Rags and riches

The Multi-Fibre Arrangement (MFA) is among the most important nontariff trade barriers facing developing countries today. Originating over twenty years ago, it uses product-specific quotas intended to encourage the expansion of trade, reduce barriers, and further the liberalization of world trade in textile products. It has been argued, however, that the MFA may cut off access to major export markets for developing countries, thereby short-circuiting their industrialization process at an early stage.

Krishna and Tan conclude that the process of quota implementation begins with an initial system of regulation drawn up in order to meet certain desirable objectives. But over time, as loopholes are discovered in the system, additional layers of regulation continue to be introduced, resulting in a complicated, discretionary system that no longer meets the MFA's original objectives.