TNCs and the removal of textiles and clothing quotas

This study argues that the removal of import quotas on clothing and textiles is likely to lead to greater dominance by transnational corporations (TNCs) relying on economies of scale and consolidating production in larger factories in countries where economic fundamentals are sound. In numerous developing countries, clothing and textile production is already dominated by East Asian TNCs that operate factories. It is noted that the dismantling of quotas on 1 January 2005, following the expiration of the WTO Agreement on Textiles and Clothing, is expected to increase competition for the foreign direct investment (FDI) that drives production and exports in the clothing and textile sectors. Furthermore, it predicts that the end of the quotas will lead to tougher requirements on countries that aspire to be export bases for such products.