The end of the multifibre agreement : a case study of South Africa and China

Abstract

The Multifibre Agreement ("MFA") regulated textile trade until 1 January 2005. It was predominantly focused on curtailing textile exports from developing countries, like South Africa and China. With the end of the MFA, a textile crisis occurred in South Africa due to the domination of the domestic market by more affordable Chinese textile products. This case study is applied to illustrate the inadequacy of domestic legislation to provide for the resolution of an international trade dispute that affects an industry. No legislation refers to the resolution of the trade dispute by entering into a Memorandum of Understanding ("MOU"), or recourse to the neutral dispute settlement body of the World Trade Organisation ("WTO"). Due to the absence of legislation that directly addresses either forum, all the power is vested• in the government to determine the appropriate course of action. Applications brought by textile industry representative bodies like TEXFED, CLOTRADE and SACTWU were inadequately investigated due to the limited powers of the independent investigative body, ITAC, and were ultimately abandoned. The government entered into a MOU with the Chinese government and in doing so violated international agreements, rights and obligations. An analysis of the inadequacy of the MOU that was entered into and the suitability of the WTO as dispute settlement body is conducted. It is concluded that the current legislation is inadequate in that it doesn't provide for recourse to the WTO and in that it doesn't clearly set out the obligations on government and the independent powers of an independent body.