Multi Fibre Arrangement

Multi Fibre Arrangement

The Multi Fibre Arrangement, also known as the Agreement on Textile and Clothing governed international trade of textiles and garments from 1974 to 2004. It imposed quotas on the quantities developing countries could export to developed ones. It expired on the 1st of January 2005.

The MFA was introduced in 1974 as a short term contract so as to allow developed countries to adjust to imports from the developing world. According to a World Bank/International Monetary Fund (IMF) study, the system has cost the developing world 27 million jobs and $40 billion a year in lost exports.

It is noted that India will gain from the phasing out of the MFA. EXIM Bank forecasts show that India's export of goods will go up from $9.7 billion in 2003 to almost $30 billion in 2013. This year, Indian textile exports touched $23.4 billion. China, India, Pakistan, Taiwan, Brazil are expected to have record gains after the expiry of the MFA. It is believed that in the long run,high cost producers like USA, EU, Japan and Canada will suffer.

The Multi Fibre Arrangement was one of the remaining threads of protectionism tactics that developed countries imposed on developing ones. The growth potential of the textile and apparel sectors in India has been severely restricted through domestic regulations and international factors including the Multi-Fibre Arrangement (MFA). The textile and apparel sectors in India have traditionally been subject to a number of government regulations through reserving parts of each sector for small-scale industry and maintaining employment even at the expense of sharp decline in productivity.