The Agreement on Textiles and Clothing and the Restructuring of Global Textile Trade

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The Agreement on Textiles and Clothing (ATC) marked a turning point in the governance of international textile and clothing trade. Created as a transitional framework, the ATC guided the global textile sector away from protectionism and towards a more liberalised and rules-based trading system under the World Trade Organization (WTO). Its termination in 2005 reshaped the competitive dynamics of the global fashion industry, prompting a re-examination of market access, trade equity, and the future of industrial development in many parts of the world, particularly in Africa.

Historical Context and Rationale for the ATC

For several decades prior to the ATC, the global textile trade was dominated by the Multifibre Arrangement (MFA), a system introduced in 1974 that allowed developed countries to impose quotas on imports of textiles and clothing from developing nations. The MFA was ostensibly created to protect domestic industries from rapid surges in imports, but in practice, it institutionalised trade restrictions that hindered the full participation of developing countries in global trade.

The establishment of the WTO in 1995 ushered in a broader commitment to free and fair trade. As part of this shift, the ATC was adopted to gradually phase out the MFA and integrate textile and clothing trade into the multilateral system. The ATC provided a ten-year transitional period during which existing quotas would be progressively dismantled, concluding with full integration into WTO rules by 1 January 2005.

Mechanics and Implementation of the ATC

The ATC was structured around four stages of quota liberalisation, each occurring over a set period. It required WTO members to eliminate import quotas on textile and clothing products in three phases before the final stage of full integration. Countries were expected to increase the share of trade they liberalised over time and apply WTO principles such as national treatment and non-discrimination.

Although the ATC created a framework for liberalisation, its implementation was uneven. Major importers like the United States and the European Union delayed the removal of quotas on sensitive products until the final stage. As a result, the full benefits of the agreement were not felt until its expiration, creating uncertainty and limiting the preparatory capacity of smaller exporters.

Impact of the Expiration of the ATC on Global Trade

The end of the ATC in 2005 had immediate and far-reaching effects. Without quota restrictions, countries with competitive advantages in textile and apparel manufacturing, such as China and India, expanded their global market share rapidly. China, in particular, became the world’s largest textile and clothing exporter, prompting concerns about overconcentration and dependence on a few dominant suppliers.

For developing countries that had benefited from preferential access under the MFA and ATC, the post-2005 landscape posed significant challenges. Countries such as Bangladesh, Sri Lanka, and Cambodia saw mixed results. Some retained competitiveness due to low labour costs and trade preferences under schemes like the Generalised System of Preferences (GSP). Others, lacking scale or efficiency, struggled to compete with larger producers.

Implications for Africa’s Textile and Clothing Sector

The African continent experienced both gains and losses in the post-ATC world. Many African countries had relied on quota-free access to developed markets under the MFA and later the ATC. With the removal of quotas, they faced increased competition from more efficient Asian producers. This led to factory closures and job losses in countries that had not developed the infrastructure or capacity to compete globally.

However, some African countries were able to leverage other trade agreements, such as the African Growth and Opportunity Act (AGOA) in the United States, to maintain or expand their exports. Ethiopia, Kenya, and Lesotho, for example, emerged as important players in the global value chain, supported by targeted industrial policies and foreign investment in garment manufacturing.

Nevertheless, the long-term development of Africa’s textile and clothing sector requires more than temporary trade preferences. The continent needs policies that support value addition, local processing of raw materials like cotton, infrastructure development, and skills training. Strengthening intellectual property protections, including geographical indications and traditional knowledge, can also help African producers carve out unique niches in the global market.

Looking Ahead: Lessons from the ATC Era

The termination of the ATC revealed the vulnerabilities of countries that relied heavily on trade preferences without building internal capacity. It also exposed the imbalances in global trade that persist despite multilateral rules. For policymakers and fashion law scholars, the ATC offers a case study in transitional trade policy and the importance of aligning legal frameworks with development objectives.

Going forward, African countries must take a strategic approach to global trade. This includes investing in regional integration through frameworks like the African Continental Free Trade Area (AfCFTA), improving compliance with international labour and environmental standards, and fostering innovation in textile production and fashion design.

The story of the ATC is not merely one of trade liberalisation. It is a reminder that the rules of global commerce are not neutral. They are shaped by political and economic power. As such, legal and policy interventions must be designed to ensure that trade serves as a tool for inclusive growth and sustainable development.