WORLD TRADE
ORGANIZATIONG/TMB/N/450/Add.1
16 September 2002
(02-4883)
Textiles Monitoring Body Original:  English
AGREEMENT ON TEXTILES AND CLOTHING
Notification under Article 2.17
UNITED STATES
Administrative Arrangements with China
Addendum
The Textiles Monitoring Body has received an further notification from the United States
pursuant to Article 2.17.  The TMB is circulating this notification to WTO Members for their
information.G/TMB/N/450/Add.1
Page 2
Permanent Mission of the United States
to the World Trade Organization
Geneva
12 September 2002
The Honourable András Szepesi
Chairman
Textiles Monitoring BodyWorld Trade Organization
Rue de Lausanne 154
1211 Geneva
Switzerland
Dear Mr. Chairman,
Thank you for your letter of 26 June 2002, concerning the notification to the Textiles Monitoring
Body (TMB) by the United States under Article 2.17 of the Agreement on Textiles and Clothing(ATC) concerning quantitative restrictions main tained on imports from China (G/TMB/N/450).
Answers to the specific questions you have posed follow.  As an introductory comment, though, I
would like to remind the TMB of the statement in the chapeau to the notification, which states:  "the
following provisions are drawn from the United States - China bilateral textile and apparel
Memorandum of Understanding of 1 February 1997...."  The TMB may wish to bear in mind first, thatthe administrative provisions were drawn from an existing bilateral agreement, rather than being
drafted anew and were not prospectively adjusted to account for changes that would occur upon
China’s accession to the WTO.  Second, at the time the Memorandum of Understanding was
concluded, neither Member anticipated the delay to China’s eventual accession to the WTO late in
2001.
1. The TMB’s understanding is correct.
1
2. The TMB’s assumptions are correct.2
3. The reference in paragraph 6(b) to "restraint limits established pursuant to paragraph 8" no
longer applies.   The sublimit for category 640 was not resolved.
                                                     
1 The TMB's question to the US was as follows:  "Paragraph 2(A) states that 'the textiles and textile
products covered by the Agreement are those summarized in Annex A'.  Since Annex A describes the
entire US textiles and apparel category system, the TMB would appreciate it if its understanding could
be confirmed that the products covered by the admini strative arrangements are limited to those covered
by the ATC and not yet integrated as a result of the implementation of the provisions of Articles 2.6,2.7(a), 2.8(a), 2.8(b) and 2.11 of the ATC;"
2 The TMB's question to the US was as follows: "The TMB also assumes that the limits contained in
Annex B are only provided for historical considera tions, since they refer to a period prior to China
being a Member of the WTO and have not been implemented under the ATC.  Similarly, references topossible amendments to the levels indicated in Annex B as reflected in paragraph 6(B) do not apply.
The TMB would appreciate receiving clar ification of its understanding;"G/TMB/N/450/Add.1
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4. Each Agreement Year or period is a calendar year.
5. Article 5.1 of the ATC states that circumvention by transshipment and other means "frustrates
the implementation of this Agreement to integrate the textiles and clothing sector into GATT 1994"
and calls on Members to cooperate fully to address this problem. Furthermore, Article 5.2 makes clearthat transshipment and other practices can circumvent the ATC.  Thus, Article 5 expresses the
understanding of the WTO Members that transshipment and other practices that result in
circumvention of the quantitative restrictions notified under Article 2 undermine these restrictions and
frustrate the integration process set out in Article 2.  Accordingly, the United States and China have
agreed that the provisions of paragraph 13, which address circumvention, are necessary in relation to
the implementation of Article 2 of the ATC.
6. Paragraph 13(E) is part of an administrative arrangement that the United States and China
agreed was necessary in relation to the implementation of Article 2 of the ATC for the reasons set
forth in response to the previous question. We do not believe that each provision of such an
arrangement requires separate justification, as Paragraph 13 as a whole is clearly an administrative
arrangement within the scope of Article 2.17.  The United States will implement this administrativearrangement in conformity with all relevant provisions of the ATC.  The United States notified similar
provisions in agreed administrative arrangements with the following WTO Members:   Bangladesh,
Brazil, Colombia, Costa Rica, Dominican Republic , Egypt, Guatemala, Haiti, Hungary, India,
Indonesia, Jamaica, Korea, Macau, Malaysia, Mauritius, Oman, Pakistan, Philippines, Poland, Qatar,
Romania, Sri Lanka, Chinese Taipei, Thailand, Turkey, Uruguay and United Arab Emirates.
7. As explained in the US response to the previous question, the United States does not believe
that each provision of an administrative arrangement with in the scope of Article 2.17 requires
separate justification. We note that Article 5.5 of the ATC makes clear that circumvention may
include goods transiting through a country or place with no change or alteration.
8. The TMB’s understanding is confirmed.
3
9. The TMB’s understanding is confirmed.4
                                                     
3 The TMB's question to the US was as follows:  "The TMB recalled that when it had examined the
administrative arrangements concluded by the United States with several WTO Members, in June
1997, the United States had provided written replies to the TMB’s request for clarification.  In light of
these replies, as regards the correct understanding of the product coverage of these administrative
arrangements, the TMB 'took note of the precision provided by the United States according to which
only products subject to restraints under paragraph 1 of Article 2 were subject to the administrativearrangements' (G/TMB/R/31, paragraph 10).  Furthermore, 'the United States had stated that whenprovisions of the administrative arrangements were inconsistent with the ATC, the provisions of theATC would apply.  The TMB understood that this statement applied to each and every provision of thearrangements notified.  The TMB expected, therefore,  that all the provisions of these administrative
arrangements would be implemented by the respective Members in conformity with the relevant
provisions of the ATC' (G/TMB/R/31, paragraph 21).  Against this background, the TMB wouldappreciate it if confirmation could be provided that the above statement made by the United States also
applies to the administrative arrangements concluded between the United States and China;"
4 The TMB's question to the US was as follows:  "Paragraph 14 states that 'the visa system established
for exports to the United States of America of cotton, wool and man-made fiber, other vegetable fibers,and silk blend textiles and textile products of the People's Republic of China, effective 25 July 1980, asamended, will remain in force.'  It would be appreciated if the TMB's understanding could beconfirmed that no visa requirements would be applied to the imports from China any of the productsintegrated into GATT 1994 by the United States as a result of the Stages 1 to 3 integration
programmes;"G/TMB/N/450/Add.1
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10. Paragraph 7 of Annex C refers to an historical adjustment to the Group III limit that predated
the notification under Article 2.1 (see response number 2 above).
I appreciate the opportunity to respond to questions from the TMB, and will be pleased to response to
additional questions if they arise.
Sincerely,
(Signed for)
David M. Spooner
Special Textile Negotiator
__________