The Return of Voluntary Export Restraints? How WTO Law Regulates (and Doesn't Regulate) Bilateral Trade-Restrictive Agreements

Abstract

As part of the renegotiation of its Free Trade Agreement with the United States, South Korea has agreed to cut by 30% it steel exports to the US. In NAFTA negotiations, it is reported that Mexico has also agreed to a quota on auto exports, after which Mexican autos would be subject to more-than-MFN tariffs. Other WTO Members have accepted the application by the US of quotas on their steel an aluminium exports, avoiding additional tariffs on their products. These agreed limitations on exports bring back the spectre of ‘voluntary export restraints’, a widespread practice of the 1980s that was outlawed in the Uruguay Round Agreements. This article discusses the ways in which WTO law regulates, and does not regulate, agreements between WTO Members to limit parties’ rights under WTO law (‘WTO-minus’). While WTO-minus provisions in bilateral agreements are able to influence WTO law only under very specific circumstances, the design of WTO dispute settlement is such that measures based on WTO-minus arrangements may remain unopposed for long periods of time. At the same time, if trade-restrictive measures are challenged, WTO-minus provisions are unlikely to serve as a defense before WTO adjudicators, even where the Member that gave its consent to the WTO-inconsistent measure is the one challenging it.