Voluntary Restraint Agreements Imports

The steel industry has been protected for 13 of the last 16 years. In 1968, the Ministry of Foreign Affairs negotiated “voluntary” restrictions with all major foreign steel suppliers. They lasted until 1974 and were torn apart as a result of a global shortage of steel. If the VER are distributed in such a way as to cover imports of a product from all sources, the VER system is similar to an import quota. However, the process is very different. A quota is generally applied at the global level; it is not discriminatory and is generally allocated either on a first-come, first-soft basis or on a quota quota basis, under the current import share model. REVs are negotiated bilaterally, usually with one or a few suppliers. They are therefore discriminatory, as export volumes depend on the strength of the negotiations. They may distort the trade structure of the product covered by the ERR for the importing country compared to more efficient exporters and create investment signals for third-country producers that could prove to be incorrect. As a result, VER may result in greater efficiency losses than a quota applied globally for equivalent amounts of import reduction.

A typical WORM limits the supply of exports by product type, country and volume. GATT articles dealing with trade-type measures taken by the Government prohibit export restrictions under normal circumstances; if they are allowed, they must not be discriminatory and can only be enforced through customs duties, taxes and fees. However, the participation of governments in THE RERs is not always clear. In addition, REVs do not always have fixed market allocation rules; they may, for example, be available in the form of an export forecast and therefore be conservative. For these reasons, REVs fall into a “grey zone”, as there may be doubts as to their illegality under the GATT. In addition, it is unlikely that parties to an ERR will request a finding in GATT dispute settlement procedures – they have never done so before – while third parties can often benefit from an ERR and are therefore reluctant to initiate litigation proceedings. Finally, the signatories of the Code of Sub-Presidencies and Duties Countervailing, resulting from the Tokyo Round of trade negotiations, appear to have acquired legal powers to negotiate EEVs. In this regard, the decision of the GATT 1987 Council of Representatives to establish a litigation body for the examination of the Japan-US semiconductor agreement is important. The U.S. steel industry expects increased production, firmer prices, and more jobs if the Reagan administration can strike voluntary agreements with foreign producers to limit its steel shipments to 18 1/2 percent of the U.S.

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