2. A chronology of the events that led to the multifibre agreement International trade policy has for many decades used quantitative import restrictions as a means of achieving specific development outcomes. This form of protection provides local industry with limited protection from foreign competition, which would have been the case if foreign products were in free competition in the domestic market. Quotas are fundamentally different from other policy instruments, such as tariffs, because they limit import competition, regardless of direct price considerations. In other words, quotas remove part of the incentive for foreign suppliers to compete on price despite import duties, because quantitative restrictions completely remove costs and prices from the equation. In monitoring the evolution of the Multifibre Agreement (MFA) and, later, the WTO Agreement on Textiles and Clothing (ATC), it should be stressed that quantitative restrictions on textiles and clothing are contrary to the original word and spirit of certain basic principles contained in the General Agreement on Tariffs and Trade (GATT). After it came into force in early 1948, the agreement contained provisions relating, directly or indirectly, to quantitative restrictions. Thus, Article XI (general elimination of quantitative restrictions) explicitly prohibits quantitative restrictions (and related export and import licences), except in a small number of exceptional circumstances (for example. B export restrictions to temporarily alleviate food shortages in the country). In addition, Articles I (general treatment of the nation`s most favoured nation) and XIII (non-discriminatory management of quantitative restrictions) stipulate that countries` trade policy measures must not discriminate between supplier countries. In the United States (United States), early trade restrictions on the textile and clothing sector took the form of a domestic agricultural policy that limited cotton imports. This followed an increase in imports that threatened prices and price stability for local cotton producers.
The resulting upward pressure on cotton prices has resulted in downstream textile and clothing producers eroding some of their competitiveness. Subsequently, the United States entered into a bilateral agreement with Japan (one of the largest foreign suppliers of cotton and cotton textiles) that would limit its textile exports to the United States for several years, while setting partial quotas for different categories of specific products. In Europe, quantitative restrictions on some imports have been even greater and cover most of the textile and clothing sector. Facilitation took the form of Article XII of the GATT (balance-of-payments coverage restrictions), but which did not establish the degree of balance-of-payments disruption sufficient to trigger a reaction, leaving countries with the opportunity to allay their fears about this mechanism. In 1961, under pressure from various countries, including the United States, an official forum was created within the GATT to deal with the increasing market disruptions (and their threat) in major importing countries. The forum resulted in the conclusion of a “short-term agreement on international trade in cotton textiles” (STA) – specifically note cotton textiles – and, therefore, a “long-term agreement on international trade in textiles” (LTA). The STA, adopted by nearly 20 countries, provided for the unilateral introduction of quotas for cotton textiles and clothing in cases where the exporting country did not voluntarily and satisfactorily limit itself to its exports. The LTA, which initially covered a five-year period and was renewed in 1967 and 1970, served as the basis for other, even more targeted restrictions.