The End of the Multi-Fibre Arrangement / Agreement on Textiles and Clothing (MFA/ATC)

The expiration of the Multi-Fibre Arrangement (MFA) on December 31, 2004, has the potential for bringing momentous changes to patterns of production and trade in textiles and clothing and for affecting global labor standards and working conditions. The FLA -- individually and through collaboration with other multi-stakeholder initiatives -- has been engaged in a continuing assessment of the implications of the expiration of the MFA, seeking to provide information and analysis to its constituents about the post-MFA environment. To that end, the FLA has dedicated this Resources page to bring together its own documents and those of other organizations on the impact of the expiration of the MFA and responses to the post-MFA environment.

Resources:

Please read "The Expiration of the Multi-Fibre Arrangement (MFA) and its Consequences for Labor Standards in the World
By Auret van Heerden and Dorothee Baumann, FLA
FLA Board Resolution
FLA Monitoring and post-MFA Production Shifts
FLA Collaboration
Guidance for FLA Participating Companies and Licensees on Retrenchment
Guidance for FLA Universities

 

By Auret van Heerden and Dorothee Baumann, FLA
For the full article as published in the 2005 Annual Public Report, please click here (PDF)  

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 to the detriment of global labor standards and working conditions.

This paper explores 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, it seeks 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?

Based on the FLA’s on-the-ground work experience in China, it presents an assessment of the situation in that country that attempts to capture the many facets of its complex labor rights environment. The third section discusses 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.

For the full article as published in the 2005 Annual Public Report, please click here (PDF)

 

In 2004, the FLA Board adopted a resolution urging FLA-affiliated companies to adopt guidelines managing shifts in sourcing, and to support efforts of the MFA Forum and others to address the consequences of quota elimination.

(The full text) The FLA Board:

Urges FLA companies to adopt guidelines to ensure they fulfill their commitment to manage shifts in sourcing in a manner consistent with the FLA Charter, the Workplace Code of Conduct and national law; and

Encourages all companies to support the work of the MFA Forum and other multi-stakeholder initiatives addressing the consequences of quota elimination.

The Fair Labor Association will continue to participate in ongoing dialogues concerning the expiry of the MFA/ATC, and will support efforts to address the social and economic impacts of the expiry. The FLA is also working to develop guidance for companies and universities so as to enhance their ability to protect workers who may be affected by these changes.

In accordance with its mission to improve workers' lives, the FLA seeks to prevent against the potentially negative impacts of a post-MFA world for workers. The FLA's independent monitoring system is a tool that is being used to protect workers who may be affected by the phase-out.

The FLA's Code Implementation and Monitoring Program is a start. The FLA has engaged in multi-stakeholder initiatives that aim to develop a common understanding of the impacts and identify possible course of actions. Lessons learned from both sources has contributed to the development of guidelines for FLA constituents. Please read further about our activities related to the FLA monitoring program, collaboration and guidance offered to FLA Participating Companies and Colleges and Universities.

 

The FLA methodology of Code implementation and monitoring addresses some of the issues that arise with changing patterns of sourcing. The FLA independent external monitoring of FLA Participating Companies and Category B and C Licensees examines whether companies are ensuring that their supplier factories are complying with local laws and Code standards. If they are not, the FLA requires the companies to develop and implement remediation plans at those facilities. In most countries, local law requires that factories contribute to social security on behalf of workers and pay workers severance if they are dismissed for economic reasons.

 

The FLA is a founding member of the MFA Forum, with FLA President and CEO Auret van Heerden serving on its executive committee. This collaborative effort among multilateral and national public institutions, trade unions, NGOs, businesses, and multi-stakeholder initiatives, was born out of a discussion that identified common concerns among a number of participants in the Nike Stakeholder Forum, held in February 2004. The group aims to develop a common understanding of the likely impacts of MFA expiration on the apparel-manufacturing countries and to identify possible course of action to mitigate the social consequences of this, based on respect for international labor rights. Click here to learn more about the MFA Forum.

 

The FLA has developed guidance for participating companies and licensees on retrenchment. This document guides Participating Companies and licensees on closures of factories for economic reasons in their supply chain. The guidance document is currently under review and will be made available soon.

 

The FLA has developed a working document that provides guidance for FLA universities seeking to address the post-MFA impacts. Please read the working statement (PDF).