March 3, 2022

The Agreement on Textile and Clothing (ATC) was a significant agreement that took effect on January 1, 1995, as a part of the Uruguay Round of the World Trade Organization (WTO). The agreement aimed to phase out the quotas that textile and clothing imports were subject to, which helped the industry to grow and evolve, making it more competitive in the global market.

Before the ATC, the textile and clothing industry was heavily regulated by quotas, which limited the amount of goods that could be imported from specific countries. These quotas were intended to protect local textile and clothing manufacturers in developed countries from cheap imports from developing countries.

However, these quotas had several negative effects. Firstly, they limited the amount of choice available to consumers, as imports from certain countries were restricted. It also resulted in an uneven playing field, where local manufacturers would enjoy artificially inflated prices, making them less competitive and innovative. The quotas also created inconsistent trade policies among different countries, further complicating international trade.

The ATC aimed to address these shortcomings by phasing out quotas over a ten-year period. The agreement sought to provide reassurance to textile and clothing manufacturers in developed countries who were concerned about the impact of increased competition, by providing a ten-year phase-out period during which they could adjust to the changes in the market.

The ATC also allowed for an increase in trade between developed countries and developing countries, as the removal of quotas led to increased competition, driving down prices and making these goods more accessible. This led to the growth of the textile and clothing industry in developing countries, which had previously been limited by quotas.

Overall, the ATC was a significant milestone in international trade. It opened up new opportunities for textile and clothing manufacturers, allowed for increased competition, and provided more choices for consumers. Its success demonstrates the importance of international cooperation and agreements in the promotion of fair and sustainable trade practices.