The ATC is a transitional instrument that relies on the following key elements: a) product coverage, which mainly covers yarns, substances, textiles and clothing; (b) a programme of gradual integration of these textile and clothing products into the 1994 GATT rules; (c) a liberalisation process aimed at gradually extending existing quotas (until they are abolished) by increasing annual growth rates at each stage; (d) a special protection mechanism to deal with new cases of serious damage or threats to domestic producers during the transition period; (e) the creation of a textile control body (TMB) to monitor the implementation of the agreement and ensure compliance with the rules; and (f) other provisions, including those relating to the circumvention of quotas, their management, the treatment of restrictions on non-AMF and commitments made elsewhere under WTO agreements and procedures relating to this sector. A textile watchdog (TMB) oversaw the implementation of the agreements. It consisted of a president and ten members who acted in their personal function. It followed the measures taken under the agreement to ensure their coherence and reported to the Goods Council, which reviewed the operation of the agreement before each new stage of the integration process. The textile watchdog also looked into disputes under the textile and clothing agreement. If left unresolved, disputes could be referred to the regular WTOs dispute resolution body. When the textile and clothing agreement expired on January 1, 2005, the textile monitoring office no longer existed either. The agreement was concluded for the first time under the General Agreement on Tariffs and Trade (GATT). Origins (1) recognized both the threat to developed markets of imports of cheap clothing and textiles in terms of market disruptions and the impact on their own producers, and (2) the importance of such exports to developing countries for their own economic development and as a means of diversifying export earnings.
The agreement indicated the percentage of products that, at each stage, had to be covered by the GATT rules. If one of these products fell under quota, the quotas had to be abolished at the same time. The percentages were applied in 1990 to the textile and clothing trade levels in importing countries. The agreement also stated that import volumes allowed under quotas should increase each year and that the growth rate should increase at each stage. The speed of this expansion was defined in a formula based on the growth rate of the old multifibre arrangement (see table). If further losses were to occur during the transition period for the sector, the agreement allowed for the temporary imposing of additional restrictions under strict conditions. These transitional guarantees were not in line with the usual GATT safeguards, as they can be applied to imports from certain exporting countries.