Report from the Commission to the Council on the respect of market access commitments by WTO Members in the textiles and clothing sectors
Date: 1997-05-15
Institutions: European Commission
Subjects: World Trade Organisation, clothing, market access, textile product, trade policy

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  15.05.1997 
COM(97)  219 final 

Report from the Commission to the Council on the respect of market access 
commitments by WTO Members in the textiles and clothing sectors 

1.0 

Introduction 

In  accordance  with  Article  1(7)  of  Council  Regulation  (EEC)  No.  3030/93l  the 
Commission  presents  its  report  on  the  respect  by  third  countries  of  their  commitments 
under the WTO  rules  and disciplines referred  to in Article 7 of the WTO  Agreement  on 
Textiles and Clothing (ATC). 

Article 7 of  the  ATC stipulates  that WTO Members  shall  take such  necessary  actions  to 
abide by GATT  1994 rules and disciplines so as (a) to achieve  improved  market  access, 
(b)  to  ensure  the  application  of  fair  and  equitable  trading  conditions  in  such  areas  as 
dumping,  subsidies  and  intellectual  property  rights,  and  (c)  to  avoid  discrimination 
against imports when taking measures for general trade policy reasons. 

According  to  the  provisions  of  the  article,  and  following  authorisation  by  the  Dispute 
Settlement  Body,  importing  members  have  the  possibility  to  cut  back  the  increased 
growth  rates  provided  for  under  Article  2.14 of the  ATC  should  any  exporting  member 
breach their Article 7 commitments. 

Article 7 provides that these obligations  are to be fulfilled  with reference  to the  specific 
commitments  undertaken by Members as a result of the Uruguay  Round.  For this reason 
the present report concentrates  on instances where WTO members  have clearly  infringed 
GATT  1994 rules and disciplines and where these infringements  have been brought to the 
attention of the Commission. 

Finally,  it  should  be  remembered  that  three other  reports  have been  prepared  on  similar 
subjects  related  to  that  being  covered  by  this  report.  The  Commission  services  have 
recently submitted a report to the Article  113 Committee on the overall implementation of 
GATT  1994  commitments  by  contracting  parties.  In  addition,  the  Textiles  Monitoring 
Body has prepared  a report on implementation  of the ATC2 and the Council  on Trade in 
Goods has also prepared a report on the same subject3 - however, since these reports have 
largely relied upon notifications  by WTO Members this aspect of implementation was not 
fully  covered. 

1 OJNoL275,  8.11.1993, p. 1. 
2 WTO document, G/L/113 of 4 October  1996 
3 WTO document, G/L/134 of 5 November 1996 

2.0 

The achievement of improved market access 

2.1 

Trade 

Annex  I to  this  report  provides  historical  details  of  trade  with  selected  WTO  members 
including  all  those  whose  textiles  and  clothing  exports  are  subjected  to  Community 
quantitative  restrictions  for  specific  product  categories.  In  global  terms  (including  trade 
with  non-WTO  members)  Community  exports  have increased  steadily  over recent  years. 
If  one  looks  at  individual  export  markets  this  trend  is,  largely,  repeated.  In  particular, 
exports  to  the  ASEAN  countries  have  increased  significantly,  in  some  cases  doubling 
between  1993 and 1995. 

While  in several  cases the  level  of exports  remain  disappointingly  low and  while  market 
access problems do remain  with many third countries  it can  be reasonably  assumed,  from 
looking  at  the  trade  statistics,  that  market  access  conditions  for  Community  exports  of 
textiles and clothing products have been  improving. 

2.2 

Obstacles to Market Access 

In line with the principles elaborated  in its recent Communication  "The Global  Challenge 
of  International  Trade:  A  Market  Access  Strategy  for  the  European  Union"4  the 
Commission  has  held  comprehensive  consultations  with 
industry,  Member  State 
representatives  and  the  Commission's  own  delegations  in  third  countries  in  order  to 
determine  the  extent  to  which  WTO  commitments  are  being  honoured  by  our  WTO 
partners.  Based  upon  the  information  received  the  Commission  has  established  a  data 
base  of  market  barriers  existing  in  third  countries  which  has been  circulated  to  Member 
States and industry for their reference, use and comments. 

2.2.1  Tariffs 

Argentina  has recently  adopted  specific  duties which  are in  violation  of  the tariff  binding 
commitments  given  during  the  Uruguay  Round  negotiations.  After  consulting  Member 
States  the  Commission  entered  into  consultations  with  Argentina  under  Article  XXII of 
GATT  1994 and has joined, as a third party, the US request for a dispute panel. 

Of  additional  concern  is  the  fact  that,  as  regards  textiles  and  clothing  products,  some 
countries,  notably  Brazil,  Mexico,  South  Africa  and  South  Korea,  have  increased  their 
applied tariff  rates while staying within their bound rates. Although  not incompatible with 
these countries respective WTO commitments, such actions can be criticised for  reducing 
the  level  of effective  market  access.  The  Commission  has made  representations  to each 
of  these  countries  and has  requested  a return  to the previous  tariff  rates.  In  the  specific 
case  of  South  Korea  Member  States  supported  a Commission  decision  to  suspend  GSP 
benefits  on textile and clothing products. 

4 COM (96) 53 final 

In  contrast,  other  countries,  such  as  India,  Indonesia  and  Pakistan,  have  improved  their 
tariff  bindings  compared  to  their  commitments  agreed  at  Marrakesh.  This  welcome 
development  occurred  as the  result  of continued  encouragement  from  other  WTO  partners 
and  followed  exhaustive  market  access  negotiations  with  major 
importing  nations, 
including  the  European  Community.  This  is  of  particular  importance  in  relation  to  both 
India  and  Pakistan  which  were previously  considered  as closed  markets.  In  addition,  India 
has  autonomously  announced  a  further  reduction  in  its  applied  tariff  rates  for  selected 
textiles  products. 

Other  countries,  most  notably  Thailand,  have  substantially  reduced  their  applied  tariff 
rates  although  no  modifications  have  been  made  to  the  bound  rates.  It  should  be  noted 
that  the  majority  of  third  countries  maintain  applied  tariff  rates  substantially  below  their 
WTO  bound  limits. 

2.2.2  Non-Tariff  Measures 

introduced 
As  regards  Argentina,  the  Commission 
Argentine  measures  regarding  the  labelling  of  textiles  products  and  the  requirements  for 
having  certificates  of  origin  validated  by the  Argentine  consulate  in  the country  of  export. 
The  Commission  has  entered  into  consultations  with  Argentina  under  Article  XXII  of 
GATT  1994  subsequent  to  which  Argentina  has  made  certain  changes  to  its  legislation  in 
order  to comply  with  its WTO  commitments. 

is  also  concerned  over  recently 

In  the  case  of  South  Korea  the  Commission  was  notified  of  certain  chemical  testing 
procedures  on  carpets  which  complicated  import  and  were  therefore  considered  as 
technical  barriers  to trade.  After  consultations  with  the  Korean  authorities  agreement  was 
reached  that  they  would  adopt  a  testing  system  similar  to  that  of  the  Community.  The 
new  Korean  legislation  entered  into effect  on  15 June  1996. 

The  Community  also has  an  ongoing  dispute  with  the US  over the  implementation  of  new 
rules  of  origin  for  textiles  products.  Should  a  satisfactory  outcome  to  this  dispute  not  be 
found  the  Commission  reserves  its  right  to  propose  that  a  formal  complaint  be  made  to 
the  Textiles  Monitoring  Body.  At  the  same  time,  industry  has  submitted  a  complaint 
under  the provisions  of  the Trade Barriers  Regulation. 

The  Commission  has  received  complaints  from  European  industry  and  from  certain 
Member  States  regarding  the  difficulty  of  obtaining  import  licences  for  textiles  and 
clothing  products  despite  assurances  given  in  the  EC/India  bilateral  agreement  on  market 
access  for  textiles.  Under  the  provisions  of  the  agreement,  the  Commission  intends  to 
hold  bilateral  consultations  with  India  on  this  matter  as  soon  as  possible. 
The 
Commission  has  also  raised  the  more  general  issue  of  the  import  licencing  measures 
maintained  by  India  under  balance  of  payments  provisions  in  the  review  which  is  being 
conducted  by the WTO/BoP  Committee. 

H-

2.3 

Conclusion 

Other than the instances indicated  above the Commission  is not aware of  instances  where 
a  WTO  Member  has  not  complied  with  its  Uruguay  Round  commitments  in  relation  to 
tariff  reductions  and bindings, non-tariff  barriers  or customs,  administrative  or  licensing 
formalities,  applying  to  textiles  and  clothing  products.  Nevertheless,  should  any  such 
instances  be brought  to the Commission's  attention  all  appropriate  legal  channels  will  be 
used in order to ensure that these obstacles to trade are removed. 

3.0 

Fair and equitable trading practices 

In  the  areas  of  dumping  and  anti-dumping  rules  and  procedures,  subsidies  and 
countervailing  measures,  and  protection  of  intellectual  property  rights  the  Commission 
has not been informed  by Member States, by industry or by any other sources of  instances 
where  WTO  Members,  in  relation  to  the  textiles  and  clothing  sectors,  have  applied 
policies inconsistent with GATT  1994 commitments. 

This  is  not  to  say  that  the  Commission  has  not  encountered  cases  of  unfair  trading 
practices  in the  above  mentioned  areas  and  a number  of  procedures  have  been  launched 
(details are provided in Annex II to this report). 

Should  any such  instances  be brought to the Commission's  attention  all  appropriate  legal 
channels will be used in order to ensure that these obstacles to trade are removed. 

4.0 

General  discrimination 

The  Commission  has  not  been  informed  by Member  States, by  industry  or  by  any  other 
sources  of  instances  where  WTO  Members  have  discriminated  against  imports  in  the 
textiles  and  clothing  sector  when  taking  measures  for  general  trade  policy  reasons. 
Nevertheless,  should  any  such  instances  be  brought  to  the  Commission's  attention  all 
appropriate legal channels will be used in order to ensure that these obstacles to trade are 
removed. 

5.0 

Conclusion 

The Commission  concludes  that most WTO Members have generally  abided  by  specific 
commitments on tariffs  and non-tariff  specific  barriers made under the Uruguay  Round. 

The  Community  has  acted  swiftly  to  deal  with  breaches  of  WTO  commitments  by 
Argentina and the US.  These will be pursued  in the appropriate WTO Bodies. 

Where countries have not abided by the spirit of Article 7 and have taken  measures which 
effectively  limit  market  access,  notably  Brazil,  Mexico,  South  Africa  and  Korea,  the 
Commission has also begun bilateral contacts. 

Problems relating to import licences in India will  be dealt with both bilaterally under the 
EC/India market access agreement, and in the WTO/BoP Committee. 

The Commission considers that the Community should use all the various instruments of 
the WTO relating  to  market access  systematically  in  order to  raise  these  and any other 
issues that European industry and Member States consider important, so as to ensure that 
the TMB takes these matters fully into account in preparing its report to the Council  for 
Trade in Goods on the first stage of the ATC. 

Annexes (2) 

fo 

European 

Commission 

ANNEX  I 

Directorate  General 

External  Relations 

EC TEXTILES AND CLOTHING TRADE 1992-1995 WITH WTO COUNTRIES SUBJECT TO QUOTAS 

DOMINANT  SUPPLIERS 

HS-CHAPTERS  50-63 

TRADE  V O L U M E ( M E C U) 

1992 =  100 

PARTNER 

SOUTH  KOREA 

HONG  KONG 

MACAO 

FLOW 
Imports 

Exports 
Balance 

Imports 
Exports 

Balance 

Imports 

Exports 

Balance 

1392 

1993 

1994 

1995 

1992 

1993 

1994 

1995 

1,079 

300 

-779 
2,590 

772 
-1,818 
426 

3 

-422 

931 

345 
-587 
2,810 

992 
-1,819 

453 
4 

-449 

852 
514 

-338 
2,623 

1,267 
-1,355 

448 

5 

-444 

828 

673 

-154 
2,601 

1,284 
-1.318 

415 
6 

-408 

100 

100 

100 

100 
100 

100 

100 
100 

100 

86 

115 
75 

109 

128 

100 
106 

130' 

106J 

79 

171 
43 

101 
164 

75 

105 
151 

105| 

77 

225 
20 

100 

166 

72 

97 
201 
97 

INDIAN SUB-CONTINENT 

HS-CHAPTERS  60-63 

TRADE VOLUME  (MECU ) 

1992  = 1 00 

PARTNER 

PAKISTAN 

INDIA 

SRI  LANKA 

FLOW 

Imports 

Exports 

Balance 
Imports 

Exports 
Balance 

Imports 

Exports 

Balance 

1992 

1993 

1994 

1995 

1992 

1993 

1994 

1995 

980 

56 

-924 

1,870 

42 
-1,828 

325 

38 

-286 

1,074 

58 

-1,016 

2,203 
66 

-2.136 

400 

50 

-350 

1,171 

46 
-1,124 

2,560 
87 

-2,472 

457 
64 

-394 

1,231 

55 

-1,176 
2,947 

105 
-2,842 

476 
75 

-401 

100 

100 

100 

100 

100 
100 

100 

100 

100 

110 

102 

110 

118 
158 

117 

123 

131 

122 

119 

82 

122 

137 

208 
135 

141 

166 

137 

126 

97 

127 

158 
249 

155 

147 

195 

140 

HS-CHAPTERS  50-63 

TRADE VOLUME  (MECU ) 

1992 =  100 

ASEAN 

1992 

1993 

1994 

1995 

1992 

1993 

1994 

1995 

PARTNER 

THAILAND 

INDONESIA 

MALAYSIA 

SINGAPORE 

PHILIPPINES 

FLOW 

Imports 
Exports 
Balance 
Imports 

Exports 

Balance 

Imports 

Exports 

Balance 

Imports 

Exports 

Balance 

Imports 

Exports 

Balance 

912 
60 

-852 
1,372 
46 

-1,326 

483 

40 

-443 

227 

165 

-62 

357 

45 

-312 

905 
68 
-837 
1,466 

58 

901 

91 
-811 
1.559 

92 

866 
109 
-757 
1,508 

126 

-1,409 

-1.466 

-1,382 

100 
100 
100 
100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

464 

83 

-381 

9S 

290 

191 

306 

52 

-254 
\ 

10G 

99 
113 
98 
107 

124 

106 

104 

122 

103 

76 

127 

-60 

100 

103 

100 

99 

151 
95 
114 

199 

111 

109 

162 

105 

55 

169 

-248 

96 

113 

94 

95 

182 
89 
110 
271 

104 

96 

207 

86 

44 

176 

-308 

86 

114 

82 

504 

49 

-455 

173 

210 

37 

359 

47 

-312 

528 

65 

-463 

125 

279 

154 

343 

51 

-292 

T-

European 

C o m m i s s i on 

ANNEX  I 

LATIN AMERICA 

D i r e c t o r a te  General 

E x t e r n al  Relations 

j 
| 
| 
1 

i 

S 

! 

| 
1 

HS-CHAPTERS  50-63 

TRADE  VOLUME  (MECU ) 

1992  = 

=  100 

PARTNER 

PERU 

BRAZIL 

ARGENTINA 

FLOW 
Imports 
Exports 

Balance 
Imports 

Exports 

Balance 

Imports 

Exports 
Balance 

1992 

1993 

1994 

1995 

1992 

1993 

1994 

1995 

122 

4 
-117 
322 

82 

-240 

115 

71 
-44 

104 

9 

-95 

270 

153 

-117 

130 

108 

-21 

100 
6 

-94 

279 

150 

-130 

81 

84 

3 

CEECs 

104 
13 
-91 

241 

209 

-32 
178 

80 

-98 

100 
100 

100 

100 

100 

100 

100 

100 

100 

82 
138 

80 

87 

183 

54 

70 

1Ï 8~ 

-7 

85 
204 

81 

84 
187 

48 

113 

153 
48 

86 
299 

78 
75 

256 

13 

155 

113 
223 

HS-CHAPTERS  50-63 

TRADE VOLUME  (MECU ) 

1992 =  100 

PARTNER 

POLAND 

CZECH  REP. 
(1992.  estimated) 

SLOWAKIA 

(1992  estimated) 

HUNGARY 

ROMANIA 

BULGARIA 

FLOW 

Imports 

Exports 

Balance 

Imports 

Exports 

Balance 

Imports 

Exports 

Balance 
Imports 

Exports 
Balance 

Imports 
Exports 

Balance 

Imports 

Exports 

Balance 

1992 

1993 

1994 

1995 

1992 

1993 

1994 

1995 

1,114 

943 

-170 

489 

320 

-169 

177 

101 

-75 
658 

554 
-104 

494 
324 

-170 
198 

136 

-62 

1,394 

1,204 

-190 

565 

448 

-117 

208 

139 
-69 
700 

602 
-98 
644 

449 

-195 
213 

155 

-58 

1,634 

1,446 

-188 

710 

584 

-126 

319 

180 

-138 
749 

683 
-65 
840 

575 
-265 
250 

214 

-37 

1,885 

1,738 

-147 

853 

748 

-105 

402 
267 

-135 
900 

832 
-68 

1,040 
783 

-257 

317 

278 

-40 

100 

100 

100 

100 

100 

100 

100 
100 

100 
100 
100 
100 

100 
100 

100 
100 

100 

100 

125 

128 

112 

116 

140 

69 

118 

137 

92 
106 
109 
94 

130 

139 
115 

108 
114 

93 

147 

153 

110 

145 

183 

74 

180 

178 
184 
114 

123 
63 

170 

177 

156 
126 

157 

591 

169 

184 

86 

174 

234 

62 

227 

263 

179 
137 
150 
66 

211 
242 

151 
160 

204 

64 

NOTES: 

Reporting countries  1992-1994 : EC12; 1995 : EC15 

Ceuntries with MFA or MFA-type agreements not subject to restrictions excluded 

& 

ANTI-DUMPING AND ANTI-SUBSIDY  MEASURES IN FORCE 
AGAINST WTO MEMBERS IN THE TEXTILE SECTOR 
AS AT 1st APRIL 1997 

Annex II 

PRODUCT 

ORIGIN 

MEASURE 

PUBLICATION 

-Cotton yarn 

-Polyester fibres 
and yarns 

-Polyester fibres 
(synthetic) 

Brazil 
Turkey 

Turkey 

duties 

OJL 82,27.3.92, p. 1 

undertaking 
(countervailing) 

OJ L 272, 28.9.91, p.92 

Turkey 

duties 

OJL347,  16.12.88, p.10 

-Polyester textured 
filament  yarn 

Indonesia 
Thailand 

-Polyester yarns 

Indonesia 
Turkey 

duties 

duties 

OJ L  128, 25.5.96, p.3 
OJ L  178, 17.7.96 

OJL88,3.4.92,p.l 
OJL141,  14.6.96. 

-Sisal twine 
(binder and baler) 

Brazil 

undertakings 

OJ L 251, 8.10.93 

-Synthetic textile 
fibres of polyester 

Turkey 
Romania 

duties 

OJL 306, 22.10.92, p. 1 

India 
South Korea 

duties 

OJL 9,  15.01.93, p.2 

<\ 

ONGOING ANTI-DUMPING  PROCEEDINGS 
AGAINST WTO MEMBERS 
AS AT 1st APRIL 1997 

PRODUCT 

-Bed linen 

-Cotton fabric  (grey) 

ORIGIN 

Egypt 
India 
Pakistan 

Turkey 
Egypt 
India 
Indonesia 
Pakistan 

TYPE 

INITIATION 

AD initiation 

13.9.96 

AD initiation 

21.2.96 

-Polyester yarn 
(POY/PTY) 

India 
Indonesia 

AD initiation 
Review  11/4 

29.7.94 
23.11.96 

-Polyester yarn 
(PTY) 

Malaysia 

AD initiation 

19.4.95 

-Polyester yarns 

Turkey 

review  11/4 

4.7.96 

-Polyolefin  sacks 
(small) 

-Synthetic fibre ropes 
(small) 

-Synthetic  fibres 
of polyester 

India 
Indonesia 
Thailand 

India 

India 

AD initiation 

13.4.95 

AD initiation 

4.4.96 

review  11/4 

4.7.96 

\o 

ISSN 0254-1475 

COM(97) 219  final 

DOCUMENTS 

EN 

11  02  10 

Catalogue number  :  CB-CO-97-210-EN-C 

ISBN 92-78-19654-1 

Office  for Official  Publications of the European  Communities 

L-2985  Luxembourg 

U