Abstract
WITH tariffs on industrial products being reduced to very low levels, inter-governmental attention began to focus in the early 1970s on non-tariff measures and, indirectly, on VERs and OMAs through discussions on the reform of the GATT provision for emergency ‘safeguard’ protection. Since then VERs and OMAs (which are distinguished from VERs in that trade restrictions are imposed by the importing country) have come to be referred to as ‘informal’ agreements and also as ‘grey area’ measures, for they are thought to fall in the indistinct area between protective devices that are legal under the GATT and those that are illegal.
‘Import relief would place a costly and unjustifiable burden on US consumers and the US economy. The Council of Economic Advisers estimates that the global quota remedy recommended by the [US International Trade Commission] would create between 13,000 to 22,000 jobs with an average annual wage of $14,000. However, the cost to consumers to create these jobs would be $26,300 per job, amounting to a total consumer cost which could be as high as $2.9 billion over the next five years’
— President Ronald Reagan, Message to the United States Congress, 28 August 1985, declining to grant protection to the non-rubber footwear industry
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes and References
In Article XI of the GATT, paragraph 2 states that ‘… the provisions of paragraph 1 [prohibiting quantitative restrictions] shall not extend to import restrictions on any agricultural product, imported in any form, necessary to the enforcement of governmental measures …’ to control domestic production and sales.
For a history of ‘residual’ import restrictions, see Dam, op. cit., pp. 163–66, and Hudec, op. cit., ch. 21.
Two of the first reviews of non-tariff measures were Robert E. Baldwin, Non-tariff Distortions of International Trade (Washington: Brookings Institution, 1970),
and Gerard and Victoria Curzon, Hidden Barriers to International Trade, Thames Essay No. 1 (London: Trade Policy Research Centre, 1970).
For a discussion of subsidies and the GATT, before the code was negotiated, see Dam, op. cit., ch. 8. Also see Harald B. Malmgren, International Order for Public Subsidies, Thames Essay No. 11 (London: Trade Policy Research Centre, 1977).
With respect to the United States, see J. Michael Finger, H. Keith Hall and Douglas R. Nelson, ‘The Political Economy of Administered Protection’, American Economic Review, Menasha, June 1982.
See Finger, ‘The Industry-country Incidence of “Less than Fair Value” Cases in US Import Trade’, in Werner Bair and Malcolm Gillis (eds), Export Diversification and the New Protectionism (Champaign: University of Illinois, 1981).
Annual Report on Exchange Arrangements and Exchange Restrictions (Washington: International Monetary Fund, 1984).
See Keesing and Wolf, op. cit.
Th understanding was negotiated by Viscount Etienne Davignon, as the European Community’s Commissioner for Industry, in discussions with Japanese ministers in Tokyo and in Brussels. According to Agence Europe, Brussels, in its 14–15 February 1983 edition, Viscount Davignon divided the ‘unilateral measures’ decided upon by Japan into five categories, their implementation to be closely watched by the Commission and to lead to quarterly consultations, so permitting the development to be followed: ‘(1) General moderation of exports, with the possibility of consultations if the development does not appear in accordance with the moderation principle, for five products: light utilitarian vehicles (vans), forklift trucks, motor-cycles, quartz watches and Hi-Fi installations. For these products, Japan is not committing itself to any figures, but is committing itself not to invade the European market with torrential exports. ‘(2) Maintenance of the moderation measures already practised in 1982, concerning tourism, vehicles and machine-tools with numerically controlled blades. In the motor-car sector, the various limitations on the one or the other European Community national market will be respected, and framed within the Community context. In the machine-tool sector, the Japanese exporters’ cartel will be maintained. This cartel is increasing its export prices, with effect from the beginning of the current year. Particular attention will be given to the situation on the French market. ‘(3) Moderation defined, for three years, for TV cathode tubes. The Commission succeeded in getting this measure to apply in 1983, 1984 and 1985, in view of the requirement to give the Community industry the necessary time to restructure and organize itself. Moderation will mainly cover “large tubes” (over 52 cm). In 1983, Japan will not export more than 900,000 of these tubes. The 1984 and 1985 figures will be fixed through consultation. ‘(4) Moderation for two years (1983 and 1984), with a possibility of continuing in 1985, for colour televisions. ‘(5) Ad hoc solution for video-cassette-recorders. The formula was developed with a view to prevent artificial protection and, on the other hand, to stimulate both European production and cooperation with Japan. Japan will practise moderation for three years, taking the following three factors cumulatively into consideration: (a) European manufacturers must be certain of selling about 1.2 million VCRs manufactured using European technology in 1983. (b) A “price clause” will guarantee that there can be no dumping. In principle, ex-stock prices of Japanese VCRs will have to be aligned on the prices of European VCRs ex-factory. For “ex-Japan” prices, there will be a sales cartel and a floor price, (c) In any event, VCRs exported by Japan on the European market cannot exceed the ceiling of 4.55 million; this figure includes Japanese VCRs assembled in Europe (with an added value of less than 10 per cent), Japanese manufacturers undertaking to give priority to meeting contracts signed with European assemblers. Obviously the maximum figure of 4.55 million could be reached solely in the event of major market expansion (from 4.5 to 4.7 million VCRs in 1982), as priority must be given to observing the figure of 1.2 million reserved for Community manufacturers. ‘The content of the “price clause” will be communicated to Philips and Grundig, which shall be able to decide on withdrawal of the anti-dumping complaint already lodged. In addition, it is obvious that, in the context of this overall arrangement, the French measure on obligatory customs clearance at Poitiers for imported video-cassette-recorders would be pointless.’
Carl Hamilton, Voluntary Export Restraints on Asia: Tariff Equivalents, Rents and Trade Barrier Formation, Seminar Paper No. 276 (Stockholm: Institute for International Economic Studies, 1984).
Orsalia Kalantzopoulos, ‘The Cost of Voluntary Export Restraints for Selected Industries in the US and EC, mimeograph, World Bank, Washington, 1984.
Wolf, Hans Hinrich Glismann, Joseph Pelzman and Dean Spinanger, Costs of Protecting Jobs in Textiles and Clothing, Thames Essay No. 37 (London: Trade Policy Research Centre, 1984).
From a study by the Council on Wage and Price Stability entitled Textiles/Apparel: a Study of the Textile and Apparel Industries (Washington: US Government Printing Office, 1978).
Glenn P. Jenkins, Cost and Consequences of the New Protectionism: the Case of Canada’s Clothing Sector (Ottawa: North-South Institute, 1980).
Vincent Cable, Protectionism and Industrial Decline (London: Hodder & Stoughton, for the Overseas Development Institute, 1983).
David Greenaway, ‘Clothing from Hong Kong and Other Developing Countries’, in Greenaway and Hindley, What Britain Pays for Voluntary Export Restraints, Thames Essay No. 43 (London: Trade Policy Research Centre, 1985).
Z.A. Silberston, The Multi-fibre Arrangement and the UK Economy (London: Her Majesty’s Stationery Office, 1984).
David Tarr, ‘Estimation of the Costs to the US Economy and to Consumers of the Imposition of a Fifteen Per Cent Quota on Carbon and Alloy Steel Mill Products’, Investigation Regarding Imports of Carbon and Certain Alloy Steel, Pre-hearing Brief on Section 201 (Washington: Federal Trade Commission, 1984).
Anthony Cockerill, ‘Downward Adjustment in the Steel Industry: the Case of the United Kingdom’, prepared for the Adjustment and Trade Policy Project of the Institute for International Economics, Washington, 1984.
Robert C. Feenstra, ‘Voluntary Export Restraint in US Autos, 1980–84’, unpublished paper prepared for the NBER Summer Workshop, National Bureau of Economic Research, Cambridge, Massachusetts, August 1984.
Robert W. Crandall, ‘Import Quotas and the Automobile Industry: the Costs of Protectionism’, The Brookings Review, No. 4, Vol. 2, 1984, p. 16.
Hindley, ‘Motor Cars from Japan’, in Greenaway and Hindley, op. cit.
See, for example, the following studies: J.T.H. Tsao, Economic Effects of Export Restraints, Publication No. 1256 (Washington: International Trade Commission, 1982); and Costs and Benefits of Protection (Paris: OECD Secretariat, 1984).
Hindley, loc. cit.
Kalantzopoulos, op. cit., p. 19.
Morris E. Morkre and Tarr, Effects of Restrictions on United States Imports: Five Case Studies and Theory, Staff Report of the Bureau of Economics to the Federal Trade Commission (Washington: US Government Printing Office, 1980) Table 7.6.
Charles Pearson, Emergency Protection in the Footwear Industry, Thames Essay No. 36 (London: Trade Policy Research Centre, 1983) Table 4.7.
Greenaway, loc. cit.
For a fuller discussion of the issues raised in this section, see Corbet, ‘Public Scrutiny of Protection: Trade Policy and the Investigative Branch of Government’, in International Trade and the Consumer (Paris: OECD Secretariat, 1986) pp. 224–37.
‘Understanding Regarding Notification, Consultation, Dispute Settlement and Surveillance’, Agreements Relating to the Framework for the Conduct of International Trade, op. cit., para. 24.
Leutwiler Report, op. cit., proposal 8, p. 42.
Ibid., proposal 12, p. 46.
Protectionism and Structural Adjustment: Restrictions on Trade and Structural Adjustment, Part I, op. cit.
See Scott et al., op. cit., pp. 95–99.
A thorough discussion of the requirements of stable international agreements can be found in Irving B. Kravis, Domestic Interests and International Obligations (Philadelphia: University of Pennsylvania Press, 1963), reprinted in 1975 by Greenwood Press, Westport, Connecticut, in the United States.
Besides Article VI, permitting the imposition of anti-dumping and subsidy-countervailing duties, and Article XIX, providing for emergency or ‘safeguard’ action on imports of a particular product, the GATT contains a number of other ‘escape clauses’. Article XI permits the imposition of import restrictions to enforce technical standards or domestic agricultural policies; Article XII, the general imposition of quantitative import restrictions for balance-of-payments purposes. Article XVIII allows trade restrictions to assist economic development in poor countries. Article XX provides for general exceptions to the GATT, including actions to safeguard public health and safety; and Article XXI allows action to protect essential national-security interests. Other ‘escape clauses’ are Article XXVIII, which permits the renegotiation of concessions granted under GATT schedules, and Article XXV, permitting waivers to be granted from GATT rules in exceptional circumstances. These articles represent standard escape clauses in international agreements. They also involve the renegotiation of commitments under the GATT and therefore they are not automatic.
The Treaty of Rome, the constitution of the European Community, and the Stockholm Convention, establishing the European Free Trade Association (EFTA), had to comply with the GATT’s Article XXIV, another ‘escape clause’, permitting departures from the principle of non-discrimination (Article I) to form a customs union or free trade area, and so they included general and specific safeguard provisions similar to those in the GATT.
Corbet, ‘Public Scrutiny of Protection: Trade Policy and the Investigative Function of Government’, loc. cit.
Lydia Dunn et al., In the Kingdom of the Blind: a Report on Protectionism and the Asian-Pacific Region, Special Report No. 3 (London: Trade Policy Research Centre, 1983) p. 117.
Copyright information
© 1987 United Nations
About this chapter
Cite this chapter
Viravan, A. et al. (1987). Neo-protectionism and the Need for Transparency. In: Trade Routes to Sustained Economic Growth. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-18860-4_6
Download citation
DOI: https://doi.org/10.1007/978-1-349-18860-4_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-44835-9
Online ISBN: 978-1-349-18860-4
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)