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Multi-Fiber Arrangement, textiles (MFA)

(WTO) An international compact under the World Trade Organization (WTO) that allows an importing signatory country to apply quantitative restrictions on textiles imports when it considers them necessary to prevent market disruption.
The MFA provides a framework for regulating international trade in textiles and apparel with the objectives of achieving “orderly marketing” of such products, and of avoiding “market disruption” in importing countries. It provides a basis on which major importers, such as the United States and the European Community, may negotiate bilateral agreements or, if necessary, impose restraints on imports from low-wage producing countries. It provides, among other things, standards for determining market disruption, minimum levels of import restraints, and annual growth of imports.
The MFA provides that such restrictions should not reduce imports to levels below those attained during the preceding year. Bilateral agreements usually allow for import growth tied to anticipated greater demand.
Since an importing country may impose such quotas unilaterally to restrict rapidly rising textiles imports, many important textiles-exporting countries consider it advantageous to enter into bilateral agreements with the principal textiles-importing countries.
The MFA went into effect on Jan. 1, 1974, was renewed in December 1977, in December 1981, and again in July 1986. It succeeded the Long-term Agreement on International Trade in Cotton Textiles (“The LTA”), which had been in effect since 1962. Whereas the LTA applied only to cotton textiles, the MFA now applies to wool, man-made (synthetic) fiber, silk blend and other vegetable fiber textiles and apparel. Note: The MFA will eventually be phased out as a result of the Uruguay Round of the General Agreement on Tariffs and Trade. See quotas; bilateral trade agreement; Uruguay Round; General Agreement on Tariffs and Trade.

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