Which Of The Following Best Describes A Voluntary Restraint Agreement

There are ways for a company to avoid a VER. For example, the company in the exporting country can still build a production facility in the country to which the export would be directed. In this way, the company no longer needs to export goods and should not be tied to the country`s ERR. A voluntary export restriction (OR) or voluntary export restriction is a limit imposed by the government on the quantity of a class of goods that can be exported to a particular country for a certain period of time. They are sometimes referred to as „export visas”. [1] REVs are generally used in exports from one country to another. VER have been used since at least the 1930s and have been applied to products ranging from textiles and footwear to steel, machine tools and automobiles. They became a popular form of protection in the 1980s; they have not violated the agreements concluded by countries under the current General Agreement on Tariffs and Trade (GATT). Following the GATT Uruguay Round, concluded in 1994, Members of the World Trade Organization (WTO) agreed not to introduce new REOs and to allow existing ones to expire over a period of four years, with exemptions for one sector in each importing country. Linked to Voluntary Export Restriction (VER) is a voluntary import expansion (VIE), which represents a change in a country`s economic and trade policies to allow more imports by lowering tariffs or removing quotas.

Often, VIE are part of trade agreements with another country or are the result of international pressure. When the auto industry in the United States was threatened by the popularity of cheaper, more fuel-efficient Japanese cars, a 1981 restraint agreement limited the Japanese to export 1.68 million cars to the United States each year, as determined by the U.S. government. [2] This quota was originally due to expire after three years, in April 1984. However, in the face of a growing trade deficit with Japan and pressure from domestic manufacturers, the U.S. government extended the quotas for another year. [3] The ceiling was raised to 1.85 million cars for the following year and then to 2.3 million for 1985. The withholding was lifted in 1994. [4] Voluntary export restrictions (VERs) fall into the broad category of non-tariff barriers, which are trade-restrictive barriers such as quotas, sanctions, embargoes and other restrictions. As a general rule, REVs are the result of requests from the importing country to grant a certain level of protection to its domestic companies producing competing products, although these agreements can also be concluded at the industry level. The Japanese auto industry responded by establishing assembly plants or „transplants” in the United States (mainly in the southern United States). States where right-to-work laws exist, as opposed to Rust Belt states with established unions) to produce mass vehicles.

Some Japanese manufacturers that had their transplant assembly plants in the Rust Belt, e.B Mazda, Mitsubishi, had to have a joint venture with a Big Three manufacturer (Chrysler/Mitsubishi, which became Diamond Star Motors, Ford/Mazda, which evolved into AutoAlliance International). GM founded NUMMI, which was originally a joint venture with Toyota, which was later expanded to include a Canadian subsidiary (CAMI) – a GM/Suzuki that consolidated into the Geo division in the United States (its Canadian counterparts Passport and Asuna were short-lived – Isuzu automobiles manufactured at that time were sold as captive imports). The big three Japanese (Honda, Toyota and Nissan) also began exporting larger and more expensive cars (soon under their newly formed luxury brands like Acura, Lexus and Infiniti – luxury brands moved away from their parent brand, which was marketed en masse) to make more money with a limited number of cars. .