The paper addresses two issues: (i) the extent of the restrictiveness/effectiveness of teh MFA with respect to developing country exporters of textile products during the 1980s, and (ii) the extent to which these restrictions yield trade gains for the unconcstrained/less established developing suppliers.
Based on the analysis of the developments in the EC, US, Canadian and Swedish markets during the 1980s, the following observations can be made: (i) There was a tightening in MFA restrictions over time and across markets, especially for the relatively new suppliers, in terms of the share of shipments subjected to quotas and these limits becoming effective constraints. The grip of the MFA was tighter on clothing than on textiles yet the pattern across markets and over time was the same for both. (ii) Volume growth was generally lower in cases where quotas were binding; (iii) Increase in the unit value of shipments subject to binding quotas was substantially higher than that in unconstrained items.
As to the extent of trade gains due to MFA by less restricted developing suppliers, the following was found: (i) In products for which major developing exporters had binding quotas, other developing suppliers somwhat increased their market share. (ii) A case study of a representative sample of apparel products which were predominately supplied by developing countries in the US market revealed that trade diverted to unconstrained developing suppliers taken as a whole accounted for not more than 15 percent - in the most extreme scenario 25 percent - of their exports. The main beneficiary were the US domestic producers.
The paper has two messages: (i) the MFA has not been easing, on the contrary, it has been getting tougher for most developing exporters, and (ii) trade gains for less established exporters resulting from MFA restrictions on others may be exaggerated, except for marginal suppliers.
Stockholm: IIES , 1989. , 55 p.
Published in connection with a visit at the IIES.