Contents Summary Introduction What is the Multifibre Agreement? What is the Agreement on Textiles and Clothing? Sri Lanka's flagship- Textiles and Garment Industries What will the likely impact of abolition of quotas be on some other countries in the South Asian region? - Bangladesh - India What are the disadvantages of removing quotas for Sri Lanka Impact on Workers What are the Alternatives Workers and the Alternatives Plan of Action Bibliography

The beginning of 2005 will mark a dramatic change for the Sri Lankan garment industry and the country's economy. Sri Lankan industry has benefited significantly from the MFA. The MFA has certainly attracted foreign investment and created many jobs. However, it appears that many foreign investors have not planned for a long stay in Sri Lanka. This is evident in the unwillingness to implement labour laws and ILO Conventions and the lack of investment in supporting industries, training and development of workers, provision of adequate welfare for workers, and a narrow market.

The quotas will be completely gone by 2005 but unfortunately there appears to be little action from either the government or the private sector who have benefited enormously from the MFA and from the workers of Sri Lanka.

The government needs to urgently diversify other industries in the country to reduce the dependence on the garment and textile trades. Within the industry itself, expansion of both product range and markets is essential if the industry is going to continue.

Although Sri Lanka offers a literate and relatively skilled workforce, there is low motivation to produce at competitive levels due to poor wages and conditions. Investment in technology needs to occur and workers trained to use the new technology.

However, this certainly requires the involvement of workers in the planning and implementation of new strategies. It cannot be left to the government, its agencies and foreign investors. Surely those who provide so much income to the country are entitled to a "say" in how their industry and their livelihoods are to survive and prosper.

This paper aims to provide information on the MFA and stimulate debate within Sri Lanka and other countries in the Asia region that will be affected by the removal of quotas. It could also be used as a basis for awareness raising, education and strategy development. A simpler questions and answer version of this paper is also available. Information will continue to be collected and analysed both from Sri Lanka and other countries that will be affected by the abolition of the MFA. Questions, comments and constructive criticism are welcome.

This paper, on the abolition of quotas in the garment and textile industries by 2005, is meant to stimulate debate and discussion. Although this is still three years away it is critical that debate begins, a plan of action agreed upon and implemented as soon as possible. Changes are occurring now. For example the proposed changes to the termination of employment of workmen act that will impact negatively on workers including those who may lose their jobs as a result of the abolition of quotas under the MFA.

Quotas are part of the "free trade" system and therefore part of neo liberalism. The debate about whether to retain or abolish quotas takes place within this framework. Nevertheless, it is an important debate as workers' livelihoods are at risk and possible scenarios and outcomes need to be articulated and broadly discussed with workers so that other positions, options and eventually a plan of action can emerge. However, the debate should be broader than this and should challenge the current systems of globalisation, including aspects such as the notion of "free trade" and bilateral agreements and articulate alternatives.

This plan of action however must be situated within broader plans that seek to bring about meaningful changes for workers within society generally- a new system free from exploitation and oppression.

The conclusion of the Uruguay Round of General Agreement for Trade and Tariff (GATT), on April 15, 1994 delivered the most significant decisions in the recent history of the international, pervasive regime. The scope of multilateral trade was expanded to cover three major areas that were previously not under the jurisdiction of GATT, namely the General Agreement on Trade in Services (GATS), Trade-Related Intellectual Property Rights (TRIPS) and Trade-Related Investment Measures (TRIMS). GATT also addressed the other two major sectors outside of its control, agriculture and textiles. The other significant event at the Uruguay Round was the advent of the World Trade Organisation (WTO).

The WTO promised to provide a framework for the conduct of trade between its members on matters related to the Uruguay Round Agreements. The WTO pushes "liberalisation" of trade in goods, services and related areas. This has had a big impact upon the economies of both "developed" and "developing" nations. The proponents or propagandists of the WTO regulations would argue that the world community as a whole would benefit from such interventions. However, critics have suggested that the WTO is simply another aggressive tool of the developed world to further extract resources from the developing world for their own benefits, to further serve global capital within the current economic globalisation paradigm.

Perhaps the most significant decision to emerge from the Uruguay Round for Sri Lanka was to abolish the Multifibre Agreement (MFA) for the textile and garment industries. Although it was only supposed to be a temporary agreement, the MFA was extended four times, the last time being in 1986. Now that the WTO wants textiles to be under its control, the abolition of the MFA over a ten-year period commenced from January 1, 1995. As a result, the quota system that has provided some security (albeit with associated difficulties) for those in the industry in Sri Lanka, will be completely abolished by the beginning of 2005.

The abolition of quotas has come about as a result of decisions made by the WTO, of which Sri Lanka is a member. The decision will affect not only Sri Lanka but other countries in South Asia, such as India and Bangladesh, and the entire textile industry that from 1974 until the end of the Uruguay Round was governed by the Multifibre Agreement (MFA).

The introduction of the WTO's Agreement on Textiles and Clothing (ATC) and the ten year phasing out of quotas will mean massive changes in the Sri Lankan garment industry, which presently has a heavy reliance and was built on quota categories. Garment workers will no doubt feel the biggest impact. On the eve of the cessation of the MFA, opposing views about the future of the Sri Lankan garment industry have been expressed, as have strategies for dealing with the abolition of quotas.

Certainly what is apparent, is the need for all interested parties to be involved in developing and implementing appropriate strategies, in order to cope with the changes that the new trade rules will facilitate. All players in the garment industry in Sri Lanka will need to explore suitable alternatives if it is going to survive.

The MFA governed trade in the textile and clothing industry and consisted of A framework of bilateral agreements or unilateral actions that established quotas limiting the amount of imports to countries whose domestic industries were facing serious damage from rapidly increasing imports.

The MFA, intended only to be a temporary arrangement, has been in existence for almost twenty-five years. It received four extensions; these being in 1977, 1981, 1986 and 1994. The MFA provided for the application of selective quantitative restrictions when surges in imports of particular goods are caused. Or threatened to cause damage to the industry of the importing country.

On January 1 1995, WTO replaced the MFA with the Agreement on Textiles and Clothing (ATC).

The ATC is a transitional tool that will be used in place of the MFA until
January 1, 2005. The ATC has a number of defining features. Some of these are:

1. the product coverage, encompassing yarns, fabrics, made-up textile products and clothing;
2. a program for the progressive integration of these textile and clothing products into GATT 1994 rules;
3. the liberalisation process to progressively enlarge existing quotas (until they are completely removed) by increasing the annual growth rate at each stage and:
4. establishment of the Textiles Monitoring Body (TMB) to supervise the implementation of the other provisions.

The TMB consists of a chairperson and ten members acting in their personal capacity. It monitors actions taken under the agreement to ensure they are consistent and it in turn reports to the Council on Trade in Goods, which reviews the operations of the agreement before the implementation of each new step in the process. The TMB also deals with disputes arising from the ATC. If these remain unresolved they are forwarded to the WTO's Dispute Settlement Body.

The ten members are appointed by WTO members according to an agreed grouping of WTO members into constituencies. In January 1995 the General Council decided upon the format of the TMB for the first stage of the quota phase out. At the end of 1997, the second stage (1998-2001) with TMB members from the following constituencies:

1. ASEAN member countries;
2. Canada and Norway;
3. Pakistan and China;
4. the EU;
5. Korea and Hong Kong (China);
6. India and Egypt/Morocco/Tunisia;
7. Japan;
8. Latin America and Caribbean
9. the US;
10. Turkey, Switzerland and Bulgaria/ Czech Republic/ Hungary/ Poland/ Romania/ Slovak Republic/ Slovenia.

There are also two non-participating observers from members not already represented, one from Africa and one from Asia. Members of the TMB are expected not to act as representatives or lobbyists for their respective governments.

The abolition of the MFA/ATC is presently underway and is taking place in four (4) steps. Full phase out of existing quotas is scheduled to occur on 1st January 2005

"The garment industry is Sri Lanka's flagship industry."

The late C.V. Goonaratne, the then Minister for Industrial Development, expressed these sentiments, at a seminar in Colombo to discuss the future of the textile and garment industries. The Minister was addressing a large delegation of the various players in Sri Lanka's garment industry, including the US Ambassador to Sri Lanka and representatives from the union movement, industry management and the government sector.

The Sri Lankan Apparel Exporters Association sponsored seminar held in July 1998 posed the question, "Will you be there when the quotas are gone?" The question referred to the upcoming abolition of quotas on Sri Lanka's garment exports.

Minister Goonaratne suggested that Sri Lanka needed to diversify its industry and that the country depended too heavily on the garment sector. This is supported by statistics from the Central Bank and by Kelegama (1998). The main industrial export is garments.

In 1948, export trade in the country relied very much on three main commodities, tea, rubber and coconut. These three accounted for 96% of export earnings in 1948.

The most significant change has been the dramatic shift from the agricultural to the industrial sector of export trade. The main industrial export in 1996 was garments. Many of the raw materials used in the manufacturing of machinery and leather products for example were imported.

With the advent of Export Processing Zones (EPZ) in 1978, the export of garments and some textiles increased.

In "The Uruguay Round- Textiles, Trade and the Developing Countries", Raffaelli writes,

"One of the realties we must face is that the MFA's existence did encourage the entrance of several countries into the export of textiles and clothing that otherwise would not have been involved; I can mention both within and without the ranks of the MFA members, Sri Lanka, Indonesia, Mauritius, Maldives, Panama and Nepal among others." (World Bank Publication 1990)

Quotas, one form of import regulation, were implemented to protect the industries of developed countries, the MFA to protect the garment industry. Since the implementation of the MFA the means of global production has changed dramatically. Transnational companies (TNCs), both brand label and mega retailers, concentrate their wealth in one or a few countries, sourcing from sub contractors all over the world under conditions that
maximise profit.

Many developing countries were lured into signing WTO agreements such as TRIPS and TRIMS in return for the abolition of quotas under the MFA. Developing countries argued that the abolition of quotas would increase the market access of products produced in their countries to the markets of developed countries. However, the devastating impact on the livelihoods of people in developing countries that will occur through the implementation of TRIPS and TRIMS will far outweigh any possible benefits that might occur from the abolition of quotas under the MFA.

The abolition of quotas will benefit some developing countries, while others will lose dramatically. While the current global production processes are in place, workers everywhere will lose.

The MFA works through bilateral agreements between governments. Sri Lanka's most important markets are the US and EU. In 1997, 60% of all Sri Lankan garment exports were to the US, while 35.1% were to the EU. When a government for the example, the US government, decides to make an agreement, they will negotiate with the exporting country the amount of quotas that can be imported to the US. If a US importer wishes to import a certain category that company must apply for an importing license. If the export quota for that particular country has already expired then the importer will have to go to another company that has a license to import the particular category from that exporting country. If many countries are exporting the same category then it is regulated by the MFA.

The reason why Sri Lankan industry has benefited under the MFA is because of the reasonably large quotas it receives when compared to other apparel exporting countries.

Table 2: MFA Quotas for Apparels in 1997

The high quotas and a semi-skilled, cheap labor force, supported by tax incentives and concessions to foreign investors have made Sri Lanka an attractive country in which to invest. Therefore, the phasing out of the MFA will definitely bring problems to the Sri Lankan economy, unless the economy diversifies or becomes more competitive in the garment and textiles sector. This of course adversely affects workers, many will lose their jobs as a result of the removal of quotas. Those that remain will face extra pressure. As jobs become scarce, it is likely that workers will be faced with further erosion to their already meagre conditions and wages. The rights of workers to organise and bargain collectively will most certainly come under further pressure from a government seeking to maintain the level of foreign investment in the industry.

India

The clothing and textile industry in India is the largest manufacturing industry in the country, accounting for nearly 20% of India's industrial output. For many years, India has produced textiles, having the largest cotton acreage in the world. Since the 1970s has India developed a large-scale clothing manufacturing industry. Prior to this, the manufacturing of clothing was considered a cottage industry. Initial markets were Africa and the Soviet Union. These markets expanded into both the EU and US. By 1987, over 50% of India's garment exports went to Europe.

Like Sri Lanka, investors view India as having cheap flexible labor, which has attracted the likes of Levi-Strauss, Benetton, Lacoste and Pierre Cardin. According to Martin (1996) India has suffered under the MFA because it seems to discriminate against cotton products. Indian cottons were taxed 20% more than other fibres. Quotas have not yet been removed at all on cotton garments. As a result, many products that India has had an advantage in, such as shirts and women's outerwear will not have any of their quotas removed until 2005. This has created a huge demand for quotas amongst India's exporters who specialise in cotton products. This has also lead to quotas being traded on the black market.

During the course of the first and second MFA in the 1970s, Indian exporting companies enjoyed significant growth. The quantities exported rarely reached the quotas. However, during the third MFA, the quotas began to have an effect on Indian exports. Many Indian exporters were unhappy because they felt that they could not mass-produce garments and enjoy the benefits of an economy of scale.

To get around quota restrictions some Indian exporters moved operations to countries such as Sri Lanka and Nepal. Often a local plant would be established using Indian material and technical personnel were sent to oversee production. The label inside the garment would be printed with "Made in Sri Lanka" and not "Made in India".

India then began to expand its markets to non-quota markets such as Australia, Japan and the Middle East.

By the end of the 1986 1994 Uruguay round negotiations, although generally Indian industry was pleased that the garment and textiles industries would come under GATT, it argued that it was "disingenuous to expect that developing countries need to pay for this integration and are obliged to offer reciprocal market access."

It would appear that India would receive a net gain from the elimination of quotas. However, there is a diversity of views on this issue, including amongst the union movement. It already has established markets in non-quota countries as well as a large manufacturing base and locally supplied raw materials. Countries such as Sri Lanka and Nepal do not have the advantages of either India's economy of scale or the access to cheaper local raw materials.

Bangladesh

The garment industry is Bangladesh's "top earner" covering 68% of total exports. Exports rose from USD$31 million in 1983 to USD$1,900 million in 1996. Despite this massive growth, only 30 % of the proceeds from the industry stay in the country. The other 70% is TNC profit and is used to import fabrics and other materials for the industry

Like the governments of India and Sri Lanka, the Bangladesh government has enticed foreign investors with promises of tax breaks. The development of the industry started as producers began to relocate production to countries where wages were lower, namely Asia. Bangladesh featured in the second wave of relocation to Asia due to the formation of the newly industrialised nations such as Hong Kong, Taiwan and South Korea.

In Bangladesh, well over one million women work in the garment industry, which barely existed 15 years ago. At 7.30am the streets of Dhaka are awash with young women emerging from the slums, walking to factories that line the city streets. Women in a factory producing quilted ski jackets for Nike receive the equivalent to USD$0.70 per jacket. A similar jacket will then sell in the UK for the equivalent of USD$150.00.

The country is likely to be a big loser when the quotas are finally removed in 2005. Again, there is a diversity of views on this issue, including amongst the union movement. Some within the union movement argue that there is a large black market for the buying of existing quota. This may or may not be the case and certainly the abolition of quotas would eliminate this practice, however it would still leave Bangladesh without a guaranteed market for export of its garments. Bangladesh suffers from poor infrastructure and a poorly developed textile industry that will have great difficulty in competing with countries with much better infrastructure. Although the "cheap, productive workforce" approach will be used to maintain and attract new foreign investment, Bangladesh may not be able to compete with large-scale producers such as India or China.

The five most likely disadvantages or drawbacks for Sri Lanka are:

a) declining competitiveness;
b) heavy reliance upon quota categories;
c) high concentration on a few markets;
d) lack of direct marketing links with major purchasers and;
e) a heavy reliance on imported inputs/materials.

Decline in Competitiveness

The current trends in the Sri Lankan garment industry show a slowdown in market growth, which could cause damage to the industry if measures are not taken to address this backward trend.

In the early 1990s, Sri Lanka's garment industry consisted of 891 garment factories, 33 garment factories employed over 1,000 workers.

This has resulted in factories here being of an inefficient size. The small size of the factories has prevented the achievement of technical economies of scale in the industry as a whole. Compare this to the massive manufacturing infrastructure in place in countries such as India and China.

Another reason for a decline in competitiveness, from the economic rationalist race-to-the-bottom perspective, is the relatively high labor costs in Sri Lanka. Many international buyers no longer consider Sri Lanka to be a low wage country. When compared to Bangladesh (USD$0.16/ hour), India (USD$0.27/ hour), China (USD$0.25/ hour) and Indonesia (USD$0.28/ hour), Sri Lanka with its USD$0.35/ hour looks expensive. These figures do not take into account the cost of living in these exporting countries. The only issue that concerns the multi-national investor is that the wages are kept low, regardless of the impact that has on the workers and the respective communities in which the workers live.

Furthermore, according to A.G. Nimal Karunatilaka from the Sri Lanka Department of Commerce, "it is widely believed that labour productivity in the Sri Lankan garment industry is rather low due to lack of proper training, wastage and absenteeism."

There is a lack of significant investment in advanced technology in the country that could also affect competitiveness. The majority of factories are small scale and there is an obviously lack of new investment in technology. More than half of the firms in the industry work on old sewing machines.

Electricity prices in Sri Lanka are high when compared to other countries in Asia and supply is often interrupted due to the reliance on hydro-electricity, which recently has been hampered due to unfavourable weather. In 1996 and now (2001), production in the industry has been reduced because of a long drought. Due to the country being recently put on a "war footing" by the government, prices for electricity, communications and other services have increased through the imposition of a National Security Levy (NSL) currently at 8.11% (9/2001). The NSL is on top of a 12.5% Goods and Services Tax (GST).

Reliance on Quota Categories

The introduction of the MFA can be clearly seen as one of the key factors in the rapid expansion of the Sri Lankan textile and clothing industry. Foreign investment was enticed with the assistance of more liberal economic policy from the late 1970s under then President J.R. Jayawardene.

Although rapid growth took place, the number of products was limited to those that came under the MFA. More than 90% of Sri Lanka's garment exports to the US, such as shirts, blouses, trousers and undergarments come under the quota (MFA) system. These items are nearly all of a standardised type. Sri Lanka is established as a supplier of low-price, low-medium quality garments. "It has not moved into the high fashion, expensive branded clothing." Only 7% of Sri Lanka's garment exports to the US are not bound by quotas. Due to the heavy reliance on low-priced quota-bound products, the Sri Lankan garment industry is almost certain to face severe competition once the MFA is finally dissolved in 2005.

Too Few Markets

According to Sri Lanka customs nearly 97% of all garments exported from Sri Lanka are quota-bound. The removal of the quotas will expose the vulnerability of an industry that has focussed on too small a market. It will be difficult for the Sri Lankan industry to compete with other countries that have already established non-quota markets.

With the phasing out of the MFA/ATC approaching, there has been an attempt to diversify exports of products that do not come under the quotas and to export to non-quota countries such as the Middle East and Australia. However, it is apparent that many of the firms, which are aimed at producing standardised products under the MFA are not flexible enough to adapt to the demands of new customers, who perhaps prefer a wider product range but in smaller quantities.

Lack of Marketing Links

Nearly all of Sri Lanka's marketing of garments is done through Colombo based purchasers. There is little established direct links between US-based entrepreneurs and Sri Lankan manufacturers. US buyers know very little about Sri Lanka. It is estimated that Sri Lanka has lost over USD$10 million due to the removal of duties of certain duties.

Dependence on imported Inputs

Despite the rapid growth in the industry over the last two decades, the development of supporting industries such as fabrics and accessories has been slow. As a result, the garment industry relies very much on imported inputs. According to Kelegama and Unamboowe, nearly 65% of all material inputs were imported. This then affects local value adding keeping it at a low level.

Due to the need to import inputs there is often a long lead-time on products from Sri Lanka, when compared to Taiwan, Hong Kong or South Korea, which have established domestic sources for necessary inputs. Sri Lanka is also at the mercy of delivery delays and the fluctuations of international prices for raw materials. This in turn may result in delays in exporting the finished product to overseas buyers. The prompt delivery of products is especially important edge for manufacturers that can be easily lost because of the over dependence on imported inputs. Turn around time for garments produced in Sri Lanka and India is approximately six months; compare to an average of three months in China, Taiwan and South Korea.

In much of the analysis of the possible impact of the elimination of the MFA for the garment and textile industry, very little is said about those who work in the industry.

From the beginning of the "open economy" in Sri Lanka under President Jayawardene, government policy has strongly favoured employers at the expense of workers. With the establishment of the Katunayake EPZ in 1978 by the Greater Colombo Economic Commission (GCEC) came massive tax breaks as well as a range of other incentives for foreign investors.

One of the incentives was a semi-skilled, literate workforce, with 90% being women. The Sri Lankan government actively advertises a "cheap and highly productive workforce" to attract foreign investment. "The power to keep wages low is an important factor for the success of the EPZ."

Along with low wages comes cramped, inadequate housing. A typical boarding house is usually a room (10 feet X 12 feet) shared by up to 12 women workers. Some of these places have little or no ventilation; some are without electricity or running water.

The employers in EPZ impose all sorts of draconian measures on workers. For example, one employer operating under the Board Of Investment (BOI) had written in a letter of appointment that workers are prohibited from having love affairs and if they do get married that they agree not to have children within the first two years of marriage.

The foreign investors have also levered concessions from the Sri Lankan government with regards to the hours that women work. Under ILO convention Number 89 (ratified by Sri Lanka), women workers are prohibited from being employed after 10 pm. However due to pressure from investors the government has relaxed this regulation and now women are forced to work after 10 pm. Often this overnight shift can be imposed without prior notice. Currently a proposed amendment is under discussion by the National Labour Advisory Committee that proposes increasing the number of overtime hours that women can work from 100 hours PER YEAR to 80 hours PER MONTH. This 80 hours per month will become forced overtime.

Although unions are legally allowed under the law, it was only in January 2000 that the first union was successfully established for the EPZs. Workers who organise within many factories are subject to various sorts of intimidation and threats and their unions repressed. It has been very difficult for workers to organise and have their concerns heard. Furthermore, employers with the complicity of government and the BOI simply refuse to recognise unions in the factories in the EPZs.

Although the government has been quick to provide infrastructure and other incentives to foreign investors there has been little achievement in adequate infrastructure or welfare facilities for workers such as proper pension schemes, insurance, scholarships and childcare.

With the impending phasing out of the MFA, employers must address the issues of workers if their businesses are to survive. The garment industry is "dependent on highly qualified and motivated employees with less labour turnover."

Backward Integration

This refers to the development of ancillary industries in order to reduce Sri Lanka's dependence on imported inputs. In this case, supporting industries that produce garment accessories and the initial processing of imported gray fabric.

Upgrading of Skills and Technical Expertise

Although there is an apparent abundance of labour in Sri Lanka, there is insufficient skill level when it comes to the use of many high-speed machines used in the industry. Far too little has been spent on training of staff with skills that are transferable across the industry. Better skilled staff will lead to a happier staff and more productive staff, which in turn will lead to an increase in production. This factor of investment in its workforce is often neglected by enterprises, which have been hampered by short term planning.

Communication

Due to the lack of development networks among the players involved in the Sri Lankan industry and their respective markets, there is little communicated about the garment industry here. It is also necessary to develop direct links with retailers in the US and EU.

Opening of New markets

Outside of the markets covered by quotas which have been the traditional markets Sri Lanka has exported to. Diversification of industry both within the garment industry and the development of new industries are also essential. The development of new industries should however, be strategic, sustainable and evaluated in terms of their benefit to Sri Lankan people and not in terms of the profits they will deliver to Transnational Corporations.

Diversifying Product range

Sri Lanka has always relied on a small, low/medium quality product. These were the main categories covered by the MFA. The development of high quality products will require an investment in technology, training and quality control.

The alternatives outlined above all have implications for workers.

The development of ancillary industries and export to new markets both have the potential to employ additional people, retraining of workers from garment factories could occur and these workers employed.

Improving the skills of current staff through meaningful training programmes that encourage transferable skills, along with corresponding pay increases, will lead to a well trained workforce, with less turnover This is important for the development of high quality products, the diversification of product ranges and the introduction of new technology.

The development of technology in the garment industry will also bring its own set of problems for example it is well documented that women are usually the first to be made redundant in technological change process; the new jobs created mostly go to men, at least until their value decreases; increased automation of production processes leads to manual work being sub contracted to the informal sector where women are the majority and virtually no regulation exists. The introduction of new technology invariably leads to loss of jobs for workers.

The Board of Investment and the government of Sri Lanka may argue that job losses bought about by the abolition of quotas and/or the introduction of new technology will be absorbed, as currently there are approximately 15,000 vacancies in the FTZ. This argument misses the point. The reason why vacancies exist is because of the appalling conditions and repression that workers are forced to work and live under. Conditions for workers must improve from both a basic human rights perspective and if highly qualified and motivated workers are to be retained and attracted to the industry.

Increasingly unionists and consumers in developed countries are demanding that the products they buy be produced in conditions free from labour human rights violations. They are demanding greater accountability and transparency of companies responsible for the goods the purchase. The impact of consumer campaigns is still in its infancy however they are a growing movement.

Likewise arguments that Sri Lanka will not suffer due to the under utilisation of existing quota does not mean that it will not be affected by their abolition. Some quota categories have been under utilised while others have been filled. The abolition of quotas means that there is no guaranteed access to overseas markets for any classification of garment.

There is no doubt that some workers in the Sri Lankan garment industry will lose their current employment if quotas are phased out and technology introduced, their livelihoods must also be defended. There is a range of material outlining various options for workers who are terminated as a result of changes or "restructuring" of an industry. This is also an area where workers must be involved. Some of the issues to think about include (not exhaustive):

1. Provisions for paid training of workers, to upgrade skills or retrain for other existing or new industries;
2. Commitments to employ terminated (also called redundant) workers as vacancies arise and the maintenance of a register to facilitate this;
3. Paid time off from the current workplace to search for other employment and other forms of assistance to find new employment opportunities;
4. Negotiations of a package for workers terminated due to industry "restructuring", this could include agreements on the amount of termination benefits (compensation) to be paid and other benefits, including those listed above. Particularly worrying is the changes currently being considered by the National Labour Advisory Committee that would make it easier to terminate workers;
5. Also of concern is the lack of a universal safety net including social security and unemployment benefits in Sri Lanka, this is an area that must be addressed.
6. Additional issues to consider will arise as this topic is further debated and discussed.

A plan of action needs to be developed involving:

1. Where necessary education of trade union officials, organisers and activists on the MFA and the impact of its abolition;
2. Education of workers through unions and other supportive worker organisations on what the quota system is, the impact of its abolition on workers in the industry and the development of a strategy and alternatives;
3. Widespread discussion and debate among all unions who represent workers likely to be affected by the abolition of quotas;
4. Widespread discussion and debate among all players in the garment and textile industry;
5. The development by unions of a national strategy document, including lobbying and advocacy with Government, the Board of Investment, Employers and Training Institutions;
6. Education on and promotion of the strategy document. Documents can be used to raise public awareness on the abolition of quotas, workers rights, bilateral trade agreements, free trade and can also promote alternatives to these;
7. Awareness raising and discussions at the regional and international level identifying possible areas for joint campaigns, acknowledging that the impact of the abolition of quotas will be uneven across Asian countries;
8. Other issues

The abolition of quotas is three years away, however, it is imperative that action begins now, many of the issues that the abolition of quotas will raise for Sri Lanka require medium to long term solutions, not last minute ones. Changes are occurring now (to termination act for example) that if passed will adversely impact on workers if quotas are abolished under the MFA.

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