 WORLD TRADE  
ORGANIZATION  G/TMB/N/479 
25 June 2004  
 
(04-2743) 
Textiles Monitoring Body Original:   English 
   
AGREEMENT ON TEXTILES AND CLOTHING 
 
Communication from the United States
 
  
 The following communication, dated 21 June 2004, from the Delegation of the United States, 
is being circulated to WTO Members for their information. G/TMB/N/479 
Page 2  
 
 
Permanent Mission of the United States  
to the World Trade Organization  
Geneva  
  
 
   
21 June 2004 
 
    
 
 Dear Chairman Szepesi,   Thank you for the opportunity to respond to Indi a's submission, on behalf of several members 
of the International Textiles and Clothing Bureau (ITCB), regarding the TMB's report on the 
implementation of the Agreement on Textiles and Clothing (ATC). 
 
I would like to point out, first and foremost, th at the United States has fully complied with its 
obligations under the ATC, including with respect to the integration programme set forth in Article 2.  
The United States announced its integration schedule on 13 October 1994 for Phase 1, and 
1 May 1995 for Phases 2, 3 and 4.  It has abided by this schedule, and intends to continue to do so.  
ITCB members have frequently complained that the Un ited States has not liberalized its system more 
quickly than is called for under the ATC.  The US textile and apparel industry is being forced to 
undergo a major restructuring as a result of the co mmitments the United States made in the Uruguay 
Round, and a million jobs have been lost in the United States.  While the United States intends to 
honour its commitments, it will not accelerate the integration schedule in the face of the serious 
conditions facing the US industry. 
 
Moreover, the United States notes that several ITCB members have maintained policies and 
practices that have effectively limited access to ma rkets in this sector, despite the obligation in 
Article 7 of the ATC to "achieve improved access to markets for textiles and clothing through such 
measures as tariff reductions a nd bindings, reduction or elimination of non-tariff barriers, and 
facilitation of customs, administrative and licensing formalities".   While the United States has been 
opening its market, ITCB members have been keep ing theirs shut to US exports.  Under such 
conditions, it is impossible for the United States to jus tify early integration, as requested by the ITCB.  
Moreover, the United States hopes and expects as part of its review of the implementation of the ATC 
that the TMB will review whether ITCB members have  adhered to their obligations under Article 7 of 
the ATC.  US import statistics clearly demonstr ate that the United States has lived up to its 
obligations under Article 7, with imports of textile and apparel pr oducts up by 150 per cent since 
1994, increasing from 17.3 Billion Square Metres Equi valent (BSME) in 1994 to 43.2 BSME for the 
year ending March 2004.  We question whether ITCB members can say the same.   G/TMB/N/479 
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With respect to the specific points raised by  the ITCB, the United States would make the 
following points:  
• Carry forward, which is the borrowing of quota from the subsequent agreement year 
for use in the current year, is obviously unavailable in the final agreement year.  
Countries which chose to borrow from future  quotas all recognized that, ultimately, 
that capability would cease in the final year, and that they had already obtained the 
benefit in access through their initial borrowing.   Most of our bilateral agreements 
state specifically that there is no carry forwar d in the final year, just as they say that 
there is no carryover in the first year.  
 
• The numbers indicated by the ITCB appear to  be largely accurate.  As the ITCB has 
pointed out, the United States has made clea r from the very start of the integration 
process that it intended to integrate the mo st sensitive products at the end of the 
ten-year integration period.  This is c onsistent with ATC requirements, and the 
United States can assure the TMB that it has fully lived up to its commitments under 
the formulas to which all Members agreed  and which were incorporated into the 
ATC. 
 
• Article 2.17 of the ATC, along with the ot her provisions of the ATC, will terminate 
on 1 January 2005.  Thus, this paragraph w ould not justify any restrictions on trade 
that are inconsistent with the WTO Ag reements, including GATT 1994, after that 
date.  However, to the extent agreed administrative arrangements are consistent with 
other obligations under the WTO Agreements, including GATT 1994, the United 
States does not believe that the termination of the ATC requires their termination.  
Nothing in the ATC requires Members to re move measures that are consistent with 
the WTO Agreements. 
 
• Article 2.18 of the ATC provides that small suppliers shall receive specified advances 
in growth rates throughout the term of the ATC.  The United States complied with the 
provisions of Article 2.18 and, in Stage 3, since there were no more stages by which 
small suppliers' growth rates c ould be advanced, the growth rates of all suppliers were 
increased by an additional 27 per cent.  We note that since the base levels of those 
suppliers had been increased at accelerated  rates during the first two stages, they 
continued to benefit from the advanced stag ing received during Stages 1 and 2.  Also 
we note that the United States has not impl emented any textile safeguard actions on 
small suppliers under Article 6 of the ATC since 1995.  The United States firmly believes it has implemented Article 2.18 in a ma nner consistent with its terms, as well 
as its object and purpose. 
 
• The ITCB also raises the US treatment of least developed countries.  Virtually all 
LDCs are  small suppliers not subject to quotas.  Furthermore, the United States has 
already extended significant preferences to least developed Members through regional trade preference programmes bene fiting sub-Saharan African countries and 
Caribbean countries.  The latter two programmes provide benefits for the textile sector as well as other products. 
 
• With regard to cotton-producing exporting countries, we note that the base level 
quotas which formed the basis for the im plementation schedule of the ATC were 
negotiated within the parameters appropr iate for cotton-producing countries, least-
developed exporting countries, wool-producing countries, small suppliers, etc.  With 
respect to further consultations, we note that cotton-producing countries did not seek to consult with the United States under this  provision, and that some of the most G/TMB/N/479 
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vocal of those countries have maintained high tariffs, non-transparent customs procedures, and other mechanisms to restrain  imports of textiles and apparel into their 
own markets.   
 
• The United States is surprised that India woul d again raise the changes to US rules of 
origin made in 1995.  First, despite years of complaining about this issue, when India 
had the opportunity to fully explain its  position before a WTO dispute settlement 
panel, it was unable to demonstrate that these changes had any restrictive, distorting, or disruptive effect on trade.  Second, these  changes were made in 1995, yet India and 
the other ITCB members continue to complain about them in 2004, even after a dispute settlement panel confirmed their consistency with WTO requirements. The 
United States declines to justify these chang es yet again.  However, to clarify one 
point made by India, we note that the changes to US rules of origin, codified in section 102.21 of the US Customs regulations, do not govern the classification of products. Classification is made according to the Harmonized System and certain administrative arrangements notified pursuant  to Article 2.17 and is independent from 
any origin determination. 
  With respect to the accuracy of the informati on contained in the attached tables, we have 
examined Tables 1-3 attached to the letter from the TMB Chairman to Ambassador Deily, 
(Ref: TMB/100), that are updates of the Tables 9-11 from the second comprehensive report (G/L459, 
pages 57-59).  They are corr ect except for the following: 
  
For Table 1: 
 
- Add "Korea*" to "Chinese Taipei*" as WTO Members affected on the line 
for 369-L/670-l/870 
 
- Add a line for "369-R;  Bar mops;  Pakistan."  - Add the letter "P" to "369-F", making it "369-F/P" cotton dishtowels, for Pakistan (this is 
the same coverage as 369-D) 
 
For Table 2: 
 
- Add an asterisk to Thailand on the line for 359-H/659-H  
 For Table 3: 
 
- Add an asterisk to Hong Kong, China;  and to Thailand, for the line for category 331;  cotton 
gloves (only knitted) 
 
- Delete Pakistan from the line for category 36 9;  Blankets, furnishing articles, bedding. 
 
With respect to your questions on notifications of the US trade preference programmes 
(ATPDEA, AGOA, and CBTPA), the United States in tends to notify these programmes to the Council 
for Trade in Goods (CTG) as soon as possible.  
Finally, the United States would like to note for the attention of the Textiles Monitoring Body 
that many small and medium-sized suppliers of te xtiles and apparel have expressed great concern that 
the coming transition will prove disruptive to their industries and economies, if, as expected, it results 
in a sharp consolidation of production into larger suppliers.  The United States urges that all Members 
reaffirm their commitments to market opening m easures in the textile and apparel sector, so as to  G/TMB/N/479 
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provide market opportunities for suppliers who are po tentially facing dislocation of production.  The 
United States also urges the Textiles Monitoring B ody and WTO to examine ways to be of assistance 
to producers and suppliers who experience disruption in the short term as a result of the implementation of ATC commitments.  
 Sincerely, 
    (signed) 
 David Spooner 
 Chief Textile Negotiator  
__________ 