Sharon Schroeder

AMRC, along with Hong Kong Christian Industrial Committee (HKCIC) and Documentation for Action Groups in Asia (DAGA), hosted a conference for Chinese NGOs on Codes of Conduct and the Multifibre Arrangement (MFA) from August 2-4, 2004, at the Macao Institute for Tourism Studies. This article focuses on the MFA discussion.

Sweatshop Watch, US, Katie Quan
The MFA was part of a worldwide trade agreement from 1974, whose purpose was to protect the jobs and businesses of North Americans and Europeans. The MFA set up systems of quotas that limit the inputs of apparel from one country to another. When manufacturers in one country come close to using up all the quotas in their country, they either bid against each other for unused quotas or shift production to other countries with unused or unlimited quota.

In 1994, World Trade Organisation (WTO) members agreed that the MFA would terminate on December 31, 2004. Over the 10-year transitional period, quotas would be gradually eliminated. Part of this bargain meant that North American and European countries would give up their quotas and protection of their markets, and developing countries would agree to WTO rules on intellectual property rights, privatisation, and deregulation of their own domestic markets.

The phasing out of the MFA has not gone according to schedule, however; half of the quota eliminations have not taken place. There is widespread fear that production will dramatically shift in 2005 mainly to China.
While workers are afraid of losing their jobs, the governments have not prepared for job loss by adding policies to increase social protection for workers who lose jobs or to establish economic development programmes that will substitute for loss of jobs in the apparel industry.

The international union movement called for an extension of the MFA even though MFA regulations specifically do not allow an extension. This situation causes a dilemma for worker advocates who want to support the workers, but not a protectionist trade agreement.

Free trade, as well as race and trade are important issues for worker advocates to consider. Is there really such a thing as free trade that can actually benefit workers? In terms of race and trade, there has already been some bashing of China in documents, which ignores the situation of global trade and capitalists in the interest of workers. The capitalist WTO may also need some reform.

Oxfam – Hong Kong, Carlitos Escueta
There are several problematic issues with the MFA/ATC (Agreement on Textiles and Clothing):
1) Endloading: The ATC’s schedule for transition, whereby countries would free a certain percentage of their textile/clothing industry every three years, did not indicate which products to liberalise at which time.
2) Alternative methods of controlling trade after the quotas end: Whenever developed countries label an import as a threat to their local industry, they can call it dumping, which is against WTO rules, and the industry can be shut down.
3) Rules of origin: The country from which a product comes determines whether it passes the grade to be opened up from the developing countries to developed countries.
4) MFA decision makers: The implementing institution deals with issues of transparency, and decides how much of a voice developing countries can have.
5) Limited market access: On 1 January 2005 not everything will become free trade. There will be tariff arrangements and other barriers to full market access.
6) Relationship between the MFA and labour: This relationship revolves around lost jobs both in the North and South, where industries have developed around quotas.

Even with quotas in place, China produces a lot of clothing, which is bought by the US and EU among others. After the MFA/ATC expire, the US has predicted that supplies from China would increase from 16 percent to 50 percent, and other countries’ proportions will shrink. The China market has less dependence on export earnings from clothing and textiles, and they have a strong manufacturing foundation. There are still some limitations in terms of transportation and bureaucracy, which will still keep investors wary.

Oxfam urges northern countries to reduce tariffs on clothing and textiles to the average for manufactured goods (four percent) by 2010. They should also halve their overuse of dumping regulations, adopt more fair rules of origin requirements, and provide financial and technical assistance for Least Developed Countries (UN standard).

All Ceylon Federation for Free Trade Unions, Sri Lanka, Lalitharanjani Deduwakumara
In the private sector in Sri Lanka, migrant and garment workers represent the majority of the wage earners. Sri Lanka’s competitiveness depends mainly on wage costs, raw material supplies, and infrastructure for transport and marketing, as well as physical proximity to markets.

With the MFA phase out, Sri Lanka may lose, as it depends on imported fabric and on external marketing/buying groups; it may not be able to compete with even lower cost producers. There will be major shifts in production locations. The majority of workers, who come from the rural areas, would have a difficult time returning to their villages. While the consequences of the MFA phase out are obvious, neither the government nor the industry dealt with the situation until recently.

Fair Trade Alliance, Philippines, Angelito R Mendoza
The Philippines textiles industry began during the American colonial period. After 1974, the MFA became the driver of a tremendous surge in the production of exports to the US.

The Free Trade Alliance advocated a shift from being an export-oriented industry to being a domestic consumption industry. Garment workers are highly skilled and productive. The government should not give up WTO commitments, but should apply and enforce safeguards and use anti-dumping laws. Labour laws and standards should be enforced. Industry leaders are asked to invest resources for this project.

Asia Monitor Resource Centre, Apo Leong
Macao has a population of 448,500, half of who are non blue-collar workers. Wages for Macao workers are higher than in China, so many migrant workers sign one or two year contracts. There are 25,000 legal migrant workers, and an estimated 30,000 undocumented migrants. Many come in large groups, dispatched by a government-controlled employment agency. Workers are contracted for an average wage of 5,000 MOP (US$1 = 8 MOP); however, the reality is closer to 2,000 MOP.

Womyn’s Agenda for Change (WAC), Cambodia, Ros Sokunthy
Cambodia began opening its market in 1993. The clothing industry currently employs approximately 230,000 workers in mainly foreign-owned factories.
After the MFA, factories may relocate. Some Cambodian factories are trying to create a niche for ethically produced garments.

Ching-Jen Health and Safety Service Center, Taiwan, Tsai Chih Chieh
Taiwan used to have much more textile production than it does now. The impact of the MFA on Taiwan is uncertain. There has recently been increased investment in China. Taiwanese leaders do not want to rely too much on China.

Macao Labourer and People’s Spirit Association, Wong Pui Lam
In 2000, street actions led the government to retrain workers who only had primary education, as well as those aged below 55, to help them enter the labour market.

Macao’s EPZ was created because of the MFA and WTO so that investors and the government would not have mass relocation of jobs to China. However because of the bilateral CEPA (closer economic partnership agreement) between the Macao government and China. Macao products going to China would not be taxed, and vice versa. With CEPA, the cross-border EPZ would have no relevance.

Renmin University, Luo Siqi
Beijing has almost no collective labour relations.
After the MFA phase-out, industry in China may gain a greater share of the global market, but it will not benefit over the long term. There is very little industry control and local governments protect the competitive low wage. Other countries complain of dumping and no environmental protections, which may result in new trade barriers. Now, there are customs duties and trade agreements, as well as non-tariff barriers.

There are countermeasures against these problems. But trade unions are unable to negotiate because there are not many of them, and the officials involved are unrepresentative of workers, dominated by the employers and administration.

China needs to combine Corporate Social Responsibility (CSR) with traditional models of labour relations in the textile and clothing industry, although suppliers might be reluctant to invest in CSR after the MFA ends.