1981 versus 1991: Why no new auto VER? (A historical analysis)

There are a number of parallels between the U.S. auto industry's situation in 1981 and 1991. Yet one difference is telling; the auto voluntary export restraint (VER) trade policy tool used to allay the industry's economic losses in the early 1980s has nowhere been mentioned as a possible auto trade policy tool in 1991. After ten years of experience, do U.S. policymakers and lobbyists still consider the automotive VER a viable policy tool? To find the answer, this paper analyzes how the trade-policy system generally works, how the auto-trade policy process worked in 1981, and what are the differences between the situation in 1981 and the one in 1991. The current policymakers' and lobbyists' views on the usefulness of automotive VERs are determined by using interviews. Eighteen policymaker and lobbyists were queried. The findings are that fourteen (78 percent) of U.S. trade policymakers and lobbyists believe that the auto VER no longer is a viable policy tool. The primary reason for this is the unintended consequences of the 1981 VER were great.