Quotas on Clothing Imports: Impact and Determinants of EU Trade Policy

Abstract

We assess the impact of the phasing-out of quotas on European clothing imports within the framework ofthe phase-out of the Multi-Fiber Agreement and the accession of the CEEC. We use 1996 data on trade bar-riers for 20 categories of clothing products and 22 exporters. The estimation of a standard gravity equationconcludes that tariffs have a large and negative impact as expected but seldom corroborated in the litera-ture. The negative impact of non-tariff barriers also appears clearly after controlling for an endogeneity biasby the instrumental variables method. The phasing-out of quotas should increase EU imports by 20%.