Multi Fibre Agreement Wto

While the US and EU governments formally opposed the proliferation of interest groups calling for an extension of the quota system (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 trade in textiles and clothing. As one of the most important agreements from the Uruguay Round of trade negotiations and, in many ways, a standard-bearer for the WTO`s stated goal of liberalizing global trade in a rules-based environment, the ATC quickly became the WTO`s litmus test. The difficult situation for policymakers and WTO member states was clear: any extension of quantitative restrictions would undermine the consensus agreement reached 10 years earlier, for which countries had to prepare for a decade. Similarly, any extension would be in tune with the important structural changes and investments that would have taken place pending the abolition of quotas, particularly in China, which had in any case 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 threatened sustainability and, consequently, the existence of a basic manufacturing sector, often considered the first entry point for countries, as they diversify their economies, for example, from a simple dependence on commodity exports or agriculture. In many developing countries, the garment sector, in particular, had become the mainstay of formal economic activity, for example in Lesotho and Bangladesh. Since few countries are able to compete internationally (or in the face of foreign competition) without any form of direct or indirect protection, any threat to the sector in these countries becomes a threat to much-needed job creation, investment inflows, productive performance and foreign exchange earnings. Such a threat also undermines any hard-earned economic diversification from a previous dependence on resource-based exports. While the ATC has provided the overall framework for textile and clothing quotas and the integration of trade in this sector with normal WTO disciplines, it is not the only instrument for countries to limit imports of textiles and clothing.

Other WTO measures, as well as clauses in China`s WTO accession agreement (Article 242), at least provide some relief to countries against any increase in imports that threatens domestic industry. The measures that can be taken in accordance with the WTO are largely contained in the ”safeguard clauses” that allow Member States to temporarily protect a particular sector through certain restrictive measures (including, but not limited to, quotas). . . .

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