Agreement Establishing the World Trade Organization
(Continued)
Agreement on Textiles and Clothing
Article 5
1. Members agree that circumvention by transshipment, re-routing,
false declaration concerning country or place of origin, and falsification
of official documents, frustrates the implementation of this Agreement
to integrate the textiles and clothing sector into GATT 1994.
Accordingly, Members should establish the necessary legal provisions
and/or administrative procedures to address and take action against
such circumvention. Members further agree that, consistent with
their domestic laws and procedures, they will cooperate fully
to address problems arising from circumvention.
2. Should any Member believe that this Agreement is being circumvented
by transshipment, re-routing, false declaration concerning country
or place of origin, or falsification of official documents, and
that no, or inadequate, measures are being applied to address
and/or to take action against such circumvention, that Member
should consult with the Member or Members concerned with a view
to seeking a mutually satisfactory solution. Such consultations
should be held promptly, and within 30 days when possible. If
a mutually satisfactory solution is not reached, the matter may
be referred by any Member involved to the TMB for recommendations.
3. Members agree to take necessary action, consistent with their
domestic laws and procedures, to prevent, to investigate and,
where appropriate, to take legal and/or administrative action
against circumvention practices within their territory. Members
agree to cooperate fully, consistent with their domestic laws
and procedures, in instances of circumvention or alleged circumvention
of this Agreement, to establish the relevant facts in the places
of import, export and, where applicable, transshipment. It is
agreed that such cooperation, consistent with domestic laws and
procedures, will include: investigation of circumvention practices
which increase restrained exports to the Member maintaining such
restraints; exchange of documents, correspondence, reports and
other relevant information to the extent available; and facilitation
of plant visits and contacts, upon request and on a case-by-case
basis. Members should endeavour to clarify the circumstances of
any such instances of circumvention or alleged circumvention,
including the respective roles of the exporters or importers involved.
4. Where, as a result of investigation, there is sufficient evidence
that circumvention has occurred (e.g. where evidence is available
concerning the country or place of true origin, and the circumstances
of such circumvention), Members agree that appropriate action,
to the extent necessary to address the problem, should be taken.
Such action may include the denial of entry of goods or, where
goods have entered, having due regard to the actual circumstances
and the involvement of the country or place of true origin, the
adjustment of charges to restraint levels to reflect the true
country or place of origin. Also, where there is evidence of the
involvement of the territories of the Members through which the
goods have been transshipped, such action may include the introduction
of restraints with respect to such Members. Any such actions,
together with their timing and scope, may be taken after consultations
held with a view to arriving at a mutually satisfactory solution
between the concerned Members and shall be notified to the TMB
with full justification. The Members concerned may agree on other
remedies in consultation. Any such agreement shall also be notified
to the TMB, and the TMB may make such recommendations to the Members
concerned as it deems appropriate. If a mutually satisfactory
solution is not reached, any Member concerned may refer the matter
to the TMB for prompt review and recommendations.
5. Members note that some cases of circumvention may involve shipments
transiting through countries or places with no changes or alterations
made to the goods contained in such shipments in the places of
transit. They note that it may not be generally practicable for
such places of transit to exercise control over such shipments.
6. Members agree that false declaration concerning fibre content,
quantities, description or classification of merchandise also
frustrates the objective of this Agreement. Where there is evidence
that any such false declaration has been made for purposes of
circumvention, Members agree that appropriate measures, consistent
with domestic laws and procedures, should be taken against the
exporters or importers involved. Should any Member believe that
this Agreement is being circumvented by such false declaration
and that no, or inadequate, administrative measures are being
applied to address and/or to take action against such circumvention,
that Member should consult promptly with the Member involved with
a view to seeking a mutually satisfactory solution. If such a
solution is not reached, the matter may be referred by any Member
involved to the TMB for recommendations. This provision is not
intended to prevent Members from making technical adjustments
when inadvertent errors in declarations have been made.
Article 6
1. Members recognize that during the transition period it may
be necessary to apply a specific transitional safeguard mechanism
(referred to in this Agreement as "transitional safeguard").
The transitional safeguard may be applied by any Member to products
covered by the Annex, except those integrated into GATT 1994 under
the provisions of Article 2. Members not maintaining restrictions
falling under Article 2 shall notify the TMB within 60 days following
the date of entry into force of the WTO Agreement, as to whether
or not they wish to retain the right to use the provisions of
this Article. Members which have not accepted the Protocols extending
the MFA since 1986 shall make such notification within six months
following the entry into force of the WTO Agreement. The transitional
safeguard should be applied as sparingly as possible, consistently
with the provisions of this Article and the effective implementation
of the integration process under this Agreement.
2. Safeguard action may be taken under this Article when, on the
basis of a determination by a Member 5, it is demonstrated
that a particular product is being 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. Serious damage or actual threat
thereof must demonstrably be caused by such increased quantities
in total imports of that product and not by such other factors
as technological changes or changes in consumer preference.
3. In making a determination of serious damage, or actual threat
thereof, as referred to in paragraph 2, the Member shall examine
the effect of those imports on the state of the particular industry,
as reflected in changes in such relevant economic variables as
output, productivity, utilization of capacity, inventories, market
share, exports, wages, employment, domestic prices, profits and
investment; none of which, either alone or combined with other
factors, can necessarily give decisive guidance.
4. Any measure invoked pursuant to the provisions of this Article
shall be applied on a Member-by-Member basis. The Member or Members
to whom serious damage, or actual threat thereof, referred to
in paragraphs 2 and 3, is attributed, shall be determined on
the basis of a sharp and substantial increase in imports, actual
or imminent 6, from such a Member or Members individually,
and on the basis of the level of imports as compared with imports
from other sources, market share, and import and domestic prices
at a comparable stage of commercial transaction; none of these
factors, either alone or combined with other factors, can necessarily
give decisive guidance. Such safeguard measure shall not be applied
to the exports of any Member whose exports of the particular product
are already under restraint under this Agreement.
5. The period of validity of a determination of serious damage
or actual threat thereof for the purpose of invoking safeguard
action shall not exceed 90 days from the date of initial notification
as set forth in paragraph 7.
6. In the application of the transitional safeguard, particular
account shall be taken of the interests of exporting Members as
set out below:
(a) least-developed country Members shall be accorded treatment
significantly more favourable than that provided to the other
groups of Members referred to in this paragraph, preferably in
all its elements but, at least, on overall terms;
(b) Members whose total volume of textile and clothing exports
is small in comparison with the total volume of exports of other
Members and who account for only a small percentage of total imports
of that product into the importing Member shall be accorded differential
and more favourable treatment in the fixing of the economic terms
provided in paragraphs 8, 13 and 14. For those suppliers, due
account will be taken, pursuant to paragraphs 2 and 3 of Article
1, of the future possibilities for the development of their trade
and the need to allow commercial quantities of imports from them;
(c) with respect to wool products from wool-producing developing
country Members whose economy and textiles and clothing trade
are dependent on the wool sector, whose total textile and clothing
exports consist almost exclusively of wool products, and whose
volume of textiles and clothing trade is comparatively small in
the markets of the importing Members, special consideration shall
be given to the export needs of such Members when considering
quota levels, growth rates and flexibility;
(d) more favourable treatment shall be accorded to re-imports
by a Member of textile and clothing products which that Member
has exported to another Member for processing and subsequent reimportation,
as defined by the laws and practices of the importing Member,
and subject to satisfactory control and certification procedures,
when these products are imported from a Member for which this
type of trade represents a significant proportion of its total
exports of textiles and clothing.
7. The Member proposing to take safeguard action shall seek consultations
with the Member or Members which would be affected by such action.
The request for consultations shall be accompanied by specific
and relevant factual information, as up-to-date as possible, particularly
in regard to: (a) the factors, referred to in paragraph
3, on which the Member invoking the action has based its determination
of the existence of serious damage or actual threat thereof;
and (b) the factors, referred to in paragraph 4, on the
basis of which it proposes to invoke the safeguard action with
respect to the Member or Members concerned. In respect of requests
made under this paragraph, the information shall be related, as
closely as possible, to identifiable segments of production and
to the reference period set out in paragraph 8. The Member invoking
the action shall also indicate the specific level at which imports
of the product in question from the Member or Members concerned
are proposed to be restrained; such level shall not be lower
than the level referred to in paragraph 8. The Member seeking
consultations shall, at the same time, communicate to the Chairman
of the TMB the request for consultations, including all the relevant
factual data outlined in paragraphs 3 and 4, together with the
proposed restraint level. The Chairman shall inform the members
of the TMB of the request for consultations, indicating the requesting
Member, the product in question and the Member having received
the request. The Member or Members concerned shall respond to
this request promptly and the consultations shall be held without
delay and normally be completed within 60 days of the date on
which the request was received.
8. If, in the consultations, there is mutual understanding that
the situation calls for restraint on the exports of the particular
product from the Member or Members concerned, the level of such
restraint shall be fixed at a level not lower than the actual
level of exports or imports from the Member concerned during the
12-month period terminating two months preceding the month in
which the request for consultation was made.
9. Details of the agreed restraint measure shall be communicated
to the TMB within 60 days from the date of conclusion of the agreement.
The TMB shall determine whether the agreement is justified in
accordance with the provisions of this Article. In order to make
its determination, the TMB shall have available to it the factual
data provided to the Chairman of the TMB, referred to in paragraph
7, as well as any other relevant information provided by the Members
concerned. The TMB may make such recommendations as it deems appropriate
to the Members concerned.
10. If, however, after the expiry of the period of 60 days from
the date on which the request for consultations was received,
there has been no agreement between the Members, the Member which
proposed to take safeguard action may apply the restraint by date
of import or date of export, in accordance with the provisions
of this Article, within 30 days following the 60-day period for
consultations, and at the same time refer the matter to the TMB.
It shall be open to either Member to refer the matter to the TMB
before the expiry of the period of 60 days. In either case, the
TMB shall 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. In order to conduct such examination,
the TMB shall have available to it the factual data provided to
the Chairman of the TMB, referred to in paragraph 7, as well as
any other relevant information provided by the Members concerned.
11. In highly unusual and critical circumstances, where delay
would cause damage which would be difficult to repair, action
under paragraph 10 may be taken provisionally on the condition
that the request for consultations and notification to the TMB
shall be effected within no more than five working days after
taking the action. In the case that consultations do not produce
agreement, the TMB shall be notified at the conclusion of consultations,
but in any case no later than 60 days from the date of the implementation
of the action. The TMB shall promptly conduct an examination of
the matter, and make appropriate recommendations to the Members
concerned within 30 days. In the case that consultations do produce
agreement, Members shall notify the TMB upon conclusion but, in
any case, no later than 90 days from the date of the implementation
of the action. The TMB may make such recommendations as it deems
appropriate to the Members concerned.
12. A Member may maintain measures invoked pursuant to the provisions
of this Article: (a) for up to three years without extension,
or (b) until the product is integrated into GATT 1994,
whichever comes first.
13. Should the restraint measure remain in force for a period
exceeding one year, the level for subsequent years shall be the
level specified for the first year increased by a growth rate
of not less than 6 per cent per annum, unless otherwise justified
to the TMB. The restraint level for the product concerned may
be exceeded in either year of any two subsequent years by carry
forward and/or carryover of 10 per cent of which carry forward
shall not represent more than 5 per cent. No quantitative limits
shall be placed on the combined use of carryover, carry forward
and the provision of paragraph 14.
14. When more than one product from another Member is placed under
restraint under this Article by a Member, the level of restraint
agreed, pursuant to the provisions of this Article, for each of
these products may be exceeded by 7 per cent, provided that the
total exports subject to restraint do not exceed the total of
the levels for all products so restrained under this Article,
on the basis of agreed common units. Where the periods of application
of restraints of these products do not coincide with each other,
this provision shall be applied to any overlapping period on a
pro rata basis.
15. If a safeguard action is applied under this Article to a product
for which a restraint was previously in place under the MFA during
the 12-month period prior to the entry into force of the WTO Agreement,
or pursuant to the provisions of Article 2 or 6, the level of
the new restraint shall be the level provided for in paragraph
8 unless the new restraint comes into force within one year of:
(a) the date of notification referred to in paragraph 15 of Article
2 for the elimination of the previous restraint; or
(b) the date of removal of the previous restraint put in place
pursuant to the provisions of this Article or of the MFA
in which case the level shall not be less than the higher of (i)
the level of restraint for the last 12-month period during which
the product was under restraint, or (ii) the level of restraint
provided for in paragraph 8.
16. When a Member which is not maintaining a restraint under Article
2 decides to apply a restraint pursuant to the provisions of this
Article, it shall establish appropriate arrangements which: (a)
take full account of such factors as established tariff classification
and quantitative units based on normal commercial practices in
export and import transactions, both as regards fibre composition
and in terms of competing for the same segment of its domestic
market, and (b) avoid over-categorization. The request
for consultations referred to in paragraphs 7 or 11 shall include
full information on such arrangements.
Article 7
1. As part of the integration process and with reference to the
specific commitments undertaken by the Members as a result of
the Uruguay Round, all Members shall take such actions as may
be necessary to abide by GATT 1994 rules and disciplines so as
to:
(a) achieve improved access to markets for textile and clothing
products through such measures as tariff reductions and bindings,
reduction or elimination of non-tariff barriers, and facilitation
of customs, administrative and licensing formalities;
(b) ensure the application of policies relating to fair and equitable
trading conditions as regards textiles and clothing in such areas
as dumping and anti-dumping rules and procedures, subsidies and
countervailing measures, and protection of intellectual property
rights; and
(c) avoid discrimination against imports in the textiles and
clothing sector when taking measures for general trade policy
reasons.
Such actions shall be without prejudice to the rights and obligations
of Members under GATT 1994.
2. Members shall notify to the TMB the actions referred to in
paragraph 1 which have a bearing on the implementation of this
Agreement. To the extent that these have been notified to other
WTO bodies, a summary, with reference to the original notification,
shall be sufficient to fulfil the requirements under this paragraph.
It shall be open to any Member to make reverse notifications
to the TMB.
3. Where any Member considers that another Member has not taken
the actions referred to in paragraph 1, and that the balance of
rights and obligations under this Agreement has been upset, that
Member may bring the matter before the relevant WTO bodies and
inform the TMB. Any subsequent findings or conclusions by the
WTO bodies concerned shall form a part of the TMB's comprehensive
report.
Article 8
1. In order to supervise the implementation of this Agreement,
to examine all measures taken under this Agreement and their conformity
therewith, and to take the actions specifically required of it
by this Agreement, the Textiles Monitoring Body ("TMB")
is hereby established. The TMB shall consist of a Chairman and
10 members. Its membership shall be balanced and broadly representative
of the Members and shall provide for rotation of its members at
appropriate intervals. The members shall be appointed by Members
designated by the Council for Trade in Goods to serve on the TMB,
discharging their function on an ad personam basis.
2. The TMB shall develop its own working procedures. It is understood,
however, that consensus within the TMB does not require the assent
or concurrence of members appointed by Members involved in an
unresolved issue under review by the TMB.
3. The TMB shall be considered as a standing body and shall meet
as necessary to carry out the functions required of it under this
Agreement. It shall rely on notifications and information supplied
by the Members under the relevant Articles of this Agreement,
supplemented by any additional information or necessary details
they may submit or it may decide to seek from them. It may also
rely on notifications to and reports from other WTO bodies and
from such other sources as it may deem appropriate.
4. Members shall afford to each other adequate opportunity for
consultations with respect to any matters affecting the operation
of this Agreement.
5. In the absence of any mutually agreed solution in the bilateral
consultations provided for in this Agreement, the TMB shall, at
the request of either Member, and following a thorough and prompt
consideration of the matter, make recommendations to the Members
concerned.
6. At the request of any Member, the TMB shall review promptly
any particular matter which that Member considers to be detrimental
to its interests under this Agreement and where consultations
between it and the Member or Members concerned have failed to
produce a mutually satisfactory solution. On such matters, the
TMB may make such observations as it deems appropriate to the
Members concerned and for the purposes of the review provided
for in paragraph 11.
7. Before formulating its recommendations or observations, the
TMB shall invite participation of such Members as may be directly
affected by the matter in question.
8. Whenever the TMB is called upon to make recommendations or
findings, it shall do so, preferably within a period of 30 days,
unless a different time period is specified in this Agreement.
All such recommendations or findings shall be communicated to
the Members directly concerned. All such recommendations or findings
shall also be communicated to the Council for Trade in Goods for
its information.
9. The Members shall endeavour to accept in full the recommendations
of the TMB, which shall exercise proper surveillance of the implementation
of such recommendations.
10. If a Member considers itself unable to conform with the recommendations
of the TMB, it shall provide the TMB with the reasons therefor
not later than one month after receipt of such recommendations.
Following thorough consideration of the reasons given, the TMB
shall issue any further recommendations it considers appropriate
forthwith. If, after such further recommendations, the matter
remains unresolved, either Member may bring the matter before
the Dispute Settlement Body and invoke paragraph 2 of Article
XXIII of GATT 1994 and the relevant provisions of the Dispute
Settlement Understanding.
11. In order to oversee the implementation of this Agreement,
the Council for Trade in Goods shall conduct a major review before
the end of each stage of the integration process. To assist in
this review, the TMB shall, at least five months before the end
of each stage, transmit to the Council for Trade in Goods a comprehensive
report on the implementation of this Agreement during the stage
under review, in particular in matters with regard to the integration
process, the application of the transitional safeguard mechanism,
and relating to the application of GATT 1994 rules and disciplines
as defined in Articles 2, 3, 6 and 7 respectively. The TMB's comprehensive
report may include any recommendation as deemed appropriate by
the TMB to the Council for Trade in Goods.
12. In the light of its review the Council for Trade in Goods
shall by consensus take such decisions as it deems appropriate
to ensure that the balance of rights and obligations embodied
in this Agreement is not being impaired. For the resolution of
any disputes that may arise with respect to matters referred to
in Article 7, the Dispute Settlement Body may authorize, without
prejudice to the final date set out under Article 9, an adjustment
to paragraph 14 of Article 2, for the stage subsequent to the
review, with respect to any Member found not to be complying with
its obligations under this Agreement.
Article 9
This Agreement and all restrictions thereunder shall stand terminated
on the first day of the 121st month that the WTO Agreement is
in effect, on which date the textiles and clothing sector shall
be fully integrated into GATT 1994. There shall be no extension
of this Agreement.
Continue with the Agreement on Textiles and Clothing
5 A customs union may apply a safeguard measure as a single
unit or on behalf of a member State. When a customs union applies
a safeguard measure as a single unit, all the requirements for
the determination of serious damage or actual threat thereof under
this Agreement shall be based on the conditions existing in the
customs union as a whole. When a safeguard measure is applied
on behalf of a member State, all the requirements for the determination
of serious damage, or actual threat thereof, shall be based on
the conditions existing in that member State and the measure shall
be limited to that member State.
6 Such an imminent increase shall be a measurable one and
shall not be determined to exist on the basis of allegation, conjecture
or mere possibility arising, for example, from the existence of production capacity in the exporting Members.
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