WORLD TRADE G/TMB/12
29April 1997
ORGANIZATION(97-1867)
Textiles Monitoring Body
TWENTY-NINTH MEETING OFTHE TMB
Note bytheChairman
1. TheTextiles Monitoring Body meton21to23April 1997.
2. TheTMB authorized itsChairman toprovide WTO Members withthefollowing information.
Honduras/United States: notification under Articles 8.6and8.7oftheAgreement onTextiles
andClothing (ATC)
3. TheTMB received on27March 1997 acommunication from Honduras under paragraphs 6
and7ofArticle 8requesting theTMB to“consider andmake arecommendation atitsnextmeeting
concerning theappropriateness oftheUnited States maintaining arestraint onHonduran exports under
category 435(women ’swool coats andjackets) ”.Honduras referred alsotoparagraph 8ofArticle 8
which states that“whenever theTMB iscalled upon tomake recommendations orfindings, itshall
doso,preferably within aperiod of30days, unless adifferent timeperiod isspecified inthis
Agreement ”.
4. TheTMBinvitedparticipationfrombothHondurasandtheUnitedStatesatitsreview,scheduled
foritsmeeting on21to23April 1997. Itwasinformed thatHonduras would participate inthemeeting.
TheUnited States senton14April 1997 acommunication totheTMB inwhich itexplained thatin
theviewoftheUnited States thematter referred tobyHonduras wasthesubject ofasigned bilateral
agreement between thetwogovernments andhadalready beenreviewed bytheTMB inaccordance
withparagraph 9ofArticle 6oftheATC; thataccording totheUnited States Government, paragraph 7
ofArticle 8didnotpermit there-opening ofagreements between Members oncetheyhadbeenreviewed
bytheTMB forconformity withtheAgreement; andthattheUnited States therefore requested that
“theTMB notagree toHonduras ’request forasecond review ofthisissue based onevents thathave
taken place since theTMB’sfirstreview ”.
5. Therepresentative ofHonduras stated thatthecontinuation oftherestraint constituted amatter
detrimental toHonduras ’interests forthefollowing main reasons:
- theUnited States haddropped arestraint onimports ofthesameproduct category from
India, arestraint which hadbeenintroduced, pursuant toparagraph 10ofArticle 6,
atthesame timeasthatonimports fromHonduras. However, theUnited States had
notrescinded therestraint onimports fromHonduras, despite repeated requests from
thelatter;
- theTMB should haveextended toHonduras, whose exports totheUnited States of
products ofcategory 435were lower thanthose from India, thefinding ithadmade
inreviewing themeasure introduced bytheUnited States onimports ofproducts of
category 435from India. TheTMB should alsohavefound thatthecontinuation of
therestraint constituted adetriment toHonduras;G/TMB/12
Page2
- theTMB hadnotcompleted itsreview oftheagreement reached between Honduras
andtheUnited States, pursuant toparagraph 9ofArticle 6,onimports ofproducts
ofcategory 435;
- duetothecontinuation oftherestraint oncategory 435,Honduras experienced aloss
ininvestment, andwasnotinaposition toutilize itsquota fully. Theadministrative
costsassociated withtheadministration oftheagreement hadtobeborne byHonduras.
Since norepresentative oftheUnited States waspresent atthemeeting, theTMB hadtorelyonthe
United States ’communication, summarized inparagraph 4above.
6. Inreviewing thematter brought before itbyHonduras, theTMB considered thearguments
putforward byHonduras aswellastheposition taken bytheUnited States and,without reaching final
conclusions, wasinaposition atthismeeting toform thefollowing views.
7. TheTMB noted thatthecommunication fromHonduras referred toaproduct withrespect to
whichtheUnitedStateshadatthesametimehadrecoursetotheprovisionsofArticle6oftheAgreement
onTextiles andClothing in1995 withaview tointroducing restraints onimports ofproducts of
category 435from bothHonduras andIndia. TheTMB reviewed theaction bytheUnited States on
imports fromIndia atitsmeetings on28August to1September 1995 and12to15September 1995;
itreviewed theaction onimports from Honduras atitsmeeting on12to15September 1995. With
respect tothesafeguard action taken bytheUnited States against imports from Honduras, theTMB
heard presentations ofthearguments ofbothMembers, andwasinformed byboththattheyhaddecided
toresume bilateral consultations, andasked forsuspension oftheconsideration ofthisissue bythe
TMB. TheBody wasinformed subsequently thattheUnited States andHonduras hadarrived ata
mutually agreeable resolution oftheissueunder paragraph 9ofArticle 6.1Withrespect tothesafeguard
action taken bytheUnited States against imports ofcategory 435fromIndia, theTMB, initsreview
pursuant toparagraph 10ofArticle 6,found thatserious damage, asenvisaged intheprovisions of
Article 6,hadnotbeendemonstrated. TheTMB could not,however, reach consensus ontheexistence
ofactual threat ofserious damage.2
8. India subsequently requested theTMB, pursuant toparagraph 6ofArticle 8,toreview the
action bytheUnited States incontinuing itsrestraint onimports ofcategory 435fromIndia, assuch
action wasdetrimental toIndia’sinterests. TheBody could notmake anyrecommendation inaddition
totheconclusions ithadreached atitsmeeting on12to15September 1995, norcould theTMB reach
aconsensus onwhether ornottherestraint oncategory 435could continue tobemaintained inlight
oftheabsence ofconsensus ontheexistence ofactual threat ofserious damage. TheTMB therefore
considered itsreview ofthematter under therelevant provisions oftheATC completed.3
9. Atitsmeetingon18to20December1995,theTMBreviewedtheagreementconcludedbetween
Honduras andtheUnited States onimports ofwomen ’sandgirls’wool coats (category 435)from
Honduras. Asreflected initsreport, theTMB tooknoteoftheelements oftheagreement (base level,
annual growth rate,duration ofthemeasure, presence ofaspecific limitaswellasofaguaranteed
access level(GAL)), andmade anobservation withrespect totheannual growth ratetobeapplicable
totheGAL. TheTMB alsorecalled that,when reviewing theaction taken bytheUnited States against
imports ofcategory 435from India under paragraphs 2and3ofArticle 6,ithadfound thatserious
1G/TMB/R/3, paragraph 32.
2G/TMB/R/3, paragraph 19.
3G/TMB/R/6, paragraphs 6to9.G/TMB/12
Page3
damage, asenvisaged inthese provisions, hadnotbeendemonstrated, buthadnotreached consensus
ontheexistence ofactual threat ofserious damage.4
10. Atthismeeting, during itsreview ofthecommunication byHonduras pursuant toparagraph 6
ofArticle 8,theTMB observed thatwhen, inDecember 1995, ithadreviewed theagreement concluded
between Honduras andtheUnited States onimports ofwomen ’sandgirls’woolcoats (category 435)
fromHonduras, ithadnotreached adetermination whether thatagreement wasjustified inaccordance
withtheprovisions ofArticle 6oftheATC.
11. TheTMB further observed that,following therequest byIndia thatapanel beestablished to
examine matters arising outoftheUnited States ’action with regard toimports ofproducts of
category 435from India, theUnited States hadremoved therestraint onsuchimports, since the
United States hadbecome convinced thattherestraint oncategory 435wasnolonger necessary.5
12. TheTMBunderstoodthat,subsequently,HondurashadraisedwiththeUnitedStatesthequestion
oftheappropriateness fortheUnited States tomaintain therestriction onimports ofproducts of
category 435from Honduras, buthadreceived nopositive reply from theUnited States.
13. TheTMB noted thearguments putforward byHonduras inparagraph 5above thatthe
maintenance ofthisrestraint onimports from Honduras isdetrimental toHonduras ’interests under
thisAgreement.
14. Inthelightoftheelements mentioned above, theTMB expected thattheUnited States would
re-assess thesituation toseewhether inallthecircumstances itwasstillappropriate fortheUnited States
tomaintain therestraint oncategory 435against Honduras.
15. TheTMB further expected thattheUnited States would keepitinformed oftheoutcome of
itsre-assessment, soastorevert tothematter atitsmeeting on4to6June1997.
*******
16. Thethirtieth meeting oftheTMB isscheduled for16May1997.
17. Thefullreport ofthetwenty-ninth meeting willbecirculated atalaterstage.
4G/TMB/R/8, paragraphs 23to26.
5WT/DSB/M/13, page 3.