Strategic Trade Policy, Competition and Welfare: The Case of Voluntary Export Restraints between Britain and Japan (1971-2002)

We evaluate the voluntary export restraint (VER) placed on Japanese automobile exports from 1977 to 1999 by the UK. We show that the policy failed to assist the British domestic car industry. Instead, UK-based US multinationals and Japanese manufacturers were the primary beneficiaries, at a substantial cost to UK consumers. While there are a number of caveats, the policy was on balance damaging to the UK economy in welfare terms. JEL Classifications F13, F15, F59 Acknowledgements I thank the staff at the Comité des Constructeurs Français d’Automobiles for their help with the European data (and tolerating my dubious French), and to Augurtech Ltd (for allowing access to attribute data), Nigel Griffith at HIS Global Insight Ltd. and Fraser Davidson at Renault UK for providing hard copies of the new registration data, and to representatives at the European Commission for discussions about the implementation of VERs. Three anonymous referees and the editor are thanked for their contributions that have significantly enhanced the paper. The usual disclaimer applies. Contacts James T Walker, Henley Business School, University of Reading, Whiteknights, PO Box 218, Reading, Berkshire RG6 6AA. EmaiI: [email protected] Centre for International Business History 2 © Wallker, February 2015