What Is Meaning Of Multi Fiber Agreement
There are, of course, debates about long-term sustainability and even the timeliness of some of the developments that have taken place. As explained in more detail below in the section on value chains, the production of textiles and especially clothing is known to be notoriously inconsistent and mobile. Because garment production requires relatively less skilled labor than many other sectors, as well as lower capital investments (most of which can be easily moved in and out of certain places and countries), location decisions are often the result of short-term incentives and opportunities rather than a long-term commitment from investors. These factors and strong industry competition, especially in the low value-added commodity segments, have all contributed to lower wage rates and increased mobility for industrial firms. Nevertheless, these factors, together with the incentive created by the absence of quota restrictions in some countries, have also played an important role in facilitating the much broader development of this sector. Given that the garment industry, in particular, is in many cases a first “entry point” for non-agricultural production and economic appreciation, countries such as Mauritius and Lesotho have long integrated these factors into their respective industrial strategies. Both were able to offer investors preferential margins based on quotas and tariffs on access to key international markets that countries subject to quota restrictions did not have. On the understanding that the WTO Agreement on Textiles and Clothing provides for the planned abolition of MFA quotas for the decade 1995-2005, little was achieved in the world at the beginning of the Agreement with regard to the phasing out of quotas. As has already been demonstrated, the flexibility granted by the ATC, as well as the scope and coverage of the products on which it was based, meant that the integration of sectoral trade with normal GATT disciplines took place much later. Given the strong mobilization of the sector, certainly compared to other production sectors, producers and buyers (retailers) felt little pressure to reorganize production or supply decisions.
While ATC was preparing the conditions for the future elimination of quotas, in practice it had very little impact for at least half of its duration of use. The period covered by the ATC was also important for other developments, in particular for a substantial reduction in import duties on industrial products. This has also had an impact on the textile and clothing sector, with the main result that preferential margins for countries that are not limited by quotas or that go beyond additional market preferences beyond those agreed in the WTO have become larger. China, which until its accession to the WTO at the end of 2001 did not benefit from the most-favoured-nation principles that member states have mutually extended, has therefore been restricted not only in absolute terms (quotas), but also relatively in terms of preferential margin due to generally lower tariffs or under specific preferential trade regimes and agreements. This has helped to maintain the continued dispersion of the sector. Other factors also contributed to the apparent short-term durability of these site models. The increase in non-tariff barriers, in particular technical standards (e.B. the use of environmental criteria and the increase in the eco-label), additional customs procedures and requirements (ranging from cumbersome administrative criteria to pre-shipment inspections), rules of origin, etc.
have contributed to the relative importance of preferential trade agreements. For African countries, successive Lom Conventions and later the Cotonou Agreement, as well as the general GSP and Everything But Arms programmes, granted preferential access to the European market, further increasing the relative benefits for quota-free countries. .