Political Timeline

Political Timeline

1948: General Agreement on Tariffs and Trades (GATT) established

  • This agreement – signed by 23 countries following WWII – is implemented to boost post-war economic recovery efforts
  • Aims to increase international trade by eliminating/reducing tariffs, quotas, and subsidies
  • Explicitly prohibits that trade agreements discriminate against supplying countries
  • Acts as a precursor to the World Trade Organization (WTO)

1961: Short-term arrangement regarding international trade in Cotton Textiles (STA) ratified.

  • Adopted by 20 countries, this arrangement imposes unilateral quotas on cotton-based textiles and clothing in cases where the exporting country does not voluntarily restrict exports
  • Primarily acts as an attempt to limit domestic market disruption in the US
  • Goes directly against the principles established by GATT

1974: Multifibre Agreement (MFA) implemented

  • Expands the products covered by the STA – covers more than just cotton textiles
  • The MFA was a system of bilateral quotas governing textile and apparel exports by developing countries to the United States, Canada, and the European Union. These quotas favored textile and apparel industries in developed countries by limiting import competition.
  • Encourages countries like China, South Korea to set up factories in countries like Bangladesh to utilize their unused apparel export quotas
  • At this time, the average wage for a US clothing worker is $3.79/hr. In comparison, it is $0.75 in Hong Kong, $0.29 in Taiwan, and $0.22 in South Korea

1974: Generalized System of Preferences (GSP) program introduced

  • Established by the Trade Act of 1974, this program continues to promotes economic growth in developing countries by providing duty-free treatment to over 3,500 products. Most apparel articles are excluded from the GSP

1977: MFA renewed by GATT

1981: MFA renewed by GATT for a second time

1986: MFA renewed by GATT for a third time, this time extending product coverage.

  • Under this renewal, vegetable fibre products exports are capped
  • Decision to renew is a polarizing one – major importing country widely approve, while developing and exporting do not

1991: Agreement on Textiles and Clothing (ATC) proposed

  • Aims to gradually remove global textile quotas and eliminate the MFA
  • Designed to be phased in over the course of a decade. This is to allow developed countries to restructure their textile industries in order to adjust to increases in competition

1995: World Trade Organization formed

  • Based off the tenets established by GATT, it’s founded to help facilitate global trade cooperation

1995: ATC goes into effect

  • Ratified by the WTO, it is binding for all member states
  • Set up in four stages of quota liberalization. The first stage is triggered in 1995. In this first stage, textile import limits are raised 16%
  • Total textile imports in developed countries rises from 5% to 5.8%

1998: ATC second stage goes into effect

  • Textile import limits are raised from 16% to 33%
  • Total textile imports in developed countries rises from 5.8% to 7.25%

2001: Everything But Arms (EBA) Initiative developed

  • In conjunction with the ATC, this trade initiative is introduced and adopted by the EU  to better introduce developing countries to the global economy
  • Relieves LDCs (least developed countries) of their tax obligations when exporting the EU countries. You can find a list of current LDCs here
  • Similar to the US’s GSP program, however unlike the GSP, textiles are covered

2002: ATC third stages goes into effect

  • Textile import limits rises from from 33% to 51%
  • Total textile imports in developed countries rises from 7.25% to 9.21%

2005: ATC reaches full integration

  • All quantitative restrictions on textile exports are lifted

2007: ATC’s effects on american

  • US textile production falls for a 10th straight year, and US employment in the

industry falls 9.2%

  • In the EU, production falls 6.4%

2008: Global economic recession

  • Demand from major importing countries grinds to a halt
  • Results in a consolidation among a limited number of large apparel exporters, while many smaller exporters are cut out of the chain

2009: China emerges as the clear winner from the ATC and recessionary conditions

  • Exporter consolidation allows China to grasp 41% of all total apparel exports, up from 22% when the ATC was implemented in 1995
  • Asia-Pacific regions grasps an additional 3.6% global market share between the beginning of the recession and the end of 2009

2013: Rana Plaza Incident

  • Bangladesh – now the world’s second largest apparel exporter – suffers a tragedy when an 8-story apparel factory collapses, killing 1,135 textile workers
  • Sparks fierce debate among both importing and exporting countries about worker condition in developing countries. Increases global awareness
  • Leads to the Bangladesh Accord on Fire and Building Safety

2014: Developing countries take control of textile and apparel manufacturing

  • Since the ATC’s implementation, India, Vietnam, and Bangladesh have taken the ranks of second, third, and fourth biggest apparel exporter (behind China), each holding around 4-5% of total global exports

2015: 20 straight years of waning US apparel jobs

  • In the 20 years since ATC’s implementation, the US continues to experience year-over-year decline in apparel manufacturing and textile jobs