Multi-Fiber Agreement

Products imported in each of the first three stages under GATT rules were to cover the four main types of textiles and clothing: yarns and yarns; Substances; Elaborate textile products; and clothes. All other restrictions that are not covered by the multifibre agreement and do not comply with the regular WTO agreements until 1996 were to be met or expire until 2005. Macro-financial assistance was introduced in 1974 as a short-term measure to enable industrialized countries to adapt to imports from developing countries. Developing countries and countries that do not have a welfare state[1] have a comparative advantage in textile production because they are labour-intensive and their poor social security systems allow them low labour costs. [2] According to a study by the World Bank and the International Monetary Fund (IMF), the system has cost developing countries 27 million jobs and $40 billion in lost exports per year. [3] Developing countries have opposed measures such as a social clause in customs agreements to make them conditional on improving working conditions. In any quota-setting system for individual exporting countries, exporters could attempt to circumvent quotas by shipping products through third countries or making false statements about the country of origin of the products. The agreement contained provisions to deal with these cases. The agreement indicated the percentage of products that, at each stage, had to be covered by the GATT rules.

If one of these products fell under quota, the quotas had to be abolished at the same time. The percentages were applied in 1990 to the textile and clothing trade levels in importing countries. The agreement also stated that import volumes allowed under quotas should increase each year and that the growth rate should increase at each stage. The speed of this expansion was defined in a formula based on the growth rate of the old multifibre arrangement (see table). 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.