Voluntary Restraint Agreement Definition

A voluntary export restriction (VER) is a trade restriction for the quantity of a product authorized to export from one exporting country to another country. This limit is imposed by the exporting country itself. When negotiating an ERN, the importing country tends to avoid the often long, public and often multilateral debate, which precedes without exception other forms of protectionism, such as for example. Β the increase in customs duties or the introduction of quotas. Such a debate should make it possible to identify more clearly the cost of the protective measure, which makes the action politically costly and risky. An ERR then has the advantage of avoiding a national legislative struggle as an action of a foreign source; it can often be negotiated quickly without its cost being obvious. In addition, for exports that are subsidized or suspected of being subsidized, national authorities can circumvent the often costly and lengthy process of a countervailing duty investigation by entering into an agreement with the exporter. Finally, it can be argued that by addressing the cause of the problem, i.e. one or a few low-cost suppliers disrupting domestic industry, an ERR imposes the need for more comprehensive measures that could harm third countries, as would be the case with a non-discriminatory import quota with an equivalent effect of reducing imports (see below). For one of these reasons, national decision-makers often prefer alternative measures to ERR; it provides relatively rapid and politically profitable assistance to an industry threatened by import competition.

A VER, which consists of a government-to-government agreement, is generally referred to as an orderly marketing agreement and often sets rules for export management, consultation fees, and monitoring of trade flows. In some countries, particularly the United States, orderly marketing agreements differ legally from a well-defined WORM. Agreements involving industry participation are often referred to as voluntary restraint agreements. The distinction between these forms of VER is largely legal and terminological and has little influence on the economic impact of VER. In the context of the Voluntary Export Restriction (VER), it is a voluntary import expansion (VIE), which is a change in a country`s economic and trade policy to allow more imports by reducing tariffs or dropping quotas. Often, VIPs are part of trade agreements with another country or result from international pressures….

Fotos: Kathrin Leisch
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