WORLD TRADE  
ORGANIZATION  G/C/W/518 
13 May 2005 
 (05-1952) 
Council for Trade in Goods Original:   English 
  
 
UNITED STATES -  REQUESTS FOR WAIVERS FOR THE  
CARIBBEAN BASIN ECONOMIC AND RECOVERY ACT (CBERA, AS AMENDED), THE  
AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA), AND THE 
ANDEAN TRADE PREFERENCE ACT (ATPA, AS AMENDED) 
 
Replies of the United States to comments and questions
 
from China, India and Pakistan  
 
 
Comments and questions from India  
 
1.  Would the US please clarify whether the th ree different requests for waiver are a composite 
whole or does the US wish to pu rsue the three separately on their own merits? Further we would also 
request the US to indicate the rationale for seeking a waiver under Article XIII of GATT which 
pertains to non-discriminatory adminis tration of quantitative restrictions.  
 
 The United States has submitted a separate, inde pendent waiver request for each programme:  
AGOA, CBERA and ATPA.  We are seeking a waiver for each programme on its own merits.  The preferences contained in each of these programmes consist primarily of duty-free treatment on goods 
entering the US market, but in some cases, th e duty-free treatment is subject to quantitative 
restrictions (QRs).  The requests submitted to the WTO in February 2005 contain draft decisions to 
waive both Article I (most favored nation (MFN) on duties) and Article XIII (non-discrimination in 
QRs) to permit the provision of be nefits through these programs.   
 
2. We note that the AGOA and CBERA legislations  came into effect in 2000 while the ATPA was 
implemented in 2002.  However, the waiver re quests have been made only in March 2005. My 
delegation requests the US to inform us the reasons  for this delay in seeking a waiver.  Would the US 
please comment on the impairment of benefits to non- beneficiary countries during this period?  Is the 
US considering any compensation to the non-benefic iary Members for the impairment thus caused?   
 
 The United States sees compliance with WTO obligations as an essential element of 
Membership in this organization.  These program mes have been updated and refined on several 
occasions in recent years to improve their effectiv eness.  Most recently, the AGOA Acceleration Act, 
passed in the summer of 2004, contained significant refinements to the programme.  We felt it was 
best for our submissions to reflect all of these rece nt changes, and to be vetted informally with our 
partners.  We have been consulting informally w ith the beneficiary countries on these submissions.   
 
 That waivers are being sought does not in itsel f mean that any WTO Member has been denied 
benefits to which it is entitled.  
3. One of the pre-requisites for eligibility for duty free treatment for apparel and textile products 
originating in the beneficiary countries under the th ree schemes is that the products be assembled 
from US fabric and yarn.  Is this not a constraini ng factor for the beneficiary countries as it would 
pose a greater burden of adjustment on them in the post-ATC era?   
 G/C/W/518 
Page 2  
 
  These programmes were intended to encourage the development of the textile and apparel 
industries in the regions by providing preferential access to the United States in a variety of ways.  We worked hard with beneficiary countries to craft a programme that gives them the maximum benefit 
within the constraints of what is possible.  Ce rtain aspects of the programmes provide benefits to 
apparel assembled using U.S. yarn and fabric.  However, there are also provisions that provide 
benefits to apparel assembled us ing regional and third-country inputs.  All programmes allow for 
world-wide sourcing of yarns and fabrics that have  been found to be commercially unavailable in the 
United States.  There are also provisions that allow the world-wide sourcing of various components of apparel articles.  The result has been positive but is fr agile given the competitive nature of this sector.    
 
4. Could the US also please clarify whet her under the CBERA and ATPA the apparel assembled 
in beneficiary countries with fabric formed in the US from yarn imported into the US from third 
countries is eligible for duty free treatment? If not, could the rea sons for the same be indicated? 
 
 Apparel assembled in beneficiary countries with fabric formed in the United States, but using 
yarn imported into the United States, is not elig ible for duty-free treatment.  These non-reciprocal 
preference programmes were established to provide  benefits to the industries in the beneficiary 
countries.  In addition to benefits for apparel asse mbled from U.S. formed fabric and yarn, provisions 
in these programmes provide preferential treatment to  apparel assembled from regional fabric.  In the 
case of the AGOA, preferential treat ment is also available for appa rel assembled using third-country 
fabric.  The regional and third-country provisions ap ply generous annual limits to the benefits, which 
are heavily utilized by the beneficiary countries.  
 
5. Further are the assembled apparel products in beneficiary countries from third country 
fabrics but partially processed in the US eligib le for duty free treatment under the CBERA and ATPA 
legislations? If not, could the reasons for the same be indicated? 
  It is not required that apparel assembled in beneficiary countries from third country fabrics be 
partially processed in the United States to be elig ible for duty-free treatment.  Other than fabrics 
designated under the commercial availability prov isions of the CBERA and ATPA, preferential 
treatment is not available to apparel articles made from third-country fabrics.   
 
6.  The data on imports of textile material s by sub-Saharan African countries, which are 
beneficiaries under AGOA, reveals that a bulk of these materials is sourced from third countries.  It 
has also been indicated in analysis that this greatly  enhances the viability of their exports.  In view of 
this could the US consider dropping the conditionality of using US domestic textile materials to assist 
developing countries? 
  The AGOA contains provisions that provide preferential treatment to apparel assembled from 
regional and third-country inputs, subject to generous annual limits .  The United States has amended 
the AGOA several times to increase the limits and to ex tend this provision to 2007.  This has been a 
popular and heavily-used provision of the AGOA. 
 
7. US data on its exports of yarns and fabrics to CBI countries as compared to its exports to the 
world shows a remarkable increase.  This points to conclusion that the underlying objective of the legislation is providing export advantage to US yarn and fabric producers.  Could the US please 
comment on this observation as also the US co mmitment in document WT/L/104 that duty free 
treatment “shall be designed not to raise barriers or create undue difficulties for the trade of other 
Members”?  
 
These programmes are intended to encourage th e development of the textile and apparel 
industries in the regions by providing preferential access to the United States in a variety of ways.   G/C/W/518 
 Page 3 
 
 
 The objective of the legislation is to boost productio n, employment, and investment in the beneficiary 
countries for the reasons stated in our waiver reque st.  With respect to the impact on US industry, 
these programmes have in fact increased the pace of adjustment in the US industry just as it was 
facing the end of ATC quotas.  This is clearest in cases where third-country or regional fabric is used. 
All programmes allow for world-wide sourcing of yarns and fabrics that have been found to be 
commercially unavailable in the United States.  
 
8. Would the US also indicate the basis of  exclusion of some sub-Saharan countries under the 
AGOA? 
 
 AGOA requires the President to determine a nnually whether sub-Saharan African countries 
are, or remain, eligible for benefits based on thei r progress in meeting criteria set out in the Act.  
These criteria include establishment of a market-based  economy, the rule of law, the elimination of 
barriers to US trade and investment, implementa tion of economic policies to reduce poverty, the 
protection of internationally recognized worker ri ghts, and establishment of a system to combat 
corruption.  Additionally, countries cannot engage in :  (i) violations of internationally recognized 
human rights, (ii) support for acts of internationa l terrorism, or (iii) activities that undermine US 
national security or foreign policy interests.   
 
 An interagency US Government committee c onducts the annual eligibility review, drawing on 
information from the public, NGOs, the private sect or, and prospective beneficiary governments.  
Following the last eligibility review in December  2004, and based on the recommendation of the US 
Trade Representative, the President signed a Proc lamation on 21 December 2004, stating that 37 of 
the 48 sub-Saharan African countries met AGOA’s requi rements for eligibility.  Three countries have 
not expressed an interest in receiving the benefits of AGOA and therefore have not been reviewed for 
prospective eligibility.  The list of AGOA beneficiar y countries is contained in the waiver request.  
Additional information on some of the country-speci fic factors that have been considered in the 
AGOA eligibility review is contained in the annual Report on US Trade and Investment Policy toward 
Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act.   The next such 
annual report is to be published in May 2005. 
 
9. Would the US also indicate the basis on which countries and products are graduated out of 
these schemes?  
 The AGOA, CBERA and ATPA programmes do not have graduation provisions. 
 
Comments and questions from Pakistan
 
 
1. In documents G/C/W/508, G/C/W/509 and G/C/W/510, the United States submitted three 
different requests seeking waivers from its WTO ob ligations under paragra ph 1 of Article I and 
paragraphs 1 and 2 of Article X III of GATT 1994.  However, for the CTG meeting held on 
11 March 2005, the three requests w ere inscribed under a single item. 
  Can the US please clarify whether it wishes to  pursue these as a single request or as three 
separate requests for consideration on their respective merits?  
 In February 2005, the United States simultane ously submitted a separate, independent waiver 
request for each programme:  AGOA, CBERA and ATPA.   We are seeking a waiver for each programme on its own merits.   
 
2. We note that paragraph 3 of the decision on renewal of the CBI waiver granted in 1995 
(WT/L/104) provided that "the United States shal l promptly notify the General Council of any ... G/C/W/518 
Page 4  
 
 modification being considered  in the list of eligible products and duty-free treatment thereof, ..." 
(italics provided).   Will the United States please inform whether any  such notification was made to the General 
Council;  if so, when and under what document number? 
 
 In this connection, can the US also comme nt on the attached observations of the Textiles 
Monitoring Body in its comprehensive reports to th e CTG on the implementation of the (now-defunct) 
ATC in its second and third stages?  
 With respect to Pakistan's question regarding notification to the General Council, we note that 
the 1995 decision WT/L/104 requires annual reports on the operation of the CBI waiver.  Per this 
requirement, the United States submissions are WT/L/288, WT/L/329/, WT/L/373, WT/L/417, WT/L/498, WT/L/549 and WT/L/593.  We note that the report for 2001 contained the following information regarding the eligib le products in footnote 1: 
 
Many of these excluded products are now eligib le for preferential treatment under the United 
States – Caribbean Basin Trade Partnership  Act (CBTPA), Title II of the Trade and 
Development Act of 2000, whic h amended the CBERA.  The United States is analyzing what 
kind of waiver is required for these additional preferences . 
 
 Further, we note that WT/L/498 (2002) and WT/L/549 (2003) contain the following 
information: 
 
The CBTPA, effective October 1, 2000, enhan ced CBERA benefits by authorizing preferential 
tariff treatment for certain qualifying apparel articles.  The CBTPA also extended NAFTA-
equivalent duty treatment to a number of products previously excluded from the CBERA, 
including certain tuna, petroleum products, cert ain footwear, and some watches and watch 
parts.  The Trade Act of 2002, passed on Augu st 6, 2002, further amended the CBERA to 
expand the type and quantity of textile and apparel articles eligible for the preferential tariff 
treatment accorded to designated beneficia ry CBTPA countries.  Among other benefits, the 
Trade Act of 2002 expands the duty-free treatmen t available for clothing made in beneficiary 
countries from US and regional inputs, and increases the quantity of clothing made from 
regional inputs that regional producers can ship duty-free to the United States annually. 
 
 With respect to Pakistan’s question on the TMB report, the TMB correctly noted that the 
United States had informed it that no notification to the TMB could be made until a waiver request 
had been submitted to the CTG.  For an explanati on of the timing of these requests for waivers by the 
United States, please see our response to India’s question No. 2.    
 
3. It is noted that the CBERA and AGOA legi slations were implemented in 2000 and the ATPA 
in 2002;  however, that the wa iver requests have been made only in March 2005, i.e. four-three years 
after they were put into effect. 
 
 By submitting the waiver requests, the US recogni ses that the measures, subject of the waiver 
requests, were inconsistent  with its GATT obligations. 
  In the event, can the US please comment on the denial of bene fits accruing to the 
non-beneficiary WTO Members in the meantime?  Furt hermore, can it also inform whether it would 
consider compensating these Members for the impairment caused to those benefits? 
 
 The United States sees compliance with WTO obligations as an essential element of 
Membership in this Organization.  These progr ammes have been updated and refined on several  G/C/W/518 
 Page 5 
 
 
 occasions in recent years to improve their effectiv eness.  Most recently, the AGOA Acceleration Act, 
passed in the summer of 2004, contained significant refinements to the programme.  We felt it was 
best for our submissions to reflect all of these rece nt changes, and to be vetted informally with our 
partners.  We have been consulting informally w ith the beneficiary countries on these submissions.   
 
 That waivers are being sought does not in itsel f mean that any WTO Member has been denied 
benefits to which it is entitled.  
 
4. It is noted that one of the conditions for e ligibility to duty-free treatment of apparel products 
originating in the beneficiary countries is that the ap parel be assembled with f abrics formed in the US 
with yarns formed in the US. 
  Can the US please clarify whether apparel a ssembled in beneficiary countries (under the 
CBERA and ATPA) with fabric formed in the US but using yarn imported into the US from third 
countries is likewise eligible for duty-free t reatment?  If not, the reasons therefore? 
 
Also, are the apparel products assembled in the beneficiary countries from third country 
fabrics and partially processed in the US (such as by dying and/or finishing, etc.) eligible for duty-
free treatment under the subject legislations?  If not, the reasons for that?  
 Apparel assembled in beneficiary countries with  fabric formed in the United States but using 
yarn imported into the United States is not elig ible for duty-free treatment.  These non-reciprocal 
preference programmes were established to provide be nefits to textile and apparel industries in the 
beneficiary countries by providing preferential access to the United States in a variety of ways.  In 
addition to benefits for apparel assembled from US-formed fabric and yarn, aspects of these programmes provide preferential treatment to appa rel assembled from regional fabric.  Other than 
fabrics designated under the commercial availability provisions of the CBERA and ATPA, 
preferential treatment is not available to appa rel articles made from third-country fabrics.  
  In the case of the AGOA, preferential treatment is also available for apparel assembled using third-country fabric.  There are generous annual limits to the regional and third-country fabric 
benefits, which are heavily utilized by the beneficiary countries.   5. According to data available on US Govern ment websites, US exports of yarns and 
fabrics to CBI countries relative to its ex ports to the world increased as follows: 
 
United States Exports of Yarns and Fabrics 
 
  
   1989  
    2004 In $1000 
Increase 
 
Yarns : 
To world 
Of which to CBI 
CBI Share  
 628,527  31,172 
 4.96%  
 1,429,700   566,756 
  39.64%  
  127.5% 1718.2% 
 
 
 
Fabrics:  
To world 
Of which to CBI 
CBI Share  
 2,145,899   222,039   10.35%  
 8,060,001 2,030,378   25.19% 
  
  275.6%  814.4% G/C/W/518 
Page 6  
 
  
  In light of the above date, can the US please comment if the underlying objective of the legislation is to provide export advantage to US yarn and fabric makers?  If so, how does it square 
with the commitment in paragraph 2 of the existing waiver decision (i.e., WTO/L/104) that duty-free 
treatment "shall be designed not to raise barriers or create undue difficulties for the trade of other 
Members"? 
 
 These programmes were intended to encourage the development of the textile and apparel 
industries in the regions by providing preferential access to the United States in a variety of ways.  
The objective of the legislation is to boost producti on, employment and investment in the beneficiary 
countries for the reasons stated in our waiver request .  With respect to the impact on US industry, in 
fact, these programmes increased th e pace of adjustment in the US industry just as it was facing the 
end of ATC quotas.  This is clearest in cases wher e third-country or regional fabric is used.  All 
programmes allow for world-wide sourcing of yarn s and fabrics that have been found to be 
commercially unavailable in the United States.  Ther e are also provisions that allow the world-wide 
sourcing of various components of apparel articles.   
  
6. The data on imports of textile materials by  Sub-Saharan African countri es, beneficiaries of 
preferences under AGOA reveal that most of these materials are sourced  from other than the US.  But 
for this flexibility, the viability of their exports is considerably reduced. 
 
 Under the circumstances, can the US drop the conditionality of using US domestic textile 
materials to assist developing countries?  If not, the reasons therefor.  
 
 There are aspects of the AGOA programme that provide benefits to apparel assembled using 
regional and third-country inputs.  AGOA also allo ws for world-wide sourcing of yarns and fabrics 
that have been found to be commercially unavailable in the United States.  There are also provisions 
that allow the world-wide sourcing of various components of apparel articles.  These programmes 
were intended to encourage the development of the textile and apparel industries in the beneficiary 
countries.  We worked hard with beneficiary coun tries to craft a programme that gives them the 
maximum benefit within the constraints of what is possible. 
 
7. Paragraph 1 of the "Unders tanding in Respect of Waivers of Obligations under GATT 1994" 
provides that "A request for a waiver or for an ext ension of an existing waiver shall describe ... the 
reasons which prevent the Member from achieving it s policy objectives by measures consistent with 
its obligations under GATT 1994". 
 
 Will the US kindly explain why its objectives cannot  be met by GATT- consistent measures?   
 
 It is the view of the United States that the mo st beneficial way to integrate these countries into 
the global trading system is through ambitious r esults on market access in the Doha Round.  These 
programmes, which were initiated at different tim es, share a common philosoph y:  increased trade and 
investment with the United States offers tangible, long-run benefits not readily achievable through our 
development assistance programmes.   
 
8. It is noted that the draft decisions submitted by the United States with the waiver requests are 
considerably different in their language than the exi sting waiver decision in respect of the CBERA (in 
G/L/104) as well as the one in respect of the ATPA (WT/L/184) that expired on 4 December 2001. 
  Can the US kindly explain the proposed changes and the reasons for those changes? 
  G/C/W/518 
 Page 7 
 
 
  The United States is not simply seeking renewal of existing waivers on previous programmes, 
but an expansion of the waivers to cover additiona l benefits conferred in the revised programmes.  
The language of the waiver requests and draft decisions reflects those additional benefits. 
 Questions and comments from China
 
 
1. Both AGOA and CBERA as amended entered  into force in 2000 while ATPA as amended 
entered into force in 2002. We would like to k now why the United States has just recently notified 
these schemes to the WTO.  
 The United States sees compliance with WTO obligations as an essential element of 
Membership in this Organization.  These progr ammes have been updated and refined on several 
occasions in recent years improve their effectiven ess.  Most recently, the AGOA Acceleration Act, 
passed in the summer of 2004, contained significant refinements to the programme.  We felt it was 
best for our submissions to reflect all of these rece nt changes, and to be vetted informally with our 
partners.  We have been consulting informally w ith the beneficiary countries on these submissions.   
 
2. In each of the three requests, the United Stat es is requesting not only a waiver for Article I of 
GATT but also one for Article XIII which deals w ith non-discriminatory adminis tration of quantitative 
restrictions. Could the United States elaborate a bit more as to why it also requests a waiver for Article XIII and how this Article is related? 
 
 The preferences contained in each these programmes, AGOA, CBERA and ATPA, consist primarily of duty-free treatment on goods entering the US market.  In some cases, the duty-free 
treatment is subject to quantitative restrictions (QRs).  The requests submitted to the WTO in 
February 2005 contain draft decisions to waive both Article I (most favored nation (MFN) on duties) 
and Article XIII (non-discrimination in QRs) to permit the provision of benefits through these 
programmes. 
 
3. The benefit of preferences for textile and ap parel products is conditional on use of US 
material or components. It is shared in studies by various authors including the World Trade Report 
published by the WTO that such rules of origin  have negative impacts on the beneficiary country 
members. No wonder such kind of rules of origin hinders the ability of those members in adjusting to 
the post-ATC era. So our question is whether the Un ited States is considering relaxing such rules so 
that preference-receiving country members can benefit from these schemes more genuinely. 
 
 The preference programmes currently contain provi sions that provide preferential treatment to 
apparel articles assembled from re gional and third-country yarns and fabrics.  The programmes 
provide preferential treatment to apparel articles ass embled from regional fabric , subject to generous 
annual limits.  In addition, the AGOA also provides pr eferential treatment to apparel assembled using 
third-country fabric, subject to generous annual limits.  These provisions have been a popular aspect 
of the programmes and h eavily utilized each year. 
 
4. Since the entry into force of these preference schemes, how much  bilateral textile and clothing 
trade has taken place between the United States and the beneficiary countries?  
See attached table. 
  
 G/C/W/518 
Page 8 United States Imports of Apparel 
(General Imports, Customs valuation, Millions of Dollars) 
                          
Apparel (SITC 84) Imports 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992     
     AGOA Program (excl GSP) 0 0 0 0 0 0 0 0 0 0     
     ATPA (Andean) Program 0 0 0 0 0 0 0 0 0 0     
     CBI Program 0 1 12 3 6 9 16 12 10 35     
     CBTPA Program 0 0 0 0 0 0 0 0 0 0     
                          
  1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 
     AGOA Program (excl GSP) 0 0 0 0 0 0 0 0 355 799 1,197 1,614 
     ATPA (Andean) Program 2 4 3 4 3 3 2 2 2 0 759 1,158 
     CBI Program 56 52 64 72 79 63 61 94 99 92 93 24 
     CBTPA Program 0 0 0 0 0 0 0 159 5,116 6,036 6,252 6,489 
                          
Apparel (HS 61+62) Imports 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992     
     AGOA Program (excl GSP) 0 0 0 0 0 0 0 0 0 0     
     ATPA (Andean) Program 0 0 0 0 0 0 0 0 0 0     
     CBI Program 0 1 11 2 1 1 1 1 3 17     
     CBTPA Program 0 0 0 0 0 0 0 0 0 0     
                          
  1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 
     AGOA Program (excl GSP) 0 0 0 0 0 0 0 0 355 798 1,197 1,613 
     ATPA (Andean) Program 0 2 1 2 2 1 1 2 1 0 758 1,156 
     CBI Program 34 36 47 48 60 45 49 75 79 73 73 4 
     CBTPA Program 0 0 0 0 0 0 0 159 5,111 6,029 6,247 6,483 
                          
Note:  Apparel data is given for comparison purposes and may differ from data supplied by OTEXA.           
                          
Data Source: ITC website and TPIS database.                     
 
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