MFA The Multi Fibre Arrangement 1974 Restrictions on exports to industrialized

Mfa the multi fibre arrangement 1974 restrictions on

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barrier protection in the T&C industry. MFA – The Multi Fibre Arrangement (1974): Restrictions on exports to industrialized countries through a system of bilaterally negotiated quotas on T&C products. T&C were kept out of multilateral trade negotiations (GATT and WTO). Uruguay Round (1994) Agreement on Textile and Clothing (ATC): Ended MFA and began the process of integrating T&C products into GATT/WTO rules by removing their quotas. Set the stage for a substantial reallocation of production and exports across countries. Integration occurred over four phases. Introduction – The MFA 2
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In each phase, importing countries were to integrate a portion of T&C products covered by the ATC. Subject to two rules: Products retired in each phase had to include goods from all four major T&C segments: Yarn, Fabrics, Made Up textile products, and Clothing. The chosen products had to represent a set portion of each country’s 1990 T&C imports. Introduction – The MFA 3
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Level of Imports and Adjusted Quota Base (Examples) NAICS 313312: Textile and Fabric Finishing NAICS 315222: Men’s and Boys’ Cut and Sew Suit, Coat, and Overcoat 4
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T&C sector in Pakistan (Levinsohn & Petrin Productivity Measure) 5
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T&C sector in Pakistan (Levinsohn & Petrin Productivity Measure) 6
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Using a sample of 321 T&C companies for the years 1992 93 to 2002 2003, this paper analyzes the effect of the phasing out of quotas on firm level efficiency in Pakistan. In spite of an increase in the adjusted level of quotas taking place simultaneously for a group ofcompeting developing countries, there is an increase in the level of imports. In the first step, plant level productivity is estimated, and then the change in firm productivity is regressed on the adjusted level of quotas. The MFA expiration led to an increase in the average productivity of textile producing firms but a significant reduction in the mean productivity of clothing producers. I compare the productivity of clothing producers that buy their raw materials and that of vertically integrated clothing producers. Overview of Results 7
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Literature Review Brambilla, Khandelwal and Schott (2007) analyze China's experience under the US T&C quotas: China’s share of US imports jumped from 10 to 33 percent. This expansion came at the expense of other exporters rather than domestic producers. Evans and Harrigan (2004) analyze how MFA affects the sources and prices of US apparel imports: Binding quotas substantially raise import prices. Shift of US apparel imports away from Asia in favor of Mexico and the Caribbean. Sasidaran and Shanmugam (2008) attempt to empirically investigate the implications of the phasing out of MFA on efficiency of firms in the Indian textiles industry: Using stochastic coefficients frontier approach, they estimate the overall and input specific efficiency values for 215 sample firms during 1993 2006.
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