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News Tip: End of MFA to "Shock" Global Economy, Duke Professors Say

Some countries, like Mexico, Bangladesh and Indonesia, stand to lose thousands of jobs as large segments of the international textile market go to other countries.

The end of the Multi-Fiber Agreement (MFA) on Jan. 1 will bring about an abrupt shift in the global economy, which could destabilize some developing countries unless the international community works to mitigate its effects, say two Duke University professors.

The MFA, negotiated through the World Trade Organization (WTO), has placed limits, by country, on exports of textiles for 30 years. In 1995, the WTO began to phase out these quotas under the Agreement on Textiles and Clothing, but left the largest reductions in quotas for 2004, the final year of the phase-out.

Some countries, like China and India, stand to benefit greatly from the end of the MFA quotas on the first day of 2005. Other countries -- including Mexico, Bangladesh and Indonesia -- stand to lose thousands of jobs as large segments of the international textile market go to other countries.

"We have to pay attention to the impact this is going to have on countries that are losing out," says Gary Gereffi, a sociology professor and director of Duke's Center on Globalization, Governance and Competitiveness. "A shock this big to the global economy could send a small country into political or social turmoil.

"It's in the interest of the international community that that doesn't happen," adds Gereffi, a member of a National Academies committee on outsourcing. "So now is the time to find ways 'losing' countries can still participate in the post-MFA global economy."

Gereffi and Duke public policy professor Frederick Mayer have been leading a two-year project, funded by the Ford Foundation, that brings together an international group of practitioners and policymakers from business, labor, environmental, government and academic backgrounds to explore ways to ensure that the economic benefits of free trade do not impose excessive costs on workers and the environment.

Mayer says the sunset of the MFA highlights the need to rethink the advice we give to developing countries.

"It is increasingly clear that free trade, alone, is not an adequate development strategy," says Mayer, author of "Interpreting NAFTA: The Art and Science of Political Analysis" (Columbia University Press, 1998). "The countries that will be hardest hit by the end of the MFA did what they were asked to do: They bet on trade. But they are not prepared to deal with the shock they are about to face.

"The answer isn't to abandon free trade, however," Mayer says. "The global economy is here to stay. What we need now is to focus on how to make globalization work."

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