Impact of MFA Phase-Out on the World Economy -- An Intertemporal, Global General Equilibrium Analysis

International trade in textile and apparel has been governed by quantitative restrictions under the Multi-Fiber Arrangement (MFA) and earlier agreements for more than 30 years. One of the major “accomplishments” of the Uruguay Round was the conclusion of the Agreement on Textiles and Clothing (ATC), which provides for the dismantling of these restrictions. Under the Uruguay Round ATC, the MFA restrictions are to be phased out over a 10-year period and are scheduled to end by the year 2005. Purpose of this study is to evaluate the possible effect of the MFA phase-out on the world economy especially the effect on the structure of world textile markets. As growth in textile and apparel industries and in the exports is one of the most important sources of economic development in many developing countries, this study will focus on the effect of the MFA phase-out on the developing countries.