Agreement On Textiles and Clothing
Agreement On Textiles and Clothing
Agreement On Textiles and Clothing
The Agreement on Textiles and Clothing (ATC) was negotiated in the Uruguay Round of
Trade Negotiations. It replaced the Arrangement Regarding International Trade in Textiles
(MFA, or Multi- Fibre Arrangement) of 20 December 1973. The Multi Fibre Arrangement
(MFA) governed the world trade in textiles and garments from 1974 through 2004, imposing
quotas on the amount developing countries could export to developed countries. It expired on
1 January 2005.
The MFA was introduced in 1974 as a short-term measure intended to allow developed
countries to adjust to imports from the developing world. Developing countries have an
absolute advantage in textile production because it is labor-intensive and they have low labor
costs.
The ATC provided for all then-existing textile and clothing trade restrictions to be notified
and eliminated over a period of 10 years from the date of entry into force of the WTO
Agreement. The ATC also provided that the ATC itself would be terminated at the beginning
of the 12th year of the WTO, together with all of the remaining restrictions within its scope.
As this termination duly took place on 1 January 2005, the ATC is no longer in effect.
The Agreement on Textiles and Clothing (ATC) and all restrictions there under terminated on
January 1, 2005. The expiry of the ten-year transition period of ATC implementation means
that trade in textile and clothing products is no longer subject to quotas under a special
regime outside normal WTO/GATT rules but is now governed by the general rules and
disciplines embodied in the multilateral trading system.
It also contains a specific transitional safeguard mechanism which could be applied to
products not yet integrated into the GATT at any stage. Action under the safeguard
mechanism could be taken against individual exporting countries if it were
demonstrated by the importing country that overall imports of a product were entering
the country in such increased quantities as to cause serious damage — or to threaten it
— to the relevant domestic industry, and that there was a sharp and substantial
increase of imports from the individual country concerned. Action under the
safeguard mechanism could be taken either by mutual agreement, following
consultations, or unilaterally but subject to review by the Textiles Monitoring Body. If
taken, the level of restraints should be fixed at a level not lower than the actual level
of exports or imports from the country concerned during the twelve-month period
ending two months before the month in which a request for consultation was made.
Safeguard restraints could remain in place for up to three years without extension or
until the product is removed from the scope of the agreement (that is, integrated into
the GATT), whichever comes first. The agreement includes provisions to cope with
possible circumvention of commitments through transshipment, re-routing, false
declaration concerning country or place of origin and falsification of official
documents. .
Textiles Monitoring Body (TMB)
The Agreement on Textiles and
Clothing
Since 1 January 1995, international textiles and clothing trade has been
going through fundamental change under the 10-year transitional
programme of the WTO's Agreement on Textiles and Clothing (ATC).
Before the Agreement took effect, a large portion of textiles and clothing
exports from developing countries to the industrial countries was subject to
quotas under a special regime outside normal GATT rules.
Before the Agreement took effect, a large portion of textiles and clothing exports
from developing countries to the industrial countries was subject to quotas under
a special regime outside normal GATT rules. Under the Agreement, WTO
Members have committed themselves to remove the quotas by 1 January 2005
by integrating the sector fully into GATT rules.
Multifibre Arrangement
Up to the end of the Uruguay Round, textile and clothing quotas were
negotiated bilaterally and governed by the rules of the Multifibre
Arrangement (MFA). This provided for the application of selective
quantitative restrictions when surges in imports of particular products
caused, or threatened to cause, serious damage to the industry of the
importing country. The Multifibre Arrangement was a major departure
from the basic GATT rules and particularly the principle of non-
discrimination. On 1 January 1995 it was replaced by the WTO
Agreement on Textiles and Clothing which sets out a transitional
process for the ultimate removal of these quotas.