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The Expiration of the Multi-Fibre Arrangement (MFA) and its Consequences for Global Labor Standards

By Auret van Heerden and Dorothée Baumann, FLA

The expiry of the Multi-Fibre Arrangement (MFA) in December 2004 heralded the end of the quota system that had governed global trade in apparel for over forty years. Apparel industry analysts predicted that the elimination of the quota system would lead to a shift of production to China and other countries where production costs -- and labor standards -- are low. Labor rights commentators warned that such shifts would put pressure on other countries to reduce the degree of labor law enforcement in order to encourage or retain investors and buyers. This would be to the detriment of labor standards and working conditions globally.

In this Chapter we explore how the end of the quota system in textile and clothing (T&C) trade in particular, and geographic shifts in production more generally, will affect labor rights – both in individual countries and world-wide – and how the FLA should respond to this new environment. Specifically, we seek to address the following question: has the increase in the percentage of market share achieved by China led to an improvement or a decline in the respect for labor rights in China and other countries?

The Chapter is structured as follows. In the first section, we provide some background information on the MFA, some early statistics on trade patterns after the end of the MFA, and a discussion of the factors responsible for China’s ascent in the T&C market. In the second section, we assess the consequences of the MFA phase-out for labor rights. Based on the FLA’s on-the-ground work experience in China we will present an assessment of the situation in that country that attempts to capture the many facets of its complex labor rights environment. In the third section we discuss the role of the FLA in China, emphasizing changes in FLA monitoring methodology and how that methodology might be relevant in analyzing changes in worker rights in China.