The new era of textile trade Taking stock in the post-MFA environment

In the six months since the quota system held over from the Multifibre Agreement (MFA) expired, much public debate has taken place over the social, economic, and employment impact of this new state of play in the textile sector. Will the new paradigm mean more or less jobs for workers in the developing, transition, and developed countries? The ILO will take on this issue in October 2005 when tripartite delegates meet to discuss the future and work toward a fair globalization.

GENEVA - In the months leading up to 1 January 2005 - when the quota system that regulated the global trade of textiles and clothing for 40 years was scheduled to expire - many tried to picture what the post-MFA global landscape would look like. Would there be a social and economic impact? Would there be an impact on employment? Would there be job losses, and if so, where? Which countries would emerge stronger or weaker in international textile trade?

The answers to these and other questions are still unknown. But in light of the uncertainty among producing countries, workers, and enterprises worldwide, the ILO has called for a tripartite meeting this fall to review the immediate social and economic impact of the expiration of the MFA quota system.

With a focus on promoting fair globalization in textiles and clothing in a post-MFA environment, the meeting will be held at ILO headquarters in Geneva from 24 to 26 October 2005. It will centre on developing strategies to ensure decent work worldwide and promoting social dialogue between governments and employers' and workers' organizations regarding the consequences and trends associated with the end of the quota system. Participants will also share their own experiences on how they have helped and will continue to help their respective constituents adapt to the changing environment. At the conclusion of the meeting, the results of the discussions and any recommendations will be presented to the ILO Governing Body.

Representatives of governments from the following countries have been invited to participate: Bangladesh, Brazil, Cambodia, China, France, Haiti, India, Kenya, Lesotho, Mexico, Morocco, the Philippines, Romania, Turkey, the United States, Burkina Faso, Egypt, the Dominican Republic, Italy, Madagascar, Sri Lanka, and Viet Nam. In addition, 15 employer and 15 worker delegates will take part in the meeting. Observers from the World Bank, the World Trade Organization (WTO), the Organisation for Economic Co-operation and Development (OECD), the European Union, the United Nations Conference on Trade and Development (UNCTAD), the International Trade Centre, and the International Textiles and Clothing Bureau have been asked to attend.

An ILO report being prepared for the meeting will assess the initial impact of the end of the quotas on the world of work and discuss key developments since the quotas were lifted during the first quarter of 2005. It will focus on major producing and importing countries, reviewing initiatives undertaken around the world with the help of the ILO to promote competitiveness in the industry while maintaining decent working conditions.

Balancing the world on a pin

In many ways, the MFA brought about a sense of equilibrium as the textile and clothing sector was growing more global and interconnected over the last 40 years. Created in 1974, the MFA governed the global give-and-take of textiles and clothing through a complex system of quotas established by industrialized nations to protect their sectors from outside competition. As a result, clothing exporters migrated throughout the world in search of countries where additional quotas were still available, and in the process helped to create millions of jobs in nations that previously had a small textile exporting business, if any.

But the MFA was only a finite solution, with the eventual aim of integrating the sector into the General Agreement on Tariffs and Trade over a 10-year period by phasing out the quota system in four steps, the last of which was completed on 1 January 2005.

Weighing the possibilities

A working paper issued by the ILO in January 2005, entitled "Labour implications of the textiles and clothing quota phase-out" made the first attempt to examine the impact of ending the MFA quota system. The paper examined how nine exporters (Bangladesh, China, the Dominican Republic, the European Union, India, Pakistan, the Philippines, Romania, and the United States) were anticipating the change in regulations prior to 1 January 2005.

The paper concluded that countries in south Asia could emerge stronger in the international arena than others, with an advantage for capacity, workforce, and cost-efficiency that is more attractive to buyer firms. Meanwhile, in countries that are not at the fore of the textile and clothing sector and depended on the quotas to ensure viability, things may begin to shift. They are now relying on ingenuity for what they lack in infrastructure to handle the transition as gracefully and competitively as possible. For example, Thailand is promoting Bangkok as a leading fashion centre for Asia, and Cambodia is making a determined effort to improve working conditions for employees.

The paper also stated that employment could decline as a result of the end of the quotas, particularly in countries that formerly imposed them. The ILO estimates a global decline of between 1 and 2.5 per cent by 2018. However, the proliferation of international supply chains could improve the bargaining position of workers in participating firms, and thus improve the quality of employment conditions for those working in the sector.

These are just hypothetical conclusions, and the true global impact of the end of the quota system on textile trade remains to be seen. But for the ILO, dealing with these new circumstances in a socially responsible way, particularly when international competition is high, will require integrated social and economic strategies to be implemented at the national and international level. The October meeting will offer an ideal opportunity for government, employer, and worker delegations from around the world to work together in building a fair globalization.

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