. /.WORLD TRADE
ORGANIZATIONG/TMB/N/440/Add.1
14 June 2002
(02-3307)
Textiles Monitoring Body Original:  English
AGREEMENT ON TEXTILES AND CLOTHING
Notification under Article 2.17
CANADA
Administrative Arrangements with China
Addendum
The Textiles Monitoring Body has received a further notification from Canada pursuant to
Article 2.17.  The TMB is circulating this notification to WTO Members for their information.G/TMB/N/440/Add.1
Page 2
The Permanent Mission of Canada
to the United Nations
Geneva
13 May 2002
Mr. András Szepesi
Chairman
Textiles Monitoring Body
World Trade Organization
Centre William RappardRue de Lausanne 154
CH-1211 Genève 21
Dear Mr. Szepesi,
This is in response to your letter of 26 April 2002 requesting further clarification regarding
Canada's administrative arrangement concluded with China under Article 2.17 of the Agreement on
Textiles and Clothing (ATC).
Paragraph 5 of the Administrative Memorandum of Understanding (AMOU) allows for re-
crediting any quantity covered by an export licence that is not shipped to Canada.  Such situations
occur regularly, for example when the exporting country cancels an export license for a shipment
which is subsequently not exported to Canada.  In this case, China would inform Canada through our
electronic verification system that the relevant expo rt licence had been cancelled and then it would re-
credit automatically its quota so that it may re-allocate the amount to another shipment.  However, no
credit would be authorized in a situation where an exporting government were seeking to cancel an
export licence against which a shipment had already been entered into Canada. This is exceedingly
rare in the case of China given the aforementioned electronic verification system and the fact that
usage of export licences is reported back to China on a daily basis.
Paragraph 12 of our AMOU, which reserves the right of both governments to seek additional
statistics from the other, including statistics for non-restrained products, is common to all of Canada's
administrative arrangements pertaining to apparel and textile restraints.  It is intended, inter alia , to
address issues concerning circumvention and transshi pment.  In this context, we note that Article 5.1
of the ATC explicitly acknowledges the importance of this issue, indicates that "Members should
establish the necessary legal provisions and/or administrative procedures to address and take actionagainst such circumvention", and calls on all Members to cooperate fully to address these problems.
Yours sincerely,
(Signed)
A.R (Sandy) Moroz
Counsellor
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