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The End Of Mfa

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Due the end of textile and garment quotas maintained under the Multifibre Arrangement (MFA) starkly illustrates the human development threats posed by the loss of preferences. Under the WTO Agreement on Textiles and Clothing, drawn up in 1994, all textile and clothing quotas maintained by industrial countries under the MFA have been phased out. Some momentous changes are coming in the global textile and clothing industry. At the end of 2004, a system of quotas that regulates trade between rich and poor countries comes to an end. The changes are the final stage in a ten year phasing out of long standing restrictions in the textiles trade. Some of those inroads can best be seen at the retail end of the sector.As the last quotas are withdrawn, the shake-up in the $350 billion textile and clothing market produce winners and losers. Impoverished female workers, who make up two-thirds of the global labour force in this sector, are the biggest losers.

The elimination of quotas has changed the global clothing industry forever, raising the bar for suppliers. The facilities that were needed to compete in the industry before January 2005 are no longer sufficient. The ability to ship a decent garment, on time every time and at a competitive price, is no longer an asset. It has become the entry level requirement.

Developing countries have a natural advantage in textile production because it is labour intensive and they have low labour costs. According to a World Bank/IMF study, the system has cost the developing world 27 million jobs and $40 billion a year in lost exports.However, the Arrangement was not negative for all developing countries. For example the EU imposed no restrictions or duties on imports from the very poorest countries, such as Bangladesh, leading to a massive expansion of the industry there.

Most of the countries losing there market share because until 31 December 2004, the WTO agreement on Textile and Clothing and its predecessor, the Multifibre Arrangement (MFA), allowed a big developed markets likes United States and United Kingdom to restrict imports of textiles and clothing through quotas. This gave clothing exporters in many less-competitive least developed countries years of export market security. However, 2005 saw the end of quotas, and a pressing need for companies and industry associations to understand and adjust to new international market access conditions.

India and China are likely to benefit most from the end of the MFA by capitalising on economies of scale. The MFA was originally intended to protect the garment trade of industrialised countries from poorer states with lower production costs. Over time, however, it also acted to protect the clothing industry in those developing countries.


There are both positive and negative counterparts of the end of Multi Fibre Agreement. When the trade has liberalised preferences margin fall or disappear altogether .Under the MFA, some developing countries such as Bangladesh, Nepal and Sri Lanka had enjoyed protected access to industrial country market under a quota system. But after the end of the removal of quotas through a WTO trade liberalization agreement exposes these countries to competition from more competitive supplies such as China and India.

The end of MFA has consolidated the supply base to those countries and suppliers that offer the best deal in terms of price, quality, service and turn-around time and there is minimum political instability, insecurity and association with human rights.

 The end of the MFA brings fears of large-scale job-losses as well as downward pressure on working conditions. For example, in Bangladesh the hundreds of factories to close and warned that replacement employment could prove hard to find. As a result of shifts in production over the latter of last year as foreign buyers and firms prepared to look elsewhere foe their garment imports rather than an abrupt one month fall.

"In December, John McGhie of Christian Aid published a report warning that as many as a million jobs could be lost in Bangladesh as a result of the end of the MFA." (Source:

 Anti-dumping and safeguard measures available to importing countries Import tariff.

 The welfare increases both in the developed world (i.e. consumers paying lower prices for clothing) and in the developing world (i.e. efficient producers able to grow) and an overall growth in garment production.

 China grows as a powerhouse in the global garment industry. It is able to deliver competitively at every level of price and quality and challenge most other garment producing nations

 Some countries not are attractive supply bases without the quota system. Some countries are likely to see their garment export industry fold. These include small players in the global garment trade such as Nepal and many in sub-Saharan Africa, and those countries such as the Philippines and to some extent Thailand, which have been major garment exporters but are now unable to compete on the basis of low wages and have failed to develop full-service garment industries and move into higher value-added areas of the supply chain.

Recent trends in trade of major export countries:

This is bad news also for developing countries in SOUTHERN AFRICA, which are unable to compete with China and India in their exporting markets in Europe and USA, as well as in their domestic markets. A lot of textile industries are struggling or closing in Southern Africa, and many countries are becoming IMPORTERS of finished goods that were previously made in their own countries.

The policies have developed and implemented by the government is exporting and importing countries.

The policies of different exporting and importing country's government has implemented the enhance competitiveness through regional integration Ð'- both in terms of markets for products and supplies of fabric. Ease restrictions on fabric imports, and unnecessary red tape. In Bangladesh the garment industry is calling for the set up of a central bonded warehouse to enable faster access to imported fabric. The textile industry is opposed to this move. Industrial policies focusing on upgrading and skills development. The majority of government or industry post 2005 strategies as well as donor led programmes focus on this area. Ensure that the private sector is a partner in these efforts. Improve the general business climate - improve infrastructure and



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