Notice on the application of Article 10a of Council Regulation (EEC) No 3030/93 concerning a textiles specific safeguard clause
Date: 2005-04-27
Institutions: European Commission
Subjects: China, clothing, common commercial policy, protective clause, textile industry, textile product

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Notice on the application of Article 10a of Council Regulation (EEC) No 3030/93 concerning a
textiles specific safeguard clause

(2005/C 101/02)

1. INTRODUCTION — OBJECTIVE OF THE GUIDELINES

The provisions of the textiles specific safeguard clause (here-
after ‘TSSC’) contained in the Protocol of Accession of China to
the WTO were incorporated into EU law by Council Regulation
(EC) No 138/2003 (1), in the form of a new Article 10a inserted
in Council Regulation (EEC) No 3030/93 (2). The new Article
10a is almost a literal transcription of the language contained
in China's Protocol of Accession to the WTO, the main addi-
tion being the establishment of
the internal EU decision-
making procedure, according to which decisions are adopted
following what is called ‘comitology procedure’ (cf. description
further below).

These guidelines are for the information of interested parties
and do not constitute a legal instrument. They reflect the policy
intention of the Commission to follow certain procedures and
criteria for the application of the TSSC, and therefore should
not lead to any legally legitimate expectations regarding the
individual decisions that the Commission will adopt on the
TSSC in conformity with the relevant regulations, and which
will have to result from a case-by-case examination to ensure
that any action under the TSSC is fully justified. Since the
Commission has wide powers under the Community legislation
for the application of the TSSC, these guidelines explain to
interested parties how the Commission intends to exercise
these powers.

in response to these concerns,

Since its adoption, the provision has raised a number of ques-
tions of interpretation, and concerns have also been expressed
regarding the need for the greatest possible transparency to be
introduced in the procedures and for more predictability
regarding the Commission policy on its implementation. The
indicated in its
Commission,
communication on ‘Textiles and clothing after 2005’ of 13
October 2004 (3)
it would make available ‘guidelines
containing procedures and criteria that the Commission intends
to follow, in conformity with the relevant Regulations adopted
by the Council, for the application of safeguard clauses, in par-
ticular for the textiles-specific safeguard clause established in
China's Protocol of Accession to the WTO’. This communica-
tion contains an indication (hereafter called the ‘guidelines’) of
the way the Commission intends to apply the TSSC.
Its
purpose is therefore to inform interested parties of:

that

(a) the criteria for

the application of
Commission considers should apply;

the TSSC that

the

(b) the procedures for a diligent handling and examination of
requests for the application of
the TSSC, providing an
opportunity for any interested parties to be involved in the
process, that the Commission intends to apply.

The guidelines also explain the ‘early warning system’, which
the Commission intends to use to guide it in deciding whether
to open an enquiry and consult
intensively with China if
certain ‘alert levels’ are reached. This will be without prejudice
to the actual application of the TSSC, which will depend on the
conditions specified therein.

2. DESCRIPTION OF THE SPECIFIC TEXTILES SAFEGUARD

CLAUSE

The Report of the Working Party on the Accession of China to
the WTO (4) attached to the Protocol of Accession of China to
the WTO (5) introduced in its paragraph 242 a provision that
would enable WTO Members to introduce safeguard measures
vis-à-vis imports of textile and clothing (T&C) products from
China, and this until the end of 2008 (6). The main elements of
the provision (reproduced in Annex 1) are the following:

(a) Conditions for invocation: the clause can be triggered ‘in
the event a WTO Member believes that imports of Chinese
origin of T&C products (…) were, due to market disruption,
threatening to impede the orderly development of trade in
these products’.

(b) Safeguard measures contemplated. The clause is triggered
by a request for consultations by the Member invoking the
clause. There are two steps: (a) upon request of consulta-
tions, China agrees to limit its shipments to the country
concerned in the relevant product category subject of the
to the amounts exported during the first 12
request
months of
the most recent 14 months preceding the
month in which the request for consultations was made,
increased by 7,5 % (6 % for wool products);
in the
absence of a mutually agreed solution, the WTO Member
concerned may introduce quantitative limits
such
amounts.

for

(b)

(1) OJ L 23, 28.1.2003, p. 1.
(2) OJ L 275, 8.11.1993, p. 3.
(3) ‘Textiles and clothing after 2005 — the Recommendations of the
High Level Group for textiles and clothing’, COM(2004)668 final, of
13.10.2004.

(4) Document WT/MIN(01)3 of 10 November 2001.
(5) Document WT/L/432 of 23 November 2001.
(6) This paragraph is considered a part of the Protocol of Accession of
China to the WTO, which in turn is an integral part of the WTO
Agreement, cf. paragraph 2 of the Accession Protocol.

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Such measures may be in force only for one year. However,
the question whether they can be extended is subject to
interpretation, as the text says that ‘no action taken under
this paragraph shall remain in effect beyond one year
without reapplication (…)’, thus leaving open the possibility
for a new application of the clause to the same products
after the expiry of the year period.

It is worth noting that the TSSC is an exceptional provision of
a transitional nature with no clear link with other safeguard
provisions or procedures in the WTO. Its uniqueness, which
implies that the approach followed in these guidelines cannot
be applicable in other safeguard instruments, comes from the
fact that it is destined to provide an additional means to facili-
tate the transition to the quotas-free regime that will be in
force from the time of expiry of the WTO Agreement on
Textiles and Clothing (ATC) on 31 December 2004, and taking
into account the accession of China to the WTO seven years
after the negotiations on the ATC concluded. It is also a parti-
cularly vaguely worded provision which can be applied with a
relatively wide margin of discretion and little room for chal-
lenge in the WTO.

Its standards for application appear to be lower than those in
force in the other WTO safeguard provisions. This may be attri-
butable to the fact that the measures available under the TSSC
are more limited in scope (only quantitative limits) and dura-
tion (maximum one year) than those possible under other safe-
guard instruments.

3. TRANSPOSITION OF THE TSSC INTO EU LAW

The TSSC was implemented into Community law by Council
Regulation (EC) No 138/2003 of 21 January 2003, which
introduced a new Article 10a into Council Regulation (EEC) No
in terms similar to the language contained in the
3030/93,
Protocol
to apply the
(see Annex 2) and granted power
mechanism to the Commission. The Commission thus is
empowered to take the decisions,
in consultation with the
Textiles Committee, concerning the request for consultations
(which triggers the imposition of self-limitations by China),
acting at the request of a Member State or on its own initiative,
and regarding the imposition of restrictions. It is this provision,
in conjunction with general principles of Community law, that
governs the application of TSSC in the Community.

Under Article 10a in Council Regulation (EEC) No 3030/93,
whose legal provisions are also reproduced in Annex 2 (1),
before the Commission requests formal consultations with
the Commission
China or before introducing restrictions,
submits a draft of
the measures proposed to the Textiles
Committee, and adopts it subsequently if the Committee votes
in favour by a qualified majority. In case of absence of qualified
majority, the Commission submits to the Council a proposal

(1) Cf. Article 17 of Council Regulation (EEC) No 3030/93, which was
amended by Council Regulation (EC) No 391/2001 of 26 February
2001.

without delay, after which the Council may reject, amend or
revoke the Commission proposal by a qualified majority.
However, if the Council fails to reach a position by a qualified
majority within one month, then the Commission adopts the
proposed measures. In case the Council opposed the measure
by a qualified majority,
then the Commission should re-
examine it, and may then either make an amended proposal,
resubmit its proposal, or present a legislative proposal; after the
expiry of one month without a Council Decision, then the
Commission should adopt the act.

This present Communication explains the criteria according to
which decisions will be taken, which will be addressed in
Section 4, and the procedures for the handling of complaints
and in the decision-making, which will be addressed in Section
5. It also describes the ‘early warning system’ designed to mini-
mise the risk of market disruption and therefore having to
resort to safeguards (Section 6). Finally, some levels of imports
are indicated, below which the Commission does not intend, in
principle, to invoke the safeguard clause (Section 7).

4. DEFINITIONS AND CRITERIA FOR THE APPLICATION OF

THE TSSC

The TSSC can be applied when ‘imports into the Community
textile and clothing products originating in China and
of
covered by the ATC threaten to impede, owing to market
disruption, the orderly development of trade in those products’.
A number of key elements, as set out below, deserve explana-
tion. This explanation should not be regarded as binding or
it merely sets out, for the benefit of interested
authoritative;
parties, the Commission's understanding of these elements.

(a) Causes of the disturbance

The cause of the disturbance — disorderly development of
trade due to market disruption — has to be ‘imports of textile
and clothing products originating from China and covered by
the ATC’. The origin of the products, as determined in accord-
ance with the rules in force in the Community, is relevant, no
matter if they come directly from China or through other inter-
mediate territories. The products concerned must be covered
by the WTO Agreement on Textiles and Clothing (ATC).

(b) ‘Threat to impede the orderly development of trade in

textile and clothing products’

The TSSC was agreed in the WTO accession negotiations with
China as an additional safeguard mechanism available in par-
ticular after liberalisation in the ATC has taken place, to take
into account the very important production and export poten-
tial of China in textiles and clothing. In particular, its objective

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was to ensure a transition as smooth as possible to the quota-
free trade environment prevailing in the sector from 2005. For
this reason, the TSSC establishes as a trigger that the evolution
the
of
orderly development of trade’ in textile and clothing products.

imports from China must

‘threaten to impede (…)

trade’

the ‘orderly development of

Such a concept has not been defined in WTO law or jurispru-
dence, nor is it found in EU legislation. In order to assess
whether
in textile and
clothing products is being threatened, the Commission will
take into account as a main indicator the existence of a rapid
rise or surge in imports, in absolute or relative terms. A small
percentage change cannot be considered sufficient to trigger
the application of the TSSC. The increase must be rapid and
steep, in a way that it can be considered as a significant altera-
tion of trade patterns in a given product or group of products.
It may concern the quantities imported, or the values of the
products imported, or both. For instance, an increase of several
tens of percentage points in products where China is already a
dominant supplier — or by more in those cases where the
quotas for China were low in relative terms — in a matter of a
few months in 2005 as compared with the same period in
2004 can be considered as a rapid increase in imports.

In this context, increases such as those indicated in tables A
and B of Section 6 can be considered as in principle ‘threa-
tening to prevent the orderly development of trade in textile
and clothing products’. Conversely, the Commission will
in
that below certain rates of growth of
principle consider
imports, as indicated in Section 7, there is not such a ‘disor-
derly development of trade’, as certain increased imports can be
considered as a normal consequence of
the elimination of
quotas.

Such a rapid increase of imports need not be in absolute terms,
it can also be in relative terms. However, the case for action to
the increase is only in relative terms will
be envisaged if
obviously be weaker and more difficult to justify, except in case
the imports took place under certain conditions (for instance in
case of significant price drops or significant drops in exports to
the EU from, for example, Euro Mediterranean or ACP partner
countries), so as to ‘threaten to impede the orderly develop-
ment of trade’. In particular in cases of increased imports from
China in relative or absolute terms which cannot be considered
a surge in imports, a relevant factor to take into account will
be the evolution of import prices, which will normally have to
be assessed as average unit import prices as can be determined
by import statistics. Significant drops of average unit import
prices (especially if there is price undercutting as compared

with other suppliers) combined with such increases in imports
are likely to result in market disruption and constitute a threat
to the ‘orderly development of trade’.

(c) Market disruption

Drawing from the definitions and practice in other WTO and
EC safeguard instruments (1), market disruption can be consid-
ered to exist, whenever imports of a product, or a category of
products, are increasingly rapidly, either absolutely or relatively,
or under such conditions, so as to be a significant cause of
material injury, or threat of material injury, to the Community
industry. Factors to be taken into consideration in determining
whether market disruption exists are inter alia the volume of
imports concerned, the effect of such imports on prices for
such products in the EU, and the effect of such imports on the
EU industry producing these products.

In accordance with this internationally agreed definition of
‘market disruption’, there is no need for actual injury to materi-
alise, as in that case it would be too late for any measure to be
effective, and therefore a threat of such injury can be sufficient.
However, the threat of injury should be qualified and cannot be
it should be imminent and appear from the
hypothetical:
current evolution of imports. In this respect, a requirement for
the consideration of the existence of a threat of injury should
be an actual rapid increase, in absolute or relative terms, of
imports. A mere likelihood that such an increase may take
place — for instance after the elimination of import quotas —
should not be enough. Such a rapid increase in imports should
be assessed in particular comparing the evolution of imports in
a given relevant period (not shorter than 2 or 3 months) with a
similar period in preceding years.

Another important element to take account is the evolution of
import prices, as any significant drop of such prices or an
undercutting of prices as compared for instance with other
major suppliers can provide an indication of market disruption

It should also be examined whether the volume of imports and
their price have or will have a direct negative effect on the EU
industry. The impact on upstream industry (e.g. spinning,
weaving and knitting, or finishing industries) may also be rele-
vant and should not be excluded in the assessment of injury or
threat of injury to industry. All available relevant data will be
used to assess the actual or expected impact on affected EU
industry, such as, for instance, the evolution of production,
market share, sales, employment, profitability and supply chain
effects.

(1) Cf. Article 2.1 of the WTO Agreement on Safeguards on the condi-
tions for the application of safeguard measures, and paragraph 16.4
of the Protocol of Accession of China to the WTO (the Transitional
Product Specific Safeguard Mechanism or TPSSM, Article 2.1 of
Council Regulation (EC) No 427/2003 on a transitional product-
specific safeguard mechanism for imports from China and Article
16.1 of Council Regulation (EC) No 3285/94 on the common rules
for imports.

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In order to take account of the multiplicity of products within
and among categories in the textile and clothing sector, and the
links and overlaps that may exist among them, it is considered
appropriate to maintain flexibility to define on a case-by-case
basis the products or groups of products concerned.

(d) Other relevant factors

One factor to be considered is the impact that a surge in
imports from China may have on other suppliers and in par-
ticular on the more vulnerable and textile-dependent devel-
oping countries (small developing country economies,
least
developed and ACP countries, and in particular Southern and
Eastern Mediterranean countries as they are part of the natural
zone of competitiveness of the EU textile and clothing industry
and are an important destination of both exports and invest-
ments of EU industry). A serious displacement from the EU
market of traditional suppliers can constitute a sign that trade
is being disturbed and have serious negative consequences that
it may be appropriate to remedy, although safeguard action
can be taken only if the criteria of ‘threat to prevent the orderly
development of trade’ and ‘market disruption’, as explained in
sub-sections (b) and (c) above, are met.

A positive determination that the conditions for the application
of
the TSSC have been met would in principle lead the
Commission to request formal consultations with China under
paragraph (a) of Article 10a. However, the Commission may
decide otherwise in case the invocation of the TSSC would
have important and tangible negative impact on the general
interest of the Community (e.g. other industries — upstream or
downstream -, EU industry with investments in China, consu-
mers or trade), which would clearly outweigh the positive
consequences of action for industry.

5. PROCEDURES AND TIMETABLE
PROCEEDINGS

FOR

SAFEGUARD

The Commission attaches great importance to the transparency
and expediency in the handling of its trade instruments, so that
when a Member State or other interested parties introduce a
request for safeguard action, there are procedures to treat them
in a way that all interested parties can be heard, decisions are
adopted within a reasonable period of time and are properly
motivated and communicated to the interested parties and to
the public in general. Such transparency should result
in
greater predictability and certainty for trade and business, and
make sure that decisions are taken in the best possible knowl-
edge of all relevant factors and after having heard all relevant
arguments. In cases of particular urgency, the Commission may
decide, however, to expedite its procedures involving a short-
ening of the deadlines or a simplified and accelerated process

of consultations, or take the necessary steps on the basis of the
information available.

In order to achieve these objectives, the Commission intends to
proceed as follows regarding the procedures for the implemen-
tation of the TSSC. Again, this must be regarded as an explana-
tion, for the benefit of interested parties, of how the Commis-
sion intends to exercise its powers. It should not be regarded as
binding or authoritative.

(a) Initiation of the procedure — Opening of an investiga-
tion and request for informal consultations with China

Before the invocation of the safeguard clause by requesting
formal consultations with China,
the
Commission will open an investigation in order to establish
facts and request informal consultations with China in order to
examine ways to avoid market disruption. This will be done
under two hypotheses:

is appropriate that

it

— at the request of a Member State,

— on the Commission's own initiative, which can be in two
instances: when in application of the ‘early warning system’
described in Section 6 certain ‘alert levels’ are reached; or at
the request of industry providing prima facie evidence of the
need for safeguard.

The same procedures will apply to investigations initiated ex-
officio or those initiated on the basis of requests.

(i) Initiation upon request from a Member State

In case a request contains sufficient prima facie evidence that
the conditions for the application of the TSSC as spelt out in
Section 4 are met, the Commission services will open an inves-
tigation and request informal consultations with the Chinese
authorities.

Prima facie evidence is understood to exist when the request
includes data and elements sufficiently pointing to the existence
of market disruption, either at the EU level or at an appropriate
lower geographical
level, and the ‘disorderly development on
trade’ as defined in Section 4 of these guidelines. Such requests
import levels are
in principle, not be admissible if
should,
below those indicated in Section 7 of this document.

Requests may concern one or more product categories, or indi-
vidual products within such categories.

The Commission will normally decide, within 15 calendar days
from the reception of the request, whether to launch an investi-
gation and request
the
request. Any rejection of a request will give the reasons for its
inadmissibility.

informal consultations or to reject

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The Commission will, in principle, not accept for examination
requests
that constitute basically a repetition of previous
requests that had been rejected, unless there were new elements
that justify their presentation.

ten working days. The Commission will seek all information it
deems to be necessary, including as appropriate by examining
representations from interested parties to make a determination
on whether to request formal consultations with China.

(ii) Initiation on the Commission own initiative

The Commission intends to initiate the procedures in two
hypotheses:

— when, based on information collected under the imports
monitoring system as detailed under Section 6 of these
guidelines, the ‘alert levels’ are exceeded;

— upon the presentation of sufficiently substantiated requests
by parties which are directly affected by market disruption.

In this second hypothesis, for requests to be admissible, they
should come from a body or group of enterprises within the
EU sufficiently representative of the sector or product in ques-
tion (this would not be the case, for instance, if there were two
or more associations of manufacturers of the same products
which held opposite views).

The Commission intends to apply to requests for safeguard
action received from industry the procedures and criteria
described in section (i) above.

(b) Publication of a notice and deadlines for comments

In case of the opening of an investigation, the Commission will
publish without delay a notice of initiation of an investigation
in the Official Journal (‘OJ’) of the European Union and in the
first page of
for
Trade (1).

the web-site page of Directorate-General

The Commission will disclose its findings to interested parties
inviting additional comment and may also conduct hearings, if
requested, of interested parties. The Commission will fix appro-
priate limits for this purpose. At the same time the investiga-
tion is opened the Commission will request informal consulta-
tions with China. The investigation and the informal consulta-
tions with China will be conducted simultaneously and within
the deadline of 60 days.

(d) Decision to request formal consultations with China

The Commission will reach its decision on the basis of the
information available at the end of the investigation, and will
present to the Textiles Committee the results and conclusions
of the investigations and of the informal consultations with
China.

In case the Commission makes a positive determination
regarding the applicability of the TSSC, it will without delay
call a meeting of the Textiles Committee to seek its opinion on
its intention to request formal consultations with China under
paragraph (a) of the TSSC. The Commission will provide the
Committee with a detailed factual statement of reasons and
justifications
together with ‘current data
showing the existence or threat of market disruption and the
role of products of Chinese origin in that disruption’ (2). The
further steps in the procedure are those indicated in Article 17
of Council Regulation (EEC) No 3030/93 (3).

the request,

for

The notice in the OJ and in the web-site of Directorate-General
for Trade will contain a summary of the basis for a safeguard
investigation, including as appropriate the main elements of a
request for safeguards that may have been presented, and invite
all interested parties to make, within 21 calendar days, submis-
sions with their views and providing relevant factual informa-
tion. It will also specify the procedures and timetable to be
followed by interested parties participating in the process.

After consultation of the Textiles Committee and, as appro-
priate, completion of the procedures provided for in Article 17
of Council Regulation (EEC) No 3030/93, the Commission will,
without undue delay, request formal consultations with China.
Its determination and the reasons for the decision to request
consultations will be published in a notice in the Official Journal
of the European Union and in the first page of the web-site page
of the Directorate General for Trade (4) and communicated to
the party that made the request.

(c) Investigation and informal consultations

The Commission will conduct an investigation to establish the
facts within 60 days from the publication of the notice. This
period can be extended once, in exceptional circumstances, by

(1) Address: http://europa.eu.int/comm/trade/index_en.htm.

In case the Commission finds that the conditions for the appli-
cation of the TSSC are not met, it will inform the complainant
accordingly with an indication of the reasons of the decision,
which will also be published in the OJ of the EU.

(2) Cf. first sub-paragraph of Article 10a).1.(a) of Council Regulation
(EEC) No 3030/93 and paragraph 242(a) of the Report of the
Working Party on the Accession of China to the WTO.

(3) See Annex 2.
(4) Address: http://europa.eu.int/comm/trade/index_en.htm.

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(e) Decisions and procedures in case of extreme urgency

In circumstances where delay would cause damage which it
would be difficult to repair, the Commission may, after a preli-
minary determination that
imports threaten to impede the
orderly development of trade, request directly formal consulta-
tions with China without an investigation, or before the investi-
gation is completed. This could be the case in particular if
there is a surge of imports of such a significant magnitude that
it is deemed obvious that the orderly development of trade is
threatened and that such imports will cause significant material
injury to the Community industry if action is not taken. Such
request shall be made after consultation with the Textile
Committee,
in
Article 17 of Council Regulation (EEC) No 3030/93.

in accordance with the procedures set out

months preceding the month in which the request for consulta-
tions was made, increased by 7,5 % (or 6 % for wool product
categories). Such limit will be effective for a period ending on
in which consultations were
31 December of
requested, or, where three months or less remained in the year
at the time of the request for consultations, for a period ending
12 months after the request for consultations. Consultations
with China should be continued during the term of the quanti-
tative limit set up under this provision.

the year

in accordance with the relevant procedures
Such a decision,
(Commission or Council), will be published in the OJ of the
EU.

(f) Period of formal consultations with China

After the expiry of a safeguard measure on a given product, the
procedures described in this section will be applicable for the
introduction of new safeguards on the same products.

In accordance with the TSSC, China should from the receipt of
the requests for consultations introduce self-restrictions in the
exports. Should that not be the case within 15 calendar days
from the request, the Commission will transmit, without delay,
to the Textiles Committee the necessary proposals to remedy
the situation; these should normally provide for the establish-
ment of import limits calculated as provided for in Article
10a.1(a) of Council Regulation (EEC) No 3030/93.

The consultations period shall last 90 days from the receipt of
the request for such consultations.

(g) Adoption of safeguard measures

If no mutually satisfactory solution is reached with China
within the 90 day period specified in (f) above, and if it deter-
mines that the conditions set out in Section 4 are met, the
Commission may impose a quantitative limit for the products
under consideration.
the Commission will,
In this context
without delay, call a meeting of the Textiles Committee to seek
its opinion on a proposal to impose a quantitative limit for the
relevant categories subject
to the consultations. Such limit
should also apply to imports of goods of Chinese origin,
exported after the publication of the notice announcing formal
consultations and shipped in excess of the quantities to which
China should have limited itself in accordance with §242 of the
Protocol of Accession. The further steps in the procedure are
those indicated in Article 17 of Council Regulation (EEC) No
3030/93 (1).

6. EARLY WARNING SYSTEM — EX-OFFICIO INITIATION
INVESTIGATION AND REQUEST FOR INFORMAL

OF

CONSULTATIONS

In the light of past experience and in particular the develop-
ment of imports from China in product categories liberalised in
2002,
it would be appropriate to provide some guidance
concerning the steps that the Commission will follow in order
to give the highest possible degree of predictability for trade, to
facilitate that imports from China evolve in a manner that
avoids market disruption, and thus give maximum scope for
finding acceptable solutions in a way that safeguard action is
taken only as a last resort.

To pursue these objectives, the Commission will introduce an
early warning system according to which, should the trend of
imports from China show that there are indications that a
‘disorderly development of imports’ is occurring or is immi-
nent, and before invoking the safeguard clause, it would first
ask for informal consultations with China and open an investi-
gation on whether such imports may be causing market disrup-
tion. Only in cases where, despite such discussions, the trends
in trade continued in such a way that the conditions for the
application of the safeguard were met, the Commission would,
using the procedures established in Council Regulation (EEC)
No 3030/93, formally invoke the safeguard clause and there-
fore request formal consultations with China.

Such a quantitative limit will be fixed at
the amount of
products of the concerned category that were imported into
the EU during the first 12 months of the most recent 14

(1) See Annex 2.

In any event, determinations to take safeguard action under the
TSSC should be made on a case-by-case basis, after verification
that the conditions for the application of the TSSC are met and
— unless in cases of extreme urgency — following an investi-
gation in line with the procedures outlined above.

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On the basis of the monitoring of imports that it is carrying out in accordance with the provisions of
Council Regulation (EEC) No 3030/93, the Commission will be examining regularly whether some indica-
tive thresholds of actual imports (1) from China may be exceeded, either on a yearly basis or during a
shorter period of time (in principle no less than 3 months) on a pro-rata temporis basis. In such cases, the
Commission will establish contact with the Chinese authorities to examine the evolution of imports, its
impact and the likelihood that the trends may continue. Such indicative thresholds, which contemplate
very considerable increases over the quotas for China in 2004, have been determined, on a category by
category basis, taking into account:

(a) The extent to which the quotas eliminated on 1 January 2005 were utilised, also taking into account

the relative position of other countries subject to quota in 2004.

(b) The share of total EU imports represented by imports from China as an indication or scope for

expansion.

(c) The import penetration ratios and their evolution.

(d) The levels of EU production and their evolution.

(e) Other indicators concerning the situation of the market in the products concerned, such as the trends

in consumption and prices.

The tables below give an indication of the growth of imports from China which, if reached, would in prin-
ciple lead the Commission to open an investigation and request informal consultations with China:

TABLE A

Formula to determine the consultation levels

Products whose imports from China
represent as % of total EU imports in
2004 in volume

2005
Increase over 2004
in % of 2004
imports

2006
Increase over 2005
level in % of 2004
imports

2007
Increase over 2006
level in % of 2004
imports

2008
Increase over 2007
level in % of 2004
imports

7,5 % or less

> 7,5 % to 20 %

> 20 % to 35 %

Over 35 %

100 %

50 %

30 %

10 %

50 %

50 %

30 %

10 %

TABLE B

50 %

50 %

30 %

10 %

50 %

50 %

30 %

10 %

Consultation levels resulting from the application of the formula in Table A

[NB: table to be developed on a category by category basis after application of the formula]

Product category

Unit

Chinese
2004
imports
EU-25
(thousands
of units)

Chinese
2004
quota
EU-25
(thousands
of units)

Level
2005

Level
2006

Level
2007

Level
2008

1 — cotton yarn

2 — cotton fabrics

3 — synth. fabrics

4 — T-shirts

tns

tns

tns

pcs

3 263

4 770

9 540

11 925

14 310

16 695

34 465

30 556

51 698

68 930

86 163

103 395

10 938

8 088

21 876

27 345

32 814

38 283

191 473

126 808

382 946

478 683

574 419

670 156

(1) Data on actual

imports collected in accordance with Article 27 of Annex III of Council Regulation (EEC) No
3030/93. Should, however, such data not be available in a timely manner for reasons outside its control, the
Commission may decide to start the procedure and open an investigation and request informal consultations with
China if the data available from import licensing (cf. Article 25 of Annex III of Council Regulation (EEC) No
3030/93) indicate that imports from China are likely to exceed such ‘consultations levels’.

27.4.2005

EN

Official Journal of the European Union

C 101/9

Product category

Unit

5 — pullovers

6 — men's trousers

7 — blouses

8 — men's shirts

9 — terry towels

12 — stockings + socks

13 — men's underpants

14 — men's overcoats

15 — women overcoats

16 — men's suits

17 — jackets & blazers

20 — bed linen

22 — synthetic fibre yarn

26 — dresses

28 — trousers (other)

29 — women suits

31 — brassieres

39 — table + kitchen linen

78 — other garments

83 — overcoats

97 — nets

163 — medical gauze

ex 20 — bed linen silk

115 — flax or ramie yarn

117 — woven fabrics flax

118 — table bedlinen flax

122 — sacks and bags flax

pcs

pcs

pcs

pcs

tns

prs

pcs

pcs

pcs

pcs

pcs

tns

tns

pcs

pcs

pcs

pcs

tns

tns

tns

tns

tns

tns

tns

tns

tns

tns

Chinese
2004
imports
EU-25
(thousands
of units)

Chinese
2004
quota
EU-25
(thousands
of units)

Level
2005

Level
2006

Level
2007

Level
2008

64 324

39 422

128 648

160 810

192 972

225 134

75 688

40 913

151 376

189 220

227 064

264 908

26 035

17 093

52 070

65 088

78 105

91 123

40 837

27 723

61 256

81 674

102 093

122 511

13 538

6 962

20 307

27 076

33 845

40 614

131 443

132 029

264 058

330 073

396 087

462 102

681 114

586 244

749 225

817 337

885 448

953 560

24 326

17 887

26 759

29 191

31 624

34 056

35 570

20 131

46 241

56 912

67 583

78 254

17 407

17 181

19 148

20 888

22 629

24 370

6 063

13 061

14 367

15 804

17 241

18 677

7 894

5 681

15 788

19 735

23 682

27 629

9 364

19 351

38 702

48 378

58 053

67 729

8 682

6 645

17 364

21 705

26 046

30 387

102 204

92 909

132 865

163 526

194 188

224 849

22 541

15 687

24 796

27 050

29 304

31 558

128 272

96 488

166 754

205 235

243 717

282 198

7 342

5 681

11 013

14 684

18 355

22 026

31 395

36 651

40 316

43 981

47 646

51 311

12 039

10 883

15 651

19 262

22 874

26 486

3 124

2 861

4 062

4 999

5 936

6 873

8 657

8 481

9 523

10 388

11 254

12 120

100

59

200

250

300

350

2 727

1 413

3 545

4 363

5 181

6 000

1 510

684

2 264

3 019

3 774

4 529

2 409

1 513

2 650

2 891

3 132

3 373

360

220

468

576

684

792

C 101/10

EN

Official Journal of the European Union

27.4.2005

Product category

Unit

Chinese
2004
imports
EU-25
(thousands
of units)

Chinese
2004
quota
EU-25
(thousands
of units)

Level
2005

Level
2006

Level
2007

Level
2008

136A — woven fabrics silk

tns

446

462

693

924

1 155

1 386

156 — blouses, pullover silk

tns

7 291

3 986

8 020

8 749

9 478

10 207

157 — garments knitted

tns

17 941

13 738

19 735

21 529

23 323

25 117

159 — blouses silk

tns

3 236

4 352

4 787

5 222

5 658

6 093

The increases provided for the calculation of such levels are so important that, if they were exceeded, it
could be considered in principle that there is a high likelihood that a ‘disorderly development of imports’ is
taking place. In case they were reached, either on a yearly basis or on a pro-rata basis over a period of in
principle no less than 3 months (1), the Commission would launch an investigation to examine whether
there are factors that may lead to the conclusion that the development of those imports prevent or not the
‘orderly development of imports’ and whether the second condition for the application of the TSSC is met,
i.e. market disruption in the sense of at least threat of injury to domestic industry. These thresholds would
only trigger an investigation and informal consultations but would not be relevant in determining applica-
tion of whether the TSSC is justified or not.

The consultations levels for 2006, 2007 and 2008 may be adjusted in the light of further examination and
other factors that may come to the light subsequently.

The formula for the calculation of the consultation levels can be applied as appropriate for particular
products determined at a level of aggregation below that of a product category. In that case, if imports
from China exceeded the resulting levels on a yearly or on a pro-rata basis (in principle no less than 3
months), Commission could also, on its own initiative or at the request of a Member State or of an inter-
ested party, request informal consultations with China and open an enquiry.

Such levels therefore should be seen as an indication, which in case they are reached do not trigger any
automatic application of the TSSC.

7. LEVELS BELOW WHICH, IN PRINCIPLE, NO TSSC ACTION SHOULD BE CONSIDERED

The Commission also considers that, in case some levels are not exceeded, there should in principle be no
case for the invocation of the TSSC. This should be particularly the case when a Chinese expansion is
moderate, taking into account their relative position in the EU market. In those instances, the Commission
will consider that such increases are normal after the elimination of import quotas and therefore will in
principle — i.e. unless evidence to the contrary is provided — consider that there is no ‘disorderly develop-
ment of trade’. These levels, which would provide already a considerable margin for expansion of Chinese
exports to the EU, are indicated in the table below:

(1) The calculation of the ‘consultation’ or ‘alert’ levels on a pro-rata basis should be done in such a way that, insofar as
possible, seasonal aspects are taken into account. This may make it advisable to apply the formula for the calculation
of the levels for the relevant period of the year to the imports of a comparable period of 2004.

27.4.2005

EN

Official Journal of the European Union

C 101/11

TABLE C

Formula to determine the minimum levels below which the TSSC will not be triggered

Products whose imports from China
represent as % of total EU imports in
2004 in volume

2005
Increase over 2004
in % of 2004
imports

2006
Increase over 2005
level in % of 2004
imports

2007
Increase over 2006
level in % of 2004
imports

2008
Increase over 2007
level in % of 2004
imports

7,5 % or less

> 7,5 % to 20 %

> 20 % to 35 %

Over 35 %

25 %

20 %

15 %

10 %

25 %

20 %

15 %

10 %

25 %

20 %

15 %

10 %

25 %

20 %

15 %

10 %

TABLE D

Levels below which in principle the TSSC should not be invoked

Product category

Unit

1 — cotton yarn

2 — cotton fabrics

3 — synth. fabrics

4 — T-shirts

5 — pullovers

6 — men's trousers

7 — blouses

8 — men's shirts

9 — terry towels

12 — stockings + socks

13 — men's underpants

14 — men's overcoats

15 — women overcoats

16 — men's suits

17 — jackets & blazers

20 — bed linen

22 — synthetic fibre yarn

26 — dresses

28 — trousers (other)

29 — women suits

tns

tns

tns

pcs

pcs

pcs

pcs

pcs

tns

prs

pcs

pcs

pcs

pcs

pcs

tns

tns

pcs

pcs

pcs

Chinese
2004
imports
EU-25
(thousands
of units)

Chinese
2004
quota
EU-25
(thousands
of units)

Level
2005

Level
2006

Level
2007

Level
2008

3 263

4 770

5 963

7 155

8 348

9 540

34 465

30 556

41 358

48 251

55 144

62 037

10 938

8 088

13 673

16 407

19 142

21 876

191 473

126 808

239 341

287 210

335 078

382 946

64 324

39 422

80 405

96 486

112 567

128 648

75 688

40 913

94 610

113 532

132 454

151 376

26 035

17 093

32 544

39 053

45 561

52 070

40 837

27 723

49 004

57 172

65 339

73 507

13 538

6 962

16 246

18 953

21 661

24 368

131 443

132 029

165 036

198 044

231 051

264 058

681 114

586 244

749 225

817 337

885 448

953 560

24 326

17 887

26 759

29 191

31 624

34 056

35 570

20 131

40 906

46 241

51 577

56 912

17 407

17 181

19 148

20 888

22 629

24 370

6 063

13 061

14 367

16 326

18 285

20 245

7 894

5 681

9 868

11 841

13 815

15 788

9 364

19 351

24 189

29 027

33 864

38 702

8 682

6 645

10 853

13 023

15 194

17 364

102 204

92 909

117 535

132 865

148 196

163 526

22 541

15 687

24 796

27 050

29 304

31 558

C 101/12

EN

Official Journal of the European Union

27.4.2005

Product category

Unit

Chinese
2004
imports
EU-25
(thousands
of units)

Chinese
2004
quota
EU-25
(thousands
of units)

Level
2005

Level
2006

Level
2007

Level
2008

31 — brassieres

pcs

128 272

96 488

147 513

166 754

185 994

205 235

39 — table + kitchen linen

78 — other garments

83 — overcoats

97 — nets

163 — medical gauze

ex 20 — bed linen silk

115 — flax or ramie yarn

117 — woven fabrics flax

118 — table bedlinen flax

122 — sacks and bags flax

136A — woven fabrics silk

156 — blouses, pullover silk

157 — garments knitted

159 — blouses silk

tns

tns

tns

tns

tns

tns

tns

tns

tns

tns

tns

tns

tns

tns

7 342

5 681

8 810

10 279

11 747

13 216

31 395

36 651

40 316

43 981

47 646

51 311

12 039

10 883

13 845

15 651

17 457

19 262

3 124

2 861

3 593

4 062

4 530

4 999

8 657

8 481

9 523

10 388

11 254

12 120

100

59

125

150

175

200

2 727

1 413

3 136

3 545

3 954

4 363

1 510

684

1 812

2 113

2 415

2 717

2 409

1 513

2 650

2 891

3 132

3 373

360

360

220

220

414

414

468

468

522

522

576

576

7 291

3 986

8 020

8 749

9 478

10 207

17 941

13 738

19 735

21 529

23 323

25 117

3 236

4 352

4 787

5 222

5 658

6 093

27.4.2005

EN

Official Journal of the European Union

C 101/13

ANNEX 1

Extract of the Report of the Working Party on the Accession of China

242. The representative of China agreed that the following provisions would apply to trade in textiles and clothing

products until 31 December 2008 and be part of the terms and conditions for China's accession:

(a) In the event that a WTO Member believed that imports of Chinese origin of textiles and apparel products
covered by the ATC as of the date the WTO Agreement entered into force, were, due to market disruption,
threatening to impede the orderly development of trade in these products, such Member could request consul-
tations with China with a view to easing or avoiding such market disruption. The Member requesting consulta-
tions would provide China, at the time of the request, with a detailed factual statement of reasons and justifica-
tions for its request for consultations with current data which, in the view of the requesting Member, showed:
(1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disrup-
tion;

(b) Consultations would be held within 30 days of receipt of the request. Every effort would be made to reach
agreement on a mutually satisfactory solution within 90 days of the receipt of such request, unless extended
by mutual agreement;

(c) Upon receipt of the request for consultations, China agreed to hold its shipments to the requesting Member of
textile or textile products in the category or categories subject to these consultations to a level no greater than
7,5 per cent (6 per cent for wool product categories) above the amount entered during the first 12 months of
the most recent 14 months preceding the month in which the request for consultations was made;

(d) If no mutually satisfactory solution were reached during the 90-day consultation period, consultations would
continue and the Member requesting consultations could continue the limits under subparagraph (c) for textiles
or textile products in the category or categories subject to these consultations;

(e) The term of any restraint limit established under subparagraph (d) would be effective for the period beginning
on the date of the request for consultations and ending on 31 December of the year in which consultations
were requested, or where three or fewer months remained in the year at the time of the request for consulta-
tions, for the period ending 12 months after the request for consultations;

(f) No action taken under this provision would remain in effect beyond one year, without reapplication, unless

otherwise agreed between the Member concerned and China; and

(g) Measures could not be applied to the same product at the same time under this provision and the provisions

of Section 16 of the Draft Protocol.

The Working Party took note of these commitments.

C 101/14

EN

Official Journal of the European Union

27.4.2005

Extract of provisions concerning the internal EU procedures for the adoption of decisions concerning the
TSSC

ANNEX 2

Article 10a of Council Regulation (EEC) No 3030/93:

‘Article 10a

Special safeguard provisions for China

1. Should imports into the Community of textiles and apparel products originating in China and covered by the
(ATC) threaten to impede, owing to market disruption, the orderly development of trade in those products, such
imports may, during the period ending on 31 December 2008, be made subject to specific safeguard measures
under the following conditions:

(a) The Commission — acting at the request of a Member State or on its own initiative — shall open consulta-
tions with China with a view to easing or avoiding such market disruption. The request for consultation
shall provide China with a detailed factual statement of reasons and justifications for the request, with
current data showing the existence or threat of market disruption and the role of products of Chinese origin
in that disruption. Consultations shall be commenced within 30 days of receipt of the request, the consulta-
tion period lasting 90 days from such receipt, unless extended by mutual agreement.

Upon receipt of the request for consultations China shall, during the period of consultation, hold its ship-
ments to the Community of textile or textile products in the category or categories subject to the consulta-
tions, at a level no greater then 7,5 % (6 % for wool product categories) above the amount entered during
the first 12 months of the most recent 14 months preceding the month in which the request for consulta-
tions was made.

(b) The Commission may, if no mutually satisfactory solution is reached during the 90-day consultation period,
establish a quantitative limit for the category or categories subject to the consultations. The quantitative limit
shall be set up on the basis of the level at which China held its shipments upon receipt of the Community's
request for consultation. The term of this quantitative limit shall be effective for a period ending on 31
December of the year in which consultations were requested, or, where three months or less remained in the
year at the time of the request for consultations, for a period ending 12 months after the request for consul-
tations. Consultations with China shall be continued during the term of the quantitative limit set up under
this provision.

(c) No action taken under this paragraph shall remain in effect beyond one year without reapplication, unless
otherwise agreed between the Community and China. Measures shall not be applied to the same product at
the same time under this paragraph and the provisions of Section 16 of the Protocol on the Accession of
China to the WTO. Measures taken pursuant to point (b) shall be the subject of a Commission communica-
tion published without delay in the Official Journal of the European Communities.

2. The quantitative limits established pursuant to this Article shall not apply to products which have already been
dispatched to the Community provided that they were shipped from the supplier country in which they originate
for export to the Community before the date of notification of the request for consultations.

3. The measures provided for in this Article, including opening of consultations as provided for in paragraph 1(a),

shall be adopted and implemented in accordance with the procedure laid down in Article 17.’

Article 17 of Council Regulation (EEC) No 3030/93:

‘Article 17

The textile committee

1. The Commission shall be assisted by a committee (hereinafter referred to as the “textile committee”).

2. Where reference is made to this paragraph, Articles 5 and 7 of Decision 1999/468/EC shall apply.

The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at one month.

3. The textile committee shall adopt its rules of procedure.’

27.4.2005

EN

Official Journal of the European Union

C 101/15

Articles 5 and 7 of Council Decision 1999/468/EC (1):

‘Article 5

Regulatory procedure

1. The Commission shall be assisted by a regulatory committee composed of the representatives of the Member

States and chaired by the representative of the Commission.

2. The representative of the Commission shall submit to the committee a draft of the measures to be taken. The
committee shall deliver its opinion on the draft within a time-limit which the chairman may lay down according
to the urgency of the matter. The opinion shall be delivered by the majority laid down in Article 205(2) of the
Treaty in the case of decisions which the Council is required to adopt on a proposal from the Commission. The
votes of the representatives of the Member States within the Committee shall be weighted in the manner set out
in that Article. The chairman shall not vote.

3. The Commission shall, without prejudice to Article 8, adopt the measures envisaged if they are in accordance

with the opinion of the committee.

4. If the measures envisaged are not in accordance with the opinion of the committee, or if no opinion is delivered,
the Commission shall, without delay, submit to the Council a proposal relating to the measures to be taken and
shall inform the European Parliament.

5. If the European Parliament considers that a proposal submitted by the Commission pursuant to a basic instru-
ment adopted in accordance with the procedure laid down in Article 251 of the Treaty exceeds the imple-
menting powers provided for in that basic instrument, it shall inform the Council of its position.

6. The Council may, where appropriate in view of any such position, act by qualified majority on the proposal,
within a period to be laid down in each basic instrument but which shall in no case exceed three months from
the date of referral to the Council.

If within that period the Council has indicated by qualified majority that it opposes the proposal, the Commis-
sion shall re-examine it. It may submit an amended proposal to the Council, re-submit its proposal or present a
legislative proposal on the basis of the Treaty.

If on the expiry of that period the Council has neither adopted the proposed implementing act nor indicated its
opposition to the proposal for implementing measures, the proposed implementing act shall be adopted by the
Commission.

Article 7

1. Each committee shall adopt its own rules of procedure on the proposal of its chairman, on the basis of standard

rules of procedure which shall be published in the Official Journal of the European Communities.

Insofar as necessary existing committees shall adapt their rules of procedure to the standard rules of procedure.

2. The principles and conditions on public access to documents applicable to the Commission shall apply to the

committees.

3. The European Parliament shall be informed by the Commission of committee proceedings on a regular basis. To
that end, it shall receive agendas for committee meetings, draft measures submitted to the committees for the
implementation of instruments adopted by the procedure provided for by Article 251 of the Treaty, and the
results of voting and summary records of the meetings and lists of the authorities and organisations to which the
persons designated by the Member States to represent them belong. The European Parliament shall also be kept
informed whenever the Commission transmits to the Council measures or proposals for measures to be taken.

4. The Commission shall, within six months of the date on which this Decision takes effect, publish in the Official
Journal of the European Communities, a list of all committees which assist the Commission in the exercise of imple-
menting powers. This list shall specify, in relation to each committee, the basic instrument(s) under which the
committee is established. From 2000 onwards, the Commission shall also publish an annual report on the
working of committees.

5. The references of all documents sent to the European Parliament pursuant to paragraph 3 shall be made public

in a register to be set up by the Commission in 2001.’

(1) OJ L 184, 17.7.1999, p. 23.