WORLD TRADE
ORGANIZATIONWT/GC/65
14 August 2002
(02-4435)
General Council
8 and 31 July 2002Original:  English
STATEMENT BY THE EUROPEAN COMMUNITIES
Agenda Item No. 14
The following statement by the delegation of the European Communities under item 14 at the
General Council meeting of 8 and 31 July is being circulated at the request of that delegation.
_______________
We are closing today several months of intensive discussions concerning the implementation
of the ATC.  I would like to thank Ambassador Supera maniam for all his efforts in trying to produce a
report that all Members could agree on.  Going be yond the divergence of views, I would like to focus
on one critical element:  we are now seven years and a half into the process of integration of thetextiles and clothing sector under the normal rules of the WTO, and all Members are wholly
committed to the full and faithful implementation of the ATC.  This includes one major and definitive
element:  that the ATC itself will cease to exist as from 1 January 2005, and for good.  There is no
way back on this.
In addition, as the Report on the 2
nd Stage of the ATC pointed out, all countries were living up
to their commitments;  there may have been disagreements on a number of issues, but overall thingsare well on track.
This is the framework in which we should be looking at the issues on the table for this sector
today.  Against this background, we would like to stress several points.
First, as regards compliance with their ATC obligations, the so-called "restraining" Members
have proceeded carefully but faithfully with the integration of products under the ATC  in each
of the different stages, and as a consequence more than 51 per cent of their imports (in 1990 volume
terms) have now been freed and subject to normal WTO rules.  In the case of the EU, 82 quotas have
gone in the 2
nd and 3rd stages of integration.  We have not used the temporary safeguard mechanism of
Article 6 of the ATC a single time, and indeed we can note with satisfaction that the use of this
safeguard mechanism has gone down and almost fallen into disuse.
Second, facts show that the ATC has made a difference when it comes to exports from
"restrained" Members in real life .  In the case of the EU, imports from all WTO countries which
are subject to one or more quotas have grown between 1994 and 2001 by 58 per cent.  Imports into
the EU from the same WTO countries of products subject to quota have in fact grown more quickly,
by 66 per cent in the same period.  This growth is  not only higher than growth of all textiles and
clothing imports from those countries, but four percen tage points higher than the growth of all textiles
and clothing imports from all countries.  Such relatively good performance of exports to the EU of
products subject to quotas can be explained mainly by a combination of two factors:WT/GC/65
Page 2
- On the one hand, EU quotas vis-à-vis  WTO Members have increased steadily:  they
will have almost doubled in volume between 1994 and 2004, and this is due also to
the ATC provisions for accelerated growth.
- On the other hand, many of the EU quotas are not very much utilised and therefore
are not often a major restriction to imports:  in 2001, out of a total 299 quotas applied
vis-à-vis  WTO countries, only 40 were utilised at 95 per cent or more, or just 13.4 per
cent of the total number of quotas.
And total EU textiles and clothing imports under quota have represented over the last few
years a consistently low share of total textiles and clothing imports:  between 23 per cent and a quarter
only, out of a total figure of imports that reached in 2001 €72.2 billion, accounting for one third oftotal consumption of textile products and garments in the EU.
Another factor that explains the quite good pe rformance of non-EU suppliers – and especially
from developing countries, which are by far our largest suppliers – are low custom duties and the
absence of technical barriers to trade .  The average EU import duties in the sector are amongst the
lowest in the world (9 per cent), and there are no tariff peaks (maximum duties do not exceed 12 per
cent).  In addition, the EU does not maintain any quotas against least developed countries, which
benefit from full duty exemption, i.e. zero duty for textiles and clothing.  Some 40 per cent of our
imports come duty free, almost all from developing countries.  And to this we must add that over one
third of EU imports from developing countries benefit from reduction of duties under the GSPscheme.  Over 90 per cent of yearly increases in EU imports in this sector is accounted for by
developing countries.  The EU has an integrated internal market with no technical or administrative
barriers to imports of textiles and clothing products.
And the EU textiles and clothing industry has taken its share of the brunt of this steady market
opening in the sector.  The EU textiles and cl othing industry had in 1995 132,162 firms and employed
2,549,100 people; in 2001 the figures were 112,968 companies and 2,117,200 people (drops of 17 per
cent and 20 per cent respectively, mostly in areas experiencing difficulties of industrial decline in the
EU).
In this discussion, we must say a word about how this record of compliance compares with
other WTO Members , especially those who have been pressing us to do more.  Practically by any
measure we take, we can observe that our imports in  the sector bear no comparison with the extremely
low levels of imports of many of those countries that are insisting most on the EU and other countries
to proceed to faster liberalization of their markets over and above their ATC obligations.  A quick
look at document G/C/W/40 2 shows that imports of clothing products from some of these countries –
not only from the EU but also from among themselves – are very low – and in some cases negligible,and generally very modest for textiles.
The EU requested the WTO Secretariat for comparative information on the rates of duties
applied and bound by its Members (G/C/W/406).  Its reading will enable all to assess here who is
providing how much market access to whom.  As compared with the so-called "exporting countries",EU tariffs are considerably lower:  its 9 per cent average duties – the same it applies – contrast with
duties bound at much higher levels or not bound at all;  it is not rare to find among those countries
average bound levels of 20 per cent, several at around 30 per cent, and even some at 35 per cent.  That
document contains some shocking figures, such as a few bindings at 100 per cent or more, not to
speak about the high proportion of non-bound tariff lines by some countries or the frequent presenceof specific duties.  This shows that during the seven and a half years of the life of the ATC there has
been a much more acute focus on the opening of the markets of countries and entities such as the EU
than on the many countries that are already benefiting most from their exports, increasingly
unhampered, to other countries.WT/GC/65
Page 3
Where would this leave the request for "rebalancing" the ATC and contained in
paragraphs 4.4 and 4.5 of the Doha Ministerial Decision on Implementation?   I will concentrate
here on the proposal in paragraph 4.5 since, as regards paragraph 4.4, the EU has already been
applying the most favourable available methodology for imports from small suppliers.
We understand that the restrained Members would like to have increased access to markets
such as the EU.  But we have two significant proble ms here.  The first is that we fail to see any need
for rebalancing:  no failed expectations can be claimed as instances of non-compliance by the EU with
its ATC obligations have not been proved.  The proposals for a recalculation of the "growth-on-
growth" provisions would introduce a new commitment absent in the ATC, which established very
precise calculations for the acceleration of the growth rates of quotas.  In our case, this would require
a change of current legislation, as increases in quotas can take place only as implementation ofagreements or stand-alone legal acts that we would need to justify properly.
It is this second test that fails to be met also.  It would be highly difficult for us to justify a
concession to a number of countries which, in many instances, have not opened their textiles and
clothing markets in a meaningful way, so as to enable imports to meet demand for many products inwhich the EU is competitive and for which many of those countries have a good potential market.  We
would also find it very difficult to justify a concession that would actually mostly benefit – for more
than half – countries which, not being Members of WTO at the time of negotiation of the ATC,
cannot therefore hold any legitimate expectation from the implementation of the ATC.
I would like to conclude with a final remark.  The ATC is designed to put an end to thirty
years of textiles and clothing quotas.  It was a very finely balanced instrument and one of the
cornerstones of the WTO.  The EU has done its share of adjustment in the sector prompted by
constant market opening.  Unfortunately, we do not observe that many other countries are taking real
steps to secure that there will be a level playing field in textiles trade world-wide, and this worries us,because the EU is the largest textiles exporter in the world and the second largest combined exporter
of textiles and garment products, and we consider that textiles trade should not be a one-way affair.
In this context, whilst reasserting once more our commitment to the end of the quota system in 2005,
we do not think that there is much to gain by keeping what amounts to a certain re-reading of the ATC
and to constantly try to go beyond what it actually says and which was agreed by all WTO Members.
__________