International Trade in Textiles: MFA Quotas and a Developing Exporting Country

With the growth in international trade, the developed market economies have increasingly resorted to protectionism by introducing a wide variety of non-tariff barriers against the import of goods from developing countries. Specifically, the international trade in textiles is affected by this protectionism since it is institutionalized and legitimized in the Multi-Fibre Arrangement (MFA). The MFA, in existence since 1974, is an exception to the non-discriminatory rules of international trade embodied under GATT. There now exists a growing sense that the MFA has outlived its usefulness and is beginning to hinder international trade. Based on a sample of 177 units drawn from all over the country, this pioneering case study of India examines the impact of MFA quotas on firms in developing countries engaged in producing and exporting textiles. Dr. Khanna highlights MFA s impact on the manufacturing-exporting business. He explores the crucial question of how and when country level export quotas become binding at the level of the individual firm. He also analyzes how a market for buying and selling quotas develops in the exporting country and how organizations adjust their pricing, production, and personnel in response to the environment created by the MFA. This pathbreaking study will interest scholars in the fields of international trade and economics and international business relations as well as professionals working in the textiles industry.