End of MFA: Impact on Developing Countries
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Code : ITF0024
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Region : :Null |
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Introduction: TheMFAhad governed the international textile and apparel industry since 1974.This agreement,which came into effect on January 1st 1974, enabled an importing country to lay down quantitative restrictions on textile and apparel imported into the country if it believed that these restrictions were essential to avert market disruption. For three decades, developed countries restricted the number of items that could be imported under each product category fromeach exporting country. The governments’ of the exporting countries were free to distribute these quotas amongst the local textile and garment manufacturers as they sawfit. In someAsian countries the quotas were auctioned to the highest bidder, adding to the cost. TheMFAwas meant to protect the domestic industry of the developed countries against competition fromcheap foreign imports and give the domestic industry sufficient time to adjust to the competition fromdeveloping countries. The textile exporters of those developing countries, which were highly competitive, were hampered by the quota restriction imposed on them. To overcome this problemthese exporters, usuallywith hugemanufacturing operations, used to establish their factories in countries with surplus quotas after they had exhausted their quota in their home country. This enabled the growth of the textile industry in countries where it would not had been sustainable otherwise. |
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