An orderly marketing arrangement is a non-legal

treaty A treaty is a formal, legally binding written agreement between actors in international law. It is usually made by and between sovereign states, but can include international organizations An international organization or international o ...

agreed upon by the national government stating that a

sovereign state A sovereign state or sovereign country, is a polity, political entity represented by one central government that has supreme legitimate authority over territory. International law defines sovereign states as having a permanent population, defin ...

must refrain from exporting goods to a targeted negotiating sovereign state. These agreements relate directly to

voluntary export restraints A voluntary export restraint (VER) or voluntary export restriction is a measure by which the government or an industry in the importing country arranges with the government or the competing industry in the exporting country for a restriction on t ...

safeguard A safeguard, in international law, is a restraint on international trade or economic development to protect communities from development aggression or home industries from foreign competition. In the World Trade Organization (WTO), a member may t ...

and

escape clause An escape clause is any clause, term, or condition in a contract that allows a party to that contract to avoid having to perform the contract. If an agreement was drawn up for the sale of a house, for example, the purchaser could include some k ...

policies. Orderly marketing arrangements are predominantly bilateral arrangements between the governments of two countries, and any change to the agreement must be approved by both parties.

Characteristics

Orderly Marketing Arrangements deal directly with political tensions in importing countries with an elevating abundance of imports. A disruption in the competitive production of imports may occur when there is a sudden increase in a specific

import An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. In international trade, the importation and exportation of goods are limited ...

going into a country. This would cause undesirable economic problems for the factors of production involved, therefore an orderly marketing arrangement may be implemented to deal with the spike in imports. Orderly marketing arrangements help protect against more permanent protectionist measures such as import quotas and

Tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...

s. These agreements are also restrictive and commonly affect prices, international relations and free trade. Protectionist strategies implemented under orderly marketing arrangements include import quotas, export-supply management, and the monitoring of

trade flows Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct exchan ...

. The use of orderly marketing arrangements generally span one to five years, although they may be continually extended to a length of ten years or more. Orderly marketing arrangements also focus on the difference between binding arrangements and non-binding arrangements. Orderly marketing arrangements are included under voluntary restraint agreements; however voluntary restraint agreements may also pertain to trade agreements made between industries and governments. ''The Consumers Union'' distinguishes binding from non-binding as government to

industry Industry may refer to: Economics * Industry (economics), a generally categorized branch of economic activity * Industry (manufacturing), a specific branch of economic activity, typically in factories with machinery * The wider industrial sector ...

arrangements and government to government arrangements. The effect on ''domestic'' and ''international law'' differs depending on binding and non-binding agreements ''.'' An agreement could cause problems with domestic law but not international law or vice versa. There has been an increase in the desire of orderly marketing arrangements due to the rising pressures from the ever-changing patterns of imports and world trade, this led to orderly marketing arrangements becoming a tool for policy. If agreements are not negotiated, a more unilateral trade policy may be applied by the importing country. Voluntary restraint agreements and orderly marketing arrangements are considered grey area measures and have been banned by the

World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and e ...

since 1995. All grey area measures active at that time were terminated by 1999.

Former orderly marketing agreements

The United States alone has applied orderly marketing arrangements to the import of textiles, steel, automobiles, electronics and shoes. At the end of the 1960s and early 1970s there was a marketing arrangement implemented in the steel Industry. This arrangement occurred when the United States government engaged steel industries particularly from Japan and Europe. This presented the idea of self-restraints on steel products coming into the US market. During this time, there was a letter send by steel industries from Japan and Europe to the US which presented the action plan. The ''Consumers Union of Kissinger'' states that the arrangement was not a formal operation, and was more informal than most marketing agreements. Due to this, Orderly Marketing Arrangements are strictly government to government and formal arrangements where voluntary restraint agreements are less formal. Voluntary restraint agreements are not legally binding and are used by the exporting country to avoid bigger trade problems.{{Cite journal, last=Kostecki, first=Michel, date=1987, title=Export-restraint Arrangements and Trade Liberalization, journal=The World Economy, volume=10, issue=4, pages=425–453, doi=10.1111/j.1467-9701.1987.tb00861.x

References

External links

* https://www.wto.org/english/thewto_e/glossary_e/vra_ver_oma_e.htm Commercial treaties

Characteristics

Former orderly marketing agreements

See also

References

External links