The MultiFibre Agreement

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MFA came into force to allocate export quotas to the low cost developing countries, limiting the number of imports to countries whose domestic industries were facing a serious challenge from rapidly increasing imports. It sought to expand trade, reduce barriers to trade and progressively liberalize world trade.The MFA regime existed for 25 years, until 1994 when the Uruguay Round of Multilateral Trade Negotiations resulted in the Agreement on Textiles and Clothing (ATC). The ATC sought to phase out all quota restrictions in four phases spread over a period of 10 years. The first three partial phase-outs were in January 1995, January 1998 and January 2002. The final one is due on January 01, 2005.This came into force along with the WTO framework for multilateral trade in 1995: stipulated that the quota system for textile exports and imports under the Multi-Fibres Agreement (MFA) was finally phased out on January 1, 2005. More specifically, in terms of the agreement, the transition period, which began in 1995, would be operative for ten years and, by the end of that time, all textiles and apparel articles will have to be brought under the GATT discipline, subject to the same rules, as are the products of other sectors.China was a participant country of the MFA, the implications of the end of the MFA regime on world trade generally in textiles and apparel, also the projected impact on the Chinese textile and apparel industry. To set the perspective, the MFA was negotiated under GATT 1947 and was functional from 1974 to 1994. In the eyes of the USITC, the agreement was intended to deal with domestic market disruption in importing countries: that is, developed economies – while allowing the exporting, or developing, nations to expand their textile and apparel trade as much as possible. This was achieved by the MFA through the instrument of negotiating bilateral agreements