Assessing the Effects of the MFA/ATC from US and World Trade Data after Its Removal
In this paper we assess the effects of the MFA/ATC using both world trade and US data after its removal. Previous literature assesses its effects while in operation. The trade data we analyze are consistent with theoretical predictions of more trade volumes, lower product prices, smaller effect of RTA on trade, less transshipment and quota hopping investment, and higher country concentration of exporters. We also find the effects of the MFA on clothing trade were more significant than for textiles trade. The benefits from freer trade in textiles and clothing shed light on other sectors that are still under trade protection.
We are grateful to the ORF (Ontario Research Fund) and CIGI (Centre for International Governance Innovation) for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.