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Tight Clothing. How the MFA Affects Asian Apparel Exports

In: International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14

  • Carolyn Evans
  • James Harrigan

International trade in apparel and textiles is regulated by a system of bilateral tariffs and quotas known as the Multifiber Arrangement or MFA. Using a time series of detailed product-level data from the United States on the quotas and tariffs that comprise the MFA, we analyze how the MFA affects the sources and prices of US apparel imports, with a particular focus on the effects on East Asian exporters during the 1990s. We show that while a large fraction of US apparel is imported under binding quotas, there are many quotas that remain unfilled. We also show that binding quotas substantially raise import prices, suggesting both quality upgrading and rent capture by exporters. In contrast, tariffs reduce import prices. Lastly, we argue that the substantial shift of US apparel imports away from Asia in favor of Mexico and the Caribbean during the 1990s is only partly due to discriminatory trade policy: the other reason is an increasing demand for timely delivery that gives a competitive advantage to nearby exporters.

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This chapter was published in:
  • Takatoshi Ito & Andrew K. Rose, 2005. "International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14," NBER Books, National Bureau of Economic Research, Inc, number ito_05-1, July.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 0199.
    Handle: RePEc:nbr:nberch:0199
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    1. James Harrigan & Carolyn Evans, 2004. "Distance, Time and Specialization," Econometric Society 2004 North American Winter Meetings 640, Econometric Society.
    2. J. Michael Finger & Ann Harrison, 1996. "Import Protection for U.S. Textiles and Apparel: Viewed from the Domestic Perspective," NBER Chapters, in: The Political Economy of Trade Protection, pages 43-50 National Bureau of Economic Research, Inc.
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