The end of the multifibre arrangement (MFA) and the heterogeneous performance of quota-constrained countries
Mulu Gebreeyesus
#2013-035
On 1 January 2005, the international trade in textile and clothing was
freed from the quota restrictions that had persisted for more than four
decades. This study tests one of the predictions that countries
effectively constrained by quotas in the major world markets will
increase their exports at the expense of non-quota-constrained
suppliers. The focus is on clothing imports of the two major markets,
the US and EU-15. These markets are separately analysed as they
constitute different lists of quota-constrained countries, QCCs. Unlike
others, this study uses a relatively longer data set of post-quota
years, which allows us to understand the medium-term adjustment process
of exporters following quota removal. We find a large amount of
heterogeneity among the QCCs in their post-quota export performance.
Only a few QCCs have benefited at the expense of not only the non-quota
countries but also fellow QCCs. The estimates show that almost half of
the QCCs were better off under the quota regime at least in terms of
exports. The factors most likely to have influenced their heterogeneous
performance are also examined.
Keywords: Global apparel trade, Quotas, MFA, Heterogeneous country
performance
JEL: F13, F14, L67