Textiles and Clothing in a New Round of Trade Negotiations

Abstract

Because developing countries generally have a comparative advantage in the production of labor-intensive textiles and clothing, the liberalization of trade in these products is critical to their prospects for increasing foreign exchange earnings. The new round of trade negotiations is likely to be less important for trade in textiles and clothing, however, than were the recent renegotiations of the fourth Multifibre Arrangement (MFA). As the MFA remains in effect until July 1991, this limits the range of measures which can be altered in the interim. Nonetheless, textile trade will influence the process and outcome of the current negotiations because of the overlap of textile trade disputes with other broader trade issues. These include tariffs, the rollback of tariffs and quotas, voluntary export restraints, and other nontariff barriers, all of which have been applied to textiles trade at various times. Each of these measures has an influence on trade flows and a cost to both the importing and exporting countries. Any proponents of liberalization of trade in textiles and clothing must not only be familiar with these costs but also must be knowledgeable about the economic and political forces which have initiated and sustained the protective measures. The following discussion suggests that there are groups and transitional approaches which may favor some progress in textile trade liberalization in the current round of negotiations. The Multifibre Arrangement (MFA), the international rules which govern much