Thereafter, the United States shall not adopt or maintain any customs duty on textile and apparel goods of Mexico that satisfy the requirements of subparagraph (a) or (b) or the requirements of any successor provision to U.S. tariff item 9802.00.80.10.

4. Each exporting Party whose goods are subject to a restriction or consultation level shall endeavor to space exports of such goods to the territory of the importing Party evenly throughout each calendar year, taking into consideration normal seasonal factors.

5. On written request of an exporting Party whose goods are subject to a prohibition, restriction or consultation level, that Party and the importing Party shall consult within 30 days of receipt of the request on any matter arising from the implementation of this Appendix.

6. On written request of an exporting Party that considers the application of a prohibition, restriction or consultation level under this Annex has placed it in an inequitable position in relation to another Party or a nonParty, the exporting Party and importing Party shall consult within 60 days of receipt of the request to seek a mutually beneficial solution.

7. An importing Party and an exporting Party, at any time by mutual agreement, may adjust annual Designated Consultation Levels (DCLs) as follows:

(a) if the exporting Party whose goods are subject to a DCL wishes to export goods in any category in excess of the applicable DCL in any calendar year, that Party may present to the importing Party a formal written request for an increase in the DCL; and

(b) the importing Party shall respond, in writing, within 30 days of the receipt of the request. If the response is negative, the Parties concerned shall consult no later than 15 days after the receipt of the response or as soon thereafter as mutually convenient, and shall endeavor to reach a mutually satisfactory solution. The Parties concerned shall confirm any agreement reached on a new DCL by an exchange of letters.

8. Adjustments to annual specific limits (SLs), including those set out in Schedule 3.1.2, may be made as follows:

(a) an exporting Party wishing to adjust an SL shall deliver a notice to the importing Party of its intent to make an adjustment;

(b) the exporting Party may increase the SL for a calendar year by no more than six percent ("swing"); and

(c) in addition to any increase of its SL under subparagraph (b), the exporting Party may increase its unadjusted SL for that year by no more than 11 percent by allocating to such SL for that calendar year (the "receiving year") an unused portion ("shortfall") of the corresponding SL for the previous calendar year ("carryover") or a portion of the corresponding SL for the following calendar year ("carryforward"), as follows:

(i) subject to subparagraph (iii), the exporting Party may utilize carryover, as available, up to 11 percent of the unadjusted SL for the receiving year,

(ii) the exporting Party may utilize carryforward charged against the corresponding SL for the following calendar year, up to six percent of the unadjusted SL for the receiving year,

(iii) the combination of the exporting Party's carryover and carryforward shall not exceed 11 percent of the unadjusted SL in the receiving year, and

(iv) carryover may be utilized only following confirmation by the importing Party that sufficient shortfall exists. If the importing Party does not consider that sufficient shortfall exists, it shall promptly provide data to the exporting Party to support that view. Where substantial statistical differences exist between the import and export data on which the shortfall is computed, the Parties concerned shall seek to resolve these differences promptly.

B. Trade between Mexico and the United States

9. During the transition period, nonoriginating textile and apparel goods of Mexico exported to the United States shall be subject to the restrictions and consultation levels specified in Schedule 3.1.2, in accordance with this Appendix and its Schedules. Such restrictions and consultation levels shall be progressively eliminated as follows:

(a) restrictions or consultation levels on items contained in the categories of textile and apparel goods in staging category 1 in Schedule 3.1.1 shall be eliminated on January 1, 1994;

(b) restrictions or consultation levels on items contained in the categories of textile and apparel goods in staging category 2 in Schedule 3.1.1 shall be eliminated on January 1, 2001; and

(c) restrictions or consultation levels on items contained in the categories of textile and apparel goods in staging category 3 in Schedule 3.1.1 shall be eliminated on January 1, 2004.

10. In addition, on January 1, 1994, the United States shall eliminate restrictions or consultation levels on textile and apparel goods that are assembled in Mexico from fabrics wholly formed and cut in the United States and exported from and reimported into the United States under:

(a) U.S. tariff item 9802.00.80.10; or

(b) Chapter 61, 62 or 63 if, after such assembly, those goods that would have qualified for treatment under 9802.00.80.10 have been subject to bleaching, garment dyeing, stonewashing, acidwashing or permapressing.

Thereafter, notwithstanding Section 5, the United States shall not adopt or maintain prohibitions, restrictions or consultation levels on textile and apparel goods of Mexico that satisfy the requirements of subparagraph (a) or (b) or the requirements of any successor provision to U.S. tariff item 9802.00.80.10.

11. Mexico and the United States may identify at any time particular textile and apparel goods that they mutually agree fall within:

(a) handloomed fabrics of a cottage industry;

(b) handmade cottage industry goods made of such handloomed fabrics; or

(c) traditional folklore handicraft goods.

The importing Party shall exempt from restrictions and consultation levels goods so identified, if certified by the competent authority of the exporting Party.

12. The Bilateral Textile Agreement Between the United States of America and the United Mexican States, signed at Mazatlán, February 13, 1988, as amended and extended (the Bilateral Agreement), shall terminate on the date of entry into force of this Agreement.

13. On request of either Party, the Parties shall consult to consider accelerating the elimination of restrictions or consultation levels set out in Schedule 3.1.2 on specific textile and apparel goods. An agreement between the Parties to accelerate the elimination of a restriction or consultation level shall supersede Schedule 3.1.1 when approved by each such Party in accordance with Article 2202(2) (Amendments).

14. During 1994, Mexico may carry over any unused portion of the 1993 limit specified in the Bilateral Agreement, or apply against the 1994 limit specified in this Appendix any exports made during 1993 in excess of the applicable limit under the Bilateral Agreement, in accordance with the flexibility provisions set forth in paragraph 8.

15. All exports of textile and apparel goods from the territory of Mexico to the territory of the United States covered by restrictions or consultation levels under this Appendix shall be accompanied by an export visa issued by the competent authority of Mexico, pursuant to any bilateral visa arrangement in effect between the Parties.

16. On written request of either Party, both Parties shall consult within 30 days of receipt of the request on any matter arising from the implementation of this Appendix. In addition, on written request of either Party, both Parties shall conduct a review of this Appendix by January 1, 1999.

17. For purposes of applying prohibitions, restrictions or consultation levels, each Party shall consider a good as being of:

(a) man-made fibers if the good is in chief weight of manmade fibers, unless
(i) the good is knitted or crocheted apparel in which wool equals or exceeds 23 percent by weight of all fibers, in which case it shall be of wool,

(ii) the good is apparel, not knitted or crocheted, in which wool equals or exceeds 36 percent by weight of all fibers, in which case it shall be of wool, or

(iii) the good is a woven fabric in which wool equals or exceeds 36 percent by weight of all fibers, in which case it shall be of wool;

(b) cotton, if not covered by subparagraph (a) and if the good is in chief weight of cotton, unless the good is a woven fabric in which wool equals or exceeds 36 percent by weight of all fibers, in which case it shall be of wool;

(c) wool, if not covered by subparagraph (a) or (b), and the good is in chief weight of wool; and

(d) non-cotton vegetable fiber, if not covered by subparagraph (a), (b) or (c), and the good is in chief weight of non-cotton vegetable fiber, unless

(i) cotton with wool and/or man-made fibers in the aggregate equal or exceed 50 percent by weight of the component fibers thereof and the cotton component equals or exceeds the weight of each of the total wool and/or man-made fiber components, in which case it shall be of cotton,

(ii) if not covered by subparagraph (i) and wool exceeds 17 percent by weight of all component fibers, in which case it shall be of wool, or

(iii) if not covered by subparagraph (i) or (ii) and manmade fibers in combination with cotton and/or wool in the aggregate equal or exceed 50 percent by weight of the component fibers thereof and the man-made fiber component exceeds the weight of the total wool and/or total cotton component, in which case it shall be of man-made fibers.

For purposes of this paragraph, only the textile fibers in the component of the good that determines the tariff classification of the good are to be considered.

C. Schedules

To determine which HS provisions are contained in a U.S. category listed in the Schedules to this Appendix, the Parties shall refer to the Correlation: Textile and Apparel Categories with the Harmonized Tariff Schedule of the United States, 1992 (or successor document), U.S. Department of Commerce, International Trade Administration, Office of Textiles and Apparel, Trade and Data Division, Washington, D.C. The descriptions listed in these Schedules are provided for ease of reference only. For legal purposes, coverage of a category shall be determined according to the Correlation.

B. Non-originating Goods

Category               Description                             Staging Category
Broadwoven Fabric
   Group               C/MMF                                          1
218                    C/MMF Fabrics/Yarns of Different Colors        1
219                    C/MMF Duck Fabric                              2
220                    C/MMF Fabric of Special Weave                  1
225                    C/MMF Denim Fabric                             1
226                    C/MMF Cheesecloth, Batistes                    1
227                    C/MMF Oxford Cloth                             1
300/301/607-Y          C Combed/Carded Yarn; etc.                     1
313                    C Sheeting Fabric                              2
314                    C Poplin and Broadcloth Fabric                 2
315                    C Printcloth Fabric                            2
317                    C Twill Fabric                                 2
326                    C Sateen Fabric                                1
334/634                C/MMF Men's and Boys' Coats                    1
335 NR                 C Coats, Women's and Girls'                    1
336/636 NR             C/MMF Dresses                                  1
338/339/638/639 NR     C/MMF Knit Shirts and Blouses                  2
340/640 NR             C/MMF Woven Shirts                             2
341/641 NR             C/MMF Woven Blouses                            1
342/642                C/MMF Skirts                                   1
347/348/647/648 NR     C/MMF Trousers and Pants                       2
351/651                C/MMF Pyjamas and Nightwear                    1
352/652 NR             C/MMF Underwear                                1
359C/659-C NR          C/MMF Coveralls                                1
363                    C Terry and Pile towels                        1
410                    Woven Wool Fabric                              3
433                    W Men's and Boys' Suittype Coats               3
435                    W Women's and Girls' Coats                     1
443                    W Men's and Boys' Suits                        3
604-A                  Acrylic Spun Yarn                              1
604O/607O              Staple Fiber Yarn                              1
611                    Artificial Staple Fiber Woven Fabric           3
613                    MMF Sheeting Fabric                            1
614                    MMF Poplin & Broadcloth Fabric                 1
615                    MMF Printcloth Fabric                          1
617                    MMF Twill & Sateen Fabric                      1
625                    MMF Poplin/Broadcloth Staple/Filament          1
626                    MMF Printcloth Staple/Filament                 1
627                    MMF Sheeting Staple/Filament                   1
628                    MMF Twill/Sateen Staple/Filament               1
629                    MMF Other Staple/Filament Fabric               1
633 NR                 MMF SuitType Coats, M&B                        2
635                    Women's and Girls' MMF Coats                   1
643                    MMF Suits for Men and Boys                     2
669-B                  Polypropylene Bags                             1
670                    MMF Luggage, Flat Goods Etc.                   1

For purposes of this Schedule:

C means cotton;

M&B means men's and boys';

MMF means manmade fiber;

NR means normal regime;

W means wool; and

W&G means women's and girls'.