Textile and Apparel Trade After the Multifiber Arrangement
Although Multifiber Arrangement (MFA) quotas have been
completely phased out, other policy instruments, such as
tariffs and preferential agreements, will affect the market.
Global tariffs on textiles and apparel remain significantly higher
than for most other manufactured products. Nontariff trade barriers
are also a factor, including anti-dumping duties, import "rules of
origin," safeguards, elaborate custom procedures, stringent
labeling requirements, and outright bans on apparel imports.
Countries with preferential market access typically pay lower
tariffs, which will also influence production and trade.
Textile-producing countries have expressed particular concern
about the expansion of Chinese textile and apparel exports in the
more open world market following termination of MFA quotas. For
this reason, China-specific safeguard provisions were established
in the 2001 World Trade Organization (WTO)-China Accession
Agreement. These provisions were designed to reduce market
disruption and protect WTO members from surges in Chinese imports
that would impede the "orderly development of trade." Two types of
China-specific safeguards were identified in the accession
protocol, namely special-textile and the transitional,
product-specific safeguards. The requirements for imposing
China-specific safeguards are much less stringent than the "general
safeguards" specified in the WTO Agreement on Safeguards (Liu and Laixiang). Unlike WTO general safeguards,
China-specific safeguards can be levied by a WTO member given the
threat of market disruption. No governmental investigation is
required prior to imposition nor is it necessary to establish a
causal link between increased import quantities and "serious
The special-textile safeguards allow for the expansion
of Chinese exports, but limit growth to as little as 7.5 percent
annually. These safeguards provide 1 year of protection, renewable
on an annual basis through 2008. The transitional,
product-specific safeguards can be maintained for 3 years with
the possibility of a 2-year extension. WTO member producers will
have recourse to these safeguards through 2013.
The United States and the European Union (EU) forged bilateral
accords with China in 2005 that supplemented the WTO-China
Accession Agreement of 2001. The U.S.-China agreement calls for
China to limit the shipments of 34 products to increases of 8-10
percent in 2006, 13 percent in 2007, and 17 percent in 2008. The 34
products accounted for almost half of China's textile exports to
the United States in 2005.
The U.S.-China textile deal provides greater predictability for
both Chinese exporters and U.S. importers than the system of annual
safeguards sanctioned under the special textile provision in the
WTO-China Accession Agreement. Moreover, it provides U.S. retailers
with greater import growth opportunities from China than the
previously established 7.5 percent cap. Both the U.S.-China and the
EU-China 2005 bilateral accords are likely to raise
developed-country imports from other low-cost sources of
Textiles safeguards have also been invoked by Argentina, Brazil,
Colombia, South Africa, and Turkey.
For More Information
- Huan Liu and Laixiang Sun, "Beyond
Phase-out of Quotas in Textile and Clothing Trading: WTO-Plus Rules
and the Case of U.S. Safeguards against Chinese Exports in 2003,"
Asian-Pacific Development Journal, Vol. 11, pp. 49-71,
- U.S. Department of Commerce, International Trade
Administration, Office of Textiles and Apparel, China Textile Safeguard actions.
WTO topic area and its chapter
Agreement on Agriculture and Beyond.