A voluntary export restraint or voluntary export restriction is a government-imposed limit on the quantity of some category of goods that can be exported to a specified country during a specified period of time. They are sometimes referred to as 'Export Visas'. Typically VERs arise when industries seek protection from competing imports from particular countries. VERs are then offered by the exporting country to appease the importing country and deter it from imposing explicit trade barriers.
Characteristics
VERs are typically implemented on exports from one specific country to another. VERs have been used since the 1930s at least, and have been applied to products ranging from textiles and footwear to steel, machine tools and automobiles. They became a popular form of protection during the 1980s; they did not violate countries' agreements under the General Agreement on Tariffs and Trade in force. As a result of the Uruguay round of the GATT, completed in 1994, World Trade Organization members agreed not to implement any new VERs, and to phase out any existing ones over a four-year period, with exceptions grantable for one sector in each importing country. Some examples of VERs occurred with automobile exports from Japan in the early 1980s and with textile exports in the 1950s and 1960s.
1980 Automobile VER
When the automobile industry in the United States was threatened by the popularity of cheaper, more fuel efficient Japanese cars, a 1981 voluntary restraint agreement limited the Japanese to exporting 1.68 million cars to the U.S. annually as stipulated by U.S Government. This quota was originally intended to expire after three years, in April 1984. However, with a growing deficit in trade with Japan, and under pressure from domestic manufacturers, the US government extended the quotas for an additional year. The cap was raised to 1.85 million cars for this additional year, then to 2.3 million for 1985. The voluntary restraint was removed in 1994. The Japanese automobile industry responded by establishing assembly plants or "transplants" in the United States to produce mass market vehicles. Some Japanese manufacturers who had their transplant assembly factories in the Rust Belt e.g. Mazda, Mitsubishi had to have a joint venture with a Big Three manufacturer. GM established NUMMI which was initially a joint venture with Toyota which later expanded to include a Canadian subsidiary ) - a GM/Suzuki which were consolidated that evolved into the Geo division in the U.S.. The Japanese Big Three also began exporting bigger, more expensive cars in order to make more money from a limited number of cars.
