34 - Victory in principle: Pakistan's dispute settlement case on combed cotton yarn exports to the United States

Summary

On 24 December 1998 the government of Pakistan received a Call Notice from the US government for consultation regarding the establishment of quantitative restraints on Pakistani exports of combed cotton yarn (Category 301). The basis of this was the allegation on the part of the United States that the exports of Pakistan were causing verifiable harm to the US textile sector. The legal grounds employed by the United States were the transitional safeguard measures sanctioned under Article 6 of the Agreement on Textiles and Clothing (ATC) of the WTO. This was the first time in the trade history of Pakistan that a case went through all the stages of the WTO dispute settlement mechanism. After the failure of bilateral consultations as the first stage of the case, Pakistan had to take the case to the Textile Monitoring Board (TMB) and finally to the Dispute Settlement Board (DSB) of the WTO.

Although the eventual outcome was in Pakistan's favour, the pursuit of a positive decision was a challenging task manifested by an array of problems relating to co-ordination and co-operation between the public and the private sectors. The objective of this case study therefore is not just to narrate the events which occurred in this case but also to highlight the various obstacles faced by the government and the business players in contesting the case at each stage of the dispute settlement process.