EXIM BANK: RESEARCH BRIEF
Textiles Exports: Post MFA Scenario
Opportunities and Challenges
February 2005
EXPORT-IMPORT BANK OF INDIA
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No.11
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Brief on New Publications
Exim Bank : Research Brief No. 11 February 2005
1
Introduction
T he Multi-Fibre Arrangement
(MFA) has governed
international trade in textiles
and clothing since 1974. The MFA
enabled developed nations, mainly the
USA, European Union and Canada to
restrict imports from developing
countries through a system of quotas.
The Agreement on Textiles and
Clothing (ATC) to abolish MFA quotas
marked a significant turnaround in the
global textile trade. The ATC mandated
progressive phase out of import quotas
established under MFA, and the
integration of textiles and clothing into
the multilateral trading system before
Januray 2005.
The Agreement on Textiles and
Clothing
ATC is a transitory regime between the
MFA and the integration of trading in
textiles and clothing in the multilateral
trading system. The ATC provided for a
stage-wise integration process to be
completed within a period of ten years
(1995-2004), divided into four stages
starting with the implementation of the
agreement in 1995. The product groups
from which products were to be
integrated at each stage of the
integration included (i) tops and yarns;
(ii) fabrics; (iii) made-up textile
products; and (iv) clothing.
The ATC mandated that importing
countries must integrate a specified
minimum portion of their textile and
garment exports based on total volume
of trade in 1990, at the start of each
phase of integration. In the first stage,
each country was required to integrate
16 percent of the total volume of
imports of 1990, followed by a further
17 percent at the end of first three year
and another 18 percent at the end of
third stage. The fourth stage would see
the final integration of the remaining
49 percent of trade.
Global Trade in Textile and
Clothing
World trade in textiles and clothing
amounted to US $ 385 billion in 2003,
of whi