The `inward-looking' 1992 programme ignores external trade, with the exception of the abolition of Article 115 of the Treaty of Rome, which currently permits member countries to control the movement within the Community of certain goods imported from the rest of the world. In Discussion Paper No. 475, Research Fellow Carl Hamilton investigates the frequently-made claim that the abolition of such `voluntary export restraints' VERs on imports from third countries will have a liberalizing effect. In particular, he analyses changes in the restrictiveness of existing VERs on Hong Kong clothing over the 1980s, focusing on their impact on import tariff equivalents, rent transfers and intra-EC price dispersion.

Hamilton estimates the relationship between home-country income growth, exporting-country supply conditions and the import tariff equivalents of VERs, and he uses this estimated relationship to forecast the increase in VERs' restrictiveness brought about by the tendency of the `internal market' to boost the demand for imports. He also assesses the probable consequences of the opening-up of the Community's trade with Eastern Europe, which promises to be considerable. This paper was presented at the joint CEPR/EFTA policy seminar on `Completing the European Internal Market: The Consequences of 1992 for International Trade', held in Geneva on 6 November, which is reported more fully in this issue of the Bulletin.

European Community External Protection and 1992: Voluntary Export Restraints Applied to Pacific Asia
Carl B Hamilton

Discussion Paper No. 475, November 1990 (IT)