Import quotas are limitations on the quantity of goods that can be imported into thecountry during a specified period of time. An import quota is typically set below the freetrade level of imports. In this case it is called a
. If a quota is set at or abovethe free trade level of imports then it is referred to as a
. Goods that areillegal within a country effectively have a quota set equal to zero. Thus many countrieshave a zero quota on narcotics and other illicit drugs.There are two basic types of quotas: absolute quotas and tariff-rate quotas. Absolutequotas limit the quantity of imports to a specified level during a specified period of time.Sometimes these quotas are set globally and thus affect all imports while sometimes theyare set only against specified countries. Absolute quotas are generally administered on afirst-come first-served basis. For this reason, many quotas are filled shortly after theopening of the quota period. Tariff-rate quotas allow a specified quantity of goods to beimported at a reduced tariff rate during the specified quota period.In the US in 1996, milk, cream, brooms, ethyl alcohol, anchovies, tuna, olives and durumwheat were subject to tariff-rate quotas. Other quotas exist on peanuts, cotton, sugar andsyrup.In the US most quotas are administered the US Customs Service. The exceptions includedairy products, administered by the Department of Agriculture, and watches and watchmovements, administered by the Departments of the Interior and the CommerceDepartment.
Voluntary Export Restraints (VERs)
A voluntary export restraint is a restriction set by a government on the quantity of goodsthat can be exported out of a country during a specified period of time. Often the wordvoluntary is placed in quotes because these restraints are typically implemented upon theinsistence of the importing nations.Typically VERs arise when the import-competing industries seek protection from a surgeof imports from particular exporting countries. VERs are then offered by the exporter toappease the importing country and to avoid the effects of possible trade restraints on the part of the importer. Thus VERs are rarely completely voluntary.Also, VERs are typically implemented on a bilateral basis, that is, on exports from oneexporter to one importing country. VERs have been used since the 1930s at least, andhave been applied to products ranging from textiles and footwear to steel, machine toolsand automobiles. They became a popular form of protection during the 1980s, perhaps in