The Impact and Unforeseen Implications of the MultiFiber Arrangement

Thursday, May 24, 2012


As many of you may recall, there was a time when global trade in textiles and apparel was regulated by a system of quotas operated under the auspices of an international agreement called the Multifiber Arrangement (or MFA). As a consultant, I am often asked by sourcing people to talk about those days and how the global business then was different from what we know today. Were prices higher or lower? Were there more suppliers competing in the market or less? Did quotas help some exporting countries at the expense of others? With quotas in place, was sourcing strategy tougher? To help address these and other questions, I have prepared the following essay looking at various sources of information about the MFA, how it operated, why it was dismantled and how its impact on the global textile and apparel industry was far reaching and is still felt to this day. I recommend reading all of the selected sources described below for those of you interested in learning more about the MFA and how various authors described the agreement over time -- that is, the historiography (or a review) of many of the books and articles written about the agreement over the years.  

[Note: This essay is a little long for a blog, so you may want to download a PDF copy HERE.]


Introduction: What was the Multifiber Arrangement?
The MFA was a global quota agreement that regulated international trade in textiles and apparel from 1974-1995. The MFA was managed under the auspices of the General Agreement of Tariffs and Trade (GATT) in Geneva, Switzerland. As a condition of the establishment of the successor organization to the GATT, the World Trade Organization (WTO), the MFA was terminated January 1, 1995. Upon its termination, the agreement was gradually phased out until all quotas were eliminated by 2005.
The MFA was a high-profile exception to the principles of free trade and the operation of the GATT. As such, the MFA was supposed to be a temporary measure. However, the agreement was renewed four times and became a political pariah for all those involved. Although the agreement was meant as a tool for the regulation of global trade in textiles and apparel, the politics supporting the agreement ultimately unraveled the agreement.
Politics and economics became intertwined to undermine the MFA. From the perspective of historiography, this essay will answer the following questions: How has the historiography on the MFA evolved over time? What are the different opinions and outlooks on the MFA, and how do they impact the interpretations of the various authors? Why have different writers come to different conclusions about the MFA?
Further, the literature described in this essay also supports an evolving perception of the interplay between politics and economics, and is populated by writings from the 1980s reflecting the viewpoints of observers around the time of the first extension of the MFA. In turn, other writings are covered in this essay from other periods during the evolution of the MFA to include perspectives from two further extensions of the agreement and then the phase-out in 1995. Many of the writings compiled in this essay address the history of the agreement since its inception in 1974, as well as the precursor arrangement, the Long-Term Cotton Agreement. More contemporary accounts of the clothing trade and the aftermath of the MFA move the discussion out of the isolated realms of politics and economics into social considerations.
Much of the historiography pits authors with a bias towards smaller exporting nations versus the opinions of others favoring importing nations. In some cases, schools of trade policy are pitted against each other – free trade versus protectionism. Furthermore, in many ways, the historiography depicts the interests of the developing world against those of the developed world. Additionally, the discussion over time about the MFA has evolved from one of seeming acquiescence to virulent objection. As each stage of the MFA was carried out from 1974 to 2005, analysis becomes more acute. Criticism of the agreement as being trade distorting and economically unsustainable grew with subsequent iterations of the agreement with more and more elaborate economic modeling typically supporting the vehemence of the attacks. At the same time, political attacks escalated.
From a chronological perspective, by the time the literature describes the end of the MFA in 2005, the discussion turns into one of assigning which countries would be “winners” and which would be “losers.” In fact, because of the broader forces of globalization -- and helped by the very structure of the MFA -- a winner-loser discussion is largely irrelevant, as those countries set to gain were already well established in the literature (e.g. China, India and Pakistan). In the end, a survey of available literature suggests that political debate settled into a shrill coating over the economics of the MFA. At the outset of the MFA, economics seemed to override politics. In time, social issues (as represented by labor rights and environmental concerns) gained prominence as a driving force in the literature and reflect much of the current debate in contemporary industry circles.

Global Politics
As the MFA was an exception to the trade-promotion rules of the GATT -- the agreement institutionalized trade restrictions – over time the MFA’s position began to erode. The fact that the MFA operated outside of normal rules is a testament to the political power of textile interests, particularly those in the United States and European Economic Community, the dominant producers of textiles when the agreement was first signed. It is also a measure of the economic importance of the textile industry in both regions at the time. This, of course, changed by the time the MFA ended; the priorities of the United States and Europe had changed. Service and high-technology industries were the new powerhouses in the developed world and supplanted textiles as the dominant industry. Textiles still had enormous political clout, but that clout now emanated from Hong Kong, Taiwan, Korea, China and elsewhere in Asia, not from South Carolina or Germany, as was previously the case. Moreover, this shift in political clout mirrored the shift in production between 1974 and 1995 from the developed world to the developing world.
Vinod Aggrawal in his Liberal Protectionism: The International Politics of Organized Textile Trade, /1/ examined the history of the MFA up until its first renewal in 1981. The analysis offered tracks the development of the global textile industry since the 1950s, discusses precursor agreements to the MFA and outlines the broad economic forces that brought government together to identify a political solution as a means of regulating global trade. Aggrawal placed particular emphasis on the political machinations necessary to establish the MFA in the first place and the decisions that were made to extend an agreement that was supposed to be temporary. He asked, “Are the arrangements [of the MFA] in textile and apparel trade the wave of the future?” /2/ This was an important question to ask at the time as the MFA was renewed until 1995; the agreement did establish a model of sorts for other trade restricting programs, such as that governing trade in steel for many years.
As a follow-up piece to Liberal Protectionism, Aggrawal contributed an article to the journal International Organization in 1983 entitled, “The Unraveling of the Multi-Fiber Arrangement, 1981: An Examination of International Regime Change.” /3/ The article was a detailed history of the MFA from 1974 to 1981 when the first major revision of the MFA was made as part of the GATT. Originally meant to be a temporary quota agreement, the MFA was extended in 1981 to the chagrin of observers in many exporting countries. Hence, Aggrawal’s assertion in the title of article that the MFA was “unraveling.” A questionable choice of words, as in 1981, if anything, the MFA was raveling tighter than ever before. Although Aggrawal’s bias in favor of free trade comes through in his prose, his positions were crafted earlier than those of other authors who had not yet realized the full distorting effects the MFA would have on developing countries. As such, this article provides a starting point of sorts for the evolving historiography of the MFA presented in this essay. The renewal of the MFA in 1981, Aggrawal found to be “disturbing” due to “shifting international and domestic structural constraints … led policy makers to spin a more entangling web of protection, which can only hinder the growth and adjustment efforts of developed and developing countries.” /4/
In The Future of World Trade in Textiles and Apparel, /5/ William Cline wrote about the sharp divisions between free trade and protectionist philosophies of international trade and how those divisions came to affect the operations of the MFA. “Textile trade is replete with paradoxes,” said Cline. /6/ According to Cline, “Textiles and apparel have received more comprehensive and persistent protection than any other industrial sector, even though the original rationale … was to provide temporary relief so that industries could adjust and become sufficiently competitive to face international competition on their own.” /7/ A highly pivotal portrayal of the MFA when published in the 1980’s, both free trade and protectionist political groups used the author’s analysis to further their own political positions. The book was written just prior to the second extension of the MFA and reviews many of the changes made to the MFA as part of the extension -- in particular broader product coverage, greater quota enforcement provisions and tighter limits on the amount of product that could be exported to importing countries from large producing countries in Asia.
Although the previously described literature discussed the political implication of the MFA, the mechanics of the agreement often took a back seat to the interplay of the various forces at work in shaping the agreement. In a manual of the MFA, Kala Marathe Krishna and Ling Hui-Tan published Rags and Riches: Implementing Apparel Quotas under the Multi-Fibre Arrangement /8/ in 1998. Focused on the mechanics of the MFA, Krishna and Hui-Tan’s analysis endeavors to fill in gaps in the historical literature. Much of the analysis is centered on the rules of the MFA and how countries implemented those rules. Krishna and Hui-Tan claim they wrote their book to address a “largely neglected area [concerning] the actual implementation of MFA quotas.” Econometric modeling is included in the analysis to help support the authors’ case. The book outlines many of the loopholes in the MFA that helped to distort trade and, in turn, alter the nature of the global textile and apparel industry.
Often, the political debate over the MFA focused on the impact of quotas on small, developing suppliers. In 1990, Judith Dean published “The Effects of the U.S. MFA on Small Exporters,” in the journal The Review of Economics and Statistics. /9/ This article tests two hypotheses regarding the impact of the MFA on developing countries: first, that MFA quotas actually restrict trade and, second, that the MFA encourages growth of small suppliers at the expense of larger suppliers due to more lenient quota restrictions. Dean concludes that the MFA was, in fact, restrictive and favored smaller producing countries that either were not subject to quotas or were restricted by quotas that were not binding. “Results show strong support for the hypothesis that the MFA restraints [were] indeed binding on exporters,” said Dean. /10/ In turn, this article supports the notion that the MFA scattered trade around the world as sourcing companies continually looked to by-pass larger quota countries in favor of newer, smaller suppliers that did not suffer from tight quota restrictions.

Economic Factors
The very nature of the MFA helped to boost production in low cost places in the world. The imposition of quotas also had the effect of raising prices for consumers in importing countries. As a result, production around the world was often skewed to meet the higher price points brought about by quota restrictions while at the same time meeting the needs of the low end of the global market by moving production to non-quota countries around the world. An original intent of the MFA was to regulate trade from the largest exporting countries. What in practice ended up happening was that trade was scattered around the globe as apparel producers worked to avoid countries subject to quota. Moreover, by moving production to non-quota countries, apparel companies were better able to meet the soaring demand for low-cost apparel in importing countries. Better shipping and communications helped to facilitate the expansion of global trade.
Edited by Edna Bonacich, Global Production: The Apparel Industry in the Pacific Rim, /11/ is a series of essays examining the effects of globalization and trade liberalization on textile and apparel industries around the world and provides insight into the global trade of textiles and apparel and the role of the MFA prior to its termination. The analysis was published just as the MFA phase-out was finalized in 1994 and, as such, the book provides a primer on the global apparel industry and how, from the viewpoint of various authors, the industry would evolve in the post-MFA world. A key essay in the book was written by Richard P. Applebaum and Gary Gereffi entitled “Power and Profits in the Apparel Commodity Chain,” where the authors discuss “the profit squeeze at every step” in the textile supply chain and how this squeeze often results in political solutions to address economic challenges brought about by globalization of the industry. /12/
Although much of the literature written about the MFA covered the broad impact of quotas on the global textile and apparel trade, few studies were published on the effects on specific industries in a given country. Fortunately, several sources do exist. For example, Palash Kishore Dey and Md.Tawfique Hasan Sumon published the Effects of Post Multi-Fiber Agreement on Bangladesh Readymade Garments /13/ in 2011 and is a case study on the effect of the elimination of the MFA in 1995 on a selected list of apparel companies in Bangladesh and provides for a practical examination of the effect of the MFA and its aftermath written from a Bangladeshi perspective. Whereas many of the sources included in this essay deal with macro-economic and political issues, this study focuses on a micro-economic assessment of the impact of the MFA on specific companies in a specific country and provides an alternative historiographic measure. For example, according to the authors, the garment industry grew sharply in Bangladesh after the end of the MFA and exhibited social benefits such as “empowering women, [increasing] their mobility and [expanding] their individual choice” but that increased opportunities for women also “have been made at the cost of their health and increased risk of harassment” /14/
Also focusing on the country-specific impact of the MFA, Irene Brambilla, Amit Khandelwal and Peter Schott, in 2010 published "China's Experience under the Multi-Fiber Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC),” /15/ an article published in a National Bureau of Economic Research publication entitled China's Growing Role in World Trade. This study analyzes China experience under U.S.-administered textile and apparel quotas as governed by the MFA. The analysis makes use of a U.S. government-sponsored trade database to measure the relative impact on U.S. imports from China over time while under the auspices of the MFA. Particular focus is placed on import prices and quantities. The authors conclude that China was more constrained under the MFA than were other textile and apparel exporting countries. As quotas were lifted with the phase-out of the MFA beginning in 1995, Chinese exports grew disproportionately to the frustration of smaller exporting countries and set the stage for political tensions at the WTO. Said the authors, “China’s rapid increase in U.S. market share as quotas were relaxed came at the expense of both domestic manufacturers and the United States’ other trading partners.” /16/
Sara Douglas published the article “The Textile Industry in Malaysia: Coping with Protectionism,” /17/ in 1989 in the journal Asian Survey that analyzed the experience of Malaysian textile exporters under the MFA and measures the positives and negatives for these firms operating in a quota-dominated environment. When this article was written, Malaysian textile firms were still relatively sheltered from direct competition with industries in other countries (e.g. China) due to tight quota limits that restricted exports from larger suppliers to importing markets. According to Douglas, “It seems clear that while U.S. effort to contain trade-induced disruption in the U.S. industry is a source of problems for Malaysia, the Malaysian textile and apparel industry is, for the time being, both surviving and demonstrating considerable vigor.” /18/ As such, the article sounds optimistic about the prospects of the Malaysian industry, which was shown in other articles listed to be a foolhardy assessment once the MFA was phased out.
In a subsequent article, Douglas, in “The Administration of Textile and Apparel Quotas: A Case Study of Malaysian Policy and Its Implication for the U.S.,” /19/ published in the journal Clothing & Textiles Research Journal in 1992 extended her previous analysis of the impact of quotas on exporting and importing countries using the example of Malaysia. The approach of the article utilizes trade and economic analysis to develop conclusions. These conclusions include that economic benefits to Malaysia were significant under the MFA as would-be competitors, such as China, were more tightly restrained than Malaysia thus granting local producers greater access to U.S. and E.C. importing markets, yet, the social costs for Malaysia were high. For importing countries, the economic costs to the United States, for example, were high as were political benefits of the MFA, while social costs were low. Douglas maintained MFA quotas provided importing countries like the United States “high political benefits and relatively low social costs” with the exact opposite for exporting countries such as Malaysia where “the social costs were high” due to unemployment brought about by the disrupting effects of quotas on Malaysia’s then burgeoning industry. /20/
The Journal of Consumer Affairs in 1998 published “Are Apparel Trade Restrictions Regressive?” /21/ by Jessie Fan, Jinkook Lee and Sherman Hanna, an article that explored the impact of quotas on prices and demand via a discussion of market conditions and econometric modeling. An essential conclusion of the article is that the price of apparel is quite elastic in that it models the basic economic tenet that units consumed will fall when prices rise. According to the authors, their analysis showed that “the price elasticity of apparel [was] found to be negative in all cases, indicating that an increase in price was associated with a decline in the amount of clothing purchased.” /22/ Further, the authors maintain that the import quota system of the MFA resulted in sharply higher prices, which in turn not only dampened consumer demand but also skewed supply-chain logistics for various textile and apparel companies. Further, the authors conclude that price rises hurt those least able to afford higher prices in importing countries, the poor.
In addition to the aforementioned article by Judith Dean, Dean followed up in 1995 with an econometric analysis of the impact of quotas on various countries entitled “Market Disruption and the Incidence of VERs Under the MFA” /23/ published in the journal The Review of Economics and Statistics. An article published later than the previous entry listed above by Dean, she makes the case that gradually quota emphasis shifted to smaller suppliers. This represents a significant shift in the analysis of the impact of the MFA. In turn, the movement of quotas to smaller suppliers just before the end of the MFA placed larger suppliers in a beneficial position in terms of the phase out of the agreement. “ A cursory look at the available data suggests a dramatic shift in the determinants of MFA restraints, to the detriment of very small suppliers,” said Dean. /24/ In turn, Dean bases her analysis on an econometric model and focuses on the measurements of the model on different stages in the development of the MFA from 1974 to 1995.
Sanjay Kathuria, Will Martin and Anjali Bhardwali in 1999 released “Implications for South Asian Countries of Abolishing the Multifibre Arrangement” /25/ as part of an NCAER-World Bank WTO 2000 South Asia Workshop. This study is a review of the economic influences of the MFA since 1974. According to the authors, some exporting countries actually gained share of importing country markets over the term of the MFA as unrestricted suppliers gained access while quota-restricted countries actually lost market share – all at a time of increased demand for textiles and apparel in importing markets. The authors maintain, “ Following the removal of [MFA] quotas, important parts of world textile and clothing markets are much more price responsive.” /26/ The analysis goes on to conclude that employment levels suffered in exporting countries as full industrial capability was restricted by the MFA regime, while the jobs saved in importing countries, such as the U.S., came at a high economic cost. An early proponent of quota elimination, the paper argues for the elimination of quotas as a means of bolstering the growing economies of South East Asia.

The Rise of Globalization
In a very real sense, the MFA set the stage for globalization. In fact, the negotiated end of the MFA was a requisite to the establishment of the World Trade Organization in 1995. As a quid pro quo, developing countries pushed for end of the MFA while developed countries, led by the United States, pushed for an expansion of the GATT system to provide new incentives for trade in services and technology. Concurrently, trade officials from around the world adopted a pro-trade philosophy based on the simple economic assumption that all countries will naturally produce and trade what products and services of which they are most competitive. For example, in the case of the United States, this was trade in services. In the case of China, this was textiles and apparel. The WTO was also a mechanism to bring China into the formal structure of world trade, a development until that time had been resisted by many developed countries as the Chinese economy was feared to have an unfair advantage in global trade due to its central planning and systematic subsidies.
Joseph Pelzman in 1988 published “The Multifiber Arrangement: Is There a Future Post Uruguay Round?” /27/ in Issues in the Uruguay Round: NBER Conference Report as a discussion of the operation and impact of the MFA on the Uruguay Round of trade negotiations that established the WTO. This article reviews the political and broad economic implications of the MFA. Pelzman provides a concise history of the agreement since 1974 and discusses how the agreement was implemented in the United States with particular emphasis with how new quotas were imposed utilizing the open-ended “call” system. At the time of authorship, it was unclear how the Uruguay Round would turn out and if a successor organization to the GATT would be established. However, Pelzman does a thorough job of explaining how politics affects economics and vice versa particularly as related to the politics of Lesser Developed Countries [LDCs]. “A coalition of LDCs simply could not reject any further renewals of the MFA,” said Pelzman in his concluding remarks, as large quota holders did not wish to lose their market access to new, smaller suppliers then appearing on the scene. /28/
In 1989, Thomas Grennes published “The Multifiber Arrangement and the Management of International Textile Trade” /29/ in CATO Journal outlining the history and functioning of the MFA until 1989, a time when the agreement was up for renewal. The author’s sources include many of the book and articles listed in this essay. Analysis of the MFA concludes that the agreement was not good for anyone as the economic costs far outweighed any perceived benefits and that the political costs were damaging for both government and industry. Said Grennes, “Because the costs of MFA quotas are so large relative to worker benefits, it is time to change the direction of textile trade policy. The MFA should be abolished and nondiscriminatory tariffs should become the sole form of textile protection. Textile trade then would return to compliance with the GATT rules and trade would be determined by economic considerations rather than political forces.” /30/
In helping to assess the impact of the MFA on the structure of the global textile and apparel industry, in 1993 Amy Glasmeier, Jeffery Thompson and Amy Kays released “The Geography of Trade Policy: Trade Regimes and Location Decisions in the Textile and Apparel Complex,” /31/ an article published in Transactions of the Institute of British Geographer. According to this article, the structure of the global textile and apparel industry is directly the result of trade distorting effects of the MFA. The analysis focuses on companies throughout the world that responded to an expanded period of regulated trade. The authors’ conclude that the end of the MFA paved the way for an acceleration of globalization: “ Textile and apparel trade policy has had enormous impact on strategies that … exporting nations have pursued to remain globally competitive … [with] dominant strategies [including] internationalization have been pursued to varying extents and in different combinations by exporting nations with varying levels of success … [but that] reactions to future trade policy … are likely to manifest in more participants in the global industry.” /32/
Assignment of “winners and “losers” under the MFA, Ashe Hate, Shisir Khanal, John Larsen, Paul Smart, Romania Soria and David Sanni released “The Expiration of the Multi-Fiber Arrangement: An Analysis of the Consequences for South Asia” /33/ as part of the Public Affairs Workshop, International Issues, University of Wisconsin-Madison in 2005. This study sets forth a list of countries that will “win” and “lose” under the phase out of the MFA in 1995. Such commentary is typical of the time as policy makers in government and industry worked to understand the implications of the end of the MFA. For example, according to the authors, “ India and Pakistan are likely to be winners, [while] Nepal is expected to suffer loses [and] the effects of the MFA expiration on the Bangladeshi and Sri Lankan garment and textile industry are ambiguous.” /34/ For developing countries, many were distraught at the prospect of the end of quotas. As the authors establish, quotas provided guaranteed access to importing-country markets, while without quotas, large suppliers -- in particular China -- would slowly drive smaller suppliers out of the market.
A more contemporary assessment of the impact of the MFA on the global textile and apparel industry, James Harrigan and Geoffrey Barrows published “Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement” /35/ in the journal The Review of Economics and Statistics in 2009, an economic analysis focusing on the effects of binding quotas on apparel exports and the increased cost for consumers in importing countries. According to the calculations from the model, the annual cost of the MFA to U.S. consumers was about $90 per household, “which is more than 6% of the median household budget.” /36/ This article makes the basic argument that quotas are inherently trade distorting and have hidden costs, an essential position maintained by MFA foes. The authors conclude that the sudden end of the MFA in 2005 provided a unique opportunity to test trade theory (which states that quota restrictions result in higher prices).
Finally, no historiography of the MFA would be complete without a good primer on the WTO. Amrita Narlikar authored The World Trade Organization: A Very Short Introduction /37/ in 2005. As an overview, this book describes the origins of the WTO and frames many of the issues that have confronted the organization since its inception in 1995. In turn, the book explores the role of the MFA as a negotiating chip used by developed countries to entice developing countries to support the WTO. In a case of understatement, according to Narlikar in his preface, “For an apparently small organization dealing with abstruse trade matters in Geneva, the WTO arouses surprisingly levels of popular interest, emotions, and high drama,” /38/ not the least of which was the public and industry reaction to the elimination of the MFA in 1995.

Textiles & Apparel: An Industry With Global Impact
The textile industry is one of the first rungs in the ladder of industrialization for a developing country. Over time, however, the impact of the industry on the developing world became more significant as new suppliers entered the market. Consumers in the developed world may have benefitted from lower prices for clothing imported from Third World producers, but those benefits came with costs in the form of labor abuses and environmental impact. Whereas previous analysis focused more on the practical political and economic impact of the industry on the developing world, contemporary exposition about the industry focused more on the social implications of the burgeoning global trade in textiles.
Two books in particular highlight the social impact of the global textile industry. Pietra Rivoli in 2005 published The Travels of a T-Shirt in the Global Economy, /39/ an overview of the global trade in textiles and apparel and the MFA. This book offers suggestions as to why the business has developed as it has. More contemporary in tone than other literature listed in this bibliography, the book explores the social implications of the MFA and how that helped to shape the global apparel industry. Published during the last year of the MFA phase-out, the book is an introduction to global supply chains, international politics and business practices. The book also explores various unintended consequences of the MFA using its example of t-shirt production around the world. Asked Rivoli, “What have been the effects of the dominance of politics over markets in world trade in apparel?” /40/ To which she answered: “The influence of politics in redirecting trade [under the MFA] has had a number of consequences – mostly perverse and unintended – but both positive and negative, for rich and poor countries alike.” /41/
In 2007, with particular emphasis on the labor issues surrounding the global apparel business, Rachel Snyder published Fugitive Denim: A Moving Story of People and Pants in the Borderless World of Global Trade. /42/ This book is a detailed description of the supply chain behind the global textile and apparel industry and is written in the style of an investigative reporter. The MFA is analyzed from the perspective of its impact of global trade and the global apparel business. The author uses denim jeans as an example of how apparel is produced around the world based on the lingering effects of the MFA. “What I wanted to do was find the complex humanity in the world of manufacturing – beyond simply good factories and the bad, the making and breaking of rules, and the unwieldy negotiations of trade deals,” concludes Snyder. /43/ “I wanted the struggle illuminated in the people who lived between all those extremes.” /44/ In doing so, Snyder helped to illuminate the legacy of the MFA and its impact on the social fabric of both developed and developing countries.

Conclusions
In summary, based on the literature discussed above, the MFA was a trade agreement that restricted international trade of major manufactured products as an exception to the goals and principles of the GATT. This exception became a political lightning rod over time and ultimately became a bargaining chip in the effort to establish a successor organization to the GATT -- namely, the WTO. Moreover, the quantitative restrictions imposed by the MFA and how those restrictions were implemented by importing countries skewed the trade resulting in significant social and economic costs for both importing and exporting nations.
From an economic perspective, the MFA quota regime helped to raise costs for consumers in importing countries, while limiting employment opportunities for workers in exporting countries. Further, importing companies in the United States and Europe made efforts to circumvent the quota program by scattering sourcing to non-quota countries around the world in a search for cheaper production not affected by quotas. By sourcing cheaper goods, importing companies hoped to build market share with consumers. The result was that some cheaper clothing was imported during the years of the MFA, but the real impact of cheaper production was not fully realized until the end of the MFA in 1995.
From a social perspective, workers in exporting nations had the opportunity to gain employment in the textile and apparel industry, but those job opportunities were often temporary, as importing companies would frequently shift sourcing strategies to avoid tight quota restrictions. As such, new industries seemingly grew up over night in countries that had not previously maintained apparel industries. Women and other second-class citizens of the Third World, as a result, had the chance for employment, though they lacked job security. Also, the drive on the part of importing companies to buy cheaper products set the stage for labor abuses in exporting countries as the competitive pressures placed significant burdens on both management and labor in those countries.
This essay has endeavored to show how, from published literature, both political and economic forces ultimately undermined the MFA. The agreement was meant to be temporary, yet in practice, the agreement lasted more than twenty years. Over that time, trade became distorted, economics became stilted and the politics over the agreement became intense. As the historiography has shown, attitudes about the MFA changed over time from one of relative passive acceptance to one of vehement rejection of the agreement. In turn, the problems that began under the MFA -- in particular labor issues -- became more acute over time and were more widely discussed with the literature. Although the MFA stood out as an exception to the principles of free trade, it also had a significant role in setting the stage for the globalization of the world economy, as the agreement helped to expand production of a major manufacturing industry all around the globe.

Notes:
1. Vinod K. Aggrawal, Liberal Protectionism: The International Politics of Organized Textile Trade (University of California Press: London, 1985). At the time of publication, Dr. Aggrawal was a Professor of Political Science at the University of California at Berkley. He is a well-known commentator on international economics and politics.
2. Ibid., p. 195.
3. Vinod K. Aggrawal, “The Unraveling of the Multi-Fiber Arrangment, 1981: An Examination of International Regime Change.” International Organization, Vol 37, No 4. (August 1983): pp. 617-645. Dr. Aggrawal is an expert on U.S. trade policy.
4. Ibid., p. 645.
5. William R. Cline, The Future of World Trade in Textiles and Apparel (Institute for International Economics: Washington, DC, 1987). Dr. Cline was a Senior Fellow at the Peterson Institute in Washington, DC., a think tank. He has taught international trade research, is a former fellow at the Brookings Institution, and has held several posts in the U.S. government. Cline was at the Peterson Institute when he wrote this book.
6. Ibid., p. xv.
7. Ibid., p. 1.
8. Kala Marathe Krishna and Ling Hui-Tan, Rags and Riches: Implementing Apparel Quotas under the Multi-Fibre Arrangement (University of Michigan Press: Ann Arbor, MI, 1998). At the time of publication, Dr. Kala Krishna was a Professor of Economics at Pennsylvania State University and was the author of numerous essays about the MFA. Ling Hui-Tan was an economist at the International Monetary Fund.
9. Judith M. Dean, “The Effects of the U.S. MFA on Small Exporters.” The Review of Economics and Statistics, Vol. 72, No. 1 (Feb., 1990): pp. 63-69. Dr. Dean was Associate Professor of International Economics at Bowdoin College when she wrote this article.
10. Ibid., p. 68.
11. Edna Bonacich (Ed.), Lucie Cheng, Norma Chinchilla, Nora Hamilton, Paul Ong, Global Production: The Apparel Industry in the Pacific Rim (Temple University Press: New York, 1994). At the time of publication, Dr. Edna Bonacich was Professor of Sociology and Ethnic Studies at the University of California, Riverside. Dr. Lucie Cheng was Professor of Sociology at the University of California, Los Angeles, and Visiting Professor of Urban Studies at National Taiwan University, Taipei. Dr. Norma Chinchilla was Professor of Sociology and Director of Program in Women’s Studies at California State University, Long Beach. Dr. Nora Hamilton was Associate Professor of Political Science at the University of Southern California, Los Angeles. Dr. Paul Ong was Associate Professor in the Graduate School of Architecture and Urban Planning at the University of California, Los Angeles.
12. Richard P. Applebaum and Gary Gereffi, “Power and Profits in the Apparel Commodity Chain,” in Global Production: The Apparel Industry in the Pacific Rim, ed. Edna Bonacich, p. 48. Dr. Applebaum was Professor of Sociology and Global & International Studies at the University of California, Santa Barbara. Dr. Gary Gereffi is Professor of Sociology and Director of the Center on Globalization, Governance & Competitiveness at Duke University.
13. Palash Kishore Dey and Md.Tawfique Hasan Sumon, Effects of Post Multi-Fiber Agreement on Bangladesh Readymade Garments (Lambert Academic Publishing: New York, 2011). At the time of publication, Palash Dey, held a M.Sc. in Business Administration from Blekinge Institute of Technology, Sweden. Md. Tawfique Hasan Sumon held a M.Sc. in Business Administration from Blekinge Institute of Technology, Sweden.
14. Ibid., p. 20.
15. Irene Brambilla and Amit K. Khandelwal & Peter K. Schott, "China's Experience under the Multi-Fiber Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC)." NBER Chapters, in: China's Growing Role in World Trade, National Bureau of Economic Research, Inc.,2010: pp. 345-387. At the time of publication, Dr. Irene Brambilla was Professor of Economics at Yale University; Dr. Amit Khandelwal was Professor of Management at the Columbia Business School; and Dr. Peter Schott was Professor of Management at the Yale School of Management.
16. Ibid., p. 2.
17. Sara U. Douglas, “The Textile Industry in Malaysia: Coping with Protectionism.” Asian Survey, Vol 29, No. 4 (April, 1989): pp. 416-438. Upon publication, Dr. Douglas was Assistant Professor in the Division of Textiles, Apparel, and Interior Design, University of Illinois, Urbana-Champaign.
18. Ibid., p. 436.
19. Sara U. Douglas, “The Administration of Textile and Apparel Quotas: A Case Study of Malaysian Policy and Its Implication for the U.S..” Clothing & Textiles Research Journal, July 1992, Vol. 11 Issue 1: pp. 1-9. When published, Dr. Douglas was Associate Professor of Textile Marketing at the University of Illinois, Urbana.
20. Ibid., p. 8.
21. Jessie X. Fan; Jinkook Lee; Sherman Hanna, “Are Apparel Trade Restrictions Regressive?” Journal of Consumer Affairs (December 22, 1988), http://www.thefreelibrary.com/Are apparel trade restrictions regressive?-a053436481 (accessed April 26 2012).
22. Ibid., p. 4.
23. Judith M. Dean, “Market Disruption and the Incidence of VERs Under the MFA.” The Review of Economics and Statistics, Vol. 77, No. 2 (May, 1995): pp. 383-388. Dr. Dean was Associate Professor of International Economics at Johns Hopkins University when she wrote this article. VER is defined as “voluntary export restraint.” At the outset of the MFA, VERs were the typical kind of quota restraints utilized by importing countries to control trade, but over time these types of quotas became fixed quantitative limits, without the implied “voluntary” export controls as seen with the VER’s. Other examples of VERs include Japanese car export restraints implemented throughout the 1980’s on exports tot the United States.
24. Ibid., p. 383.
25. Sanjay Kathuria, Will Martin and Anjali Bhardwali. “Implications for South Asian Countries of Abolishing the Multifibre Arrangement.” NCAER-World Bank WTO 2000 South Asia Workshop, December 20-21, 1999. Revised version, World Bank, November 2001. The authors were staff economic analysts at the World Bank at time of publication.
26. Ibid., p. 21.
27. Joseph Pelzman, “The Multifiber Arrangement: Is There a Future Post Uruguay Round?” in Issues in the Uruguay Round: NBER Conference Report, National Bureau of Economic Research, Inc.,1988: pp. 47-59. Dr. Pelzman was Professor of Economics, George Washington University at the time of article publication.
28. Ibid., p. 54.
29. Thomas Grennes, “The Multifiber Arrangement and the Management of International Textile Trade,” CATO Journal, March 1989, Vol. 9 Issue 1: pp. 107-131. Dr. Grennes was Professor of Economics at North Carolina State University when this article was published.
30. Ibid., p. 129.
31. Amy Glasmeier, Jeffery W. Thompson, and Amy J. Kays, “The Geography of Trade Policy: Trade Regimes and Location Decisions in the Textile and Apparel Complex.” Transactions of the Institute of British Geographers, New Series, Vol. 18, No. 1 (1993): pp. 19-35. Dr. Glasmeier was Associate Professor of Geography, Department of Geography, Pennsylvania State University; Jeffery Thompson and Amy Kays were research associates, Community and Regional Planning, University of Texas, Austin.
32. Ibid., pp. 31-32.
33. Ashe Hate, Shisir Khanal, John Larsen, Paul Smart, Romania Soria and David Sanni, “The Expiration of the Multi-Fiber Arrangement: An Analysis of the Consequences for South Asia.” Public Affairs Workshop, International Issues, University of Wisconsin-Madison, Spring 2005. The aforementioned authors were graduate students at the La Follette School of Public Affairs at the University of Wisconsin and were enrolled in the school’s Public Affairs 860: Public Affairs Workshop, International Issues, the capstone course in the international public affairs program.
34. Ibid., p. vii.
35. James Harrigan and Geoffrey Barrows, “Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement,” The Review of Economics and Statistics, Vol. 91, No. 2 (May 2009): pp. 282-294. When published, both James Harrigan and Geoffrey Barrows were with the International Research Department of the Federal Reserve Bank, New York.
36. Ibid., p. 18.
37. Amrita Narlikar, The World Trade Organization: A Very Short Introduction (Oxford University Press: New York, 2005). Upon publication, Dr. Narlikar was University Lecturer in International Relations at the Centre if International Studies, University of Cambridge.
38. Ibid., preface.
39. Pietra Rivoli, The Travels of a T-Shirt in the Global Economy (Wiley & Co: Hoboken, NJ, 2005). When published, Dr. Pietra was Professor of International Business at Georgetown University’s McDonough School of Business.
40. Ibid., p. 171.
41. Ibid., p. 171.
42. Rachel Louise Snyder, Fugitive Denim: A Moving Story of People and Pants in the Borderless World of Global Trade (W. W. Norton & Co.: New York, 2007). At the time of publication, Rachel Snyder was a freelance reporter living in Cambodia and Chicago.
43. Ibid., p. 313.
44. Ibid., p. 313.
           
Bibliography
Books
Aggrawal, Vinod K. Liberal Protectionism: The International Politics of Organized Textile Trade. University of California Press: London, 1985.
Bonacich, Edna (Ed.), Lucie Cheng, Norma Chinchilla, Nora Hamilton, Paul Ong. Global Production: The Apparel Industry in the Pacific Rim. Temple University Press: New York, 1994.
Cline, William R. The Future of World Trade in Textiles and Apparel. Institute for International Economics: Washington, DC, 1987.
Dey , Palash Kishore and Md.Tawfique Hasan Sumon. Effects of Post Multi-Fiber Agreement on Bangladesh Readymade Garments. Lambert Academic Publishing: New York, 2011.
Krishna, Kala Marathe and Ling Hui-Tan. Rags and Riches: Implementing Apparel Quotas under the Multi-Fibre Arrangement. University of Michigan Press: Ann Arbor, MI, 1998.
Narlikar, Amrita, The World Trade Organization: A Very Short Introduction. Oxford University Press: New York, 2005.
Rivoli, Pietra. The Travels of a T-Shirt in the Global Economy. Wiley & Co: Hoboken, NJ, 2005.
Snyder, Rachel Louise. Fugitive Denim: A Moving Story of People and Pants in the Borderless World of Global Trade. W. W. Norton & Co.: New York, 2007.
Journals
Aggrawal, Vinod K. “The Unraveling of the Multi-Fiber Arrangment, 1981: An Examination of International Regime Change.” International Organization, Vol 37, No 4. (August 1983): pp. 617-645.
Brambilla , Irene and Amit K. Khandelwal & Peter K. Schott, 2010. "China's Experience under the Multi-Fiber Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC)." NBER Chapters, in: China's Growing Role in World Trade, National Bureau of Economic Research, Inc.: pp. 345-387.
Dean Judith M. “The Effects of the U.S. MFA on Small Exporters.” The Review of Economics and Statistics, Vol. 72, No. 1 (Feb., 1990): pp. 63-69.
Dean Judith M.  “Market Disruption and the Incidence of VERs Under the MFA.” The Review of Economics and Statistics, Vol. 77, No. 2 (May, 1995): pp. 383-388.
Douglas, Sara U. “The Textile Industry in Malaysia: Coping with Protectionism.” Asian Survey, Vol 29, No. 4 (April, 1989): pp. 416-438.
Douglas, Sara U. “The Administration of Textile and Apparel Quotas: A Case Study of Malaysian Policy and Its Implication for the U.S..” Clothing & Textiles Research Journal, July 1992, Vol. 11 Issue 1: pp. 1-9.
Fan, Jessie X.; Lee, Jinkook; Hanna, Sherman. “Are Apparel Trade Restrictions Regressive?” Journal of Consumer Affairs (December 22, 1988), http://www.thefreelibrary.com/Are apparel trade restrictions regressive?-a053436481 (accessed April 26 2012).
Glasmeier, Amy, Jeffery W. Thompson, and Amy J. Kays, “The Geography of Trade Policy: Trade Regimes and Location Decisions in the Textile and Apparel Complex.” Transactions of the Institute of British Geographers, New Series, Vol. 18, No. 1 (1993): pp. 19-35.
Grennes,Thomas, “The Multifiber Arrangement and the Management of International Textile Trade,” CATO Journal, March 1989, Vol. 9 Issue 1: pp. 107-131.
Harrigan, James and Geoffrey Barrows. “Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement,” The Review of Economics and Statistics, Vol. 91, No. 2 (May 2009): pp. 282-294.
Hate, Ashe, Shisir Khanal, John Larsen, Paul smart, Romania Soria and David Sanni. “The Expiration of the Multi-Fiber Arrangement: An Analysis of the Consequences for South Asia.” Public Affairs Workshop, International Issues, University of Wisconsin-Madison, Spring 2005.
Kathuria, Sanjay, Will Martin and Anjali Bhardwali. “Implications for South Asian Countries of Abolishing the Multifibre Arrangement.” NCAER-World Bank WTO 2000 South Asia Workshop, December 20-21, 1999. Revised version, World Bank, November 2001.
Pelzman, Joseph. “The Multifiber Arrangement: Is There a Future Post Uruguay Round?” in Issues in the Uruguay Round: NBER Conference Report, National Bureau of Economic Research, Inc.,1988: pp. 47-59.

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