Tight Clothing: How the Mfa Affects Asian Apparel Exports

37 Pages Posted: 31 Jan 2004 Last revised: 6 Jul 2010

See all articles by Carolyn L. Evans

Carolyn L. Evans

Intel Corporation

James Harrigan

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 2004

Abstract

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.

Suggested Citation

Evans, Carolyn L. and Harrigan, James, Tight Clothing: How the Mfa Affects Asian Apparel Exports (January 2004). NBER Working Paper No. w10250. Available at SSRN: https://ssrn.com/abstract=492363

Carolyn L. Evans

Intel Corporation ( email )

United States

James Harrigan (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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