Beyond Phase-out Of Quota: An Exploration Of China's Textiles And Clothing From Internal And External Dimensions

In economics, people and nations benefit from the perfect market economy, which allows each firm, each region and each country to produce what they are best at and to exchange their product for the goods and services of others. However, in the real world, free trade is the exception. Take the textiles and clothing (T&C) industries as an example. For several decades, international trade in T&C has been subject to significant constraints such as quota restrictions and other tariff and non-tariffs barriers. A series of Multi Fiber Arrangement (MFA), for example, governed textiles and clothing trade under the General Agreement on Tariffs and Trade (GATT) between 1974 and 1994.On 31 December 2004, the Agreement on Textiles and Clothing (ATC) ended, and with it the quota system for international trade in T&C. As a result, trade in these sectors undergoes a fundamental change. By 2005 the sector has been fully integrated into the WTO General Agreement on Tariffs and Trade, and all quotas have disappeared. Only tariffs remain as a market entry mechanism. This stage is called "post-quota era".A market currently characterized by artificial comparative advantages and managed trade realigns, as market forces become the dominant determinant in the sector. A shift in market fundamentals considerably affects exports from many developing countries and economies in transition, where national incomes depend to a large extent on exporting garments. Countries and firms in these countries must prepare for a new reality in T&C trade.China is the world's largest textile producer and exporter and therefore this sector may stand to gain most from a more liberalized trading system upon accession to the...