The impact of MFA phasing out on world clothing and textile markets

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Abstract
Simulations using a world clothing and textile trade model and a new set of estimates of tariff equivalents suggest that the global welfare cost of the Multifibre Arrangement (MFA) amounted to US$7.3 billion a year in the mid‐1980s. Most of this cost seems to have been inflicted on the established developing country exporters and on major industrial MFA markets. Emerging developing country exporters have also suffered considerably from the MFA but, unlike the established exporters, their losses may have largely occurred in the non‐MFA restricted markets, where export prices have been depressed. Thus, it is in the interest of both industrial and developing countries to eliminate the MFA. The proposed phasing out of the MFA should go ahead as quickly as possible.