Do Vertical Linkages Limit Protectionism? Switzerland in the Multifibre Arrangement

Authors


  • We would like to thank two anonymous referees as well as Franz Blankart, Michael K. Finger and Ronald W. Jones for excellent input and discussions. We also benefited from the comments of participants at the ‘Valuing International Trade Rules’ Conference in Pfäffikon (Switzerland) from 17 to 19 June 2009 and at the ‘Economic History Workshop’ at the University of Basel on 17 September 2010. Many thanks to the Swiss Federal Archives for granting us access to their files.

Abstract

The multifibre arrangement (MFA) heavily restricted the world trade in textiles and clothing (T&C) from 1974 to 1994. Switzerland joined the MFA as one of 44 signatory economies in 1974, but never applied its discriminatory instruments. To explain this peculiar behaviour, we apply international trade theory as well as files gathered from the Swiss Federal Archives. Our analysis suggests that Switzerland used the MFA, first, as an instrument to seek better market access, and second, as an option to protect its T&C industry if required. Switzerland refrained, however, from exercising the option mainly because of the existence of an important vertically related export industry, that is the Swiss textile machinery industry.

Ancillary