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framework.

There have been two contrasting views regarding the effect of MFA on the

developing countries.

One has criticised increasing protectionism in

OECD

markets

as

neo-protectionism,

whereas

the

other

has

taken

note

major of the

positive impacts of MFA in promoting the textile and

developing countries. to country because of

In reality, the actual effects of MFA the varying economic conditions and

garment industry in differed from country experiences in global

trade. The implications of exporting countries and new

MFA differed particularly between long-standing

exporters

of

textile

and

clothing5.

For

new

entrants

such as Bangladesh, MFA proved a blessing since it induced

from more advanced economies to Bangladesh.

It can

be

industrial re-location said that Bangladesh

as a garment exporter was created by the MFA regime6.

The sudden surge of Bangladesh garments in the OECD markets led in 1985 to a fresh imposition of quotas by some countries like the UK, France, the US and Canada. Later the UK and France lifted restrictions and subsequently only the US

and

Canada

were

implementing

quotas

for

Bangladesh

RMG

exports.

The

US

restrictions affected growth at that time

Bangladesh’s RMG sector significantly was mainly owing to the US market.

because the export Implementation of

quotas 1986.

caused a decline in absolute terms for most items in the first months of However after a transition period, in 1987 the level of growth increased

again, mainly due to diversification into non-quota items (Wiig 1990: 154-159).

5 Raffaelli (1994: 61) delineates the effects as follows: limitation of competitive exports; disruption to individual lines of production; transference of resources to less efficient lines of production; discouragement and /or distortion of investment; switch from less sophisticated products to different, more sophisticated products; improvement in quality; transference of production to third countries; fight for a guaranteed share of the market; quota ownership and attendant problems; costs of quota management and political costs.

6 Besides the industrial relocation by quota-hoppers, political instability in neighbouring Sri Lanka led to a buyers’ shift to Bangladesh (Rahman 1993: 5).

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