PROTOCOL
EXTENDING THE ARRANGEMENT REGARDING
INTERNATIONAL TRADE IN TEXTILES
GENERAL AGREEMENT ON TARIFFS AND TRADE
_______________
31 July 1986, Geneva- 3 -
PROTOCOL EXTENDING THE ARRANGEMENT REGARDING
INTERNATIONAL TRADE IN TEXTILES
THE PARTIES to the Arrangement Regarding International Tra de in Textiles
(hereinafter referred to as "the Arrangement" or "MFA".
ACTING pursuant to paragraph 5 of Article 10 of the Arrangeme nt, and
REAFFIRMING that the terms of the Arrangement regarding the competence
of the Textiles Committee and the Textiles Surveillance Bod y are maintained, and
SUBJECT TO the Conclusions of the Textiles Committee adopte d on
31 July 1986.
HEREBY AGREE as follows:
1. The Arrangement shall be extended, in accordance with Con clusions of the
Textiles Committee, attached herewith and forming an integ ral part of this Protocol,
for a period of five years until 31 July 1991.
2. This Protocol shall be deposited with the Director-Gener al to the
CONTRACTING PARTIES, by signature or otherwise, by the Part ies to the
Arrangement, by other governments accepting or acceding to the Arrangement pursuant
to the provisions or Article 13 thereof and by the European Ec onomic Community.
3. This Protocol shall enter into force on 1 August 1986 for th e countries which
have accepted it by that date. It shall enter into force for a c ountry which accepts
it on a later date as of the date of such acceptance.
Done at Geneva this thirty-first day of July, one thousand ni ne hundred and eight-six,
in a single copy in the English, French and Spanish languages , each text being
authentic.- 4 -
CONCLUSIONS OF THE TEXTILES COMMITTEE ADOPTED
ON 31 JULY 1986
1. The participants in the Arrangement exchanged views rega rding the future of
the Arrangement.
2. Participants emphasized that the basic objectives of the MFA are to achieve the
expansion of trade, particularlyfor the developing countr ies,the reductionof barriers
to such trade and the progressive liberalization of world tr ade in textile products while,
at the same time ensuring the orderly and equitable developm ent of this trade and
avoidance of disruptive effects in individual markets and o n individual lines of
production in both importing and exporting countries.
3. They stressed the importance of promoting liberalizatio n of trade in textiles and
clothing. In this connection, they recognized the need for c o-operative efforts by
all participants. They agreed that the final objective is th e application of GATT rules
to trade in textiles.
4. It was reiterated that a principal aim in the implementati on of the Arrangement
is to further the economic and social development of develop ing countries and to secure
a substantial increase in their export earnings from textil e products and to provide
scope for a greater share for them in world trade in these prod ucts. Participants
undertook to contribute to this through improvement in bila teral agreements under
this Arrangement, which should provide for increased effec tive access in overall terms.
5. Attention was drawn to the fact that decline in the rate of g rowth of per capita
consumption in textiles and in clothing is an element which m ay be relevant to the
recurrence or exacerbation of a situation of market disrupt ion. Attention was also
drawn to the fact that domestic markets may be affected by ele ments such as
technological changes and changes in consumer preference. In this connection it was
recalled that the appropriate factors for the determinatio n of a situation of market
disruption as referred to in the Arrangement are listed in An nex A.
6. The importing participants undertook that where,in thei r view, a case of market
disruption or real risk thereof exists in terms of the defini tion in paragraph I and II
of Annex A requests for action under Articles 3 or 4 shall be ac companied by
available, specific and relevant factual information as up -to-date as possible,
particularly in respect of factors set out in Annex A. In resp ect of requests made
under Article 3, the information should be related, as close ly as possible, to identifiable
segments of production and to the reference period set out in Annex B, paragraph I (a).
They agreed that actions based on the existence of serious da mage to domestic
producers or actual threat thereof in terms of paragraph I of Annex A cannot be based
solely upon the level of imports or growth thereof. Particip ants agreed that in- 5 -
determining a situation of market disruption, due consider ation has to be given to
the evolution of the state of the domestic industry in the imp orting country, including
its export performance and the market share held by this indu stry.
7. Participants agreed that in examining the factors causin g a situation of market
disruption, due consideration shall be given to both factor s (i) and (ii) indicated in
Paragraph II of Annex A.
8. The view was expressed that special difficulties may be cr eated for importing
countries which administer restraints imposed under Artic le 3, paragraph 5 on the
basis of date of export when, in the absence of a mutually agre ed solution as indicated
in Article 3 paragraph 8, an imminent and measurable increas e in imports may arise
which would cause recurrence or exacerbation of market disr uption or impede the
steady and orderly development of trade. It was agreed that i n such cases, and after
submission to the Textiles Surveillance Body in accordance with Article 3, paragraph 8,
the importing country may extend for one further period of tw elve months the restraint
previously applied. Growth and flexibility shall be accord ed to the subsequent
twelve-month restraint in accordance with provisions of pa ragraphs 3 and 5 of
Annex B.
9. It was recalled that in exceptional cases where there is a r ecurrence or
exacerbation of a situation of market disruption as referre d to in Annex A, and
paragraphs 2 and 3 of Annex B, a lower positive growth rate for a particular product
from a particular source may be agreed upon between the parti es to a bilateral
agreement. It was further agreed that where such agreement h ad taken into account
the growing impact of a heavily utilized quota with a very lar ge restraint level for
the product in question from a particular source, accountin g for a very large share
of the market of the importing country for textiles and cloth ing, the exporting party
to the agreement concerned may agree to any mutually accepta ble arrangementswith
regard to flexibility.
10. The Committee also confirmed that exporting participan ts, predominant in the
exporting of textile products in all the following fibres (c otton, wool and man-made
fibres) covered by the Arrangement may agree with importing participants to any
mutually acceptable solution as regards growth and flexibi lity; but in no case should
such growth and flexibility be negative. Importing partici pants at the same time
recognized the importance to predominant exporting partic ipants of stability in the
textile trade and the need to ensure that stability and certa inty throughout the full life
of their bilateral agreements, keeping in mind also the need for orderly development
of trade.
11. The view was expressed that real difficulties may be caus ed in importing countries
by sharp and substantial increases in imports as a result of s ignificant differences
between larger restraint levels negotiated in accordance w ith Annex B on the one- 6 -
hand and actual imports on the other. When such difficulties arise the exporting and
importing countries may consult in order to arrive at a mutua lly acceptable solution
including the provision of equitable and quantifiable comp ensation where appropriate.
As regards consistently under-utilized quotas, considera tion should be given to their
removal upon request. Should a quota that has been removed be re-introduced, the
quota level shall fully take into account the previous restr aint level.
12. The Committee recognized that participating importing countries having small
markets, an exceptionally high level of imports and a corres pondingly low level of
domestic production are particularly exposed to the proble ms arising from imports
causing market disruption as defined in Annex A, and that the ir problems should be
resolved in a spirit of equity and flexibility in order to avo id damage to those countries 
minimum viable production of textiles. At the same time, the Committee noted the
commitment by those countries to contribute to further libe ralization of world trade
in textile products. Participants agreed that these countr ies may apply lower positive
growth rates as set out in Annex B and on a mutually acceptable basis lower flexibility
than the norms set out in the same Annex, on the understanding that future bilateral
agreements shall, depending on the point of departure for ea ch importing country,
in respect to growth and flexibility represent meaningful i mprovements over those
agreements previously in place. Participants further agre ed that minimum viable
production provisions are available only in the circumstan ces set out in the
Arrangement and in this paragraph.
13. The participating countries were conscious of the probl ems posed by restraints
on exports of new entrants and small suppliers, as well as on e xports of cotton textiles
by cotton producing countries. They reaffirmed their commi tment to the letter and
intent of Article 6 of the Arrangement and to the effective im plementation of this
Article to the benefit of these countries.
To this end they agreed that:
(a) Restraints shall not normally be imposed on exports from small suppliers,
new entrants and least developed countries.
(b) If circumstances oblige the importing country to introd uce restraints on
exports from the least developed countries, the treatment a ccorded to these
countries should be significantly more favourable than tha t accorded to the
other groups referred to in this paragraph, preferably in al l its elements
but, at least, on overall terms.- 7 -
(c) Where restraints are applied on exports from new entrant s and small
suppliers, the economic terms relating to growth and flexib ility rates should
take due account of the future possibilities for the develop ment of trade
and the need to permit commercial quantities of imports in or der to further
the economic and social development of such suppliers.
(d) Exportsof cotton textiles from cottonproducingexport ingcountriesshould
be given special consideration. Where restraints are appli ed, more
favourable treatment should be given to these countries in t erms of quotas,
growth rates and flexibility, having due regard to the provi sions of Annex B.
This special consideration should be reflected in the impro vements in
bilateral agreements foreseen in paragraph 4 above, and sho uld take into
account the point of departure for each country, the degree o f vulnerability
of the industrial sectors concerned in the importing countr y, as well as the
importance of cotton textile exports in the economy of the ex porting country
concerned.
(e) The provisions of Annex B relating to exceptional circum stances and cases
should be applied sparingly to exports from new entrants, sm all suppliers
and trade in cotton textiles of cotton producing developing countries.
(f) Any restraintsenvisaged on exports from new entrants, s mall suppliersand
cotton textile producing countries shall take into account the treatment of
similar exportsfrom other participants, as well as non-par ticipants in terms
of Article 8, paragraph 3.
14. The participants recognized that particular problems a re created by restrictions
on wool products for those wool producing developing countr ies whose economy and
textile trade are dependent on the wool sector, whose total t extile exports consist almost
exclusively of wool textiles and clothing, and whose volume of textile trade is
comparatively small in the markets of the importing countri es. It was agreed that,
in the application of safeguard measures under the Arrangem ent, special consideration
shall be given to the export needs of such countries when cons idering quota levels,
growth rates and flexibility, so as to ensure overall improv ed access in the importing
country s market, having due regard to the provisions of Annex B.
15. In conformity with the provisions of Article 6, paragrap h 6 of the Arrangement
for consideration to be given to special differential and mo re favourable treatment
in the light of the special nature of the trade referred to the rein, participants agreed
that, in negotiating bilateral restraints account shall be taken of the relative degree
to which those exports contribute to situations of market di sruption or real risk thereof.- 8 -
16. Participants agreed to co-operate fully in dealing with problems relating to
circumvention of the Arrangement, in the light of the provis ions of Article 8 thereof.
To this end, it is agreed that such cooperation will include s uch administrative
co-operation and exchange of available information and doc uments in accordance with
national laws and procedures, as are necessary to establish the relevant facts. It was
further agreed that the appropriate administrative action referred to in Article 8,
paragraph 2, should in principle, where evidence is availab le regarding the country
of true origin and the circumstances of circumvention, incl ude adjustment of charges
to existing quotas to reflect the country of true origin; any such adjustment together
with its timing and scope being decided in consultation betw een the countries
concerned, with a view to arriving at a mutually satisfactor y solution. If such a
solution is not reached any participant involved may refer t he matter to the Textiles
Surveillance Body in accordance with the provisions of Arti cle 8, paragraph 2.
17. The participantsagreedto collaborate in regardto inst ances or false declarations
regarding the quantity and type of textile products present ed for import by the exchange
of available information and documents in accordance with n ational laws concerned,
with a view to establishing the relevant facts and enabling t he government concerned
to take appropriate action under national laws and procedur es.
18. Introduction of changes (such as changes in practices, r ules, procedures,
categorizationoftextile products,includingthose chang es relatingto the Harmonized
System) in the implementation or interpretation of bilater al textile agreements or of
the Arrangement, which have the effect of upsetting the bala nce of rights and
obligations between the parties concerned, or which affect the economic content of
a bilateral agreement, or which affect the ability of a parti cipant to use or benefit
fully from a bilateral agreement, or which disrupt trade, sh all be avoided as far as
possible. Where such changes are necessary, participants a greed that the participant
initiating any such changes shall, wherever possible infor m and initiate consultations
with the affected participant prior to the time that such cha nges may affect the trade
in question, with a view to reaching a mutually acceptable so lution regarding
appropriate and equitable adjustments. Participants furt her agreed that where
consultation prior to implementation of any such changes is not feasible, the participant
initiating such changes will consult, as early as possible, with the affected participant
with a view to reaching a mutually satisfactory solution reg arding appropriate and
equitable adjustments. Any dispute under this provision ma y be referred to the Textiles
Surveillance Body for recommendation.- 9 -
19. In pursuance of the objective of trade liberalization em bodied in the Arrangement,
the Committee re-affirmedthe need to monitor adjustment po licies and measures and
the process of autonomous adjustment in terms of the provisi ons of Article 1,
paragraph 4. To this end, the Committee decided that the Sub- Committee on
Adjustment should continue to make a periodic review of deve lopments in autonomous
adjustment processes and in policies and measures to facili tate adjustment, as well
as in production and trade in textiles, on the basis of materi al and information to be
provided by participating countries as well as additional m aterial and information
obtained by the Secretariat from other sources, and with the help of any supporting
analysis by the Secretariat. Attention was drawn to the impa ct of technological
developments on the comparative advantage and competitive ness in textile trade.
Participatingcountrieswere urgedto provide the Sub-Comm ittee on Adjustment with
all relevant and up-to-date information relating, inter al ia, to production and trade,
necessary for the Sub-Committee to discharge its function a nd to report periodically
to the Textiles Committee to enable that Committee to fulfil its obligations under
Article 10, paragraph 2.
20. The participants re-affirmed the importance of the effe ctive functioning of the
TextilesCommittee, the Sub-Committee onAdjustment and th e Textiles Surveillance
Body, in their respective areas of competence. In this conte xt, the participants
emphasized the importance of the responsibilities of the Te xtiles Surveillance Body
as set forth in Article 11 of the MFA.
21. The participants also re-affirmed that the role of the Te xtiles Surveillance Body
is to exercise its functions as set out in Article 11 so as to he lp ensure the effective
and equitable operation of the Arrangement and to further it s objectives. In this
respect, the Committee recognized the need for close co-ope ration among participants
for the effective discharge of the Textiles Surveillance Bo dy s responsibilities.
22. Participants agreed that in considering problems arisi ng from the application
of bilateral agreements or measures taken under the Arrange ment and with a view
to discharging its functions with respect to the review of su ch action, the Textiles
Surveillance Body may address problems of interpretation o f the relevant provisions
of the Arrangement.
23. Taking into account the important role of the Textiles Su rveillance Body and
in view of the increased membership of the Arrangement, the p articipants agreed
to examine the possibilities of an increase in the number of m embers of the Textiles
Surveillance Body.- 10 -
24. (i) The Committee acknowledged the concern of some impor ting countries
regarding substantially increased imports of textiles mad e of vegetable fibres,
blends of vegetable fibres with fibres specified in Article 12, and blends
containing silk, which are directly competitive with texti les made of fibres
specified in Article 12. Accordingly, the Committee agreed that the
provisions of Article 3 and 4 may be invoked with respect to di rectly
competitive imports of such textiles, in which any or all of t hose fibres
in combination represent either the chief value of the fibre s or 50 per cent
or more by weight of the products, which cause market disrupt ion or a real
risk thereof, bearing in mind also the provisions of Article 8, paragraph 3
of the Arrangement.
(ii) In examining the case for market disruption, the Textil es Surveillance Body
is instructed to pay particular attention to the evidence de monstrating that
these products are directly competitive with products of co tton, wool and
man-made fibres manufactured in the importing country conc erned.
(iii) It is understood that restraints will not be applied to historically traded
textiles which were internationally traded in commerciall y significant
quantities prior to 1982, such as bags, sacks, carpetbackin g, cordage,
luggage, mats, mattings and carpets typically made from fib res such as
jute, coir, sisal, abaca, maguey and henequen.
25. In the context of the phasing out of restraints under the A rrangement, priority
attention would be given to sectors of trade, e.g., wool tops , and suppliers for which
the Arrangement provides for special and more favourable tr eatment as referred to
in Article 6.
26. It was felt that in order to ensure the proper functioning of the MFA, all
participants should refrain from taking measures on textil es covered by the MFA,
outside the provisions therein, before exhausting all the r elief measures provided in
the MFA.
27. Participants noted the concern expressed by a number of p articipants with respect
to the problem of infringement of registered trademarks and designs in trade in textiles
and clothing and noted that such problems could be dealt with in accordance with
the national laws and regulations.
28. Having regard to the stated objectives set out in paragra ph 2 above, and on the
basis of the elements mentioned in the preceding paragraphs ,which supersede in their
totality those adopted on 22 December 1981, the Textiles Com mittee considered that
the Arrangement should be extended for a period of five years , subject to confirmation
by signature as from 31 July 1986 of a Protocol for this purpos e.