Introduction

The post–World War II era is often hailed as a period of great trade liberalization, which led to gains for all parties through free trade. Owing to a series of negotiations conducted under the auspices of GATT, tariffs have been negotiated steadily downward, and at present they are at an average level of about 4 percent on manufactured goods. However, this figure does not necessarily indicate that protection has fallen over time. Since 1970, a new kind of protectionism involving nontariff barriers (NTBs) has arisen.

The leading instruments of this “new protectionism” have been the socalled voluntary export restraint (VER) and its relative, the orderly marketing arrangement (OMA). Although the articles of GATT explicitly forbid quotas since they are inherently discriminatory, the proportion of total world trade that moves under some kind of quantitative restraint is thought to be between 30 and 50 percent.

The rise in the new protectionism coincided with the slow economic growth and higher unemployment of the early 1970s, and is often linked causally to the adverse economic environment faced by established industries in this period. The popularity of VERs stems from their legal, political, and economic advantages over more traditional protectionist measures. This is likely to make them even more popular in the future. VERs, however, tend to be socially inefficient ways of providing protection, although they do have advantages for certain groups.