
took note that all four restraining Members, name ly Canada, the European Communities, Turkey and 
the United States, had already notified that, on 1 January 2005, they would integrate into GATT 1994 all textiles and clothing products to which the ATC a pplies, which had not yet been integrated during 
the first three stages of the integration process.  Fu rthermore, they had notified that on that date, they  G/C/M/76 
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  would eliminate all remaining ATC restrictions on such products, and would, thus, have integrated 
into GATT 1994 all products listed in the Annex of the ATC. 
2.13 In conclusion, the representative of Egypt st ated that, contrary to the requirements of the 
ATC, the integration process had not been implem ented in a progressive manner.  The restraining 
Members had pursued a deliberate policy of back-l oading the process, maintaining the bulk of quota 
restrictions throughout the ten-year period.  The ATC had provided for a framework to phase out the 
quota restrictions in a gradual and progressive manner, not just at the end of the ten-year period.  The 
progressive character of the integration process was a specific requirement of the Agreement.  In 
addition, Ministers had specifically agreed and e xhorted that the provisions of the Agreement relating 
to the early integration of products and the elimin ation of quota restrictions should be effectively 
utilized.  And finally, Article 1.5 of the Agreemen t also required that, in order to facilitate the 
integration of the textiles and clothing sector, th e restraining Members should allow for continuous 
industrial adjustment and increased competition in thei r markets, not just at the end of the process.  
This had been previously ignored by the restraini ng Members.  They had stuck to their position that 
they had promised their domestic constituents to keep the bulk of quota restrictions until the end of 
the ten-year period. 
2.14 He, therefore, asked that the CTG express disappointment ove r the manner in which the major 
restraining Members had implemented their integration processes during the integration period, in particular by postponing the elimination of the bulk of quota restrictions until the end of that 
integration process and also by not giving meaningful effect to ATC provisions with regard to special 
and differential treatment of small suppliers , least-developed and co tton-producing exporting 
countries. 
2.15 The representative of El Salvador
 made a few comments on the fourth indent of Item 1 of the 
Agenda.  She joined and supported the precedi ng speaker.  She referred to document G/L/683 
prepared by the TMB, which gave a complete fact ual assessment of the third integration phase.  She 
referred to a paragraph of that report, which said that "The timely and full implementation of the ATC 
will bring about, without any doubt, important trading opportunities and also challenges the WTO 
Members will have to meet."  While it was true th at the implementation of the ATC would bring trade 
opportunities for some Members, it  was also important to recognize that some other countries, 
including El Salvador, would have to face cha llenges as a result of the implementation of this 
Agreement.  Discussion on this point had been initia ted at the CTG meeting on 1 October 2004 under 
the item concerning issues relating to the post-ATC adju stment period.  In that discussion, El Salvador 
and other small suppliers that we re highly dependent on the textile and clothing industry had stated 
their concern at the employment and investment sh ifts which were looming in their markets once the 
integration of this Agreement would be completed.  In this respect, El Salvador was grateful that 
special consultations had been pla nned which would be held in the c ourse of the week and in view of 
the importance of this subject, she would request that any further discussions held should try to find 
solutions that would minimise the negative impact that certain Members would have to face once the 
ATC had been integrated into the WTO. 
2.16 The representative of China  fully endorsed the statement made  by the representative of Egypt, 
also Vice-Chairman of the ITCB.  She wanted  the CTG to conduct a thorough review of ATC 
implementation since, as China had said at the pr evious CTG meeting, this had a very significant 
implication for the multilateral trading system and China did not want this review to be pro forma .  
The major review to be conducted by the CTG had si gnificant systemic implications.  She, therefore, 
encouraged all Members to engage in this exercise.   Members would find that the experience of this 
sector and the lessons drawn from the sector were relevant to other sectors and areas covered by the WTO.   She thanked the Secretariat for compiling sta tistical data on the evolution of trade during the 
ATC period.  However, first she noted that the cove rage of products for the purposes of these data had 
been taken as SITC Division 65 and 84 for textiles and clothing respectively, which was significantly G/C/M/76 
Page 6  
 
  different from the product of coverage of the ATC.  This point was worth noting since the subject of 
this major review exercise was the implementation of  ATC.  Second, except for tables 5 and 16 which 
showed the evolution of trade under certain select ed regional trade arrangements, the rest of the 
document did not include data on intra-EC trade,  which was a significant portion of trade in the 
sector.  The global size of textiles and clothing trad e had thus been reduced by around US$ 60 billion 
and the market shares of certain exporting Members ha d hence been overstated.  Finally, data with 
respect to exports of textiles and clothing from individual Members (Tables 2 and 13) had been 
compiled on the basis of individual Member’s reports. As a result, in some cases, the data differed from imports from these same Members as shown by importing Members an included in the relevant tables of the document. 
2.17 Commenting on the evolution of textiles and clothing trade during the ATC implementation, 
the representative of China first stat ed that since the large bulk of quota restrictions still remained in 
place, the increase in imports in the restraining ma rkets was not attributable to the elimination of 
quotas under the ATC.  Secondly, a breakdown of the da ta in the Secretariat document into imports 
from restrained and unrestrained exporting Members would indicate that in the United States, while 
overall imports of clothing from all sources had increased by 72.3 per cent between 1995 and 2003, 
imports from restrained Members had increased by only 43.2 per cent.  US imports from its NAFTA 
partners had increased by 137.2 per cent.  In terms of market share, the shar e of restrained Members 
in US imports of clothing had declined from 79.1 pe r cent in 1995 to 65.7 per cent in 2003.  The share 
of non-restrained Members had increased from 20.9 pe r cent in 1995 to 34.3 per cent in 2003.  In the 
EC, imports of clothing from all sources had incr eased by 48.5 per cent but only by 39.8 per cent from 
restrained Members.  Meanwhile, EC imports from 10 preferential suppliers that enjoyed duty-free, 
quota-free entry of their exports into the EC had increased by 53.1 per cent.  It was, therefore, 
apparent that while the ATC had been under im plementation, both major importing Members had 
moved to influence production and trade flows of te xtiles and clothing in a manner that ultimately had 
provided protection to their domestic producers, since imports from preferential suppliers were 
generally contingent on the use of US/EC yarns and fabrics through the rules of origin. 
2..18 On the integration process in general, the representative of China fully endorsed the 
observation made by the TMB in paragraph 47 of  its report as well as the statement by the ITCB 
Vice-Chairman that the integration process under Ar ticle 2 of the ATC was the main pillar of ATC 
implementation.  In this regard, as China had said at  the last CTG meeting, it appreciated the fact that 
Norway had eliminated most of its quotas befo re 1998 and removed the remaining quotas at the 
beginning of 2001.  So, when she would refer to "i mport restraining Members", she would, in effect, 
be referring to the "remaining import restrain ing Members", which did not cover Norway. 
2.19 The representative of China appreciated the f act  that all the remaining import restraining 
Members, i.e. the United States, the EC, Canada an d Turkey had notified their last-stage integration 
programmes to the TMB:  to the effect that all th e remaining quota restrictions would be eliminated 
and all products listed in the Annex of the ATC would have been integrated on 1 January 2005.  
However, it had to be recognised that the integra tion process, as a whole, had not been undertaken in 
the spirit and objective of the ATC, which was desi gned to progressively phase out the long-standing 
quota restrictions and to allow for the textile and cl othing sector to be smoothly adjusted  back to 
normal.  Article 1.5 of the ATC specified clearly that "[i]n order to facilitate the integration of the textiles and clothing sector into GATT 1994, Memb ers should allow for continuous autonomous 
industrial adjustment and increased competition in thei r markets", not just at the end of the process.  
To the disappointment of this organisation, in orde r to provide as much prot ection as possible to their 
domestic industries, the remaining restraining member s had chosen either not to remove any or to 
remove only very few quotas in the first and se cond stages of ATC implementation.  It was 
particularly important to notice that the third stage of the ATC integration process had started on 
1 January 2002, just one month after the Doha Minist erial Conference.  In relation to the integration 
process, it had been decided at that Conference "tha t the provisions of the Agreement relating to the  G/C/M/76 
 Page 7 
 
 
  early integration of products and the elimination of quota restrictions should be effectively utilized".  
Regrettably, despite this decision, the restra ining Members had implemented their third stage 
integration programmes in such a way as to leave most  of their quota restrictions to be removed at the 
last minute of the 10-year implementation period.  As a result, even though only a little over two months were left before the full expiry of the AT C, in the United States there were still about 90 per 
cent of the quotas remaining in place.  In Canada , around 80 per cent of quotas were still kept and the 
EC had maintained 70 per cent of the quotas.  In a ll these markets, most of the best-seller items were 
to be freed from quota restrictions at the very end of the ATC implementation.  China hoped, as the ITCB Vice-Chairman had just said, that the Council would take a serious look at this back-loading 
practice and at the disregard by the import restraining Members of a solemn Ministerial agreement 
reached at Doha. 
2.20 The representative of China was greatly con cerned with the failure of the United States to 
implement the TMB recommendation with respect to the minimum requirement that the United States had to meet in terms of quota increases for Chin a for the year when Chin a acceded to the WTO.  
China became a Member by the en d of 2001 when the ATC was still in its second stage.  Article 2 of 
the ATC, as well as paragraph 241 of the Working Party Report of China's Accession to the WTO, 
required that import restraining Members grant the growth-on-growth specified in Article 2 of the 
ATC to China, including the 25 per cent growth factor applicable to stage two of the ATC 
implementation.  However, the United States ha d failed to fully implement its obligations as 
mentioned above, by not applying the full 25 per cent growth factor to China.  China had requested the TMB to review this matter.  The TMB, after a thorough and careful review, as described in detail 
by the TMB in paragraphs 208 through 226 of its report, had recommended that the United States 
apply the 25 per cent growth factor in full to  China as a minimum requirement and make the 
necessary adjustments to its methodology.  So far,  the United States had declined to make such 
adjustments in compliance with the TMB recomme ndation.  Such a failure on the US side had 
adversely affected the market access available to Ch ina and upset the balance of rights and obligations 
between China and the United States under the ATC.  It had also caused damage to the credibility of 
the TMB and to the WTO as well. 
2.21 The representative of China, therefore, s upported the proposal submitted by the ITCB that the 
CTG express disappointment over the manner in  which the import restraining Members had 
implemented their integration programmes during the integration process, in particular the back-loading approach they had used.  She also suggest ed that the CTG express disappointment or regret 
over the way in which the United States had treated the TMB recommendation. 
2.22 The Chairman
 observed that China’s comments on the st atistical information prepared by the 
Secretariat would be passed on to the Secretariat and would be responded to by the Secretariat at a later stage, as appropriate.  
2.23 The representative of India
 said that he would make his intervention on all four sub-items of 
item 1 of the agenda.  He echoed the comments ma de by the representative of Egypt, also Vice-
Chairman of the ITCB and by the representative of Chin a.   He stated that the third and last major 
review of the ATC implementation was an extremely important exercise.  Firstly, the textiles and clothing sector was of enormous trade interest to a number of developing countries.  For India, this 
sector contributed four per cent to its GDP and 21 pe r cent to its exports.  The textile sector was the 
second largest employer in the Indian economy, after agriculture.  Secondly, as pointed out by the 
representatives of Egypt and China, the ATC provided that the CTG shall conduct a major review of 
the ATC implementation pursuant to Article 8.  It wa s, therefore, important that the CTG ensure that 
all requirement of the ATC had been fully implem ented.  The review process was being assisted 
enormously by the TMB's comprehensive report contained in document G/L/683.  The review, of course, would require constructive engagement from all Members and he assured the Chairman that 
he would participate very constructively in the debate in the dedicated session. G/C/M/76 
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  2.24 He further stated that India was one of th e co-sponsors of the joint submission introduced by 
the ITCB Chairman at the last CTG meeting on 1 October 2004.  The paper highlighted some of the important issues and made seven specific proposals.  Like Egypt and China, he also noted that the 
integration process was one of the main pillars of  the ATC.  The ATC had envisaged progressive 
integration of the textiles and clothing sector within  a transitional period of 10 years.  The objective 
had been to actually liberalise trade in textiles a nd clothing through progressive integration, i.e. the 
elimination of quota restrictions.  However, it was difficult to see how this objective had been achieved in the letter and the spirit of the ATC.  The pattern in the third stage of integration had been 
no different than the two previous stages.  In fact , the integration schedules had concentrated only on 
low value-added products.  While the requirements for integration might have been met in a technical 
sense, the bulk of quota would be eliminated only on 1 January 2005. 
2.25 Out of a total of 937 quotas notified by th e US on imports of textiles and clothing products 
from WTO Members, it had so far phased out only 10 3.  In the case of the EC, it had phased out 
91 quotas out of 303, and Canada only 76 out of  368.  From this data, one failed to see any 
progressivity in the elimination of restrictions by the major restraining Members.  As had been 
pointed out by Egypt and China, only in the case of Norway had all quota restrictions been eliminated 
well before the end of the implementation period, in two phases – a fact which should be appreciated 
by the Council in its review.  In terms of trade under restriction with respect to 1990 imports, the US 
had thus far integrated less than 20 per cent of its trade.  The EC, based on 1995 imports, only 32 per 
cent.  In respect of India, the majority of its exports to the major restraining Members would only be integrated at the end of the ATC.  One also wonde red how this pace of integration would relate to 
Article 1.5 of the ATC.  As had been noted by the representative of Egypt, the provisions of the ATC 
relating to early integration of pr oducts (Article 2.10) and early elimination of quota restrictions 
(Article 2.15) had remained largely unutilised, desp ite a clear decision taken by the Ministers at Doha 
urging Members to effectively take recourse to these provisions.  In fact, due to lack of flexibility on 
the part of the restraining Members, no pos itive result could be achieved on the other two 
implementation tirets, which had been sent to the CTG by Ministers for examination and the 
development of clear recommendations. 
2.26 The representative of India further stated that restraining Members had also failed to give any 
particular attention to the ATC provisions with resp ect to special treatment for small suppliers, least 
developed Members and cotton-produc ing exporting Members.  On the other hand, there had been 
cases of new restrictions or widening of the scope of  restrictions, to which he would revert under the 
specific agenda items.  With respect to the final stag e of integration, he noted, with satisfaction, that 
all major restraining Members had notified to the TM B that they would integrate all remaining textile 
and clothing products which had not yet been integrated  in the previous three stages, with effect from 
1 January 2005, as per Article 9 of the ATC, and th at all restrictions maintained under it would be 
eliminated on that date.  With reference to the statis tical information provided by the Secretariat, India 
had also alluded to this aspect of the review at th e 1 October meeting and did not wish to reiterate its 
point of view, but shared the point made by China in this respect.  He concluded by saying that the ATC was about elimination of quota restrictions by the restraining Members and the sectors' full 
integration in a progressive and smooth manner into  the normal GATT disciplines over a period of ten 
years.  The Council, in its review, might e xpress disappointment over the manner in which the 
integration programme had been implemented, leav ing the bulk of restrictions until the end of the 
implementation period.  
2.27 The representative of Hong Kong, China
 observed that the TMB comprehensive report had 
devoted considerable coverage to  reviewing and analysing Members'  integration programmes.  This 
reflected the importance of integration to the full and faithful implementation of the ATC.  He noted two positive developments.  First, all four rest raining Members, namely Canada, the European 
Communities, Turkey and the United States, had not ified to the TMB that, on 1 January 2005, they 
would integrate into GATT 1994 all textile and clot hing products to which the ATC applies but had  G/C/M/76 
 Page 9 
 
 
  not yet been integrated during the first three stages of  the integration process.  On that date, therefore, 
they would eliminate all remaining restrictions un der the ATC on such products, and thus would have 
integrated into GATT 1994 all products listed in the Annex to the ATC.  The full integration of the 
textile and clothing sector into normal GATT ru les had significant systemic importance to the 
credibility of the multilateral trading system and also of the WTO.  The second positive development 
was that another WTO Member who had carried over quota restrictions from the MFA at the start of 
the ATC, Norway, had abolished all quota restrictions by the beginning of the year 2001.  He commended Norway for taking this initiative. 
2.28 He noted that a lot had been said about th e problem of back-loading in the manner in which 
the restraining Members had decided to implement th eir integration programmes.  Facts and figures in 
this case spoke louder than words.  Taking the fi rst three stages as a whole, the US had phased out 
only 103 quotas out of a total of 937;  the European Communities had phased out 91 quotas out of a total of 303;  Canada had phased out 76 quotas out of  a total of 368.  In volume terms, the US had 
thus far integrated less than 20 per cent of the portion of 1990 imports that had actually been 
restrained by quotas.  The EC had integrated only 32 per cent, based on 1995 imports.  It was, 
therefore, abundantly clear that little progress had been achieved by the major restraining Members 
towards the attainment of the essential objective of the ATC, that is, progressive integration of the 
textile and clothing sector.  He hardly needed  to remind Members that such an objective was 
enshrined in the preamble of the ATC. 
2.29 When discussing the integration process, rest raining Members had often cited figures such as 
the increase in their imports, or loss of jobs.  In this regard, he wanted to  make two observations.  
First, as required under Article 1.5 of the ATC, Members should allow for continuous autonomous 
industrial adjustment and increased competition in th eir markets in order to facilitate the integration 
process.  Thus, increased imports and loss of jobs in restraining countries should hardly come as a 
surprise as the restraining Members no longer enjoye d comparative advantage in the area of textile 
and clothing. Hong Kong, China for its part knew that there would be a price to pay in terms of a 
radical restructuring of its own industry when it concluded the ATC.  Since 1996, the number of 
workers employed in the sector in Hong Kong, Chin a had shrunk by more than 60 per cent.  The 
adjustment process had not been without pains, but it had also been beneficial to Hong Kong, China’s economy as a whole, assisting its own transformation from a predominantly manufacturing economy to one based predominantly on services.  Second, in  relation to the purported increase of imports into 
restraining Members, when one examined carefu lly the data in the document prepared by the 
Secretariat and broke the numbers down into imports from restrained  and unrestrained Members, one 
came to a rather different conclusion.  In the case of the United States, while overall US imports from 
all sources had increased by 72.3 per cent between th e years 1995 and 2003, imports from restrained 
countries had increased by only 43.2 per cent.  Duri ng the same period, US imports from its NAFTA 
partners had increased by 137.2 per cent.  While the share of restrained countries in US imports of 
clothing had declined from 79.1 per cent in 1995 to  65.7 per cent in 2003, the share of non-restrained 
countries had increased from 20.9 per cent in 1995 to 34.3 in the year 2003.  On the EC side too, the imports of clothing from all sources had increased by  48.5 per cent, but imports from restrained WTO 
Members had only increased by 39.8 per cent.  Here  again, EC imports from 10 preferential suppliers, 
namely Bulgaria, the Czech Republic, Hungary, Poland, Romania, the Slovak Republic, Malta, 
Morocco, Tunisia and Turkey, had increased by 53.1 per cent during the same period.  One point was 
clear from these statistics, the purported increase in  imports was largely due to an increase in 
preferential trade.  In the case of textiles and clothi ng, the increase in preferen tial trade was very often 
tied to highly restrictive rules of origin which ultim ately provided protection to restraining Members' 
domestic producers of upstream input, thereby further distorting world trade in this sector. 
2.30 The representative of Hong Kong, China stat ed that besides the unsatisfactory situation 
created by back-loading, restraining Members had failed to give any concrete effect to the ATC 
provisions with respect to the specific special treatment of small suppliers, least-developed Members G/C/M/76 
Page 10  
 
  and cotton-producing exporting Members.  The inflex ible approach by the major restraining Members 
had also kept the CTG from making any recommenda tions to the General Council in regard to the 
Doha Ministerial decisions relating to the calculatio n of growth rates for small suppliers and least-
developed Members.  The TMB comprehensive report had elaborated at great length on the failure of 
the US to implement the TMB clear recommendation w ith respect to the minimum requirement that it 
had to meet in terms of quota increases for China fo r the year that it acceded to the WTO.  This was 
another incident under which the balance of ri ghts and obligations among Members under the ATC 
had been affected. 
2.31 The representative of Hong Kong, China concluded by stating that the integration 
programmes should be evaluated in light of the object and purpose of the ATC, including its 
requirement that the process be gradual and progressive.  One could not escape the conclusion that 
restraining Members had failed to fulfil their obl igations completely, deny ing developing exporting 
Members the benefits they leg itimately expected from the ATC.  For this Council to discharge 
meaningfully its oversight functions over the impl ementation of the ATC, he called upon the CTG to 
express disappointment over the manner in which the major restraining Members had implemented 
their integration programmes. 
2.32 The representative of Pakistan
 was grateful to the TMB Chairman for the comprehensive and 
objective report and to the effort made by the S ecretariat in producing exports and imports data.  
Pakistan was also co-sponsors of the ITCB paper a nd agreed completely and endorsed all the views 
contained therein.  He also agreed with what had been said in the statements by Egypt, China, India 
and Hong Kong, China.   
2.33 He believed that the major review of the fourth and final stage of integration should be 
conducted with as much interest and fervour as in  the past.  The Council needed to take this 
opportunity and highlight the shortcomings in the pr ocess leading up to the final integration, whereby 
trying to learn lessons from this particular exercise of quota elimination.  What had been seen in this 
process leading up to the final integration, was the lack of the most important element of the ATC, 
progressivity in the elimination of quotas.  As had al ready been alluded to in previous statement, the 
three major restraining Members had not taken into account the progressive nature of the elimination 
which had been proposed in the ATC.  As already stated, the United States only managed to phase out 
103 out of the 937 quota restrictions during the implem entation period.  Similarly, 70 per cent of the 
EC quota restrictions were still in place and 79 per ce nt of the Canadian quota restrictions, although 
he had noted that all three Members had notified that all the remaining quota categories would be 
integrated by 1 January 2005.  The textile and clothing sector accounted for 49 per cent and 23 per 
cent of Pakistan's total export of merchandise respec tively and, taken together, for 72 per cent of all 
merchandise exports.  He could not even begin to  underplay the dependency the Pakistan economy 
had on this sector.  Similarly he could not even over-emphasize the importance the quota elimination 
and full integration of this sector had in Pakistan’s national policies.  He would not go into details as 
to the process of integration itself.  He just high lighted what had been said by the Acting Chairman of 
the ITCB and stated that the recommendations cont ained in the ITCB submission might be taken into 
account and should be seen as a part of the forthcomi ng CTG report at the end of the review process. 
2.34 The representative of Indonesia  fully endorsed the statement made on behalf of ITCB 
members and fully supported the statements made by  El Salvador, China, India, Hong Kong, China 
and Pakistan. 
2.35 The representative of Turkey  thanked the TMB for its comprehensive report and expressed 
his appreciation to the WTO Secretariat for the deta iled information provided.  With respect to the 
recommendation proposed by ITCB members in paragraph 54 of G/C/W/495 regarding the introduction and maintenance of certain measures by Turkey in disregard of the disciplines of the 
ATC, he drew the Council’s attention to the fact th at mutual satisfactory results had been achieved in  G/C/M/76 
 Page 11 
 
 
  the dispute to which Turkey had been a party and emphasized that the quantitative restrictions being 
implemented by Turkey were only one aspect of th e Customs Union with the European Union.  To 
consider these restrictions without paying attenti on to the overall results of the Custom Union would 
only lead to misunderstandings.  Turkey had adopted the common commercial and competition 
policies of the European Communities and had launc hed market access conditions for third countries 
that were similar to those of the European Comm unities.  As a result of these developments, Turkey 
had become one of the most developed markets and currently, Turkey's trade of textile and clothing 
products ranged from four per cent to 12 per cent.  He recalled for the record, once again, Turkey's 
notification to the WTO on the integration of all textile and clothing products into GATT 1994 by 
1 January 2005. 
2.36 The representative of Turkey stated that th e third integration stage had revealed a very 
different picture than had been expected.  WTO Members had experienced a dramatic transformation 
of global production and sourcing patterns in this sector.  Price reductions had happened at very high 
rates, almost dropping below cost levels, which coul d not be totally attributed to the quota rents and 
market dominance in liberalized categories to the a dvantage of very few countries, in most cases, only 
one.  No matter how WTO Members perceived and expressed the implementation of the ATC, it was 
well known that the majority of the products had been left to be integrated last.  The fourth and the 
last phase was going to be for yarns, fabrics and most of the clothing items which had the highest 
value added.  Those were also the items that the deve loping countries had an in terest in.  That was the 
main reason why developing countries were concerned,  as current data indicat ed a similar trend for 
the post ATC period.  Therefore, one had to be very  cautious in assessing the last phase of integration.  
Identification and explanation of the present factors n eeded to be complete for future reference.  The 
impact of any accession or unionship should be  elaborated with all consequences and the 
recommendation by the Members shoul d be given due consideration. 
2.37 The representative of Brazil  stated that, in view of the comprehensive statement made by the 
representative of Egypt in the name of the ITCB members and the statements by China, India, 
Hong Kong, China, Pakistan and Indonesia, he just wanted to highlight his country’s support to the 
proposal, contained in document G/C/W/495, that the CTG express disappointment over the manner in which the major restraining Members had implemen ted their integration process.  Besides, in spite 
of the frustration with the back-loading of the quota phase-out to the last period of the ATC 
integration and with the introduction of new restrict ions by the major restraining countries, he was 
encouraged, at least, by the reassurance from all restraining Members that all quotas would be 
eliminated by the end of the year. 
2.38 The representative of the European Communities
 stated that the EC considered that it had 
complied fully with the provisions of the ATC.  On 17 March 2004, the EC had notified its intention to stick to its schedule of liberalisation, according to  which all restrictions would be eliminated by the 
end of the year.  Several of the delegates who had intervened had implicitly or explicitly been 
criticising importing countries, including the EC, for not having been completely working within the 
letter or, at least, the spirit of the ATC.  Notably,  certain provisions of the ATC had been mentioned, 
including the well-known accusations about back-l oading of liberalisation of quotas.  These are 
allegations, did not come as a surprise, since they ha d consistently been put forward.  He wished to 
remind the Committee that, according to the provisions  of the ATC, it was at the discretion of the 
importing country to decide which quotas were going to  be liberalised, provided that the percentages 
and the product mix of tops and yarns, fabrics, made-ups and garments were respected.  That had 
consistently been the case and it could not be a surp rise to anybody that the bulk or the most sensitive 
products would be liberalised at the end of the process.  With regard to the figures put forward 
concerning the percentages, or the pace, of quota aboliti on, he had to say that he was flattered that the 
EC, on page 15 of document G/C/W/495, appeared quite prominently as the least negative importing 
country when it came to implementation.  But he said that with a pinch of salt, because, in his view, 
quantifying the number of quotas at the start of th e ATC was a risky business since the categorisation G/C/M/76 
Page 12  
 
  system was not identical in all importing countries.  The more such figures we re repeated, the more 
truthful they became, just like a self-fulf illing prophecy.  He had notably heard from the 
representative of China accusations about back-loadi ng.  He knew that China was an a-typical case 
considering it had become a Member of the WTO in  2001 but, he observed that Chinese exports to the 
EC had, in fact, quadrupled in tonnage from 2001 to 2003 inclusive.  If that was the normal 
interpretation of back-loading, he believed that coun tries should be satisfied with it.  On the other 
hand, though the Council would come back to such i ssues later in the debate, he pointed out that the 
EC had stuck to the provisions of the ATC and had not  had recourse at all to the safeguard mechanism 
of Article 6 of the ATC.  The Council might come to  consider the implementati on of Article 7 later in 
the day since this question had been put on the agen da at the EC’ request, and he supposed that the 
question of new restrictions would, inter alia , also eventually be consider ed, with the questions raised 
in the comprehensive report about the EU enlargement. 
2.39 The representative of the United States
 stated that his country had fully met its obligations 
under the ATC and confirmed the one element that  all Members could agree on, which was that 
quotas would end on 1 January 2005.  As regards the issue of progressive liberalisation versus back-
loading, he did not dispute the statements made by previous speakers that the United States’ 
integration programme had been back-loaded.  This  was because the ATC had been written that way.  
If one went back to the negotiating history of this Ag reement, it became clear that when the Annex to 
the ATC had been agreed, one was not talking about integrating restrained products only, the universe 
of products was much larger.  The implication of th at was that restrained products, for the most part, 
would not be integrated until the very end of the ATC.  However, that left the problem of how 
Members were going to avoid a situation whereby,  after the 10-year phase-out, such a substantial 
additional adjustment (the “cliff” ) would be required of importing Me mbers and that they would not 
be willing to absorb it in one go.  The solution th at the negotiators had come up with had been the 
staged acceleration of existing annual growth rates.  This solution had, in fact, worked.  In the case of 
the United States, imports had increased by 120 per cen t, until last year, over the course of the ATC.  
Import growth had continued very fast throughout 2004 as well.  US employment in the sector was a 
small fraction of what it had previously been.  No  one worried now that the United States would have 
to take a large, additional step to finalise ad justment because this adju stment process had been 
substantially completed. 
2.40 He stated that the United States, therefore,  believed that not only had they fulfilled their 
obligations in this area but also that the negotiators , in fact, had come up with a system that had been 
progressive, had stretched out the adjustment proce ss, and had been quite successful.  It had been 
mentioned that the United States’ position would not put an additional burden of liberalisation on its 
domestic industry by liberalising early.  This was e ssentially true.  It had been the US’ position right 
at the beginning of the ATC that this had been the deal and that it was not going to ask its industry to 
incur a faster pace of liberalisation than what had been  agreed at the start.  But he also noted that in 
recent years, the additional issue had come up, as it had been referred to by El Salvador at this 
meeting, that the US industry was not the only stake- holder in this area, that there were others, mostly 
small exporting countries, that were going to not on ly be substantially impacted by the end of the 
ATC, but, in fact, had already been substantially im pacted by the pace of liberalisation in this area.  
One could look at a number of these countries and se e, in fact, over the last few years, that their 
exports to the United States had dropped as this adjust ment process had come clo ser to conclusion.  In 
fact, had the United States liberalised faster than it did, it would have put an even greater burden of 
adjustment onto these smaller exporting countries. 
2.41 With respect to the point that had been rai sed about the early elimination of restrictions and 
the statement which had been made by Ministers at Doha to the effect that this mechanism should be 
effectively utilised, he responded that there was a hist ory to that statement as well.  The United States 
had eliminated restraints on African producers.  He  did not think that anyone at Doha was under any 
illusions that what that statemen t meant was that the United States  were going to eliminate quotas on  G/C/M/76 
 Page 13 
 
 
  large exporting countries.  As far as the United St ates was concerned, it had met its responsibilities, 
not just under the ATC, but with respect to Ministerial statements that relate to the ATC. 
2.42 On the continuous industrial adjustment as men tioned in Article 1.5 of the ATC, he pointed to 
US’ import and employment data, which showed that  this adjustment process had proceeded steadily 
through the entire 10 years of the phase-out of the ATC.  There was no way one could credibly 
maintain that adjustment had not proceeded in an orderly fashion, as expected by the drafters of the 
ATC.  With regard to the question of special a nd differential treatment for small suppliers, least-
developed countries and cotton supplie rs, his country’s position had been that, at the start of the ATC, 
a negotiation had taken place between the United Stat es and all of these categories of suppliers.  The 
notifications that the United States had made to th e TMB had been adjusted to reflect understandings 
that had been reached in those discussions and the United States had, in effect, met its obligations 
under this provision of the ATC. 
2.43 He further referred to the fact that China had raised the issue of the proportion of restrained to 
unrestrained trade.  This did not come as a surpri se to him.  The whole purpose of restraints was to 
slow down exports of the larger exporting countries.  The fact that they had not maintained and had, 
actually, lost some market share over the ATC peri od shouldn't come as a surprise.  Since some 
Members had been subject to quotas and others had not , some adjustment in market share had had to 
take place.  He also noted that, at least in the case of the United States, it was quite true that the 
preferential suppliers had gained a larger portion of  the US’ market, but this phenomenon had peaked 
around 1991.  Since China had become a Member of the WTO, this process had quickly reversed.  He 
noted that the trade data that had been put forward did not, in his mind, reflect, as the EC had said, the 
enormous growth that had taken place in China's e xports to the United States over the period that it 
had been a Member of the WTO.  Such growth ha d continued at an extremely rapid pace through the 
current year. 
2.44 Finally, with respect to the issue raised a bout the failure by the United States to implement the 
TMB's recommendation with respect to the adjustme nt of China's quotas when the latter had entered 
the WTO, all he could say was that the United St ates had taken the position that the benefits of 
China's WTO membership should have started from the point at which China had entered the WTO 
and not before.  The United States had, therefore, ad justed China's quotas to reflect that period of the 
second stage during which China had been a Member  of the WTO, but had not given China the 
benefit of that accelerated growth for the period of  time before it had become Member.  The United 
States believed that its position had a legally soun d basis, and felt that, had this issue gone on to 
dispute settlement, the US’ position would have prevailed. 
2.45 The representative of Pakistan  commented on two points which had been raised by the EC 
and the US, respectively, about different aspects of the interventions which had been made by certain 
other Members, including Pakistan, at the present mee ting.  The EC had stated that it should not have 
come as a surprise to anybody that the more sensitiv e products would be integrated during the last 
phase, or at the last juncture.  He emphasised th at the lessons learned from the ATC integration by 
Members were precisely that the nature of inte gration as per the ATC Agreement should have been 
progressive, as implicitly stated in the ATC, and that in practice it had not been.  It would have been 
easier and more refreshing for all textile exporting countries to have seen integrated a good mix of 
sensitive and of other products.  That would have  made life easier, not only for the restraining 
Members, but also for the exporting Members, towards the end of the ATC.  This was the lesson he 
had learnt, which would help him in negotiations in other areas where such a phase out of restrictions 
was envisaged.  That was going to make Members’ work even more interesting and more difficult in 
other areas of the negotiation, mo st importantly in agriculture. 
2.46 The representative of Pakistan recalled the stat ement of the representative of the United States 
where he stated that had the United States liberalis ed earlier, more problems would have been faced G/C/M/76 
Page 14  
 
  by those countries which were having or were now fearing post-ATC adjustments problems.  To that 
argument, the representative of Pakistan replied that, had it not been for the ATC, some of the 
suppliers would not be existing at present.  Th is was a long debate, and it all had to do with 
competitive advantage in certain areas of production and merchandise.  If the process of integration 
had been more progressive and fair, these adjustment problems would not have been so prominent at 
this point in time.  Members would have had th e time to phase out, so to speak, the adjustment 
problems foreseen at a later stage.  And, theref ore, it would have been an easier and smoother 
integration process for all. 
2.47 The representative of China
 fully endorsed the statement just made by Pakistan.  She further 
stated that China had been expressing the concern of back-loading of quota restrictions by the 
importing restraining Members from a systemic point of view because, as China and most Members 
saw it, the ATC was designed to progressively phase out the quota restrictions.  Article 1.5 of the ATC specified clearly that in order to facilitate the integration of the textiles and clothing sector, the restraining members should allow for continuous in dustrial adjustments and increased competition in 
their markets, not just at the end of the process.  Regarding the comments made by both the EC and 
the US regarding China's textiles and clothing sector, she had to make it clear that, so far, China had 
been under the most restrictive quotas restrictions in  the major importing restraining Members.  China 
had the lowest base levels and the lowest growth rates.  Although it was generally recognised that 
China had a comparative advantage in this sector, such discriminatory quantitative restrictions had 
prevented China from enjoying the benefits of its comparative advantage as the global production and 
trade of textiles and clothing had been severely di storted and to some extent China’s development 
efforts had been adversely affected by such discrimination.  Therefore, at the beginning of the 
integration of the products previously subject to quota restrictions, it was normal and easy to 
understand, either from a theoretical or practical poi nt of view, that exports from China might increase 
in some cases in the major restraining Member s.  Such increases simply demonstrated China's 
competitive advantage in this sector, as the represen tative from the World Bank had clearly stated at 
the last CTG meeting.  If the United States repre sentative’s argument was va lid, then Members should 
ask themselves whether they should also set in pl ace quota restrictions in some other sectors, for 
example, the automobile sector.  It was well known that in this sector only a few Members had monopolised global production and trade.  If one were to follow the argument of  the representative of 
the United States, then Members should also set in place restrictions so that the producers in the 
developing world could also gain some market share. 
2.48 The representative of India
 commented on the statements made  by the US and the EC that it 
was obvious that he had different perspectives in te rms of the meaning of integration, progressivity 
and Article 1.5.  There were a number of provisions in the ATC such as Article 1.4 and other special preferential treatment provisions.  His guess was that  the objective of the drafters of the ATC had 
been that these provisions would be taken into acc ount during the course of the ATC implementation.  
He wanted to  make that point for the record.  Th e point had also been made that imports into the 
restraining Members’ markets had increased over the last two years and statistics had been given in 
this regard.  In this context, he referred to the comments made by the representatives of China and 
Hong Kong, China, who had given data showing how the US and the EC import profiles had been 
changing and from which sources imports were risi ng.  Of course, the US representative had 
mentioned that one should not have been surprised by this increase in imports and that this should 
have been expected.  But he was of the view that the increase in imports did not develop because of 
ATC implementation but because of other factors, such as preferential trade.  Another point which had been referred to was that there were technical  requirements and growth-on-growth provisions in 
the ATC which had given some relief to the exporting Members.  In this rega rd, he drew the Council's 
attention to the TMB's observation that growth-on- growth was not a substitute for integration.  
Secondly, for countries like India, the growth in exports during the pre-ATC period had been far 
greater than during the ATC period so far.  It was obviously clear that quota restrictions had continued to stunt the growth of India’s textiles and clothi ng industry during ATC implementation.  Last, he  G/C/M/76 
 Page 15 
 
 
  stressed once again, and this point  had also been mentioned by Paki stan, that the idea was to have a 
progressive elimination of quota restrictions and a smooth transition at the end of the day.  The 
objective of progressivity in the ATC was to gradually eliminate quota restrictions in a smooth manner so that the cliff at the end would not be so steep. 
2.49 The representative of Hong Kong, China
 reacted to one point just made by the United States.  
He was grateful to the US representative for his admission here that the US had been implementing 
the integration programme in a back-loaded manne r.  The US representative had further contended 
that such back-loading was consistent with the hi s country’s obligations under the ATC and that, had 
the United States liberalised earlier, the adjustment  problems faced by some smaller suppliers, would 
have been even more serious.  The representative of Hon Kong, China questioned how such a back-
loaded implementation could be consistent with the essential objective of the ATC which was 
progressive liberalisation of the textiles and clothi ng sector.  Such an objective was enshrined in the 
very preamble of the ATC.  There were also speci fic provisions under Article 1.5 of the ATC which 
required Members to allow for continuous industri al adjustment and increased competition in their 
markets.  In addition, when the ATC had been conc luded all Members were aware that they all would 
need to go through certain adjustments within th eir economy.  That was why Members had allowed 
for this 10-year adjustment period.  Hong Kong, China had to choose between two options:  one was 
to allow for continuous orderly in tegration and for the market to ad just in a gradual and progressive 
manner; .  the other, was the way in which the ma jor restraining Members had decided to implement 
their integration, i.e. in a back-loading manner, by leaving all the commercially meaningful products 
to the very end of the integration process.  Even the United States had admitted today that this had 
created a scenario of a certain cliff whereby most Members would have to jump down on the very last 
day of the ATC.  Had the major restraining Memb ers implemented their integration programme in a 
more orderly and progressive manner, the kind of adjustment problems faced by many Members would have been alleviated rather than the other way round. 
2.50 The Chairman
 noted that all the statements made on the issue of the ATC integration process 
would be reflected in the records of this dedicated  session.  He would attempt an overall summary of 
the results of the examination of the integration pro cess at the end of the examination of all the topics. 
2. Carry Forward 
2.51 The representative of Egypt , speaking on behalf of members of the ITCB, stated that the ATC 
had been negotiated in the Uruguay Round with the purpose of bringing about the integration of the 
sector into the same mainstream of multilateral rules as any other industrial sector,  this being stressed 
by a progressive phase-out of quota restrictions  over a transitional period of 10 years, from 
1 January 1995 to 31 December 2004.   Despite increases in quota growth rates, a number of quotas 
had continued to be fully utilised .  Consequently, quota administ rators and exporters had been 
obliged, year-by-year, to tap into the advance u se of some entitlements from the following year under 
the “carry forward” provision of the Agreement.  The use of advanced quota access through "carry 
forward" had been incorporated in the ATC fro m a long-standing practice under its predecessor's 
Arrangement, the MFA, in order to provide flexibilit y for the conduct of trade, in accordance with 
market conditions in the importing country.  The per centages of advanced utilisation (carry forward) 
of quotas had been laid down with each quota in respective bilateral agreements between the 
importing and exporting countries concerned.  In genera l, the "carry forward" rates in US bilateral 
agreements were between 6% and 7% for a major ity of products and exporting countries.  For major 
exporting Members, however, they were lower, between  1% to 3%.  In EC bilateral agreements, the 
general rate was around 5%, but for major exportin g Members, it was between 1% and 2.75%.  In 
Canada, the general rates were between 5% and 6%.  Unfortunately, the restraining importing 
Members had refused to allow the u se of "carry forward" in 2004, c ontending that since all quotas 
were to be eliminated at the end of 2004 ther e was no "carry forward" available from 2005.  The 
resulting reduction in market access was contrary to the objective of trade liberalisation which was the G/C/M/76 
Page 16  
 
  bedrock of the WTO system.  It was also incons istent with an essential provision of the ATC.  
Article 1.5 of the ATC provided that “[i]n order to facilitate the integration of the textiles and clothing 
sector into GATT 1994, Members should allow for c ontinuous autonomous indus trial adjustment and 
increased competition in their markets”.  Moreover, th e avowed purpose of the WTO, indeed also that 
of it predecessor – the GATT – was to increase market  access opportunities.  Thus in the very 
preamble of the Agreement, Members recognized that  the relations in the field of trade should be 
conducted with a view to, inter alia , “expanding the production of and trade in goods and services…”.  
They also recognized further that  there was a need for positive e fforts designed to ensure that 
developing countries, and especially the least devel oped among them, secure a share in the growth in 
the international trade commensurate with the need  of their economic development.  Under the GATT 
even the concept of the so-called “one-way street” evolved, i.e., that the liberalization achieved could 
not be reversed or reduced.  In a nutshell, the overriding purpose and direction of the WTO was to 
increase market access, not to reduce it.  In successive  declarations, Ministers had reiterated the need 
for making positive efforts designed to ensure th at developing countries and especially the least 
developed among them secure a share in the growth  of world trade commensur ate with the needs of 
their development.  In the Doha Declaration, they further affirmed that “in this context, enhanced 
market access has an important role to play”.  Thus, Members should avoid any situation that, in his view at least, resulted in the reduction of market access.  Some restraining Members had made the point that even if "carry forward" was not availa ble, one could use other flexibilities such as "carry 
over" of some unutilised quotas from the previous year , or swing provisions, as an alternative.  While 
this suggestion might theoretically sound plausible, it did not entirely mitigate the problem of loss of 
"carry forward".  In the case of a number of expor ting Members, the large majority of quotas were 
fully utilised, making it impossible to transfer quo ta from one category of products to the other.  
Moreover, there were also ceilings in the use of "car ry over" as well as in swing.  In short, therefore, 
the use of other flexibility provisions did not fully solve the problem.  Looking at the utilisation of quotas in 2004, he explained that many exporting countries were faced with the prospect of huge 
losses in market access, and consequently in expor ts, because many quotas had either already been 
fully utilised or were getting close to being fully u tilised.  Taking the threshold at 75% utilization of 
respective quotas in the first nine months of 2004, 46  quotas in the EC had already hit that percentage.  
In the case of the US, the corresponding number w as 139.  The affected exporting Members were 
Bangladesh, Brazil, Bulgaria, Cambodia, China, Gu atemala, Hong Kong China, India, Indonesia, 
Republic of Korea, Macao China, Malaysia, Paki stan, Philippines, Romania, Sri Lanka, Chinese 
Taipei, Thailand, Turkey and Vietnam, a quite substa ntial number.  In regard to the issue of "carry 
forward", it might also be pertinent to recall the TMB’s observations in paragraphs 260 and 261 of its 
comprehensive report for the present major review.  The TMB said that although “the ATC does not contain any explicit disposition concerning the matter [r elating to "carry forward" in 2004], the denial 
of this flexibility would run counter to the basic concept of  progressive liberalisation embodied in the 
ATC.  In fact, it would be absurd if a more rest rictive application of the flexibility provisions had 
been foreseen for the last year of ATC implementati on compared to the preceding years.  In addition, 
what would justify such an approach in economic te rms, since all the restrictions will have to be 
eliminated on 1 January 2005?". 
2.52 In paragraph 643 of its report, the TMB went  on to "express its hope that appropriate solution 
to this matter, addressing the concern about pot ential reduction in market access opportunities in 
2004, will be found and adopted by th e General Council in the near futu re".  It added that "the TMB 
believes that appropriate solutions to avoiding potential reduction in market access in 2004 can be 
sought by relying on a number of different mechanis ms or combination thereof".  This was, in the 
view of the representative of Egypt, a modest sugge stion and was to the benefit of all - the exporting 
countries, the importing countries and the multilateral tr ading system as a whole.  It was hoped that 
the restraining Members could be magnanimous and accept the TMB recommendation that an 
appropriate solution be found and adopted in the near future.  G/C/M/76 
 Page 17 
 
 
  2.53 The representative of Indonesia  fully endorsed the statement made by Egypt on behalf of the 
ITCB Members.  Much had been raised by other Members with respect to the report of the major 
review of the ATC implementation.  He felt that one  of the most important elements that had been 
raised by others, the issue of "carry forward", was very important as the time was now approaching 
December and only two months were left as from now .  However, the two months left were very 
critical for Indonesia since it needed to ensure whether its exporters could continue their exports, as, 
to date, no positive response from the restraining c ountries as to the availability of "carry forward" 
had been received.  The decrea se of quota access for 2004 due to the non availability of "carry 
forward" for the year 2004 had created a heavy bu rden for Indonesia in continuing its exports for 
certain categories, which had reached their limit since July.  This, of course, had adversely affected, 
not only the export activities, but mostly the social aspects which were tightly related to the loss of 
jobs of thousands of workers.  He believed th at his colleagues from developing countries fully 
understood the situation. 
2.54 Members were all aware that the ATC ha d been negotiated in the Uruguay Round with the 
purpose of bringing about the integration of the sector into  the GATT by a progressive phase-out of 
quota restrictions over a transitional period of 10 year s.  Unfortunately, he saw that the ATC was not 
implemented in a full and faithful manner since the developed restraining Members had left the bulk 
of quotas to be eliminated only at the end of the tr ansitional period.  The ATC also required that until 
the respective quota restrictions had been phased  out, quota access in those products shall be 
progressively increased.  To do so, the Agreement pr ovided that quotas levels would be increased by 
increasing the quota growth rates.  Despite the increa ses in quota growth rates, however, a number of 
quotas had continued to be fully utilised.  Consequent ly, quota administrators and exporters had been 
obliged, year by year, to tap into the advance use of some entitlements from the following year under 
the "carry forward" provision of the Agreement.   This was a longstanding and normal practice 
allowed by the Agreement as well as bilateral ag reements under the MFA, the percentages for 
advance utilisation of quotas being laid down in a bilateral agreement between the importing and 
exporting countries concerned.  In ge neral, the carry forward rates in the US bilateral agreements for a 
majority of products and exporting countries were 6 to 7%.  For major exporting members, however, 
they were lower, at 1 to 3%.  In the European Communities the general rates for bilateral agreements 
were 5%, but for major exporting members they were from 1 to 2.75%.  In Canada, the general rates were 5 to 6%.  Once again, this was normal practi ce in order to comply with the demand, and had 
been mutually agreed by Member countries in their bilateral agreements.  Unfortunately, the 
restraining importing Members had refused to allo w the use of carry forward in 2004 for the reason 
that since there would be no more quota in 2005, there was no carry forward available from 2005.  He 
was seriously concerned by the reason provided by restraining Members for not allowing developing 
Members to use flexibility in the form of carry forw ard to continue their exports.  The objections or 
denial to use the carry forward which had lead to reduction in market access were absolutely contrary 
to the essential provision of the ATC, in particular , the basic objectives of the WTO system.  As the 
WTO, and in particular the ATC, were historic achievements the Marrakech Declaration had clearly 
underlined the importance of employment and income  growth throughout the world.  The key element 
was that the ATC, which was of great importan ce to maintain employment and economy for most 
developing countries had to be fully and faithfull y implemented in a manner that benefited the 
developing countries by providing market access bu t not refusing the use of carry forward.  The 
promise of the WTO, as inherently found in the pr eamble of the Marrakech Agreement, was that the 
interest of developing countries shall be fully ta ken into account.  He found it difficult to understand 
and to justify that the diminution of quota access due  to the non availability of carry forward was only 
due to the fact that there were no more quota in 2005 and that the ATC was silent on this. 
2.55 The representative of Indonesia went on to  emphasize that the purpose of the WTO, and 
indeed also that of its predecessor - the GATT – wa s to increase market access opportunities.  Thus, in 
the very preamble to the WTO Agreement, one could read that Members, inter-alia , recognised that 
there was a need for positive efforts designed to ensure that developing countries and especially the G/C/M/76 
Page 18  
 
  least-developed among them, secure a share in the gr owth of the international trade commensurate 
with the needs of their economic development.  In successive declarations, Ministers had reiterated 
the need for making positive efforts designed to en sure that developing countries, and especially the 
least-developed among them, secure a share in the growth of world trade commensurate with the 
needs of their economic development.  In the Doha D eclaration, Ministers had further affirmed that in 
this context, enhanced market access had an important  role to play.  In the context of textiles and 
clothing trade, one should avoid any situation that would result in a reduction in market access.  The 
argument and suggestion made by some restraining Members was that even if carry forward was not 
available, one could use other flexibilities such  as carry over of some unutilised quotas from the 
previous year, or swing provisions.  While this sugge stion might theoretically sound plausible, he was 
of the view that it did not entirely mitigate the prob lem of loss of carry forward.  For Indonesia, the 
large majority of quotas had been fully utilised over the last two months.  The problem was that it was 
not possible to transfer quota from one category of products to another and that there were also 
ceilings on the use of carry over as well as swing.  In  short, the use of other flexibility provisions did 
not fully solve the problem.  Looking at the utilisa tion of quotas in 2004, Indonesia was faced with the 
prospect of huge losses in the textiles and clothi ng market, as many quotas had either already been 
fully utilised or were getting close to being fully util ised.  He, therefore, reiterated that this situation 
had very adversely affected Indonesia’s small a nd medium enterprises which employed thousands of 
poor workers.  He questioned what  would happen if any of the WTO Agreements like the ATC finally 
created unemployment and thousands of poor peopl e would suffer from the wrong implementation of 
the ATC.  In his view, any of the WTO Agreements  could be defined as the best if it could create 
prosperity for all Members, especially those rela ted to people who live on the poverty line such as 
workers, as clearly stated in the ve ry preamble of the Marrakech Agreem ent.  He was of the view that 
it was imperative that the very noble purposes of th e WTO would not be jeopardized.  The credibility 
and the nature of the WTO depended on this. 
2.56 The representative of Indonesia also wished to touch briefly upon the TMB's observations in 
paragraphs 260 and 261 of its compre hensive report.  In this report, it was stated that "while the ATC 
does not contain any explicit disposition concerning th is matter, the denial of this flexibility would 
run counter to the basic concept of  progressive liberalization embodied  in the ATC.  In fact, it would 
be absurd if a more restrictive application of the flexibility provisions had been foreseen for the last 
year of ATC implementation, compared to the prec eding years.  In addition, he asked what would 
justify such an approach in economic  terms, since all the restrictions  will have to be eliminated on 1 
January 2005?”  In para graph 643 of its report, the TMB went on to express its hope that appropriate 
solutions to this matter, addressing the concern about the potential reduction in market access 
opportunities in 2004, would be found  and adopted by the General Council in the near future.  The 
TMB believed that appropriate solutions for avoi ding potential reduction in market access in 2004 
could be found by relying on a number of different m echanisms or combinations thereof.  As he had 
just stated, since last month Indonesia’s exports of  certain categories of textiles products could not be 
shipped to the US and the EC due to the lack of quot a availability.  Therefore, this would continue to 
happen if there was no solution to the problem of ca rry forward.  There would be no doubt that this 
would adversely affect Indonesia’s poor  workers in the textiles industries. 
2.57 To conclude, as already stated by the re presentative of Egypt on behalf of ITCB members, 
this was a modest suggestion and was to the bene fit of all, exporting countries, importing countries 
and the multilateral trading system as a whole.  I ndonesia hoped that the restraining Members could 
be magnanimous and accept the TMB recommendation that an appropriate solution be found and 
adopted in the very near future. 
2.58 The representative of Thailand
 fully shared the concerns a nd comments made on this specific 
issue by the Acting Chairman of the ITCB and by th e TMB through its comprehensive report.  Indeed, 
the main thrust of the ATC was the progressive inte gration process of the textiles and clothing sector 
into the GATT/WTO.  Besides the normal mechanis ms of integrating these products at different  G/C/M/76 
 Page 19 
 
 
  stages and providing greater market access to t hose products still under quotas through higher growth 
rates, the ATC had specific provisions for early integration and/or early elimination of quota 
restrictions – reference was made specifically to  Articles 2.10 and 2.15.  All these provisions were 
aimed at alleviating, to the extent possible, th e back-loading of the inte gration process and to 
facilitating the necessary industrial adjustments in both importing and exporting countries.  The denial 
of carry forward was, however, a move in the opposite  direction.  It deprived exporting countries of 
normal flexibility to the extent of 5-6% of their r espective quotas for 2004, the last transitional year of 
the ATC, in the major importing markets.  The re presentative of Thailand wished to remind Members 
that this flexibility had been available since early MFA days in the 1970's.  According to available 
data, Thailand was among those countries whose expor ts in a number of quota items faced potential 
embargo.  It was well known that this issue had b een discussed on various occasions in the WTO.  But 
the problem remained real and she felt strongly that it was not  the intention of the ATC drafters not to 
accord this flexibility to exporters in the last y ear of the ATC transition on grounds that no carry 
forward would be available after the ATC.  Therefor e, Thailand joined the appeal for an appropriate 
and speedy resolution of this issue and hoped that  discussions in the CTG would have a  positive 
outcome this time. 
2.59 The representative of India  stated that the issue of the im pact of non availability of carry 
forward for exporting members in 2004 had first been raised by some ITCB Members in the General Council in 2003.  However, as noted by the re presentatives of Egypt and Indonesia, the issue 
remained unresolved to date.  This issue was, in his view, also linked to the pace of elimination of 
quota restrictions by major restraining Members.  The fact was, that the bulk of quotas would remain 
in place until 31 December 2004.  If one looked at the utilisation of quotas in 2004, many categories 
had either already been fully utilised or were ge tting close to their full utilisation.  Many exporting 
countries would thus be faced with significant losses in market access opportunities due to the non-
availability of "carry forward".  The purpose a nd direction of the WTO was to increase market access 
opportunities, a point which had been stressed by both previous speakers.  This was reflected in the 
Preamble to the WTO Agreement and had been stress ed in successive declarations made by Ministers, 
who had reiterated that Members would need to make positive efforts designed to ensure that 
developing countries, and especially the least developed amongst them, would secure a share in the growth of world trade commensurate with the needs of their economic development. 
2.60 He viewed this as a modest proposal by some ITCB Members, which was to the benefit of all, 
exporting and importing countries, as well as the multila teral trading system as a whole.  He also 
wanted to reiterate, as the representative of Egypt had done, the observation made by the TMB in its 
comprehensive report (G/L/683), which stated:  "t he ATC does not contain any explicit disposition 
concerning this matter, the denial of this flex ibility would run counter to the basic concept of 
progressive liberalization embodied in the ATC.  In fact, it would be absurd if a more restrictive 
application of the flexibility provisions had been foreseen for the last year of ATC implementation, 
compared to the preceding years.  In addition, wh at would justify such an approach in economic 
terms, since all the restrictions will have to be e liminated on 1 January 2005?"  As noted by the TMB 
in paragraph 643 of its report, India hoped that an  appropriate solution to this matter, addressing the 
concerns about potential reduction in market access opportunities in 2004, would be found and 
adopted by the General Council in the near future. 
2.61 The representative of Hong Kong, China
 stated that developing Members' concern about the 
issue of potential reduction in market access in 2004 b ecause of denial of carry forward had to be seen 
from the broader perspective, of the general overa ll liberalising objectives of the WTO, the ATC in 
particular, as well as the process of ATC implementation.  As had been made abundantly clear from the discussions on the integration process, the back-l oading of quota phase-out and the retention of the 
bulk of quota restrictions until the very end of th e 10-year transition period under the ATC had not 
been helpful in terms of spreading the adjustment process.  Further reducing market access in the last 
year of ATC by taking away the legitimately expected quota which had all along been available G/C/M/76 
Page 20  
 
  through the carry forward arrangements w ould only further compound the problem.  The 
representatives of Egypt, Indonesia and India had corr ectly referred Members to the relevant parts of 
the TMB report, which, given their importance to the discussions, he repeated.  His delegation also shared the remark made by the TMB which had "express [ed] its hope that appropriate solutions to this 
matter, addressing the concern about potential re duction in market access opportunities in 2004, will 
be found and adopted by the General Council in the near future".  His delegation shared this last 
remark by the TMB.  Indeed, as the WTO body r esponsible for overseeing trade in goods, the CTG 
could discuss this matter and make an expediti ous recommendation to the General Council for its 
adoption. 
2.62 The representative of Pakistan
 said that in view of the comprehensive statement made on 
behalf of the ITCB Members by the representative of  Egypt, and also those made by representatives 
from Indonesia, Thailand, India and Hong Kong, Ch ina, he had the luxury of making a shorter 
intervention.  He wanted to bring to the notice of  Members that the membership, by and large, had 
been aware and sensitive to issues that could have  been foreseen at a time when the ATC was being 
signed.  But still, under Article 1.5 of the ATC, an effort had been made to take into account certain 
instances which would arise at the end of the implementation phase.  Article 1.5 of the ATC provided 
that in order to facilitate the integration of th e textiles and clothing sector into GATT 1994, Members 
should allow for continuous aut onomous industrial adjustments and increase competition in their 
markets.  The buzzwords here were "continuous  increased market access".  He thought that the 
statement made by Egypt on behalf of the ITCB also highlighted certain other areas where this 
concept was also further alluded to by giving the example of the so-called one-way street concept, 
according to which liberalisation achieved could not be  reversed or reduced and also by alluding to 
successive declarations, especially the Doha Declara tion, which had reaffirmed that enhanced market 
access had a very important role to play.  He also pointed at the kind of problems the exporting countries were facing due to the non-availability of carry forward.  This could also be seen from the 
list of affected countries, which had been menti oned by the Egyptian representative.  He would not 
read out paragraphs 260 and 261 of the TMB compre hensive report again but would simply state that 
it would be unfair if a more restrictive application of the provisions of the ATC would be made in the 
last year of its implementation.  The keywords here were magnanimity and flexibility.  Maybe the 
wrongs or the misgivings of the non-progressive na ture of quota phase-out could be redeemed in a 
way by allowing  carry forward in the last year of ATC implementation. 
2.63 The representative of China
 thanked the representative of Egypt for making a statement on 
behalf of ITCB Members.  She also associated he rself with the statement made by the previous 
speakers, all of whom had been adversely affected by the denial of carry forward.  As they had 
pointed out, carry forward was designed to provide flexibility for the conduct of trade, in accordance 
with market conditions in importing Members whic h had imposed quota restrictions for over four 
decades.  It had been used by exporting Members for product categories which were subject to the 
tightest quota restrictions but were  welcomed by importers  and consumers in the importing restraining 
Members.  These product categories also generate d more foreign exchange earnings for exporting 
Members.  Unfortunately, the restraining  importi ng Members had refused to allow the use of carry 
forward in 2004 on the grounds that all quotas had to be eliminated at the end of 2004.  The result of the non-availability of carry forward, from a business point of view, was a virtual reduction of market 
access for exporting Members in importing countries in the last year of ATC implementation.  From a 
systemic standpoint, the denial of this flexibility was contrary to the overriding purpose and direction 
of both the ATC and the WTO, which was to increa se market access opportunities with liberalisation, 
not to reduce it.  In the words of the TMB, which ha d carried out a careful review of this matter, "the 
denial of flexibility would run counter to the basic concept of progressive liberalisation embodied in the ATC.  In fact, it would be absurd if a more re strictive application of the flexibility provisions had 
been foreseen for the last year of ATC implementati on compared to the preceding years.  In addition, 
what would justify such an approach in economic te rms, since all the restrictions will have to be 
eliminated on 1 January 2005?"  G/C/M/76 
 Page 21 
 
 
  2.64 The representative of China further argued th at while it produced adverse effects on exporting 
Members, denying the use of carry forward in th e final year of the ATC implementation was by no 
means conducive to the adjustment process of the domestic industry in the restraining markets.  
Because the restraining Members had back-loaded th e bulk of their quota restrictions to be removed 
only at the end of the 10-year tr ansitional period rather than prog ressively, any reduction in quota 
access in the last year of the transitional period woul d add to the adjustment shock in this sector, for 
example, by exerting further downward pressure on prices in the first year following ATC expiry.  She was, therefore, of the view that it was to the benefit of both importing and exporting Members, as well as of the WTO system, that importing restraini ng Members take action to avoid any reduction in 
quota access for exporting Members in 2004 due to lack of carry forward.  The use of other flexibility 
provisions, such as carry over and swing, as argued by the importing restraining Members, did not 
fully solve the problem, because:  on the one ha nd, for a number of exporting Members the large 
majority of quotas were fully utilised since thes e were products most welcomed by importers and 
consumers;  and on the other hand, there were also  ceilings on the use of carryover and swing.  She 
also believed, as the TMB did, that appropriate solu tions to this matter could be sought by relying on 
a number of different mechanisms or combinati on thereof if there was goodwill on the side of the 
import restraining Members. 
2.65 The representative of the United States
 said that although the previous speakers had correctly 
noted that the ATC was silent on the question of whether carry forward should or should not be 
provided in the last year of the ATC, it was also  a fact that the administrative arrangements the 
United States had submitted to the TMB, as provided for in the ATC, routinely contained an explicit 
provision according to which carry forward would not be provided in the last Agreement year.  This 
fact had been known for years to potentially affect ed Members.  The United States had suggested, in 
the past, that there were ways to deal with this so  that it would not become a crisis in the last two 
months of the ATC.  That, through the use of flexibility provisions such as carry over and swing and through the accelerated growth procedures of the ATC, quotas, given enough time, could grow.  This 
was something that could be handled in an orderl y manner.  The crux of the matter was that carry 
forward was a loan, and that loans had to be paid b ack.  It was just simply a fact that this was one 
element where the United States was not going to be  in a position to go beyond the provisions of the 
ATC and provide an additional element of liberali sation that was not contemplated by the ATC. 
2.66 The representative of the European Communities
 stated that the matter had already been dealt 
with - inconclusively - by the CTG and that he had little hope that the examination at the current 
meeting would lead to any other result.  In his view, it was not, and never had been, foreseen by the 
provisions of the ATC.  This matter was very im portant for the European Communities because of the 
numbers involved.  According to data, in the event where quotas would be utilized in full, the 
availability of carry forward would, for the EC al one, amount to 1.6 million Euros, quite an important 
amount.  The European Communities would stick to the interpretation that what was not foreseen by 
the Agreement was not allowed.  Also, that there would be no corresponding 2005 quota to borrow 
from.  On the contrary, exporting countries had th e prospect of full liberalisation as from 1 January 
and, all-in-all, this was a very good result.  He himself had not been presen t when the ATC had been 
negotiated in Marrakech but he wondered whet her any carry over from 1994 to 1995 had been 
foreseen at that moment.  He believed that this had not been the case.  Therefore, the European 
Communities position remained unchanged on the issue of  carry forward.  He also noted that the 
TMB report eloquently put forward the two positions on this issue.  It was a question of what position 
you would take, because both positions could be argued persuasively. 
2.67 The representative of Indonesia  reacted to the statements ma de by the representatives of the 
United States and the European Communities by stating that, unfortunately, the response to his concerns was still very far from expectations.  He had clear instructions to defend Indonesia through 
the ATC.  He, together with other colleagues fro m ITCB members, had raised  a great concern about 
the importance of carry forward to be provided for the next two months, namely November and G/C/M/76 
Page 22  
 
  December.  He did not feel appropria te to reiterate what he had alr eady explained, nor was he going to 
discuss the legal aspects of the questio n.  He wanted to talk about th e losers and the winners.  What he 
was trying to achieve was that the ATC would not let developing countries be the losers.  However, 
they would definitely be the losers if the ATC was not aimed at creating prosperity for poor people.  
Developed countries, the US and European Communiti es, would never be the losers if they provided 
countries like Indonesia with the opportunity to use ca rry forward, as the Agreement was silent on it.  
He acknowledged the credibility of the TMB as the Body to supervise the implementation of the 
ATC.  Accordingly, he wanted to underline the TMB suggestion, who "express its hope that 
appropriate solution to this matter, addressing the concern about potential reduction in market access 
opportunities in 2004, will be found and adopted by the General Council in the near future."  He 
emphasised that what he was seeking was how th e ATC could create a balanced outcome for all 
Members.  He requested the restraining Members to reconsider this issue for the benefit of all.  
Finally, he pledged his delegation' s full cooperation with the Chairman in order to seek a solution on 
this matter and requested that he convene  informal consultations to discuss it. 
2.68 The representative of India
 stated that he had taken careful note of the Indonesian proposal 
requesting the Chairman to hold informal consulta tions on this matter.  India also invited other 
Members to reconsider their position and see whet her one could make progress on this particular 
issue.  India, therefore, supported the Indonesian pr oposal and would be willing to participate in any 
consultation the Chairman might organise in the future on this matter. 
2.69 The representative of China  fully supported the proposal made by Indonesia, as this issue had 
both systemic and commercial implications.  She hoped that the Council would give positive 
consideration to the proposal. 
2.70 The representatives of Brazil , Hong Kong, China , Pakistan  and Thailand  also supported the 
proposal, expressing a desire to be part of such consultations. 
2.71 The representative of Egypt , as Acting Chairman of the ITCB, called upon the restraining 
countries to look at this matter in a slightly l ess legalistic way and concentrate on a more economic 
way.  What some were asking for was not something that would disturb the international marketing in 
textiles and clothing for the next few months.  In  the meantime, it would afford an opportunity for 
some less fortunate Members to be  able, at least, to maintain their export markets as they had been 
doing over previous years. As a representative of Egypt he supported the idea that had been presented 
by Indonesia and stood ready to participate in what ever format that the Chairman would convene on 
the matter. 
2.72 The representative of Macao, China  fully endorsed the original statement made by the 
representative of Egypt on behalf of the ITCB, as well as the statements made by the other members of the ITCB that had spoken on this subject, and also supported the Indonesian proposal for organizing informal consultations on this matter, to which Macao, China was ready to participate. 
2.73 The representative of the European Communities
 carefully noted the interventions which had 
just been made by a number of exporting countries on this issue, calling for informal consultations.  
He stated there was no need to recall that this exer cise had been done before and, in fact, the General 
Council had not been in a position to take a decision on this issue.  Of course, he could not object to 
requests being put forward by a number of Members of the CTG, but he merely wished to point out that this exercise did not, in his view, seem to be very  promising.  It had been tried before, to no avail, 
and he had not heard anything that was of a nature  to change the prospective outcome of informal 
consultations.  However, the EC did not wa nt to oppose endeavours in this exercise. 
2.74 The Chairman
, in light of the urgency of the request , and the little time left on the calendar of 
meetings for the current year and the open-ended fo rmat of the informal meeting requested, suggested  G/C/M/76 
 Page 23 
 
 
  that, in consultations with the Secretariat, he w ould find a possible date, time and place to convene an 
informal meeting. 
2.75 It was so agreed . 
3. New Restrictions 
2.76 The representative of Egypt , speaking on behalf of members of the ITCB, made reference to 
paragraphs 7 to 28 of document G/C/W/495, where th e views of ITCB members had been elaborated.  
He also recalled that Article 2.4 of the ATC provide s that:  “No new restrictions in terms of products 
or Members shall be introduced except under the provisions [of the ATC] or relevant GATT 1994 
provisions.”  Regrettably, however, there had be en instances of not only the introduction of new 
restrictions in violation of the ATC (or, for that matter, other GATT 1994 provisions) but also of their 
maintenance even after a dispute settlement Panel and the Appellate Body, or, in some cases, the 
TMB, had ruled them to be contrary to the re levant restraining Memb ers’ obligations.  The 
submission highlighted three such instances. 
2.77 The first one related to the new restrictions introduced by the EC following its enlargement.  
With the enlargement of the EU following the accession of 10 new member States from May 2004, 
the EC had extended its quotas on textiles and clot hing to include these newly acceded States, and 
also, and this was the concern, determined th e levels of these quotas unilaterally.  The 10 new 
acceding States, WTO Members in their own right, ha d not applied any quota restrictions before their 
accession to the EU.  Indeed, despite the fact that prior to this accession they had had Free Trade Area 
agreements with the EU, none of them had been oblig ed, or had felt the need to do so.  The imposition 
of these quotas by the EC was incompatible with Article 2.4 of the ATC.  It might be noted in this 
connection that a dispute panel and the Appellate Body had ruled that  similar restrictions imposed by 
Turkey following its customs union with the EC had violated Article 2.4 of the ATC.  Both had 
further ruled that these restrictions were not justif ied by reference to GATT Article XXIV either.  The 
following finding by the Panel was especially noteworthy: 
2.78 "The prohibition on 'new restrictions' must  be interpreted taking into account the preceding 
sentence [in Article 2.4 of the ATC]:  'The restric tions notified under paragra ph 1 shall be deemed to 
constitute the totality of such restrictions  applied by the respective Members on the day before the 
entry into force of the WTO Agreement'.  The or dinary meaning of the words indicates that WTO 
Members intended that as of 1 January 1995, the incidence of restrictions under the ATC could only be reduced.  We are of the view that any legal fic tion whereby an existing restriction could simply be 
increased and not constitute a 'new restriction', woul d defeat the clear purpose of the ATC which is to 
reduce the scope of such restrictions, starting from 1 January 1995....  Thus, we consider that, setting 
aside the possibility of exceptions and justifications mentioned in Article 2.4 of the ATC, any increase 
of an ATC compatible quantitative restriction no tified under Article 2.1 of the ATC, constitutes a 
'new' restriction.  
2.79 On 28 February 1995 (therefore within th e 60-day period of Article 2.1 of the ATC), the 
European Communities notified its previous restricti ons maintained under the MFA.  This notification 
referred to restrictions applicable only to EC territo ry.  After the period of 60 days (under Article 2 of 
the ATC) the European Communities is prohibited from notifying any new restrictions or changes to existing and notified restrictions, except if adopt ed in compliance with the ATC or any other 
provisions of GATT 1994.  Apart from these special  cases the European Communities is not entitled 
to notify any increase of its MFA-derived restrictions …" 
2.80 The representative of Egypt further noted that  in reply to a question from the TMB, the EC 
had taken the position that "the Communities does not  consider its extension of the geographical 
application of existing restrictions to constitute ne w restrictions in the sense of Article 2:4 of the G/C/M/76 
Page 24  
 
  ATC".  After a thorough examination of this EC  contention, the TMB had concluded that the 
measures taken by the EC constituted "new restri ctions" and that the "action could not find 
justification under the provisions of the ATC". It  was unnecessary to produce the details of TMB's 
analysis and arguments in this rega rd, as these were spelled out in de tail in its comprehensive report to 
the CTG in paragraphs 325 through 334.  Regrettably,  the EC had chosen not to give any credence to 
the TMB findings, leaving in place the restrictions in  question.  It was unfortunate that in the CTG 
meeting held on 1 October, the EC had, first, con tinued to argue that “the Communities considers the 
relevant GATT 1994 provisions – as mentioned in Artic le 2.4 of the ATC – provide legal justification 
for the measures taken”.  It was curious, however, that it had not specified the purported GATT provision.  Obviously the EC recognised that a de fence with reference to Article XXIV of the GATT 
had already been rejected by the Appellate Body in relation to a similar case of restriction by Turkey.  
Second, the EC stated that “Two supplementary poi nts on the enlargement question are worth making.  
Firstly, the whole question of restrictions applying to geographical parts of the EC where they had not 
been applied before is, by definition, of a short term nature. There remains only three months before 
all quota restrictions will disappear any way.  Seco ndly, in the hand-over period of 1 May this year, 
the EC made every effort to lean in favour of the exporting countries with goods in transition”.  For 
the representative of Egypt, both these contentions c ould not stand scrutiny.  The argument that these 
new restrictions had been introduced only for a short period did not, and could not, make them consistent with EC’s legal obligatio ns under the ATC;  nor did the contention that some special effort 
had been made to accord some uns pecified unilateral consideration fo r goods in transit carry the same 
meaning.  The fact was that the TMB had consider ed all these arguments that the EC has sought to 
repeat before the CTG.  The TMB had ruled th ese restrictions unjustified.  Moreover, similar 
restrictions by Turkey had long since been declared  illegal by a Panel and the Appellate Body both 
under Article 2.4 of the ATC and Article XXIV of the GATT.  He urged that the CTG should take 
note of that. 
2.81 The second such instance related to the conti nuation of quota restrictions by Turkey despite 
Panel and Appellate Body rulings .  Following the establishment of  its customs union with the EU, 
Turkey had imposed quota restrictions on textile a nd clothing imports from countries on which the EC 
also imposed these restrictions a lthough, later, it had withdrawn the restrictions that it had imposed 
vis-à-vis Bulgaria, the Czech Republic, Hungary , Malta, Morocco, Poland, Romania, the Slovak 
Republic, and Tunisia.  On a challenge by India,  a WTO dispute panel had found that the measures 
adopted by Turkey were inconsistent with th e provisions of Articles XI and XIII of GATT and 
Article 2.4 of the ATC .  The Panel had rejected Turkey’s claim that these restrictions were compatible 
with Article XXIV of the GATT.  The Panel had th en concluded that Turk ey’s action nullified or 
impaired the benefits accruing to India.  The Appellate Body had upheld the Panel conclusion and 
ruled that Article XXIV did not allow Turkey to  adopt these GATT-inconsistent measures.  The 
Dispute Settlement Body had adopted  the Appellate Body and Panel reports.  Yet, as the TMB report 
to the CTG noted (paragraphs 408-410 and 421  of G/L/683), Turkey had continued to maintain these 
restrictions on imports from a number of ITCB members, including Argentina, Brazil, China, Egypt, Hong Kong, China, India, Indonesia, Korea. 
2.82 For the representative of Egypt, it was obvious that Turkey's action was inconsistent with its 
obligations.  It also amounted to a disregard of the ATC disciplines as well as a variety of declarations and decisions of Ministers for full and faithful implementation of the provisions of the ATC, 
especially as the Panel and the Appellate Body had ruled these actions to be unjustified.  
Unfortunately, just as with the EC in regard to its  own restrictions following its enlargement, Turkey 
had also argued at the CTG meeting on 1 October that  “The Panel and Appellate Body decisions 
were fully respected by Turkey in  that, at that time, as a resoluti on a mutually agreed solution was 
adopted between India and Turkey”.  For the represe ntative of Egypt, the maintenance by Turkey of 
restrictions on a number of other Members, even af ter these restrictions had been declared illegal by 
the Panel and the Appellate Body, was not sustaina ble.  The contention that a resolution had been 
effected with one Member did not make the restricti ons on others justified.  Nor did Turkey’s silence  G/C/M/76 
 Page 25 
 
 
  with regard to those restrictions, and keeping them in place despite knowing them to be illegal, 
conform to full and faithful implementation of its ob ligations – a commitment repeatedly reaffirmed 
by Ministers.  The representative of Egypt asked the CTG to take note of Turkey’s failure to fulfil its 
obligation. 
2.83 The third such instance was in relation to the changes to pr oduct classification by the United 
States.  It was well known that during the impl ementation of the ATC the US had substantially 
changed its rules of origin relating to the import of textile and clothing products, creating significant 
adverse effects on trade.  In the process of these cha nges, the US had also enlarged the coverage of 
certain cotton made-up products.  Thus, it was now specified that these products were of cotton even 
if they contained as little as 16% of cotton by weight .  Prior to this, of course, these products were 
considered to be of cotton only if they contained cotton as their chief weight.  Indeed, this was the 
disposition under the pre-ATC bilateral agreem ents between the United States and respective 
developing countries which were the basis of rest rictions carried over from the MFA and notified to 
the TMB under Article 2 of the ATC.  Notwithstanding that a dispute panel had ruled in a case brought by India that the complainant, namely India, had not succeeded in establishing that the 
changes had been effected in violation of obligations under the Agreement on Rules of Origin , the 
change in classification of cotton products enlarged  the scope and incidence of restrictions on these 
products under the ATC to the disadvantag e of the exporting Members concerned. 
2.84 Lest it be misconstrued, the point that the representative of Egypt was seeking to highlight in 
connection with the CTG’s major review was specifi cally the one relating to the widening of the 
coverage of some cotton products in the contex t of quota access under the ATC, not the changes to 
rules of origin per se .  It was apparent that the change in the definition and coverage of these products 
had led to more exports being classified and c ounted as those of cotton than had been the case 
previously.  Thus, for example, products which had been exported under US Category 666 (the 
category covering "other man-made fibre furnishing s") now came to be classified and counted under 
Categories 360, 361 and 362 (namely "cotton pillo wcases", "cotton sheets" and "bedspreads" 
respectively), in which a number of exporting Members had high rates of quota utilization.  
Unfortunately, with respect to this issue, the TMB report simply stated as follows:  "[…] while noting 
the concerns expressed in this regard, the TMB obs erves that none of the Members has referred any 
such specific matter to the TMB …" under its dispute resolution functions.  While that might be the case, the real question to highlight for the CTG's co nsideration was the neglect, by the restraining 
countries, of their obligations and the failure to implement their commitments faithfully, leaving the 
developing countries concerned with the burden of expensive recourse.  The change resulted in 
effective diminution of access (or, to put it differe ntly, in enlarging the scope and incidence of 
relevant restrictions), which was again in violatio n of Article 2.4 of the ATC, and causing disruption 
to established trade.  It should be noted  that a Panel had unambiguously ruled that  “any legal fiction 
whereby an existing restriction could simply be in creased and not constitute a 'new restriction', would 
defeat the clear purpose of the ATC which is to reduce the scope of such restrictions”. 
2.85 To conclude, the representative of Egyp t asked the CTG to express its regret over the 
introduction and maintenance of these measures by th e EC, Turkey and the United States, in disregard 
of the disciplines of the ATC. 
2.86 The representative of Hong Kong, China
 recalled that the second sentence of Article 2.4 of 
the ATC provided that "No new restrictions in te rms of products or Members shall be introduced 
except under the provisions of this Agreement or relevant GATT 1994 provisi ons."  This should be 
read together with the first sentence of the same Article:  "The restrictions  notified under paragraph 1 
shall be deemed to constitute the totality of such restrictions applied by the respective Members on the 
day before the entry into force of the WTO Agreem ent."  The implication being that, over the duration 
of the ATC, instances of restrictions should only be reduced.  In the joint submission G/C/W/495, a 
number of developing exporting Members ha d documented three instances under which new G/C/M/76 
Page 26  
 
  restrictions had been introduced by restraining Me mbers in contravention with their obligations under 
the WTO Agreement.  The three cases were:  first,  the introduction of new quota restrictions by the 
EU following its enlargement from May 2004;  second,  continuation of  quota restrictions by Turkey, 
despite clear Panel and Appellate Body rulings to  the contrary;  and, third, changes to quota 
classification by the US.  He wished to comment on each of the three cases. 
2.87 On the first case, concerning the introduction of new quota restrictions by the EU following 
its enlargement, the task before the CTG was clear.  After thorough examination and having afforded 
the concerned Members to put their case before the Body, the TMB had concluded, in paragraph 334 
of its comprehensive report that "the action by th e European Communities could not find justification 
under the provisions of the ATC".  In coming to th is conclusion, the TMB had made reference to the 
Panel ruling in an earlier similar case, that any le gal fiction whereby an existing restriction could 
simply be increased and not constitute a "new restri ction", would defeat the clear purpose of the ATC, 
which is to reduce the scope of such restrictions , starting from 1 January 1995.  The restrictions 
notified by the European Communities on 22 February  1995 should therefore constitute the totality of 
restrictions under the ATC and after that day the EC was prohibited from notifying any new 
restriction or changes to existing and notified rest rictions, except if adopted in compliance with the 
ATC or any other provisions of GATT 1994.  At  the CTG meeting on 1 October, the European 
Communities had continued to argue that the EC considered that the relevant GATT 1994 provisions 
provided legal justification for the measures taken, that the new measure was, by definition, of a 
short-term nature and that the EC had made every e ffort to lean in favour of exporting countries with 
goods in transition.  On the first argument used by  the EC, the Appellate Body in the earlier case had 
already ruled that restrictions maintained by Turkey could not find justification based on GATT 
Article XXIV.  On the second argument used by th e European Communities, he wanted to make two 
points.  First, the fact that the new restrictions  were by definition of a short-term nature would 
precisely argue against putting in place such restrictions for the sake of only an eight-month period, considering the administrative and other burdens that such a restriction would impose on exporting 
developing Members.  As an additional point, the European Communities had also earlier argued that 
when adjusting and increasing the quantities from EU  15 to EU 25, the EC had used a methodology 
which took into account the traditional imports into the new Member States, using a formula consisting of the average of the last three years import into the 10 new Member States adjusted pro 
rata.  However, such an arrangement ignored one of the very basic points of the ATC, which was the 
growth-on-growth provisions.  However, the repres entative of Hong Kong, China wanted to clarify 
that there be no misunderstanding:  whether or not the EC had provided growth rates would not 
change the very fact that such measures could not find justification under the provisions of the ATC. 
2.88 Turning to the second case, concerning the c ontinuation of quota restrictions by Turkey 
despite Panel and Appellate  Body rulings to the contrary, the f act before the CTG was that Turkey 
continued to maintain restrictions on 17 WTO Me mbers even after these restrictions had been 
declared illegal by the Panel and by the Appellate Bo dy.  At the CTG meeting on 1 October and again 
at the present meeting, Turkey had argued that a mutually agreed solution had been adopted between 
the two parties concerned in the dispute.  However,  the point was that a resolution with one Member 
did not make the restrictions on others justified.   He questioned whether the Turkish Delegation had 
suggested that this mutually agreed solution with  another WTO Member would alter the balance of 
rights and obligations with other WTO Members. 
2.89 With respect to the third case, concerning changes to product classification by the US, the key 
point was that the change in classification of cott on products had effectively enlarged the scope and 
instance of restrictions on these products in the cont ext of quota access.  This was particularly the case 
as a number of exporting Members had high rates of quota utilisation under the concerned categories.  
The undisputable fact was that the change has resulted in effective diminution of access and was 
causing disruption to established trade.  G/C/M/76 
 Page 27 
 
 
  2.90 To conclude, the representative of Hong Kong,  China joined the repr esentative of Egypt in 
asking the CTG to express its regret over the introdu ction and maintenance of these restrictions by the 
EC, Turkey and the US in disregard of the disciplines under the ATC. 
2.91 The representative of  the European Communities  stated that he had carefully read the report 
of the TMB, which had been on the forefront for quite some time, on this issue, including the 
conclusion that these new restrictions  could not find a justification un der the ATC.  In his view, that 
should not surprise anybody.  It was obvious to him that the ATC had not been conceived to take account of a very specific situation such as the one concerning the enlargement of the EC.  He did not think either that any of the drafters in 1993/1994,  when the ATC had been conceived and when the 
theme of the day was adoption of the ATC as a major achievement of the Uruguay Round, had the 
issue of EU enlargement on the forefront of the mind .  It was not surprising, therefore, that the ATC 
did not cover this situation.  In fact, it was very clear that such a situation was covered by the ATC 
and was, in his view, far beyond the remit of the AT C, and that it had to be dealt with accordingly. 
2.92 With respect to the arguments put forward by ITCB members on the basis of the Turkey/India 
Panel, the question was whether this Panel, deal ing with the issue of a customs union and the 
introduction of quotas on that occasion, did constitute a precedent, which, by analogy would be valid 
to the rather specific situation of the enlargemen t of the EC from 15 Members to 25 Members.  He 
was of the view that it was not, at first glance, ev ident that this analogy applied, because qualitatively 
the two situations were different.  The accession process and the enlargement process extending the 
EU of 15 to EU 25 was, qualitatively speaking, much deeper than the elements contained in a customs 
union. 
2.93 The representative of the European Commun ities had also heard the arguments that these 
measures were restrictive, that they had been intr oduced and did not exist before.  He observed that 
some tariffs had also been adjusted, sometimes dow nwards.  But there was one key element: if the EC 
had not chosen to proceed as it did, another optio n would have been to prohibit or to stop free 
circulation between the 10 new Member States and the former  EU of 15, so as to prevent exporting 
countries from benefiting from free circulation in an e xpanded market of EU 25.  He considered this 
to be a major advantage, of such a nature that, at  least in the medium- and long-term, far outweighed 
what might be felt as being a short-term disadvantage.   He, therefore, invited Members to take a long-
term view and also to have regard to the political and historical context of what had happened.  He 
was aware that, on previous occasions, namely on the occasion of enlargement of the EC with 
Sweden, Finland and Austria, short-term measures  aiming at the prevention of free circulation had 
been taken but, in the present case, the European  Communities had not thought that, politically and 
economically, with 10 new Members, this was an op tion.  He was of the view that Members should 
consider that, if that option had been followed, it wo uld not necessarily have been to their advantage.  
He also appealed for common sense, as these measur es were for a short term and would be terminated 
on 1 January 2005, together with all other me asures concerning restrictions under the ATC. 
2.94 Remarks had also been made concerning the method.  He stated that the European 
Communities had taken the method of the average import year 2001-2002 into the 10 new Member 
States.  These were the figures which had been av ailable and, also, the European Communities had 
followed the procedure which had been followed be fore.  Everybody was aware of the notification 
which had been made concerning the EU enlarg ement and would probably stick to his or her 
interpretation of the findings of the TMB.  Th e European Communities, for its part, had put its 
arguments forward before, including the argument th at these restrictions were not new but constituted 
a geographical extension of already existing rest rictions, made for the overriding political and 
economic purposes to which he had just referred. 
2.95 The representative of India
 referred to the submission made by ITCB members (G/C/W/495) 
which gave some examples of m easures which either constituted new restrictions or had widened the G/C/M/76 
Page 28  
 
  scope of existing restrictions.  The representative of  Egypt had already elaborated in detail on these 
three examples.  He wished to focus on two, namely  the introduction of new restrictions by the EU 
following its enlargement in May 2004 and enlargemen t in the scope and incidence of restrictions as a 
result of changes in rules or origin by the US.  As regards the first example, he observed that, with the 
EU enlargement, the EC had extended its quotas on textiles and clothing to include these 10 newly 
acceded states, and also determined these quota limits  unilaterally.  The 10 newly acceded states did 
not apply any quota restrictions before their accessi on to the EU.  As noted by the representative of 
Egypt, the imposition of these new restrictions by the EU was incompatible with Article 2.4 of the ATC according to which, “no new restrictions in terms of products or members shall be introduced 
except under the provision of the ATC or relevant GATT 1994 provisions.”.  The matter had been 
addressed in the TMB’s comprehensive report at length.  After the thorough examination of the EU 
argument, the TMB had concluded that the measures taken by the EC constituted new restrictions and 
that the action could not find justification under th e provisions of the ATC.  Details of the TMB’s 
analysis could be found in its comprehensive repor t to the CTG in paragraph 325-334.  The report of 
panel/Appellate Body in the Turkey-Textiles case was also  extremely relevant in this context.  The 
observations made by the EC at the CTG meeti ng on 1 October 2004 that these restrictions would 
remain only for 3 months and that the European Communities had made every effort to lean in favour of the exporting countries with goods  in transition, could not change the fact that these measures were 
not justifiable under the ATC. 
2.96 The second example the representative of India wi shed to focus on refe rred to the substantial 
changes in the US rules of origin relating to textile and clothing prod ucts, which had created 
significant adverse effects on trade.  Among others, the coverage of certain cotton made-up products 
had been changed significantly.  Thus, it was now sp ecified that these products were of cotton even if 
they contained as little as 16 per cent of cotton by weight.  Prior to this, such products had been 
considered to be that of cotton only if they cont ained cotton as their chief weight.  Indeed this had 
been the disposition under the pre-ATC bilateral agreements between the United States and the 
respective developing countries, which had been th e basis of restrictions carried over from the MFA 
and notified to the TMB under Article 2 of the ATC.   Notwithstanding that a dispute panel had ruled 
in a case brought by India that the complainant did not succeed in establishing that the changes had 
been effected in violation of obligations under the Agreement on Rules of Origin, the change in 
classification of cotton products had enlarged the sc ope and incidence of restrictions on these products 
under the ATC to the disadvantage of the exporting Members concerned.  He clarified that the issue 
was not rules of origin per se  but the widening of the covera ge of some cotton products under 
restrictions.  He urged the Council to express its regret over the introduction and maintenance of new 
restrictions by the EU.  The review should, in his view, also bring out the fact that the scope and 
incidence of restrictions had increased as a result of changes in the rules of origin by the US. 
2.97 The representative of China
 stated that negotiators in the Uruguay Round might not have 
envisaged the enlargement of th e European Union to 25 members per se , but they might have 
envisaged that one day certain restraining Members might enlarge the incidence of their restrictions 
one way or another.  Therefore, they had include d the language of Article 2.4 of the ATC, which 
states that the restrictions notified by Members to  the TMB shall be deemed to constitute the totality 
of such restrictions applied by the respective Memb ers on the day before the entry into force of the 
WTO Agreement.  In other words, the scope of su ch restrictions should be reduced starting from 
1 January 1995.  That the incidence of restric tions under the ATC could only be reduced had been 
emphasized by the Panel and the Appellate Body in a case where one Member’s restrictions were introduced after the entry into force of the ATC.  This provision had been intended to ensure a smooth 
liberalisation process in the textiles and clothing sector .  Regrettably, some of the import restraining 
Members had failed to fulfil their commitments unde r the ATC.  The ITCB paper had described three 
cases of such nature in detail, one of which (i.e. ne w restrictions introduced by the EU following its 
enlargement) has been analysed in great depth by the TMB in paragraphs 325 through 334 in its report.  G/C/M/76 
 Page 29 
 
 
  2.98 With respect to Turkey’s restrictions, th e first such case, the representative of China 
understood that the ITCB paper was not questioning  whether Turkey had settled the case with the 
concerned Member or not.  Rather it intended to hi ghlight the fact that Turkey had continued to 
maintain its restrictions, inconsistent with its WT O obligations, despite of the ruling of the panel and 
the Appellate Body that Turkey’s restrictions were  not justified either under Article 2 of the ATC or 
Article XXIV of the GATT which governs the formation of customs union. 
2.99 In the second case, although only eight months rema ined at that time before the final expiry of 
the ATC, the EC had, as a consequence of its enla rgement, extended its quota restrictions to the 
10 new Member States from May 2004 and had set the restriction levels unilaterally.  Exporting 
Members, including China, thus faced new restrictions in the 10 new Member States of the EU where 
they were not subject to quotas prior to their accessi on to the EC.  The TMB, after reviewing carefully 
and thoroughly the case, had found that the measure s taken by the EC constituted “new restrictions” 
and that “the action could not find justification under the provisions of the ATC”.  Moreover, similar 
restrictions by Turkey had been declared illega l by a panel and the Appellate Body both under 
Article 2.4 of the ATC and Article XXIV of the GA TT.  Therefore the EC has not abided by its 
commitments made approximately 10 years previously.  Regrettably, the EC had chosen not to give 
any credence to the TMB findings but had proceeded with  its restrictive measures.   It had hence upset 
the balance of rights and obligations between EC  and exporting Members under the ATC and created 
additional disruptive and distorting factors in the textiles and clothing trade. 
2.100 In the third case, i.e. US changes to its products classificati on, the representative of China 
highlighted that as a result of these changes, produc ts containing as little as 16% of cotton by weight 
were classified as cotton products , whereas before such reclassification only products containing 
cotton as their chief weight were considered to be cotton products.  Such changes had created 
significant adverse effects on trade since the resp ective restrictions carried over from the MFA and 
notified to the TMB under Article 2 of the ATC by the United States against exporting Members were based on the original classification.  One had to be clear that China was not asking the CTG to review 
the US changes to rules of origin per se .  Instead the CTG was being ask ed to look at the issue of 
widening the coverage of some cotton products in the context of quota access under the ATC, as such 
changes effectively enlarged the sco pe and incidence of relevant restrictions, leading to effective 
diminution of market access for exporting Members who were subject to quota restrictions and causing serious disruption to established trade.  To  conclude, the representative of China associated 
herself with previous speakers, with the exception of  the EC, that the CTG, while taking note of these 
cases, should express its regret over the introduction and maintenance of thes e measures by the three 
Members, in disregard of the disciplines of the ATC. 
2.101 The representative of Hong Kong, China
, reacted to the intervention made by the 
representative of the European Commu nities.  The latter had explained that when the ATC had been 
negotiated the very specific scenario of EU enlarg ement had not been envisaged and that the issue 
was far beyond the remit of the ATC and had to be  dealt with elsewhere.  The representative of Hong 
Kong, China wondered whether he should take th is statement as an indirect criticism of the 
Commission’s negotiator who had negotiated the ATC w ith a lack of foresight, and a lack of “a little 
common sense”.  But, on his part he had a very clear recollection that, in drafting the ATC, particularly this Article 2.4 on no new restrictions , Hong Kong, China had very clear ideas about the 
possibilities of EU enlargement.  His second reactio n was that even after the present discussion, he 
did not think that the EC had come up with any legal justification of the measures that it had 
introduced following its enlargement.  The Eur opean Communities’ representative had merely said 
that the scenario had not been fo reseen when the ATC had been conc luded but he had not pointed to 
any specific legal justification under either the ATC or GATT Articles.  The representative of Hong 
Kong, China would appreciate it if the Commission would explain this specific point.  The EC had 
also made the point that the present case was qua litatively different from the earlier case involving is 
customs union with Turkey.  Again, as far as he could understand, he thought that the relevant GATT G/C/M/76 
Page 30  
 
  Article, that is Article XXIV, did not draw any distinction between enlargement or customs union so, 
insofar as that discipline was concerned, the relevant  Article was the same.  Finally, on the EC's point 
that the imposition of quota was necessary to ensure the free flow of goods after the enlargement, he 
recalled that in the Panel ruling concerning the Tu rkey/India case, the Panel had clearly ruled that 
there could be less trade restrictive means of achie ving the same effect.  He would not dwell on this, 
but the point that he was trying to make was th at the EC argument simply could not stand up to 
scrutiny in the light of the earlier Panel findings. 
2.102 The representative of the United States
 responded that, with respect  to the issue involving the 
change in US rules of origin, the facts were clear.  The US had changed its rules of origin, India had 
chosen not to pursue a complaint against this eith er in the TMB or under the DSU involving the ATC 
but, in fact, had challenged the US changes under the Agreement on Rules of Origin.  In that dispute 
India had lost and now, neither in the documentatio n in front of the Council, i.e. the communication 
from the ITCB nor in anything else he had heard he re was anyone saying that the United States had 
violated its obligations under the ATC.  So for hi m that seemed to be the end of the matter.  He 
understood that Members didn’t like what had happene d, but, in fact, the United States was within its 
rights and he did not see how the Council could take this matter any further. 
2.103 The representative of Korea  stated that he understood the representative of the European 
Communities to have said that the EU enlargement ha d not been in the minds of the drafters of the 
ATC 10 years ago, and that this enlargement wa s qualitatively different from a customs union and, 
therefore, justified in itself the action taken by the European Communities.  He failed to understand 
that point.  The ATC was clearly dealing with textile  trade so the basic con cept of the ATC that the 
evolution could  only go in one direction, i.e. reduction, st ood.  In any case, enlargement or not, the 
ATC should be respected.  So he asked the EC representative whether he considered that the ATC 
could be substituted by some kind of new developm ent, or not.  This question had very important 
implications. 
2.104 The representative of Thailand  joined others in supporting the statement made by the 
representative of Egypt on behalf of the ITCB member s.  She was surprised by the statement made by 
the EC representative that the quota restriction of 10 new Members of the EU were just short-term 
measures and that exporting countries should be pleased with the free circulation of textiles and clothing in the larger EU market after 1 January 2005.  She thought that Members could not violate 
WTO rules and give such unjustified reasoning.  It was also beyond her understanding to think that 
the ATC drafters would have thought like that at the time of the negotiation.  Having said this, she 
sought the view of the EC representative on the enla rgement process since he had said that maybe the 
drafters of the ATC had not envisaged the enlargem ent process and, therefore, the issue might fall 
under other WTO rules.  In this regard, she sought the view of the EC representative about negotiation 
under Article XXVIII regarding compensatory ne gotiation on the impairment of the exporting 
countries for additional quota restriction on the 10 new EU Members. 
2.105 The representative of the European Communities
 explained that if the European Communities 
had not proceeded the way it had, it would obviously  have had to restrict free circulation among EU 
Member States after enlargement, otherwise the exis ting restrictions maintained by the EU 15 would 
have been ineffective in restricting EC imports .  There would obviously have been a hole in the 
system.  So the options the European Communities ha d were to extend the restrictions to take account 
of imports into the EU of 25, or to prohibit free circulation.  The option taken, after careful 
consideration, had been found to be the best wa y to proceed and the European Communities thought 
that it did not have any other viable option for th e short-term period of eight months.  As to the 
question of compensation, he understood that discussions were underway for a request for 
compensation on tariff changes, but he did not think the European Communities was under any obligation to grant compensation for the quota in questi on.  He repeated that the political dimension of 
the enlargement of the European Communities should not be overlooked.  He could hardly imagine  G/C/M/76 
 Page 31 
 
 
  that such complications or implications had been on the agenda of the drafters of the ATC, otherwise 
they would probably have put some provisions into  the ATC to take account of such a situation. 
2.106 The representative of Pakistan  reacted to the statements made by the representatives of the 
European Communities and the United States.  It had been explained at the meeting that the ATC had 
not been conceived to take into account the enlargem ent of the EU.  He was, nevertheless, surprised, 
because the basic element of the ATC was progressivity and the progressive elimination of quotas, 
and Article 2.4 spoke about the fact that there shoul d be no new restrictions except under of the ATC.  
He was, therefore, surprised when the implemen tation of the ATC was done in a regressive manner 
and not in a progressive manner.  On the question of the changes in rules of origin effected by the 
United States, he wanted to clarify that it was not a rules of origin matter per se , but rather a matter of 
widening the coverage of some cotton product cate gories as a result of the changes made by the 
United States.  He reiterated that he was seeki ng the CTG to express its regret over the introduction 
and maintenance of these measures by the EC, the United States and Turkey, in disregard of the 
disciplines of the ATC, in view of the fact that th ese measures had dented the progressivity element in 
the ATC Agreement. 
2.107 The Chairman suggested that all the statem ents would be reflected in the records of the 
dedicated session.   It was so agreed . 
4. Administrative Arrangements for Quot a Administration and Implementation 
2.108 The representative of Egypt , also on behalf of  ITCB members, co-sponsors of document 
G/C/W/495, referred to paragraphs 137 and 366 through 370 of the TMB’s comprehensive report.  He 
explained that, together with the quota restricti ons, administrative arrangements had existed for the 
purposes of implementing and administering these rest rictions.  It was therefore logical and essential 
that with the termination of quota restrictions a nd the ATC these administrative arrangements also 
expire.  Earlier in the year, the three major rest raining Members had notifie d their final integration 
programmes to the TMB, indicating that with the integration of the remaining ATC products they 
would also eliminate all remaining quota restrictions .  However, these notifications remained silent 
with respect to the administrative arrangements a nd procedures which had been in place only for the 
implementation and administration of quota restrictions .  He did not wish to go into the details of 
what the TMB had finally resolved.  However, it was important to bear in mind that these 
arrangements were not applicable to all WTO Memb ers, but only to those whose exports had been 
under quota restrictions which, at least in the view  of ITCB, made these arrangements inconsistent 
with a fundamental GATT obligation of MFN treatment for all, as required by Article I of the GATT.  
They were also inconsistent w ith the restraining countries' oblig ations under GATT Article XI, which 
provides that no restrictions “whether made eff ective through quotas, import or export licences shall 
be instituted or maintained by any Member on the importation of any product …”  Also, the TMB had 
observed that with the expiry of the ATC on 1 Janua ry 2005, all the provisions of the Agreement will 
expire and the measures notified pursuant to those pr ovisions will have to cease to be applied, unless 
justified under other applicable provisions of the WTO Agreement, including GATT 1994.  It was 
difficult to see what, if any, in these administra tive arrangements could be justified under other 
applicable provisions of the WTO.  The administ rative arrangements, by their very nature, were 
discriminatory, against the fundamental GATT princi ple of MFN treatment and added to the cost of 
doing business for those WTO Members who were under restraint.  In order to ensure the faithful 
implementation of the ATC and full integration of textiles and clothing sector into GATT 1994, ITCB 
members proposed that the CTG reaffirm the TMB's observation that "the process of integration in the 
sense of the ATC will only become complete if the administrative requirements that were related to 
the administration of quota restrictions are also abolished". 
2.109 The representative of India  observed that Article 2.17 of the ATC provides that 
"Administrative arrangements, as deemed necessa ry in relation to the implementation of any G/C/M/76 
Page 32  
 
  provision of this Article, shall be a matter for ag reement between the Members concerned.  Any such 
arrangements shall be notified to the TMB."  Evid ently, the administrative arrangements had a clear 
object and purpose which was to administer and to implement restrictions – and he emphasised, to administer and implement restrictions – maintained under Article 2 of the ATC.  Once these restrictions were eliminated, as per Article 9 of the ATC, these administrative arrangements would 
have clearly lost their object and purpose.  The is sue had been dealt very comprehensively in the 
TMB's comprehensive report to the CTG (paragra phs 137 and 366 to 370).  He drew the Council's 
attention to TMB’s submission in paragraph 137 of its comprehensive report that "the TMB believes 
that it has made a useful contribution by pointing out that with the elimination of all quantitative restrictions maintained under the ATC, all relate d administrative procedures, including those specified 
in the administrative arrangements notified pursuant to  Article 2.17, shall also stand terminated.  In 
fact, the process of integration in the sense of th e ATC will only become complete if administrative 
requirements that were related to the administra tion of the restrictions are also abolished." 
2.110 He pointed out that, as noted by the repr esentative of Egypt, these arrangements had been 
applicable only to those Members whose exports ha d been under restrictions.  They would thus be 
inconsistent with the fundame ntal GATT obligation of MFN  treatment.  They would also be 
inconsistent with the restraining Members’ oblig ation under GATT Article XI following the full 
integration of textiles and clothing sector into norma l GATT disciplines.  Besides, they added to the 
cost of export transactions and would be c ontrary to the purpose of trade facilitation. 
2.111 The representative of India welcomed the info rmation provided by Canada to the TMB that 
the administrative arrangements undertaken pursuant to  Article 2.17 for administering the provision of 
the ATC would expire along with the ATC on 31 Dece mber 2004.  In terms of conclusion, he noted 
that, as per Article 9 of the ATC, the Agreement and all restrictions maintained thereunder shall stand 
terminated on 1 January 2005.  On that date, th e sector would stand fully integrated and would 
thereafter be subject to normal GATT 1994 discip lines.  In order to ensure full and faithful 
implementation of the ATC, he urged that the Council reaffirm the TMB's observation that "the 
process of integration in the sense of the ATC will only become complete if administrative 
requirements that were related to the administra tion of the restrictions are also abolished." 
2.112 The representative of Hong Kong, China
 stated that the discussion on this item was of 
particular importance to developing exporting Memb ers and also to the real world of import/export 
commodities, as any mishandling could give rise to uncertainty in the trading environment post-ATC 
and add to the cost of export transactions.  He echoed the TMB's observations that "[i]n fact, the 
process of integration in the sense of the ATC will only become complete if administrative 
requirements that were related to the administration of the restrictions are also abolished."  When 
introducing the submission made jointly by a number of developing exporting Members, the 
representative of Egypt had made the valid point  that all these administrative arrangements were only 
applicable to countries under quota restraint.  Once quotas were eliminated, it would be very difficult 
to see how the continuation of such measures on a selective set of WTO Members would meet the 
very basic GATT/WTO principle of MFN.  This was the most important point that this Council should bear in mind when discussing this item.  He noted with appreciation the confirmation by 
Canada to the TMB that administrative arrangements undertaken pursuant to Article 2.17, which were 
used to administer the provisions of the ATC, would expire along with the ATC on 31 December 2004.  Unfortunately, the other two ma jor restraining Members had either chosen to 
take a different stance or remained silent  altogether.  In conclusion, he echoed the call made by the 
representatives of Egypt and India that the CTG should reaffirm the TMB’s observation that the process of integration in the sense of the ATC w ould only become complete if the administrative 
requirements that were related to the administrati on of quota restrictions were also abolished. 
2.113 The representative of Pakistan
 said that, in view of the statem ents made by Egypt on behalf of 
the ITCB, and by India and Hong Kong, China, he would be brief.  He reiterated that it had been  G/C/M/76 
 Page 33 
 
 
  amply emphasised in the TMB report that, with th e elimination of all quantitative restrictions 
maintained under the ATC, all related administra tive procedures including those specified in the 
administrative arrangement notified pursuant to Article 2.17 shall stand terminated.  It was clear that the administrative arrangements did not conform to the MFN obligation and with the expiry of the 
ATC their demise would also be seen.  He suppor ted the statement made by the representative of 
Egypt and reaffirmed the support of his delega tion to the conclusions contained therein. 
2.114 The representative of China
 stated that when one looked back at history, it was easy to see 
that the administrative arrangements had been developed for the purpose of implementing and 
administering quota restrictions in the textiles and clothing sector.  They consisted of elements such as export licences, visas in relation to quotas, procedures  for exchange and reconciliation of information 
pertaining to the use of quotas, arrangements for tr eatment of shipments in excess of quotas, etc.  It 
was important to bear in mind that these arrangements were not applied to all WTO Members, but only to those whose textiles and clothing exports wh ich were restricted by import quotas, as pointed 
out by previous speakers.  Developed countries expor ting the same products were not required to bear 
the burden of fulfilling the requirements of these arra ngements.  Therefore, such arrangements were 
not consistent with the fundamental GATT obligati on of MFN treatment for all.  Article I of the 
GATT required a Member, with respect to all rules a nd formalities in connecti on with importation, to 
accord immediately and unconditionally to the like pr oducts originating in the territories of all other 
Members any advantage, favour, privilege or immun ity that it granted to any product originating in 
any other country.  Apart from creating discrim ination among WTO Members, these arrangements 
also added to the cost of export transactions.  Ther efore, in this regard, she shared the understanding 
of Canada and of the previous speakers that the administrative arrangements undertaken pursuant to 
Article 2.17 were used to administer the provisions  of the ATC and would expire along with the ATC 
at the end of this year.  She noted that the United States had stated to the TMB that it did not believe 
that the termination of the ATC required the term ination of those measures in the administrative 
arrangements consistent with ot her obligations under the WTO Ag reements, including GATT 1994.  
However, as pointed out in the ITCB paper and by the previous speakers, it was difficult to see what, 
if any, in these administrative arrangements could be  justified under the other applicable provisions of 
the WTO Agreements, including GATT 1994.  Therefor e, her delegation was of the view that they 
should be terminated along with the elimination of th e quota restrictions and the full integration of the 
textiles and clothing sector into normal GATT rules and disciplines, including the MFA rule. 
2.115 The representative of Indonesia
 stated that, as one of the co-sponsors of the paper presented 
by the representative of Egypt, he fully suppor ted and endorsed the statements made by the 
representatives of India, China and Pakistan. 
2.116 The representative of the United States  drew Members' attenti on to paragraph 370 of the 
TMB's report which, among other things, said that the TMB observed that with the expiry of the ATC on 1 January 2005, all the provisions of the Agreem ent will expire and the measures notified pursuant 
to those provisions will have to cease to be app lied, unless justified under other applicable provisions 
of the WTO Agreement, including GATT 1994.  Th e United States’ admini strative arrangements 
notified to the TMB were quite detailed and, in so me instances, dealt with things such as customs 
procedures.  The US category system for textile pr oducts was not discriminatory, and was required for 
all exporters to the United States.  One could find cat egory data for even the smallest suppliers that 
were not under quota restraint.  Therefore, if the United States were to main tain, for example, these 
kinds of customs procedures, there would be nothing  wrong with that in terms of violation of WTO 
Agreements.  Therefore, it was not correct to say  that restraining Members had an obligation to 
eliminate all administrative procedures that had been notified to the TMB.  Only those that could not 
be justified by other WTO provisions should be eliminated. 
2.117 The representative of the European Communities
 drew attention to Article 4.1 of the ATC, 
which stated that exporting countries were responsib le for the administration of the restrictions and G/C/M/76 
Page 34  
 
  that, more importantly, importing Members should not be obliged to accept ship ments in excess of the 
restrictions notified.  For decades the date of ship ment had been the determining factor for setting off 
against quota the products under quantitative restric tions.  This had been a long established practice 
which was also in the bilateral agreements now tr ansformed into administrative arrangements.  The 
European Communities had also noted that in the word ing of the ATC, restrictions,  together with the 
administrative arrangements stood to be terminated by the end of the 2004.  He was of the view that 
this should be read in conjunction with the fact that importing members were not obliged to accept shipments in excess of restrictions notified.  In this  regard, the date of shipment was important.  This 
meant that the products shipped in the year 2004 had to be shipped in respect of the ceiling.  
Consequently, one could argue that administrative a rrangements, which were there in order to ensure 
that the system worked properly, had to be interpre ted as applying to the products shipped in the year 
2004, even if they effectively arrived in January/F ebruary 2005.  This was all under the management 
of the existing restrictions system, so it would be logical to maintain that importing countries were 
authorised to insist on keeping and respect the ceili ngs and that this was done under the administrative 
arrangement, namely the export licensing system and the corresponding importing licences, until 
shipments made in 2004 had terminat ed.  Otherwise, there was a very serious risk of evasion of the 
quotas and bilateral partner countries were obliged to respect the ceilings.  The shipment date was the 
determining factor and the importing country was not obliged to accept shipments in excess of the ceilings.  Therefore, the EC intended to reserve its right  to maintain this system for a very short period 
in 2005, until shipments made under the provisions and according to the restrictions that entered into 
force in 2004 had terminated.  The European  Communities was still considering the corresponding 
practical modalities. 
2.118 The representative of Egypt
 responded that he had a problem in assimilating what had been 
elaborated by the representative of the European Co mmunities, particularly, as his country also faced 
a similar problem of restrictions when it came to products of the agricultural type imported in the 
European Communities.  Egypt had an arrangeme nt with the EC whereby Egyptian fruits and 
vegetables, if they arrived, as opposed to have been shipped on a certain date got a certain treatment.  
He could not appreciate the fact that when it came to  textiles, it was the shipping date and that became 
the most important factor, whereas, when exporting fr uits and vegetables, it was the arrival date that 
became the most important factor.  One had to ch oose one or the other, one could not have both.  
Furthermore, there would be an element of discrimin ation in this respect, exporters from the farthest 
countries, although having the same rights and obligations under the WTO, being put at a 
disadvantage because of longer shipping times.  He  was, therefore, wondering whether the EC would 
be willing to reconsider the idea of maintaining t hose administrative arrangements.  The latter would 
certainly not be, at least in his view, in line with the ATC. 
2.119 The representative of Hong Kong, China  reacted to the responses given by the representatives 
of the United States and of the European Communities on this topic.  In essence, he was of the view 
that the statement by the European Communities ha d focused solely on the shipments that would 
leave the country of origin before the end of 2004 and reach the European Communities after 
1 January 2005.  Setting aside the different inte rpretations on the releva nt legal provisions, he 
considered that what was more important from a long -term perspective and also be for the real world 
trading community was whether the EC agreed that  once the quota had been eliminated, and putting 
aside all those year-end shipments, all the other ad ministrative arrangements that had been introduced 
under Article 2.17 of the ATC would be phased out a ltogether with the termination of the ATC.  He 
would be grateful for confirmation of this.  As to  the statement by the representative of the United 
States, he understood that the United States felt that  it had no obligation to eliminate all administrative 
arrangements but only those that could not be  justified under other GATT Articles or WTO 
Agreements.  He was of the view that when the United States had introduced these administrative 
arrangements, the legal cover for them was Artic le 2.17 of the ATC.  When the ATC would be 
terminated, and if the United States considered that some of these administrative measures could be justified under other WTO Agreemen ts, he questioned whether, procedurally, the United States would  G/C/M/76 
 Page 35 
 
 
  make the relevant notification to the relevant  WTO Committee and seek justification under the 
relevant Articles before introducing these administrativ e measures.  He considered that the legal cover 
applicable to all these administrative measures woul d expire at the same time the ATC would be 
terminated, and that the concerned Member would ha ve to follow some sort of procedure and notify 
such administrative measures to the relevant Commi ttee and make them subject to another round of 
fresh scrutiny under another set of legal provisions. 
2.120 The representative of India  also reacted to the statements made by the United States and the 
European Communities on this agenda item.  He not ed that his task was easier after hearing the 
comments from the delegations of Egypt and Hong Kong,  China.  He also noted that he would like to 
hear the response from the European Communities a nd the United States to the questions posed by 
Hong Kong, China.  He briefly reacted on the point  with reference to year end shipment and the 
reference made to Article 4 of the ATC.  He re called his previous intervention, and said that the 
administrative arrangements had a clear object a nd a purpose which was to administer and to 
implement restrictions maintained under Article 2.  He expressed his view on the subject stating that 
as per Article 9 of the ATC, the agreement and a ll restrictions maintained thereunder should stand 
terminated on 1 January 2005 and on that date th e sector would stand fully integrated and would 
thereafter be subject to normal GATT 1994 disciplines.   
2.121 The representative of the European Communities , referring to the question asked by Hong 
Kong, China and India, noted that his reflections te nded to be that this was going to be a very short 
transitional period until these shipments had arrived a nd had been cleared.  He suggested a couple of 
months, maybe three, not more.  In response to  the observations made he asked whether it was 
contested that shipments made in December 2004 must  have an export licence.  He noted that all 
shipments made must follow the rules and th e corresponding import licence was the logical 
consequence of that export licence and of the need  to ensure that quotas in force on the date of 
shipment were not being invaded. He said that wa s the reason why he believed they had to insist on 
the interpretation he had put forward, othe rwise, there was a loophole in the system.  
2.122 The representative of India  requested the Chairman to give Members some time to reflect on 
some of these issues and revert to them at some la ter stage, as he was sure some of them might wish 
to do so.  In relation to the point made by the European Communities he said that he had referred to 
the treatment of goods which come after the expiry of the ATC and there he mentioned that Article 9 
was very clear that the sector would stand integrat ed into normal GATT discipline, which was a fact. 
2.123 The Chairman , in view of the late hour and of the urgency of the issue raised by the 
representative of Indonesia and also to respond to the request for an informal discussion on the issue 
of "carry forward", suggested that the Council go to an informal mode.  
2.124 The representative of the United States  said that he had no objectio n if other Members wanted 
to proceed in this fashion but observed that tho se who had taken the position that "carry forward" 
should be available in 2004 had presented their argu ments extensively. He could certainly relay the 
concerns that had been expressed to his authorities.  He would also be willing to listen to anything that 
anyone had to say on this issue but he simp ly did not have anything more to add. 
2.125 The Chairman   observed that it was a longstanding WTO practice to react positively to any 
request for a consultation.  He, therefore, suggest ed that the Council go into an informal mode.  
2.126 It was so agreed.  
2.127 After an informal discussion of item 3 of the Agenda, the Council re turned to the formal 
mode. G/C/M/76 
Page 36  
 
  5. Use of Transitional Safeguard Mechanism  
2.128 The representative of Egypt
 noted that there was not a lot that the ITCB Members, the co-
sponsors of document 495, had to de bate on this.  He recalled that  when the ATC began in 1995, 
things were very confused.  He drew Members' atte ntion to the fact that in 1995, there had been as 
many as 24 safeguard actions and none in 2003 or 2004.  There were only two safeguard measures 
adopted in 2002, which was the first year of stage three of the ATC implementation, and they were 
ruled to be justified under Article 6 of the ATC by the TMB.  So, from this perspective, he believed 
that the Council might like to express satisfaction wi th respect to the restra int exercised by Members 
in the invocation of safeguard actions in stage th ree of the implementation process and that the CTG 
record its appreciation of the manner in which th e TMB had conducted its ex amination of safeguard 
actions, especially after the guidelines established by  dispute panels and the Appellate Body.   
2.129 The representative of Hong Kong, China  noted some positive development over the duration 
of the ATC, as was documented in the TMB compre hensive report and at the meeting. He drew 
Members' attention to Table 14 in page 206 of the co mprehensive report.  He said that there had been 
a marked deceleration in the number of safeguard cases brought under Article 6 of the ATC.  He 
noted that as had been mentioned by the representati ve of Egypt, within the first few months of the 
coming into effect of the ATC, the US alone had brought 24 cases.  Some of these actions involved products that were already under quota restriction at  that time, under the so- called "group limits".  
Three of these cases were subsequently challenge d under the Dispute Settlement Understanding and 
in all three cases, the US was found not to have co mplied with its obligations under Article 6 of the 
ATC.  On top of the three cases, a number of ot her cases were also brought to the attention of the 
TMB.  He called Members' attenti on to the fact that the result of all these examinations by dispute 
panels and, subsequently, by the Appellate B ody, was the establishment of clear guidelines for 
importing countries, the TMB and others concerned as to the high standard required if safeguard 
actions were to stand legal scrutiny under the ATC.  He noted that this added to the clarification and 
to the strengthening of the discipline under the ATC and probably accounted for the deceleration of 
the number of cases. 
2.130 He supported the suggestion that the CTG might  like to express its satisfaction with respect to 
the restraint exercised by Members in the invocati on of safeguard actions in stage three of the 
implementation process.  He finally added that the CTG might also like to record its appreciation of 
the manner in which the TMB had conducted its exam ination of safeguard actions, especially after the 
guidelines established by dispute pane ls and the Appellate Body.   
2.131 The representative of  the European Communities
 drew Members' attention to the fact that the 
European Communities had not availed itself of the possibility of using Article 6. 
2.132 The representative of India  recalled that in its report of the second major review, the CTG had 
noted the declining trend with respect to the app lication of the traditional safeguard mechanism during 
the second stage.  He noted that while recognising th at Members might resort to safeguard provisions 
of the ATC during its final years, the CTG had called upon Members to apply it as sparingly as 
possible, consistently with the provision of Article  6 of the ATC and the effective implementation of 
the integration process under the ATC.  As menti oned by Hong Kong China and Egypt, out of total 65 
recourses to the provision of Article 6 during the ATC implementation so far, the fact that only two recourses to Article 6 were made in 2002, none in  2003 and thereafter, confirmed that Members had 
followed the Council's call to exercise restraint.  The use of traditional safeguard mechanism had 
indeed declined after the uncertain start at the beginning of the ATC implem entation and he believed 
this should be a matter of satisfaction for the CTG.  He also expected that the Council would concur 
with the view of the TMB that disciplines embodied in, and control exercised by the WTO system, the jurisprudence set by the respective panels a nd Appellate Body reports, which provided detailed 
guidelines to Members and established appropriate sta ndards on which TMB had been able to rely in  G/C/M/76 
 Page 37 
 
 
  improving the efficiency and transparency of the TM B proceedings, had been some of the reasons for 
this declining trend.  
2.133 The representative of China  associated herself fully with the statements made by the 
representative of Egypt on behalf of ITCB Me mbers and Hong Kong, China and India.   
2.134 The representative of the United States  said that that it was his G overnment's position that at 
the start of the ATC it had invoked the Article 6 sa feguard mechanism in those cases that it thought 
were justified.  In some cases, the TMB had been ab le to concur with the action that the United States 
had taken, whereas in other cases the United States withdrew the action and in other cases the TMB did not concur.  Subsequently, as time went on through the ATC, the United States did not feel the need to invoke the Article 6 mechanism in the same fashion that it had done at the start of the ATC.  
He finally noted that this was as far as they would be willing to go and that the US would not want to 
ascribe to these outside factors. 
2.135 The Chairman
 stated that all statements made would be reflected in the records of the session. 
6. Article 7 – Abiding by GATT 1994 rules and disciplines so as to achieve improved 
market access, ensure the application of polic ies for fair and equitable trading condition 
(AD, CVD, IP), avoid discrimination against textiles in general trade policies 
2.136 The Chairman  proposed to start the examination of the issue of Article 7 abiding by GATT 
1994 rules and disciplines so as to achieve improved ma rket access, ensure the application of policies 
for fair and equitable trading conditions, avoid discrimination ag ainst textiles and general trade 
policies.   
2.137 The representative of the United States  said that he would be quite brief on this issue, even 
though it was an issue that his Government had felt strongly about through the life of the ATC, 
because he believed that this was one of those issues  that came under the heading of the spirit of the 
ATC.  Much of the discussion Members had had di d not revolve around strict rights and obligations 
of Members but more on how the ATC should have been  interpreted in a more liberal light.  Article 7 
was one of those issues.  It had, in his view, been designed by the negotiators to provide an element of 
balance in the ATC, in that restraining countri es were removing their restraints over the 10-year 
phase-out period, and in return exporting countries had an obligation to open their markets as well, in 
order to "achieve improved market access".  In this  case, the US believed that, for the most part, many 
of the exporting countries remained quite closed to  imports of textile and apparel products.  In 
addition to not fulfilling this obligation that they incurred under the ATC, they had foregone some of 
the benefits that would have accrued from libera lising the sector and the gains from trade that, it 
would be seen, the United States was certainly goin g to reap from this phase-out of restraints under 
the ATC.  From this standpoint, it was one of the unfinished elements of what Members thought they 
had achieved in the Uruguay Round, which would now need to be addressed within the NAMA 
negotiations. 
2.138 The representative of Turkey  noted that according to the Article 7 of the ATC, as part of the 
integration process and commitments resulting fro m the Uruguay Round, all Members were also 
expected to take necessary actions, so as, the artic le said: (i) achieve improved access to markets for 
textile and clothing products through tariff reductions , reduction or elimination of NTB’s, and 
facilitation of customs and red tape; and also ensure th at the application of policies relating to fair and 
equitable trade conditions including trade defence measures, subsidies, and Intellectual Property 
Rights (IPRs).  He noted that Turkey had also been  criticised for some of its decisions stemming from 
their Customs Union obligation with the European Union.  He emphasized that, with the Customs 
Union Agreement, Turkey had provided for the lo west market access barriers among the developing 
economies to the other developing economies and LDCs .  The average applied tariffs of Turkey had G/C/M/76 
Page 38  
 
  been reduced to 4%.  In addition, Turkey had started to provide GSP preferences to developing 
countries and to the LDCs on many products including textile & clothing, even to a majority of the 
Members who had criticised Turkey in this meeting.  All this had been provided within the framework 
of the Customs Union which had been signed under GATT Article XXIV. 
2.139 He observed that it was a known fact that unde r the Customs Union, practically and logically, 
Turkey had no other choice but to comply with its Customs Union obligations.  Having reduced its 
industrial tariff average to its current 4% average and provided GSP to developing countries, there 
emerged huge imbalances in Turkey’s textile a nd clothing trade with many of the developing 
countries which had spoken at this meeting.  For exam ple, with one of them, their imports in textile 
and clothing products had reached 10 times or 1000% diffe rence in bilateral trade.  In addition to this, 
Turkey’s exports to those countries faced almost prohi bitive taxes.  He noted that he would like to 
hear other delegations’ views on this market access i ssue, since he believed that Article 7 ATC also 
constituted one of the important parts of the ATC. 
2.140 The representative of the European Communities
 noted that Article 7 was a kind of 
unfinished business because it had always expected th at the generalised liberalisation inscribed into 
Article 7 might yield higher results than what had been seen.  It was now too late, at the end of the 
ATC.  The EC considered that there remained s till things outstanding.  He emphasized that the EC 
had negotiated bilateral agreements  with three countries, Sri Lanka, Brazil and Pakistan, covering 
tariff reductions, as well as commitments on certain NT Bs.  He felt that probably more could have 
been done.  Nevertheless, he joined the United States in adding that it would most likely be one of the 
leftovers of the ATC which would have to be continued in the NA MA negotiations on tariffs and non-
tariff measures.  The issue of tariff was still on the ta ble, there were tariff peaks in many countries and 
it was the European Communities’  intention to pursue that, as the DDA negotiations progressed.   
2.141 The representative of Egypt , on behalf of the ITCB Members mentioned in G/C/W/495, said 
that in discussing the market access issue, it was impo rtant to identify the problem that the restraining 
countries wished to raise.  It was not enough to a llege that exporting developing country Members did 
not consider the obligation to achieve improved mark et access as an important part of the integration 
process.  He referred to a certain number of facts in this area.  First, as confirmed by the TMB in paragraphs 536 and 537 of its report, no non- compliance with any specific market access 
commitments undertaken as a result of the Uruguay Round had been brought to its attention.  On the other hand, WTO Members, devel oped and developing alike, had ge nerally been implementing their 
specific commitments in accordance with their respective schedules of commitments.  Indeed, on the 
occasion of the second major review, even according to the European Communities, and quoting from 
paragraph 548 of the TMB report, in the specific context of Article 7 of the ATC, most of the WTO Members had generally complied with their specifi c commitments and with the relevant GATT 1994 
rules and disciplines.  It was noteworthy that, in paragraph 545 of its report, the TMB had observed as 
follows: "no notification whatsoever has been received by the TMB from any WTO Member (the 
United States included) with specifi c reference to any of the provisions of Article 7. (...) it would 
appear that Members continued to implement thei r specific commitments undertaken as a result of the 
Uruguay Round and no particular probl em related to such implementati on, affecting products covered 
by the ATC have been brought to the attention of the TMB by any WTO Member. (...) [A] general statement claiming that certain Members have be en keeping their markets shut to exports from 
another Member, without identifying whether sp ecific commitments undertaken as a result of the 
Uruguay Round have been adhered to , or not, does not constitute sufficient basis for offering further 
comments."   
2.142 He observed that in effect if one looked at some other facts, it would appear that a number of 
developing countries had adopted signi ficant autonomous liberalisation m easures in their markets.  He  
mentioned a few: China had assumed market access commitments as part of its accession to the WTO, 
so that its tariffs were bound at rates lower than the OECD average; Pakistan had reduced and bound  G/C/M/76 
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  its tariffs at rates which in certain cases were lowe r than those of the US; India and Egypt had reduced 
their tariffs on a number of items. And, likewise a number of other developing countries had reduced 
their tariffs unilaterally as part of their refo rm measures under other programmes.  Against this 
background,  the complaints by some importing Memb ers appeared to be unjustified.  He, therefore, 
asked the CTG to conclude accordingly.  In the ev ent, he requested that the CTG conclude that the 
concerns expressed by the restraining Members in relation to market access commitments in the 
context of ATC Article 7 were not justified. 
2.143 The representative of India  said that he had taken careful note of the statement made by the 
representatives of European Communities and Unite d Sates and supported the intervention made by 
the representative of Egypt on behalf of the co-spons ors of document G/C/W/495.  He wanted to give 
initially a snapshot of where India stood in terms of tariffs applied for the textiles and clothing sector.  
In the case of India there had been a progressive re duction in the applied tariffs over the years.  
Current applied rates were much below bound rates.  The peak rates had been sl ashed to an average of 
20% in 2004, whereas bound rate in this sector ranged from 25 to 40%.  For example,  while India’s 
bound rate for ready-made ga rments, made-ups and knitted fabrics were  in the range of 35 to 40%, the 
current applied rates were 20%.  In some cases,  even less than 20%.  Moreover, in textiles and 
clothing, overall imports into India for the past few years had also been increasing.  While developing 
countries had undertaken autonomous liberalisation meas ures in the area of textiles and clothing, he 
wondered whether any steps had been taken by majo r restraining Members which under the rubric of 
Article 7.  He also noted that the representativ e of Egypt had recalled pa ragraph 545 of the TMB 
report which stated that  "…It would appear th at Members continued to implement their specific 
commitments undertaken as a result of the Uruguay R ound and no particular problem related to such 
implementation, affecting products covered by the ATC have been brought to the attention of the 
TMB by any WTO Member; a general statement claiming that certain Members have been keeping their markets shut to exports from another Member, without identifying whether specific 
commitments undertaken as a result of the Uruguay Round had been adhered to, or not, does not 
constitute sufficient basis for offering further comments." 
2.144 He stressed that Article 7 did not prescrib e any tariff concession or additional obligations over 
and above what was committed by each Member in its schedule of Uruguay Round commitments.  
Any suggestion to discuss tariff concessions over and above Uruguay Round commitments was a matter of ongoing market access negotiations and in this context he said he had taken note of the 
observation made by the US at the 1 October meeting of the CTG as well as at this meeting.  With 
respect to the comment made by the EC that they intended to address the issue of market access in the 
NAMA negotiations, he further said that, as noted by the EC representative, it was a fact that the incidence of tariffs in textiles and clothing was c onsiderably high compared to other non-agricultural 
industrial products in major restraining markets.  In the lighter vain, he was a little amused to hear 
references to the "spirit" of the ATC in the context of Article 7.  In the de bate under the agenda item 
‘integration process’, he had been told that the r estraining Members had fulfilled their commitments 
in the strict technical sense of the ATC.  Apart from Article 7.1(a), Article 7.1(b) provided that, as part of the integration process, Members should take necessary action, inter alia,  to ensure the 
application of policies relating to fair and equitabl e trading conditions as rega rds textiles and clothing 
in such areas as anti-dumping, etc.  In the contex t of ATC implementation, this implied that access 
available under the Agreement should not be underm ined or impeded by improper recourse to trade 
remedy actions.  The TMB had also noted that, in  its view, although recourse to anti-dumping actions 
must be judged only on the merit of individual cases, due consideration should be given if the 
products in question had been, and continued to be, subject to restriction under the ATC, and that 
repeated anti-dumping procedures affecting these products could indeed create an ongoing problem 
for the exporting Members concerned.  He observed that while his delegation did not challenge the 
right of any Member to impose trade remedy actions, the issue in the context of ATC implementation 
was whether these actions were valid and the uncertain ty caused by initiation of such actions and their 
adverse affect on market access.   He further st ated that the saga of anti-dumping duty on bed linen G/C/M/76 
Page 40  
 
  imports and related panel a nd Appellate Body reports had become pa rt of the folklore.  In the joint 
ITCB submission, as referred to by the representative of Egypt, Members' attention had been drawn to 
the fact that major restraining Members would elim inate the bulk of the quotas only at the end of the 
transitional period.  Most business operators believed that the elimination of quota restrictions would 
exert downward pressure on prices following the abolition of all quota restrictions with effect from 
1 January 2005.  This might generate pressure for alternate methods of protection on import from 
developing Members.  In this context, he drew  the Council's attention to the decision taken by 
Ministers at Doha, that "Members will exercise par ticular consideration befo re initiating investigation 
in the context of anti-dumping remedies on tex tiles and clothing exports from developing countries 
previously subject to quantitative restrictions under the ATC for the period of two years following full 
integration of this Agreement into the WTO."  He finally urged the Council to recall the Doha 
decisions in its report and to establish appropria te procedures to operationalise this decision 
2.145 The representative of Turkey
 reminded Members and warned that everybody had the right to 
speak about subjects listed on the agenda.  He also expressed that Turkey was one of the most liberal 
economies among the developing countries. 
2.146 The representative of China  believed that exporting Members had been faithfully 
implementing the commitments contained in their respective tariff schedules. China as an example 
had reduced its tariffs on textiles and clothing imports to a level below that of the OECD average.  In 
particular, tariffs in this sector were bound at lower rates than the EC and far below those of the 
United States.  China’s market was very liberal in the textiles and clothing sector.  On the other hand, 
it was evident that the EC and the US had themselve s not provided additional market access to their 
own markets in addition to their schedules of tari ff concessions.  She had noticed, however, that the 
EC had been using quotas as a bargaining chip  for securing increased market access from third 
developing Members.  This was a matter of concern.  Therefore, in terms of market access, she suggested the CTG take note of the relevant ob servations made by the TMB in its report and 
conclude, accordingly, that the concerns expressed  by the EC and other import restraining Members 
in relation to market access commi tments in the context of Article 7 of the ATC were not justified. 
2.147 She further stated that, in terms of IPR protection, China had fully implemented its 
obligations under the TRIPs Agreement and that it had done a lot in terms of both regulation and 
enforcement.  She noted that Article 7 was not only about market access, it also concerned anti-
dumping and countervailing duties, wh ich were usually used by import restraining Members to assist 
their protective quota restrictions.  She stressed that as a result of the back-loading of the quota 
removal by import restraining Members, the current international textile and clothing trade was still 
under serious distortion, notably in terms of price.   It had been known to all that under the severe 
quota restrictions, textile and clothing trade transactions were not conducted on commercial 
considerations alone.  Quota rent had been an  important component of  pricing decisions and 
arrangements and it had been extremely so in China' s case since China had been subject to the most 
severe restrictions in the ATC implementation period .  Documentation costs such as those relating to 
quota application and distribution was were another type of additional cost that businessmen had to 
take into account in price setting.  Consequent ly, it was not difficult to foresee that when the 
remaining quotas would finally be abolished and the related quota rent and documentation costs 
would disappear at the end of 2004, they would ex ert a sudden downward pressure on prices of those 
products subject to long-standing quota restrictions .  Deliberately postponing the elimination of most 
quota restrictions at the end of the 10-year period in  one go, exacerbated the situation and encouraged 
domestic industries in the importing restraining Members to seek protectionist measures other than quotas, in particular anti-dumping measures and c ountervailing measures.  The experience of this 
sector, which had been reflected in the ITCB’ s submission to the Negotiating Group on Rules 
(document TN/RL/W/48/Rev.1), had shown that the industry’s interests in the importing restraining 
Members were prone to equating any price declines  with dumping or countervailing.  Previous cases 
such as the bed linen case also provided a case in point and there had been signs of abuse of anti- G/C/M/76 
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  dumping rights.  She noted that given that it had take n some time for international textile and clothing 
trade to return to its normal course after the re moval of quota restrictions, allegations about anti-
dumping in the immediate aftermath of the abo lition of quotas could not be reasonably evaluated 
without allowing for sufficient opportunity for businesses to adjust to normal pricing.  That was why restrained exporting members had repeatedly brought this problem to the attention of the WTO with a 
proposal for a specific short-term adjustment meas ure.  Such a proposal was intended to serve the 
interests of all: exporting members, importing me mbers as well as the multilat eral trading system 
itself. In this regard he recalled that the Doha Ministerial Decision requested that Members exercise 
particular consideration before initiating investiga tions in the context of anti-dumping remedies on 
textile and clothing exports from developing member s previously subject to quantitative restrictions 
under the ATC for a period of two years following fu ll integration of the sector into the WTO.  She 
was of the view that this was a ne cessary adjustment measu re to ensure that the textiles and clothing 
sector would make a smooth return to normality.  Therefore, she requested the CTG, recalling the Doha Ministerial Decision, to establish appropria te procedures to operationalise the decision. 
2.148 The representative of Thailand
 supported the statements made by the Delegation of Egypt. 
2.149 The Chairman  concluded that the CTG had had an exte nsive, detailed and rich exchange of 
views on the issues it had examined.  Concerns had b een expressed in some areas.  Several points had 
been clarified.  But, he believed that Members now had an enhanced and clear understanding of the 
situation and position of each other on the various i ssues.  What was most evident and what was sure 
was that the ATC shall expire on the 1 January 2005.  This in itself would be a historic 
accomplishment for the multilateral trading system on many counts.  He noted that the Council had 
agreed to hold informal consultations as soon as possi ble to consider the issue of "carry forward".  
Therefore, he suggested to hold another formal de dicated session of the Council in order to wrap up 
the review process. 
2.150 It is so agreed . 
__________