Page 2: The external environment
The textile industry has been characterised by keen international competition ever since the days of mass production in factories. Increasingly this competition is being intensified as global markets are exposed to free competition. In this respect, one of the most significant changes is the phasing out of the Multi-Fibre Agreement, as textiles and clothing are integrated into the General Agreement on Tariffs and Trade. GATT was a global agreement by countries to create free trading arrangements which has recently been superseded by the Multilateral Trade Organisation (MTO).
The Multi-Fibre Agreement (MFA) was set up in the early 1970s, essentially with the intention of trying to control imports from the developing world into the developed world. It consisted of a series of bilateral quotas between exporting and importing countries. In 1993, it was agreed progressively to phase out the MFA over a ten year period. In year one, 16% of textile imports had to be quota free, in year four a further 17%, in year eight a further 18% and in year ten 100%. The overall effect is an ongoing relaxation of quotas.
A major advantage that UK industry has over its European competitors, such as Germany and France, is that of relatively low labour costs.