Is the End of the MFA a threat?

The end of the Multifiber Agreement in January 2005 had a negative impact on the Tunisian apparel industry, but the effects were weaker than expected. Using a dynamic general equilibrium model, the article provides a prospective assessment of the impact on Tunisia of the phase out of the MFA and of the agreement which manages the rate of growth of Chinese clothing exports to Europe until the end of 2007. The main findings are an increase in unemployment and wage inequality, but no significant effects on the main macroeconomic variables if the exchange rate management takes into account this shock.