Multi Fibre Agreement Example

At that time, developing countries were still often heavily dependent on exports of primary raw materials. The agreement attempted to mitigate this potential conflict in order to ensure continued cooperation in the field of international trade. In this context, quotas were seen as an orderly way to manage the world trade in clothing and textiles in the short term in order to avoid market disruptions. The ultimate goal remained the removal of barriers and trade liberalization, with developing countries expected to play an increasing role in trade over time. While the governments of the United States and the EU have formally opposed the growing group of stakeholders calling for an extension of the quota regime (either to extend the WTO ATC or to implement immediate alternative measures), imports from China continued to increase in the months following the opening of the textile and clothing trade. One of the most important agreements resulting from the Uruguay round of trade negotiations and, in many ways, a flag bearer of the WTO`s stated objective of liberalizing world trade in a rules-based environment, has quickly become the ultimate litmus test of the WTO. The difficult situation faced by policy-makers and WTO member countries was clear: any extension of quantitative restrictions would undermine the consensus agreement reached ten years earlier, to which countries had to prepare for a decade. Similarly, any extension would run counter to the structural changes and significant investments that would have taken place in anticipation of the abolition of quotas, particularly in China, which had been a full member of the WTO since the end of 2001, with all its rights and obligations. On the other hand, the abolition of quotas has threatened sustainability and hence the existence of a basic manufacturing sector, often seen as the first entry point for countries, as they diversify their economies, for example. B of a simple dependence on exports of raw materials or agriculture.

In many developing countries, the clothing sector, in particular, had become the mainstay of formal economic activity, for example in Lesotho and Bangladesh. Given that few countries are able to compete internationally (or against foreign competition) without any form of direct or indirect protection, any threat to the sector in these countries becomes a threat to the job creation, investment inflows, production and foreign exchange earnings they sorely need. Such a threat also undermines any hard-hit economic diversification resulting from a previous dependence on resource-based exports. Although the ATC has provided the overall framework for textile and clothing quotas and the integration of trade in this sector into normal WTO disciplines, it is not the only instrument for countries to limit imports of textiles and clothing. The alternative measures taken by the WTO and the clauses of China`s WTO accession agreement (Article 242) offer at least some kind of facilitation to countries against any increase in imports that threatens domestic industry.