Multi Fiber Agreement India

13 12 2020

Under the multifibre agreement, the United States and the European Union (EU) have restricted imports from developing countries to protect their domestic textile industry. As part of the agreement, quotas (limited in numerical numbers) were allocated to each country that signed certain items that could be exported to the United States and the EU. (Note that at the beginning of the agreement, the EU did not exist in its current form; the agreement included the European Community at the time (EC) and the European Free Trade Association (EFTA). The agreement was concluded for the first time under the General Agreement on Tariffs and Trade (GATT). Origins (1) recognized both the threat to developed markets of imports of cheap clothing and textiles in terms of market disruptions and the impact on their own producers, and (2) the importance of such exports to developing countries for their own economic development and as a means of diversifying export earnings. Meanwhile, GATT has been supplanted by the World Trade Organization (WTO) and Uruguay-GATT has decided to transfer surveillance of world textile trade to the WTO. This round of negotiations has also resulted in the abolition of quotas for the world trade in clothing and textiles. The trial ended on 1 January 2005, marking the end of the MfA. The agreement helped to protect industries in developed economies as planned, but also helped boost textile production in some countries where quotas did allow them access to access they did not previously have.

The Multifibre Agreement (MFA) was an international trade agreement on textiles and clothing that was in force from 1974 to 2004. It imposed quotas on the volume of clothing and textile exports from developing countries to industrialized countries. The ATC is a transitional instrument that relies on the following key elements: a) product coverage, which mainly covers yarns, substances, textiles and clothing; (b) a programme of gradual integration of these textile and clothing products into the 1994 GATT rules; (c) a liberalisation process aimed at gradually extending existing quotas (until they are abolished) by increasing annual growth rates at each stage; (d) a special protection mechanism to deal with new cases of serious damage or threats to domestic producers during the transition period; (e) the creation of a textile control body (TMB) to monitor the implementation of the agreement and ensure compliance with the rules; and (f) other provisions, including those relating to the circumvention of quotas, their management, the treatment of restrictions on non-AMF and commitments made elsewhere under WTO agreements and procedures relating to this sector. A key aspect of THE ATC is the provision of Article 6 relating to a special transitional protection mechanism, which aims to protect members from adverse increases in imports during the transitional period of products that are not yet integrated into the GATT and which are not yet below a quota. This clause is based on a two-step approach: first, the importing member must find that the total imports of a particular product cause serious harm or real threat to its domestic industry and, second, that it decides to which Member States can be attributed to this serious harm. Specific criteria and procedures are defined for each step. The importing member must then request consultations with the exporting Member States. These safeguards can be applied selectively and by mutually agreed country or, if the consultation process is not concluded within 60 days, unilateral measures. For a period of 12 months, the quota cannot be below the actual level of imports for that exporting country and the measures taken can only be maintained for up to three years.


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