Abstract
This article provides a critical analysis of the Agreement on Textiles and Clothing (ATC), one of the key outcomes of the GATT Uruguay Round, and assesses whether it represents a "mixed bag" for developing countries. The study examines the main feature of the ATC: the ten-year phased elimination of the Multi-Fibre Arrangement (MFA) quota system, which had governed and restricted global trade in textiles for decades. The research explores the potential benefits of the ATC for developing countries, particularly the promise of unrestricted access to the markets of developed countries after the phase-out. However, it also provides a detailed analysis of the significant challenges and potential negative consequences. These include the slow, back-loaded nature of the quota phase-out, the risk that the most competitive developing country producers (like China) would dominate the market, and the potential for developed countries to use new protectionist tools, like anti-dumping measures, to replace the old quotas. The paper concludes that while the ATC represented a conceptual victory for developing countries, its practical outcomes were far from certain and depended heavily on the specific competitiveness of each country.
Full Text
The Agreement on Textiles and Clothing (ATC) was heralded as a major victory for developing countries in the Uruguay Round, as it promised to dismantle the discriminatory Multi-Fibre Arrangement (MFA) and integrate the textile sector into the normal rules of the GATT/WTO. This paper provides a nuanced analysis, arguing that the agreement was, in fact, a "mixed bag." The first part of the study details the potential positive outcomes. It explains how the elimination of the MFA quota system would, in theory, allow efficient and low-cost producers from the developing world to expand their exports and fully utilize their comparative advantage. The paper acknowledges that for countries like Bangladesh, this offered a significant long-term opportunity. The core of the article, however, focuses on the significant downsides and challenges that made the bag "mixed." A major critique is leveled at the structure of the phase-out, which was heavily "back-loaded," meaning that the most commercially significant quotas would only be removed at the very end of the ten-year transition period. The paper also explores the intense competitive pressures that would be unleashed after 2005. It argues that the end of quotas would lead to a major shakeout in the industry, with a few highly competitive countries benefiting enormously, while many less competitive developing countries could see their industries decimated. Furthermore, the analysis highlights the concern that new forms of protectionism, such as stringent rules of origin and the misuse of anti-dumping actions, would replace the old quota system. The findings suggest that the ATC was not a guaranteed win for all developing countries, but rather the beginning of a new and much more competitive era in the global textile trade.