Voluntary export restraint (VER) without market restraints? The case study of the monitoring agreement (1991‐1999) between the Japanese car manufacturers and the European Union

Abstract

Purpose

The paper aims to research the mechanics of voluntary export restraints (VERs). It first develops a comprehensive VER research agenda, subsequently covering a 1991 VER between the European Union (EU) and Japan that established “voluntary” quotas on Japanese cars until 1999.

Design/methodology/approach

Reflecting gaps in research, an overall VER research agenda is set up. Then, referring to the only source providing ex ante hypotheses on the specific EU/Japan VER, those hypotheses by Preusse are checked against available ex post data at the time of writing in 2002.

Findings

First, Japan has not exhausted any of its yearly quotas during and even accepted a cut of quota in some years – an outcome only partly influenced by lower than expected market growth in the relevant period. Then, the competitive power of the Japanese producers appears overestimated, while the European capability to catch up was underestimated. Potential “escape routes” such as transplants and third‐country imports fell short of estimations – providing no particular support for Preusse's efficiency effect hypothesis and competitive effect hypothesis.

Research limitations/implications

Typical research limitations such as data source availability and actor accessibility notwithstanding, it is shown that the product upgrading effect often associated with VERs may happen independently of such agreements.

Originality/value

This first results‐based, hypothesis‐driven exploration of particular VER mechanisms supports the authors’ call for a dual, actor‐driven and multi‐disciplinary VER research approach. It holds promise for the potential avenues for related research.

Citation

Seidenfuss, K. and Kathawala, Y. (2005), "Voluntary export restraint (VER) without market restraints? The case study of the monitoring agreement (1991‐1999) between the Japanese car manufacturers and the European Union", European Business Review, Vol. 17 No. 3, pp. 217-231. https://doi.org/10.1108/09555340510596634