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The MFA Paradox: More Protection and More Trade?

In: The Political Economy of American Trade Policy

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  • J. Michael Finger
  • Ann Harrison

Abstract

The textile industry's political power stemmed from its importance in southern states plus the power of the Southern delegation in the U.S. Congress in the 1960s. The strongest resistance to the industry's pressure for protection came from the foreign policy interests of the Executive branch. A constellation of influences explains why negotiated, or voluntary export restraints (VERs), sanctioned by international agreements (the Multi-Fiber Arrangement) was the form protection took. First, the Japanese industry, at the time the world's leading textile exporter, already in the 1930s had exhibited a willingness to accept negotiated agreements to trade disputes. Second, the U.S. Executive, having been a leader in establishing the GATT system to control the sort of unilateral restrictive actions that contributed to the 1930s depression, was reluctant to take unilateral action. Third, the arrangement was acceptable to the U.S. industry because, through their particular power over agricultural legislation, the Southern delegation won passage, as amendments to agriculture bills, of legislation to enforce these 'voluntary' restraints at the U.S. border. But because enforcement remained with the Executive branch, it tended to follow the letter of the agreements, hence exports could continue to expand by shifting to new product varieties and to new supplier countries.

(This abstract was borrowed from another version of this item.)

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This chapter was published in:

  • Anne O. Krueger, 1996. "The Political Economy of American Trade Policy," NBER Books, National Bureau of Economic Research, Inc, number krue96-1, octubre-d.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 8706.

    Handle: RePEc:nbr:nberch:8706

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    Cited by:
    1. Grether, Jean-Marie & de Melo, Jaime & Olarreaga, Marcelo, 2001. "Who determines Mexican trade policy?," Journal of Development Economics, Elsevier, vol. 64(2), pages 343-370, April.
    2. Maggi, Giovanni & Rodriguez-Clare, Andres, 2000. "Import penetration and the politics of trade protection," Journal of International Economics, Elsevier, vol. 51(2), pages 287-304, August.
    3. Costinot, Arnaud, 2008. "Jobs, Jobs, Jobs: A "New" Perspective on Protectionism," University of California at San Diego, Economics Working Paper Series qt1cp9749b, Department of Economics, UC San Diego.
    4. Theo S Eicher & Thomas Osang, 2000. "Politics and Trade Policy: An Empirical Investigation"," Discussion Papers in Economics at the University of Washington 0004, Department of Economics at the University of Washington.
    5. Finger, J. Michael & Schuknecht, Ludger, 1999. "Market access advances and retreats : the Uruguay Round and beyond," Policy Research Working Paper Series 2232, The World Bank.
    6. Hudson, Darren & Ethridge, Don E. & Mutuc, Maria Erlinda M., 2011. "Lessons Learned from the Phase-out of the MFA: Moving from Managed Distortion to Managed Distortion," eJADE: electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization, Agricultural and Development Economics Division, vol. 12(1).
    7. Scott Bradford, 2000. "Rents, Votes, and Protection: Explaining the Structure of Trade Barriers Across Industries," Econometric Society World Congress 2000 Contributed Papers 1717, Econometric Society.
    8. Theo Eicher & Thomas Osang, 2002. "Protection for Sale: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 92(5), pages 1702-1710, December.
    9. Costenot, Arnaud, 2006. "Jobs, Jobs, Jobs: A New Perspective on Protectionism," University of California at San Diego, Economics Working Paper Series qt1bt8n04n, Department of Economics, UC San Diego.
    10. Madani, Dorsati & Olarreaga, Marcelo, 2002. "Politically optimal tariffs : an application to Egypt," Policy Research Working Paper Series 2882, The World Bank.

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