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International Trade and Finance

Notes Agreement on a “voluntary” export restraint
In the past decade, a widespread practice of concluding agreements on the “voluntary” export
restrictions and the establishment of import minimum prices imposed by leading Western nations
upon weaker in economical or political sense exporters. The specifics of these types of restrictions is
the establishment of unconventional techniques when the trade barriers of importing country, are
introduced at the border of the exporting and not importing country. Thus, the agreement on
“voluntary” export restraints is imposed on the exporter under the threat of sanctions to limit the
export of certain goods in the importing country. Similarly, the establishment of minimum import
prices should be strictly observed by the exporting firms in contracts with the importers of the country
that has set such prices. In the case of reduction of export prices below the minimum level, the importing
country imposes anti-dumping duty, which could lead to withdrawal from the market. “Voluntary”
export agreements affect trade in textiles, footwear, dairy products, consumer electronics, cars, machine
tools, etc.
Problems arise when the quotas are distributed between countries because it is necessary to ensure
that products from one country are not diverted in violation of quotas set out in second country.
Import quotas are not necessarily designed to protect domestic producers. For example, Japan,
maintains quotas on many agricultural products it does not produce. Quotas on imports is a leverage
when negotiating the sales of Japanese exports, as well as avoiding excessive dependence on any
other country in respect of necessary food, supplies of which may decrease in case of bad weather or
political conditions.
Export quotas can be set in order to provide domestic consumers with sufficient stocks of goods at
low prices, to prevent the depletion of natural resources, as well as to increase export prices by
restricting supply to foreign markets. Such restrictions (through agreements on various types of goods)
allow producing countries to use quotas for such commodities as coffee and oil; as the result, prices
for these products increased in importing countries.

Embargo is a specific type of quotas prohibiting the trade. As well as quotas, embargoes
may be imposed on imports or exports of particular goods, regardless of destination, in
respect of certain goods supplied to specific countries, or in respect of all goods shipped
to certain countries.
Although the embargo is usually introduced for political purposes, the consequences, in
essence, could be economic.

Standards
Standards take a special place among non-tariff barriers. Countries usually impose standards on
classification, labeling and testing of products in order to be able to sell domestic products, but also to
block sales of products of foreign manufacture. These standards are sometimes entered under the
pretext of protecting the safety and health of local populations.
Administrative and bureaucratic delays at the entrance

Among the methods of non-tariff regulation should be mentioned administrative and bureaucratic
delays at the entrance, which increase uncertainty and the cost of maintaining inventory.
Import deposits
Another example of foreign trade regulations is import deposits. Import deposits is a form of deposit,
which the importer must pay the bank for a definite period of time (non-interest bearing deposit) in
an amount equal to all or part of the cost of imported goods.
At the national level, administrative regulation of capital movements is carried out mainly within a
framework of bilateral agreements, which include a clear definition of the legal regime, the procedure

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