RESTRICTED
WORLD TRADE G/C/M/12
11September 1996
ORGANIZATION(96-3473)
COUNCIL FOR TRADE INGOODS
25July1996
MINUTES OFMEETING
Held inCentre William Rappard
on25July1996
Chairman: Mr.S.Narayanan (India)
Theproposed agenda (G/C/W/50) wasadopted asfollows:
Page
1. Implementation oftheAgreement onTextiles andClothing 2
andrelated Matters
- Communication from Pakistan onbehalf ofanumber
ofWTO Members (G/L/92)
2. Issues concerning market access andcircumvention astheyrelate to 20
theimplementation oftheAgreement onTextiles andClothing
- Communication from theUnited States (G/L/95)
3. Implementation oftheAgreement onTextiles andClothing andrelated matters 20
- Communication from theEuropean Communities (G/L/97)
Thefollowing itemwasincluded under "Other Business".
4. Dateofthenextmeeting 21
Annex 22
_________________
TheChairman welcomed delegations tothemeeting, convened byWTO/AIR/384. Henoted
thatinaccordance withtheagreement reached atthelastmeeting oftheCouncil on5July1996, the
following Organizations hadbeeninvited tothismeeting: FAO, IMF, ITCB, OECD, UN,UNCTAD,
World Bank andtheWCO.
Hepointed outthatatitsmeeting of18July1996, theGeneral Council hadapproved the
"Guidelines onObserver Status forInternational Intergovernmental Organizations". Inlightofthis
Decision, heproposed tohold informal consultations onwhich International Intergovernmental
Organizations would begranted observer status intheGoods Council.
TheCouncil forTrade inGoods soagreed.G/C/M/12
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1. Implementation oftheAgreement onTextiles andClothing andrelated Matters
- Communication from Pakistan onbehalf ofanumber ofWTO Members (G/L/92)
1.1 TheChairman recalled thatthere hadbeenafirstdiscussion ofthissubject atthelastCouncil
meeting of5July1996. Atthatmeeting, ithadbeenagreed thatfurther discussions werenecessary
inorder todetermine whether thisbody wastheappropriate forum toreview oftheImplementation
oftheAgreement onTextiles andClothing (ATC) forthepurpose ofsubmitting areport totheSingapore
Ministerial Conference through theGeneral Council. Informal consultations heldon8July1996had
ledtoanagreement thattheCouncil forTrade inGoods wastheappropriate forum forthispurpose.
1.2 During theinformal consultations theUnited States hadindicated thatitwould liketoseetwo
additional elements covered inthereview exercise, andhadsubsequently circulated awritten
communication tothiseffect (G/L/95). TheEuropean Communities hadalsorecently submitted a
communication, circulated indocument G/L/97.
1.3 Inorder tohaveastructured discussion, heproposed that,following general statements, the
Council should takeupeachoftheitems proposed forconsideration inthethree communications, the
objective being tohaveafirstround ofdiscussions sothatdelegations weresensitized tothevarious
concerns andviews.
1.4 Therepresentative ofPakistan welcomed theopportunity foranin-depth review ofthe
implementation oftheATCinthecontext ofthepreparation fortheMinisterial Conference inSingapore.
Hisdelegation hadbriefly introduced apaper atthelastCouncil meeting of5July1996 onbehalf of
theASEAN Members oftheWTO, i.e.Brunei Darrusalam, Indonesia, Malaysia, Philippines, Singapore
andThailand, aswellasHong Kong, India, Korea andPakistan. Hebelieved thepaper enjoyed even
wider support. Exporting Members ingeneral attached great importance tothefullandfaithful
implementation oftheATC, andwereseriously concerned because implementation hadnotlived up
toitsexpectations.
1.5 Asstated byhisdelegation on5July1996, thepaper brought outthesignificance oftextiles
trade foranumber ofdeveloping exporting Members, aswellastheimmense systemic importance
oftheintegration oftextiles intotheWTO bodyofrules. Itdelineated thepurpose ofthereview exercise
which wasdesigned nottoseekmodification oftheATCprovisions, norwasittoseektrade-offs against
thespectrumofissueswhichhadbeenraisedinpreparationfortheMinisterialConference.Thepurpose,
wasessentially toundertake anevaluation oftheimplementation oftheATC andtomake appropriate
recommendations totheConference. Ashadbeensuggested inparagraph 4ofthepaper, theevaluation
should aimtoidentify andassess theelements necessary forafaithful implementation oftheATC and
foraneffective process ofintegration ofthetextile sector intoGATT/WTO rules. Thepaper had
proposed thescope ofthereview exercise under aten-point framework, which hadbeenoutlined at
thelastmeeting. Tomake bestuseofthetimeavailable ithadbeenagreed thatdifferent co-sponsors
andother ITCB members would address thevarious elements. Heexpressed confidence thatthe
discussion anddialogue withthemajor importing Members would beproductive andfruitful forall
concerned.
1.6 Therepresentative oftheUnited States stated thatthisCouncil hadtheright todiscuss any
textile issue atanytime. However, given theimportance andthestature oftheTextile Monitoring
Body (TMB) asaWTO institution, itwasimportant nottointerfere withitsfunctioning. TheTMB
hadasitsprimary responsibility arising from paragraph 1ofArticle 8oftheATC tolookatthe
monitoring andimplementation oftheATC. Since itwasdoing itsownreport totheSingapore
Ministerial Conference which would beincorporated intotheGoods Council report, itwould beuseful
tolimitthediscussion toareasinthecommunication fromPakistan thattheTMB would notbecovering.G/C/M/12
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Shealsorecalled thattheTMB under paragraph 11ofArticle 8would havetoissue areport in1997
before theendofthefirststage ofthetransitional period.
1.7 HerGovernment hadclearly indicated thatthefirstpriority issue inthecontext ofATC
implementation related tocircumvention and,secondly, tomarket access. Withrespect tocircumvention
theUSindustry estimated thatabout US$1 billion worth oftransit goods wasbeing brought intothe
USyearly, accounting forabout 20percentofannual imports. Herauthorities wished towork very
closely withtrading partners inorder toseekadditional enforcement activities aswellasadeterrence
tocircumvention. Astomarket access, itwasveryimportant thatgovernments complied withthe
agreements reached, which didnotappear always tohavebeenthecaseinthefirstyearandahalf.
While theUSwaswilling toopenitsmarket, itstrading partners should dothesame withrespect to
theirmarkets. Also, forherGovernment, thefullandfaithful implementation oftheATC wasthe
maingoal.Thepurpose oftheUSpaper wastogenerate information fromMembers onhowobligations
regarding transshipment andcircumvention were being met.
1.8 Therepresentative oftheEuropean Communities stated thattheGoods Council wasan
appropriateforumforthedebateontextiles.AsmentionedinthecommunicationfromtheCommunities,
Members hadtobecareful inrespecting theareasofcompetence oftheTMB andoftheGoods Council.
Hisdelegation feltthatalltheissues raised wereappropriate fordiscussion inthisforum, butthatsome
ofthose issues lentthemselves better tofruitful discussion nowthandidothers. TheTMB report which
wasinpreparation andwhich would beavailable veryshortly would beavitalinput tothisdebate.
Inrelation toitem5(i)ofthepaper fromPakistan, while accepting thatstage twointegration wasan
appropriate matter fordiscussion now, hereiterated thatthechoice ofproducts tobeintegrated ateach
intermediary stage wasleftentirely tothediscretion oftheMember concerned. Hisdelegation wished
tointroduce market access andrules anddisciplines asitems fordiscussion.
1.9 Therepresentative ofHong Kong, speaking onbehalf oftheChairman oftheITCB, stated
thattheissues fordiscussion atthismeeting concerned anextremely important sector under theoverview
oftheGoods Council andwere crucial totheimplementation ofUruguay Round commitments. At
thelastGoods Council meeting of5July, theITCB Chairman hadalready made acomprehensive
presentation oftheconcerns ofITCB members inregard totheimplementation oftheATC. Theposition
wasasstated intheBangkok communique dated 24May19961.Asalready mentioned, theissues
ITCB members were addressing inthisCouncil formed partoftheUruguay Round implementation
programme. ITCB sought, expected anddemanded liberalization inaccordance withthecommitments
which WTO Members hadaccepted byvirtue oftheATC. ITCB members were notseeking to
renegotiate theATC. Furthermore, whereas theGoods Council might raisevarious issues related to
international textiles trade, priority hadtobeaccorded toissues instrumental totrade liberalization
asprovided under theATC andelements which hadimpeded ormight impede trade whilst running
contrary totheprovisions oftheATC. Members oftheBureau naturally would wishtoemphasise
different elements having regard totheirrespective priorities.
1.10 Therepresentative ofNorway stated thathisdelegation sawmerit inPakistan 'sproposal that
theGoods Council conduct athorough review oftheimplementation oftheATC aspartofthe
preparationsforthecomprehensivereviewattheSingaporeMinisterialConferenceoftheimplementation
oftheUruguay Round results. Aconstructive andnon-confrontational debate ontheATC would be
animportant element inMembers 'common quest tobalance theagenda fortheConference. While
theGoods Council wasclearly theappropriate organ toultimately conduct suchareview, itshould
beconducted onasinformed abasis aspossible. Inthisrespect, andinorder toavoid unnecessary
duplication ofwork, Norway believed thatMembers would bebestserved iftheTMB report was
1Circulated asanannex tothese minutes attherequest oftheMembers oftheITCB.G/C/M/12
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available asabasis fordiscussion onthose issues thatfellunder theTMB'scompetence, inwhose
competence andintegrity Norway hadfullconfidence. With respect toissues thatdidnotfallwithin
thecompetence oftheTMB, hisdelegation sawmerit intheCouncil initiating adiscussion onthose.
However, onewould havetoreflect closely onhowtobestorganize thatdebate, including thethemes
tobecovered.
1.11 Therepresentative ofSwitzerland while emphasizing thatthediscussion wasnotbeing held
under paragraph 11ofArticle 8oftheATCbelieved thatitwould beveryuseful fortheGoods Council
todealwiththedifferent submissions before it.Hisdelegation alsobelieved thatthediscussion was
fullyjustified within theGoods Council when dealing withthefunctioning oftheATCandwithcertain
horizontal issues which could, forexample, relate totextiles andcertain elements ofmarket access,
rulesoforigin ormeasures taken forbalance ofpayments purposes. Atthesame time, hisdelegation
feltthatitwould bepremature toholdaconclusive discussion ontheimplementation oftheATCwithout
having examined thereport oftheTMB which hadbeengiven amandate tomonitor theimplementation
oftheATC. Itwastherefore working ontheprinciple that,when available, thatreport should serve
asthebasis forthediscussion within theGoods Council. Switzerland believed thatthedisciplines
andinstitutional arrangements relating totheATC weretheresult ofdifficult negotiations andshould
beconsidered intheoverall context oftheUruguay Round results. AllWTO Members hadaccepted
theMarrakesh Agreement establishing theWTO considering thatthiswasabalanced package. After
almost twoyears ofimplementation andinthelightofexperience gained, itwasquiteunderstandable
thatsome Members might wishtocome backtoacertain number ofissues. However, ithadtobe
clearly understood thatanyamendments totheUruguay Round package hadtobethesubject ofa
consensus. Inorder tocarry outaserious andconstructive analysis attheproper time, itwould be
advisable forMembers having made contributions toclarify thedifferent points thatwerecontained
intheirrespective communications.
1.12 TheCouncil thenproceeded tothereview oftheelements setoutinthecommunication from
Pakistan:
(i) Integration Programmes
1.13 Therepresentative ofPakistan stated thatthebasic objective oftheexercise wastoseethe
fullandfaithful implementation oftheATC which reflected theinterests ofallconcerned parties. The
second preambular paragraph oftheATC established thenexus between thephase-out oftheMFA
restrictions andtheintegration scheme intheATC. InApril 1989 aTrade Negotiations Committee
(TNC) Decision hadprovided that"modalities fortheprocess ofintegration ...should, interalia,cover
thephasingoutofrestrictionsundertheMFA".TheATCalsoemphasizedthattheprocessofintegration
should beprogressive incharacter. Itwasanunfortunate factthatthefirstphase oftheintegration
programmes ofMFA restraining Members didnotinclude anyitemrestrained under MFA except for
oneitembyoneMember. Inthiscontext hedrewattention toaTMB report G/TMB/R/6 which stated
that
"Notwithstanding theprovisions ofparagraphs 6and7ofArticle 2,theTMB wasaware that
theproducts thusintegrated were not,prior totheirintegration intoGATT 1994, subject to
quantitative restrictions notified under paragraph 1ofArticle 2."
1.14 TheUSinthefirststage hadintegrated volume-wise 16.2percentofthebaselevel ofits
imports. Thisintegration comprised thefollowing: yarns andfabrics 62.4percent, made-ups 25.8
percent, clothing 11.8percent. Interms ofvalue theintegrated products amounted toonly6.9per
centofimports. FortheCommunities, thevolume-wise integration amounted to16.4percent,which
comprised yarns andfabrics 76.5percent,made-ups 21.2percent,clothing 2.3percentandinvalue
terms theimports amounted to8.7percent. ForCanada thevolume-wise integration amounted toG/C/M/12
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16.3percentcomprising ofyarns andfabrics 85.3percent,made-ups 7.8percent,clothing 6.9per
cent.ForNorway, thevolume-wise integration amounted to16.3percent,comprising ofyarns and
fabrics which amounted to95.1percent,made-ups 4percent, clothing 0.9percentandinterms of
value ofimports theintegrated products amounted to7.4percent. While itwasuptotheMember
concerned toselect theproducts forintegration, theimplementation ofanyagreement hadtobedone
inamanner thatwasconsistent withitsoverall objectives. Theoverall objective oftheATC was
theprogressive integration ofproducts under restraint sothatattheendoftheten-year period alltextiles
trade would besubject tothediscipline oftheWTO rules.
1.15 Themarket access which wasprovided intheabove-mentioned integration programmes had
beenminimal andlargely illusionary. There wasconcern thatthesecond stageintegration programmes
would resemble those ofthefirststage. Inaddition, itwashisdelegation 'sunderstanding thatamajor
trading partner might propose linkage ofitssecond stageintegration programme withfurther reciprocal
market openings. Such ademand wasnotconsistent witheither thespirit ortheletter oftheATC
andindeed thepackage ofagreements thatwere concluded inMarrakesh. Thisform of"cosmetic
integration" frustrated andundermined theintegration scheme asenvisaged under theATC. Ifthis
continued tobetherule,rather thantheexception, attheendoftenyears, there wasapossibility that
exporting Members might betoldthatitwaseconomically andpolitically difficult fortheimporting
countries toliveuptotheircommitments toachieve fullintegration attheendofthisperiod. Therefore
heurged trading partners togivecareful consideration toprovide inthesecond stage forintegration
programmes thatwould contain asizeable element ofliberalization andintegration ofproducts that
were currently under restrictions inherited from theMFA.
1.16 TherepresentativeofHongKongstatedthattheimplementationoftheATCneededtobeassessed
byreference totheultimate objective ofliberalization. TheATC represented acarefully constructed
balance ofinterests, leading progressively toliberalization. There were clear stages ofintegration
envisaged intheATC, andinorder tobecredible, theseintegration programmes hadtobecommercially
meaningful. Thefactthatthevolume figures forproducts integrated instage onehadfarexceeded
thevalue figures wasacleardemonstration ofalackofsincerity inimplementing theATCcommitments.
Hecompared integration withtheuseofArticle 6oftheATC, "Transitional Safeguards": instage one
oftheintegration exercise, on1January 1995 theonlyproduct which hadbeenliberated was"work
gloves" inCanada. Thetotalvalue ofimports intoCanada ofcotton andman-made gloves under tariff
numbers 6116.92 and93amounted tosomeCanadian $23.25 million -orapproximately US$18 million.
Since January 1995, theATC Article 6safeguard hadbeeninvoked byonemajor importing country
twenty-five times. Newquantitative restraints hadbeenestablished ineleven outofthetwenty-five
casesthrough so-called bilateral settlements, withthenetresult thatnewrestraints covered aconstructed
trade value ofUS$1.7 billion perannum. Acomparison ofthevalue oftrade liberated through
integration sinceJanuary 1995, andthelevelofnewly restricted tradeduring thesameperiod therefore
showed thatthelatter hadexceeded theformer byalmost hundred-fold. While some might argue that
thiscomparison wassimplistic, thefigures spoke forthemselves, anddidnotlendcredibility toany
claim thattheATC hadbeenfaithfully implemented.
1.17 Although hisdelegation hadbeenadvised thatCanada wasconsidering liberalizing additional
categories, itwashisdelegation 'sassessment atpresent that,forHong Kong, some 80percentof
thecurrently restricted items would remain under restraint untiltheyear2005. InthecaseoftheUnited
States, theassessment wasthatupto89percentofthecurrently restricted imports fromHong Kong
would remain under restraint untiltheyear2005. Ontheother handthere werenosuchrestrictions
onimports intoHong Kong oftextile andclothing products from theUS,orindeed anywhere else,
which didnotgivemuch credibility tocomplaints fromtheUSabout market access. Suchintegration
programmes werenotconducive toprogressive tradeliberalization, nordidtheyaugur wellforasmooth
return ofthetextile sector toGATT/WTO rules.G/C/M/12
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1.18 Therepresentative ofJapan stated thathisdelegation agreed withthepoint made bythe
Communities, Norway, Switzerland andtheUnited States thattheGoods Council should notdiscuss
atthisstage theissues which theTMB would address. Thiswasallthemore trueinviewofthefact
thattheGoods Council hadasked theTMB toproduce areport regarding implementation oftheATC.
Nothing prohibited theGoods Council from discussing anyissue related totheATC, buttoengage
inparallel work might create confusion anditwould bemore constructive anduseful thatdiscussion
onthistopic bepostponed untilsuchatimewhen thereport from theTMB wasavailable.
1.19 Therepresentative ofIndia stated that,asindicated byhisdelegation intheGoods Council
meeting of5July1996, itwasconcerned thattheprovisions oftheATC werenotbeing implemented
inafairandproper manner. Although theATC fellshort oftheexpectations ofmany Members, it
stillrepresented anegotiated commitment tomeetbasic concerns regarding tradeinthissector. Other
delegations hadpointed outthattheimplementation ofthisAgreement hadnotbeen, from thepoint
ofviewofthemajority ofdeveloping exporting countries, satisfactory. Thiscaused Indiagreatconcern,
because ofthecentral roleplayed bythetextiles sector inIndia'sexport earnings, inaddition tothe
significance ofthissector foremployment anditsattendant social ramifications. Hisdelegation
considered theATC asproviding amechanism tointegrate thetextiles andclothing trade intothe
multilateral disciplines oftheWTO system, andlooked totheATC astheharbinger ofarule-based
system rather thanapower-based system.
1.20 However, when thedetails oftheimplementation oftheATC wereexamined, hisdelegation
found thatinstead oftheruleoflaw,bothinitsletter andspirit, theoldattitudes oftherestrictive,
unilateralist MFA system continued toprevail. Thiswasinspiteofthedisciplines contained inthe
negotiated provisions oftheATC.
1.21 Therepresentative ofThailand, speaking onbehalf oftheASEAN Members, recalled the
fundamental premise oftheATC thatprogressive integration must contribute significantly totrade
liberalization inthetextiles andclothing sector. Itwasnoexaggeration tosaythatstage oneintegration
bythefourmajor importing countries hadconfirmed thefears which many countries hadexpressed
duringtheUruguayRoundnegotiations.Theirimplementationprogrammesdidnotcontaincommercially
meaningful products ofinterest toanyASEAN Member, anddidnotdemonstrate thenecessary political
will. Itwasamatter ofutmost concern thattheintegration programmes implemented sofarhadnot
ledtoanysignificant liberalization oftheprevailing restrictions andwould nothaveaneffect onworld
tradeintextiles andclothing. Thetwomajor importers hadappeared toindicate theirintention todefer
integration ofproducts under quota asfaraspossible under theterms oftheATC. Ifso,thiswould
mean thatasmuch as89percent ofsignificant apparel quotas would beretained untiltheyear2005.
Although therewasaten-year period forgradual elimination ofquotas, theimporters preferred toopt
foralast-minute adjustment which would havetraumatic effects ontheirownindustries. Theapproach
bysome importing countries tooffermoremeaningful integration inexchange forgreater market access
indeveloping countries wasnotjustified. IntheUruguay Round, developing countries hadmade
substantial efforts inproviding significant andsatisfactory offers onindustrial products. Therefore,
itwasnotreasonabletointroduceconditionalitiesthatinhibitedthefulfilmentofthetextilescommitments.
1.22 ASEAN wasaware oftheargument ofsome oftheimporting countries thattheyhadfulfilled
thelegal requirements oftheATC. Inastrict legal sense, theessential technical requirements had
beenfulfilled. However, theATC coverage included anumber ofproducts which hadnotbeenunder
theMFA regime. Theintegration under theATC wasdesigned toremove MFA restrictions
progressively,anditwasunfortunatethatthefirststageintegrationprogrammeofsomeoftheimporting
countries hadnoteliminated anyoftheexisting restrictions. ASEAN believed thattheverypurpose
ofthetransition period could onlybeserved bysubstantial elimination ofrestrictions ateachstage,
andurged thatthesecond stage integration programme contain ajudicious mixture ofrestrained and
unrestrained products, andabalanced proportion ofsensitive andnon-sensitive products withgreaterG/C/M/12
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emphasis onclothing. Integration programmes onthese lineswould ensure asmooth transition from
thepresentsystemtotheGATT/WTOdisciplinesandwasintheinterestofbothrestrainingandexporting
countries.
1.23 Therepresentative ofNorway stated thatNorway would liveuptoitscommitments under the
ATC. HisGovernment hadeliminated restrictions overandabove itsobligations, andmoreover the
speed offurther liberalization wasbeing studied.
1.24 Therepresentative ofCanada stated thathisdelegation regarded thisdiscussion asimportant
andwould participate initfullyandseriously. Itrecognized theroleandrightofthisCouncil todiscuss
these matters butdidnotwanttolosesighteither oftheresponsibilities oftheTMB under theATC.
Amore fruitful discussion onarange oftheseissues could beheldoncetheTMB report wasavailable.
With respect totheintegration programme, hisGovernment wasconfident thatitwould fullymeet
itsobligations under theATC tocompletely integrate thissector within therequired time-frame. In
thisrespect itwasalsoimportant totakeaccount oftheimpact ofthegrowth rateaccelerating which
hasasignificant effect interms oftheactual liberalization oftrade. Hehoped thatnothing saidat
thismeeting would betaken bysome intheimporting countries asasignthatthecollective efforts
might fail.
1.25 Inlooking atintegration andthepractical effects ofhowthissector hadbeenintegrated and
howtrade hadbeenliberalized, itwasalsoimportant totakeintoaccount thegrowth rateaccelerators
provided forunder theATC. IntheCanadian market these growth ratesweregoing tohaveavery
significant effect interms ofthepractical liberalization, andarealbearing onthepractical effects of
quotas astheprocess ofintegration tookplace. Therefore anaccurate analysis would alsorequire
examining theeffect ofgrowth rates onintegration. Inresponse tothecomment made bythe
representative ofHong Kong regarding thesecond stage integration process, hestated thathewasnot
inaposition toofferanyadditional information. Hisauthorities wereactively engaged indiscussing
howtoapproach thiswithvarious groups concerned inCanada.
1.26 Therepresentative oftheUnited States agreed withsome ofthepoints made byNorway and
especiallywithCanada'sstatementregardinggrowthrates.Itwasarealproblemthatexportingcountries
overlooked thefactthatgrowth-on-growth would continue toincrease withtheliberalization ofquotas.
Shestated thattheUShaddecided ontheproducts tobeintegrated atallofthestages. Allthese
integrationdecisionswereconsistentwiththerequirementsofArticle2oftheATCandwiththeapproach
followed byother countries toretain therighttokeepinplace quotas onproducts thatwereconsidered
sensitive. Hergovernment hadgiven certainty totrade bydeciding whatwasgoing tobeintegrated
overthenexttenyears. Thishadbeendonethrough three daysoftestimony, hearings fromdomestic
industry, from importers, retailers andrepresentatives offoreign countries whohadalltestified that
theywanted certainty. There weresensitive products thatwould beintegrated attheveryend,because
thiswaslegislatively mandated. Butinterestingly enough, some ofthose products considered sensitive
nowwould notbesensitive atthattimeoftheirintegration, whereas some ofthearticles integrated
attheverybeginning hadnowbecome verysensitive. Itwasworth noting thatnocountry had
complained totheTMB onthewaythattheUShadcarried outthestage oneintegration.
1.27 Therepresentative ofSwitzerland stated thathisdelegation hadpointed outduring theUruguay
Round thattheprocessus ofintegration asenvisaged intheATC would leadtoarestructuring ofthe
textiles andclothing sector towards theendofthetransition period. Thefirstphase ofintegration
confirmed whatallMembers could havereasonably foreseen when theATCwasadopted inMarrakesh.
Inspiteofthis,thesituation wasaworrying one. Theexamination oftheintegration programmes
wastherefore fullyrelevant, asborne outbyparagraph 11ofArticle 8oftheATC. Thismatter should
bedealtwithinaveryserious manner.G/C/M/12
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1.28 Therepresentative ofArgentina stated thatoneofthereasons whydisciplines intheWTO
existed wasprecisely toallow forthegrowth oftrade. Sotomixtheintegration ofquotas withthe
growth factor didnotseem tohisdelegation tobereasonable. With respect tothegrowth factor of
trade, therewasevidence incertain agreements which indicated thespirit andtheletter ofthisparticular
issue: Paragraph 6oftheUnderstanding ontheInterpretation ofArticle XXVIII oftheGeneral
Agreement onTariffs andTrade 1994 andparagraph 13ofArticle 6oftheATC.
1.29 Therepresentative oftheEuropean Communities reiterated thatthechoice ofproducts tobe
integratedateachintermediatestagewasamatterforeachindividualWTOMemberconcernedtodecide.
Most oftheproducts integrated instage oneweretaken fromalistwhich hadbeensupplied byabody
representing exporting countries. Withregard tostage two,theCommission hadinvited submissions
from allinterested parties, thatincluded third countries, before ithadbegun work onfinalizing its
proposal totheCouncil ofMinisters. TheCommission hadconsulted allthemajor exporting countries
andwascontinuing toconsult withother exporting countries withaviewtorefining itsunderstanding
oftheirpositions. Asconcerned thetiming oftheCommission 'sproposal totheCouncil ofMinisters,
itcould beexpected thattheywould bemade intheautumn. However, hisdelegation considered it
legitimate toaskwhat inconcrete terms allexporting countries were prepared tocontribute tothe
worldwide liberalization oftrade intextiles andclothing.
1.30 Therepresentative ofPakistan, noting withinterest andasawelcome signthatimporting
countries wereconfident thattheywould achieve theobjectives oftheATC within thetime-frame of
theATC, wasconcerned atsome ofthepoints thathadbeenraised. First, itwasclearthatboththe
Goods Council andtheTMB hadtheirrespective responsibilities clearly stated intheATC andboth
bodies should discharge those responsibilities. TheGoods Council had,furthermore, theresponsibility
toundertake areview oftheimplementation oftheATCunder Article IVoftheMarrakesh Agreement.
Therefore, arguments totheeffect thatconsideration ofcertain items should bewithheld because the
TMB hadnothadanopportunity toundertake aprior review exercise were notjustifiable. Alarger
body representing governments could notbeconstrained byasmaller body oftenpeople acting on
anadpersonam basis. Secondly, regarding theenquiry astowhattheexporting countries wereprepared
todotocontribute toliberalization, those countries hadalready made suchacontribution, andwere
concerned atthedemands forfurther reciprocity. Thiswascontrary tothespirit andtheletter ofthe
ATC. Inreference totheclaim thattheUSintegration programme hadadded certainty totrade, he
noted thatthisprogramme could havebeenevolved alsoinconsultation withthecotton-producing
countries, forexample, asrequired inparagraph 4ofArticle 1oftheATC. Thiswould haveprovided
notonlycertainty,butprovidedsatisfactiontosomeofthemajorandminorexportingcountries.Finally,
inreference towhathadbeenstated inrespect oftwintracts ofliberalization andexpansion ofquotas,
theATC made itclearthatbothprocesses weretoproceed simultaneously, andonecould notbeused
todenytheother.
1.31 TheCouncil forTrade inGoods tooknoteofthestatements.
(ii) UseofTransitional Safeguards
1.32 Therepresentative ofIndia stated thattheATC provided forasafeguard mechanism during
thetransition period tobe"used assparingly aspossible" and"consistently withtheprovisions" of
Article 6oftheATCand"theeffective implementation oftheintegration process under thisAgreement".
TheCouncil hadalready heard howineffective theimplementation oftheintegration process hadbeen
under theATC sofar.
1.33 Thetransitional safeguard hadbeenconceived asanexceptional measure forapplication during
thetransition period onproducts which remained tobeintegrated intoGATT. Itwasexceptional
because, being selective innature, itwasaderogation from theMFN system ofGATT safeguards.G/C/M/12
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Moreover, since thediscriminatory restrictions inherited fromtheMFA regime weretobecontinued
untiltheproducts were integrated intoGATT, ithadbeenconsidered desirable toprevent additions
tosuchrestrictions unless thecircumstances really justified theuseoftransitional safeguards.
1.34 Itwasnotable thatinthefirstyearoftheATC, onlyoneWTO Member hadnotified the
invocation oftransitional safeguard actions, inrespect of24actions within thespace ofafewmonths
against nolessthan14WTO Members, whowerealldeveloping countries. Somuch forthesparing
useofthisexceptional measure. These notifications hadbeendulyreviewed bytheTMB. Inthecase
ofseven ofthese actions which came intheformofdispute cases before theTMB, three actions were
rescinded aftertheTMB found nojustification forthem. Three actions werebrought before theDispute
Settlement Body, ofwhich twowerecurrently being examined bypanels. Thiswasanalarming track
record fortransitional safeguard measures, which should betaken intoaccount when reviewing the
implementation oftheprovisions ofArticle 6oftheATC. Thecasual manner inwhich Article 6had
beeninvoked inthese cases wasalsoborne outbythefactthatinseven cases, thecallswere made
andrescinded evenbefore theycould bereviewed bytheTMB.
1.35 Itwasofparticular concern tohisdelegation thatthetransitional safeguard hadbeeninvoked
without taking intoconsideration whether themeasure wasmeant toprevent either serious damage,
oractual threat ofserious damage, tothedomestic industry sought tobeprotected. Thedistinction
between thesetwosituations wasclearly envisaged intheprovisions ofparagraphs 2,3and4ofArticle
6oftheATC which speltoutthespecific requirements which wentintomaking adetermination of
threat. Therefore, theinvoking Member hadconsidered thatthetwosituations wereinterchangeable,
thereby undermining thatcleardistinction. Inreviewing thissituation, theTMB, required toexamine
theconformity ofthese measures withtheprovisions ofthisAgreement, hadnotpointed outthis
inconsistency.
1.36 Theprovisions ofArticle 6oftheATC allowed for"specific andrelevant factual information"
tobeusedtomake adetermination forinvoking thetransitional safeguard measure andissuing a
consultation call. Thisdata, however, could notbealtered byadditional datafrom theperiod after
theconsultation call.Hisdelegation noted withconcern thateventhisprovision ofArticle 6hadbeen
undermined bytheMember concerned inthatithadjustified itsdetermination withnewdata, from
theperiod afterthedateofissueoftheconsultation call.Itwasalsoamatter ofconcern thatthismethod
ofaltering factual information, justified bytheMember aspermissible under "additional relevant
information", hadnotbeenrejected bythebody reviewing thetransitional safeguard cases.
1.37 Therampant useofthetransitional safeguard mechanism inArticle 6oftheATC hadviolated
thecommitment toimplement thisimportant provision oftheAgreement. Suchactions seemed tohave
beeninitiated without careful consideration ofthefactsandproper assessment ofserious damage to
domestic industry. Ineffect, these actions hadcontinued theprotectionist legacy oftheMFA regime,
andwere directly against the"objective offurther liberalization oftrade" soeloquently promised in
thepreamble totheATC.
1.38 Therepresentative oftheUnited States stated that"sparingly used" didnotmean thatwhen
safeguard action wasjustified herGovernment could notact.AllUScallswere consistent withthe
procedures under theATC andwerejustified. Inthefirsthalfof1995, USimports hadgrown very
rapidly, andmany ofthecallshadbeenrecalls under theWTO. Since thattime, theunmanaged growth
hadslowed down considerably. Overthelasteightorninemonths onlyonecallhadbeenmade because
therehadbeenamore orderly adjustment oftrade. Thegrowth-on-growth provisions hadalsoallowed
formore quota availability. These elements andtheparticular circumstances inthefirsthalfof1995
hadalsotobetaken intoconsideration when drawing attention tothenumber ofcallsmade. Other
Members could alsobeinvoking safeguard measures according totheconditions intheirownmarkets;
thiswastherightofallMembers under theATC. Concerning thefactthatsome ofthecallshadbeenG/C/M/12
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rescinded, some ofwhich aftertherecommendation oftheTMB, shenoted thatacallwasmade to
givetimefortrade toadjust andtoprevent disruption oftheUSmarket, oncethiswasachieved the
callwasdropped. TheTMB recommendation hadalsobeentaken toheart. TheUShadusedthe
transitional safeguard measure andwould continue todosointhefuture when theneedarose.
1.39 Therepresentative ofSriLanka supported theviews expressed indocument G/L/92 withregard
totheimplementation aspects oftheATC, andparticularly theuseoftransitional safeguards. Textiles
andapparel werekeyareasofinterest toSriLanka, sinceexports ofthose products accounted fornearly
halfofSriLanka 'sforeign exchange earnings, while providing direct andindirect employment for
halfamillion people. During thefirstyearoftheimplementation oftheATC, SriLanka hadbeen
avictim ofunjustifiable application oftheprovisions oftransitional safeguards provided forunder
paragraph 1ofArticle 6oftheATC, which hadbrought uponserious disruption toSriLanka 'sindustry.
Thiswascontrary totheobjectives oftheATC thatsuchaction should beexercised assparingly as
possible. Although SriLanka wasthesmallest supplier, ithadbeensubject tosuchaction verysoon
after theentry intoforce oftheATC. Although thesituation hadbeen rectified subsequently, it
nevertheless underscored theimportance ofseeing thattheobjectives oftheATC werefulfilled. His
delegation wasoftheviewthattheconcerns expressed bytherepresentative ofPakistan onvarious
aspects oftheimplementation oftheATC were justifiable, andtherefore warranted thehighest
consideration andshould bebrought before theSingapore Ministerial Meeting inthereport oftheGoods
Council.
1.40 Therepresentative oftheUnited States stated thatSriLanka hadagreed inbilateral consultations
withtheUSthatarestraint onacategory 670-L product wasjustified. Attherequest ofSriLanka,
herGovernment hadreviewed thecaseandhadrescinded themeasure.
1.41 Therepresentative ofHong Kong stated thatthehighwithdrawal rateofthese transitional
safeguard measures showed thattheactions were taken onfragile grounds.
1.42 Therepresentative ofCanada stated thatCanada hadnotmade useofthetransitional safeguards
procedures. Canada hadnotcome under pressure todoso,butattached importance tothisprovision
because itwould helpCanada proceed inanatmosphere ofgreater confidence withtheintegration
process. However, theoverall effect ofwhathadhappened seemed nottobediscouraging forthefuture
oftheintegration process andtheeffectiveness oftheATC andtheTMB.
1.43 Therepresentative ofPakistan stated thathisdelegation hadreached theopposite conclusion.
Thetransitional safeguard actions had,astheUSrepresentative hadconfirmed, ledtothelevelling
offoftrade, which wasanother wayofsaying thattheliberalization process hadhalted. The
representative fromHong Kong hadmentioned thatthenewrestraints under thetransitional safeguards
hadaffected trade worth 1.7billion USdollars. So,infactthetransitional safeguards actions that
hadbeentaken, evenbyoneimporting country, hadhadasignificant restraining impact ontheprocess
ofliberalization.
1.44 Therepresentative ofHong Kong stated that,taking intoaccount events orlackofevents in
recentmonths,onemightperhapsunderstandtheobservationbytherepresentativeofCanada.However,
suchlessons hadbeen learnt attheexpense ofcertain Members, whose trade hadbeen seriously
interrupted intheproduct sectors concerned.
1.45 TheCouncil forTrade inGoods tooknoteofthestatements.G/C/M/12
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(iii) Bilaterally Agreed Arrangements
1.46 Therepresentative ofIndia stated thathisdelegation wished toaddress anissue related tothe
transitional safeguard provision oftheATCwhich wasthatofbilaterally agreed restraints arising from
theprovisions ofparagraph 9ofArticle 6oftheATC. Afundamental concept oftheATC wasto
strengthen multilateral disciplines inthefieldoftextile trade, soastoensure thefinalintegration of
thesector intothenormal rulesoftheGATT/WTO. Theprevious emphasis onbilateral arrangements
under theMFA regime hadbeenexcluded fromtheATC, andinthelimited context inwhich bilateral
arrangements weretobeconsidered, theTMB hadbeenspecifically asked to"determine whether the
agreement isjustified inaccordance withtheprovisions ofthisArticle".
1.47 FromthereviewsconductedbytheTMBofsuchcases,insofarashisdelegationcouldunderstand
thereasoning behind theTMB'sconclusions, itwould appear thatthelevels oftherestraints agreed
uponwereconsiderablyhigherthantherollbacklevelswhichwereallegedlythecauseofseriousdamage,
i.e.thereason forinvoking thetransitional safeguard measure itself. Itwashisdelegation 'sviewthat
iftheinvoking Member could absorb thehigher levels ofimports fromthesources withwhich ithad
entered intosuchbilateral arrangements, thenobviously itsinitial determination ofserious damage
onthebasis ofrollback levels wasfaulty. Thisfeature could beseenineight ofthecases in1995,
inwhich bilateral arrangements wereentered intounder Article 6oftheATC. Hisdelegation wished
toconvey itsconcern atthisfeature, which wasineffect aderogation from therelevant provisions
oftheATC. Furthermore, forsome ofthenotified agreements, there hadbeenjustification forthe
useofdouble restraints forproducts ofthesame category. Thiswascontrary totheprovisions of
paragraph 4ofArticle 6oftheATC, andshould havebeentaken intoaccount bythebody charged
withdetermining whether theagreement wasjustified "inaccordance withtheprovisions ofthisArticle".
1.48 These serious concerns werebeing raised withaviewtoseeing howtheGoods Council could
findanappropriate waytobring them before theMinisters attheSingapore Ministerial Conference.
From thepoint ofviewofhisdelegation, thiswasanimportant matter, since Ministers might wish
toconsider ways inwhich therecurrence oftheindiscriminate useofthetransitional safeguard
mechanism contained intheATC could beprevented infuture.
1.49 TheCouncil forTrade inGoods tooknoteofthestatement.
(iv) Functioning oftheTMB
1.50 Therepresentative ofThailand, speaking onbehalf ofASEAN Members, stated thattheTMB
hadbeenentrusted withthetaskofsupervising theimplementation oftheATC, examining measures
taken under itsprovisions andassessing theirconformity therewith. TheTMB wasalsomeant tobe
thefirstforum fortheresolution ofdisputes among WTO members arising fromtheimplementation
oftheATC.
1.51 Regarding theTMB'sachievements, inretrospect, theTMB hadspent agoodpartofthefirst
halfof1995indrawing upitsworking procedures. Asearlyas1March 1995, ithadbegun receiving
aspate ofbasic notifications fromMembers. However, itsinitial work andattention hadconcentrated
onexamining alarge number oftransitional safeguard measures which hadtaken upaconsiderable
amount ofitstime. TheTMB hadbeenworking veryhard, andperhaps totheutmost ofitsabilities.
ASEAN wished toacknowledge thattheTMB hadsucceeded, bythesystematic approach ithadtaken,
insetting certain standards forassessing thejustification oftheexistence ofserious damage. Asa
result ofitsstandards inobserving relevant criteria, theTMB hadbeenabletogiveguidance tocountries
intending toinvoke transitional safeguards. However, therewasscope forimprovement insome other
respects.G/C/M/12
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1.52 Theproblems related tothefunctioning oftheTMB could behighlighted asfollows: with
regard toaconsensus, ASEAN acknowledged thatthestructure oftheBody anditsinternal rulesand
procedures were suchthatthere hadbeenanumber ofproblems which theTMB hadhadtoface.
Despite theundeniable shortcomings, ASEAN Members depended, ingood faith, ontheTMB for
ensuring aneffective, fairandequitable implementation oftheATC. Itwasunfortunate thatithad
beeninherently difficult foraBody oftenmembers toreach consensus onissuing recommendations,
particularly regarding theintroduction oftransitional safeguard measures. Withrespect totransparency,
ASEANregrettedthatreportsoftheTMBmeetingshadbeensparseandinadequate.OnlythoseMembers
which maintained apermanent seatintheBody hadtheadvantage ofmaintaining an"institutional
memory", while theother Members werekeptinthedarkabout thedifferent views andrationale taken
onvarious points which could berevisited inthefuture. Itwasimportant thattheTMB provide the
underlying basis andreasoning initsrecommendations. Greater transparency regarding therecords
ofmeetings would provide Members withabetter understanding, particularly theexporting developing
countries whose representatives served intheTMB onarotating basis. Another point ofconcern
regarded thedutyoftheTMB toexamine anissueandgivefindings ontheconformity ofthemeasure
ormake arecommendation consistent withtheATCprovisions. Withrespect totheadpersonam status
andrulesofconduct oftheTMB, theTMB wasaunique body intheWTO which, inorder toretain
theconfidence among allMembers, should strive touphold andmaintain itsimage andcredibility.
There wasaneedtoensure adpersonam participation bybringing theTMB under theRules ofConduct
asintended forother WTO bodies andpanels soastoensure impartiality. Another issue ofconcern
wasthesubstantial workload oftheTMB. Thenotification obligations under theATC wereperhaps
much more voluminous compared toanyother WTO agreement. Inaddition tothehugevolume of
notifications, theTMB hadalsobeenconfronted withalarge number ofsafeguard actions involving
conflicts ofinterests. Theimportance ofthese transitional safeguard measures hadoverridden other
built-in issues. Infact,itwasnotuntiltheautumn of1995thattheTMB hadfinally beenabletoembark
upon asystematic review ofallother notifications received asfarbackasMarch 1995. TheTMB
didhaveitsphysical limitations inhandling andperforming allofitswide-ranging tasks, fromroutine
review ofbasic notifications toexamination ofhighly technical issues. Toimprove itsefficiency and
toensure thatitwasnotoverloaded withwork, thereappeared tobeaneedforanoverseeing mechanism.
Suchamechanism could concentrate onensuring transparency involving routine notifications among
Members while theTMB could devote itsenergy andtimeonmatters thatrequired theexercise of
careful andimpartial judgement ontechnical andlegalissues. Another point towhich attention needed
tobedrawn wasthefactthatthere existed provisions intheATC which required further clarifications
orestablishment ofguidelines inorder toassist andensure theeffective implementation oftheATC.
Anoverseeing mechanism would beabletoaddress theissueofinterpretation inamoreefficient manner.
Authoritative interpretations, aslegalguidelines, should notonlyserve tocreate better understanding
withregard totheimplementation oftheATC, butwould alsocontribute totheoverall improvement
ofthefunctioning oftheTMB.
1.53 Therepresentative ofCanada stated thathewished toawait thereport oftheTMB before making
detailed comments onthisissue.
1.54 Therepresentative oftheUnited States stated thattheUShadalsoconcerns inthisarea. Her
delegationbelievedthattheTMBhadinsomeinstancesmisreadtheATCandoverlookedsomeprovisions
withrespect toseveral issues inthedecisions ithadmade against theUS.However, theUSsupported
theTMB asaninstitution; itbelieved thattheTMB wasaveryimportant partoftheWTO andwould
continue tobe.Without prejudice toitsviews oncertain TMB findings, theUShadcomplied with
alloftheTMB recommendations issued thusfar,including those which hadgoneagainst theUS.
1.55 Therepresentative ofJapan stated thathecould agree withsome ofthepoints made bythe
representative ofThailand onbehalf ofASEAN Members. However, there wereconceptual conflicts
between anumber ofthose points. Forexample, regarding lackofconsensus within theTMB andG/C/M/12
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itsadpersonam status. While itwasunfortunate thatonoccasions theTMB hadfailed toreach
consensus, thereason whythishadoccurred wasthatTMB members worked onanadpersonam basis.
Regarding thelackoftransparency andthelimitations caused bytheworkload oftheTMB, thebody
wasaquasi-judicial one,therefore itsreports hadtobecarefully drafted asneutrality hadtobe
maintained. Ifmoretransparency wasrequested thenthereports would havetobemore detailed, which
would inturnalsoincrease theTMB'sworkload. Japan supported Canada 'sideathatitwould bemore
useful toawait theTMB'sreport before theGoods Council embarked onareview exercise.
1.56 Therepresentative ofPakistan stated thatbefore invoking thedispute settlement mechanism
oftheWTO, atextiles issue hadtoberaised atthelevel oftheTMB, which, asanadjudicatory
mechanism, wasanexception within theWTO framework. Therefore thisbody hadtobecredible.
From pastexperience, hisdelegation didnothavesuchconfidence intheoperation oftheTMB. His
delegation feltthattheTMB should becovered bytheCode ofConduct, asother bodies were. There
ought alsotobeagreater effort bytheTMB toreach conclusions incases brought toit.IftheTMB
didnotapprove ofaunilateral measure taken byanimporting country thenthatshould automatically
leadtothewithdrawal ofthatmeasure. Theburden ofproof wasonthose whosought torestrict trade
rather thanthose whoappealed fortrade liberalization, butthisgeneral principle hadnotbeenapplied
sofarorwasnotevident intheresults oftheTMB'swork. Hisdelegation hoped toinstall these
disciplines intothefuture work ofthisbody.
1.57 Therepresentative ofCosta Ricasupported thedocument submitted byPakistan alsoonbehalf
ofother delegations. Hebelieved thatanexamination oftheimplementation oftheATC should be
carried outattheSingapore Ministerial Conference onthebasisofthereview carried outintheGoods
Council. Hisdelegation alsobelieved thatthiswork should beinitiated immediately, andthatthere
wasnoneedtowaitforthereport oftheTMB. Many elements covered inPakistan 'scommunication
andwhich wereobserved intheshort period ofimplementation oftheATC hadcaused hisdelegation
concern. Oneofthese aspects hadbeenthefunctioning oftheTMB. Thatbody, according tothetext
oftheATC hadtoexamine allmeasures taken under theATC, andtheirconformity therewith, and
takeother actions asspecifically required under theATC. Although theTMB hadhadveryarduous
work during thefirstoneandahalfyears, certain aspects ofthatwork hadinfactdeviated fromthe
original intention andtheletter oftheATC. Inthisregard hisdelegation agreed thatthere wasroom
forimprovements inthefunctioning oftheTMB. Theinability oftheTMB toreach consensus on
certain occasions hadprompted considerable concern because itmeant thattheTMB hadbeenprevented
fromcarrying outitstaskanditsdutyofmaking recommendations inexamining safeguard measures
under Article 6oftheATC. Thisinability tofulfil theterms oftheAgreement wasanaspect which
hadtobelooked atverycarefully. Intheabsence ofconsensus withregard tothistypeofmeasure,
theTMB haddeparted onsome occasions fromtheprovisions oftheATC andhadsuggested thatthe
parties tothedispute undertake further consultations which were notprovided forintheATC; this
wasextremely serious. Ithadnotonlyencouraged bilateralism inthetrade relations ofthecountries
concerned butfurthermore hadincreased thepressure brought tobearontheMember affected bythe
restricted measure. Ithadalsoresulted inaveryserious modification ofthebalance ofrights and
obligations which were embodied inthetextoftheAgreement. WTO Members hadevery rightto
seecompliance withtheprocess specifically established inArticle 6oftheATC, which provided for
aperiod ofconsultation prior totheTMB examination. Noprovision oftheATC could leadtothe
assumption thattheTMB could takethedecision tochange theperiod ofconsultations withregard
tothetransitional safeguard mechanism. Thishadbeendoneinclear violation oftheprovisions of
Article 6andwithout taking intoconsideration therights oftheMembers involved.
1.58 Therepresentative ofKorea thanked TMB members fortheirdevoted efforts andconsiderable
accomplishments. Theyhadfaithfully reviewed amountain ofnotifications inacompressed time-frame,
while following monthly meeting schedules, unlike other WTO Committees. However, hisdelegation
could notdenythatthere weresome concerns withregard tothepractice andprocedures oftheTMB.G/C/M/12
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Itfeltthataddressing suchconcerns attheSingapore Ministerial Conference would inject some positive
momentum toimproving thefunctioning oftheTMB, andthereby facilitate theimplementation ofthe
ATC.
1.59 TherepresentativeofElSalvadorstatedthatasamemberoftheITCB,hisgovernmentsupported
what hadbeen saidonbehalf ofitsChairman. Healsoagreed withthecomment made bythe
representative ofJapan thatthere might beacertain amount ofcontradiction between theobjectives
ofincreasing transparency andreducing theworkload oftheTMB. Given theimportance attached to
theTMB anditstransparency, Members hadtostrengthen thestructure oftheTMB, giveitmore staff
toenable ittocarry outtheimportant obligation placed uponitandatthesame timeensuring greater
transparency.
1.60 TheCouncil forTrade inGoods tooknoteofthestatements.
(v) Treatment ofLeast Developed Countries (LLDCs)
1.61 Therepresentative ofBangladesh stated thattheATCcontained provisions forspecial treatment
ofleast developed countries inthepreamble, inthefootnote ofparagraph 2ofArticle 1andin
Article 6:6(a). These provisions needed tobeimplemented faithfully forthebenefit ofthesecountries.
TheATC didnotspecify theprecise modalities foraccording special treatment totheLLDCs, but
onewayofaccording special treatment might betoreview thequotas inplace, including morefavourable
growth rates.
1.62 IntheMarrakesh Declaration, Ministers hadrecognized theimportance oftheimplementation
ofspecial provisions fortheLLDCs andhaddeclared theirintention tocontinue toassist andfacilitate
theexpansion ofLLDC trade andinvestment opportunities. They hadagreed tokeepunder regular
review bytheMinisterial Conference andtheappropriate organs oftheWTO theimpact oftheresults
oftheUruguay Round ontheLLDCs withaviewtofostering positive measures toenable them to
achieve theirdevelopment objectives. Although almost twoyears hadpassed sincetheATChadcome
intoforce, there hadbeennoinformation ontheimplementation ofitsprovisions forLLDCs. The
leaders ofG-7during theLyon Summit hadstated that,"Wewillimplement theprovisions ofthe
Marrakesh Decision onmeasures infavour oftheleastdeveloped countries".
1.63 TheDirector-General oftheWTO hadreferred tothemarginalization oftheleastdeveloped
countries during theAPEC Trade Ministers meeting inChristchurch, NewZealand andhademphasized
theneedtoextend thebenefits ofglobal integration totheleastdeveloped countries. Ministers at
Singapore might lookintothisproblem, especially withregard totextile exporting LLDCs. Inlight
oftheabove, theGoods Council might analyze thesituation ofLLDCs andmake appropriate
recommendations. Positive measures were required tostopthefurther marginalization ofLLDCs.
Their integration intotheglobal trading system would beintheinterest ofallWTO Members.
1.64 Therepresentative ofPerustated thatatopic ofparticular interest related tothecompliance
withtheATC provisions ontreatment ofsmall suppliers. Hisdelegation considered itimportant as
ageneral principle andincompliance withparagraph 18ofArticle 2oftheATC thatallcountries
imposing ormaintaining restrictions should provide when necessary anotification indicating theway
inwhich theywereapplying the"meaningful improvement inaccess". Thiswastheonlywayinwhich
itwould bepossible todetermine iftherehadbeeneffective compliance withtheprovisions concerning
treatment ofsmall suppliers.
1.65 Therepresentative oftheUnited States stated thatherauthorities would continue toabide by
theirobligations toleast-developed countries. TheUShadnotified itsformula under Article 2:18.
Inreference towhattherepresentative ofBangladesh hadstated, although theUSmaintained restraintsG/C/M/12
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oncertain textile exports ofthiscountry, Bangladesh hadunusually freeaccess totheUSmarket and
hadbenefited from quota growth ratesinexcess of8percent. In1995 Bangladesh wasthetwelfth
largest supplier totheUSoutofnearly 200suppliers anditwasthesixthlargest supplier totheUS
ofapparel.
1.66 Therepresentative oftheEuropean Communities stated thathisdelegation alsostood bythe
commitments thatithadundertaken withregard totheleast-developed countries, inaccordance with
theprovisions oftheATC.
1.67 TheCouncil forTrade inGoods tooknoteofthestatements.
(vi) Particular interests ofcotton-producing countries
1.68 Therepresentative ofPakistan recalled thatparagraph 4ofArticle 1oftheATC stated that
"....the particular interests ofthecotton-producing exporting Members should, inconsultation with
them, bereflected intheimplementation oftheprovisions ofthisAgreement". Noconsultations had
beeneither requested withornotified tothecotton-producing countries. Their interest therefore had
notbeenreflected intheimplementation ofthevarious provisions oftheATC. Hisdelegation called
forafullimplementation ofthecommitment contained inthesaidprovision.
1.69 Therepresentative ofIndia supported thestatement made bytherepresentative ofPakistan.
1.70 TherepresentativeoftheEuropeanCommunitiesstatedthatthiswasanissuewhichhisdelegation
feltwould bebetter discussed atalaterstage, inparticular inlightoftheTMB report. Atthesame
timehewished toindicate thatnospecific consultations hadbeenrequested and,ashehadunderstood
it,there wasnoobligation tonotify either. Nevertheless, theEChadhadconsultations which it
considered toberelevant toparagraph 4ofArticle 1oftheATCwithanumber ofcountries, including
Pakistan.
1.71 Therepresentative ofPakistan stated thattheTMB hadbeenestablished under paragraph 1
ofArticle 8oftheATC tointeraliasupervise theimplementation oftheATC. Under paragraph 3
ofArticle 8,theTMB wasrequired to"rely onnotifications andinformation supplied bytheMembers
under therelevant Articles ofthisAgreement, supplemented byanyadditional information ornecessary
details theymaysubmit oritmaydecide toseekfrom them". Itwasregrettable thattheTMB had
notsought anyinformation fromtheMembers concerned andcertainly Pakistan wasacotton-producing
country, which hadnotbeenconsulted atallinthiscontext. Inhisdelegation 'sview, theobligations
deriving from paragraph 4ofArticle 1oftheATC hadnotbeenfulfilled.
(vii) Rules ofOrigin
1.72 Therepresentative ofThailand onbehalf oftheASEAN Members stated thatASEAN was
concerned thatchanges intherulesoforigin recently introduced byoneimportant trading partner had
brought uncertainty andhadbegun todisrupt trade under theATC. Thisdevelopment wasvery
disturbing considering thattheideaoftheATCwastobring about further liberalization, notrestriction,
oftrade intextiles andclothing. TheASEAN delegations wereconcerned thatmeasures introduced
atthisearly stage ofthetransition period, suchaschanges intherules oforigin, would render the
integration programme provided intheATC meaningless. They believed thatanychanges intherules
oforigin should beconsistent, interalia,withtheprovisions oftheATC, theAgreement onRules
ofOrigin, andArticle XIofGATT 1994.
1.73 Paragraph 2ofArticle 4oftheATC clearly provided thattheintroduction ofchanges, such
aschanges inpractices, rules, procedures, etc.should notupset thebalance ofrights andobligationsG/C/M/12
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between Members concerned, noradversely affect theaccess available toaMember, norimpede the
fullutilization ofsuchaccess, nordisrupt trade under theAgreement. Thenewrules oforigin had
already affected theaccess available tosome members ofASEAN andhadthepotential ofaffecting
theaccess available toother WTO Members.
1.74 Article 2oftheAgreement onRules ofOrigin clearly outlined thedisciplines tobeobserved
byallMembers during theperiod untilthework programme fortheharmonization ofrulesoforigin
wascompleted. Inparticular thefollowing provisions wererelevant. Article 2(b)provided thatrules
oforigin werenottobeusedasinstruments topursue trade policy objectives directly orindirectly.
TheASEAN delegations wondered ifatrade policy objective hadmotivated thechange intherules
oforigin andifnot,whythechanges were introduced atatimewhen theHarmonization Work
Programme hadjustcommenced. Article 2(c)provided thatrules oforigin "shall notthemselves
created restrictive, distorting ordisruptive effects oninternational trade." TheASEAN delegations
believed thatthechanges intherules oforigin hadcreated thesituation thatthisparticular provision
sought toavoid. Article 2(e)provided thatrules oforigin weretobeadministered inaconsistent,
uniform,impartialandreasonablemanner.TheASEANdelegationswereconcernedthatsixteenproducts
hadbeensingled outtobecovered byspecial rules, thatdeviated fromtheprinciple ofconferring origin
onthecountry where theproduct waswholly assembled. Likewise thetiming oftheentry intoforce
ofthenewrules, i.e.1July1996, wasunreasonable considering thatquotas under theATC were
administered foracalendar year. Article XIofGATT 1994provided fortheelimination ofquantitative
restrictions, buttheintroduction ofchanges intherulesoforigin hadhadtheeffect ofrestricting the
access ofcertain items where noMFA restraints existed before.
1.75 Inviewofthefactthatharmonization work wason-going inthisimportant fieldandinorder
toavoid disruption intrade, theGoods Council wasurged toexamine thelegality ofthechanges in
therules oforigin inthelightoftheabove provisions andtomake appropriate recommendations to
theSingapore Ministerial meeting.
1.76 Therepresentative oftheUnited States stated thatArticle 4oftheATC involved changes such
asthose intherules andpractices concerning theimplementation andadministration ofrestrictions
maintained ornotified under theATC. Onrules oforigin, Members requesting consultations were
required under Article 4toshow thattherehadbeenachange intheimplementation andadministration
ofrestrictions andifthatwasthecase, thattheyhadbeenadversely affected ortrade disrupted. In
consultations withvarious Members, eachsidehadagreed thattheimplementation ofrestrictions on
some ofthetradeidentified bytheexporting country hadinfactnotchanged. Thiswastrueofanumber
ofcases where negotiations wereundertaken onacategory-by-category andproduct-by-product basis.
Inothercases,wherechangecouldbedemonstrated,theUSwasworkingtowardsamutuallysatisfactory
solution. Nocountry hadbrought totheTMB asrequired bytheATC anydifficulties thattheymight
havehadwiththerevised UStextile andclothing rules oforigin, which were designed toconform
withthestandard rules ofother importing countries andalsotoprovide greater protection against
circumvention, which wasahighUSpriority.
1.77 TheCouncil forTrade inGoods tooknoteofthestatements.
(viii) Other ATC issues (Outward Processing Trade andspecial regimes etc)
1.78 Therepresentative ofIndia expressed hisdelegation 'sconcern attheconsistent extension of
special regimes toprovide better market access forselected countries thuscontravening thefundamental
principle ofGATT andtheWTO, andtheobjective oftheATC, toeliminate discriminatory treatment
ininternational commerce. Some ofthese special access arrangements included justification forthe
useofdouble restraints forproducts ofthesamecategory, which contravened paragraph 4ofArticle 6
oftheATC. Hisdelegation hadapprehended thatsuchspecial regimes were being actually usedtoG/C/M/12
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promote theinterests ofspecial interest groups inimporting countries, suchasmanufacturers offabrics
attheexpense oftheexport oftextile andclothing products from developing country manufacturers.
Therefore, hisdelegation suggested thattheCouncil takenoteofitsconcerns, andinclude these in
anappropriate manner inthereport forMinisters toconsider atSingapore.
1.79 Therepresentative oftheUnited States stated thattheATCrequired more favourable treatment
toqualifying re-imports asdefined bythelawsandpractices oftheimporting country. TheATC gave
importing Members discretion onwhattypeofmore favourable treatment wastobegiven tothistrade.
TheUScurrentlyprovidedmorefavourablequotatreatmenttore-importsthroughitsoutwardprocessing
program, fullyconsistent withtheATC.
1.80 TheCouncil forTrade inGoods tooknoteofthestatements.
(ix) Regionalism
1.81 Therepresentative ofIndia conveyed hisdelegation 'sconcern atthetremendous adverse
implications ofanexpanding coverage ofrestrictions inthecontext ofregionalism, especially forthe
export prospects ofdeveloping countries. Oneconsequence oftheexpansion ofregional arrangements
hadbeentheapplication ofunilateral restrictions ontheimports oftextiles from alarge number of
developing countries under thepretext ofregional obligations. Hisdelegation could notseehowthese
unilateral actions could bejustified under GATT 1994ortheATC. Ifnotcorrected intimebyremedial
action attheSingapore Ministerial Conference, thiscreeping growth ofrestriction would continue
unchecked, undermining theproper implementation oftheATC, especially itsobjective offurther
liberalisation oftrade.
1.82 Therepresentative ofArgentina stated thathisdelegation shared theviews expressed bythe
European Communities inpoint 3.3ofitscommunication.
1.83 Therepresentative ofMexico stated thatifthediscussion wasonregionalism persethenthe
discussion should bemoved totheCommittee onRegional Trading Arrangements.
1.84 Therepresentative ofHong Kong supported thestatement made byIndia.
1.85 Therepresentative oftheEuropean Communities stated thatthisparticular point ofthe
communicationfromPakistanwasseekingtodrawsomegeneralconclusionsfromveryspecificindividual
cases. Thegeneral question ofregionalism wasappropriate fordiscussion anddebate within thenewly
created andmandated Committee onRegional Trading Arrangements.
1.86 TheCouncil forTrade inGoods tooknoteofthestatements.
(x) Useoftrade measures fornon-trade purposes
1.87 Therepresentative ofEgypt stated thatwhile thismatter didnotfallwithin theambit ofthe
ATC, itaffected directly market access oftextiles andclothing andtheGoods Council should, inthis
review exercise, address itinacomprehensive manner. Hisdelegation wasamong those delegations
whohavewarned against theuseoftrademeasures fornon-trade purposes, beitthrough theapplication
oflabour standards ortheuseofenvironmental measures asthiswould betantamount todisguised
protectionism.
1.88 AsrightlypointedoutinthecommunicationfromPakistan,trademeasuresfornon-tradepurposes
werebased oncriteria outside theframework ofWTO disciplines, andcomprised offorexample labour
standards, including child labour andhuman rights. Such criteria were being increasingly attachedG/C/M/12
Page18
toexports oftextiles andclothing andconditioned tothegranting ofpreferences ingeneral which,
rather thanhaving theirdesired effects, caused more harm andserious disruption tomarket access
guaranteed bytheATC, thusundermining theimplementation oftheletter andspirit ofanagreement
which wasoneofthebalancing components oftheUruguay Round package infavour ofdeveloping
countries. Suchcriteria werealsoapplied orbeing usedasthreats unilaterally. Imposing suchcriteria
wasclearly inconsistent withWTO fortwomain reasons: first, theywere applied unilaterally and
second theyinvolved non-related Processes andProduction Methods (PPMs). Although there could
becases where environmental measures might beconsistent withtherules anddisciplines ofthe
multilateral trading system, theirexcessive dependence ontheprecautionary principle andthelack
ofinternational standards orclear scientific evidence (likeAZO-dyes) created suspicion ontheir
credibility, haddisruptive effects ontrade, particularly onsmall scale firms, andrendered their
application allthemore questionable. TheCouncil 'sreview could reflect onsuchcases andexamine
whether thetrade disruptive effects wereproportional tothebenefits gained inenvironmental terms.
Itshould consider three basic elements toavoid thepotential useofsuchmeasures asdisguised
protectionism: whether theywere based oninternational standards; whether there wassufficient
scientific evidence fortheirapplication; whether there wereother measures withsimilar effects, but
were lessdisruptive totrade intextiles from developing countries andwhich were notundermining
theimplementation oftheATC. Onemight perhaps alsoforthereview purpose attempt toanswer
thequestion whysomany trade measures forextra-trade purposes applied totextiles andclothing in
comparison toother sectors.
1.89 Therepresentative oftheUnited States stated thatitwasinappropriate fortheGoods Council
toconcentrate onjustonesector when dealing withthisissue which hadamuch broader scope than
textiles trade.
1.90 Therepresentative ofPakistan saidthatthestatement made bytherepresentative ofEgypt
reflected theviews oftheco-sponsors ofPakistan 'spaper. Reference hadbeenmade inthediscussions
tocircumvention andhebelieved thattheuseoftrade measures fornon-trade purposes wasaclassic
example ofhowtheobligations undertaken under theATC were being circumvented. Hebelieved
thattheGoods Council inthecontext ofthisdiscussion wasfullyempowered todiscuss thesemeasures
because theyhadbotharealandpotential diversionary impact ontrade. Hehoped thatthismatter
would figure prominently intheconclusions oftheCouncil 'sdiscussions.
1.91 Therepresentative ofNorway stated thatthere weretwonon-papers fromNorway onlabour
standards. Hisdelegation sawnobasistoconsider suchproposals interms oftrademeasures fornon-
trade purposes. Infact,ifhisdelegation weretogetsufficient support fortheveryprecise proposals
thatitwaspreparing itwould bewilling todiscuss corelabour standards inthecontext ofliberalization
oftrade. Itwould bewilling tohaveintheguidelines forsuchdiscussions theobjective oflooking
atunilateral measures already ineffect inorder tocreate some order inasituation which wasthreatening
tospread andwhich might eventually getoutofcontrol. There wasnohidden agenda orprotectionist
objectives, butapositive proposal thatwould benefit allcountries, industrialized ordeveloping.
1.92 Therepresentative ofPakistan stated thathisdelegation remained opposed toanydiscussion
oftheextraneous so-called issueoflabour standards intheWTO. Thepromise thatdiscussion would
create order wasnotcredible asthelegalgrounds forthisissue, andtherationale foritsrelevance,
aswaswell-known, were subject toveryserious questions.
1.93 Therepresentative ofElSalvador supported thestatement made bytherepresentative ofPakistan
andemphasized thatdiscussion onlabour standards could notgohand-in-hand withadiscussion on
further liberalization oftrade.
1.94 TheCouncil forTrade inGoods tooknoteofthestatements.G/C/M/12
Page19
(xi) Further work
1.95 Therepresentative ofPakistan stated thathisdelegation hadfound thediscussion veryfruitful
andhadvalued thecomments made bytrading partners. Thediscussion hadrevealed theexistence
ofconcerns which hadtobetaken intoaccount inthereview oftheATC, particularly theintegration
programmes, thequestion ofuseofsafeguard measures, theroleoftheTMB, andsoon.Withregard
totheroleoftheTMB, hisdelegation hoped thatMembers could consider ways inwhich confidence
intheroleandperformance oftheTMB might beenhanced inthefuture. Ithadnoted thatthere were
twopapers which remained tobediscussed, andlooked forward toanearly opportunity ofanother
meeting inwhich those papers, andother issues thathadbeenraised atthisCouncil meeting could
betaken upforconsideration before reaching thestage offormulating theCouncil 'srecommendations
foraction.
1.96 Therepresentative ofCanada stated thatgiven theroleoftheTMB tosupervise the
implementation ofthisAgreement, itmight beworth requesting theTMB tolookatsome oftheissues
thathadcome upatthismeeting andwhich hadnotalready beenreferred totheTMB.
1.97 Therepresentative ofPakistan stated thathisdelegation didnotbelieve thattheGoods Council
should interrupt orholdupitsconsideration ofanyissue awaiting theuncertain outcome ofany
consideration thatmight takeplace intheTMB. Hehadthought thatthisapproach hadbeenagreed
attheinformal consultations conducted bytheChairman onthisissue.
1.98 Therepresentative ofCanada stated thathewasnotsuggesting thatthisCouncil didnothave
therighttodiscuss these matters. However, given theexpertise oftheTMB, andtheresponsibilities
thathadbeenentrusted toitunder theATC, further discussion inthisCouncil might bemore fruitful,
ifonecould benefit from themore specialized andexpert knowledge oftheTMB.
1.99 Therepresentative ofHong Kong stated thatheappreciated thegood intention behind this
suggestion, butfullyagreed withtheresponse given bytherepresentative ofPakistan. Thewhole point
ofhaving these discussions intheCouncil wasthatthiswasaforum inwhich WTO Members could
discuss theoperation oftheATC. Thiswasnotpossible intheTMB whose members wereappointed
onanadpersonam basisandwhowerealsoextremely limited innumber. TheTMB hadsome specific
functions which itcarried outandifithadaninput ofabroader nature tomake, suchastothisCouncil
thenthatwould beuseful. However, thisCouncil should notbereliant inanywayonthedeliberations
intheTMB fordiscussions oftheoperation oftheATC.
1.100 Therepresentative ofJapan supported thestatement made bytherepresentative ofCanada.
1.101 Therepresentative ofEgypt stated thathisdelegation supported thestatement made bythe
representative ofHong Kong. TheTMB hadaheavy workload andshould notbeoverburdened;
ithadspecific functions toperform, which itshould continue toperform. Moreover, TMB members
worked onanadpersonam basis. Thediscussions intheGoods Council werewider inscope andmore
comprehensive. Hisdelegation would therefore rather havethediscussions inthisforum thantransmit
issues totheTMB andawait itsresponse.
1.102 Therepresentative ofNorway supported thestatement made bytherepresentative ofCanada.
Withreference toHong Kong'sstatement, hethought thattherewasadifference between being reliant
ontheTMB andrecognizing thathaving aninputfromtheTMB would improve thebasisfordiscussion
intheGoods Council. ThefactthattheTMB consisted ofpersons acting onanadpersonam basis
would, inhisview, make itevenmore interesting toheartheirviews.G/C/M/12
Page20
1.103 Therepresentative ofPerusupported thestatements made bytherepresentatives ofPakistan,
Hong Kong andEgypt. TheMembers ofthisCouncil could notparticipate inthediscussion inthe
TMB, being arestricted bodyoperating onanadpersonam basis. Therefore thisCouncil hadthefull
competence andthemandate, notonlytoexamine theATC butindeed hadthecompetence tosend
recommendations totheSingapore Ministerial Conference independent oftheTMB.
1.104 Therepresentative ofTurkey stated thathesupported thestatements made bytherepresentatives
ofJapan, Norway andCanada. Inthisregard hereminded Members thattheGoods Council hadalready
asked theTMB toprepare areport fortheSingapore Ministerial Conference, tobeusedasabasis
foritsfurther discussion. Hisdelegation reserved therighttorevert tosome ofthespecific issues
listed inPakistan 'scommunication.
1.105 Therepresentative ofArgentina stated thataccording totherulesofprocedure anydelegation
wasentitled toaskforameeting ofthisCouncil onanysubject.
1.106 Therepresentative ofIndia supported theviews expressed bytherepresentatives ofPakistan,
Hong Kong, Egypt, Peruandothers. Hewished topoint outthatthesubject thatwasdiscussed at
thismeeting haditssource fromacommunication sentbyPakistan totheGoods Council. IfMembers
wereinterested intheviews oftheTMB theycould usetheprovisions oftheATC andasktheTMB
tolookintowhatever matters theyneeded expert assistance on.
1.107 Therepresentative ofKorea supported theideasexpressed bytherepresentative ofHong Kong.
TheCouncil wasanappropriate venue toconsider theissues raised.
1.108 Therepresentative oftheUnited States stated thatherdelegation hadalready indicated that
itdidnotconsider itappropriate atthisstage fortheGoods Council tolookatissues which theTMB
would beexamining.
1.109 TheCouncil forTrade inGoods tooknoteofthestatements.
2. Issues concerning market access andcircumvention astheyrelate totheimplementation of
theAgreement onTextiles andClothing
- Communication from theUnited States (G/L/95)
3. Implementation oftheAgreement onTextiles andClothing andrelated matters
- Communication from theEuropean Communities (G/L/97)
3.1 Therepresentative ofMexico stated thatinparagraph 2.1ofthecommunication from the
Communities dealing withmarket access, itwasstated, interalia,that"attention should alsobepaid
toanyinstances where defacto market access hasbeenreduced through theraising ofapplied tariff
ratestothebound level." Thecornerstone ofthemultilateral trading system hadbeenthebinding
oftariffs. Bound tariffs gavelegalcertainty toimports aswellastoexports, andtoimporters aswell
astoexporters. Therateoftheapplied dutywaslefttothediscretion oftheMember concerned and
itwasinappropriate thatthisspecific matter beincluded inthediscussion ontextiles. Moreover,
throughout theUruguay Round process alarge group ofcountries hadconstantly fought forthe
recognition ofunilateral liberalization measures adopted bythem. Atpresent what wasneeded was
amechanism which would enable those countries tobecompensated fortheunilateral liberalization
measures thattheyhadtaken andwhich hadbenefited thewhole multilateral trading system.
3.2 Therepresentative oftheUnited States stated thattherehadbeenafruitful discussion onpoints
raised inPakistan 'spaper; fullattention should nowbegiven totheissues which hadbeenraisedG/C/M/12
Page21
intheUSandCommunities 'communications. Shetherefore proposed thattheseitems should betaken
upfirstontheagenda ofthenextCouncil meeting.
3.3 Therepresentative oftheEuropean Communities stated thathaving dealtwiththetenpoints
contained inthecommunication fromPakistan, priority should begiven atthenextCouncil meeting
topoints introduced bytheUSandhisdelegation.
3.4 Therepresentative ofPakistan stated thathehadnoproblem discussing thesubmissions made
bytheUSandtheCommunities attheCouncil 'snextmeeting. Hehoped thatthepriority would be
toreach fruitful conclusions andrecommendations onthereview oftheimplementation oftheATC.
3.5 Therepresentative ofHong Kong stated thathehadnoproblem withwhatwasbeing proposed
andthatproper attention should begiven tothecommunications which hadbeenreceived from the
USandtheCommunities. However, theagenda forthenextCouncil meeting should notcomprise
solely those twocommunications. Various other matters which hademerged fromthismeeting would
needtobefurther examined attheCouncil 'snextmeeting.
3.6 TheChairman proposed thatatthenextmeeting oftheGoods Council scheduled forthe
19September, thecommunications fromtheUSandtheCommunities circulated indocuments G/L/95
andG/L/97 respectively bediscussed. Delegations whowished tomake further comments onelements
ofthecommunication from Pakistan would havethatopportunity also.
3.7 TheCouncil forTrade inGoods soagreed.
4. Dateofthenextmeeting
4.1 TheCouncil forTrade inGoods tooknotethatitsnextmeeting wasscheduled for19September
1996.G/C/M/12
Page22
ANNEX
BANGKOK COMMUNIQUE
TheInternational Textiles andClothing Bureau (ITCB), attheinvitation oftheRoyal Thai
Government, heldthetwenty third session oftheCouncil ofRepresentatives atBangkok from 20-
24May1996. TheITCB anditsmembers expressed their warm appreciation totheRoyal Thai
Government fortheexcellent arrangements andhospitality. TheCouncil elected Ambassador
Nestor Osorio astheChairman, andMrs.Boontipa Simaskul andMr.Timothy Tong asVice-Chairmen
ofthesession.
Thesession wasinaugurated byMr.Pracha Charutrakulchai, Director General, Department
ofForeign Trade. Itwasaddressed bythesenior representatives oftheWorld Trade Organisation
andInternational Trade Centre aswellasbyrepresentatives ofForeign Trade Association (Brussels),
Textilimportorna (Stockholm) andUSAssociation ofImporters ofTextiles andApparel (New York).
Themembers greatly appreciated thepresentations which covered aspects ofinternational trade and
trade policy ofthetextile products.
TheCouncil reviewed theimplementation oftheAgreement onTextiles andClothing (ATC)
inthefirstyearofitsexistence. Themost important aspect oftheATC istheintegration oftextile
products which isdesigned toremove theMFA restrictions progressively. Then thetransition tothe
GATT disciplines attheendofthetenyearperiod cantakeplace without difficulty. TheITCB urges
therestraining countries toprepare theirintegration programmes forthesecond stagewiththisobjective
inview. Theprogrammes should becommercially meaningful contributing substantially tothe
liberalisation ofrestrictions. These should contain anequitable mixture ofrestrained andunrestrained
products, abalanced proportion ofsensitive andnon-sensitive products, andagreater emphasis on
clothing products. Integration programmes onthese linesalone willensure asmooth transition from
thepresent system totheGATT disciplines. Thisisintheinterest ofbothrestraining andexporting
countries.
TheITCB isverymuch concerned atthelarge scale introduction oftransitional safeguards
byonemajor trading partner in1995. Itbelieves thatsuchuseisinviolation ofthecommitment of
sparing useofthesafeguard system contained intheATC. Suchactions wereinitiated without careful
consideration offactsandproper assessment ofserious damage tothedomestic industry. TheITCB
urgesWTOmemberstobeextraordinarilycarefulintheapplicationoftransitionalsafeguard,particularly
initssparing useandtoscrupulously respect thedisciplines andprocedures contained intheATC.
TheITCB attaches great importance totheroleoftheTextile Monitoring Body (TMB) in
supervising theproper implementation oftheATC. Itisunfortunate thatinsome instances, theTMB
couldnotreachconsensusonissuingrecommendationsregardingtheintroductionoftransitionalsafeguard
measures. TheITCB expects thatsuchoccasions willnotariseinthefuture. Noting theadjudicatory
roleoftheTMB andthecommitment oftheWTO tomultilateralism, itistheunderstanding ofthe
ITCB thattheTMB isnotentitled torecommend theparties backforconsultations, thereby encouraging
bilateralism. TheTMB should alsoprovide theunderlying basisandreasoning initsrecommendations.
TheITCB observed that,inspiteoftheseshortcomings, theTMB hassucceeded inlaying down rigorous
standards fortheexistence ofserious damage.G/C/M/12
Page23
TheITCB believes thattheintroduction ofnewrulesoforigin intheUnited States witheffect
from 1July1996 willdisturb theexisting patterns oftrade. Itexpects theUntied States toconsult
withtheaffected exporting countries inorder tofindappropriate andequitable adjustments. Iturges
theUnited States toundertake provisional measures intheimplementation tominimise theadverse
effects during thechange overtothenewrules.
TheITCBurgestherestrainingcountriestocomplyfullywiththeirobligationunderArticle2:18
oftheATC, andtoextend thesamebenefit totheleastdeveloped aswellascotton-producing exporting
countries.
TheITCB noted withconcern theproliferation ofanti-dumping actions inthetextile sector
onproducts which arealready under restraint. Itviews suchactions tobeinthenature ofdouble
protection andamounting totrade harassment. Itcallsupon thedeveloped countries toexercise
moderation withaviewtoinitiate actions onlyingenuine cases ofdumped imports.
TheITCB strongly supports theinclusion oftheabove mentioned aspects pertaining tothe
textile sector intheagenda oftheWTO Ministerial Conference duetobeheldatSingapore in
December 1996.