Post MFA: A paradigm shift *

Abstract:

The caselet discusses the post-MFA scenario and its impact on the world textile market. It specifically explains the impact that the removal of quotas has had on the European and American markets and points to the changing equations among countries, which are either exporting or importing textile products. The caselet looks at the competitive scenario in the international market and the strategies that the textile companies have formulated to cope with the changing scenario.

Issues: » Impact on the worldwide textile industry due to phasing out of MFA. » Changing scenario in the European and American textile industry post-MFA. » Changing equations among countries that are exporting or importing textile products. » Measures taken by countries to control cheap imports from developing countries and to reduce volatility post-MFA. Introduction The phasing out of the Multi-Fibre Arrangement (MFA) on 1st January 2005 removes the forty-year-old import quotas for the textile and clothing industry worldwide. The removal of the quota regime will open the gates for cheap Chinese and to some extent Indian textile products to flood Western markets. US retail traders are likely to step up imports of textiles and garments from China and/or India...

Questions for Discussion:

1. Do you think that the post-MFA regime will have a negative impact on Mexico's textile industry by way of reduced exports to the US market?
2. What measures can the Caribbean and Central American countries take to mitigate the onslaught of the cheap imports from countries like China and India in the post-MFA regime?

Key words:
Multi-Fibre Arrangement (MFA), Garments and textile industry, WTO, Apparel manufacturers, Gap, Wal-Mart, Nike, Mexico, Honduras in Central America, Dominican Republic in the Caribbean, Honduran Manufacturers Association

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