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countries alone. Newly industrialising countries, like the NIEs and ASEAN countries, which used to be the recipients of foreign investment, became part of globalisation as sources of direct investment.

The case of Desh Garments, one of the pioneer garment companies in Bangladesh,

clearly

illustrates

the

role played

by

foreign

capital

in

the

establishment

and

the

operation

of

mills.

Desh

Garments

was

established

by

an

ex-civil servant

with

technical collaboration with Daewoo, a leading Korean business group.

Daewoo

mainly took responsibility for procurement of raw materials and marketing of the company’s products in the international market and for training of managers and workers. When Desh’s operations proved successful, a large number of local entrepreneurs entered the sector with foreign buyers retaining major control in the

marketing operations of the local mills.

In other words, Bangladesh

was

incorporated

into

the

lowest

tier

of

the

international

subcontracting

system.

Prior to its collaboration with Desh Garments, Daewoo’s involvement in Bangladesh was limited to trading. Besides the rising cost of labour and a labour shortage in Korea, the main reason for Daewoo to invest in the RMG sector in Bangladesh was the import restrictions against some of its garment products in the US and other OECD markets under the MFA regime (Rhee 1990: 336).

Since its inception in 1974, MFA was extended several times with widening

coverage. the 1950s.

The history of trade control in the textile sector can be traced back to The US, which had been an exporter of textile articles, had become a

net importer by that time. particularly Japanese textiles,

The into

increased penetration of imported products, the US market prompted the US government,

under pressure

from the textile lobby, to

take a protectionist attitude against

free

trade

in

textiles.

The

US

raised

the

issue

at

the

General

Agreement

on

Tariffs

and

Trade

(GATT)

in

1959

and

consequently

a

Short-Term

Arrangement

on

cotton

articles

was

signed

in

1961.

The

arrangement

became

the

Long-Term

Arrangement in 1962.

In 1973 this was then extended into the MFA, which was

enlarged to cover exports in general

all kinds of textile and clothing articles. took the form of bilateral quotas negotiated

Restrictions on within the MFA

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