A voluntary restraint agreement (VRA) is a type of trade agreement usually struck between two or more countries. The agreement is typically used to limit or control the amount of goods or services that are imported or exported between the countries involved.
These agreements are voluntary in nature, which means that they are not mandatory and are agreed upon by all parties involved. Voluntary restraint agreements are often used in situations where a country is experiencing economic difficulties or to protect a particular domestic industry.
The concept of voluntary restraint agreements began in the 1930s when the United States agreed to limit the amount of silk it imported from Japan to help protect the American silk industry. The notion of VRAs was later formalized and became a popular tool for governments to regulate economic activity in the late 20th century.
Voluntary restraint agreements can be used to control a variety of products, including textiles, steel, and automobiles. Typically, the agreement will outline the amount of a particular product that a country is allowed to export to the other country or countries involved in the agreement. The agreement will also specify the duration of the agreement and the penalties for non-compliance.
VRAs are often seen as a more amicable alternative to more aggressive trade measures, such as tariffs or import quotas. By limiting the amount of a particular product that can be imported, VRAs can limit the negative impact that imports might have on the domestic industry and can help protect jobs and local economies.
However, VRAs can also lead to higher prices for consumers, as the limited supply can drive up demand and prices. Additionally, VRAs can also lead to retaliatory measures from other countries, further complicating trade relations.
In conclusion, voluntary restraint agreements are a type of trade agreement used to limit the amount of goods or services that are imported or exported between countries. While VRAs can help protect domestic industries, they can also lead to higher prices for consumers and retaliatory measures from other countries. As with any trade agreement, VRAs should be carefully considered and weighed against other options before being implemented.