RESTRICTED
WORLD TRADE G/C/W/65
11November 1996
ORGANIZATION(96-4782)
Original: english Council forTrade inGoods
DRAFT REPORT OFTHE COUNCIL FOR TRADE INGOODS TOTHE
GENERAL COUNCIL ONTHE IMPLEMENTATION OFTHE
AGREEMENT ONTEXTILES AND CLOTHING
PROPOSED CONCLUSIONS AND RECOMMENDATIONS
The delegation ofHong Kong onbehalf also oftheASEAN WTO Members:
i.e.Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore andThailand, andColombia,
Costa Rica, India, Pakistan andPeru, requested atthemeeting oftheCouncil forTrade inGoods of
1November 1996 thatthiscommunication, circulated informally atthatmeeting, alsobecirculated
asaCouncil document.
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TheCTGrecognized theimportance ofthetextiles andclothing sector, especially fortheprocess
ofdevelopment ofalargenumber ofdeveloping country Members. Italsorecognized thesignificance
ofintegration ofthissector intotheGATT fortheunity andintegrity ofthemultilateral trading system.
TheMembers tooknoteofthewidespread concerns expressed overtheimplementations of
theATC during thefirsttwoyears oftheimplementation process.
TheMembers alsotooknoteofthegeneral viewthattheATC wasnotintended tobechanged
ormodified.
(i) Integration Programmes
TheCTG recognized thatthecentral objective oftheATC wastheprogressive elimination
ofquantitative restrictions maintained under theMFA, through astaged programme. TheCTG noted
thatthetechnical requirement forthefirststage hadbeenmet. TheCTG alsonoted, however, that
thefirststage integration programmes ofthefourMembers maintaining MFA-inherited restrictions
hadnotincluded anyrestrained items except foroneproduct byoneMember, andthattheintegrated
products hadbeenconcentrated inthelessvalue-added products areas.
Withaviewtofacilitating theprocess, andensuring theintegration ofthesector intotherules
anddisciplines oftheGATT, Members maintaining items ofrestraint arecalled upon toinclude a
substantial mixofrestrained items intheirintegration programmes, especially forthesecond andthird
stages oftheprocess.
(ii) UseofTransitional Safeguards
Having regard toalarge number ofsafeguard measures applied during thefirsttwoyears,
theCTGnoted thattransitional safeguard measures canrestrict anddisrupt trade, while alsofrustrating
theintegration process under theATC. AMember mayapply safeguard measures inaccordance with
terms andconditions stipulated intheATCwhich prescribe fortheirsparing useandexceptional nature.G/C/W/65
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Thetransitional safeguard contained intheATC isdifferent from thesafeguard measures contained
inArticle XIXofGATT 1994, because itisselective anddiscriminatory innature.
Members reaffirm thecommitment thatthetransitional safeguard intheATCshould beapplied
assparingly aspossible, consistent withtheprovisions oftherelevant Article andtheobjective of
effective implementation oftheintegration process.
(iii) Bilaterally Agreed Arrangements
TheCTG noted thattheATC requires theTMB todetermine whether bilaterally agreed
arrangements arejustified inaccordance withATC provisions. Members arecommitted toensure
thattheATC rules anddisciplines governing thejustification ofsucharrangements shall notbe
undermined.
(iv) Functioning oftheTMB
TheTMB wasestablished pursuant toArticle 8.1oftheATC inorder tosupervise the
implementation oftheAgreement andtoexamine allmeasures taken under it.Under Article IV.5
oftheWTO Agreement, theCTG "shall oversee thefunctioning oftheMultilateral Trade Agreements
inAnnex 1A".
Given thequasi-judicial nature oftheTMB andtheexpectations placed byMembers inits
functioning, theCTG stressed theneedtoensure impartiality andtheadpersonam participation of
itsmembers, aswellasthetransparency ofitsfunctioning, especially through provision ofcommon
rationale foritsrecommendations orfindings withasmany details aspossible inthereports.
TheCTG alsonotes thattheTMB hasexpressed itsownconcern thatinafewcases itcould
notarrive ataconsensus decision onmatters brought toitand,therefore, could notfulfilitsmandate.
TheTMB hasalsoexpressed fullawareness oftheadverse impact suchinability hadontheMembers
affected, andisdetermined tomake allnecessary efforts toovercome suchdifficulties andreach the
decisions required ofitbyconsensus. TheCTG feelsthatthisisanimportant matter.
TheCTGexpectsthattheTMBwillsucceedfullyinitsproposeddeterminedefforts.Toenhance
accountability andacceptability ofTMB recommendations, Members called upontheCTGtoregularly
oversee thefunctioning oftheTMB.
(v) Treatment ofSmall Suppliers andLeast-Developed Countries
TheCTG noted thecommitment ofMembers inconnection withspecial provisions ofthe
Agreement relating tosmall suppliers, newentrants andleast-developed country Members.
TheCTGisconfident thatMembers willcontinue toabide bytheirobligations tosmall suppliers
andthat,totheextent possible, exports fromleast-developed country Members willalsobenefit from
therelevantprovisionsoftheATC,soastopermitmeaningfulimprovementinaccessforsuchMembers.
TheCTG recommends thatMembers comply withthespecial provisions oftheAgreement
relating tosmall suppliers, newentrants andleast-developed country Members.
(vi) Particular Interests ofCotton-producing Countries
TheCTG recalled theprovisions ofArticle 1.4oftheATC relating totheinterests of
cotton-producing exporting Members stipulating thatthese interests should bereflected intheG/C/W/65
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implementation oftheprovisions oftheAgreement inconsultation withthese Members. TheCTG
agreed tore-affirm adherence tothisprovision andtherefore theneed forconsultations with
cotton-producing exporting Members withaviewtoreflecting theirinterest intheimplementation of
theprovisions oftheATC.
Members noted thattheywere fully aware ofthefactthattheparticular interests of
cotton-producing exporting Members should, inconsultation withthese Members, bereflected inthe
implementation oftheprovisions oftheAgreement.
(vii) Rules ofOrigin
TheCTG tooknoteofthefactthatrules oforigin pertaining totextile andclothing products
hadbeenmodified byoneimporting Member. These changes haveintroduced great uncertainty for
theexports ofalarge number ofMembers tothatmarket. Inaccordance withtheprovisions ofthe
ATC suchdisruptive effects arerequired tobeavoided. These changes arecontrary totheprovisions
oftherelated Agreement onRules ofOrigin. TheCTGemphasized theneedforcorrecting thesituation.
Members noted thewidely expressed concerns withrespect totheintroduction ofchanges in
origin rules fortextiles andclothing products, andurged theadoption ofimmediate measures under
theprovisions oftheAgreement torestore thesituation inorder toavoid disruption oftrade, andto
prevent unnecessary recourse tothedispute settlement procedures oftheWTO.
(viii) Other ATC Issues
(ix) Useoftrade measures forNon-Trade Purposes
Concern wasexpressed about trademeasures taken outside therulesanddisciplines oftheWTO
andtheirpotentially disruptive effect ontrade.
Members were, therefore, determined toresist pressures forsuchmeasures.
(x) Market Access
TheCTG reaffirmed thecommitment ofallMembers tofullyimplement, inaccordance with
theprovisions ofArticle 7,theobligation thatallMembers takesuchnecessary action soastoachieve
improved access tomarkets fortextile andclothing aspartoftheintegration process andwithreference
tothespecific commitments undertaken byMembers asaresult oftheUruguay Round.
(xi) Circumvention
Members tooknoteoftheconcerns expressed inrelation toalleged circumvention ofthe
Agreement andreaffirmed theirresolve tocooperate fullytoaddress theissueinaccordance withthe
provisions anddisciplines oftheAgreement. They agree thattheissue shallnotbeusedtojustify
thenon-fulfilment ofcommitments under theATC.
General Recommendation
Taking noteofthewidespread concerns expressed byanumber ofdeveloping country exporting
MembersregardingtheimplementationoftheAgreementduringthefirsttwoyearsoftheimplementation
process, Members recommended thattheGeneral Council should keeptheimplementation ofthe
Agreement under regular review andmake appropriate recommendations toMinisterial Conferences.