Smooth as Silk? A First Look at the Post MFA Textiles and Clothing Landscape

Abstract

Despite the imposition of temporary safeguard measures on Chinese exports by both the United States and the European Union in 2005, few countries other than China and India have increased their clothing exports in markets where Multi-Fiber Arrangement quotas had been removed, e.g. the European Union, the Unites States, and Canada. This article argues that the elimination of import quotas has exposed the vulnerability of fragmented supply chains and favoured countries able to display an integrated supply chain, i.e. domestic production of high quality textile and clothing products. In terms of trade policy implications, the elimination of quotas has reduced the attractiveness of outward processing programmes and, conversely, increased the attractiveness of other preferential trade arrangements, such as regional trade arrangements and the Generalized System of Preferences. The July 2006 postponement of the Doha Round negotiations represents a setback for WTO Members and, with respect to the textile and clothing issues, widespread anxiety among supplying countries due to the competitive strength of China acts against a package of significant tariff reduction applied on a most-favoured-nation basis. To move the Doha negotiations forward, political will is required in agricultural negotiations, including a development-friendly resolution of the problem of cotton subsidies.