 
  WORLD TRADE  
ORGANIZATION  G/TMB/N/474/Add.1 
30 June 2004 
 (04-2792) 
Textiles Monitoring Body Original:   English 
  
 
AGREEMENT ON TEXTILES AND CLOTHING 
 
Communication from India
 
 
Addendum  
 
 
 The following communication, dated 22 June 2004,  from the Delegation of India on behalf of 
several members of the International Textiles a nd Clothing Bureau, is being circulated to WTO 
Members for their information. G/TMB/N/474/Add.1 
Page 2  
 
 AMBASSADOR  
 and PERMANENT REPRESENTATIVE   
Permanent Mission of India to the World Trade Organization
 
Geneva  
   
 
 Dear Mr Chairman,  
Preparation of the TMB’s comprehensive report on ATC implementation
 
 
1. I am pleased to acknowledge receipt of your letter referenced TMB/100 dated 28 May 2004 
on the above subject, and to provide on behalf of the cosponsors of our previous submission1, the 
following specific instances to substantiate the points submitted in our communication dated 6 May 
2004 under the heading “Changes in product classi fication and rules of origin (Article 4)”. 
2. First, as to widening of the scope of certain  cotton made-up products pursuant to rules of 
origin changes:  It may be recalled that on th e occasion of the second major review, we offered a 
detailed account of changes introduced by the United St ates in its origin rules pertaining to textile and 
clothing products, especially those pursuant to Sec tion 405 of its Trade and Development Act of 2000 
enacted on 18 May 2000.  Reference in this rega rd is invited to Annexes 6 and 7 of document 
G/TMB/N/403/Add.1, which reproduced the elaboration of our submission relating to rules of origin 
changes.  A copy each of the two anne xes is attached for ease of reference. 
3. We wish to reiterate that no doubt a disput e panel ruled on the basis of a narrow legal 
consideration that the complainant had not succeede d in establishing that the changes violated the 
US's obligations under the Agreemen t on Rules of Origin.  However, th e issue that we seek to bring to 
the TMB’s attention in connection with its present ma jor review is specifically the one relating to the 
widening of the coverage of some cotton products in the context of the ATC.  
4. In this connection, it may be noted that the US rules of origin changes altered the definition of 
some made-up products so that these are now deemed to  be that of cotton even if they contain as little 
as 16 per cent of cotton as their component by weight.  Prior to this change, these same products could 
be considered as those of cotton only if they contai ned cotton as their chief weight.  Indeed this was 
the disposition under the pre-ATC bilateral agreements  which were the basis of restrictions carried 
over from the MFA and notified to the TMB under Article 2 of the ATC.  
5. It is apparent that the above change in the definition of these products led to more exports 
being classified and counted as those of cotton than was the case previously.  Thus, for example, products which were exported under US Category 666 (Other man-made fibre furnishings) now came 
to be classified and counted under Categories 3 60, 361, 362 (cotton pillowcases, sheets and 
bedspreads respectively), etc., in which a numbe r of exporting Members had high rates of quota 
utilization. Thus, the change resulted in effective diminution of access (or, to put it differently, in 
enlarging the scope and incidence of relevant restrict ions) in violation of Article 2.4 of the ATC, and 
causing disruption to established trade and upsetting th e balance of rights and obligations in the sense 
of Article 4.2. 
                                                     
 
1 See G/TMB/N/474.  G/TMB/N/474/Add.1 
 Page 3 
 
 
 6. Second, as submitted in our communication of Ma y 6, 2004, there have been instances of 
changes in the classification of certain product cat egories.  In some cases, these changes involved 
transfer of particular products from one categor y to another and/or from non-category to category 
products.  These changes have generally been effected  unilaterally, without any consultation with or 
information to the affected exporting Members with in the meaning of, and as required, under Article 4 
of the ATC.  
7. Aside from the above, the changes firstly cr eated disruptive effects on trade, upsetting 
individual business plans and proper administration and utilization of quota access.  Secondly, in 
instances in which products were reclassified to  high-demand tight-quota categories, these led to 
increasing the restrictiveness of relevant quotas. 
8. We appreciate that the TMB has requested in formation from the restraining Members about 
changes in classifications.  We are confident th at comprehensive information by these Members will 
facilitate the TMB’s consideration of the issue and establish the point that we seek to bring to its 
attention. 
9. In this connection, the Body may also like to  recall that in our submission on the occasion of 
the second major review, we provided information with respect to changes effected by one restraining 
Member.  Reference in this regard is invited to  Annex 8 in document G/TMB/N/403/Add.1 quoted in 
paragraph 2 above.  A copy thereof is agai n attached for facility of reference.  
10. In addition, some further instances of changes by one Member, the United States, since the 
year 2002 coming to our notice are presented in a table attached to this letter.  It may be noted that in 
several cases particular products were transfe rred from Categories 352, 359 and 459 (Underwear and 
other apparel) to some other categories.  Include d in the categories to which products were thus 
shifted were tight-quota Categories 341 (Women and girls’ shirts and blouses), 634 (Men’s and boys’ 
coats), etc.  What is more, some products that were not previously treated as belonging to any ATC category have now been classified to ATC categories.  Thus, MMF carrying cases, polyester curtain tie-backs have now been included in Categories 670 and 666 respectively.  
11. The information requested by the TMB from the restraining Members may bring further 
instances of similar reclassifications. 
 We hope that the above elaborations  facilitate the TMB’s consideration. 
  With best regards,  
  Yours sincerely, 
     (signed) 
  K.M. Chandrasekhar 
  Ambassador/PR of India to the WTO   and  Chairman, ITCB 
Mr András Szepesi 
Chairman 
Textiles Monitoring Body 
World Trade Organization Geneva G/TMB/N/474/Add.1 
Page 4  
 
 ANNEX 6 OF G/TMB/N/403/Add.1 
 
Changes in US rules of origin for textiles and clothing products 
  
 The US changed its rules of origin with respect to textiles and clothing products as part of its 
Uruguay Round Agreements Act.  These changes became effective from July 1996 and introduced 
substantial alterations in the pre-ATC rules.   The EU challenged these changes.  Following a bilateral deal between the two, the US 
rectified the situation mainly with respect to products  of export interest to the EU through Section 405 
of its Trade and Development Act 2000 enacted on 18 May 2000.  Thus 
  (a) For processed fabrics
, the origin reverted to the pre-1996 rule.  Consequently, such 
fabrics are conferred origin of the country where they are both dyed and printed and 
undergo two or more of the following finishing operations:  bleaching, shrinking, 
fulling, napping, decating, permanent stiffe ning, weighting, permanent embossing or 
moireing. 
 
However the same rule does not apply to fabrics ma de of wool.  In other words, for fabrics of 
wool, origin remains where the basic fabric is formed. 
 
 (b) For made-up articles :  For 16 specified categories of made-up articles, the 1996 
change established the origin as the country  where the constituent greige fabric was 
formed by weaving or knitting, regardless of any further processing such as dyeing 
and printing of fabric, and subsequent c onversion of fabric to made-up articles. 
 
With respect to some of these 16 articles, the or igin rule has been ch anged by the Trade and 
Development Act 2000.  The products concerned ar e listed in an Appendix to this note.  The 
new changes are summarized below: 
 
  (i) For non-cotton and non-wool made-u p articles (i.e., only for those of silk, 
MMF or other vegetable fibres), the ru le now recognizes dyeing and printing as 
origin conferring.  Accordingly the orig in is the country where the constituent 
fabric is dyed and printed and under goes two or more finishing operations 
(regardless however of where it may be further processed). 
 
But, if these same products are made from cotton or wool fabric, the origin continues 
to be deemed the country where the basic cotton or wool fabric is formed. 
   (ii) What is more, the definition of co tton made-ups has been enlarged.  Now an 
article containing 16 per cent or more by we ight of cotton is considered as that 
of cotton. 
 
  (iii) And for all made-up articles, contrary  to pre-ATC rules, the new rule continues 
to disregard processing operations such as designing, cutting, hemming, sewing, etc., that may be undertaken on the fabric to convert it to made-up 
articles. 
 
 (c) For apparel products, no further modificati on has been effected.  Consequently, origin 
continues to be determined on the basis of rules as modified and implemented with 
effect from July 1996. 
  G/TMB/N/474/Add.1 
 Page 5 
 
 
 APPENDIX TO ANNEX 6 OF G/TMB/N/403/Add.1 
 
Changes in US rules of origin for textile and clothing products 
 
US rules of origin 
 
Treatment of 16 specified categories of made-up articles 
  
Products for which 
rules were changed 
in 1996   
Whether affected under the 
Year 2000 changes 
 HTS No. Brief Description  
1. 5609 Twine, cordage, ropes No change 
2. 5807 Labels, badges, not embroidered No change 
3. 5811 Quilted products No change 
4. 6209.20.5040 Diapers of cotton No change 
5. 6213 Handkerchiefs Changed 
6. 6214 Shawls, scarves, mufflers Changed 
7. 6301 Blankets, travelling rugs No change 
8. 6302 Bed, table, toilet, kitche n linen Changed with respect to 
HTS 6302.22, 29, 52, 53, 
59, 92, 93, 99 
9. 6303 Curtains, bed valances Changed with respect to 
6303.92, 99 
10. 6304 Other furnishing articles Changed with respect to 
6304.19, 93, 99 
11. 6305 Sacks and bags No change 
12. 6306 Tarpaulins, tents, camping goods No change 
13. 6307.10 Floor and dish cloth, dusters, etc. No change 
14. 6307.90 Other made up articles No change 
15. 6308 Sets consisting of fa bric and yarn for making 
into rugs, tapestries, etc. No change 
16. 9404.90 Quilts, cushions, comfor ters Changed with respect to 
940490.85, 95 
--- 6117.10* Shawls, scarves, mufflers, knit Changed 
 
* This HTS number has been included only in the 2000 legislation. 
 Note:  These 16 product categories are those for wh ich the 1986 rule established origin as the country 
in which the constituent fabric is made in its basic greige form. 
 G/TMB/N/474/Add.1 
Page 6  
 
 ANNEX 7 OF G/TMB/N/403/Add.1 
 
 
JOC online  – 10 July 2000 
 
Rules of Origin:  The textile mess gets messier  
By John Peterson 
 John Cleese once explained the rationale for Monty Py thon's Flying Circus thusly.  'A non-sequitur 
needs something not to follow from'.  An exquisite statement. 
 It's a phrase that comes to mind after a recent exam ination of Section 405 of the new Sub-Saharan 
Africa/Caribbean  trade bill, which amends, yet agai n, the United States' already bizarre rules of 
origin for textile and apparel products.  Rules th at were previously illogical are now virtually 
incomprehensible.  The regulations needed to implem ent the new rules will need to feature twists and 
turns worthy of the Minister of Silly Walks himself.  It all started in 1996, when Congress, for the first time, decided to prescribe the rules of origin for a 
group of imported products, in this case, textil es and apparel.  Section 334 of the Uruguay Round 
Agreements Act turned the former test of 's ubstantial transformation' on its head, as new and 
sometimes peculiar origin rules were laid down.  Apparel products, formerly deemed to originate in 
the country where their constituent parts were out, we re now deemed to originate in the country where 
the garment parts were assembled together by sewing,  perhaps the most sensible of the changes.  
Other rule changes, however, spawned outrage, disbelief-and trade disputes. 
 
For example, the Section 334 origin rules deemed a ll fabrics to originate in the country where they 
were formed in the 'greige' state by weaving or knitting.   That's all fine and well, but 'greige' fabric is 
not a useful article of commerce.  Dyeing, pr inting and other finishing operations ordinarily 
performed to turn 'greige' cloth into commercially u sable fabrics, were disregarded by the new rules.  
The change had a devastating impact on Europe's textile converting industry which for many years 
had converted 'greige' cloth formed in Asian nati ons into high quality fabrics used in many apparel 
manufacturing operations.  These products, formerly cons idered to originate in Europe (and thus not 
subject to quotas), now were deem ed products of the Asian countries where they were formed and 
subject to quota.  Equally outrageous was Section 334's origin rules for a wide range of non-apparel textile products, 
ranging from silk scarves and woo llen blankets, to assembled pr oducts like pillow cases and down-
filled comforters.  Customs interpreted the law to  require that these products also be deemed to 
originate in the country where their constituent fabrics were formed in the 'greige' state.  This rule 
disregarded fabric finishing, cutting, sewing and many other operations which formed the imported 
good and which, in many cases (i.e. down-filled co mforters), accounted for as much, as 90 per cent of 
an article's cost. 
 
The trade-distorting origin rules quickly aroused th e ire of several US trade partners who challenged 
Section 334 before the World Trade Organization.  The US anxious to preserve the rules, essentially 
'bought off' certain of the complaining parties (m ostly Asian countries) by increasing some of their 
quota allocations.  The European Union, however, who se products are not subject to quota, was not so 
easily mollified.  It pressed its case in the WTO, poi nting, by way of example, to the damage which 
the Section 334 rules had inflicted on their fa bric converting, silk- scarf producing and bedding 
industries.  Facing a likely defeat in the WTO, US negotiators settled the matter by agreeing to change 
the most offensive of the textile origin rules.   G/TMB/N/474/Add.1 
 Page 7 
 
 
 Instead of focusing on an overall solution, how ever, the US concentrated on making selective 
changes, dealing only with the products that were th e subject of the EU's most vocal complaints, and 
leaving the other origin rules intact.  Section 405 of the recent African/Caribbean trade bill carries out 
the agreement with the EU.  
And what a mess the rules are now!  Lets look at a few examples.  But before we do, check your sense 
of logic at the door.  It won't be of much help to you.  Let's start with fabrics.  Secti on 405 restores the pre-URAA rule of origin, under which fabrics are 
deemed to originate in the country where they are dy ed and printed, and subjected to at least two other 
named finishing operations.  This answers the comp laints of the EU's textile converting industry. 
 Except, however, in the case of wool fabrics (that is, fabrics wholly or in chief weight of wool, such 
as a 55 per cent - 45 per cent wool-polyester blend).  Wool fabrics are excluded from the change.  Thus, the origin of these fabrics will continue to be  the country where they are formed in the 'greige' 
state.  What makes the process of weaving wool yarn s into fabric different from weaving cotton, silk 
or man-made fibre yarns into fabric?  Politics, appa rently.  The difference certainly isn't a technical 
one.  Let's take a look at non-apparel textile articles.  (P erhaps the reader should be sitting down before we 
do).  Some of these articles, like blankets (which involve little assembly) and comforter shells (which 
involve extensive assembly) will continue to have their origin determined according to the country 
where their constituent fabrics are formed in the greige state.  Other non-apparel pr oducts, however, 
like bed valances and quilts, can be deemed to orig inate in the country where their constituent fabrics 
were finished, that is, dyed, printed and subjected to two or more named finishing operations.  Except 
in cases where the constituent fabric is wholly or in chief weight of wool or cotton, or contains more 
than 16 per cent by weight.  Got that? 
 No?  Maybe an example will help to explain.  Le t's assume that an 80 per cent polyester, 20 per cent 
cotton fabric is woven in the greige state in Country  A and then sent to Country B, where it is dyed, 
printed and subjected to two or more finishing oper ations.  The fabric, if imported into the US would 
be considered a product of Country B for tariff, quota and marking purposes. 
 
Now, let's send that fabric from Country B to Count ry C, so it can be cut and sewn to form a bed 
valance, which is then imported into the United St ates.  What's the country of origin of the bed 
valance?  Well, because the fabric contains more than 16 per cent cotton by weight, the country of 
origin of the product would be Country A, where the fabric was formed in the greige state. 
 
How, you wonder, can the origin of a manufacture d product 'predate' the origin of its constituent 
materials?  Hey, we told you to check logic at the door.  Now, of course, if the fabric used to make the bed valance had been an 85 per cent polyester, 
15 per cent cotton blend, the valance would have been  deemed to originate in Country B, where the 
fabric was finished.  What, you may ask, is the difference between cutting and sewing an 80/20 blend 
fabric and an 85/15 blend fabric?  A political diffe rence, apparently.  None of the textile industry 
experts we've consulted can think of  a single practical difference.  A nd of course, under either of the 
above circumstances, the country of origin rules give  no credit whatsoever to operations performed in 
Country C, where the bed valance is actually manufactured. 
 
With its crazy-quilt amendments to the textile rul es of origin, the US may have dodged the bullet of 
the EU's complaint to the World Trade Organization.  But the new rules certainly seem to be far more 
motivated by a desire to protect US wool and cotton producers, than by any desire to create genuinely G/TMB/N/474/Add.1 
Page 8  
 
 logical changes to rules of origin.  A WTO challenge  to the new rules, from foreign producers of wool 
and cotton products, is almost certainly on the way.  Moreover, the adoption of such bizarre origin rules undermines other efforts at trade facilitation.  The 
Uruguay Round Agreement on Rules of Origin called for a three-year study, to be performed by the 
World Customs Organization, aimed at devising uniform rules of origin for goods moving in 
international trade.  The three-year study is now in its fifth year, and more than 500 technical areas of dispute on origin rules remain unresolved.  The WTO has gotten directly involved, and will conduct 
an evaluation later this year to determine whethe r to continue the study, or abandon it.  The 
implementation of even stranger textile origin rules by the US adds fuel to the fire of discord in 
perhaps the most sensitive industry area, and thr eatens the entire WTO effort to harmonize origin 
rules.  Section 405 of the Africa/ Caribbean trade bill sh ows once again the shortcomings of fashioning 
purely political responses to technical trade issues. 
 
Monty Python once performed a marvellous spoof of British Parliamentary elections, in which the 
Silly Party opposed the Sensible Party at the polls.  If the adoption of the new US textile origin rules 
was a political exercise, then the Silly Party appears to be the clear winner. 
  
 
John Peterson is a partner with Nev ille, Peterson & Williams in New York. 
  G/TMB/N/474/Add.1 
 Page 9 
 
 
 ANNEX 8 G/TMB/N/403/Add.1 
 
US Changes in Classification of Products/Cat egories, and Technical requirements Effected 
During the ATC Transitional Period 
  
During the year 1995: 
 
1. US Customs modified its previous rulings to request the country of origin to be noted as the 
country where the fabric was woven for flat sheets.  The product used fabric woven in 
country A, cut and hemmed, with piping or capping added in country B and shipped to the 
US.  Previously, the origin was conferred to where the fabric was altered. 
 2. US Customs detained importer's goods (women's  cotton boxer-style brie fs) and determined it 
as women's woven cotton shorts in HTSUS 6204624055 and quota category 348 instead of 
HTSUS 61082100 and quota category 352 as declared by the importer in early 1995.  Court 
of International Trade (CIT) upheld the declara tion by the importer because of the physical 
characteristics of the product and the evidence educed at trial that they are designed and 
marketed as underwear. 
 3. 1995 Correlation  amended to include 5 changes relating to textiles and clothing. 
 
4. US Customs classified colour ink sheet rolls used in colour thermal transfer printers as 
typewriter and similar ribbons in HTSUS 96121090.  Importer declared it as parts of printers 
in HTSUS 84733040.  CIT agreed with the im porter that the products are not typewriter 
ribbons. 
 
During the year 1996: 
 
1. Committee for the Implementation of Textile Agreements (CITA) issued a notice reminding 
interested parties that shipments made in one year exceeding the quota level for that year are 
in violation of the terms of the agreements.  It  has been the practice of CITA to charge the 
excess to the quota for the immediate following quo ta period.  CITA now says it reserves the 
right to deny entry permanen tly to these excess shipments. 
 2. CITA changed certain HTSUS classification num bers of all import controls for goods entered 
in categories  647W and 669P. 
 
3. The US Customs changed its 1996 harmonized  tariff schedule, affecting products under 
HS No. 6117, 6217 and 6307. 
 4. The Consumer Product Safety Commission is seeking to reinstate information collection 
requirements for regulations implementing fla mmability standards for rugs and carpets. 
 
5. 1996 Correlation contained changes affe cting categories 229, 611, 618 and 629. 
 6. The Consumer Product Safety Commission modi fied the flammability standards for children's 
sleepwear in September. 
 
During the year 1997: 
 
1. US Customs implemented minimum bond requirement, for all companies importing textiles, 
of 2 per cent of the value of their world-wide imports of textiles. G/TMB/N/474/Add.1 
Page 10  
 
  
2. 1997 correlation was modified affecting category 301.  CITA amended the correlation 
effective 23 June 1997.  The products affected are classified under HS No. 5205. 
 
During the year 1998: 
 1. CITA announced revision to the 1998 correlati on for textile-covered cooler bags affecting 
categories 369, 670, 859 and 870. 
 2. Some HTSUS classification numbers were cha nged for products in part categories 369L  
and 670L. 
 3. CITA made change to 1998 Corre lation affecting categories 222 and 362.  G/TMB/N/474/Add.1 
 Page 11 
 
 
 Table (please see paragraph 10 of this letter) 
 
SOME INSTANCES OF US CHANGE OF CLASSIFICATION OF TEXTILE AND 
CLOTHING PRODUCTS SINCE 2002 
  
Series Product Description Previous classfication 
Category TSAUSA No. New classification 
Category TSAUSA No. 
1 Woven apron of cotton in 
barbeque set 359 6211420080 not in any  8215200000
2 Knit camouflage half-
fingered gloves with PVC palm patch not known 6116930800 not known 6116939400
3 Knit leg warmers, MMF/wool 
blend 459 6117809530 not known 6406991505
4 Women's upper body 
garment of cotton denim. Sleeveless 359 6211420070 341 6206302010
5 Knit cotton camisole 
 339 
 6109100060
 352 
 6109100077
6 Women's cotton tennis briefs
 352 
 6108210010
 359 
 6114200060
7 MMF gloves with palmside 
coated with plastic not known 6116004600 631 6216005820
8 Man's upper body garment 
of woven MMF  640 6211330040 634 6201933511
9 Men's woven MMF shorts 
with knit mesh lining 647 6203434030 659 6211111010
10 Boy's woven MMF shorts 
with a mesh liner 647 6203434030 659 6211111020
11 MMF carrying cases for 
notebook computers not in any 8471300000 not known 4202128000
12 Textile tool bucket organizer 
 not known
 6307909989
 not known 
 4202929026
13 Polyester woven curtain 
tiebacks not in any 6307909889 666 6304930000
14 Drawstring bags of non-
woven fabric MMF.  
Intended for one time use for packing a down comforter not known 4202923031 not known 6307999889
15 Decorative wire trim 
 201 5607503500 201 5605009000
16 Metallized polyester 
embroidery thread 201 5606000090 201 5605009000
17 Woven fabric of MMF, 
coated with cellular plastics 229 5903902500 229 5907006000
18 Man's jacket of knit fabric 
covered with a cellular PVC not known 6113001005 not in any  3926209050
 
 
__________ 