West Continues to Insist on Limiting Trade in Clothing

Economic Review, September 1990 | Go to article overview

West Continues to Insist on Limiting Trade in Clothing


West Continues to Insist on Limiting Trade in Clothings

According to a new World Bank study, the West is holding up the development of the Third World by limiting imports of textiles and clothing. The report further states textiles tariffs and quota restrictions on textiles cost developing countries annually $8 billion.

Western Europe and North America have been imposing restrictions on imports of textiles and clothing since decades. It was the United States which two centuries ago in one of its first acts of its kind established tariffs on July 4, 1789 on imports of raw cotton, yarn, ready-made clothing, shoes etc. Since then, Western countries have continued to impose restrictions on Textiles and Clothing.

The United States has been in the forefront passing various Acts over the years. The most famous was the Smooth-Hawey Act of 1930 under which the tariff on cotton goods was raised to 46 per cent and on woolen goods to 60 per cent.

The history of international trade in textiles portrays a retrogressive tendency for discriminatory restrictions. In 1936, pursuant to a "gentlemans" agreement, Japan voluntarily limited its exports to US market. Again in 1955 USA made Japan to "voluntarily" agree to limit exports of certain cotton products.

In 1956 (under section 204 of the Agricultural Act 1956) US Congress gave the President the authority to negotiate limits with exporting countries as well as provided some emergency powers to the US President to textile imports unilaterally. By the late 1950's several bilateral agreements were signed between industrialised countries and major cotton exporting countries; notably those negotiated by UK with Hong Kong, Pakistan, India and Japan and by USA with Hong Kong and Japan.

History of Restraints

A Short Term Arrangement (STA); on Cotton Textiles was drawn up in 1961, which was the first of forerunners to the MFA. In 1962 the second of the forerunners to the MFA was negotiated: "The Long Term Agreements regarding international trade in cotton (LTA)".

These two arrangements established the right of importing countries to negotiate restrictions on low cost textiles imports and to ensure avoidance of so-called market disruption in textile sector. The LTA not only enabled the selective and discriminatory application of restraint but also laid grounds for bilateral restraint agreements.

In the late 1960's manmade fibre products became a major component in textile trade. 1971 the UK Government signed bilateral restraint agreement covering trade in wool and man-made fibre textiles and apparel products with Japan, Hong Kong, Taiwan and South Korea as well as Malaysia which was relatively a smaller supplier.

After two more years the Multifibre Arrangement (MFA-I) was signed by roughly 50 countries on 1st January, 1974. On the surface of it the MFA appeared more promising for protecting the interests of developing exporting countries and providing a balance between the rights and obligations of both developed and developing countries. Ostensibly the basic objective of the MFA were to achieve progressive liberalisation of world trade in textile, while at the same time avoiding disruption in individual markets or products. One of the principal stated aims of the MFA was to encourage textile and clothing industries of the developing countries.

The MFA was originally envisioned to be a temporary measure and was intended to give the industries of developed countries time to restructure to make themselves more competitive in the face of low cost imports from developing countries, the MFA was set up under the auspices of the General Agreement on Trade and Tariffs (GATT) and is a recognised derogation of GATT Rules. GATT Rules stipulate that trade may be restricted by tariffs alone. Otherwise they embody the principle of open multilateral trade.

Despite the fact that the MFA was originally considered to be temporary, it has been extended three times; in 1977, 1981 and 1986, each time with more tightening of restrictions on imports from developing countries. …

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