Lessons Learned from the Phase-out of the MFA: Moving from Managed Distortion to Managed Distortion
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While the elimination of the Multifibre Arrangement (MFA) was presumed to be a net global benefit because it represented an elimination of a distortionary set of trade agreements, it was based on the assumption that the underlying global trading regime was based on free trade principles. However, due to the trading pattern that has emerged after the MFA and its unintended consequences – with production infrastructure and trading rules based on distortionary incentives so entrenched into the system – the global trading regime after the elimination of quotas is still far short of free.