ALTERNATIVE FORMS OF PROTECTION AGAINST MARKET DISRUPTION

Abstract

SUMMARYVoluntary export restraints (VRSs) and orderly marketing arrangements (OMAs) are increasingly important relative to explicit trade restrictions such as tariffs and quotas. Unlike the latter, which are applied by the importing countries, VERs and OMAs as protectionist techniques are implemented under duress by the exporting nations themselves. They are part of a growing ‘rifle approach’ to protection designed to curb imports specifically from ‘disruptive’ supplier countries. Textiles, footwear, consumer electronics and steel are some of the product groups affected in recent years, with Japan, South Korea, Hong Kong, Brazil, Taiwan and Singapore among the main victims. In 1976 an estimated $ 9.4 billion of international trade was covered by such restrictions, or about 16% of OECD imports in the affected product categories. It is often alleged that such ‘voluntary’ controls are less trade‐restrictive than outright quotas imposed on imports. This paper shows that, in the event that export licences are themselves tradeable and subject to monopolization ‐ which is often the case – precisely the opposite will tend to be the case. Even greater restrictiveness may occur when multiple products are covered by a single OMA or VER.