China and the MFA *

            

Details


Case Code : CLIBE044
Publication date : 2005
Subject : Business Environment
Industry : Textile
Length : 03 Pages

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Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

The caselet takes a detailed look at the situation in the textile market after the phasing out of the Multi Fiber Agreement (MFA). It explores the conditions that are favorable for China to dominate textile exports to the US and focuses on the actions of the US to counter the domination of China in the textile industry and protect domestic industries from cheap Chinese imports. It also takes a glance at China's act of imposing export tariffs to ease out the fears of other competing textile exporting countries.

Issues:

Aftermath of MFA on textile exports and imports.
Benefits to developing countries like China after the phase-out of MFA.
Chances of China dominating the US textile market.
Measures taken by China to alleviate fears in importing countries.

Introduction

China, the world's largest exporter of apparel, is expected to be the major beneficiary of the phasing out of the Multi Fibre Agreement on 1st January 2005.

Many foreign multinational clothing companies, especially US-based companies like Wal-Mart, Gap, and Liz Claiborne who have been importing textiles and apparels from at least 30 countries will now source from countries with large production capacities such as China, and to some extent from India...

Questions for Discussion:

1. Do you think the phasing out of MFA will help Chinese textile industry to capture the US market?
2. The countries that signed the Istanbul Declaration are apprehensive about the future prospects of their textile industries due to the phasing out of the MFA. Are their apprehensions justified? If so, how can they equip themselves to protect their textile industry?

Key words:
Multi Fibre Agreement, The National Council of Textile Organizations (NCTO), World Trade Organization(WTO), product-specific safeguard, US Department of Commerce, US Association of Importers of Textiles and Apparel, Istanbul Declaration, North American Free Trade Agreement (NAFTA), Caribbean Basin Trade Partnership Act (CBTPA), Euro Cotton




* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.