WORLD TRADE G/L/206
18November 1997
ORGANIZATION(97-5062)
REPORT (1997) OFTHE TEXTILES MONITORING BODY
1. ThisreportispresentedbytheTextilesMonitoringBody(TMB)pursuanttothedecisionadopted
bytheGeneral Council on15November 1995 ontheprocedures foranannual overview ofWTO
activities andforreporting under theWTO (WT/L/105). Itcovers theperiod 2October 1996 to
12November 1997. During thisperiod, theTMB held19meetings. Thereports ofthese meetings
arecontained inG/TMB/R/19 to37.1
2. Pursuant toArticle 8.11oftheAgreement onTextiles andClothing (ATC), theTMB adopted
on24July1997 acomprehensive report ontheimplementation oftheATC during thefirststage of
theintegration process (G/L/179). Thisreport, which wassubmitted totheCouncil forTrade inGoods
inorder toassist initsmajor review oftheimplementation oftheATC, covers indetail mostofthe
notifications which werereviewed ortheissues thatwereaddressed bytheTMB during thereporting
period.
3. Thepresent report doesnotgointothedetails oftheactivities oftheTMB during theperiod
covered butrather consists ofaninventory ofthework carried outbytheTMB.
Notifications under Article 2.1oftheATC: Quantitative Restrictions within Bilateral Agreements
Maintained under Article 4orNotified under Article 7or8oftheMFA inForce ontheDaybefore
theEntry intoForce oftheATC
4. TheTMBreviewedunderArticle2.21additionstothenotificationsreceivedunderthisprovision
fromCanada andtheUnited States, following Bulgaria ’saccession totheWTO (G/TMB/R/24 and26)
andfromtheUnited States, following theconsent bytheUnited States totheapplication between the
United States andRomania oftheWTO Agreement andtheMultilateral Trade Agreements inAnnexes 1
and2(G/TMB/R/30).
Notifications under Articles 2.6and2.7(b) oftheATC: FirstStage ofIntegration intoGATT 1994
ofProducts Covered bytheATCbyMembers which have, Pursuant toArticle 6.1,Retained theRight
toUsetheProvisions ofArticle 6
5. TheTMB reviewed under Article 2.21 thenotifications made byEgypt (G/TMB/R/19),
Liechtenstein (G/TMB/R/22) andSouth Africa (G/TMB/R/22). Italsoreverted toitsreview ofthe
notifications made byIsrael (G/TMB/R/21) andSaint KittsandNevis (G/TMB/R/23).
Notifications under Articles 2.8(a) and2.11oftheATC: Second Stage ofIntegration intoGATT 1994
ofProducts Covered bytheATC
6. TheTMBreviewedunderArticle2.21thenotificationsmadepursuanttoArticles2.8(a)and2.11
byBolivia, Costa Rica, theCzech Republic, Egypt, theEuropean Community, India, Japan, Malaysia,
Malta, Mauritius, Peru, thePhilippines, Romania, SriLanka, theUnited States andVenezuela
1TheReport ofthe37thMeeting willbeissued upon itsadoption bytheTMB.G/L/206
Page2
(G/TMB/R/30),NorwayandPakistan(G/TMB/R/31),Canada(G/TMB/R/32),Morocco(G/TMB/R/33),
Argentina, Tunisia andUruguay(G/TMB/R/35), Colombia, ElSalvador, theSlovak Republic and
Switzerland (G/TMB/R/37). Subsequently, theTMB tooknoteofcorrections made byNorway to
itssecond stage integration programme, andthattheimport volume oftheproducts integrated forthe
second stageofintegration bybothPakistan andthePhilippines, asearlier noted bytheTMB, remained
unchanged (G/TMB/R/36).
7. TheTMBstarteditsreviewunderArticle2.21oftheprogrammesofintegrationnotifiedpursuant
toArticles 2.8(a) and2.11byBrazil, theDominican Republic, Guatemala, Hungary, Indonesia, Korea,
Liechtenstein, Mexico, Nicaragua, Poland, Saint KittsandNevis, Slovenia, South Africa, Thailand
andTurkey anddecided torevert toitsreview ofthese programmes atasubsequent meeting, once
furtherinformationorclarificationisreceivedfromthem.Inthemeantime,inpursuanceofArticle2.11,
theTMB hascirculated these notifications toWTO Members.
Notification under Articles 2.8(b), 2.10and2.11oftheATC: Early Integration ofProducts Covered
bytheATC
8. TheTMB started itsreview under Article 2.21oftheprogramme ofintegration notified pursuant
toArticles 2.8(b) 2.10and2.11byTurkey and,seeking further clarification, decided torevert toits
review atasubsequent meeting (G/TMB/R/30).
Notifications under Articles 2.6,2.7(a) and(b),2.8(a) and2.11oftheATC: Communications Received
from Members inResponse toQuestions PutbytheTMB
9. TheTMB tooknoteofcommunications byArgentina, Canada, Colombia, theCzech Republic,
Norway, Pakistan, thePhilippines, Poland (Stage 1),South Africa, Switzerland, Turkey andUruguay
inresponse toquestions putbytheTMB withaviewtoverifying whether thestatistical information
provided regarding integration forthefirstand/or thesecond stages referred, where appropriate, to
those portions oftheHSlinescovered bytheATC andnottotheentire respective 6-digit HSlines
(G/TMB/R/32, 35,36and37).TheTMB started itsexamination oftheresponses provided byCyprus,
theDominican Republic, Hungary, Japan, Korea, Liechtenstein, Poland (Stage 2),Slovenia, SriLanka
andThailand anddecided torevert toitsconsideration ofthesecommunications atasubsequent meeting
(G/TMB/R/32, 35and37).
NotificationunderArticle2.15oftheATC:EliminationofRestrictionsMaintainedPursuanttoArticle2
10. TheTMB reviewed thenotification made byNorway under Article 2.15oftheelimination
intwosteps ofmost oftherestrictions remaining under theATC withrespect toWTO Members.
TheTMB commended Norway fortheearlyelimination ofmostoftherestrictions itmaintained under
thisAgreement (G/TMB/R/36).
Notifications under Article 2.17oftheATC: Administrative Arrangements
11. TheTMBreviewed,pursuanttoArticle2.21,theadministrativearrangementsconcludedbetween
theEuropean Community andArgentina, Hong Kong2,India, Indonesia, Korea, Macau, Malaysia,
Pakistan, Peru, thePhilippines, Singapore, SriLanka andThailand, respectively (G/TMB/R/22, 24
andparagraphs 11to17ofG/TMB/R/30). TheTMB alsoreviewed notifications made bythe
UnitedStatesregardingtheadministrativearrangementsagreedbetweentheUnitedStatesandBangladesh,
2Thename ofthisMember hasbecome "Hong Kong, China" asfrom 1July1997 -seeWT/L/218.G/L/206
Page3
Brazil, Colombia, Costa Rica, theDominican Republic, Egypt, Fiji,Guatemala, Haiti, Hungary, India,
Indonesia, Jamaica, Kenya, Korea, Macau, Malaysia, Mauritius, Pakistan, thePhilippines, Poland,
Qatar, Romania, SriLanka, Thailand, Turkey, theUnited Arab Emirates andUruguay, respectively
(G/TMB/R/26, 27,30andparagraphs 6to23ofG/TMB/R/31). Subsequently, theTMB tooknote
ofacommunication byGuatemala related toclarifications theTMB hadsought frombothGuatemala
andtheUnited States withrespect totheadministrative arrangements concluded between Guatemala
andtheUnited States andnotified bytheUnited States pursuant toArticle 2.17(G/TMB/R/35,
paragraph 15).
Notifications under Articles 2.17and5oftheATC
12. TheTMB started itsconsideration ofthenotifications made byPakistan under Article 2.17
andbytheUnited States under Article 5ofamutually satisfactory understanding reached, following
consultations, between thetwoMembers.3Seeking further information andclarification from them,
theTMB decided torevert toitsreview atasubsequent meeting (G/TMB/R/35).
Communications under Article 2.21oftheATC
13. TheTMB considered under Article 2.21acommunication fromColombia, made alsoonbehalf
ofseveral other WTO Members thataremembers oftheInternational Textiles andClothing Bureau
(ITCB), relating toparticular aspects pertaining totheimplementation byWTO Members ofthe
programme ofintegration oftheATC (G/TMB/N/211, G/TMB/N/212, G/TMB/R/21 and22).
14. TheTMB considered afurther notification byColombia, made alsoonbehalf ofanumber
ofWTO Members thatarealsomembers oftheITCB, pursuant toArticle 2.21, alleging certain
discrepancies intheprogramme ofintegration notified bytheEuropean Community under Article 2.6
oftheATC, andrequesting theTMB toreview thismatter interms ofArticle 2.21(G/TMB/R/27,
28andparagraphs 5to42ofG/TMB/R/29). Inthiscontext, theTMB alsoconsidered thestatement
oftheEC'srepresentative thatseveral other WTO Members hadincluded products ofthose HSlines
intheAnnex forwhich onlypartofthelinefellunder thecoverage oftheATC inthelistofproducts
tobeintegrated forthefirstand/or second stages ofimplementation oftheATC (G/TMB/R/29,
paragraphs 43to45).
15. TheTMB hadafollow-up discussion ofthesystemic problem mentioned inparagraph 14above,
whichledtoaconclusionaccordingtowhich,inprinciple,alltheMemberswhichhadnotifiedintegration
programmes could beaffected bytechnical problems resulting essentially from thenon-availability
ofstatistical information corresponding totheprecise product descriptions contained intheAnnex
totheATC, independently ofwhether ornottheyhadincluded "exHSitems" intheirrespective
integration programmes forStage 1and/or Stage 2.Therefore, theTMB decided torequest thatall
Members which hadsubmitted integration programmes, including those which hadnotasyetincluded
insuchprogrammes "exHSitems", ascertain whether thestatistical datacounted incalculating the
totalvolume oftheMember ’s1990imports oftheproducts intheAnnex referred tothewhole HSlines,
oronlytothatportion ofthose HSlineswhich wascovered bytheATC. ItwastheTMB'sexpectation
thatMembers would report toitontheoutcome ofsuchverification (G/TMB/R/34, paragraph 7).
16. Inaddition, theTMB received anotification fromtheEuropean Community stressing theneed
fortheapplication ofequality oftreatment inrespect ofthesystemic issue outlined above. Inlight
ofthecomments made bytheTMB initscomprehensive report totheCouncil forTrade inGoods
onthissystemic issue, andoftheTMB’scontinuing action inrespect ofthose Members thathave
3SeeG/TMB/R/11, paragraph 12.G/L/206
Page4
included “exHSlines”intheirintegration programmes, theEuropean Community didnotinsist on
aformal review ofthisnotification asscheduled bytheTMB, butreserved itsrightinrespect ofits
notification.
Notifications under Article 3.1oftheATC
17. TheTMB tooknoteofanotification byMorocco pursuant toArticle 3.1,afterhaving sought
clarification fromMorocco (G/TMB/R/22). TheTMB alsotooknoteofanadditional notification made
under Article 3.1bytheEuropean Community following Bulgaria ’saccession totheWTO
(G/TMB/R/24).
18. TheTMB alsoconcluded theconsideration ofthenotifications under Article 3.1byMexico
andThailand (G/TMB/R/30, paragraphs 18and19).
Notifications under Article 6.1oftheATC
19. TheTMB tooknoteofthenotifications byBrunei Darussalam andIceland thattheydidnot
wishtoretain therighttousetheprovisions ofArticle 6(G/TMB/R/21). TheTMB alsotooknote
ofthenotifications byBurkina Faso, Liechtenstein, SaintKittsandNevis andtheUnited ArabEmirates
thattheywished toretain therighttousetheprovisions ofArticle 6(G/TMB/R/19, 21,23and27,
respectively).
Notifications under Article 6.9oftheATC
20. TheTMB reviewed, pursuant toArticle 6.9, thenotifications bytheUnited States and
ElSalvador ofarestraint measure agreed between thetwoMembers onimports ofcotton andman–made
fibreskirts (UScategory 342/642) from ElSalvador. Onthebasis ofconsiderations asdetailed in
thereportofthemeeting,theTMBconcludedthatthisrestraintmeasureagreedbetweentheUnitedStates
andElSalvador wasjustified inaccordance withtheprovisions ofArticle 6oftheATC(G/TMB/R/19).4
Subsequently, theTMB considered acommunication received fromElSalvador, related tothisreview,
inwhich ElSalvador, interalia,urged theTMB thatitbeinvited topresent itsobservations onthis
matter, “sothattheywillbetaken intoaccount iftheTMB decides tomake recommendations or
observations onthiscase”.Inview ofthefactthatthisagreed restraint measure hadalready been
reviewed bytheTMB, theTMB decided toseekclarification from ElSalvador regarding this
communication(G/TMB/R/22,paragraph12).NofurthercommunicationwasreceivedfromElSalvador
onthismatter.
Notifications under Article 6.11oftheATC: Transitional Safeguard Actions Referred totheTMB
21. TheTMB reviewed notifications made byBrazil ofasafeguard measure ithadintroduced
provisionally, pursuant toArticle 6.11oftheATC, onimports ofproducts ofcategory 618(woven
artificial filament fabric) fromHong Kong (G/TMB/R/20, paragraphs 4to26),aswellasofasafeguard
measure introduced provisionally byBrazil, pursuant toArticle 6.11oftheATC, onimports ofproducts
ofcategory 838(men’sandboys’shirts, knitted orcrocheted, ofother textile materials) from
Hong Kong5(G/TMB/R/20, paragraphs 27to35)6.
4Theoutcome oftheTMB review assummarized iscontained intheAnnex.
5Seealsoparagraph 28.
6Theoutcome oftheTMB reviews assummarized iscontained intheAnnex.G/L/206
Page5
22. TheTMB reviewed notifications made byBrazil andKorea ofrestraint measures agreed between
thetwoMembers, pursuant toArticle 6.11oftheATC, onimports ofartificial andsynthetic fibre
products ofcategories 611,618,619,620and627from Korea7(G/TMB/R/22, paragraphs 7and8,
G/TMB/R/23, paragraph 8,andG/TMB/R/27, paragraphs 8to37).
Notifications under Article 7oftheATC
23. Inthecontext ofthepreparation forthecomprehensive report ontheimplementation ofthe
ATC during itsfirststage, tobetransmitted totheCouncil forTrade inGoods inthecontext ofthe
major review envisaged inArticle 8.11oftheATC, theTMB alsoissued, inFebruary andApril 1997,
arequest forinformation toWTO Members, reminding themofsome notification obligations contained
intheATC(G/TMB/11). Some ofthereplies received wererelated totheimplementation ofArticle 7
oftheATC. The TMB received and considered such replies from Colombia, Egypt,
theEuropean Community, India, Mauritius, NewZealand, Pakistan andPeru(G/TMB/R/31 to34).
24. TheTMB tooknoteofthecommunication bytheUnited States, addressed totheTMB pursuant
toArticle 7.2oftheATC, thattheUnited States hadrequested theDispute Settlement Body toestablish
aPanel inthematter ofArgentina -Certain Measures Affecting Imports ofFootwear, Textiles, Apparel
andOther Items (G/TMB/R/35).
Notifications under Articles 8.5and4.2oftheATC
25. TheTMBtooknoteofacommunicationreceivedfromthePhilippinesthat,inviewofamutually
agreed solution between thePhilippines andtheUnited States, itrequested thatthematter ithadraised,
pursuant toArticles 8.5and4.2,regarding changes intheUnited States 'rules oforigin, should be
removed fromtheTMB’sagenda. Thiswaswithout prejudice tothePhilippines ’rights under theATC,
inparticular under itsArticle 8(G/TMB/R/26, paragraph 7).
Notification under Article 8.6oftheATC
26. TheTMBconsideredanotificationreceivedfromKorearequestingtheTMBtoconduct,pursuant
toArticle 8.6,anexamination ofsafeguard measures introduced byEcuador, referring totheprovisions
oftheAgreement onTextiles andClothing, onimports ofseveral textile andclothing products from
Korea andHong Kong (G/TMB/R/21, 22andparagraphs 9to18ofG/TMB/R/23). Subsequently,
theTMB tooknoteofacommunication byEcuador thatthemeasure affecting textile imports, referred
totheTMB byKorea, hadexpired on9February 1997 (G/TMB/R/30).
Notification under Articles 8.6,8.7and8.8oftheATC
27. TheTMB reviewed acommunication from Honduras under Articles 8.6and8.7requesting
theTMB to"consider andmake arecommendation atitsnextmeeting concerning theappropriateness
oftheUnited States maintaining arestraint onHonduran exports under category 435(women 'swool
coats andjackets)". Honduras referred alsotoArticle 8.8which states that"whenever theTMB is
called upontomake recommendations orfindings, itshalldoso,preferably within aperiod of30days,
unless adifferent timeperiod isspecified inthisAgreement" (G/TMB/R/28, paragraphs 5to17).
Atitsthirty-second meeting, theTMB reverted, asagreed, tothematter raised byHonduras. Ittook
noteofacommunication bytheUnited States, andexpected thattheUnited States would rescind the
restraint assoonaspossible, andthatitwould communicate thedateinquestion totheTMB atthe
7Theoutcome oftheTMB reviews assummarized iscontained intheAnnex.G/L/206
Page6
latest by10July1997 (G/TMB/R/31, paragraphs 24to26). Atitsthirty-fourth meeting, theTMB
reverted, asagreed, tothatmatter, andtooknoteofcommunications bybothHonduras andthe
United States (G/TMB/R/33, paragraphs 8to11). Atitsthirty-fifth meeting, theTMB, following
uponthematter, asagreed atanearlier meeting, tooknoteofafurther communication from the
United States andofastatement byHonduras (G/TMB/R/34, paragraphs 4to6).Subsequently, the
United States informed theTMB that,inpursuance ofanearlier communication totheTMB, ithad
removed therestraint onimports ofproducts ofUScategory 435fromHonduras on30September 1997
(G/TMB/R/36, paragraph 14).
Notification under Article 8.9oftheATC
28. TheTMB tooknoteofacommunication received from Brazil that“inaccordance with
paragraph 9ofArticle 8oftheATC, theBrazilian Government shallendeavour toaccept infullthe
recommendations oftheTMB concerning transitional safeguards applied toimports ofcategories 618
(woven artificial filament fabrics) and838(men’sandboys’shirts, knitted orcrocheted, ofother textile
materials) from Hong Kong, contained indocument G/TMB/9 ”.TheGovernment ofBrazil also
“reserved itsrights under paragraph 12ofArticle 6oftheATC inrelation tosuchrecommendations ”
(G/TMB/R/22, paragraph 11).Subsequently, theTMB tooknoteofanother communication byBrazil
thatithaddecided, witheffect asfrom6January 1997, torescind thetransitional safeguard itapplied
toimports oftextile products fromHong Kong classified incategory 838(G/TMB/R/24, paragraph 9).
Notification under Article 8.10oftheATC
29. TheTMB considered acommunication from Hong Kong under Article 8.10, related tothe
safeguard measure introduced byBrazil pursuant toArticle 6.11oftheATC onimports ofproducts
ofcategory 618(woven artificial filament fabrics) fromHong Kong8,inwhich Hong Kong conveyed
itsinability toconform withtherecommendation theTMB hadmade, according towhich themeasure
should berescinded byBrazil atlatest by31December 1997 (G/TMB/R/26, paragraphs 8to30).9
Discussion onPanel andAppellate Body Reports Adopted bytheDispute Settlement Body
30. TheTMB hadageneral discussion onthereports ofthepanels “United States -Restrictions
onimports ofcotton andman-made fibreunderwear ”fromCosta Ricaand“United States -Measure
affecting imports ofwoven wool shirts andblouses from India”,andoftherespective subsequent
Appellate Body reports. TheTMB agreed torevert tothisdiscussion atafuture meeting
(G/TMB/R/33, paragraph 14).
Comprehensive Report under Article 8.11oftheATC
31. TheTMB devoted partofseveral meetings tothepreparation andadoption ofitscomprehensive
report totheCouncil forTrade inGoods ontheimplementation oftheATC during itsfirststage,
envisaged inArticle 8.11oftheATC (G/TMB/R/19, 21,22,26,30,31,32,33andG/TMB/R/34).
Inthiscontext theTMB decided tosendtoWTO Members arequest forinformation regarding the
implementation ofthenotification requirements under Article 7.2oftheATC, aswellasofsome of
itsotherprovisions (G/TMB/R/23). Attherequest oftheTMB, theWTO Secretariat provided Members
withbackground statistical information withrespect totrade intextiles andclothing, intimeforthe
major review tobeconducted bytheCouncil forTrade inGoods, pursuant toArticle 8.11(G/L/184).
8Seealsoparagraphs 21and28.
9Theoutcome oftheTMB review assummarized iscontained intheAnnex.G/L/206
Page7
TheTMB alsodecided tosendtoWTO Members, intheearly partofApril 1997, areminder ofthe
request forinformation ithadsenton14February 1997 (G/TMB/R/26).
Working Procedures
32. TheTMB tooknoteofthedecision oftheDispute Settlement Body on3December 1996 to
adopt theRules ofConduct fortheUnderstanding onRules andProcedures Governing theSettlement
ofDisputes (G/TMB/R/22).
Composition oftheTMB
33. Thecomposition oftheTMB during theperiod under review iscontained inparagraphs 2of
G/TMB/R/21, 23,24,25,29,32,33,35,36and37.G/L/206
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ANNEX
Excerpts ofTMB Review ofNotifications Received Pursuant to
Articles 6.9,6.11and8.10oftheATC
Notification under Article 6.9oftheATC
United States/El Salvador: imports ofcotton andman-made fibreskirts (UScategory 342/642)
TheTMB, while examining thespecific andrelevant factual information (market statement)
made available bytheUnited States toElSalvador during thebilateral consultations, observed that
considerable efforts hadbeenmade bytheUnited States tomatch thedataasclosely aspossible to
therequirements ofparagraphs 2,3and4ofArticle 6.
TheTMB noted thatthevolume ofimports intotheUnited States ofproducts ofcategory
342/642, from allsources, hadincreased in1993 and1994, andhadcontinued toincrease in1995.
Thishadtaken place inthecontext ofaproduct subject toquantitative restrictions foralarge number
ofcountries, including some small suppliers inthiscategory.
TheTMB observed thatcertain economic variables suchasthedeclining United States ’domestic
production, thereduction oftheshare oftheUnited States ’market heldbydomestic manufacturers
toarelatively lowlevel, thedecrease inemployment, particularly in1994and1995, andthepressure
putondomestic prices byimports prices, indicated thattheUnited States ’industry producing cotton
andman-made fibres skirts wasexperiencing problems asaresult ofincreased imports. Ontheother
hand, some other economic variables, inparticular theevolution ofaverage wages perworker, could
pointtoadifferent direction. Withrespect tosome othervariables, theTMB noted thatexports remained
atalowlevelandweredeclining; productivity hadremained stable despite reductions inemployment.
Dataonsome elements, supplied atahigher levelofindustry aggregation, suchas,forexample, profits,
investment, inventories andcapacity utilization, could notprovide sufficient guidance. TheTMB
concluded that,taking intoaccount theelements mentioned above, thecircumstances described in
paragraph 2ofArticle 6wereobserved intheUnited States 'market forcotton andman-made fibre
skirts.
TheTMB further observed thatimports ofproducts ofcategory 342/642 intotheUnited States
fromElSalvador hadincreased significantly, particularly in1995. Thiswastaking place inthecontext
ofincreased imports from several other sources, bothrestrained andun-restrained, whose share of
overall imports waslarger thanthatofElSalvador. ElSalvador ’sexports werehowever, onaverage,
priced substantially below theUSaverage domestic price and,withoneexception, below theaverage
prices ofimports fromcountries withahigher share ofimports. TheTMB therefore considered that
thecircumstances described inparagraph 2ofArticle 6could beattributed toincreased imports from
ElSalvador.
TheTMB noted thatthetotalleveloftheagreed restraint, aswellasthatportion oftherestraint
thatwasavailable unconditionally toElSalvador (i.e.thespecific limit), weresubstantially above the
rollback level. Itobserved thatnogrowth ratewasprovided forwithrespect totheGAL. However,
keeping alsoinmind indications given bytheUnited States Government thatGALs canbeincreased
onrequest, itistheTMB'sunderstanding andrecommendation thattheGAL willbeincreased byno
lessthan6percentannually.G/L/206
Page9
Onthebasis oftheconsiderations mentioned above, theTMB concluded thatthisrestraint
measureagreedbetweentheUnitedStatesandElSalvadorwasjustifiedinaccordancewiththeprovisions
ofArticle 6oftheAgreement onTextiles andClothing.
Brazil/Hong Kong: imports ofwoven artificial filament fabrics (category 618)
Notification byBrazil under Article 6.11 oftheATC
TheBrazilian industry wasshowing somewhat contradictory symptoms andtheevolution of
anumber ofeconomic indicators andtheir possible inter-relation could leadtodiverging interpretations.
Theslight increase inproduction, improvement ofproductivity, increase ofexports andriseinwages
could allow aninterpretation thattheindustry hadalready been relatively successful interms of
re-structuring andadjusting tothenewcompetitive conditions. Developments regarding employment,
thenumberofenterprises,capacityutilization,profitsandinvestmentcouldpointtotheoppositedirection.
Thedataprovided anunambiguous indication thattheindustry hadbeen unable totakeadvantage of
thesubstantial increase initsdomestic market. Partofthestrength ofthedomestic demand could be
attributed totheimplementation oftheeconomic stabilization programme, andinparticular tothe
liberalization ofimports undertaken byBrazil during thelastdecade. Adjustment efforts hadbeen
undertaken, which hadnotenabled theBrazilian industry tocompete successfully with imports, in
particular given theprice levels prevailing intheBrazilian market. TheTMB took theview that, under
these circumstances, theBrazilian industry producing, inter alia, woven artificial filament fabrics was
experiencing serious damage.
Onthebasis ofthedatasubmitted byBrazil, itwasdifficult toassess theextent towhich this
damage could beattributed specifically tothedifficulties experienced bytheproducers ofproducts of
category 618. TheTMB, while accepting thatserious damage totheindustry producing category 618
could bedemonstrated, expressed concern that,withrespect tosome variables, ithadtorelyonarguments
byinference, inview ofthelack ofsufficiently specific data relating tothecategory itself.
TheTMB therefore hadtoconsider whether thisserious damage could beattributed toimports
from Hong Kong, inaccordance with paragraph 4ofArticle 6oftheATC. Indoing so,theTMB,
mindful ofthefactthat, according tothisparagraph “none ofthese factors, either alone orcombined
with other factors, cannecessarily give decisive guidance ”,noted thefollowing:
- imports from Hong Kong hadshown asubstantial increase between 1994 and1995;
- thisincrease inimports from Hong Kong hadtaken place inthecontext ofaneven
greater increase inimports from allsources;
- theshare ofimports from Hong Kong inBrazil ’sapparent consumption ofproducts
ofcategory 618hadincreased from 1994 to1995;
- theaverage import price forHong Kong wasbelow domestic prices forproducts at
acomparable stage ofcommercial transaction. Inthisrespect theTMB considered the
argument thatproducts imported from Hong Kong were addressing adifferent segment
ofthemarket from thataddressed bydomestic products, but,duetothelackofnecessary
technical information, could notreach aconclusion onthis.
SuchelementsallowedtheTMBtoconcludethattheseriousdamageexperiencedbytheBrazilianindustry
could beattributed inparttoimports from Hong Kong inaccordance with paragraph 4ofArticle 6.G/L/206
Page10
TheTMB noted thatBrazil hadinvoked theprovisions ofparagraph 11ofArticle 6andapplied
therestraint provisionally, asithadconsidered thatitsindustry wasexperiencing “highly unusual and
critical circumstances, where delay would cause damage which would bedifficult torepair ”.Ittook
noteofthelimited information provided byBrazil toHong Kong onthismatter, andoftheinformation
ithadprovided totheTMB, according towhich afurther increase inimports wasimminent, inview
oftheamount ofimport licences issued, aswell asoftheamounts ofgoods thatcould beimported
intoBrazil atshort notice from Brazilian customs 'warehouses. TheTMB noted thatthese expectations
hadnotmaterialized.
TheTMB wasoftheview thatincases where theprovisions ofparagraph 11ofArticle 6were
invoked, theexpectation wasthattheelements envisaged inparagraphs 2,3and4ofArticle 6would
indicate asunambiguously aspossible thehighly unusual andcritical character ofthecircumstances.
TheTMB wasalsooftheview that, unless such circumstances were met, anyaction taken under Article
6should bepreceded byconsultations between theparties.
TheTMB observed thatparagraph 11ofArticle 6requires ittopromptly conduct anexamination
ofthematter, andtomake appropriate recommendations totheMembers concerned. Inthisregard
theTMB noted thatithadarrived attheconclusions according towhich:
a) serious damage totheindustry producing products category 618, caused byincreased
quantities intotal imports ofthese products, could bedemonstrated;
b) theserious damage experienced bytheBrazilian industry could beattributed inpart
toimports from Hong Kong inaccordance with paragraph 4ofArticle 6.
Itobserved,however,thattherewereindicationstotheeffectthattheBrazilianindustryproducing
products ofcategory 618hadalready been undertaking important restructuring andadjustment. Inlight
ofthistheTMB considered thatashorter period oftime than themaximum time-frame envisaged in
paragraph 12(a) ofArticle 6should enable theindustry inBrazil tosuccessfully accomplish itsadjustment
tothechanged competitive environment. TheTMB recommended therefore thatthemeasure taken
byBrazil against imports from Hong Kong ofproducts ofcategory 618should berescinded atlatest
by31December 1997.
Notification byHong Kong under Article 8.10 oftheATC
Asfollows from theTMB 'sobservations reflected inparticular inparagraphs 17,20,22,23
and25[ofG/TMB/R/26], theBody agreed with Hong Kong 'smain contention according towhich a
determination ofserious damage could notbemade almost entirely byreference to,andtherefore by
inferences drawn from, datarelating tomuch broader industries inrespect ofwhich damage isclaimed.
Ontheother hand, incarefully considering itsexamination oftheparticular case (i.e.theBrazilian
measures against imports ofcategory 618products from Hong Kong), theTMB could notreach the
same conclusions asHong Kong did,since inthiscase thedetermination ofserious damage hadnot
been made almost entirely byreference todatarelating tosuch broader industries, assome important
data andfactual information provided byBrazil were category-specific.
TheTMB recognized, however, thatcertain formulations ofitsreport ontheexamination of
thismatter pursuant toparagraph 11ofArticle 6could beread soastolead toslightly divergent
conclusions, which could bedifferent from thestatement contained inthepreceding paragraph. This
applied inparticular toparagraphs 20and21ofthereport [G/TMB/R/20)] Thereference inthereport
tothefactthattheTMB, with respect tosome variables, hadtorelyonarguments byinference inview
ofthelackofspecific datarelating thecategory itself, wasaimed atindicating theserious limitationsG/L/206
Page11
thattheBody hadindrawing reliable conclusions onthebasis ofdatawhich were related tobroader
industries than tothecategory 618industry.
TheTMBrecalledthatithadalreadyexpressedconcernswithrespecttosomeofthenon-category
specific dataprovided byBrazil, which hadmade itdifficult toassess theextent towhich developments
insome economic variables could beattributed totheevolution ofthemarket incategory 618products.
While inlight oftheconclusions reached inparagraphs 18,23,27and,inparticular, 28[ofG/TMB/R/26],
theTMB didnotconsider itappropriate torevise itsrecommendations adopted inNovember 1996 or
toissue further recommendations, theBody recalled thatithadobserved thatthere were indications
totheeffect thattheBrazilian industry producing products ofcategory 618hadalready been undertaking
important restructuring andadjustment. TheTMB, therefore, expected Brazil tokeep thedevelopments
ofthemarket ofcategory 618products under review, andrecalled thatithadrecommended toBrazil
thatthemeasure taken against imports from Hong Kong ofproducts ofcategory 618should berescinded
atlatest by31December 1997.
Brazil/Hong Kong: imports ofmen’sandboys’shirts, knitted orcrocheted, ofother textile materials
(category 838)
Notification byBrazil under Article 6.11 oftheATC
Onthebasis oftheconsiderations [detailed inparagraphs 31to33ofG/TMB/R/20], theTMB
came totheconclusion thatBrazil hadnotdemonstrated thattheBrazilian industry producing products
ofcategory 838hadexperienced serious damage, asenvisaged inparagraph 2ofArticle 6,and
recommended thatBrazil rescind themeasure.
TheTMB equally observed thattherecourse byBrazil totheprovisions ofparagraph 11of
Article 6wasnotappropriate. TheTMB reiterated itsview thatincases where these provisions were
invoked, theexpectation wasthattheelements envisaged inparagraphs 2,3and4ofArticle 6would
indicate asunambiguously aspossible thehighly unusual andcritical character ofthecircumstances,
andthat, unless such circumstances were met, anyaction taken under Article 6should bepreceded
byconsultations between theparties.
Notifications byBrazil andKorea under Article 6.10 oftheATC: imports ofartificial andsynthetic
fibre products ofcategories 611, 618, 619, 620and627
TheTMB noted that, with respect toallthecategories subject toagreement with Korea, Brazil
hadinvoked theprovisions ofparagraph 11ofArticle 6andapplied therestraints provisionally, asit
hadconsidered thatitsindustry wasexperiencing “highly unusual andcritical circumstances, where
delay would cause damage which would bedifficult torepair ”.Itobserved inthisregard thatBrazil
hadnotprovided toKorea initsmarket statements dataasuptodateascould beexpected tosubstantiate
thecritical circumstances. TheTMB recalled itsview10thatincases where theprovisions ofparagraph 11
ofArticle 6were invoked, theexpectation wasthattheelements envisaged inparagraphs 2,3and4of
Article 6would indicate asunambiguously aspossible thehighly unusual andcritical character ofthe
circumstances. TheTMB wasalsooftheview that, unless such circumstances were met, anyaction
taken under Article 6should bepreceded byconsultations between theparties.
10SeeG/TMB/R/20, paragraph 24.G/L/206
Page12
Category 611-woven fabrics containing 85percent ormore byweight ofartificial staple
TheTMB considered allthefactors mentioned [detailed inparagraphs 11to14,and16of
G/TMB/R/27], none ofwhich, either alone orcombined with other factors, cannecessarily givedecisive
guidance,inassessingwhethertheBrazilianindustryproducingproductsofcategory611wasexperiencing
serious damage. Bearing inmind alsoitsview thatproduct-specific information anddatashould have
amajor impact ontheoverall assessment whether serious damage oractual threat thereof could be
demonstrated,11theTMB concluded thatthecircumstances described inparagraph 2ofArticle 6were
observed inBrazil ’smarket forwoven fabrics containing 85percentormore byweight ofartificial
staple.
TheTMB further observed thatimports ofproducts ofcategory 611intoBrazil from Korea
hadincreased bymore that287percentinvolume from 1994 to1995, sothatKorea hadconsolidated
itsposition asthemain supplier ontheBrazilian market forcategory 611. Korea ’sshare ofthetotal
volume ofimports ofproducts ofcategory 611into Brazil hadincreased from 36.8 percent to
64.1 percentbetween 1994 and1995. Theaverage price ofimports ofproducts ofcategory 611from
Korea hadfallen over thesame period, andwas33percentbelow domestic prices in1995. TheTMB
therefore considered thatthecircumstances described inparagraph 2ofArticle 6could beattributed
toasharp andsubstantial increase inimports from Korea.
Onthebasis oftheabove considerations andbearing inmind thefactthatalltheelements of
theagreement, mentioned inparagraph 8[ofG/TMB/R/27], were inconformity with therelevant
paragraphs ofArticle 6,theTMB concluded thatthisrestraint measure agreed between Brazil andKorea
wasjustified inaccordance with theprovisions ofArticle 6oftheATC.
Category 618-woven artificial filament fabrics
Considering allthefactors mentioned [detailed inparagraphs 11to14,and20ofG/TMB/R/27],
none ofwhich, either alone orcombined with other factors, cannecessarily give decisive guidance,
andbearing inmind alsoitsview thatproduct-specific information anddatashould have amajor impact
ontheoverall assessment whether serious damage oractual threat thereof could bedemonstrated, the
TMB concluded thatthecircumstances described inparagraph 2ofArticle 6were observed inBrazil ’s
market forwoven artificial filament fabrics.
TheTMB further observed thatimports ofproducts ofcategory 618intoBrazil from Korea
hadincreased bymore that186percent involume from 1994 to1995, sothatKorea hadremained
thesecond supplier ontheBrazilian market forcategory 618,although Korea ’sshare ofthetotalvolume
ofimports ofproducts ofcategory 618intoBrazil haddecreased from 28.1 percentto24.5 percent.
Theaverage price ofimports ofproducts ofcategory 618from Korea hadfallen over thesame period.
TheTMB therefore considered thatthecircumstances described inparagraph 2ofArticle 6could be
attributed toasharp andsubstantial increase inimports from Korea.
Onthebasis oftheabove considerations andbearing inmind thefactthatalltheelements of
theagreement, mentioned inparagraph 8[ofG/TMB/R/27], were inconformity with therelevant
paragraphs ofArticle 6,theTMB concluded thatthisrestraint measure agreed between Brazil andKorea
onimports ofproducts ofcategory 618wasjustified inaccordance with theprovisions ofArticle 6
oftheATC.
11SeeG/TMB/R/26, paragraph 25.G/L/206
Page13
TheTMB further recalled that, inthecontext ofitsreview ofthesafeguard measure taken at
thesame time byBrazil onimports from Hong Kong ofproducts ofcategory 618, ithadobserved that
there were indications totheeffect thattheBrazilian industry producing products ofcategory 618had
alreadybeenundertakingimportantrestructuringandadjustment.InlightofthistheTMBhadconsidered
thatashorter period oftime than themaximum time-frame envisaged inparagraph 12(a) ofArticle 6
should enable theindustry inBrazil tosuccessfully accomplish itsadjustment tothechanged competitive
environment, andhadtherefore recommended thatthemeasure taken byBrazil against imports from
Hong Kong ofproducts ofcategory 618should berescinded atlatest by31December 1997.12
Category 619-polyester filament fabrics
TheTMB considered allthefactors mentioned [detailed inparagraphs 11to14,and25of
G/TMB/R/27], none ofwhich, either alone orcombined withother factors, cannecessarily givedecisive
guidance,inassessingwhethertheBrazilianindustryproducingproductsofcategory619wasexperiencing
serious damage. Bearing inmind alsoitsview thatproduct-specific information anddatashould have
amajor impact ontheoverall assessment whether serious damage oractual threat thereof could be
demonstrated, theTMB concluded thatthecircumstances described inparagraph 2ofArticle 6were
observed inBrazil ’smarket forpolyester filament fabrics.
TheTMB further observed thatimports ofproducts ofcategory 619intoBrazil from Korea
hadincreased bymore that139percentinvolume from 1994 to1995, sothatKorea hadconsolidated
itsposition asthemain supplier ontheBrazilian market forcategory 619. Korea ’sshare ofthetotal
volume ofimports ofproducts ofcategory 619intoBrazil hadincreased from 43.9 percent to60.1
percentbetween 1994 and1995. Theaverage price ofimports ofproducts ofcategory 619from Korea
hadfallen over thesame period, andwas44.4 percent below domestic prices in1995. TheTMB
therefore considered thatthecircumstances described inparagraph 2ofArticle 6could beattributed
toasharp andsubstantial increase inimports from Korea.
Onthebasis oftheabove considerations andbearing inmind thefactthatalltheelements of
theagreement, mentioned inparagraph 8[ofG/TMB/R/27], were inconformity with therelevant
paragraphs ofArticle 6,theTMB concluded thatthisrestraint measure agreed between Brazil andKorea
onimports ofproducts ofcategory 619wasjustified inaccordance with theprovisions ofArticle 6
oftheATC.
Category 620-other synthetic filament fabrics
TheTMB considered allthefactors mentioned [detailed inparagraphs 11to14,and29of
G/TMB/R/27], none ofwhich, either alone orcombined with other factors, cannecessarily givedecisive
guidance,inassessingwhethertheBrazilianindustryproducingproductsofcategory620wasexperiencing
serious damage. Bearing inmind alsoitsview thatproduct-specific information anddatashould have
amajor impact ontheoverall assessment whether serious damage oractual threat thereof could be
demonstrated, theTMB concluded thatthecircumstances described inparagraph 2ofArticle 6were
observed inBrazil ’smarket forother synthetic filament fabrics.
TheTMB further observed thatimports ofproducts ofcategory 620intoBrazil from Korea
hadincreased bymore that600percentinvolume from 1994 to1995, sothatKorea hadbecome the
main supplier ontheBrazilian market forcategory 620. Korea ’sshare ofthetotal volume ofimports
ofproducts ofcategory 620intoBrazil hadincreased from 24.9 percentto53.5 percentbetween 1994
12SeeG/TMB/R/20, paragraph 26.G/L/206
Page14
and1995. Theaverage price ofimports ofproducts ofcategory 620from Korea hadfallen over the
same period, andwas36.9 percent below theaverage domestic price in1995. TheTMB therefore
considered thatthecircumstances described inparagraph 2ofArticle 6could beattributed toasharp
andsubstantial increase inimports from Korea.
Onthebasis oftheabove considerations andbearing inmind thefactthatalltheelements of
theagreement, mentioned inparagraph 8[ofG/TMB/R/27], were inconformity with therelevant
paragraphs ofArticle 6,theTMB concluded thatthisrestraint measure agreed between Brazil andKorea
onimports ofproducts ofcategory 620wasjustified inaccordance with theprovisions ofArticle 6
oftheATC.
Category 627-sheeting ofstaple filament fibre combination
TheTMB considered allthefactors mentioned [detailed inparagraphs 11to14,and33of
G/TMB/R/27], none ofwhich, either alone orcombined with other factors, cannecessarily givedecisive
guidance,inassessingwhethertheBrazilianindustryproducingproductsofcategory627wasexperiencing
serious damage. Bearing inmind alsoitsview thatproduct-specific information anddatashould have
amajor impact ontheoverall assessment whether serious damage oractual threat thereof could be
demonstrated, theTMB concluded thatthecircumstances described inparagraph 2ofArticle 6were
observed inBrazil ’smarket forsheeting ofstaple filament fibre combination.
TheTMB further observed thatimports ofproducts ofcategory 627intoBrazil from Korea
hadincreased bymore that229percentinvolume from 1994 to1995, sothatKorea hadmaintained
itsposition asthemain supplier ontheBrazilian market forcategory 627, although Korea ’sshare of
thetotal volume ofimports ofproducts ofcategory 627intoBrazil haddecreased from 39.7 percent
to37.3 percentbetween 1994 and1995. Theaverage price ofimports ofproducts ofcategory 627
from Korea hadfallen over thesame period, andwas40.9 percentbelow theaverage domestic price
in1995. TheTMB therefore considered thatthecircumstances described inparagraph 2ofArticle 6
could beattributed toasharp andsubstantial increase inimports from Korea.
Onthebasis oftheabove considerations andbearing inmind thefactthatalltheelements of
theagreement, mentioned inparagraph 8[ofG/TMB/R/27], were inconformity with therelevant
paragraphs ofArticle 6,theTMB concluded thatthisrestraint measure agreed between Brazil andKorea
onimports ofproducts ofcategory 627wasjustified inaccordance with theprovisions ofArticle 6
oftheATC.