Will Martin, to start with, argues that MFA violated the most fundamental principles of the GATT: Article 1 on nondiscrimination and Article X1 on abolition of Non-Tariff Barriers (NTBs). And the discrimination was destined for developing countries. Some LDCs were exempted, but only in some markets. We tend to agree with Martin with a foot note that not only in the case of textiles and clothing, but also in the case of agriculture (and for the sake of the US in particular) GATT principles were violated and on occasions, very much..

Next on board was the theoretic arguments against quota restrictions. Quotas, any time and anywhere, reduce the quantity and raise the price in the restricting markets. Be it textiles in the US or sugar in Bangladesh, the impact of quota is sure to raise price in the consuming country. In trade text books, tariffs are always shown to be preferable to quotas as far as welfare is concerned. Second, quotas tend to generate quota rents -- given to exporting governments and then to exporting firms. Not cited by the author, quotas also breed bureaucratic interceptions in allocations, thus again giving ways to rent seeking. Quotas also depress market prices and lead to misallocation of resources. The most important implication is that inefficient processing reduces the demand for textiles and fabrics.

Quota effects could be assessed from two angles. There is the opportunity cost to exporting firms then allocated with quotas and there is also the direct cost if the firms have to buy quotas. By and large, quotas are like an export tax, except that quota prices vary a great deal. There is another problem. When one or some commodities face quotas, resources are likely to be shifted towards them away from others deemed to be efficient in a dynamic sense. Will Martin shows that Bangladesh's clothing export to the US is equivalent to 13 per cent of export tax. For China, it is 36 per cent. This is surprising given that exports to Europe are unrestricted and that export quotas to the USA have grown rapidly than any other country's -- 168 per cent since 1994.

In the face of fading out of MFA, textiles and clothing exports would be curtailed by 4 per cent each and the total negative real income effects would be worth US$347 million. Seemingly not a big figure given the big-bangs around the abolition. But a part of the losses could be compensated through rise in exports of other products. For example, exports of processed food could rise by 9 per cent, leather by 18 per cent and services by 7 per cent. Therefore, a gain looms large despite a loss of quota rents in the USA. It could create opportunities for other products in Bangladesh provided the opportunities could be seized upon through persuasion of pragmatic policies.

The bottom line is that productivity must rise to take advantage of opportunities and deal with threats. Martin is of the view that large productivity gains are not out of reach. In Pakistan, investment climate surveys claim 63 per cent gain from getting productivity to China's level and 110 per cent gain in output prices from moving to China's product quality levels.

Bangladesh does not need to mourn over the abolition of quotas, rather she should march on non-traditional paths of promoting her domestic industries and increasing exports. The tariff levels are said to be lower here but only as far as customs duties are concerned. If you add all other taxes that tend to protect domestic industries, the tariff level runs very high. High tariffs are good neither for efficiency of industries nor for raising revenues. There is also a dire need for streamlining regulations. Customs clearance process is as shabby as before. (The cost of clearance of commodities in Chittagong port is one of the highest in this part of the world). Investments in modern equipment and training is essential in a globalised regime.

Our exporters need rapid access to world input and output markets. Therefore, rapid clearance and turnaround are vital. Also vital are free trade or comprehensive duty exemptions for exports. Mind that these facilities need to be available across the board, not just for textiles and clothing. There are many new opportunities for labour intensive manufactures.

The important point that seemingly lay under the carpet of Martin's presentation is the need for a good governance. Not only economic but also political and social. Investment is not only a function of few reforms here and there. Nor it comes through lucrative incentive packages. Investments require securities, sensible and credible policies, improved law and order situation, appropriate judicial system, openness -- all that current Bangladesh allegedly is lacking. Globalisation might hurt or not hurt us, but let us not hurt ourselves. It is now time to chase the chiming challenge.

Abdul Bayes is a Professor of Economics at Jahangirnagar University