'It could drive down prices and lead to dumping. US and European department stores tell me they are worried about this because it will affect prices, quality and logistics. Bottlenecks may develop, as it may not be possible to deliver all orders on time.'
Willy Lin Sun-mo
Hong Kong Textile Council
AND HE MAY be speaking the truth about what will happen immediately after the Multifibre Arrangement (MFA) is finally dissolved next year. There certainly will be some dislocation in the garment industry. I am cheering for it, however, and there are good reasons why you should too.
The background here is that the rag trade has always been one of the most resistant around the world to the lowering of import barriers. Producers in developed countries have long shuddered at the prospect of seeing their domestic markets undercut by low-priced foreign competition.
The MFA was therefore introduced in 1974 by international agreement to give them time to adjust to changed circumstances. It is a cumbersome bureaucratic structure that works by having every importing country assign quotas for specific garment categories to every exporting country.
For consumers it amounts to a double cheat. Not only do its restrictions cause them to pay much more for clothing than they really need to pay, but the difference from the true cost of this clothing goes to foreign quota holders rather than to their home governments in the form of tariffs.