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Bangladesh and the MultiFibre Agreement


Code : ITF0005

Year :

Industry : Textails

Region : :Banladesh USA

Teaching Note: Available

Structured Assignment : Available

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Introduction: The Ready-made Garments (RMG) sector has been the most important sector of the Bangladesh economy. Fromjust nine RMG enterprises in the late 1970s to over 3000 by the year 2003, the export-oriented RMG industry of Bangladesh has indeed experienced an extraordinary evolution. In 2003, the Bangladesh garment industry employed 1.5 million people, and 85% of these being women.3 The garment industry accounted for 75% of the total export earnings of Bangladesh. Globalisation and the introduction of MultiFibre Arrangement (MFA) in 1974 changed the textile and garment industry of Bangladesh. It established quotas to limit the amount of exports to countries whose domestic industries were facing serious damage from rapidly increasing imports. On January 1st 1995, World Trade Organisation (WTO) replaced theMFAwith theAgreement on Textiles and Clothing (ATC).According toATC, by 2005, the ready-made garment sector has to be fully integrated into GATT rules and the existing quotas have to come to an end. The removal of the MFA quotas by 2005 threatened to increase competition in the global garment industry and limit Bangladesh’s growth. The survival of the industry depended upon its ability to take advantage of the Generalised System of Preferences (GSP). Under GSP, Bangladesh could receive preference benefits from EU and other countries.

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