(MFA) - that we address in Section 4 - was dismantled in 2004. A number of studies have focused on different aspects of the MFA (Brambilla, Khandelwal and Schott, 2010; Harrigan and Barrows, 2009; Dean, 1995; Khandelwal, Schott, Wei, 2013), and especially the implications of its expiration.

# **3.3 Price undertakings and voluntary export restraints**

A second form of quantitative restriction is a voluntary agreement by exporters to raise their prices and/or restrain their export volumes. These policies are referred to as price undertakings or voluntary export restraints (VERs), and while they share many common economic features; they are currently treated in different ways under the WTO. For while VERs were supposedly banned in the Agreement on Safeguards established in 1995, price undertakings are encouraged as an outcome in the 1995 WTO Agreement on Antidumping.<sup>60</sup> Not surprisingly, given the high frequency of antidumping use across countries, price undertakings are also a relatively common outcome of the investigations. Consider, for example, the data on antidumping outcomes for the European Union. Overall, approximately 20 percent of EU antidumping investigations that found evidence of dumping by foreign exporters over 1989-2011 resulted in a negotiated price undertaking. These arrangements typically consist of a minimum import price and a market share allotment.<sup>61</sup> Thus, the impact of an undertaking, like that of a quota, will depend on the competitive structure of the industry with considerable scope for losses to consumers if the market is imperfectly competitive.

Table 7 summarizes the EU’s application of different _forms_ of import barriers arising as the outcomes of antidumping investigations over 1989-2011. Each entry is the percent of total antidumping measures, by export origin, implemented in the form listed.<sup>62</sup> The EU imposed almost two thirds of antidumping measures as ad valorem duties and roughly 10 percent as specific duties; as noted earlier, these specific duties can also discriminate between trading partners and in particular against those producing lower-priced varieties.

Next consider the breakdown of the form of antidumping measures by export origin. Broadly, the EU tends to favor ad valorem import tariffs to restrict imports from high income and emerging economies. In contrast, the EU negotiates a price undertaking in roughly 40 percent of the instances in which it imposes an antidumping measure against a developing country. This result could be another means to discriminate between trading partners (against new entrants). On the other hand, price undertakings may actually be preferred by the exporters if the alternative is an EU

> 60Bown (2002a) presents a discussion. As we further describe below in Section 4, one of the political motivations for the attempts to ban VERs was that they had become a common outcome to US safeguard and antidumping investigations in the 1970s through early 1990s, especially with respect to bilateral frictions that the United States had at the time with Japan (Bown and McCulloch, 2009).

> 61However, these are non-transparent in that official EU publications do not report the negotiated prices or market shares. Rather, official _Decisions_ and _Regulations_ report the names of the lead foreign negotiating authority (for example, a foreign Chamber of Commerce or industry association) and all firms that are participating in the undertaking. This set-up leaves the Commission with flexibility to adjust minimum import prices and market shares as the situation warrants.

> 62During this period, according to the Temporary Trade Barriers Database, the EU implemented a total of 492 antidumping measures. In roughly 5 percent of cases, the form of the final antidumping measure is unknown.

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