RESTRICTED
WORLD TRADE G/TMB/R/3
3October 1995
ORGANIZATION(95-2923)
Textiles Monitoring Body
REPORT OFTHE THIRD AND FOURTH MEETINGS
1. TheTextiles Monitoring Body helditsthirdmeeting on28August to1September 1995, and
itsfourth meeting on12to15September 1995.
2. Mr.MunirAhmadappointedMr.MumtazMalik(Pakistan)ashisalternate.AmbassadorJoseph
Michel Dedans (Mauritius) wasappointed asthenon-participating observer from Africa.1
3. Thefollowing members and/or alternates/second alternates, andobservers, were present at
thethird meeting: Messrs. Daly; Dedans; Kumar/Baati; Lee/Tong/Jamaluddin; Munir/Malik;
Pangaribuan; doPrado/Pierce/Prado; Saeki; Saint-Jacques/Rey; Tagliani; Wentzel/Kacar/Hovorka.
4. Thefollowing members and/or alternates/second alternates, andobservers, were present at
thefourth meeting: Messrs. Berz; Dedans; Kumar/Baati; Lee/Tong; Munir; Pangaribuan;
Pierce/Prado; Saeki; Saint-Jacques/Rey; Tagliani; Wentzel/Hovorka.
5. TheTMB adopted thereport ofitssecond meeting (G/TMB/R/2).
Notifications under Article 6.10oftheAgreement onTextiles andClothing
United States/India: imports ofmen’sandboys’woolcoats other thansuite-type (UScategory 434)
6. TheTMB received notifications from theUnited States under paragraph 10ofArticle 6of
theAgreement ofasafeguard action ithadtaken onimports ofproducts ofcategory 434(men’sand
boys’wool coats other thansuite-type) fromIndia. Themeasure hadbeenintroduced witheffect as
from 18April 1995.
7. Bilateral consultations between theparties were inconclusive, andtheTMB invited the
participation ofIndia andtheUnited States atthethirdTMB meeting. Bothparties sentdelegations
toGeneva topresent theirrespective cases.
8. Therepresentative oftheUnited States submitted thattheaction herGovernment hadtaken
wasjustified forthefollowing main reasons:
- serious damage, oractual threat thereof existed withrespect totheUSproducers of
men’sandboys’woolcoatsother thansuit-type (category 434)asaresult ofincreased
quantities ofimports, within themeaning ofparagraph 2ofArticle 6oftheAgreement;
more recent datahadconfirmed thisfinding;
1SeeWT/L/26, paragraph 5.G/TMB/R/3
Page2
- theseincreased imports hadhadanadverse impact ontheUSproduction ofsuchgoods,
which hadbeendeclining since1994, resulting inalossofUSmarket share bydomestic
producers;
- theincreasingimports/productionratio,thecontinuingdropinthenumberofproduction
workers, intheannual average man-hours worked andinannual production workers '
wages werefurther evidence thatserious damage, oractual threat thereof, wastaking
place;
- thiswasalsoillustrated bylosses insales, employee layoffs, plant shut-downs and
closures, andtheshifting ofproduction offshore;
- thewool sector oftheUStextile andapparel industry washighly sensitive, andthe
relatively small sizeofthewoolapparel companies made themvulnerable toincreases
inimports.
9. Suchserious damage, oractual threat thereof, wasattributed bytheUnited States interalia
toasharp andsubstantial increase inimports from India.
10. Therepresentative ofIndia stated thatthesafeguard action taken bytheUnited States was
notjustified forthefollowing main reasons:
- intheviewoftheIndian Government, increased imports ofmen’sandboys’woolcoats
other thansuit-type were notcausing serious damage, orthreat thereof, totheUS
domestic industry producing likeand/or directly competitive products;
- datapresented bytheUnited States didnotdemonstrate theexistence ofserious damage,
orthreat thereof, totheUSindustry producing products ofcategory 434,nordidit
demonstrate acausal relationship between theincrease ofimports andadrop in
production. Production infacthaddeclined onlymarginally in1994, afterapeakyear
in1993;
- dataonsome oftheeconomic variables mentioned inparagraph 3ofArticle 6ofthe
Agreement, suchasproductivity, profits, inventories, export quantities, anddomestic
prices, were either notavailable orwere questioned;
- asubstantial portion oftheUSproduction wasexported andcould nottherefore be
affected byimports.
11. TheTMB started itsreview ofthemeasure introduced bytheUnited States atitsthirdmeeting
anddecided torevert toitatitssubsequent meeting.
12. During itsreview ofthesafeguard action taken bytheUnited States against imports ofproducts
ofcategory 434fromIndia, theTMB, having examined alloftheinformation provided bybothparties
inthelightoftheconditions established under paragraphs 2and3ofArticle 6,found thatserious
damage, oractual threat thereof, hadnotbeendemonstrated, andrecommended thattheUnited States
rescind themeasure.G/TMB/R/3
Page3
United States/India: imports ofwomen ’sandgirls’wool coats (UScategory 435)
13. TheTMB received notifications from theUnited States under paragraph 10ofArticle 6of
theAgreement ofasafeguard action ithadtaken onimports ofproducts ofcategory 435(women ’s
andgirls’woolcoats) fromIndia. Themeasure hadbeenintroduced witheffect asfrom18April 1995.
14. Bilateral consultations between theparties wereinconclusive, andtheTMB invited India and
theUnited States topresent theirrespective cases atitsthirdmeeting.
15. Therepresentative oftheUnited States submitted thattheaction herGovernment hadtaken
wasjustified forthefollowing main reasons:
- serious damage, oractual threat thereof existed withrespect totheUSdomestic
producersofwomen’sandgirls’woolcoatsasaresultofincreasedquantitiesofimports,
within themeaning ofparagraph 2ofArticle 6oftheAgreement; more recent data
confirmed this;
- suchincreased imports hadhadanimpact onUSdomestic producers oftheseproducts,
asshown byacontinuing decline ofproduction, alossofmarket share bydomestic
manufacturers, steady increases ofimport penetration, steep declines inthenumber
ofproduction workers employed, aswellasdeclines inweekly hours worked, average
annual man-hours worked andannual wages;
- further evidence oftheimpact ofincreased imports wasfound insignificant declines
inthedomestic producers ’prices forthese products, which, together withlosses in
sales, hadresulted inasharp deterioration ofthefinancial health ofthisindustry, and
theelimination ofprofitability;
- thewool sector oftheUStextile andapparel industry washighly sensitive, andthe
relatively small sizeofthewoolapparel companies made themvulnerable toincreases
inimports.
16. Such serious damage, oractual threat thereof, wasattributed bytheUnited States interalia
toasharp andsubstantial increase inimports from India.
17. Therepresentative ofIndia saidthatintheviewofhisGovernment theaction wasnotjustified
under theparameters ofArticle 6oftheAgreement forthefollowing main reasons:
- theincrease inannual imports, whose rateofgrowth hadgonedown inthemostrecent
period, wasmore theresult ofthedevelopment ofco-production activities ofthe
USindustry thanofanincrease inimports. Thiscould notcause damage tothatportion
oftheUSindustry engaged insuchco-production. Moreover, theincrease inimports
from India appeared substantial onlybecause itstarted from averylowbase;
- USproduction ofgoods falling under category 435hadbeendeclining, butfrom a
peakyearin1992. Anexamination oftherespective variations ofproduction and
imports from1988to1994didnotshow evidence ofacausal linkbetween thedecrease
inproduction andtheincrease inimports;
- given thefactthatasizeable share ofdomestic production wasexported, andthatUS
exports ofthese products were declining, thedown-trend inproduction wasaresult
ofthelossofexport markets;G/TMB/R/3
Page4
- verifiable andrelevant dataonprices andemployment werenotavailable, therefore
thedatasubmitted intheUSstatement were notsufficient tomake anassessment of
thehealth oftheindustry producing wool coats forwomen andgirls.
18. TheTMB started itsreview ofthemeasure introduced bytheUnited States atitsthirdmeeting
anddecided torevert toitatitssubsequent meeting.
19. During itsreview under paragraphs 2and3ofArticle 6,ofthesafeguard action taken bythe
United States against imports ofcategory 435from India, theTMB found thatserious damage, as
envisaged inthese provisions, hadnotbeen demonstrated. TheTMB could not,however, reach
consensus ontheexistence ofactual threat ofserious damage. When reviewing theimplications of
thediscussions intheTMB andtheBody’sfinding inthismatter, theparties should keepinmind the
factthattheAgreement issilent astowhether theimport restraint cancontinue tobemaintained.
United States/India: imports ofwoven wool shirts andblouses (UScategory 440)
20. TheTMB received notifications from theUnited States under paragraph 10ofArticle 6of
theAgreement ofasafeguard action ithadtaken onimports ofproducts ofcategory 440(woven wool
shirts andblouses) fromIndia. Themeasure hadbeenintroduced witheffect asfrom18April 1995.
21. Bilateral consultations between theparties wereinconclusive, andtheTMB invited India and
theUnited States topresent theirrespective cases atitsthirdmeeting.
22. Therepresentative oftheUnited States saidthatherGovernment ’saction wasjustified for
thefollowing main reasons:
- serious damage, oractual threat thereof, existed withrespect todomestic producers
ofwoven woolshirts andblouses asaresult ofincreased quantities ofimports, within
themeaning ofparagraph 2ofArticle 6oftheAgreement. More recent dataconfirmed
this;
- USproduction wasdeclining, resulting infurther losses intheshare oftheUSmarket
forwovenwoolshirtsandblousesheldbydomesticmanufacturers.Theratioofimports
todomestic production hadincreased substantially, somuch sothatimports inquantities
were twice asmuch asUSdomestic production;
- evidence ofserious damage being caused totheUSindustry wasfound inacontinuing
dropinthenumber ofproduction workers employed, declining man-hours worked
andtotalannual production workers wages. Plant closures, declining orders and
stagnant saleswere alsocited;
- thewool sector oftheUStextile andapparel industry washighly sensitive, andthe
relatively small sizeofthewoolapparel companies made themvulnerable toincreases
inimports.
23. Suchserious damage, oractual threat thereof, wasattributed bytheUnited States interalia
toasharp andsubstantial increase inimports from India.
24. Therepresentative ofIndia stated thathisGovernment ’sassessment wasthattheaction taken
bytheUnited States wasnotjustified forthefollowing main reasons:G/TMB/R/3
Page5
- theconclusion drawn bytheUSthatincreased imports ofwoven woolshirts andblouses
werecausing serious damage, oractual threat thereof, totheUSindustry producing
likeand/or directly competitive products wasnotsupported bythedatapresented;
- intheviewoftheIndian Government, theUSproduction andmarket forwoven wool
shirts andblouses were healthy andstrong. Imports hadincreased inthelastthree
years without reaching previous levels, while production hadremained, inessence,
stable. During thelasttenyears, nocorrelation could beidentified between declining
production andincreased imports. Theexpansion oftheUSmarket forwool shirts
andblouses experienced recently, filled entirely byimports, didnotperseindicate
anyinjury totheUSproducers. Rather, itmayhavebeentheirdecision nottore-invest
inanareawhich hadinthepastbeendeclining, andtoshiftproduction andinvestment
towoven shirts andblouses ofadifferent fibre;
- alargepartoftheUSproduction wasexported andtherefore adropinproduction could
beattributed more toadecline inexport demand thantoimports;
- reliable andrelevant dataonemployment andprices, which could haveformed the
basis forassessing theimpact ofimports ontheUSwoven wool shirts andblouses
industry, were notavailable.
25. TheTMB started itsreview ofthemeasure introduced bytheUnited States atitsthirdmeeting
anddecided torevert toitatitssubsequent meeting.
26. During itsreview under paragraphs 2and3ofArticle 6,ofthesafeguard action taken bythe
United States against imports ofcategory 440fromIndia, theTMB found thattheactual threat ofserious
damage hadbeendemonstrated, andthat,pursuant toparagraph 4ofArticle 6,thisactual threat could
beattributed tothesharp andsubstantial increase inimports from India.
United States/Honduras: imports ofwomen ’sandgirls’wool coats (UScategory 435)
27. TheTMB received notifications from theUnited States under paragraph 10ofArticle 6of
theAgreement ofasafeguard action ithadtaken onimports ofproducts ofcategory 435(women ’s
andgirls’wool coats) from Honduras. Themeasure hadbeen introduced witheffect asfrom
24April 1995.
28. Bilateral consultations between theparties were inconclusive, andtheTMB invited the
participation ofHonduras andtheUnited States atitsfourth meeting. Bothparties sentdelegations
toGeneva topresent theirrespective cases.
29. Therepresentative oftheUnited States submitted thattheaction herGovernment hadtaken
wasjustified interaliaforthereasons shehadmentioned inthepresentation ofthesafeguard measure
introduced onimports ofthesame products from India (seeparagraph 15). Additional andupdated
informationavailablereinforcedtheconclusionreachedbytheUSGovernmentthatthedomesticindustry
producing women ’sandgirls’woolcoats wasfacing acaseofserious damage oractual threat thereof
resulting fromimports. Inparticular, shesubmitted revised export dataindicating thattotalUSexports
ofproducts ofcategory 435, ofwhich only 10percentwere finished garments, accounted for
approximately 30percentofproduction. Shealsonoted thattwelve factories producing women ’s
andgirls’wool coats hadclosed inthepasttwelve months asaresult ofimports.
30. Such serious damage, oractual threat thereof, wasattributed bytheUnited States interalia
toasharp andsubstantial increase inimports from Honduras.G/TMB/R/3
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31. Therepresentative ofHonduras ,stressing theimportance ofthisissueforHonduras, whose
exports totheUnited States under thiscategory hadalready beenembargoed, stated thattheaction
taken bytheUnited States wasnotjustified forthefollowing main reasons:
- theUnited States hadfailed toshow thatitsindustry producing women ’sandgirls’
wool coats wassuffering serious damage caused byincreased imports ofcomparable
products atacomparable stage ofcommercial transaction;
- abreak inthecontinuity ofproduction datamade itdifficult tointerpret. Sizeable
annual increases inproduction levels during thelastfiveorsixyears could indicate
thatnewUSproducers hadstarted tomanufacture women ’sandgirls’wool coats;
- asalarge partofUSproduction andexports consisted ofcomponents foroffshore
assembly, itcould beargued thatwhat waslostinterms ofdomestic sales bythe
USindustry wasduetoincreasing recourse tooutward processing;
- inaddition, increases inimports weremainly duetoincreases inoutward processing
trade, which could notbesaidtocause damage totheUSdomestic industry;
- theprice datasubmitted bytheUnited States were questionable, andcould indicate
thattheUSproducts falling under category 435were notdirectly competing with
products imported from Honduras. Moreover, most ofthese imports contained
UScomponents assembled inHonduras andcould notcause serious damage, oractual
threat thereof, totheUSindustry.
32. After thepresentation oftheirarguments, theparties informed theTMB thattheyhaddecided
toresume bilateral consultations, andasked forsuspension oftheconsideration ofthisissue bythe
TMB. TheBody wasinformed subsequently thattheUnited States andHonduras hadarrived ata
mutually agreeable resolution oftheissue under paragraph 9ofArticle 6.
Notification under Article 8.10
Communication bytheUnited States
33. Following therecommendation theTMB hadmade atitssecond meeting thattheUnited States
rescind thesafeguard measure ithadintroduced onimports ofproducts ofcategory 351/651 (cotton
andman-made fibrepyjamas andother nightwear) from Honduras (G/TMB/R/2, paragraph 27),the
United States informed theTMB thatthisrecommendation wasunder active consideration. During
itsfourth meeting, theTMB wasinformed thattheUnited States haddecided torescind themeasure.
TheTMB tooknoteofthisdecision.
Follow-up ofTMB recommendations
United States/Honduras: imports ofcotton andman-made fibreunderwear (UScategory 352/652)
34. Following theTMB'srecommendation made atitssecond meeting (G/TMB/R/2, paragraphs 16
and17),theTMB wasinformed bytheparties thattheyhadheldconsultations without reaching a
common position. Atitsfourth meeting theBody wasinformed thatbothparties hadarrived ata
mutually agreeable resolution ofthisissue under paragraph 9ofArticle 6.G/TMB/R/3
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UnitedStates/CostaRica:importsofcottonandman-madefibreunderwear(UScategory352/652)
35. Following theTMB'srecommendation made atitssecond meeting (G/TMB/R/2, paragraphs 16
and17),theTMB received reports bybothparties explaining thatithadnotbeenpossible toreach
amutually agreeable resolution oftheissue. InviewofCosta Rica’srequest toparticipate intheTMB’s
examination ofthese reports, theBody decided toinvite theparticipation ofbothdelegations atits
meeting starting on16October 1995.