On December 31, 2004, country quotas for apparel provided for under the
Multi-Fiber Agreement were completely phased out. The quotas were
originally put in place to protect industries in the North but over
time enabled developing countries to have some guaranteed access to
markets in the U.S. and Europe.

The growth of the apparel-for-export (maquiladora) sector in Central America was stimulated in part by manufacturers from South Korea and Taiwan whose quotas to the U.S. were filled and needed to find countries with unfilled quotas that could be used to export to the North. Apparel exports are now one of the leading industries not only in Central America but for many countries in the South, including many in Asia (e.g. Cambodia,Indonesia, Pakistan, and Bangladesh). The end of quotas means that countries will no longer have protected export markets. The “free market” in apparel is expected to bring a major shift of production, and jobs, to China and India. The question is how much, and how will specific countries, like those in Central America, be affected. The International Textile, Garment, and Leather Workers Federation [1] estimates that one million jobs will be lost in Bangladesh alone. The U.S. is also expected to lose many of its remaining apparel jobs.

In the fall of 2005, the U.S. and China agreed to temporary limits on the growth of exports of certain categories of apparel exports from China to the U.S., granting the Central American maquiladora sector some reprieve from full-fledged, cut-throat competition and also slowing somewhat the loss of the remaining apparel jobs in the U.S.