31.10.2000 Official Journal of the European Communities L 278/35 COMMISSION DECISION of 20 October 2000 terminating the examination procedure concerning changes made by the United States of America in their rules of origin for textiles and apparel products (notified under document number C(2000) 3070) (2000/667 [EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 328694 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organisation (!), as last amended by Regulation (EC) No 356/95 (3, and in particular Article 11(1) thereof, After consulting the Advisory Committee. Whereas: A. PROCEDURAL BACKGROUND (1)  On 11 October 1996, Federtessile (Italian Federation of Textile Industries) lodged a complaint under Article 4 of Regulation (EC) No 3286/94 (hereinafter ‘the Regula- tion) on behalf of the association representing the Italian silk industry and the association representing the Italian luxury finishing textile industry and their members, concerning the new US rules of origin for textile and apparel products, as foreseen under the Uruguay Round Agreements Act adopted by the US Congress in July 1995. (2)  The complainant alleged that the changes made by the USA to their rules of origin legislation for textile prod- ucts constituted an obstacle to trade within the meaning of Article 2(1) of the Regulation. More specifically, the complainant referred to two Agreements annexed to the Agreement Establishing the World Trade Organisation (hereinafter ‘the WTO Agreement): Article 4(2) of the Agreement on Textiles and Clothing and Article 2(b) and (c) of the Agreement on Rules of Origin. According to the complainant, these new rules refused Community originating status to products which have been dyed, printed and finished in the Community on loom-state fabrics produced in non-member countries. Under previous US legislation, that was prior to July 1995, () O] L 349, 31.12.1994, p. 71. () O] L 41, 23.2.1995, p. 3. these products had Community origin. Under the new 1995 rules, certain fabrics, silk handkerchiefs and scarves were considered to originate where the base fabric was knit and woven, notwithstanding any further processing. The complainant pointed out that this change threat- ened Community exports of textile products. Community exports no longer benefited from the free access to the US market that they had enjoyed previ- ously but were subject to any quantitative restrictions that the USA was maintaining vis-a-vis the third country where the weaving of the grey cloth (i.e. the fabric on which subsequent finishing operations were made in the EC) took place. A second category of effects invoked by the complainant concerned the labelling of the Community products exported into the USA. For instance, silk scarves made of Chinese fabrics processed in Italy could no longer be sold under the label ‘made in Italy’ but had to indicate ‘made in China’, in some cases just next to the trade mark. This marking requirement clearly affected the brand image, in particular since products exported from the European Communities to the USA are in the high-quality/high-value bracket. After having examined the admissibility of the complaint, the European Commission considered that the complaint contained sufficient evidence to justify the initiation of a procedure under the Regulation. The European Commission considered that Article 4(2) of the Agreement on Textiles and Clothing could provide the basis for an action for all Community textile exports to the USA which would have been or may have been subject to the quantitative restrictions imposed by the USA on fibre producers. This situation is expressly provided for by Article 4(2) of the Agreement on Textiles and Clothing, which specifies, inter alia, that the introduction of changes in rules on the implementation or administration of those restrictions notified or applied under the Agreement should not adversely affect the access available to a member or disrupt trade in textiles products.