Multi-Fiber Agreement

Since 1995, the WTOs Agreement on Textiles and Clothing (ATC) has taken over the Mulltifibre Arrangement. On 1 January 2005, the sector was fully integrated into the normal GATT rules. In particular, quotas have expired and importing countries can no longer distinguish between exporters. The Agreement on Textiles and Clothing no longer exists: it is the only WTO agreement where self-destruction has been incorporated. The impact of the MFA has also been taken into account in the North American Free Trade Agreement (NAFTA) and similar regional trade agreements between the EU and its neighbouring countries. As a general rule, these agreements relax or remove quota restrictions imposed on neighbouring exporters. Mexico is an example of this in the case of the United States, Turkey and other Mediterranean countries for the EU. In this way, Mexico and Turkey have benefited indirectly from the restrictions imposed by the AMF on their competitors. Gatt has meanwhile been replaced by the World Trade Organisation (WTO) and, in the GATT Uruguay Round, it was decided to transfer supervision of world textile trade to the WTO. Similarly, as a result of this round of negotiations, the reduction of quotas for world trade in clothing and textiles has begun.

The procedure ended on 1 January 2005, marking the end of the MFA. The agreement helped protect industries in developed economies as intended, but it also helped boost textile production in some countries where quotas effectively allowed them access that they did not previously have. Another explanation for China`s small share of U.S. cotton pants imports is the role played by preferential trade agreements in U.S. textile trade. Although much of the U.S. trade in cotton pants was marked by the AMF, more than half of the 149 million dozen cotton pants imported by the United States in 2004 were imported outside the MFA. Most of these imports came from neighbouring countries, the result of preferential access granted by NAFTA, the Caribbean Basin Initiative (CBI) and the Andean Trade Preferences Act. Mexico`s 31 million export pairs were exempt from a certain quota. While in 2004 Guatemala exported 2.7 million quota pairs, its out-of-quota exports were even more important thanks to its privileged access. A textile monitoring body (TMB) monitored the implementation of the agreements.

It consisted of a Chairman and 10 members acting in their personal capacity. It monitored the measures taken under the agreement to ensure that they were codified and reported to the Goods Council, which verified the functioning of the agreement before each new stage of the integration process. The Textile Monitoring Body has also examined disputes under the Textile and Clothing Agreement. If not resolved, disputes could be referred to the WTO`s ordinary dispute settlement body. With the expiry of the Textile and Clothing Agreement on 1 January 2005, the Textile Monitoring Centre also ceased to exist. The Multifibre Agreement (MFA) was an international trade agreement on textiles and clothing, in force from 1974 to 2004. It has imposed quotas on the quantity of clothing and textile exports from developing countries to industrialized countries. China`s role in world trade in textiles could be limited in the short term by the special guarantees of its accession to the WTO in 2001. These safeguard measures, which will apply until 2008, may limit the growth of Chinese exports of certain products at an annual rate of 7.5%.

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