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Safeguards and the problem of VERs

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Intereconomics

Abstract

One of the most complex problems facing GATT during the current Uruguay round of trade talks is the reform of Article XIX on temporary protection measures, commonly known as safeguards. Our author argues that, provided there are well-defined rules to limit its use, the introduction of some selectivity in safeguard measures need not undermine the GATT system. An appropriate change in the rules would induce countries to resort less to “grey-area” measures, such as voluntary export restraints.

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References

  1. J. Jackson: World Trade and the Law of GATT, Indianapolis 1969, p. 557; for a more extensive analysis of the problems of interpreting Art. XIX see also L. Lundy: The GATT Safeguards Debacle and the Canadian Textiles and Clothing Policy, in: Journal of World Trade, Vol. 22, No. 6, 1988, pp. 71–94.

  2. E. U. Petersmann: Economic, Legal and Political Functions of the Principle of Non-discrimination, in: The World Economy, Vol. 9, No. 1, 1986, pp. 113–120.

  3. E. U. Petersmann: Grey Area Trade Policy and the Rule of Law, in: Journal of World Trade, Vol. 22, No. 2, 1988, pp. 23–44, here pp. 30–33.

  4. E. McGovern: International Trade Regulation, Exeter 1986, p. 291; G. Sampson: Safeguards, in: M. Finger, A. Olechowski (eds.): The Uruguay Round: A Handbook on the Multilateral Trade Negotiations, Washington, D.C. 1987, p. 143.

  5. M. Kostecki: Export-Restraint Arrangements and Trade Liberalisation, in: The World Economy, Vol. 10, No. 4, 1987, pp. 425–454.

  6. Ibid. M. Kostecki: Export-Restraint Arrangements and Trade Liberalisation, in: The World Economy, Vol. 10, No. 4, 1987, pp. 425–454.

  7. R. Pomfret: The Threat of Preferential Trading Arrangements, in: Economic impact, Vol. 65, No. 4, 1988, pp. 54–59.

  8. See D. Greenaway, B. Hindley: What Britain Pays for Voluntary Export Restraints, London 1985; B. Hindley: EC imports of VERs from Japan—a Costly Precedent, in: Journal of World Trade, Vol. 20, No. 2, 1986, pp. 168–184.

  9. For an historical exposition on the use and growth of VERs see K. Jones: Voluntary Export Restraint: Political Economy, History and the Role of GATT, in: Journal of World Trade, Vol. 23, No. 3, 1989, pp. 125–140. An insight into the analysis of the policy makers' motives for resorting to VERs is provided by G. Wolf: Why Voluntary Export Restraints? An Historical Analysis, paper presented to a conference on The Political Economy of Export Restraints, Washington, D.C., 6–8 June 1989. Wolf identifies the conflicting interests of the various branches of government as one of the main reasons for the “popularity” of VERs as safeguard measures.

  10. E. U. Petersmann: Grey Area Trade Policy and the Rule of Law, op. cit. in: Journal of World Trade, Vol. 22, No. 2, 1988, pp. 23–44

  11. Ibid, E. U. Petersmann: Grey Area Trade Policy and the Rule of Law, in: Journal of World Trade, Vol. 22, No. 2, 1988, p. 34.

  12. B. Hindley: Voluntary Export Restraints and the GATT's Main Escape Clause, in: The World Economy, Vol. 3, No. 3, 1980, pp. 329–341; B. Hindley: GATT Safeguards and Voluntary Export Restraints: What Are the Interests of Developing Countries?, in: The World Bank Economic Review, Vol. 1, No. 4, 1987, pp. 689–705.

  13. G. Wolf, op. cit. Why Voluntary Export Restraints? An Historical Analysis, paper presented to a conference on The Political Economy of Export Restraints, Washington, D.C., 6–8 June 1989. p. 21.

  14. R. Pomfret, op. cit. The Threat of Preferential Trading Arrangements, in: Economic Impact, Vol. 65, No. 4, 1988, pp. 54–59.

  15. J. Bhagwati: Protectionism, Cambridge, Mass. 1988.

  16. G. Sampson, op. cit., Safeguards, in: M. Finger, A. Olechowski (eds.): The Uruguay Round: A Handbook on the Multilateral Trade Negotiations, Washington, D.C. 1987, p. 145.

  17. G. Wolf, op. cit. Why Voluntary Export Restraints? An Historical Analysis, paper presented to a conference on The Political Economy of Export Restraints, Washington, D.C., 6–8 June 1989, p. 9.

  18. See K. Jones, op. cit. Voluntary Export Restraint: Political Economy, History and the Role of GATT, in: Journal of World Trade, Vol. 23, No. 3. 1989.

  19. B. Hindley: GATT Safeguards and Voluntary Export Restraints: What Are the Interests of Developing Countries?, op. cit. in: The World Bank Economic Review, Vol. 1, No. 4, 1987, pp. 689–705.

  20. J. Zietz: Negotiations on GATT Reform and Political Incentives, in: The World Economy, Vol. 12, No. 1, 1989, pp. 39–52.

  21. J. Perez-Lopez: Case for GATT Code on Temporary Measures, in: The World Economy, Vol. 12, No. 1, 1989, pp. 53–68.

  22. See, for example, the suggestions contained in J. Zietz, op. cit. Negotiations on GATT Reform and Political Incentives, in: The World Economy, Vol. 12, No. 1, 1989, and J. Perez-Lopez, op. cit. Case for GATT Code on Temporary Measures, in: The World Economy, Vol. 12, No. 1, 1989

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Authors and Affiliations

  1. The Royal Institute of International Affairs, London, UK

    Phedon Nicolaides

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  1. Phedon Nicolaides
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Revised and abridged version of the author's RIIA Discussion Paper No. 21, “The Hydra of Safeguards: An Intractable Problem for GATT”.

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Nicolaides, P. Safeguards and the problem of VERs. Intereconomics 25, 18–24 (1990). https://doi.org/10.1007/BF02924755

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