The VER require exporting countries to form cartels and allocate quota shares to all their exporting companies. Since they do not have import tariffs, they take advantage of export reductions to increase the prices of what they sell to partner countries. With less import competition, companies in partner countries will also be able to raise prices. Since these three components are negative, the VER must lead to a reduction in national welfare for the importing country. However, it is important to note that there is income redistribution – that is, some groups gain while others lose. This is particularly important because VER are often offered by the importing country. This is because the government of the importing country is under pressure from producers who are plagued by imports to offer protection in the form of an import duty or quota. The government`s reluctance to use these guidelines often leads the importer of VER to negotiate with the exporting country. Although the national welfare of the importing country is reduced, importing producers nevertheless benefit. Since there are both positive and negative elements, the net national welfare effect can be either positive or negative. But the interesting result is that it can be positive. This means that an ERVs implemented by a large exporting country can improve national welfare.

The Japanese auto industry has responded by setting up assembly or „graft“ plants in the United States (mainly in the southern states of the United States, where right-to-work laws exist, unlike the Rust Belt states with established unions) to produce mass vehicles. Some Japanese manufacturers that had their transplant assembly plants in the Rust Belt, for example.B. Mazda, Mitsubishi, had to have a joint venture with a Big Three manufacturer (Chrysler/Mitsubishi, which became Diamond Star Motors, Ford/Mazda, which became AutoAlliance International). GM created NUMMI, which was originally a joint venture with Toyota, which was later expanded to a Canadian subsidiary (CAMI) – a GM/Suzuki that was consolidated, which became a geographic division in the United States. (its Canadian counterparts Passport and Asuna were short-lived – Isuzu cars, manufactured at that time, were sold as captive imports). Japan`s Big Three (Honda, Toyota, and Nissan) also began exporting larger, more expensive cars (soon among their newly created luxury brands like Acura, Lexus, and Infiniti — luxury brands distanced themselves from their parent brand, which was marketed en masse) to make more money with a limited number of cars. In 1995, WTO member states, including the United States, agreed to ban CEMs, and rightly so. There was a long history of such agreements from the 1950s to the 1990s.

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