Source: EURLEX
Language: en
Format: md

**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. 3030/93 _[l]_ 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 ATC [2] and the Council on Trade in
Goods has also prepared a report on the same subject [3] - 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 database 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

As regards Argentina, the Commission is also concerned over recently introduced
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.

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

1992 = 100

TRADE VOLUME(MECU)

**1392** **1993** 1994

PARTNER

SOUTH KOREA

HONG KONG

MACAO

**FLOW**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**1,079**

**300**

**-779**

**2,590**

**772**

**-1,818**

**426**

**3**

**-422**

**1993**

1994

1992

100

100

100

100

100

100

100

100

100

1992

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

1995

77

225

20

100

166

72

**931**

**345**

**-587**

**2,810**

**992**

**-1,819**

**453**

**4**

**-449**

852

514

-338

2,623

1,267

-1,355

448

5

-444

1993

86

115

75

109

128

106 105 97

130' 151 201

106J 105| 97

100

106

1994

79

171

43

101

164

75

105

130' 151

**INDIAN SUB-CONTINENT**

1995

828

673

-154

2,601

1,284

-1.318

415

6

-408

1995

1,231

55

-1,176

2,947

105

-2,842

476

75

-401

1995

866

109

-757

1,508

126

-1,382

464

83

-381

9S

290

191

306

52

**HS-CHAPTERS 60-63**

1992 =100

**TRADE VOLUME (MECU** **)**

**1992** **1993** 1994

1994

1994

119

82

122

137

208

135

141

166

137

PARTNER

PAKISTAN

INDIA

SRI LANKA

**FLOW**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**1993**

**1,074** 1,171

**58** 46

**-1,016** -1,124

**2,203** 2,560

**66** 87

**-2.136** -2,472

**400** 457

**50** 64

**-350** -394

**ASEAN**

1993

110

102

110

118

158

117

123

131

122

**HS-CHAPTERS 50-63**

**TRADE VOLUME (MECU** **)**

**980**

**56**

**-924**

**1,870**

**42**

**-1,828**

**325**

**38**

**-286**

**1992**

**912**

**60**

**-852**

**1,372**

**46**

**-1,326**

**483**

**40**

**-443**

**227**

**165**

**-62**

**357**

**45**

**-312**

**1993**

**905**

**68**

**-837**

**1,466**

**58**

**-1,409**

**504**

**49**

**-455**

**173**

**210**

**37**

**359**

**47**

**-312**

1994

901

91

-811

1.559

92

-1.466

528

65

-463

125

279

154

343

51

-292

##### **T-**

-254 _\_ 10G

1992 = 100

1992 1993

1994

PARTNER

THAILAND

INDONESIA

MALAYSIA

SINGAPORE

PHILIPPINES

**FLOW**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

1993

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

1995

126

97

127

158

249

155

147

195

140

1995

95

182

89

110

271

104

96

207

86

44

176

-308

86

114

82

European

Commission

HS-CHAPTERS 50-63

TRADE VOLUME (MECU )

ANNEX I Directorate General

External Relations

LATIN AMERICA

= 100

1994

85

204

81

84

187

48

113

153

48

PARTNER

PERU

j BRAZIL
|
|
1 ARGENTINA

###### i

**FLOW**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**Imports**

**Exports**

**Balance**

**1992**

**122**

**4**

**-117**

**322**

**82**

**-240**

**115**

**71**

**-44**

**1993**

**100**

**6**

**-94**

**279**

**150**

**-130**

**81**

**84**

**3**

**CEECs**

1994

1992 = 100

1992 1993

1992 = =

1993

1993

82

138

80

87

183

54

70

1Ï 8~

-7

1995

1995

104

13

-91

241

209

-32

178

80

-98

104

9

-95

270

153

-117

130

108

-21

1992

100

100

100

100

100

100

100

100

100

**S** **HS-CHAPTERS 50-63**

**TRADE VOLUME (MECU** **)**

**1992** **1993** 1994

! PARTNER

| POLAND
1

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**

**1,114**

**943**

**-170**

**489**

**320**

**-169**

**177**

**101**

**-75**

**658**

**554**

**-104**

**494**

**324**

**-170**

**198**

**136**

**-62**

**1993**

1994

1994

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

**1,394**

**1,204**

**-190**

**565**

**448**

**-117**

**208**

**139**

**-69**

**700**

**602**

**-98**

**644**

**449**

**-195**

**213**

**155**

**-58**

125

128

112

116

140

69

118

137

92

106

109

94

130

139

115

108

114

93

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

591 64

147

153

110

145

183

74

180

178

184

114

123

63

170

177

156

126

157

1995

86

299

78

75

256

13

155

113

223

1995

169

184

86

174

234

62

227

263

179

137

150

66

211

242

151

160

204

NOTES: Reporting countries 1992-1994 : EC12; 1995 : EC15

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

**&**

Annex II

**ANTI-DUMPING** **AND ANTI-SUBSIDY MEASURES IN FORCE**

**AGAINST WTO MEMBERS IN THE TEXTILE SECTOR**

**AS AT 1st APRIL 1997**

PRODUCT ORIGIN MEASURE PUBLICATION

-Cotton yarn Brazil
Turkey

-Polyester fibres Turkey
and yarns

-Polyester fibres Turkey
(synthetic)

duties OJL 82,27.3.92, p. 1

undertaking OJ L 272, 28.9.91, p.92
(countervailing)

duties OJL347, 16.12.88, p.10

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

duties OJL88,3.4.92,p.l
OJL141, 14.6.96.

-Polyester textured
filament yarn

Indonesia

Thailand

-Polyester yarns Indonesia
Turkey

-Sisal twine

(binder and baler)

-Synthetic textile
fibres of polyester

Brazil undertakings OJ L 251, 8.10.93

Turkey
Romania

India

South Korea

duties OJL 306, 22.10.92, p. 1

duties OJL 9, 15.01.93, p.2

_**<\**_

**ONGOING ANTI-DUMPING PROCEEDINGS**

**AGAINST WTO MEMBERS**

**AS AT 1st APRIL 1997**

PRODUCT

-Bed linen

ORIGIN

Egypt
India

Pakistan

TYPE

AD initiation

INITIATION

13.9.96

-Cotton fabric (grey) Turkey
Egypt
India

Indonesia

Pakistan

AD initiation 21.2.96

-Polyester yarn
(POY/PTY)

-Polyester yarn
**(PTY)**

-Polyester yarns

-Polyolefin sacks
(small)

-Synthetic fibre ropes
(small)

-Synthetic fibres
of polyester

India AD initiation 4.4.96

India review 11/4 4.7.96

## **_\o_**

India

Indonesia

AD initiation

Review 11/4

29.7.94

23.11.96

Malaysia AD initiation 19.4.95

Turkey

India

Indonesia

Thailand

review 11/4

AD initiation

4.7.96

13.4.95

###### ISSN 0254-1475

### COM(97) 219 final

# **DOCUMENTS**

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