ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Example of a Voluntary Export Restraint (VER) The most notable example is when Japan imposed a VER on its auto exports into the U.S. as a result of American pressure in the 1980s. The VER subsequently gave the U.S. auto industry some protection against a flood of foreign competition.

Detailed explanation-2: -In May 1981, with the American auto industry mired in recession, Japanese car makers agreed to limit exports of passenger cars to the United States. This “voluntary export restraint” (VER) program, initially supported by the Reagan administration, allowed only 1.68 million Japanese cars into the U.S. each year.

Detailed explanation-3: -When the automobile industry in the United States was threatened by the popularity of cheaper, more fuel efficient Japanese cars, a 1981 voluntary restraint agreement limited the Japanese to exporting 1.68 million cars to the U.S. annually as stipulated by U.S Government.

Detailed explanation-4: -An example of a tariff would be a tax on a good imported from another country.