Main Features of the Uruguay Round Agreement on Textiles and Clothing, and Implications for the Trading System

The GATT Uruguay Round negotiations in the area of textiles and clothing aimed to secure the integration of this sector in the GATT on the basis of strengthened GATT rules and disciplines by bringing to an end the Multi-Fibre Arrangement (MFA). The main features of the Agreement and the likely implications for the trading system are discussed. Major elements of the Agreement on Textiles and Clothing include: 1. membership of the agreement, 2. the integration of textiles and clothing into GATT 95, 3. elimination of remaining restrictions, 4. the Textiles Monitoring Body, and 5. safeguard measures. Major policy implications of the implementation of the Agreement include: 1. implications for prices, trade and investment, 2. tariffs as a main trade policy instrument, and 3. new opportunities for developing countries. The decision to dismantle the MFA contributes to encouraging trade liberalization and to strengthening the integrity of the system by accepting that textiles and clothing will be treated like any other manufactured good.