Effectiveness of voluntary restraint agreements on the U.S. machine tool industry

In May of 1986, after years of industry decline as measured apparent consumption and percentage of domestic market share, the U.S. sought Voluntary Restraint Agreements (VRAs) with Japan, Taiwan, Germany, and Switzerland. In 1991 the U.S. machine tool industry's request for extensions to the VRAs was denied and all impart restrictions phased out. Production, export, and import figures for the years 1962 through 1991 were obtained. These data were adjusted for exchange rates and converted to same year dollars using the Producer Price Index. Ordinary Least Squares regression revealed that there was no statistically significant relationship between U.S. machine tool production and machine tool exports from Taiwan, Germany, or Switzerland. At the 5% significance level, Japanese machine tool production explained only 41% of the variability in U.S. machine tool production calling into question the U.S. machine tool industry's original position.