ABSTRACT
Grey area trade restrictions have been described as the most dangerous form of contemporary protectionism incurring penalties on efficient producer exporters and levying additional costs on consumers in the importing country. This chapter highlights some of the violations and considers whether the proliferation of quantitative restrictions in the form of export restraint can be said to have led to an inter se modification of multilateral General Agreement on Tariffs and Trade (GATT) obligations. The contracting parties of GATT are free to impose quantitative restrictions if these are intended as restrictions to safeguard the balance of payments, are required in protecting essential security Interests, or are seen as emergency action on imports of particular products. Apart from trade distortions and high economic costs grey area trade policy measures in the form of voluntary export restraints or export restraint agreements are in apparent violation of substantial principles embodied in the GATT.
