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Safeguards and voluntary export restraints under the World Trade Organization

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  • Kagitani, Koichi
  • Harimaya, Kozo

Abstract

Though the WTO agreement of safeguards prohibits VERs, WTO members can still use VERs without formal intergovernmental agreements. Our theoretical analysis shows that the fear of invoking a safeguard measure by an importing country on a good can induce a disruptive exporter of the good to enforce such a VER under certain conditions (for example, if the number of exporting country is not large). Our empirical analysis, using Japan's first safeguard actions as a case study, suggests that if producers of an exporting country capture an export market and if there is a large drop in their export price, the producers seeing a growing threat of safeguards will enforce such VERs. Our results highlight the need for amendments to the WTO Agreement on Safeguards.

Suggested Citation

  • Kagitani, Koichi & Harimaya, Kozo, 2015. "Safeguards and voluntary export restraints under the World Trade Organization," Japan and the World Economy, Elsevier, vol. 36(C), pages 29-41.
  • Handle: RePEc:eee:japwor:v:36:y:2015:i:c:p:29-41
    DOI: 10.1016/j.japwor.2015.06.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Safeguards; Voluntary export restraints; WTO; Political economy; Agricultural trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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