Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement

James Harrigan, Geoffrey Barrows
2009 Review of Economics and Statistics  
Quota restrictions on United States imports of apparel and textiles under the multifiber arrangement (MFA) ended abruptly in January 2005. This change in policy was large, predetermined, and fully anticipated, making it an ideal natural experiment for testing the theory of trade policy. Prices of quota-constrained categories from China fell by 38% in 2005, with smaller declines from other exporters. Prices in unconstrained categories from all countries changed little. We also find substantial
more » ... ality downgrading in imports from China in previously constrained categories. The annual cost of the MFA to U.S. consumers was $63 per household.
doi:10.1162/rest.91.2.282 fatcat:jmcdpvq2bbbergbjg2hyyre2fe