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7 J. Consumer Pol'y 1 (1984)

handle is hein.journals/jrncpy7 and id is 1 raw text is: Articles Rachel Dardis and Katherine Cooke The Impact of Trade Restrictions on U.S. Apparel Consumers ABSTRACT. The loss incurred by U.S. apparel consumers in 1980 due to higher prices from tariffs and quotas was estimated. The price impact of tariffs was based on the ad valorem tariff rate while the price impact of quotas was based on estimated price differences between domestic and imported apparel at the same U.S. distribution level. Consumer losses in 1980 ranged from $10 billion to $12 billion depending on the price elasticity of demand for apparel and whether consumers or distributors received the scarcity rent generated by quotas. The increase in consumer expenditures due to higher prices accounted for the greatest proportion of consumer losses and ranged from 23% to 25% of total consumer expenditures for apparel depending on the allocation of the scarcity rent. While a reduction in trade restrictions would benefit consumers, such a reduction would also impose losses on firms and workers in the domestic apparel industry. However, there are other strategies for meeting competition from imports that would benefit producers as well as consumers. The U.S. apparel industry has faced serious competition from im- ports in the post World War II era (Priestland, 1980). This reflects the labor intensive nature of apparel production which gives countries with low wages a comparative advantage. In addition, technological constraints have prevented the use of capital intensive production methods and limited the substitution of capital for labor. As a result, quantitative restrictions or quotas have been used to protect the U.S. apparel industry for the past 25 years. The first quantitative restric- tion was a voluntary agreement with Japan on cotton products in 1956. The growth of man-made fiber products in the 1960s led eventually to the multi-fiber arrangements commencing with the Multi-Fiber Arrangement (MFA) of 1974. Under the MFA, quotas have been negotiated between the U.S. and major textile/apparel producing countries. The MFA was extended in 1977-78 and again in 1981-82 (GATT, 1981; U.S. International Trade Commission, 1981). In addition to the protection provided by quotas the U.S. apparel industry is also protected by tariffs. In contrast to quotas, tariffs are scheduled to decline in the future as part of a general reduction in trade barriers (U.S. International Trade Commission, 1981, p. 43). Thus, quotas are likely to become more important reflecting the Journal of Consumer Policy 7 (1984) 1-12. 0342-5843/84/0071-0001 $01.20. © 1984 by D. Reidel Publishing Co.

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