 
 WORLD TRADE  
ORGANIZATION   
G/TMB/N/476 
27 May 2004 
 
 (04-2282) 
Textiles Monitoring Body Original:   English 
  
 
AGREEMENT ON TEXTILES AND CLOTHING 
 
Communication from Canada 
 
 
 The following communication, dated 13 May 20 04, from the Delegation of Canada, is being 
circulated to WTO Members for their information.    G/TMB/N/476 
Page 2  
 
 Permanent Mission of Canada to the United Nations 
Geneva 
 
   
13 May 2004 
 
 
 
Mr András Szepesi 
Chairman Textiles Monitoring Body World Trade Organization Centre William Rappard Rue de Lausanne 154 1211 Genève 21     Dear Mr Chairman,   My authorities have asked me to transm it the attached communication which provides 
information in response to the request by the TMB under document G/TMB/30. 
 
  Yours sincerely,       (Signed)   Frédéric Seppey   First Secretary 
 
 
    Enclosure  G/TMB/N/476 
 Page 3 
 
 
 COUNCIL FOR TRADE IN GOODS MAJOR REVIEW OF THE 
IMPLEMENTATION OF THE THIRD STAGE OF THE  
AGREEMENT ON TEXTILES AND CLOTHING 
 
 
Canada wishes to reaffirm its continuing co mmitment to the full implementation of the 
Agreement on Textiles and Clothing (ATC).  Canada  has fully complied with the ATC obligations set 
out in the transition provisions.     As a backdrop, opening the Canadian market to  imports has required the Canadian textile and 
apparel industry to adjust, and to adjust significantl y. In the mid seventies, the Canadian market was 
essentially supplied by domestic producers.  At that time, Canada had over 350,000 textile and 
apparel workers.  Today the sector employs 148,000 workers, producing to a considerable extent for 
the export market while maintaining less than a 50  per cent share of the domestic market.  Apparel 
took the hardest hit:  it lost 15 per cent of empl oyment since 1990, the ATC base year, in a time 
period where overall employment in the economy incr eased 14 per cent.  This transition has been 
difficult for both Canadian industry and labour.  We e xpect this transition to continue and to continue 
to be difficult, but the path has been set out.    Canada will continue to comply fully with a ll obligations under the Agreement, including the 
termination of all bilateral r estraints by 1 January 2005. 
 
Liberalization schedule    
  Canada has significantly and meaningfully libera lized its restraint regime by removing quotas 
on products of direct interest to exporting countries.  In the first two phases, we removed from quota 
the following commercially-significant products:  ta ilor collared shirts, rainwear, women & girls’ 
ensembles, women/girls' knitted blouses, children’s blouses and baby outerwear.  In addition, in 1998 
we increased by 10 per cent the restraint levels for winter outerwear, over and above what the 
required growth rates specified in the ATC.    For the third phase of the ATC, Canada integrat ed a wide range of apparel products including 
women’s/girls'/children’s suits and ensembles,  all knitted and woven shirts, blouses and tops, 
swimwear, all babywear, and thermal and standa rd overalls.  Quotas were removed from apparel 
products, irrespective of the material they are made of.  None of the partially liberalized quotas, and 
none of the combined quotas, were read justed, which resulted in a further de facto  increase in access 
to our market. 
 
 On the textile front, Canada has traditionally maintained quotas on only few of its imports.  
Restrained imports of yarns and made-up textiles added up to less than 5 per cent in 1990.  Over 85 
per cent of fabrics were imported free of quota that  year.  Still, our industry has been adapting and 
developing markets for its products, to prepare for th e new trading environment.  In addition, this 
industry is adapting to intensified competition aris ing from regional and bilateral trade initiatives.  
Canada has also instituted a process for industry to petition on an ongoing basis for tariff relief on 
imported fabrics and yarns based on domestic availa bility.  This process has led to significant duty 
reductions on imported fabric, further openi ng up Canada’s market to all suppliers. 
 LDCs 
  Canada has implemented measures to improve access for imports from least developed countries (LDCs).  The measures eliminate tariffs on most products except for certain agricultural 
products e.g., over-quota tariff items for dairy, poultry and egg products, and introduce new rules of 
origin requirements for textile and apparel products .  Under these rules of origin, apparel products G/TMB/N/476 
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 exported from LDCs will be eligible for duty-free tr eatment provided they are cut, or knit to shape, 
and sewn or assembled from inputs from any of the 48 eligible LDCs.  Inputs from General Preferential Tariff (GPT) beneficiary countries may also  be used provided at least 25 per cent of the 
content of the apparel goods originates in the LDC e xporting country.  The rules of origin for fabrics 
and yarn allow for full accumulation of originatin g inputs from LDCs or GPT beneficiary countries.  
Any materials used in the textile or apparel products  that originate from Canada are deemed to have 
originated in the LDC.    Accelerated growth rates of quota limits   
  
 The growth of Canada’s domestic apparel ma rket, according to Canada’s Department of 
Industry, has been 1.5 per cent annually for the past  five years.  By comparison, with very few 
exceptions, the average growth rate for apparel quotas into Canada is in excess of 8 per cent a year.  
  Imports have been growing significantly also because under the ATC growth-on-growth 
provisions, our annual quotas are now growing at a fast clip.  In terms of major suppliers, for 
example, India benefits from an annual compound gr owth rate of almost 11. 5 per cent per annum;  
and Pakistan’s growth rates are expa nding by 11.5-14.7 per cent per annum.  
 Small suppliers  
 
 The small exporters’ growth-on-growth provi sions provide for meaningful and significant 
increases in quota levels for products under restraint from these suppliers. 
  Small supplier growth rates will, in fact, doubl e by phase three of the ATC.  Some examples 
are:  Sri Lanka's and Mauritius' quotas are bot h expanding by 12.1 per cent per annum.   
 
 Moreover, in implementing the small supp liers’ growth-on-growth provisions, Canada 
adopted a methodology for calculating a small supplier such that the advanced formula applied to 16 
exporting developing countries, five more than strictly required by the ATC.   Safeguards 
  Canada has not requested any consultations  under Article 6 of the special safeguards 
provision.  This in itself assures meaningful steps towards the full integration of textiles and clothing 
under the ATC.  
Cotton-producing exporting Members 
 
 Over the past nine years, cotton-producing expor ting countries have never raised the matter of 
the particular interests that they might have in th e export of cotton products.  In this respect, it should 
be noted that the structure of Canada's textile r estraint category system, with few exceptions mainly 
for fabrics, does not differentiate products accordi ng to fibre type.  This allows exporting Members a 
wider latitude to diversify their exports according to the needs of the market.  
  Canadian authorities, naturally, have always b een prepared to consult with cotton-producing 
exporting Members with respect to their particular inte rests.  In this respect, it should be noted that 
modification of Canada's category structure to bene fit cotton products would result in an increase in 
the number of categories which would limit artificially , compared to the current situation, the ability 
of Members to maximize the rents from these quotas.   G/TMB/N/476 
 Page 5 
 
 
 Conclusion 
 
 In conclusion,  Canada has not only met but exceeded its ATC requirements at each stage of 
implementation.  Canada will continue to fully discharge its ATC obligations. 
 
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