ABSTRACT
This section considers voluntary export restraints (VERs) as instruments of trade policy. VERs are quantitative restrictions on international trade. However, when a VER is used as a protective device, the rents from the restriction of international trade accrue to the foreign suppliers of the restricted imports. Thus, in comparison with domestically assigned import quotas, foreigners gain from VERs. Foreigners also have reason to prefer VERs to tariffs, since the revenue from restriction of trade via a tariff accrues to the home government. The use of VERs in place of the more traditional tariff and quota instruments of trade restriction accordingly suggests a political response favoring foreign interests. Since foreigners benefit from VERs relative to other instruments, an explanation for the use of VERs suggestively encompasses the role that foreign interests might play in influencing the domestic determination of international trade policy.
