Economics Trade Barriers Questions Medium
Voluntary export restraints (VERs) and import quotas are both trade barriers implemented by governments to restrict the flow of goods and services across borders. However, there are some key differences between the two.
Voluntary export restraints refer to agreements made between exporting and importing countries, where the exporting country voluntarily limits the quantity of its exports to the importing country. This is typically done to address concerns about the negative impact of excessive imports on domestic industries. The exporting country may agree to limit its exports to a specific quantity or a certain percentage of the importing country's market. VERs are usually negotiated between governments and are considered a more flexible approach compared to import quotas.
On the other hand, import quotas are government-imposed restrictions on the quantity or value of goods and services that can be imported into a country. Unlike VERs, import quotas are not voluntary agreements but rather legally binding restrictions. They are often implemented to protect domestic industries from foreign competition, safeguard national security, or manage balance of payments issues. Import quotas can be set as absolute limits on the quantity of imports or as tariff-rate quotas, where a specific quantity can be imported at a lower tariff rate, and any imports beyond that face higher tariffs.
In summary, the main difference between voluntary export restraints and import quotas lies in their nature and implementation. VERs are voluntary agreements between exporting and importing countries, while import quotas are government-imposed restrictions. VERs are more flexible and can be negotiated, whereas import quotas are legally binding and set specific limits on imports.