WORLD TRADE
ORGANIZATIONG/TMB/16
27  November 1998
(98-4761)
Textiles Monitoring Body
FIFTIETH MEETING OF THE TMB
Note by the Chairman
1. The Textiles Monitoring Body met on 16 to 19 November 1998.
2. The TMB authorized its Chairman to provide WTO Members with the following information.
Notification under Article 6 of the Agreement on Textiles and Clothing
Colombia/Korea and Colombia/Thailand:  imports of plain polyester filaments (tariff
heading 54.02.43)
3. On 6 November 1998, Colombia notified to the TMB that it had decided, on 26 October 1998,
to apply transitional safeguard measures on imports of plain polyester filaments
(tariff heading 54.02.43) from Korea and Thailand, for a period of one year.
4. Though it was not specified in the notification, the TMB understood that the restraint had
been applied pursuant to Article 6.10 of the ATC.  On 17 August 1998, Colombia had requestedconsultations with four WTO Members (Korea, Malaysia, Thailand and the United States) and had
provided them with factual information, as refe rred to in Article 6.7, which had also been
communicated to the Chairman of the TMB.
1  Colombia had held consultations with the four
Members.  Those with Korea and Thailand had not resulted in a mutual understanding as  to whether
the situation called for restraint on the imports from these two Members.  Colombia had excluded
Malaysia from the Members to which it would apply the safeguard measure since "when the
consultations [had been] concluded, it [had] found that the attribution of damage [to Malaysia, on thebasis of which the consultations had been sought,] had been uncertain".  According to the notification,
consultations with the United States were continuing.
5. Article 6.10 requires the TMB to "… promptly conduct an examination of the matter,
including the determination of serious damage, or actual threat thereof, and its causes, and make
appropriate recommendations to the Members concerned within 30 days".  The TMB, therefore,decided to conduct this examination at its meeting starting on 16 November 1998 and invited the
participation of representatives of Colombia, Korea and Thailand.
6. Article 6.10 further states that "…[i]n order to conduct such examination, the TMB shall have
available to it the factual data provided to the Chairm an of the TMB, referred to in Article 6.7, as well
as any other relevant information provided by the Members concerned".  The factual data referred toabove revealed, inter alia , that:
- on 4 March 1998, a domestic producer had requested the Colombian authorities to
conduct an investigation with a view to applying a safeguard measure to imports of
                                                     
1 Corrected and revised data, distributed in the course of the consultations with Korea, Malaysia,
Thailand and the United States, were also made available to the TMB.G/TMB/16
Page 2
plain polyester filaments (tariff heading 54.02.43) and textured polyester filaments
(tariff heading 54.02.33) on the grounds that there had been a substantial increase in
imports which had caused serious damage;
- the investigation was conducted by the Colombian Foreign Trade Institute
(INCOMEX) which had concluded in its report that a substantial and ongoingincrease in imports of plain polyester filaments was causing serious damage to the
domestic industry producing like and directly competitive products, and that this
damage was attributable, inter alia,  to imports from the Members noted in
paragraph 4 above.  On that basis, the Colombian Government had decided to seek
consultations in August 1998 with those Members;
- the technical report prepared by INCOMEX contained data regarding the
performance of total imports for the 12-month periods June to May of 1995-1996,1996-1997 and 1997-1998, the reference period referred to in Article 6.8. The data
and information incorporated into the report regarding the economic variables set out
in Article 6.3 referred to calendar years;  for 1998, it incorporated actual data for the
period January to May and provided estimates for the full calendar year.  In addition,
the report provided monthly averages regarding each variable for 1995, 1996, 1997and January to May 1998;
- the report found, inter alia , that eight out of the 15 indicators examined (output,
productivity, capacity utilization, inventories, market share held by the domestic
industry, employment, prices and profits) yielded, in particular, evidence of serious
damage and that, out of the 10 indicators of causal relationship between imports andthe serious damage considered, nine pointed to the existence of such a relationship.
7. In reply to the TMB’s invitation, Colombia, Korea and Thailand sent representatives to
present their respective cases.  The three Members made presentations and provided replies to
questions posed by the TMB.  The presentations focused on the determination made by Colombia
regarding the existence of serious damage to its industry producing plain polyester filaments ascaused by increased quantities in total imports of that product.
8. In this context, the representative of Colombia stated, inter alia , that:
- at the request of a Colombian petitioner, INCOMEX had conducted an investigation
with a view to introducing a safeguard measure on imports of plain polyester
filaments and textured polyester filaments.  INCOMEX had ensured that that
petitioner could be considered as representative of the domestic industry.  It had also
established that imported plain polyester filaments competed directly with thedomestic product since they had similar physical characteristics within the
internationally accepted ranges and specifications for the product.  Moreover, the
imported and domestic products had identical end-uses in the production of goods for
the weaving sector;
- INCOMEX had compared the plain polyester filaments manufactured by the
Colombian petitioner with those imported from Korea and Thailand and had found
that these were similar products with similar end-uses;
- the investigation had included developments regarding imports and the evolution of
the industry during the period set out in Article 6.8, and had also covered the years
1995 to 1997;G/TMB/16
Page 3
- these developments had been provided mostly on a calendar-year basis for 1995 to
1997, and on a monthly basis for the first fi ve months of 1998.  In addition, monthly
averages had been provided.  These data were comparable as Colombia was of the
view  that this product was not affected by seasonality;
- on the basis of an examination of the variables set out in Article 6.3, showing on a
monthly average basis a drop in production (-32%), real prices (-11%), sales (-32%),
capacity utilization (-23 percentage points), number of direct employees (-25%), as
well as increased inventories (+15%), a fall in gross margin (-26%) and the decision
to suspend investment, INCOMEX had determ ined that the industry suffered serious
damage, witnessed by a loss in market share of 31%.  It had also determined that the
damage was attributable to the increased imports, inter alia , from Korea and
Thailand, and that there was nothing to suggest that it could be attributed totechnological changes or changes in consumer preference, plain polyester filaments
being a uniform product;
- INCOMEX had, therefore, recommended to the Colombian Government to introduce
a safeguard measure on imports of plain polyester filaments, inter alia , from Korea
and Thailand for a period of one year.  The Government of Colombia, consequently,requested consultations with a view to introducing a safeguard measure on imports of
plain polyester filaments from Korea, Malaysia, Thailand and the United States.  As
consultations with Korea and Thailand had not resulted in a mutual understanding
that the situation called for restraint on the imports from these two Members,
Colombia had decided to apply safeguard measures on imports of plain polyesterfilaments from these Members.
9. The representative of Korea stated, inter alia , that the measure introduced by Colombia had
not been justifiable under Article 6 of the ATC for the following main reasons:
- Colombia's definition of domestic industry was unduly narrow, as it was limited to
one single company producing only about 60 per cent of the total domesticproduction of the product subject to the transitional safeguard measure;
- this definition did not cover the industry producing like and/or directly competitive
products;
- the serious damage alleged by Colombia was based on data relating to the first
five months of 1998, a period too short to reach such a determination;
- Colombia had failed to prove the causal link between the increase in total imports and
the alleged serious damage to the domestic industry, as its demonstration in relationto causality was limited to the price comparison between imported and domestic
products;  all other statements regarding causality were mere allegations without any
substantiating evidence;
- Colombia had not examined such other factors as technological changes or changes in
consumer preference that could have affected the domestic industry;
- the alleged damage could be explained by other factors, such as the overall decline in
the industry and its weakening competitiveness.G/TMB/16
Page 4
10. The representative of Thailand stated, inter alia , that the measure introduced by Colombia
had not been justifiable under Article 6 of the ATC for the following main reasons:
- the information provided by Colombia had not met the minimum requirements
established in Article 6 of the ATC and this in itself should have been sufficient to
invalidate the transitional safeguard being taken;
- no data were available on the overall filament and/or yarn industry in Colombia;
- as the data provided were based on one single company which represented only
around 60 per cent of the domestic industry, there was no information regarding the
remaining 40 per cent of the domestic production;
- there was insufficient analysis to prove that the conditions facing the Colombian
industry were not due to technological changes or changes in consumer preference
(the plain polyester filaments exported by Thailand to Colombia were of a higherquality than those produced by the Colombian company and their prices were higher);
- there could have been normal shifts in production from one type of polyester filament
to another type of polyester filament by the Colombian producer;
- there were concerns with the methodology used by Colombia when comparing time
periods in the information provided (comparison of dissimilar time periods;  use ofestimates for 1998 and thus comparing actual data with estimated numbers; the
approach used by Colombia did not take into account any other factors such as
seasonality);
- Colombia had also not complied with the provisions of Article 6.16 because it had
failed to make available any relevant  information to Thailand regarding the
arrangements pertaining to the details of quota administration, resulting in the
disruption of the trade flow, which Thailand viewed as a nullification and impairment
of the rights and obligations of the ATC;
- also, the more detailed analysis of the specific information provided by Colombia
regarding the economic variables set out in Article 6.3 did not support the claim thatthe Colombian industry had been experiencing serious damage, or that the alleged
damage had been due to increased imports rather than to other factors; in addition,
such an analysis further confirmed the concerns regarding the problems stated with
respect to deficiencies in providing data, reliance on estimates and impossibility of
having a better comparison in order to understand the trends.
11. In starting the examination of the matter referred to it, the TMB recalled that, pursuant to
Article 6.2, Colombia had to demonstrate that the particular product (plain polyester filaments) wasbeing imported into its territory in such increased quantities as to cause serious damage, or actual
threat thereof, to the domestic industry producing like and/or directly competitive products.
12. Based on the information provided by Colombia, the TMB noted that the volume of total
imports into Colombia of plain polyester filaments (tariff heading 54.02.43) had increased
significantly during the period considered.
13. The TMB noted that the Colombian investig ating authorities had determined that one
company, which had requested the application of the safeguard measure on imports, represented on
average 62 per cent of the total domestic production of plain polyester filaments and, therefore, couldG/TMB/16
Page 5
be considered to represent the domestic industry.  It followed from this determination that Colombia
had provided information regarding the economic variables referred to in Article 6.3 which reflected
data pertaining to that one company.  The TMB observed in this respect that the ATC does not
provide a definition of what constitutes the domestic industry.  The TMB noted, however, that
Colombia had failed to provide information on a significant part of its domestic industry producingplain polyester filaments.  This lack of info rmation brought about important uncertainties and,
therefore, hampered the TMB’s ability to assess the situation of the Colombian industry producing
plain polyester filaments.
14. The TMB noted Colombia’s efforts to provid e information related to plain polyester
filaments.   It observed, however, as was confirmed by Colombia, that the company regarding which
data had been provided, produced a number of products falling under HS 54.02, including plain
polyester filaments.  The TMB observed in this respect that the ATC does not provide a definition ofwhat constitutes like and/or directly competitive products.  The TMB noted, however, that in the case
of plain polyester filaments, HS lines having descriptions quite similar could be like and/or directly
competitive products.  This created difficulties for the TMB in assessing the matter.
15. In the view of the TMB, the issues identified in paragraphs 13 and 14 above limited the
ability to reach an appropriate conclusion regarding the determination of whether or not theColombian domestic industry producing like products and/or products directly competitive with plain
polyester filaments was experiencing serious damage, as required under Article 6.3.
16. The TMB, however, decided to make an examination, on the basis of the information
available, of the possible effects of the increased quantities in total imports of plain polyester
filaments on the state of the particular industry, as specified in Article 6.3.  The TMB noted in thisrespect that it could not base its assessment on estimates provided by Colombia for the year 1998;
and that the monthly averages provided by Colombia could not be considered in most cases as
providing reliable indications.  For data to be meaningful Colombia would have had in the present
case to have provided comparisons either on a Ja nuary/May basis or on a year-ending May basis.
This further complicated the task of examining Co lombia’s determination that the domestic industry
in question had been suffering serious damage.
17. Within the limitations mentioned in paragraphs 13 to 16 above, the TMB was of the view that
the evolution of some variables such as output, capacity utilisation, inventories, market share,
employment, domestic prices, profits and investments could be a signal of the existence of serious
damage.  The TMB could not obtain any significant indication from the evolution of variables such as
productivity, exports and wages.
18. Before concluding its examination of the matter and starting to draft its report, the TMB heard
a statement by Colombia according to which, for procedural reasons, that Member had not been given
the opportunity to present in full its views on the causal link between increased imports and the
serious damage being caused to its industry;  on the attribution of serious damage to imports from
Korea and Thailand;  and on the possibility of presenting its conclusions.  Colombia also stated that if
the TMB considered it essential for its understanding  of the situation, it could request Colombia to
provide additional information on a rolling-year basis and on the state of the only other producer that
composed the industry in Colombia.  Colombia propos ed that, in the light of the attributions granted
to the TMB by Article 8.3, it could ask Colombia to collect that information for TMB’s examination
at its next session.
19. Although it was felt that every effort had been made to ensure that the opportunity had been
given to the three Members to present their views fully, the TMB decided to provide a further
possibility to Colombia to present its statement on causality. Colombia, therefore, presented a briefG/TMB/16
Page 6
statement regarding causality that referred to the re levant elements of the information it had already
submitted pursuant to Article 6.7.
20. As to attribution, the TMB felt that any statem ent would best be kept for a point where the
TMB would have been satisfied that the existence of serious damage to the Colombian industry had
been satisfactorily demonstrated.  With respect to  requesting additional information, as referred to by
Colombia, the TMB was of the view that its review of the measures introduced by Colombia had to be
based essentially on the information made available by Colombia in accordance with Article 6.7 at the
time the request for consultations had been made. Moreover, because of the definition of the product
subject to the restraint and the fact that informa tion to be provided with respect to the Colombian
industry would have to be related to the industry producing like and/or directly competitive products,
the TMB felt that such additional information would have to cover this aspect as well, which would
amount to the review of a different case.
21. At the request of Colombia, the TMB agreed to allow the delegations to present additional
remarks, which the TMB considered fully when drafting the comments and observations above, as
well as its recommendation.
22. In view of the serious limitations mentioned above, it was not possible to assess whether or
not serious damage had been caused to Colombia’s industry producing like and/or directlycompetitive products by increased imports of plain polyester filaments.  Therefore, in the view of the
TMB, Colombia had not demonstrated successfully that plain polyester filaments were being imported
into its territory in such increased quantities as to cause serious damage, or actual threat thereof, to its
domestic industry producing like and/or directly competitive products.  The TMB recommended,
therefore, that the measures introduced by Colo mbia on imports of plain polyester filaments from
Korea and Thailand should be rescinded.
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23. The fifty-first meeting of the TMB is scheduled for 17 to 18 December 1998.
24. The full report of the fiftieth meeting will be circulated at a later stage.
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