Question

Q2. In the past two decades, nontariff trade barriers have gained in importance as protectionist devices. The major nontariff trade barriers include import quotas, voluntary export agreements, subsidies, buy‑national policies, product and safety standards, and content requirements.

What is meant by voluntary export restraints and how do they differ from other protective barriers?

Answer 1

Voluntary export restraint places restriction on the quantity of goods that can be exported to another country. It is a self-imposed restriction from the part of the exporting country and is made on the request of the importing country. Importing countries request exporting countries to set restriction on the quantity of exports so as to protect domestic industries. Sometimes voluntary export restraint agreements are created at industry level. Voluntary export restraints are offered by exporting countries to avoid the effects of trade barriers from the part of importing countries. Voluntary export restraints are having less damage on the trade and political relationships between countries and can also be easily removed. What makes voluntary export restraints different from other non-tariff barriers is the fact that it is done by the exporting country rather than the importing country to protect domestic industries of the importing country.