© 1994 International Bank for Reconstruction and Development / The World Bank
research-article |
The Trade Restrictiveness of the Multi-Fibre Arrangement
James E. Anderson is in the Department of Economics at Boston College, and J. Peter Neary is in the Department of Economics at University College Dublin, the London School of Economics, and the Centre for Economic Policy Research, London. The research for this study was supported by the Research Committee of the World Bank and was carried out while the second author was visiting the University of Ulster at Jordanstown. The authors are grateful for able assistance from Christopher Holmes and Ulrich Reincke; for helpful discussions with Refik Erzan, Kala Krishna, and Will Martin; and for the comments of three anonymous referees.
This study uses the trade restrictiveness index (TRI) of Anderson and Neary (1990) to evaluate U.S. policy toward seven major exporters of textiles and apparel under the Multi-Fibre Arrangement (MFA). The period covered is 1982–88. The MFA controls the shipment of most textile and apparel items to the United States through a system of bilaterally negotiated export quotas that allow for annual growth. The arrangement itself was renegotiated in 1986, with an expansion in the number of items covered and countries included. In addition to these policy changes, changes in economic conditions during the data period altered the restrictiveness of the MFA. The TRI in principle permits all these influences to be accounted for in a consistent manner. The TRI results are contrasted with the standard trade-weighted average tariff equivalent of the quotas. The correlation of the two measures is not significantly different from zero.