What Do You Mean By Multi Fiber Agreement

Of course, there is a debate about long-term sustainability and, in fact, the desire for some of the developments that have taken place. As we have seen later in the chapter on value chains, we know that the production of textiles, and in particular clothing, is voluble and mobile. Since apparel production requires a relatively low-skilled workforce compared to other sectors and a reduction in capital investment (most of which can easily be relocated to specific locations and countries), implementation decisions are often the result of short-term incentives and opportunities rather than a long-term commitment from the investor. These factors and the highly competitive nature of the industry, particularly in the lower value-added goods segments, have all contributed to lower wage rates and increased the mobility of industrial enterprises. However, these factors, combined with the incentive of the absence of quota restrictions in some countries, have also played an important role in facilitating the much broader development of this sector. The apparel industry, in particular, is, in many cases, a first “entry point” for non-agricultural production and economic development, as countries such as Mauritius and Lesotho have long incorporated these factors into their respective industrial strategies. Both could offer investors preferential quota margins and tariff margins in relation to access to important international markets that are not available to quota countries. Given that the WTO agreement on textiles and clothing provides for the planned abolition of AMF quotas for the decade 1995-2005, there have been few overall changes in the abandonment of quotas in the early stages of the agreement. As we have already seen, ATC`s flexibility flexibility, as well as the level and coverage of the products on which it was based, led to the integration of sectoral trade with normal GATT disciplines only taking place much later. Although the sector is considered highly mobile, as is the case in other production sectors, both producers and buyers (retailers) have had little pressure to reorganize production or supply decisions. While the milestones for the future abolition of quotas have been laid, in practice the ATC has had very little impact, at least for half of its implementation period. The period covered by ATC was also important for other developments, including a significant reduction in import duties on industrial products.

This has also had an impact on the textile and clothing sector, the main result being that preferential margins continue to grow in importance for countries that are not limited by quotas or that benefit from additional market preferences that go beyond those agreed under the WTO. China, which did not benefit from the principles of the Most Favoured Nation (MFN) until its accession to the WTO at the end of 2001, which extended Member States to each other, was therefore limited not only in absolute terms (quotas), but also 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.