Economics Trade Barriers Questions
A voluntary export restraint (VER) is a trade barrier imposed by an exporting country on its own exports. It is a voluntary agreement between the exporting country and the importing country to limit the quantity of exports. The exporting country agrees to restrict its exports to a certain level, usually below its normal capacity, in order to protect the domestic industries of the importing country.
VERs act as trade barriers by artificially reducing the supply of imported goods in the importing country. This restriction on imports can lead to higher prices for the imported goods, making them less competitive compared to domestic products. It also limits consumer choices and can result in reduced competition in the domestic market. VERs are often used to protect domestic industries from foreign competition and to maintain employment levels in the importing country.