Implications for South Asian Countries for Abolishing the Multifibre Arrangement

Kathuria, Sanjay ; Martin, Will ; Bhardwaj, Anjali

World Bank, Washington, DC

关键词: MULTIFIBER ARRANGEMENTS;    TEXTILE FIBRES;    CLOTHING INDUSTRY;    EXPORT MARKETS;    TRADE QUOTAS;   

DOI  :  10.1596/1813-9450-2721
RP-ID  :  WPS2721

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The authors provide a simpleintroduction to the economics of the Multifibre Arrangement(MFA) and use available empirical evidence to examine itsimpact on exports of garments and textiles, focusing onIndia. Their review of the basic economics of the MFA showsthe discriminatory character of the Arrangement. Whileexporting countries can gain from quota rents, much of thisgain is likely to be offset by losses in exports tounrestricted markets, through waste resulting from domesticrent-seeking behavior, or shared with industrial countryimporters. Moreover, the restrictions curtail the ability ofcountries to generate sorely needed employment in thelabor-intensive garment and textile sectors. Recentestimates for India of the export tax equivalents of thequotas suggest that they increased in 1999, after a coupleof years around lower levels. The authors also examine thedomestic policy distortions affecting the industry in India.While the abolition of quotas on international trade intextiles in 2005 will create opportunities for developingcountries, it will also expose them to additionalcompetition from other, formerly restrained exporters. Theoutcome for any country will depend on its policy response.Countries that use the opportunity to streamline theirpolicies and improve their competitiveness are likely toincrease their gains from quota abolition. Modeling resultssuggest that South Asia as a whole will gain from quotaabolition, although different countries may experiencedifferent results. Unambiguously, however, the gains fromdomestic reform will increase after the abolition of thequota arrangement.