chapter  3
21 Pages

The political economy of trade liberalization in textiles and clothing

The aim of this chapter is to explain the political economy of trade liberalization in the T&C sector by focusing primarily on the changing interests and policy preferences of the developed countries. Drawing upon our historical institutionalist framework, we argue that the main catalyst for the ending of the MFA lay not with the complex bargaining scenarios devised in the Uruguay Round negotiations, but rather within the internal contradictions of the regime itself. These internal contradictions came mainly from two different sources. The first centred on the inner workings of the quota system itself which, for reasons

that will be outlined shortly, had the unintended effect of heightening the economic capabilities of low-waged exporting countries as well as exposing import-competing firms in the developed countries to a wider array of low-waged competition. A second source was the practice of outsourcing which, as was mentioned in the previous chapter, helped to shore up the competitive position of firms in the USA and EU, but only at the cost of fragmenting the protectionist coalition that had sustained the MFA up until this point. Once attention is drawn to the shifting interest of the developed countries vis-à-vis sectoral protectionism, the decision to abandon the MFA during the Uruguay Round negotiations becomes easier to understand, while our historical institutionalist account also provides important clues as to why the subsequent mode of liberalization took the particular form that it did.