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The MFA Paradox: More Protection and More Trade?

In: The Political Economy of American Trade Policy


  • J. Michael Finger
  • Ann Harrison


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.)

Suggested Citation

  • J. Michael Finger & Ann Harrison, 1996. "The MFA Paradox: More Protection and More Trade?," NBER Chapters,in: The Political Economy of American Trade Policy, pages 197-260 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8706

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    References listed on IDEAS

    1. Richard E. Caves, 1976. "Economic Models of Political Choice: Canada's Tariff Structure," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 278-300, May.
    2. Erzan, Refik & Goto, Junichi & Holmes, Paula, 1989. "Effects of the multifibre arrangement on developing countries'trade : an empirical investigation," Policy Research Working Paper Series 297, The World Bank.
    3. John M. Abowd, 1991. "Appendix: The NBER Immigration, Trade, and Labor Markets Data Files," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 407-421 National Bureau of Economic Research, Inc.
    4. M.L. Varma, 1984. "World Economy," Foreign Trade Review, , vol. 19(2), pages 347-353, July.
    5. G. K. Helleiner, 1977. "The Political Economy of Canada's Tariff Structure: An Alternative Model," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 318-326, May.
    6. Gary Chamberlain, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 225-238.
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    Cited by:

    1. Theo S Eicher & Thomas Osang, 2000. "Politics and Trade Policy: An Empirical Investigation"," Working Papers 0004, University of Washington, Department of Economics.
    2. 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.
    3. 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).
    4. Arnaud Costinot, 2009. "Jobs, Jobs, Jobs: A "New" Perspective on Protectionism," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 1011-1041, September.
    5. 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.
    6. 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.
    7. 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.
    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. 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.
    10. Feizabadi, 2014. "The Theory of Political Tariff Protection for Agricultural Sector in Developing Countries," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 4(1), March.
    11. Madani, Dorsati & Olarreaga, Marcelo, 2002. "Politically optimal tariffs : an application to Egypt," Policy Research Working Paper Series 2882, The World Bank.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • L6 - Industrial Organization - - Industry Studies: Manufacturing


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