 
 RESTRICTED  WORLD TRADE  
ORGANIZATION  G/TMB/R/115 
25 November 2004 
 (04-5138) 
Textiles Monitoring Body  
  
 
REPORT OF THE ONE HUNDRED AND SIXTEENTH MEETING 
  
1. The Textiles Monitoring Body held its one hundred and sixteenth meeting on 
18 November 2004. 
2. Present at this meeting were the following members and alternates:  Messrs. Dalela;  Iida;  
Lee/Kim;  Ortega/Alvarado;  Messrs. Samosir;  Seppey;  Tagliani;  Zambelli/Yaman;  Ms. Zhang/Ms. Lu. 
3. The TMB adopted the report of its one hundred and fifteenth meeting (G/TMB/R/114). 
Notification under Article 2.1 of the Agreement on Textiles and Clothing (ATC) 
 4. The TMB received a notification, pursuant to Article 2.1, from the United States, following 
the accession of Cambodia to the WTO (G/TMB/N/ 63/Add.15).  The TMB recalled that Cambodia 
became a Member of the WTO on 13 October 2004.  Though the United States did not state it explicitly in the notification, the TMB assumed that in accordance with the relevant provisions of the 
Report of the Working Party on the Accession of Cambodia, the quantitative limits notified were 
those in force on 12 October 2004, i.e. on the day prior to the date of accession of Cambodia to the 
WTO.  Furthermore, the TMB understood that none of the restrictions notified had been eliminated as 
a result of the integration by the United States of certain products under Stages 1, 2 or 3 of the integration process, since the categories subject to r estrictions on 12 October 2004 were not part of the 
respective integration programmes implemented by th e United States.  In this light, the TMB noted 
that the United States continued to maintain 13 specific restrictions under the ATC, comprising single 
or merged categories of the US' textiles category system, on imports from Cambodia.  It was noted 
also that the notification by the United States cont ained the necessary details regarding the levels of 
the respective restrictions as applied on the day befo re the entry into force of the WTO Agreement for 
Cambodia, together with the related annual growth rates and flexibility provisions.  
5. As regards the flexibility provisions, it was ob served that up to 12 October 2004 Cambodia 
still had the possibility of using the carry-forward provision under the pre-ATC regime (amounting to 
6 per cent of the volume of each specific limit).   
6. With regard to the implementation of the gr owth-on-growth provisions of the ATC to the 
quantitative restrictions notified, the notification of the United States stated the following:  "With 
respect to the accelerated growth applied to these restraints, the same methodology was used as was 
applied to other recently acceding Members " (emphasis added).  The TMB recalled that on previous 
similar occasions it had decided to seek further e xplanations and clarifications from the notifying 
Member(s) concerned with respect to different aspects of the notifications received, in particular regarding the methodology adopted with a view to  implementing the growth-on-growth provisions.  
In this particular case, however, keeping in mind th at the United States had already replied to similar 
questions and had explained the methodology applied,  and also keeping in mind the time requirement 
for receiving an answer to the case involving Cambodia, the TMB did not find it appropriate to pose further specific questions to the United States, since the ATC will expire in less than six weeks and, G/TMB/R/115 
Page 2  
 
 pursuant to Articles 2.8(c) and 9, all restrictions th ereunder shall stand terminated on 1 January 2005.  
In view of these circumstances, the TMB proceeded w ith the review, pursuant to Article 2.21, of all 
aspects of the notification received from the United States, including those related to the implementation of the growth-on-growth provisions.  In doing so,  the Body had to rely on the information available to it and emphasized that its review was without prejudice to the rights of 
Cambodia arising from the provisions of the ATC, including Article 2.2 thereof. 
7. Noting that according to the notification by th e United States, "[...] the same methodology 
was used [in implementing the growth-on-growth  provisions] as was applied to other recently 
acceding Members", the TMB had to assume that the reference "to other recently acceding Members" was meant to cover China, Chinese Taipei a nd the Former Yugoslav Republic of Macedonia 
(FYROM).  The TMB recalled in this regard that it had conducted a thorough and detailed review of 
the implementation of the growth-on-growth provi sions in relation to each of the three Members 
mentioned above.
1  The TMB recalled, in particular, that the methodology used by the United States 
vis-à-vis  these Members could be summarized as follows: 
• the United States implemented accelerated growth rates, referred to in Article 2.14, 
only as from the year when, respectively, China, Chinese Taipei and FYROM became 
Members of the WTO;  and 
 
• while Chinese Taipei became a Member at the very beginning of a calendar year 
(i.e. on 1 January 2002) and, thus, the in crease in the respective growth rates was 
implemented in full for that year, in the case of China and FYROM the United States 
applied the accelerated growth rates pro-rate d for that period of time, when China and 
FYROM were, in fact, Members during the year of their accession (respectively, in 
2001 and in 2003). 
 8. The TMB also recalled that in both latter cases  the United States had used, in essence, the 
same arguments:  since the respective Worki ng Party Reports of Accession required that the 
provisions of the ATC regarding growth rates "be applied, as appropriate, from the date of accession", 
the United States determined it to be appropriate to apply an accelerated growth rate pro-rated for that 
period of time (in other words, number of days of  the calendar years concerned) when China and 
FYROM, respectively, were Members of the WTO during the year of their accession. 
9. Based on the above, it would appear that in the case of Cambodia, the United States pro-rated 
the 27 per cent increase stipulated in Article 2.14(b)  for Stage 3 of the integration process, for the 
period 13 October-31 December 2004 (i.e. for 80 days out of 366).  Noting that the United States had 
applied an annual growth rate of 6 per cent with r espect to each of the restrictions maintained on the 
day prior to the date of Cambodia's accession and,  that the 6 per cent increase had already been 
implemented under the pre-ATC regime on 1 January 2004, the methodology used by the United States in implementing the growth-on-growth pr ovisions on 13 October 2004 had the following 
implications: 
• had the United States applied the 27 per cent increase for the entire year 2004, it 
should have had to increase the level of the restrictions notified by a further 1.62 percentage point (corresponding to an incr ease of 27 per cent of the 6 per cent growth 
rates taken over to the ATC regime); 
 
                                                     
 
1 See in particular G/TMB/R/90, paragraphs 5 to 44;  G/TMB/R/95, paragraphs 6 to 10;  G/TMB/R/98, 
paragraphs 5 to 27;  G/TMB/R/100, paragraphs 5 to 7;  G/TMB/R/103, paragraphs 4 to 17;  G/TMB/R/106, 
paragraphs 4 to 10.  G/TMB/R/115 
 Page 3 
 
 
 • however, using the pro-rated formula (i.e. 80 days of WTO membership divided by 
366 days), the United States actually increased the level of the restrictions only by a further 0.3540983 percentage point (corr esponding to 21.85791 per cent of the 1.62 
percentage point specified above). 
 
10. The TMB was of the view that, instead of limiti ng itself to general indications regarding the 
methodology used, the United States should have, at least, provided in the notification the precise amount of the percentages by which it had increased th e level of the respective r estrictions, as a result 
of the accession of Cambodia to the WTO.  The TM B reiterated, furthermore, that it had already 
devoted a lot of time and effort to the review  of the implementation of the growth-on-growth 
provisions in relation to China, Chinese Taipei and the FYROM.
2  Since the issues involved and the 
respective methodology applied were identical with or very similar to those arising in the case of 
Cambodia, most of the considerations the Body had made in its review of the previous cases applied, 
mutatis mutandis , to the review of the US methodology adopted in relation to Cambodia.  This 
statement notwithstanding, the TMB was of the view that in order to comply with the requirements 
defined in the first sentence of Article 2.21, it ha d to address briefly all the relevant aspects of the 
implementation of the growth-on-growth provisions by the United States vis-à-vis  imports of products 
subject to restrictions from Cambodia. 
11. The TMB recalled that it had already stated the following: 
 "[T]he ATC does not contain any disposition that gives guidance on how the growth-on-
growth provisions should be implemented in  relation to Members acceding to the WTO 
several years after the entering into force of the WTO Agreement.  Articles 2.13 and 2.14 of 
the ATC, providing for specific staged increases of the annual growth rates of the respective 
quantitative restrictions taken over from the fo rmer MFA regime and notified pursuant to 
Article 2.1 of the ATC, were essentially designed to provide clear rules applicable in relation 
to those exporters under restraint that b ecame Members at the time when the WTO 
Agreement entered into force.  [...]  There is no provision in the ATC regarding the base 
levels and the related increase in growth-rates to  be applied in cases of restrained exporters 
that acceded to the WTO only during the second or  the third stage of the integration process." 
  [In these cases], "the relevant issues such as the definition of the base levels to which the 
provisions of Article 2 of the ATC should apply and the manner in which to these base levels 
the increase in growth rates should be impl emented had been agreed between the WTO 
Members and the new Members concerned as part of the respective negotiations upon 
accession to the WTO."
3   
 12. Therefore, in order to assess whether the impl ementation of the growth-on-growth provisions 
by the United States in relation to Cambodia met the applicable requirements, the relevant provisions 
of the Report of the Working Party on the Accession  of Cambodia should be read in conjunction with 
the applicable provisions of the ATC.  Paragraph 166 of the Working Party Report reads as follows: 
 "The representative of Cambodia confirmed that the quantitative restrictions on imports 
maintained by WTO Members on textiles and clothing products originating in Cambodia that were in force on the date prior to the date of accession of Cambodia to the WTO should be 
notified to the Textiles Monitoring Body (TMB) by the Members maintaining such 
restrictions and would be app lied for the purposes of Article 2 of the Agreement on Textiles 
and Clothing.  Thus, for the purposes of Ca mbodia's accession to the WTO, the phrase 'in 
force on the day before the entry into force of  the WTO Agreement' contained in Article 2.1 
                                                     
 
2 See footnote 1. 
3 See G/TMB/R/90, paragraphs 7 and 8, and G/TMB/R/103, paragraph 7. G/TMB/R/115 
Page 4  
 
 of the Agreement on Textiles and Clothing shall be  deemed to refer to the day prior to the 
date of accession of Cambodia to the WTO.  To  these base levels the increase in growth rates 
provided for in Article 2.13 and 2.14 of th e Agreement on Textiles and Clothing shall be 
applied, as appropriate, in the Agreement on Textiles and Clothing from the date of 
Cambodia's accession, such base levels and gr owth rates coming to an end upon the 
termination of the Agreement on Textiles and Clothing.  The Working Party took note of 
these commitments.
4 
 13. The TMB noted, once again, that the notifi cation by the United States contained the base 
levels of the quantitative restrictions applied on th e day prior to the date of Cambodia's accession to 
the WTO.  Observing that the Working Party Report was adopted in 2003, i.e. during the second year 
of the implementation of the third stage of the integration process under the ATC, it was also noted 
that the respective language explicitly mentions "the increase in growth rates provided for in 
Articles 2.13 and 2.14."  In light of this, the TMB c onsidered that in the present review it had to 
address the following issues: 
• whether the United States was also require d, pursuant to the terms of the accession 
instruments of Cambodia, to apply the not less than 16 per cent increase in the growth 
rates taken over from the pre-ATC regime, as provided for Stage 1 of the integration process in Article 2.13; 
 
• whether the United States was also required under the same terms to apply the not 
less than 25 per cent increase in the respectiv e growth rates as provided for Stage 2 of 
the integration process in Article 2.14(a); 
 
• whether the United States was required unde r these terms to apply the not less than 
27 per cent increase in the respective growth  rates as provided for in Article 2.14(b) 
for Stage 3 of the integration process, also  for the years 2002 and 2003, though during 
these years Cambodia was not, as yet, a Member of the WTO; 
 
• what was the methodology required for provi ding the increase in the respective 
growth rates for the year 2004, when Cambodia joined the WTO. 
 
(i) Whether the United States was required to appl y the not less than 16 per cent increase in the 
growth rates as provided for Stage 1 in Article 2.13 
14. The third sentence of paragraph 166 of the Worki ng Party Report states that "[t]o these base 
levels the increase in growth rates provided for in  Article 2.13 and 2.14 of the Agreement on Textiles 
and Clothing shall be applied, as appropriate
, in the Agreement on Textiles and Clothing from the 
date of Cambodia's accession [...]" (emphasis added).  The TMB observed that if one were to read this 
sentence by omitting the expression "as appropriate ", that provision would unambiguously require 
that the growth rates taken over from the pre-ATC re gime should be increased, first, by not less than 
16 per cent as foreseen in Article 2.13.  On th e other hand, as already reflected upon by the TMB5, the 
inclusion of the term "as appropriate" could introduc e an element of flexibility in the sentence (and 
hence in the legal commitments reflected therein).  This notion of possible flexibility could not be 
defined with more precision;  it seemed to be design ed to respond to the particular occasion or the 
prevailing circumstances.  In any event, the inclus ion of the term "as appropriate" in the language 
could also imply that not necessarily everything pr ovided for in this sentence should be implemented 
in the way, or within the time-frame it should have been implemented, had this term or qualification 
not been attached thereto.  In the view of the TM B, this observation could raise another question as to 
                                                      
4 See WT/ACC/KHM/21. 
5 See G/TMB/R/90, paragraph 17.  G/TMB/R/115 
 Page 5 
 
 
 which part of the sentence the term "as appropriate" referred to.  It was noted that there seemed to be 
no unambiguous answer to this question either.  One possible reading of the third sentence of 
paragraph 166 was that the notion "as appropriate" was related to the very last part of the sentence, 
i.e. to the portion indicating that the respective co mmitments had to be applied "[in the Agreement on 
Textiles and Clothing] from the date of Cambodia's accession".  Accordingly, there could be a 
commitment to apply the increase provided for in Article 2.13, but only from the date of Cambodia's 
accession, i.e. with retroactive effect.  There w as, however, another possible reading, according to 
which it was appropriate to extend the benefits of the increased growth rates to Cambodia in 2004, 
since it had become a Member of the WTO during that year, but according to which it was not appropriate to apply the 16 per cent increase provi ded for in Article 2.13 since, during Stage 1, 
Cambodia had not been a Member. 
15. In summarizing its consideration of the relevant  language of paragra ph 166 of the Report of 
the Working Party on the Accession of Cambodia, and also bearing in mind, mutatis mutandis , the 
considerations the Body had made in its review  of the implementation of the growth-on-growth 
provisions in relation to China
6, the TMB arrived at the view that this language in itself provided 
neither a clear answer nor unambiguous guidance as to whether the restraining Member, i.e. the 
United States, was also required to apply the not l ess than 16 per cent increase in the original growth 
rates as provided for in Article 2.13 of the ATC.  By  using the term "as appropr iate", the drafters had 
not only introduced the possibility for some flexib ility and adjustments to be made in the actual 
implementation but had also left an important el ement of ambiguity in the respective language.  
Therefore, the TMB could not, in these circumst ances, reach a clear conclusion on the issue of 
whether the United States was required to apply th e not less than 16 per cent increase provided for in 
Article 2.13 to the growth rates taken over fro m the pre-ATC regime in the case of Cambodia. 
(ii) Whether the United States was required to appl y the not less than 25 per cent increase in the 
growth rates, as provided for Stage 2 in Article 2.14(a) 
16. The TMB observed that the same or similar ar guments and counter-arguments as reflected in 
paragraph 14 above can be raised  when addressing the issue of wh ether there was a commitment for 
the United States to apply the 25 per cent incr ease in the growth rates as provided for in 
Article 2.14(a), even though Cambodia was not yet a Member during the respective stage of 
integration.  In light of this, the TMB could not reach a clear conclusion on this issue either. 
(iii) Whether the United States was required to appl y the not less than 27 per cent increase in the 
growth rates as provided for Stage 3 in Article 2.14(b), also for the years 2002 and 2003, 
though Cambodia had not, as yet become a Member of the WTO 
17. The TMB observed that though there is no clear response as to the applicability of 
Articles 2.13 and 2.14(a), Article 2.14(b), by definition,  applies, since there is an explicit reference to 
Article 2.14 in paragraph 166 of the Report of the Working Party and also since Cambodia had 
become a Member of the WTO during Stage 3, the st age when Article 2.14(b) applies.  However, the 
same or similar arguments and c ounter-arguments, as reflected in paragraph 14 above, can be used 
regarding the question as to whether there was a co mmitment to apply the 27 per cent increase in the 
growth rates also for 2002 and 2003, given that Cambodia was not yet a Member of the WTO during those years.  Therefore, since both readings can be  made given the flexibility introduced by the notion 
"as appropriate", there was no clear and unambiguous answer to this question either.  This lack of 
clear guidance made it difficult for the TMB to take a firmer position on this matter, and it could not, 
therefore, reach a clear conclusion on the issue of whether the United States was required to apply for 
2002 and 2003 the not less than 27 per cent increase in  the respective growth rates, as provided for in 
Article 2.14(b). 
                                                     
 
6 See G/TMB/R/90, paragraphs 18 to 21. G/TMB/R/115 
Page 6  
 
 (iv) What was the methodology required for providi ng the increase in the respective growth rates 
for the year 2004 when Cambodia joined the WTO 
18. In light of the uncertainties related to the ma tters addressed in (i) to (iii) above, the TMB 
considered the question of the minimum requirement s which, in any event, had to be met by the 
United States.  The TMB recalled that the United States had used, in all likelihood, the following 
methodology for the purpose of implementing the provisions of Article 2.14(b) with respect to 
Cambodia:  for the 2004 limits, the United States had calculated the effective growth rate to be 
applied by prorating the increase in the growth rate  in force on 12 October 2004 to reflect the number 
of days in 2004 that Cambodia would be a Member of the WTO (80 days of the 366 days in 2004).  This pro-rated growth rate was a pplied to the 2004 base levels to ca lculate the revised 2004 limits.   
19. The TMB considered whether the provisions of the Report of the Working Party on the 
Accession of Cambodia and Article 2.14(b) of th e ATC entitled the United States to use this  
methodology.  In so doing, the TMB had in mind, in particular, the observations it had made when 
examining the issue of the implementation of the growth-on-growth provisions of the ATC with 
respect to recently acceded Members, in particular paragraphs 25 to 28 of G/TMB/R/90, 
paragraphs 17 to 27 of G/TMB/R/ 98 and paragraph 15 of G/TMB/R/103.  Following a similar line of 
arguments, mutatis mutandis , the TMB was of the view that si nce Cambodia had become a Member 
in 2004, during Stage 3 of the ATC integration process and, therefore, it had been appropriate to apply 
the provisions of Article 2.14(b) to it, these provisi ons should have been implemented in their entirety 
(i.e. for the entire year of Cambodia's accession) an d that the language of the Working Party Report 
and that of Article 2.14(b) did not seem to a llow for any further flexibility in this regard. 
20. Thus, in the view of the TMB, once the United States had concluded that it had been 
appropriate to apply the provisions of Article 2.14(b) to Cambodia for 2004 (since Cambodia had 
become a Member in that year), the 27 per cent increase in the respective growth rates should have 
been implemented in full for the year 2004, instead of  prorating it for the period of Cambodia's actual 
membership during that year. 
(v) Summary conclusions 
21. The TMB recalled that on previous occasions, when reviewing similar cases, it had either 
invited or, in one case, formally recommended to th e United States to reconsider its position and to 
implement the full increase in the respective growth  rates applicable to the respective stage of 
integration for the year when the new Members concer ned joined the WTO.  It was also recalled that 
the United States replied in these cases that its pos ition had remained unchang ed:  in its view, the 
methodology used by it was consistent with its WTO obligations, including the re levant provisions of 
the respective legal instruments of accession.  Also , the United States had continued to believe that 
the pro-rated growth rates implemented by it cons tituted the most appropriate methodology to use.
7  
Consequently, the United States had decided not to amend its methodology either to conform to the 
TMB's specific recommendation or to respond to the respective invitations made by the Body. 
22. The TMB stated that in spite of the consisten tly held view of the United States, as reflected 
above, had not this review taken place at a time when only 43 days remained for the full implementation of the ATC, following which the ATC and all restrictions thereunder shall stand 
terminated, the Body would have decided, without any doubt, to invite the United States to implement 
the full 27 per cent increase applicab le to Stage 3 for the year of Cambodia's accession, i.e. 2004.  
However, in view of the particular circumstance s surrounding this case, when limited time remained 
to address, receive and review any additional communi cations and, in all like lihood, the United States 
                                                     
 
7 See in particular G/TMB/R/95, paragraph 6;  G/TMB/R/98, paragraph 6;  G/TMB/R/100, 
paragraph 5;  G/TMB/R/106, paragraph 5.  G/TMB/R/115 
 Page 7 
 
 
 would, at best, simply reaffirm its view regard ing the perceived appropriateness of its methodology 
used, this time the TMB refrained  from taking any further action. 
23. In view of the above, in taking note of the notification by the United States, the TMB 
expressed its concern that the United States had not implemented the full 27 per cent increase for the 
year 2004 in the respective growth rates applicab le to imports of products  subject to quantitative 
restrictions from Cambodia.  Th e TMB reiterated also that its re view and taking note of the US 
notification was without prejudice to the rights of Cambodia under the ATC, including the provisions of Article 2.2. 
Adoption of the report of the TMB's 116
th meeting 
 24. At the end of its one hundred and sixteenth meeting, the TMB adopted the present report. 
__________ 
 