Voluntary Restraint Agreement Definition

As part of the Voluntary Export Restriction (VE), this is a voluntary expansion of imports (VIE) that changes a country`s economic and trade policy to allow more imports by reducing tariffs or reducing quotas. COUNTRY is often part of trade agreements with another country or is the result of international pressure. A voluntary export restriction (VT) or voluntary export restriction is a government-imposed limit on the quantity of a class of products that can be exported to a particular country for a period of time. They are sometimes referred to as “export visas.” [1] VERs tend to rent what can be considerable for foreign producers. The OECD estimates that the annual transfer of OECD countries to textile and clothing exporters in emerging Asian countries, under bilateral export restraint agreements for macro-financial assistance, amounts to at least $2 billion. The above-VER study of Japanese car exports to the United States calculated that Japanese exporters “earned” $1 billion in rents just because of pure price effects in 1984; The total transfer to foreign suppliers amounted to $1.67 billion, indicating that third-country exporters who were not retained by the VER were able to benefit. Mr. Kostecki estimated, using a VER rate equivalency method, that rent transfers resulting from VERs in 1984 could reach $27 billion. When negotiating an VER, the importing country tends to avoid the often lengthy, public and often multilateral debate that precedes other forms of protectionism, such as increasing tariffs or introducing quotas. In such a debate, the cost of the protection measure should be better recognized, making the measure politically costly and risky. A VER then has the advantage of avoiding, as a measure of a foreign source, a national struggle; it can often be negotiated quickly without its costs becoming obvious.

In addition, with respect to subsidized or suspected exports, national authorities can circumvent the often costly and time-consuming process of an anti-tax investigation by reaching an agreement with the exporter. Finally, it can be argued that an VER, by addressing the cause of the problem, that is, one or the other low-cost supplier that disrupts domestic industry, extends the need for more comprehensive measures that could harm third countries, as would be the case for a non-discriminatory import quota of the same import reduction (see below). For all these reasons, local policy makers often prefer alternative measures to the VER; it provides relatively rapid and politically low-cost assistance to an industry threatened by import competition. VERs are generally implemented for exports from one country to another. VERs have been in use at least since the 1930s and are used on products ranging from textiles and footwear to steel, machine tools and automobiles.

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