GATT Safeguards and Voluntary Export Restraints: What Are the Interests of Developing Countries?

Abstract

Exports from developing countries are frequently the targets of trade protection to offset injury to domestic producers. A safeguard clause of the General Agreement on Tariffs and Trade (GATT), Article XIX, authorizes such protection, but voluntary export restraints (VERS), which are not authorized or controlled by the GATT, are often used in its place. A call for a “comprehensive agreement on safeguards” was one outcome of the 1986 Punta del Este ministerial meeting. The spread of VERS is often taken to be a threat to the interests of developing countries. The costs of VERS to developing country exporters may have been overestimated, however, and as a consequence, developing countries may be at risk of conceding too much, perhaps in terms of a relaxation of the conditions of application of Article XIX, in an attempt to ban or directly control VERS. The central issue is the extent to which VERS are adopted to avoid invocation of Article XIX. If so, there is no valid case for developing countries to pay anything for a ban on VERS. A better course for them would be to press for more rigor in GATT articles used as threat, which would enhance their bargaining position in setting the conditions for VERS.