Spencer 1

Morgan Spencer

Independent Study

Dr. Steinmetz

27 April 2019

Monetary Colonialism: The Spiral of the Multi Fibre Agreement

The Downward Pressure on Cost in Textile & Clothing Industries of Developing Nations due to

the Removal of the Multi Fibre Agreement by the Recommendation of the IMF
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Introduction

Why are the lowest-income countries producing clothes that they ultimately do not wear?

For whom are these low-income countries producing? And, what factors are driving the Textile

and Clothing industries of low-income countries to low-cost production? The rise of “sweatshop”

labor in low-income countries in the last half-century has been exponential. Almost exclusively

in the last decade has the evolution of ethical consumerism brought to the forefront of media the

ethical problems in outsourcing supply chains to low-income countries. The Rana Plaza collapse

in Dhaka, Bangladesh in 2013 brought mass attention the unaudited health and safety standards

in outsourcing of multinational corporations after over two-thousand were injured and

approximately 1,134 garment workers died. The conversation about consumer “voting” for

companies with their purchases shifted towards those exhibiting aligned moral and social values.

The lives lost were woven into brand names like Nike, The Children’s Place, Joe Fresh, Mango,

Benetton, and more. However, outsourcing cannot be exclusively blamed for the recently

intensified low-cost production pressure epitomized in the Rana Plaza tragedy. Trade

liberalization does, in fact, hold corporations responsible for their own ethicality in supply

without cross-national auditing. But, holding them entirely responsible for the collapse is

misguided. For, a sequence of events at both local and global levels set the conditions, in

low-income countries like Bangladesh, for a disaster such as Rana Plaza to occur. In order to

analyze problematic factors other than self-regulation by multinational corporations, it is

necessary to also look at international monetary and trade organizations influencing policy

decisions as well as investment in the Textile & Clothing industries of low-income countries.
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The T&C industry can often be considered the “first step” up on the industrialization

ladder based upon learning by doing and knowledge spillovers, agglomeration effects, local

linkages, and upgrading the role of value chains in Foreign Direct Investment (Keane 11).

Traditionally, the T&C sector was “responsible for significant job numbers in developed

countries, but over the last few decades [1980s-2000s] the sector has become the first step

towards manufacturing production and employment for many developing countries,” (Keane 11).

The T&C industry is also largely debated in economic discourse, sometimes preferentially

treated, due to the decentralized production (Fig. 1).

(Fig. 1, Heron 3)
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Important to realize, is that in the clothing chain, “branded marketers have managed to

redistribute most functions upstream from design to financially independent

manufacturer-suppliers. At the same time, their supply-base of manufacturers has been organized

in such a decentralized way that “buyers” could optimize the comparative advantage of different

production locations (with regard to labour costs, delivery times, MFA quota ability1, etc),”

(IISD 28). For sake of no better words, this paper will refer to low-income countries as

developing (GDP Per Capita 2019 Projected less than ~$2,200), and high-income countries as

developed (GDP Per Capita 2019 Projected > $42,000). This trend mirrors the shift of

high-income countries growing the service industry sector and outsourcing manufacturing to

lower-income countries. However, the potential for long-run growth and development depends

not only on the attributes of the investors, but also on the “quality and effectiveness of

government policies and institutions in developing countries to build on this investment,” (Keane

9). Globalization functions today with an intense reliance on both local and international policy

to account for global wealth inequality and deter exploitation of labor. Thus, application of

international law through the International Monetary Fund and the World Trade Organization

must differentiate economies in order to effectively foster growth. However, it is important to

keep in mind that local instability can prevent governments from being effective in the protection

of their citizens. Thus, the operation of international law, foreign direct investment, and

multinational corporations’ reliance on unstable local policy to protect both the citizens and the

long-run economy is misguided. Of course, one approach to this theorization could include

environmental impacts, but this paper focuses solely on the laborers, or producers in low-income

1
Later Defined, see section entitled “Multi Fibre Agreement”
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economies of the T&C sector. When organizations such as the IMF and WTO approach

problems of global development universally, low-income countries, particularly, with developing

economies lose out. Thus, it is necessary to determine the most beneficial approach for a

particular country’s workers and apply specialized solutions when attempting to bolster mutually

beneficial advantages in monetary policy and investment. When global policy, foreign direct

investment, and multinational corporations effectively leverage resources and capital from

low-income countries, disguised as mutually beneficial investments, a new form of colonialism

persists: ​monetary ​colonialism. In this regard, “the globalization of textile production and the

fashion industry can highlight some of the biggest problems in the morality of both international

policy and corporate global morality,” (Masharu 3).

Definition of “Monetary Colonialism” in T&C

Traditional colonialism is the policy or practice of acquiring full or partial political

control over another country, occupying it with settlers, and exploiting it economically through

resource extraction. Monetary colonialism, instead, in the frame of this paper is a neocolonialist

field of study in which powerful, high-income countries exert dominance over low-income or

post colonial nations, despite lack of ownership. In this essay I do not intend to discredit

international monetary policy, and in turn foreign direct investment and multinational

corporation outsourcing, in the T&C sector as malicious. For, often argued in economic literature

is the comparator of what workers would have earned without outsourcing of multinational

corporations, additional infrastructure development of foreign direct investment, and additional

stimulation of loans from the IMF. However, very little economic thought outside of colonial

purview analyzes the consequences of imposed organizational intervention to internal

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development. Instead, I intend to argue that there could be a more beneficial relationship possible

for the T&C industries in low-income countries, often referred to as “developing.” In economic

terms, developing countries could be trading on a higher scale of comparative advantage. Thus,

monetary colonialism is the result of an unequal advantage for higher-income countries in the

investment in low-income countries, be it from private corporations or international

organizations. While “advertising” investment for growth in low-income countries, the

quantitative “growth” is not representative of detrimental social and economic factors such as

low-cost production pigeonholing low-income countries into unskilled production systems, the

creation of reliance on import-substitution, multinational corporations re-introducing and

subsequently monopolizing technology to create reliance, the subsequent change necessary in

local policy from imposing global, and rapid growth in interest rates and structural adjustment

policies.

This definition of monetary colonialism is comparable to dependency theory, developed

in the late 1950s by the director of the United Nations Economic Commission for Latin America.

This theory challenged the idea of the “Pareto optimal,” or that economic growth was beneficial

to all. Instead, it suggested that the “World Systems Approach” created poverty as a “direct

consequence of the evolution of the international political economy into a fairly rigid division of

labor which favored the rich and penalized the poor,” (Ferraro 58). Thus, in rationalizing this

theory, high-income countries are comparable to the Marxist bourgeoisie, while low-income

countries are the proletariat equivalent. However, the lack of unification and division of

nation-state boundaries in globalization not only disallow a “revolution,” but also dislocate

problematic parties. For, Nike, and other brands found in the wreckage of Rana Plaza, is not the
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sole party to blame in the collapse of ethicality in supply chain. The remainder of this paper will

analyze how the hierarchical organization of international organizations favoring high-income

countries affected the elimination of a specific policy, the Multi Fibre Agreement, that deeply

affected workers in the T&C sector in low-income countries (GDP Per Capita 2019 Projected

less than ~$2,200)2.

The Players

International institutions today often determine and facilitate the enactment of monetary

policy based upon information conglomerated and recommended by international institutions

such as the International Monetary Fund (IMF) and the World Trade Organization (WTO). In

order to understand the implications of the IMF and WTO on policy in the T&C sector of

low-income countries, it is first necessary to understand how the international institution operates

and what agency low-income, or developing, countries have. The International Monetary Fund

(IMF) is an organization of 189 countries, established at the Bretton Woods Conference in 1945,

working to “foster global monetary cooperation, secure financial stability, facilitate international

trade, promote high employment and sustainable economic growth, and reduce poverty around

the world,” (International Monetary Fund Fact Sheet). The goal of the IMF was, and still is,

imposing a Western approach of market liberalization, privatization, fiscal austerity, and free

trade that “had produced economic growth in the developed countries,” particularly after World

War II (Montecinos 1). In the IMF’s ten basic principles entitled the “Washington Consensus,” a

new focus on trade liberalization (eliminating quotas and tariffs) (principle 6), openness to

foreign direct investment (principle 7), and deregulation (principle 9) could potentially be reason

2
​Focus Economics 2018
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for the recently intensified low-cost production pressure on low-income countries in the T&C

industry. Thus, the universal application of the IMF’s “Washington Consensus” has effectively

aggregated certain conditions to achieve economic growth as infallible.

The WTO, in comparison, was established out of the General Agreement on Tariffs and

Trade (GATT) in Geneva in 1947. The GATT was an attempt to reduce or eliminate trade

barriers such as tariffs or quotas, aligning exactly with the policy goals of the IMF at

establishment. The GATT eventually evolved into the establishment of the WTO at the Uruguay

Round Agreements in 1994, and has since been run by WTO member countries. The WTO,

however, approaches and subsequently mediates the rules of trade between nations, and often

facilitates trade agreements. Most interesting, however, is the alliance of the IMF and the WTO

in effecting policy decisions: the two institutions work complementary to each other. IMF, in

providing surveillance reports, are important inputs into the the WTO’s reports. According to the

IMF, “the WTO Agreements require that it consult the IMF when it deals with issues concerning

monetary reserves, balance of payments, and foreign exchange arrangements,” (IMF: Fact

Sheets). Thus, enactments of monetary and trade policy are intertwined through the agency of

these two organizations.

Important in analyzing the simultaneous dependency and cooperation in the IMF and

WTO between low and high-income countries is the lack of substantial voting power available to

low-income countries. The IMF operates as a subscription service, in which countries are scaled

based on the strengths of their economies. For, according to the IMF, “quota subscriptions are

central to the IMF’s financial resources. Each member country of the IMF is assigned a quota,

based broadly on its relative position in the world economy. A member country’s quota
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determines its maximum financial commitment to the IMF, its voting power, and has a bearing

on its access to IMF financing,” (IMF Fact Sheet). The higher quota position is determined, in

order, on a country’s average GDP, openness to trade, economic variability, and international

reserves. Thus, low-income equates to low voting power. Low voting power does not only mean

lack of access to financing, but also lack of access to knowledge-diffusion for international

policy decisions due to the interconnection of the IMF and WTO. Many trade agreements are

based upon recommendations from data from institutions such as the IMF. The universal

prescription of trade liberalization has ultimately negatively impacted low-income countries and

disallowed them to have voting power to enact global change in their own territories.

Multi Fibre Agreement

Logically, if the T&C industry can be considered the “first step” on the scale to

industrialization, then the steeper the step becomes, the more difficult it is to achieve

“developed” status. Arguably, the steepening of said step in the T&C sector can be causally

related to the phase out of a particular quota system from the recommendation of the IMF, and in

agreement with the WTO, in 2005: the Multi Fibre Agreement (and its derivative, the Agreement

on Textiles and Clothing, or ATC). Although “the trend in world trade has been toward trade

liberalization since World War II, the T&C trade has remained an exception,” (Goto 203). The

MFA at establishment in 1973 was essentially, “a framework for bilateral agreements or

unilateral actions establishing quotas limiting imports into countries whose domestic industries

were facing serious damage from rapidly increasing imports,” (WTO Textiles: Back in the

Mainstream). Under the MFA, each country had a different quota relative to the “threat” they

posed to high-income markets; thus, for example, in trade between the U.S. and China, “53.1%
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of the estimated $24.4 billion in apparel exports in 2001 from Asia to the U.S. was constrained

by quota,” (Appelbaum 10). Since 1961, special arrangements have been made for trade in the

Textiles & Clothing sector. The textile industry, “like agriculture, was one of the hardest-fought

issues in the World Trade Organization,” (WTO 1). For, the prescription of trade liberalization

was not originally established in the T&C sector as other sectors. The Short-Term Arrangement

Regarding International Trade in Cotton Textiles (STA 1961), followed by the Long-Term

Agreement (LTA 1962) were international agreements based on recommendations from the IMF,

and established by the WTO, that “laid down regulations governing the illegal quota restrictions

on cotton textiles,” (McLean III 264). The purpose of the policies were to provide “slow but

steady growth for LDCs [Less-Developed Countries], which would better contribute to their

economic development than would sudden increases,” (McLean III 264).

However, disguised under the “purpose” promoted by the WTO and IMF was that “the

LTA was also designed to protect the textile industries in industrialized countries,” (McLean III

264). It is recognized that the Multi Fibre Agreement was originally an attempt to regulate the

stronghold that developing countries had as a source of cotton textile production. For “countries

whose domestic industries were facing serious damage from rapidly increasing imports,” were

those that had originally had an effective market prior to the import-substitution: simply,

developed countries. High-income, developed countries did not want low-income competitors to

gain a stronghold on their production systems. For example, after colonial independence, the

Swadeshi movement in India, (re)initiated by Mahatma Gandhi in 1922, increased cotton

production steadily. The movement aimed to revitalize internal consumption and production

through protectionist campaigns in order to effectively save the country from the recessive
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effects of import-substitution. Under previous British colonialism, the Brits were able to control

the Indian markets and sell mass-manufactured textiles back to the India. However, after

emancipation of colonial rule, India’s market continued to be flushed with British textiles for the

low-cost. Gandhi initiated the Swadeshi movement to propagandize internal production in order

to recover India’s economy and halt the effects of import-substitution. However, the success of

this movement on India’s regaining a stronghold in the T&C industry filled the US and EU with

a competitive fervor. The United States Proposal, “United States Proposal for a Long-Term

Agreement” from the Provisional Cotton Textile Committee, written just before the enactment of

the LTA, outlined the “recent rapid growth of cotton textile production in certain countries” as a

“natural development in their industrialization process,” (GATT 1961). According to the

proposal, the growth in world textile exports resulted from substantial increases in exports by

Japan, India, and a “number of newer textile suppliers (Hong Kong, Korea, Pakistan, Portugal,

Spain, Taiwan, and the United Arab Republic,” (GATT 1961). However, it also stated that

“exports of cotton textiles from these countries, as indicated above, were not distributed

uniformly among the importing countries…for example, in 1960 around 70 percent of the cotton

textile imports of the United Kingdom and the United States came from these countries,” (GATT

1961). Thus, the establishment of the LTA (1961) from the power the EU and US had in the IMF

and GATT at the time was meant to control the growth of low-income countries so that they

were unable to compete with the US and EU as “superpowers.” Ironically, the prescription of

trade liberalization only was applied through the IMF and the WTO when high-income countries

such as the United States and United Kingdom were in economic peril, as delineated through the

example of the MFA. This agreement was ultimately meant to hold back the developing and
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maintain the dominance of the high-income U.S. and EU. The exports of the Indian market had

begun to infiltrate their markets, and the reaction is clearly visible in utilizing biased

international organizations to control the effect.

However, while holistic goal of the Multi Fibre Agreement was not altruistic, the

outcome of the agreement ironically served the development of low-income countries. While

countries further along in the industrialization process, or “middle-income,” were stunted on the

economic ladder, low-income countries previously lacking production capacities were mobilized

to make up for the capacity on supply (Fig. 1.1)3.

​(Right, Fig. 1.1)

3
​Fukunishi 6
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(Right, Fig. 1.2)

Since the MFA was imposed in 1973, multinational corporations continued to search for lower

cost investment strategies in order to have the highest margins on products. While “countries that

do not have appropriate complementary factures in place will usually struggle to make incentives

effective as a basis for attracting quality investment and development in the long run,”

multinational corporations began to invest in the creation of supply chains in developing

countries due to the restrictions of the MFA (Fukunishi 34). The lack of ability for a single

country to have a monopoly in the sector pushed for more countries to enter into the international

market to fill demand. Low-income countries saw the benefits given to them under the

establishment of the MFA, and began developing Export Processing Zones (EZPs) to attract

investment from multinational corporation in high-income countries like the U.S., EU, and the

Asian Big Three. EZPs are “primarily established in developing countries in order to attract

foreign capital and know-how, and generally specialise in the production of labour intensive

consumer goods, mostly clothing,” (Fukunishi 34). These zones are provided with a “host of

concessions” such as tax benefits, infrastructure, and other commercial policies related to supply

of low-skilled labor. These concessions were most successful when coinciding with skill

development policies, which “attracted garment assemblers but has since managed to attract

higher value added, electronic investors who in turn, in coordination with local governments and
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institutes attempt to develop skills providing incentives through the whole education system,”

(Keane 35). For, the cases of Costa Rica, several Asian countries, and Mauritius, show that

during the reign of the MFA, previously poor countries were able to glean investment and

establish growth when local governments facilitate skill development in response to international

policy. While knowledge-diffusion and skill training is not always a result of these zones, with

local government pressure they can prove effective in educating laborers in technology in

low-income countries. As a result of the MFA, “the quota system...provided many developing

countries with access to markets they otherwise would likely not have achieved on the basis of

competition,” (Appelbaum 6). Further, while often mass production in developing

industrialization in low-income countries leads to wage reduction, the skills and technology

fostered in the EZPs provided opportunity for entry, skill-development, and less downward

pressure on wages due to monopolization. However, in realizing that low-income development

was subsequently taking over the industry, the MFA evolved a “parallel system of trade

governance that was both highly discriminatory and, worse still, targeted specifically at the

developing countries,” (Heron 40). Thus, in realizing the beneficial implications to low-income

countries, the IMF and WTO stepped in to control their growth. For example, in 1986 the MFA

was revised to include “safeguards against import surges and language to legitimize outright

cutbacks in quotas for major low-cost suppliers and further derogations from the statutory 6

percent annual growth rate,” (Heron 38). Thus, in the realization of what a more liberalized, yet

controlled, system could do for low-income countries in the T&C industry, the WTO and IMF

perhaps manipulated the policy in order to prevent growth in low-income countries.

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Corporate Greed

With the growing emphasis on high-income countries’ outsourcing in the late 1990s, the

necessity of protectionist policy to maintain the integrity of the US and EU markets from foreign

import became less necessary. The U.S. and EU economies moved toward service-focused

ventures leaving internal manufacturing, to the extent of the MFA, to be no longer necessary to

maintain domination. Thus, considering the stronghold these high-income countries had in

voting power of the IMF and influence in the WTO, it should not be surprising that the MFA was

eliminated in 2005 due to the strength low-income countries gained in production. Curiously,

only four years prior, in 2001, China had entered into the WTO. And, from then on, the

international market was freely able to determine prices in the T&C sector. Multinational

corporations from high-income countries were able to put more downward pressure on pricing in

low-income production because of the increased, unregulated competition. The loss of entire

textile and clothing markets in many low-income countries, such as in Zambia, and thus a fall

from the first step toward industrialization, ensued. For, there was no longer incentive for

cost-intensive investment in smaller markets. Further, relationships between high-income

countries like the U.S. and those in the EU with Asian suppliers has effectively rendered T&C

manufacturing obsolete in low-income countries despite additional tariffs added to Chinese

production. And, ultimately, after the phase-out of the MFA, the “scale of production in China

has had implications for other developing countries trying to get on the T&C ladder,” (Keane 3).

For, “eliminating quotas...consolidate[s] production into larger companies and a smaller number

of supplying countries, because of the economies of scale that can be achieved,” (Appelbaum 6).

I must preface this argument with the fact that some aggregate data “do not show a significant
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trend change since 2005,” (Whalley 1). However, other data are “consistent with theoretical

predictions of more trade volumes, lower product prices and regional trade agreements (RTAs)

effects on trade volume are smaller, there is less transshipment and quota-hopping investment,

and a higher country concentration of exporters after the end of the MFA,” (Whalley 1). Thus,

the ambivalent nature of data is often difficult in coming to a universal conclusion about the

impacts of the MFA. Nonetheless, main findings in all data, summarized by John Whalley and

Daqing Yao’s “Assessing the Effects of the Multi Fibre Agreement After it’s Termination,” are

as follows: (1) since 2005, the T&C industry has increased trade, (2) the average price of

clothing and textiles is lower, as well as the quality of garments (3) the concentration of

particular countries in production has condensed, (4) the regional trade of clothing and textiles

are smaller,” (Whalley 2). Out of these aggregated effects discussed by economists, greater

social implications arose for the laborers themselves in low-income countries facing increased

competition for T&C exports. What aggregate data of exports may not display are the impacts on

the decisions made by low-income countries, low-income consumers, and low-income laborers

in order to account for the downward pressure on price. But, what exactly are those impacts

formed out of the ending reign of the Multi Fibre Agreement quotas? What factors combined

with the end of the MFA caused detrimental social impacts for the laborers in low-income

countries? Three documentaries in particular delineate social problems from a narrative

perspective in low-income countries likely exacerbated by the elimination of the MFA: T Shirt

Travels (PBS), Bitter Seeds (ITVS), and ​The Garment Girls of Bangladesh = Bostrobalikara

(Ind.)​.

Import-Substitution Effect: Zambia

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Out of the elimination of the MFA arose the problem of multinational corporations

pulling out of the EZPs set-up to promote development of the T&C industries in low-income

countries. One example of which is the Export Processing Zones Act of 2001 in Zambia. This

EZP was meant to foster growth in the Zambian textile sector. However, with the removal of the

MFA in 2005, African countries in total lost more than 250,000 jobs in the T&C sector (UN:

Africa Renewal), and the Zambian textile industry was unable to keep up with the global

competition unleashed. While the U.S. and the EU attempted to account for the losses in the

textile sector with agreements like Everything But Arms (EBA) and the African Growth

Opportunity Act (AGOA), the elimination of the MFA in 2005 “led to a number of African large

factories closing down,” (Munoni 12). For, inadequate and high cost infrastructure was incapable

of maintenance without the investment of foreign corporations for development. Instead, a

curious phenomenon has entirely replaced the textile industry in the Zambian market: donation.

Filmmaker Shantha Bloemen, in her documentary ​T Shirt Travels​ (Bloeman 2001) explained in

her research in Zambia, that “in 1991, when the country’s markets were opened to free trade,

container load after container load of used clothing began to arrive in Zambia, undercutting the

cost of the domestic manufacturers and putting them out of business,” (Bloeman 2001). The

import-substitution of the second-hand market from clothing donations, sold at an extremely

low-cost from retailers like Goodwill. Termed ​Salaula (​ Fig. 1.3)​,​ the second-hand clothes

weakened the necessity of textile and cotton production enough for the removal of the MFA to

eliminate it entirely. Workers, instead, began to partake in the resale market of ​salula​ in order to

better support themselves. However, because the donations are so plentiful, the added value of

selling them barely adds additional income to laborers. The depletion of the textile factories left
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workers in the textile industry with even less of an income than low-cost low-skill garment

production.

(Right, Fig. 1.3: Salaula)

Thus, the combination of the impossibility to compete and the menace of import-substitution has

effectively eliminated the possibility for Zambia to gain a stronghold on the “first step” on the

industrialization ladder. And, Zambia is just one example of the fall of the textile industry

causing developing economies to become reliant on import-substitution.

Monopolizing Lives: India

Bitter Seeds​ by filmmaker Micha Peled, in his globalization trilogy, follows the

introduction of biotech (Bt) farming in India after the drive to liberalization of trade from the

WTO in developing countries. Similar to the exacerbation of import-substitution in Zambia, Bt

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cotton took over the seed market because of the advertising of higher yields. Because cotton is a

particularly volatile plant, low-income farmers attempted to capitalize on higher yields because

of their struggle to survive. Between 2003 to 2005, India produced roughly 16% of the world’s

total cotton output, and “much of the growth of cotton production after World War II is due to

improved yield per unit rather than to the expansion of planting area,” (IISD 12). While China

had been producing roughly 24% of the world’s cotton, the MFA eliminated export quotas and

further increased Chinese cotton exports. Thus, yields were crucial for small farmers in India to

compete in the production of Cotton. Thus, the introduction of Bt cotton from an American

company, Monsanto, found a way to monopolize the seed market in promising farmers in rural

India protection from the volatility through salesmen and pamphlets to re-educate the farmers on

the new technology. With the introduction did come higher yields for farmers (Fig. 1.4), but the

price of the seeds was still high in comparison to the benefit of the yields because of the input

costs it required.

(Fig. 1.4 IISD)

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According to Peled, to produce higher yields, Bt cotton required more water and fertilizer often

inaccessible to the Indian farmers used to traditional low-tech processes. Roughly 90% of

Vidarbha’s farmers have no irrigation and are rain-dependent, fortifying the idea that Bt cotton is

really only suited for large-scale farms. Further, controversial research in Peled’s documentary

states that the Bt crop required more pesticide use that exponentially grew in price in the switch

to Bt cotton. Yet, despite these facts, the Bt cotton took over the Indian seed market because of

the desperate need for cotton farmers to sell at lower prices in the competitive global market. In

2005, the same year as the removal of the MFA, “Monsanto took part in drafting a U.S. - India

agreement to ease regulations over GM seeds,” (Peled). By 2007, “only genetically modified Bt

cotton seeds [were] sold in the shops...they are non-renewable and must be re-purchased every

year,” (Peled). Thus, the necessity of the Bt cotton left farmers in hopeless cycles of debts, with

the inability to return to traditional cotton plants because of the monopolization stemming from

demand. Peled attributes the debt cycle created by the desire for a greater yield to the increase of

suicides of Indian farmers. According to Indian farmers’ rights activist, Kishor Tiwari, “The

American company Monsanto is responsible for the increase in suicides. Their expensive seeds

have destabilized the farmer community,” (Peled). Tiwari can be seen in Figure 1.4, next to a

chart he made of Vidarbha farmer suicides in 2006. While difficult to substantiate Tiwari’s

claim, partially due to a variety of potential confounding variables, the immense pressure on this

subgroup to survive is incontrovertible due to the international focus on liberalization, without

international protection for the laborers. Perhaps due to the removal of the MFA, the pressures of

competition became so great, they tested the cost of lives.

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​(Fig. 1.4: Peled)

Full-Circle: Bangladesh

Recall the initial discussion introduced in this essay: what other factors caused the Rana

Plaza collapse of 2013? The Bangladeshi clothing trade began from scratch in the early 70s. It

rose because of the protection afforded by the MFA in 1974 that “allowed new producing

countries to come into the scene and excluded the “old” producing countries,” (​Tanvir

Mokammel, 2007). Bangladesh, surprisingly for its small size, developed eight EZPs with 49

factories, Bangladesh became a major player in clothing trade, and employed around 2 million

people, 85% of which are women (​T​anvir Mokammel, 2007). According to Tanvir Mokammel,

filmmaker and director of ​The Garment Girls of Bangladesh = Bostrobalikara,​ the majority of

factory owners in Bangladesh are first generation factory owners. In Mokammel’s interview with

one ex-factory president, Annisul Huq of BGMEA, Huq states that “nineteen licenses are

required to run a factory. If you want to purchase land for a factory, the price is exorbitant, loan

interest rate is 16%. Customs have improved considerably, but there are still problems…”

(Tanvir Mokammel, 2007). While the local economy was improving under the MFA, the main

issue was the “ups and downs of the world market, the whims of international buyers,
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governmental intervention, and after 2008 China [was] entitled to export to Europe,” (Tanvir

Mokammel, 2007). The low-cost push after the elimination of the MFA in order to compete

allowed labor abuses, such as exorbitant hours, low pay, and child workers to worsen in order to

compete in the international economy. And, Bangladesh was able to compete. But, not without a

trade-off in increased labor rights violations. For, according to Stefan Frowein, the European

Commission to Bangladesh, “Fifty-four percent of Bangladesh export go to Europe, EU. The

figures show that when it comes to exports of t-shirts and jeans, for example, the exports are

bigger from Bangladesh than from China, from Vietnam, from Sri Lanka, from Pakistan, and

Cambodia...so Bangladesh is doing very well on the low-end production side of t-shirts, jeans,

and these kind of things,” (Tanvir Mokammel 2007). Yet, the women working in Bangladeshi

factories are referred to as the Bostrobalikra, made roughly $30 a month (2007), and arrive home

daily between roughly 3 or 4 AM. With the removal of the MFA, in May and June of 2006,

“frustration resulted in serious rioting and the destruction of property,” (Tanvir Mokammel,

2007). While the local economy was improving under the MFA, its removal made competition

possible only with further sacrifice in labor abuses. Thus, the elimination of the MFA put

increased pressure on the already low-cost production schemes, ultimately landing on the backs

of the workers.

Conclusion

Ultimately, the removal of the MFA caused either crucial multinational investment

pulling out EZPs in low-income countries or generally increased downward price pressure on

low-income countries that had previously been developing because of the advantages of the

MFA system, or both. Already troubled economies in low-income countries were most affected
 Spencer 23

by the removal, forcing factories and farms to look for even lower cost solutions to maintaining

supply with less export demand. In an effort to find the lowest production cost possible,

developing economies were subjected to compete with China’s production, a country whose

development, industrialization, and labor force vastly exceeded low-income countries in the

T&C sector. Much modern discourse focuses on the internal problems of developing countries,

but the implications of international agreements in combination with local social problems is

often overlooked. While economic data does not always show social impact of the end of the

Multi Fibre Agreement conclusively, the issue lies in quantifying the trade-off low-income

countries faced in labor abuses, rather than solely searching for a change in recorded exports.

This problem in quantification can once again be traced back to studies done by the IMF, already

biased to high-income countries in structure. So, what can change? Where can we go in the T&C

sector in low-income countries? Restructuring the colonial power of international organizations

and quantifying, through narrative investigation, the social trade-offs low-income countries faced

after the elimination of the MFA, rather than relying on inconclusive export data, is certainly a

start. Then, the discussion of reenacting the quota system of the MFA naturally follows.
 Spencer 24

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