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At the end of the Uruguay Round, developing countries considered the
Agreement on Textiles and Clothing (ATC), which provides for the
gradual dismantling of bilateral import quotas over a ten-year period,
to have been a major result in their favour. Today — nearly at the
penultimate stage of ATC implementation — many developing countries
are calling for the acceleration of trade liberalization in this
sector to redress what they consider to be an imbalance in the
implementation of the Uruguay Round results.
Developing
countries look at textiles and clothing — exports of which amounted
to $356 billion in 2000 representing 7.7% of world trade in
manufactures — as one major manufacturing sector in which they have
competitive advantage. They also believe that trade success in this
area would be an important step up in the industrial development
ladder.
In
the former GATT, the Multifibre Arrangement (MFA) governed a large
portion of the exports of textiles and clothing from developing
countries, to the main developed countries. Under the MFA (1974-94),
developed countries were able to establish quotas on textiles and
clothing outside normal GATT rules.
The
ATC requires members to liberalize trade in textiles and clothing in
two ways. Members must progressively bring (“integrate”) all
textiles and clothing products under normal WTO rules in four steps
(16% for the first stage in 1995-97, a further 17% at the second stage
for 1998-2001, a further 18% for the third stage in 2002-04 and the
remaining 49% in the final stage on 1 January 2005). Members that
maintain quota restrictions (Canada, the European Union, and the
United States), must progressively enlarge the quotas by increasing
the annual growth rates by a set percentage at each stage. When the
products subject to quotas are integrated, the quotas are removed.
A
special safeguard mechanism protects members from damaging surges in
imports during this transitional period. A quasi-judicial body — the
Textiles Monitoring Body (TMB) — supervises the implementation of
the ATC, including the examination of disputes.
The
Council for Trade in Goods, assisted by a report from the TMB,
conducts a major review of the ATC implementation before the end of
each stage of the integration process. At the review of the first
stage of integration held in 1997-1998, developing-country textile
exporters voiced serious concerns over what they view as lack of
meaningful commercial benefits for them as the major importers had
opted to integrate products of less export interest to developing
countries with few quotas being removed. They have also criticized new
restrictions imposed by a major importer through the use of the ATC
safeguards as well as other measures taken by importing countries such
as anti-dumping actions and changes in country-of-origin rules.
There
is also the fear that with most of the quotas being kept for the final
stage, the major importers might not be able to meet their
obligations. A group of developing-country exporters (the ITCB) has
suggested that to secure liberalization of the sector, major importers
be required to take immediate steps to improve the quality of these
implementation programmes.
The
major importing members maintain that they have been observing
scrupulously the requirements of the Agreement. In turn, they have
criticized a lack of market-access improvements in other members in
this.
The
Goods Council in October 2001 conducted its second major review of ATC
implementation. In a comprehensive report on the second integration
stage, the TMB noted that despite a higher share of clothing products
in the third stage as compared to previous stages, developing
exporting countries continue to be seriously disappointed by the
significant number of restrictions still in place and the overall lack
of higher-value products. On the other hand, the TMB noted that the
major importers—Canada, the European Union and the United States—would
have complied with the ATC’s technical requirement of integrating,
by 1 January 2002, at least 51% of their 1990 volume of textile
imports into normal WTO rules and that their textile and clothing
imports have been increasing continuously.
The
TMB has also pointed to the sharp decrease in the use of transitional
safeguard measures during the second integration stage. This could be
explained by the realization among members of the stiff requirements
for justifying such measures as laid out in the results of the dispute
settlement process on the early cases.
The
TMB has also commended Norway for eliminating, on a unilateral basis,
all its restrictions on textiles and clothing on 1 January 2001—four
years ahead of schedule.
Agreement
on Textiles and Clothing back
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Operation of the integration process of Article 2
(paragraphs 6 and 8)
% of volume of 1990 imports
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