Subject category:
Economics, Politics and Business Environment
Published by:
IBS Case Development Center
Length: 9 pages
Data source: Published sources
Topics:
Global textile and apparel industry; Multi-Fiber Arrangement (MFA); China's textile and apparel exports; World Trade Organisation (WTO); Protectionist measures and quotas; Chinese textile and apparel industry; Quantitative export restrictions; Business environment; Agreement of Textile and Clothing (ATC); Cheap labour and raw material costs; Oversupply and market disruption; Global textile and apparel market; National Council for Textile Organisations; US International Trade Commission; China Chamber of Commerce for the Import and Export of Textiles (CCCT)
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Abstract
The global textile and apparel industry had been governed by quotas under the Multi-Fiber Arrangement (MFA) since 1974. The developed countries laid certain restrictions on the number of items that could be exported by low cost producers, such as China and India, so as to protect their local textile industry. After the expiry of MFA on 1 January 2005, China was expected to be one of the biggest winners due to its competitive textile industry. Chinese textile exports had experienced tremendous growth since its entry into the World Trade Organisation in 2002. But many competitors and importing countries, including the US textile industry, voiced concerns that China was set to dominate and destroy the textile industry through unfair trade practices including currency manipulation and subsidising its textile industry. The case presents insights into the scenario during the MFA regime, the efforts to eliminate it, and the potential benefits of its elimination. The case also elaborates on the growth of China''s textile industry and the opportunities for it after the expiry of MFA. The case provides scope for discussion on whether the concerns of competitors and importing countries regarding China''s dominance are valid, and if so, what could be done to avoid the damage.
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Abstract
The global textile and apparel industry had been governed by quotas under the Multi-Fiber Arrangement (MFA) since 1974. The developed countries laid certain restrictions on the number of items that could be exported by low cost producers, such as China and India, so as to protect their local textile industry. After the expiry of MFA on 1 January 2005, China was expected to be one of the biggest winners due to its competitive textile industry. Chinese textile exports had experienced tremendous growth since its entry into the World Trade Organisation in 2002. But many competitors and importing countries, including the US textile industry, voiced concerns that China was set to dominate and destroy the textile industry through unfair trade practices including currency manipulation and subsidising its textile industry. The case presents insights into the scenario during the MFA regime, the efforts to eliminate it, and the potential benefits of its elimination. The case also elaborates on the growth of China''s textile industry and the opportunities for it after the expiry of MFA. The case provides scope for discussion on whether the concerns of competitors and importing countries regarding China''s dominance are valid, and if so, what could be done to avoid the damage.