ACCESSION: The process of adhering to a legal instrument such as a bilateral or

multilateral agreement or a treaty. In the case of the World Trade Organization, the
prospective WTO member submits a communication to the director general of the
WTO indicating its desire to accede to the WTO under Article XII of the WTO
Agreement. A working party is then established to examine the application for
accession. Any member of the WTO may join the working party. The prospective
member is required to respond to a series of inquiries by the working party as it
examines the prospective member's trade regime. Once this examination is
sufficiently advanced, the prospective member enters into accession negotiations
with the working party to determine the concessions (trade liberalization) or other
specific obligations it must undertake before accession is concluded. The draft
Protocol of Accession prepared by the working party contains the terms of accession
agreed to by the prospective member and the working party. After negotiations have
been concluded, a package of documents setting forth the working party's report,
the draft protocol, and a schedule of specific commitments is submitted for approval
to the WTO Council/Ministerial Conference. The Protocol of Accession enters into
force once the General Council/Ministerial Conference adopts the package. Thirty
days after the protocol is accepted by the applicant, it becomes a WTO member. See

Also Concession; Contracting Party; Grandfather Clause; Protocol of Accession;

World Trade Organization.

SUPPLY ACCESS — Assurance that importing countries have fair and equitable
access at reasonable prices to supplies of raw materials and other essential imports.
Such assurance might include explicit constraints against the use of the export
embargo as an instrument of foreign policy. Requests for such assurance reflect the
desire of countries to have a consistent supply of important raw materials at stable
prices. See also Embargo; Market; Supply.

MARKET ACCESS — The ability of domestic providers of goods and services to

penetrate a related market in a foreign country. The extent to which the foreign
market is accessible generally depends on the existence and extent of trade barriers.
See also Market; Market Forces; Nonmarket Economy; Nontariff Barriers; Offer List;
Restrictive Business Practices; Special and Differential Treatment.

STEEL — See Sensitive Products; Trigger Price Mechanism.

FINAL ACT — See Uruguay Round; World Trade Organization.

ACTPN — See Advisory Committee for Trade Policy and Negotiations.

LONG-TERM AGREEMENT ON INTERNATIONAL TRADE IN COTTON

TEXTILES (LTA) — See Agreement on Textiles and Clothing; Multi-Fiber
Arrangement Regarding International Trade in Textiles.

BILATERAL TRADE AGREEMENT — A formal or informal agreement involving

commerce between two countries. See also Consultations; Trade Agreement.

TRADE AGREEMENT — A bilateral or multilateral treaty or other enforceable

compact committing two or more nations to specified terms of commerce, usually
involving mutually beneficial concessions. See also Binding; Concession; General
Agreement on Tariffs and Trade; World Trade Organization.

AIRCRAFT AGREEMENT — The Agreement on Trade in Civil Aircraft, sometimes

referred to as the Aircraft Code, was signed in Geneva in December 1979 and entered
into force on January 1, 1980. This was the only multilateral sectoral agreement
designed to expand trade in manufactured products that was negotiated during the
1973-79 Tokyo Round of GATT negotiations. It is intended to provide a new
international framework for free trade in civil aircraft. It uniquely addresses tariff
and nontariff issues in a single sectoral context. It eliminates tariffs on civil aircraft,
engines, most components, and ground flight simulators. On nontariff issues, the
agreement establishes new international commitments concerning government
intervention in aircraft, aircraft component, and simulator procurement, including
disciplines on technical or standards barriers with respect to certification
requirements and specifications on operations and maintenance procedures;
government-directed procurement actions and mandatory subcontracts; sales-
related inducements; quantitative trade restrictions; and government supports.
Subsequent negotiations have resulted in modifications to the agreement and
additions to its annex of duty-free items in 1982, 1983, 1985, and 1986. The original
signatories to the agreement were Austria, Canada, the member states of the
European Economic Community, the European Community, Japan, Norway,
Sweden, Switzerland, and the United States. Romania and Egypt acceded to the
agreement later, as did Greece, Portugal, and Spain when they joined the EC.
Currently there are 22 signatories to the agreement. While the Uruguay Round did
not result in changes to the Agreement on Trade in Civil Aircraft, the General
Agreement on Trade in Services (GATS), a WTO agreement negotiated in the
Uruguay Round, implements rules and obligations designed to liberalize trade in
services generally, including air transport services. See also Codes of Conduct; Free
Trade; General Agreement on Trade in Services; Nontariff Barriers; Tariff; Tokyo
Round; Uruguay Round; World Trade Organization.

ASSOCIATION AGREEMENT — See European Community.

FLORENCE AGREEMENT — It was officially known as the Agreement on the

Importation of Educational, Scientific, and Cultural Materials. The Florence
Agreement entered into force in 1952. It is sponsored by the United Nations
Educational, Scientific, and Cultural Organization (UNESCO), which has a mandate
under its charter to facilitate the exchange of publications, objects of artistic and
scientific interest, and other materials or information, and to recommend
international agreements that will promote the free flow of ideas. The agreement
provides for the duty-free entry, under specified conditions, of various categories of
materials for educational, scientific, and cultural use.

U.S.-CANADA FREE TRADE AGREEMENT (FTA or CFTA) — A free trade

agreement implemented on January 1, 1989, between the United States and Canada
following approval and implementation of its terms by the Congress in 1988. The
United States and Canada decided to suspend the FTA upon the entry into force, on
January 1, 1994, of the North American Free Trade Agreement, which extended the
benefits of the FTA to Mexico. The original agreement provided for the elimination
of tariffs on all U.S.-Canada trade by 1998. It also provided improved access with
respect to government procurement and a code of principles on services trade,
including national treatment, the right to sell across borders, the right of
establishment, and transparency in regulations. Additional commitments were
made in the areas of telecommunications, tourism, financial services, and
architectural services. Provisions in this comprehensive free trade agreement dealt
with foreign investment regulation, bilateral energy trade and access to energy
supplies, border crossing procedures for certain professional and technical
personnel, agriculture, and dispute settlement. The FTA was the world's largest and
most comprehensive bilateral free trade agreement until NAFTA entered into force.
See also Bilateral Trade Agreement; Common External Tariff; Customs; Customs
Area; Customs Union; Free Trade Area Agreement; Free Trade Area of the
Americas; Free Zone; Kyoto Convention; MERCOSUR; North American Free Trade
Agreement; Tariff; Tariff Schedules; Trade Diversion.

MUTUAL RECOGNITION AGREEMENT (MRA) — Agreements that generally

allow conformity assessment — for example, testing, inspecting, certifying — of
manufactured goods to be performed in the United States to another country's
standards and regulations, and vice versa. An MRA can save manufacturers time
and expense by avoiding excessive assessments. It also conserves U.S. regulatory
agencies' resources. The United States maintains its current high health and safety
standards and can adopt even higher standards without in any way violating an
MRA. See also Agreement on Preshipment Inspection; Agreement on Technical
Barriers to Trade; Nontariff Barriers; Standards.

GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT) —

THE GATT ORGANIZATION: Refers both to the de facto international organization

headquartered at Geneva, Switzerland, through which the contracting parties
consulted on a day-to-day basis regarding the application of GATT provisions, and
the 1947 General Agreement on Tariffs and Trade that gave birth to it. Because the
U.S. Senate would not ratify the Havana Charter of 1948, which would have created
an International Trade Organization (ITO) as a specialized agency of the United
Nations system similar to the International Monetary Fund and the World Bank, the
GATT organization became the key international institution concerned with
multinational trade negotiations. The Interim Commission of the ITO (ICITO),
which was established to facilitate the creation of the ITO, subsequently became the
GATT Secretariat. By 1993, there were 103 GATT contracting parties, accounting for
approximately 85 percent of world trade, and some 30 additional countries and
dependencies applied GATT provisions on a de facto basis. The organization
provided a framework for negotiations — called "rounds" — within which
contracting parties negotiated to lower tariffs and other barriers to trade and a
consultative mechanism that could be invoked by governments seeking to protect
their trade interests. Over the years the GATT organization evolved through several
rounds of multilateral negotiations. With the Tokyo and Uruguay Rounds, the focus
of trade liberalization shifted from lowering tariffs to the elimination of nontariff
barriers to trade. The Uruguay Round, which was the most recent round, lasted from
1986 to 1994 and led to the creation of the World Trade Organization, which, on
January 1, 1995, replaced the GATT organization.

THE GATT AGREEMENT: A multilateral trade agreement among autonomous

economic entities (not limited to countries) aimed at expanding international trade
as a means of raising world welfare. The GATT was signed in 1947 as an interim
agreement providing the rules for a multilateral trading system. This version is now
referred to as "GATT 1947." Provisions of the GATT agreement were applied
reciprocally among its contracting parties to reduce uncertainty in connection with
commercial transactions across national borders. The cornerstone of the GATT was
traditionally the most-favored-nation clause (Article 1 of the General Agreement),
but in the 1970s and 1980s, regional and other trade preference systems became
pervasive, weakening the role of GATT in ensuring equal market access among
GATT members. Prior to the establishment of the WTO, the GATT was the principal
point of reference for the conduct of U.S. trade policy. U.S. association with the
GATT was implemented through or by an executive order and was not a treaty
obligation. U.S. observance of GATT provisions depended on congressional
approval of implementing legislation, as well as the policy orientation of the
president.

GATT 1994: The major revision of the General Agreement on Tariffs and Trade that
was produced by the 1986-94 Uruguay Round negotiations and is the cornerstone of
the WTO’s rules on trade relations in the area of goods and tariffs. GATT 1994 is an
annex to the WTO Agreement and incorporates by reference GATT 1947, as
amended. Key obligations of the latter include nondiscrimination through the most-
favored-nation principle (Article I); the national treatment of imported products
once inside the border (Article III), and the protection of domestic industries
essentially through tariffs. Quantitative restrictions are prohibited (Article XI). The
binding of tariffs (Article II) provides a stable and predictable basis for trade, since
tariffs can be increased only under strict circumstances and provided that
compensation is given in the form of bindings on other tariff lines (Article XXVIII).
Exceptions to these obligations may be invoked under certain conditions for
balance-of-payments purposes (Article XII), for development (Article XVIII, which
includes special balance-of-payments provisions), as safeguards from serious injury
(Article XIX), for health or safety (Article XX), for national security (Article XXI), and
for regional integration agreements (Article XXIV). Differential and more favorable
treatment to developing countries and to least developed countries is permitted
under the 1979 Enabling Clause with respect to tariffs in the context of the
Generalized System of Preferences (GSP) and nontariff measures, notwithstanding
the most-favored-nation clause, and with respect to regional or global arrangements
concluded by developing countries. GATT 1994 also includes seven understandings
on the interpretation of existing GATT articles dealing with schedules of concessions
(Article II:1(b)), state-trading enterprises (XVII), balance-of-payments provisions
(XII and XVIII:B), customs unions and free trade areas (XXIV), waivers (XXV),
modification of GATT schedules (XXVIII), and nonapplication of the General
Agreement (XXXV). See also Agreement on Agriculture; Agreement on the
Application of Sanitary and Phytosanitary Measures; Agreement on
Implementation of Article VI of GATT 1994; Agreement on Implementation of
Article VII of GATT 1994; Agreement on Import Licensing Procedures; Agreement
on Preshipment Inspection; Agreement on Rules of Origin; Agreement on
Safeguards; Agreement on Subsidies and Countervailing Measures; Agreement on
Technical Barriers to Trade; Agreement on Textiles and Clothing; Agreement on
Trade-Related Aspects of Intellectual Property Rights; Agreement on Trade-Related
Investment Measures; Anti-dumping Code; Articles of GATT; Bretton Woods
Conference; Codes of Conduct; Compensation; Consultations; Contracting Party;
Dillon Round; GATT Ministerial Meeting of 1982; GATT Panel; Grandfather Clause;
International Trade Center UNCTAD/GATT; Kennedy Round; Liberalization;
Licensing; Most-Favored-Nation Treatment; Multilateral Trade Negotiations; Part
IV of the GATT; Principal Supplier; Protocol of Provisional Application;
Quantitative Restrictions; Round; Special and Differential Treatment; Welfare.

GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) — A WTO agreement

that is the first multilateral agreement to provide legally enforceable rules covering
all international trade and investment in the service sector (except for those services
provided in the exercise of governmental authority). GATS is designed to reduce or
eliminate governmental measures that prevent services from being freely provided
across national borders or that discriminate against locally established service firms
with foreign ownership. Thus, GATS expands generally accepted notions of
international trade to place trade in services on the same footing as trade in goods.
GATS consists of a framework agreement that lays out the general principles and
obligations for trade in services (including most-favored-nation treatment, market
access, and national treatment) that apply to all WTO members in much the same
way as the GATT does for trade in goods. Attached to this framework agreement
are annexes dealing with rules for specific service sector (movement of natural
persons, air transport, financial services, maritime, and telecommunications)
national schedules negotiated during the Uruguay Round listing each member's
specific undertakings with respect to its service sectors. The agreement also provides
for exceptions to the principles of national treatment and most-favored-nation
treatment. First, governments can choose the services in which they make market
access and national treatment commitments; second, they can limit the degree of
market access and national treatment they provide; third, they can take exceptions
even from the MFN obligation, in principle only for 10 years, in order to give more
favorable treatment to some countries than to WTO members in general. Finally,
GATS provides a forum for further negotiations to open services markets around
the world. See also Aircraft Agreement; Basic Telecommunications Services
Agreement; General Agreement on Tariffs and Trade; Government Procurement
Policies and Practices; National Treatment; Services; Uruguay Round; World Trade
Organization.

INTERNATIONAL WHEAT AGREEMENT — See Kennedy Round.

INTERNATIONAL COMMODITY AGREEMENT (ICA) — An international

understanding, usually reflected in a legal instrument, relating to trade in a
particular commodity and based on terms negotiated and accepted by most of the
countries that export and import commercially significant quantities of the
commodity. Some commodity agreements, such as those for coffee, cocoa, natural
rubber, and sugar, have centered on economic provisions intended to stabilize the
market price within a negotiated price range for the commodity through the use of
buffer stocks, export quotas, or both. Of these, only rubber currently has economic
provisions as part of the agreement. Other commodity agreements (such as existing
agreements for jute and jute products, olive oil, and wheat) seek to promote
cooperation among producers and consumers through improved consultations,
exchange of information, research and development, and export promotion. See also
Buffer Stocks; Commodity; Common Fund; Export Promotion; Export Quotas;
Integrated Program for Commodities.

FRAMEWORK AGREEMENT — A bilateral agreement between the United States

and a trading partner that establishes certain principles that apply to that trade and
investment relationship and that also establishes a consultative mechanism that can
be used to clarify respective trade policies, resolve specific disputes, or negotiate the
reduction or removal of trade or investment barriers. The United States signed its
first such agreement with Mexico in November 1987, with similar agreements
subsequently signed with the Philippines and numerous countries in South
America, Central America, and the Caribbean. With reference to the GATT and the
WTO, framework agreement refers collectively to four separate decisions concluded
during the Tokyo Round and intended to improve the working of some
fundamental provisions of the GATT. The four decisions are:
  "Differential and More Favorable Treatment, Reciprocity, and Fuller
Participation of Developing Countries." Expands on the concept of special
and beneficial treatment for developing countries (LDCs) in the international
trading system first established in Part IV of the GATT, reiterating the
commitment that concessions should not be expected of LDCs that would be
inconsistent with their economic development. The decision also provides
guidelines for trade preferences among LDCs and for the generalized system
of preferences granted by developed countries for LDC imports. Developing
countries recognize that, as their economies grow stronger, it is expected that
they will participate more fully in the framework of GATT rights and
obligations.
 "Declaration on Trade Measures Taken for Balance of Payments Purposes."
States principles and codifies practices and procedures regarding the use of
trade measures and restrictions applied by governments under GATT
Articles XII and XVIII to defend the balance of payments.
 "Safeguard Action for Development Purposes." Elaborates on provisions in
Article XVIII, allowing for protection of LDC "infant industries," and gives
LDCs more flexibility in applying trade measures to meet their essential
development needs.
 "Understanding Regarding Notification, Consultation, Dispute Settlement,
and Surveillance." Provides for improvements in the existing mechanisms
concerning notification of trade measures, consultations, dispute settlement,
and surveillance of developments in the international trading system.

See also Balance of Payments; Bilateral; Bilateral Trade Agreement; Consultations;

Dispute Settlement; Enabling Clause; General Agreement on Tariffs and Trade;
Generalized System of Preferences; North-South Trade; Part IV of the GATT;
Preferences; Quantitative Restrictions; Reciprocity; Safeguards; Special and
Differential Treatment; Tokyo Declaration; Tokyo Round.

U.S.-JAPAN AUTOMOTIVE FRAMEWORK AGREEMENT — An agreement

between the government of the United States and the government of Japan entered
into in 1995 to facilitate access to the Japanese markets for autos and auto parts, to
address issues of market penetration at distribution and retail levels, and to initiate
deregulation of the auto parts aftermarket. This agreement includes the principle
that all measures undertaken pursuant to the agreement are to be on a most-favored-
nation basis. In this regard, measures benefiting the United States undertaken in
connection with the agreement would have to be matched by similar measures in
relation to any third country. See also General Agreement on Tariffs and Trade;
Market Access; Most-Favored-Nation Treatment; Structural Impediments Initiative;
World Trade Organization.

MULTILATERAL AGREEMENT — An international compact involving three or

more parties. For example, GATT sought, from its establishment in 1947, to promote
trade liberalization through multilateral negotiations. See also Codes of Conduct;
General Agreement on Tariffs and Trade; Liberalization; Multilateral Trade
Negotiations; Negotiations; World Trade Organization.

MULTILATERAL AGREEMENT ON INVESTMENT (MAI) — A draft set of

investment principles under consideration by OECD member countries and certain
observer countries between 1995 and 1998. OECD consideration of these principles
was informally suspended in late 1998. The principles are binding governmental
commitments to afford certain basic protections to investors and investment from
other OECD members similar to the protections found in a network of bilateral
investment agreements, such as the model United States Bilateral Investment Treaty.
Protections include commitments to expropriate only in accordance with due
process, for a public purpose, and upon payment of compensation; they generally
provide nondiscriminatory treatment to all investors to permit transfers associated
with an investment. See also Balance of Payments; Bilateral Investment Treaty;
Capital Account; Convertibility; Direct Investment; Exchange Controls; Foreign
Investment; Industrial Policy; Investment Performance Requirements; Multilateral
Investment Fund; Multilateral Investment Guarantee Agency; National Treatment;
Organization for Economic Cooperation and Development; Performance
Requirements; Restrictive Business Practices; Right of Establishment; Trade-Related
Investment Measures.

OECD AGREEMENT ON EXPORT CREDITS — See International Arrangement on

Export Credits.

AUSTRALIA-NEW ZEALAND CLOSER ECONOMIC RELATIONS AGREEMENT

(CER) — An agreement aimed at increasing trade links by liberalizing trans-Tasman
trade, thereby allowing for more efficient use of each country's resources.
Implemented on January 1, 1983, the CER has the ultimate goal of eliminating
import quotas, tariffs, and import licensing requirements. The CER contains
provisions to gradually reduce duties, quotas, and licensing requirements. It also
provides for the elimination of domestic export incentive schemes in Australia-New
Zealand transactions, extension of government purchases between the two
countries, and harmonization of customs policies. See also Bilateral Trade
Agreement; Binding; Export Quotas; Trade Agreement.

FREE TRADE AREA AGREEMENT — An agreement between two or more

countries to eliminate tariff and nontariff barriers affecting trade among themselves,
while each participating country applies its own independent schedule of tariffs to
imports from countries that are not members. Examples are the European
Community, the European Free Trade Association, the North American Free Trade
Agreement, the U.S.-Israel Free Trade Area Agreement, and the U.S.-Canada Free
Trade Agreement. GATT Article XXIV spells out the meaning of a free trade area in
GATT and specifies the applicability of the other GATT provisions to free trade
areas. See also Common External Tariff; Customs; Customs Area; Customs Union;
European Community; European Free Trade Association; Free Trade Area of the
Americas; Free Zone; General Agreement on Tariffs and Trade; Kyoto Convention;
MERCOSUR; North American Free Trade Agreement; Tariff; Tariff Schedules;
Trade Diversion; U.S.-Canada Free Trade Agreement.

U.S.-ISRAEL FREE TRADE AREA AGREEMENT — The first free trade agreement
entered into by the United States. The agreement, which took effect on September 1,
1985, called for the staged elimination of tariffs between the two countries over a 10-
year period. The agreement also established a joint commission to supervise the
agreement and to periodically review the bilateral relationship. See also Bilateral
Trade Agreement; Binding; Concession; Consultations; Free Trade Area Agreement;
Tariff; Trade Agreement.

PLAZA ACCORD — An agreement in September 1985 by the G-5 (the United States,
Japan, Germany, France, and the United Kingdom) to take concrete actions aimed at
reducing external imbalances and achieving exchange rates consistent with
underlying economic fundamentals. See also Group of 7.
AGREEMENT ON AGRICULTURE — A WTO agreement establishing rules and
commitments to ensure a fair and market-oriented system for trade in agricultural
goods and products. The Agreement on Agriculture consists of rule-based
commitments, as well as specific quantitative commitments to reduce protection and
support of agricultural goods and products over a specified implementation period.
Commitments assumed by members cover the following areas: market access in the
agricultural goods and products sector; members' support of their own domestic
producers; export competition; adherence to certain rules; the developmental needs
of certain countries, such as net-food-importing developing countries; food security;
and environmental protection. The products covered under this agreement are those
listed in chapters 1 to 24 of the Harmonized Commodity Description and Coding
System (HS), including hides and skins, certain animal or vegetable fibers, and other
products, but excluding fish and fish products. See also Agreement on the
Application of Sanitary and Phytosanitary Measures; Agreement on Technical
Barriers to Trade; Harmonized System; Quantitative Restrictions; Standards;
Uruguay Round; World Trade Organization.

AGREEMENT ON TECHNICAL BARRIERS TO TRADE (TBT) — A WTO

agreement to ensure that the standards and regulations imposed by governments
and governmental authorities do not unnecessarily restrict or distort trade. This
agreement recognizes that the need to comply with different foreign technical
regulations and standards has an impact on international trade, and that the high
costs involved in such compliance may discourage manufacturers from trying to sell
abroad. The agreement imposes rules to reduce the risk that technical standards and
regulations are adopted and applied simply to protect domestic industries. The
purpose of the agreement mirrors that of its predecessor, the 1979 Agreement on
Technical Barriers to Trade, which was negotiated during the GATT Tokyo Round.
The 1979 TBT Agreement, also called the Standards Code, laid down the rules for
the preparation, adoption, and application of technical regulations, standards, and
conformity assessment procedures. The WTO TBT Agreement strengthens and
clarifies the provisions of the 1979 agreement. The WTO agreement is accompanied
by a Code of Good Practice, which is designed to serve as a guide for bodies that
prepare, adopt, and apply standards. See also Agreement on the Application of
Sanitary and Phytosanitary Measures; Agreement on Government Procurement;
Codes of Conduct; Customs and Administrative Entry Procedures; General
Agreement on Tariffs and Trade; Government Procurement Policies and Practices;
Licensing; Most-Favored-Nation Treatment; Nontariff Barriers; Packaging,
Labeling, and Marking Regulations; Quarantine, Sanitary, and Health Laws and
Regulations; Standards; Technical Regulations; Tokyo Round; Transparency;
Uruguay Round; World Trade Organization.

AGREEMENT ON TRADE IN CIVIL AIRCRAFT — See Aircraft Agreement.

AGREEMENT ON THE APPLICATION OF SANITARY AND PHYTOSANITARY

MEASURES (SPS) — A WTO agreement establishing a set of rules, principles, and
benchmarks for WTO members to ensure that sanitary and phytosanitary trade
measures are justified and do not constitute disguised barriers to international trade.
This agreement clarifies which factors a member may take into account when
imposing health protection measures. Unlike the Agreement on Agriculture, the SPS
Agreement does not impose any quantitative and legally binding schedules of
concessions. Prior to the negotiation of the SPS Agreement, many food safety,
animal, and plant health regulations fell within the scope of the 1979 Agreement on
Technical Barriers to Trade (TBT), also called the Standards Code. The SPS
Agreement complements the new WTO Agreements on Agriculture and on
Technical Barriers to Trade by addressing measures to protect human, animal, and
plant life and health. See also Agreement on Agriculture; Agreement on Technical
Barriers to Trade; Nontariff Barriers; Quarantine, Sanitary, and Health Laws and
Regulations; Standards; Uruguay Round; World Trade Organization.

AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF GATT 1994 — A WTO

agreement resulting from the Uruguay Round that implements Article VI of GATT
1994, the set of antidumping rules that gives member countries the right to defend
themselves against dumped imports while preserving proportionality and avoiding
abuse. The agreement was negotiated to address the concern, on the one hand, that
some member countries have misused the antidumping rules and, on the other, that
exporting countries have circumvented the antidumping measures of the importing
countries. The agreement sets forth in greater detail than its predecessor, the 1979
Anti-Dumping Code, the circumstances under which antidumping measures can be
applied provisionally and can be terminated. It also provides more precise rules for
calculating an antidumping margin and additional rules concerning the submission
of information in antidumping inquiries and the evidentiary threshold that must be
met in order to warrant an investigation. See also Anti-Dumping Code; Codes of
Conduct; Dumping; Sunset Review; Uruguay Round; Uruguay Round Agreements
Act; World Trade Organization.
AGREEMENT ON IMPLEMENTATION OF ARTICLE VII OF GATT 1994 — A
WTO agreement that is the successor to the Customs Valuation Code negotiated
during the Tokyo Round to establish a uniform, fair, and predictable international
system for the valuation of goods for customs purposes and to preclude the arbitrary
use of national valuation systems as nontariff barriers to trade. The Customs
Valuation Code established the "transaction value" — or the price actually paid or
payable for imported goods plus certain permitted additional costs — as the primary
method of valuation by customs officials, and it specified a hierarchy of other
methods to be employed when the transaction value method could not be used. Like
its predecessor, the WTO agreement applies only to the valuation of imported goods
with respect to which ad valorem duties are levied. It does not set forth obligations
concerning valuation in connection with export duties, quota administration,
internal taxation, or foreign exchange control. See also Codes of Conduct; Customs;
Customs Classification; Free Zone; Imports; Liquidation; Minimum Valuation;
Most-Favored-Nation Treatment; Suspension of Liquidation; Tariff; Tariff
Schedules; Tokyo Round; Uruguay Round; Valuation; World Customs
Organization; World Trade Organization.

AGREEMENT ON PRESHIPMENT INSPECTION (PSI) — A WTO agreement

governing the use by private sector buyers and sellers of preshipment inspection to
ensure that the quantity and quality of goods to be traded conform to the
specifications of the sales contract. This agreement balances the need of parties
importing goods from other countries to protect their interests by preventing
commercial fraud, customs fraud, evasion of customs duties, capital flight, and other
harmful activities with the potentially trade-distorting effects of preshipment
inspection. The agreement applies to all government-mandated preshipment
inspection activities carried out on the territory of members (that is, in the country
of export prior to exportation). See also Transparency; Uruguay Round; World
Trade Organization.

AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY

RIGHTS (TRIPS) — A WTO agreement that obligates countries to provide minimum
standards of intellectual property (IP) protection in national laws and to enforce
minimum standards for protecting intellectual property. The TRIPS Agreement
covers copyright and related rights (that is, the rights of performers, producers of
sound recordings, and broadcasting organizations); trademarks including service
marks; geographical indications including appellations of origin; industrial designs;
patents including the protection of new varieties of plants; the layout-designs of
integrated circuits; and undisclosed information, including trade secrets and test
data. The agreement sets out the minimum standards of protection to be provided
by each member with respect to each of the main areas of intellectual property
covered by the agreement. The agreement sets these standards by requiring, first,
compliance with the substantive obligations of the main conventions of the World
Intellectual Property Organization, as well as the most recent versions of the Paris
Convention for the Protection of Industrial Property and the Bern Convention for
the Protection of Literary and Artistic Works, as well as with the Treaty on
Intellectual Property in Respect of Integrated Circuits (1989). With the exception of
the provisions of the Bern Convention on moral rights, all the main substantive
provisions of these conventions are incorporated by reference and thus become
obligations under the TRIPS Agreement between member countries. The second
main set of provisions deals with domestic procedures and remedies for the
enforcement of intellectual property rights, a feature not found in other multilateral
IP agreements. In addition, the agreement makes disputes between WTO members
concerning TRIPS obligations subject to the WTO's dispute settlement procedures.
Finally, the agreement provides for certain basic principles, such as national and
most-favored-nation treatment. Developed country members were required to have
implemented all of the obligations under the agreement as of January 1, 1996, while
developing country members were permitted a transitional period of an additional
four years (until January 1, 2000); least-developed country members are permitted a
transitional period of an additional 10 years (until January 1, 2006) to comply with
the obligations of the agreement. In addition, developing countries that, as of 1995,
were without patent protection for a given area of technology, especially
pharmaceutical or agricultural chemical inventions, have an additional five-year
transition (until January 1, 2005) before being required to provide such protection.
See also Bern Convention; Commercial Counterfeiting; Copyright; Dispute
Settlement; General Agreement on Tariffs and Trade; Intellectual Property;
Knowledge-Based Industry; Most-Favored-Nation Treatment; National Treatment;
Patent; Process Patent; Property; Section 337; Special 301; Technology; Technology
Transfer; Trademark; Trafficking in Counterfeit Goods and Services; Uruguay
Round; Uruguay Round Agreements Act; World Intellectual Property Organization;
World Trade Organization.

AGREEMENT ON TRADE-RELATED INVESTMENT MEASURES (TRIMS) — A

WTO agreement that recognizes that measures and regulations that governments
impose on investments and investors can reduce or distort international trade and
may function as disincentives for investors in situations where investment is needed.
This agreement clarifies disciplines established in the GATT 1947 provisions that are
applicable to certain aspects of investment laws. The objectives of the TRIMS
Agreement, as set forth in its preamble, include "the expansion and progressive
liberalization of world trade and to facilitate investment across international
frontiers so as to increase the economic growth of all trading partners, particularly
developing country members, while ensuring free competition." The agreement
applies to investment measures related to trade in goods only. Under TRIMS, WTO
member countries agreed to eliminate investment measures that limit or force
certain types of investments, to offer national treatment to foreign investors, and to
eliminate quotas and other restraints. The agreement restricts the use of three TRIMS
requirements: local content requirements (specifying that some minimum level of
local resources be used in operations at foreign-owned plants), trade-balancing
requirements (specifying that an investor not import more than a certain proportion
of exports, or that a minimum trade surplus be maintained), and foreign exchange
balancing requirements (limiting the importation of products used in local
production by restricting a firm's access to foreign exchange to an amount related to
its exchange inflows). See also Convertibility; Exchange Controls; General
Agreement on Tariffs and Trade; Investment Performance Requirements; Trade-
Related Investment Measures; Uruguay Round; World Trade Organization.

COMMODITY AGREEMENT — See International Commodity Agreement.

AGREEMENT ON IMPORT LICENSING PROCEDURES — A WTO agreement

implemented to prevent import licensing procedures from unnecessarily reducing
or distorting international trade flows. The agreement, which entered into force on
January 1, 1995, is a successor agreement to the Tokyo Round Import Licensing
Code, which entered into force on January 1, 1980. During the Uruguay Round, the
Import Licensing Code was revised to strengthen the disciplines on transparency
and notification. Whereas the Import Licensing Code obligated only those countries
that had signed and ratified it, the WTO Agreement on Import Licensing Procedures
is a multilateral agreement binding on all WTO members. Under the agreement,
WTO members must ensure that their import licensing procedures conform to the
relevant provisions of the GATT, are applied neutrally, and are implemented fairly
and equitably. See also Codes of Conduct; General Agreement on Tariffs and Trade;
Licensing; Licensing Code; Nontariff Barriers; Tokyo Round; Transparency;
Uruguay Round; World Trade Organization.
AGREEMENT ON RULES OF ORIGIN — A WTO agreement addressing the rules
that determine the country of origin of an imported product. Rules of origin play an
important role in international trade due to the fact that the application of duties and
other restrictions on entry often depends on the deemed source of the imports. The
agreement provides for harmonization in the practices of WTO members in
determining the country of origin of products. See also Customs and Administrative
Entry Procedures; Uruguay Round; World Trade Organization.

AGREEMENT ON SAFEGUARDS — A WTO agreement setting forth the rules

governing the application of safeguard measures. According to GATT Article XIX,
safeguard measures are emergency actions taken when increased imports of
particular products cause or threaten to cause serious injury to the importing
member's domestic industry. Safeguard measures involve suspension of
concessions or obligations under the GATT or the WTO agreements. The most
common safeguard measures are quantitative import restrictions and duty increases
exceeding bound tariff rates. The WTO Agreement on Safeguards requires that, at a
minimum, safeguard measures be temporary, be imposed only when imports are
found to cause or threaten serious injury to a competing domestic industry, be
applied on a most-favored-nation basis, and be progressively liberalized while in
effect. Unlike other trade remedies, safeguard measures do not require a finding of
an "unfair" practice. In addition, the member imposing a safeguard measure
generally must pay compensation to the members whose trade is affected. The WTO
Agreement on Safeguards was created during the Uruguay Round to add clarity to
the safeguards provisions contained in GATT Article XIX and to address so-called
gray-area measures limiting imports (that is, bilateral voluntary export restraints,
orderly marketing agreements, and other informal trade-limiting agreements
designed to curtail fairly traded imports) that were widely viewed as being contrary
to GATT. The WTO Agreement on Safeguards also clarifies existing guidelines and
tightens timetables, limiting the duration of a safeguard measure to a maximum of
eight years. See also Adjustment; Agreement on Textiles and Clothing; Article 11
(GATT Article XI); Article 19 (GATT Article XIX); Codes of Conduct; Competitive;
Concession; Escape Clause; Framework Agreement; General Agreement on Tariffs
and Trade; Import Relief; Market Access; Omnibus Trade and Competitiveness Act
of 1988; Orderly Marketing Agreements; Protectionism; Quantitative Restrictions;
Safeguards; Section 22; Section 201; Section 406; Selective Quotas; Sensitive
Products; Specific Limitations on Trade; Trade Barriers; Trade Act of 1974; Uruguay
Round; U.S. International Trade Commission; Voluntary Restraint Agreements;
World Trade Organization.
BASIC TELECOMMUNICATIONS SERVICES AGREEMENT — An agreement that
contains specific commitments on market access and national treatment taken by 70
countries under the WTO General Agreement on Trade in Services in the area of
basic telecommunications, which includes, but is not limited to, voice services,
packet-switched data transmission services, circuit-switched data transmission
services, telex services, telegraph services, facsimile services, and private leased
circuit services. See also General Agreement on Trade in Services; Services; Uruguay
Round; World Trade Organization.

AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES — A WTO

agreement that was concluded during the Uruguay Round and is the successor to
the Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of
the GATT, usually referred to as the Subsidies Code. The Subsidies Code was
concluded in 1979 during the Tokyo Round. The foundation of the 1979 Subsidies
Code was the principle that subsidies provided by a government to a domestic
industry should not be permitted to harm or threaten harm to one's trading partners.
Hence, the Subsidies Code permitted signatories to impose specific duties on
imports to offset — or "countervail" — the benefits of subsidies to producers or
exporters provided by the government of the exporting country. The Agreement on
Subsidies and Countervailing Measures builds on these principles, disciplining both
the use of subsidies and the actions that countries can take to counter the effects of
subsidies. Under the agreement, a member country can use the WTO's dispute
settlement procedures to seek the withdrawal of the subsidy or the removal of its
adverse effects, or it can launch its own investigation and ultimately assess an extra,
countervailing duty on subsidized imports that are injuring domestic producers. For
the first time, the agreement provides a definition of a subsidy that distinguishes
between prohibited, actionable, and non-actionable subsidies. As part of this
definition, it introduces the concept of a "specific" subsidy — that is, a subsidy
available only to an enterprise, industry, group of enterprises, or group of industries
in the country that gives the subsidy, rather than generally to all industries or
enterprises in the subsidizing country. A specific subsidy can be a domestic or an
export subsidy. The agreement disciplines only specific subsidies. It applies to
agricultural goods as well as industrial products, except when the subsidies conform
with the WTO Agreement on Agriculture. Unlike the 1979 Subsidies Code, which
was binding only on those GATT contracting parties that affirmatively acceded to
it, the new agreement is multilateral and binding on all WTO member countries. See
also Agreement on Agriculture; Bounties; Codes of Conduct; Countervailing Duties;
Domestic Subsidy; Export Subsidy; Illustrative List; Subsidy; Sunset Review; Tokyo
Round; Trade Agreements Act of 1979; U.S. International Trade Commission;
Uruguay Round; Uruguay Round Agreements Act; World Trade Organization.

INFORMATION TECHNOLOGY AGREEMENT (ITA) — A WTO agreement to

eliminate tariffs on a wide range of information technology products. The
Information Technology Agreement was concluded at the first ministerial
conference of the World Trade Organization at Singapore in December 1996. ITA
product coverage includes computers and computer equipment, semiconductors
and integrated circuits, computer software products, telecommunications
equipment, semiconductor manufacturing equipment, and computer-based
analytical instruments. ITA participants were to eliminate tariffs on these products
by the year 2000, recognizing that extended staging might be granted in limited
circumstances. The ITA is the only global sectoral agreement to date in which
participating governments have agreed to eliminate duties on an identical list of
products. ITA participants include Australia, Canada, Costa Rica, Czech Republic,
El Salvador, Estonia, European Communities (on behalf of 15 member states), Hong
Kong, Iceland, India, Indonesia, Israel, Japan, Korea, Kyrgyzstan, Latvia, Macau,
Malaysia, New Zealand, Norway, Panama, Philippines, Poland, Romania,
Singapore, Slovak Republic, Switzerland and Liechtenstein, Taiwan, Thailand,
Turkey, and the United States. Additional countries, including China, Lithuania,
Armenia, Georgia, and Moldova, have indicated their intention to join the ITA. In
launching the ITA, ministers agreed that the product coverage would be subject to
periodic review and expansion to take account of the rapidly changing technology
and differences in tariff nomenclature in the sector, and that consultations on
nontariff measures would be undertaken during the course of WTO work in this
sector. An exercise to update product coverage, known as "ITA II," is ongoing.
Participants have also established a WTO Committee on the Expansion of Trade in
Information Technology Products to carry out the work program identified at
Singapore. See also Consultations; Technology; Uruguay Round; World Trade
Organization.

AGREEMENT ON TEXTILES AND CLOTHING (ATC) — A WTO agreement

concluded during the Uruguay Round that superseded the Multi-Fiber
Arrangement (MFA). The MFA established quotas limiting imports of certain textile
products into countries whose domestic industries were experiencing serious harm
from rapidly increasing imports. The MFA and its predecessor, the Long-Term
Agreement on International Trade in Cotton Textiles, provided the rules for the
system of import quotas that has existed since the early 1960s and is being phased
out by the ATC. These three agreements have provided for an internationally agreed
derogation from GATT and, later, WTO rules, permitting an importing signatory
country to impose quantitative import restrictions on textile imports when it
considers such restrictions, even though contrary to GATT (or WTO) rules,
necessary to prevent market disruption. Whereas the MFA did not include all GATT
countries but could include non-GATT countries, the ATC is part of the Uruguay
Round results and thus applies to all WTO members but not to other countries, even
if they were parties to the MFA. Accordingly, non-WTO members that export textiles
will not have the benefit of the ATC's phase-out restrictions unless they become
members. Under the ATC, which entered into force in 1995, the textiles sector will
be brought into full compliance with the GATT/WTO rules by 2005. Under the ATC,
quotas will come to an end and importing countries no longer will be able to
discriminate between exporters. The ATC, the only WTO agreement that phases
itself out of existence, will cease to exist after 2005. See also General Agreement on
Tariffs and Trade; Market Disruption; Multi-Fiber Arrangement Regarding
International Trade in Textiles; Quantitative Restrictions; Safeguards; Sensitive
Products; Textiles.

CLEARING AGREEMENTS — See Countertrade.

ORDERLY MARKETING AGREEMENTS (OMAs) — International compacts

negotiated between two or more governments in which the trading partners agree
to restrain the growth of trade in specified "sensitive" products, usually through the
imposition of export quotas. Orderly marketing agreements are intended to ensure
that future trade increases will not disrupt, threaten, or impair competitive
industries or their workers in importing countries. See also Agreement on
Safeguards; Escape Clause; Export Quotas; Market Disruption; Quantitative
Restrictions; Safeguards; Sensitive Products; Voluntary Restraint Agreements.

EXPORT RESTRAINT AGREEMENTS — See Voluntary Restraint Agreements.

VOLUNTARY RESTRAINT AGREEMENTS (VRAs) — Arrangements through

which exporters voluntarily restrain certain exports, usually through export quotas,
to avoid economic dislocation in an importing country and to avert the possible
imposition of mandatory import restrictions. Such arrangements do not normally
entail compensation for the exporting country. See also Compensation; Export
Quotas; Export Restraints; Orderly Marketing Agreements; Steel Voluntary
Restraint Arrangements.

SEMICONDUCTOR AGREEMENTS — A series of bilateral agreements between the

United States and Japan, entered into between 1986 and 1999, to improve access to
the Japanese market for foreign capital-affiliated semiconductor producers. The 1999
arrangement, which takes the form of a joint statement by governments, was joined
not only by Japan and the United States but by Korea, Taiwan, and the European
Union. The 1999 arrangement will be subject to review after August 1, 2004. Key
provisions of the 1999 joint statement include a commitment by all parties to barrier-
free trade in semiconductors in markets worldwide; the principle that
competitiveness of companies and their products, not the intervention of
governments and authorities, should be the key determinant of industrial success;
the principle that governments' measures should be consistent with the WTO
agreements; the principle that governments should avoid any form of
discrimination; and the parties' recognition of the need to avoid the problem of
injurious dumping through antidumping measures consistent with GATT 1994 and
the WTO Agreement on Implementation of Article VI of GATT 1994. See also
Agreement on Implementation of Article VI of GATT 1994; Bilateral Trade
Agreement; Binding; Concession; Market Access; Trade Agreement.

STOCKPILES — See Buffer Stocks; Strategic Stockpiles.

COMMODITY STOCKPILES — See Buffer Stocks.

STRATEGIC STOCKPILES — Accumulated stocks of raw materials or other

commodities deemed essential to national defense and maintained so that a
country's actual or potential supply of the goods stocked will not fall below the
quantity likely to be required for a given period of national emergency. The U.S.
Strategic and Critical Stockpiling Act of 1946 authorizes the General Services
Administration to maintain strategic stockpiles, and to expand or reduce them,
according to changing estimates of defense needs, while making every effort to
phase purchases or sales so as to have minimum effects on world prices. Buffer
stocks, in contrast with strategic stockpiles, are intended to stabilize prices and thus
protect exporters against economic losses they would face when prices decline
precipitously. See also Buffer Stocks; Commodity.

ADDITIONALITY — A measure of the net increase in capital inflows into assisted

developing countries as contrasted with a diversion from one form or target of
development assistance to another. See also Bilateral Aid; Economic Development;
Multilateral Aid; Official Development Assistance; Soft Loan; Transfer Payments.

INTERNATIONAL TRADE ADMINISTRATION (ITA) — An agency within the

U.S. Department of Commerce that is tasked with a number of functions that fall
within the broad arena of international trade and are carried out in support of the
U.S. economy and U.S. companies. The functions of the ITA include the promotion
of U.S. exports and companies overseas; the provision of technical and business
advice and assistance to U.S. companies doing business in other countries; the
administration of the Export Administration Act; the implementation of the U.S.
antidumping and countervailing duties laws; the provision of technical and
analytical support to commercial offices located at foreign embassies of the United
States; coordination with the United States Trade Representative and other U.S.
government agencies responsible for international trade negotiations; and the
development of a trade-related policy agenda for undertaking efforts aimed at
addressing international trade issues of interest to the United States. See also Bureau
of Export Administration; Countervailing Duties; Dumping; Export Administration
Act of 1979; Export Promotion; Import Administration; United States Trade
Representative; Uruguay Round Agreements Act; U.S. Foreign and Commercial
Service.

U.S. INTERNATIONAL TRADE ADMINISTRATION (ITA) — See International

Trade Administration.

IMPORT ADMINISTRATION (IA) — The branch of the International Trade

Administration at the U.S. Department of Commerce that is responsible for, among
other things, administering the antidumping and countervailing duty laws of the
United States. See also Agreement on Implementation of Article VI of GATT 1994;
Anti-Dumping Code; Countervailing Duties; Domestic Subsidy; Dumping; Export
Subsidy; International Trade Administration; Subsidy; Sunset Review; Uruguay
Round; Uruguay Round Agreements Act; World Trade Organization.
U.S. IMPORT ADMINISTRATION (IA) — See Import Administration.

CUSTOMS — The government service responsible for the assessment and collection
of import and export duties and taxes and the administration of other laws and
regulations that apply to the importation, transit, and exportation of goods. See also
Agreement on Implementation of Article VII of GATT 1994; ATA Carnet; Consular
Formalities and Documentation; Court of International Trade; Customs and
Administrative Entry Procedures; Customs Classification; Customs Cooperation
Council Nomenclature; Customs Harmonization; Customs Union; Free Zone;
Harmonization; Harmonized System; Harmonized Tariff Schedule of the United
States; Imports; Kyoto Convention; Licensing; Liquidation; Most-Favored-Nation
Treatment; Nontariff Barriers; Port of Entry; Suspension of Liquidation; Tariff; Tariff
Schedules; Transit Zone; Valuation; World Customs Organization; World Trade
Organization.

U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT — See Agency for

International Development.

EXECUTING AGENCY — See United Nations Development Program.

MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA) — A part of the

World Bank Group that began operations in April 1988 to encourage the flow of
private foreign investment to its member developing countries by providing
insurance against noncommercial risks and by providing promotional and advisory
services. MIGA's guarantee program protects investors against losses from currency
transfer, expropriation, war, and civil disturbance and from investment-related
breaches of contract by host governments. MIGA works in close cooperation with
the World Bank, the International Development Association, and the International
Finance Corporation to promote sound investment policies, thereby assisting
developing countries in creating attractive investment environments for private
foreign direct investment. See also Developing Countries; Direct Investment;
Economic Development; Foreign Investment; International Development
Association; International Finance Corporation; Multilateral Agreement on
Investment; Multilateral Aid; Official Development Assistance; World Bank.
AGENCY FOR INTERNATIONAL DEVELOPMENT (USAID) — The unit within
the U.S. government responsible for the administration of U.S. bilateral
development assistance programs. USAID also participates actively in the
development of other U.S. policies and programs related to Third World economic
development. See also Bilateral Aid; Developing Countries; Economic Development;
Official Development Assistance.

FREIGHT FORWARDER — A person hired to move shipments from a foreign

location to a domestic location, or a portion of the way. Freight forwarders handle
many of the formalities involved in importing such shipments.

AID — See Agency for International Development.

ADJUSTMENT — The process of adaptation in an economy that is triggered, for

example, by technological developments, changes in demand, or shifting external
trade patterns. The changes may involve a reallocation of labor and capital away
from uncompetitive products or sectors and into new or other lines of production in
which the economy is competitive. In the specific sense used by the International
Monetary Fund, adjustment means the adoption of macroeconomic policies,
including monetary, fiscal, and exchange rate policies, to adjust the level of domestic
economic activity to conditions prevailing in the world economy, with the objective
of correcting balance-of-payments disequilibria and pursuing domestic objectives
such as lower inflation. See also Adjustment Assistance; Balance of Payments;
Competitive; Conditionality; Devaluation; International Monetary Fund;
Safeguards; Structural Change; Technology.

LEVEL OF TRADE ADJUSTMENT (LOT) — Under U.S. antidumping law, an

adjustment to the U.S. sales price in an antidumping investigation that compensates
for differences in the cost of selling at different commercial levels of trade. See also
Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code;
Dumping; United States Price.
ADJUSTMENTS — In calculating the margin in an antidumping determination,
modifications made to both the U.S. price and the normal value to ensure that price
comparisons between the two are not distorted by factors extraneous to the central
issue of price discrimination between markets. Differences in price for which
adjustments are made include differences in physical characteristics, quantities sold,
packing and delivery costs, circumstances of sale, and applicable indirect taxes and
duties. See also Agreement on Implementation of Article VI of GATT 1994; Anti-
Dumping Code; Dual Pricing; Dumping; Market Disruption; Normal Value;
Uruguay Round Agreements Act.

BORDER TAX ADJUSTMENTS — The remission of indirect taxes on exported

goods, including sales taxes and value-added taxes, designed to ensure that national
tax systems do not impede exports, and the imposition of domestic taxes on
imported goods, to ensure that they do not receive preferential treatment as
compared with domestically produced goods. Frontier adjustments on exports are
permitted for indirect taxes under Articles VI and XVI of GATT, but not for direct
taxes (such as income taxes assessed on producing firms). The U.S. government
makes little use of border tax adjustments, since it relies more heavily on income (or
direct) taxes than do most other governments, and since most goods exported from
the United States are not subject to indirect taxes. See also Direct Tax; Indirect Tax;
Tax; Value-Added Tax.

RELIEF — See Escape Clause; Import Relief; Safeguards.

IMPORT RELIEF — Alleviation of competitive pressures on a domestic industry and

its employees through restrictions on the inflow of goods into the relevant market
from other countries, as through the imposition of tariffs or quantitative restrictions
on imports. In U.S. trade law, import relief is most often provided under the
authority and procedures of Section 201 of the Trade Act of 1974. See also
Adjustment Assistance; Adjustments; Agreement on Safeguards; Article 11 (GATT
Article XI); Article 19 (GATT Article XIX); Competitive; Escape Clause; Market;
Market Access; Protection; Protectionism; Quantitative Restrictions; Safeguards;
Section 22; Section 201; Section 406; Trade Act of 1974.

CUSTOMS WAREHOUSE — See Bonded Warehouse.

BONDED WAREHOUSE — A secure storage area in which goods subject to excise
taxes or customs duties are stored pending payment of taxes or duties. See also
Bonded Goods; Customs Bond; Free Zone.

FREE WAREHOUSE — See Free Zone.

ANTITRUST — A term used to describe a policy or action that seeks to curtail

monopolistic power within a market. See also Export Trading Company; Market;
Monopoly; Restrictive Business Practices; Webb-Pomerene Act.

NULLIFICATION — See Consultations; Dispute Settlement.

APEC — See Asia-Pacific Economic Cooperation.

TARIFF — A duty (or tax) levied upon goods transported from one customs area to
another either for protective or revenue purposes. Tariffs raise the prices of imported
goods, thus making them generally less competitive within the market of the
importing country unless that country does not produce the items so tariffed. After
seven rounds of GATT trade negotiations that focused heavily on tariff reductions,
tariffs are less important measures of protection than they used to be. The term
"tariff" often refers to a comprehensive list or schedule of merchandise with the rate
of duty to be paid to the government for importing products listed, whereas the term
"duty" applies only to the rate applicable to an individual tariff item. See also Ad
Valorem Equivalent; Ad Valorem Tariff; Bound Rates; Column 1 Rates; Column 2
Rates; Compound Tariff; Concession; Conventional Tariff; Customs Area; Customs
Classification; Double Column Tariff; Effective Tariff Rate; General Tariff;
Harmonization; Levy; Linear Reduction of Tariffs; Most-Favored-Nation Treatment;
Nominal Tariff Rate; Price; Protection; Specific Tariff; Tariff Act of 1930; Tariff
Escalation; Tariff Quota; Tax; U.S. International Trade Commission; Valuation.

AD VALOREM TARIFF — A tariff calculated "according to value," or as a

percentage of the value of goods cleared through customs; for example, 15 percent
ad valorem means 15 percent of the value of the entered merchandise. See also
Specific Tariff; Tariff; Valuation.
COMPOUND TARIFF — A combination of an ad valorem tariff plus a specific tariff.
Also called a "mixed tariff." See also Ad Valorem Equivalent; Ad Valorem Tariff;
Specific Tariff; Tariff.

CONVENTIONAL TARIFF — A tariff established through a "convention" (or

international agreement) resulting from tariff negotiations and, hence, not subject to
modifications by national action. See also General Tariff.

DOUBLE-COLUMN TARIFF — A tariff schedule listing two duty rates for some or
all commodities. Under such arrangements, imports may be taxed at a higher or
lower rate, depending upon the importing country's trade and other relationships
with the exporting country. Some British Commonwealth countries maintain a
double-column tariff that provides preferential tariff treatment to other members of
the commonwealth. The United States and other countries also have lower tariffs for
countries to which they grant most-favored-nation treatment. See also Column 1
Rates; Column 2 Rates; Most-Favored-Nation Treatment; Preferences; Single-
Column Tariff; Tariff.

SINGLE-COLUMN TARIFF — A tariff schedule listing only one duty rate for each
imported product. The United States maintained a single-column tariff schedule
until 1909, when special preferences were instituted for products imported from
Cuba and the Philippines. See also Column 1 Rates; Column 2 Rates; Enabling
Clause; Generalized System of Preferences; Preferences; Tariff; Tariff Schedules of
the United States.

SPECIFIC TARIFF — A customs duty assessed as a stated monetary amount per unit
of physical quantity, such as so many cents a pound, a bushel, or a yard, regardless
of the value of the imported item. See also Ad Valorem Tariff; Tariff.

COMMON EXTERNAL TARIFF (CET or sometimes CXT) — A tariff rate uniformly

applied by a common market or customs union, such as the European Community,
to imports from countries outside the union. For example, the European internal
market is based on the principle of a free internal trade area with a common external
tariff [sometimes referred to in French as the Tariff Extérieur Commun (TEC)]
applied to products imported from non-member countries. "Free trade areas" do not
necessarily have common external tariffs, and free trade agreements seldom have
common external tariffs. See also Customs; Customs Area; Customs Union;
European Community; Free Trade Area Agreement; Free Trade Area of the
Americas; Free Zone; General Agreement on Tariffs and Trade; Kyoto Convention;
MERCOSUR; North American Free Trade Agreement; Tariff; Tariff Schedules;
Trade Diversion; U.S.-Canada Free Trade Agreement.

GENERAL TARIFF — A tariff that applies to imports from countries that do not
enjoy either preferential or most-favored-nation tariff treatment. Where the general
tariff rate differs from the most-favored-nation rate, the general tariff is usually an
older and higher rate. See also Conventional Tariff; Most-Favored-Nation
Treatment; Preferences; Tariff.

GRUNDY TARIFF — See Tariff Act of 1930.

INTEGRATED TARIFF — The system used by a shipping conference to charge

agreed upon rates for services.

MIXED TARIFF — See Compound Tariff.

PROGRESSIVE TARIFF — See Tariff Escalation.

ARBITRATION — An arrangement through which two parties to a dispute agree to

the appointment of an impartial chairperson or a group of competent persons to
decide the disputed issue and agree in advance to abide by the decision rendered.
See also Dispute Settlement; Panel of Experts.

CUSTOMS AREA — A geographic area, usually but not necessarily identical to one
or several contiguous national political jurisdictions, applying a particular tariff
schedule on goods entering or leaving the area. See also Common External Tariff;
Customs; Customs Union; European Community; Free Trade Area Agreement; Free
Trade Area of the Americas; Free Zone; General Agreement on Tariffs and Trade;
Kyoto Convention; MERCOSUR; North American Free Trade Agreement; Tariff;
Tariff Schedules; Trade Diversion; U.S.-Canada Free Trade Agreement.

FREE TRADE AREA — See Free Trade Area Agreement.

FREE TRADE AREA OF THE AMERICAS (FTAA) — A planned hemisphere-wide

free trade area, the Free Trade Area of the Americas will consist of North America,
Latin America, and the Caribbean, will include nearly 800 million people, and, upon
completion no later than 2005, will be the largest free trade market in the world,
stretching from the northernmost regions of Canada to Tierra del Fuego, Argentina.
The comprehensive trade agreement will cover, inter alia, tariffs, nontariff barriers,
customs procedures, rules of origin, agriculture, intellectual property rights,
government procurement, subsidies, services, investment, trade remedies, product
standards, sanitary and phytosanitary measures, competition policy, and dispute
settlement. See also Common External Tariff; Customs; Customs Area; Customs
Union; European Community; European Free Trade Association; Free Trade Area
Agreement; Free Zone; General Agreement on Tariffs and Trade; Kyoto Convention;
MERCOSUR; North American Free Trade Agreement; Summits of the Americas;
Tariff; Tariff Schedules; Trade Diversion; U.S.-Canada Free Trade Agreement.

EUROPEAN ECONOMIC AREA (EEA) — See European Free Trade Association.

INFANT INDUSTRY ARGUMENT — The view that "temporary protection" for a

new industry or firm in a particular country through tariff and nontariff barriers to
imports can help the industry or firm to become established and eventually
competitive in world markets. Historically, new industries that are soundly based
and efficiently operated have experienced declining costs as output expands and
production experience is acquired. However, industries that have been established
and operated with heavy dependence on direct or indirect government subsidies
have sometimes found it difficult to relinquish that support. The rationale
underlying the Generalized System of Preferences is comparable to that of the infant
industry argument. See also Competitive; Efficiency; Generalized System of
Preferences; Protection; Special and Differential Treatment; Subsidy.
HARMONIZATION — The process of making procedures or measures applied by
different countries — especially those affecting international trade — more
compatible, as by effecting simultaneous tariff cuts applied by different countries so
as to make their tariff structures more uniform. Most proposals for harmonizing
tariffs envisage relatively large cuts in high tariffs and smaller cuts in lower tariffs,
as contrasted with the linear reduction formula used in the Kennedy Round, which
called for identical percentage cuts for all applicable tariffs. Tokyo Round tariff cuts
increased tariff harmonization among the developed countries. See also Bern
Convention; Codes of Conduct; Customs; Customs Classification; Customs
Cooperation Council Nomenclature; Customs Harmonization; General Agreement
on Tariffs and Trade; Harmonized System; Harmonized Tariff Schedule of the
United States; Imports; Kennedy Round; Kyoto Convention; Linear Reduction of
Tariffs; Tariff; Tariff Schedules; Tokyo Round; Uruguay Round; Valuation; World
Customs Organization; World Intellectual Property Organization; World Trade
Organization.

CUSTOMS HARMONIZATION — International efforts to increase the uniformity

of customs nomenclatures and procedures in cooperating countries. The
Harmonized System, a uniform system of tariff classification adopted by most major
trading countries in recent years, was one such effort. Discussions and action to
further these efforts are normally coordinated by the Customs Cooperation Council
(CCC), an international organization with its secretariat headquartered in Brussels,
Belgium. The CCC is also involved in developing international standards for the
exchange of trade data and for determining international rules of origin and related
international customs technical questions. See also Codes of Conduct; Customs;
Customs Classification; Customs Cooperation Council Nomenclature; Customs
Harmonization; Harmonization; Harmonized System; Harmonized Tariff Schedule
of the United States; Imports; Kyoto Convention; Most-Favored-Nation Treatment;
Tariff; Tariff Schedules; Valuation; World Customs Organization; World Trade
Organization.

TARIFF HARMONIZATION — See Harmonization.

ARTICLE 2 (GATT ARTICLE II) — See Concession.

ARTICLE 11 (GATT ARTICLE XI) — A GATT provision that prohibits the use of
quantitative restrictions (for example, embargoes, bans, quotas, restrictive licenses)
to regulate imports and exports, except under certain specific conditions or unless
provided for in some other GATT article. See also General Agreement on Tariffs and
Trade; Quantitative Restrictions; Section 22; Section 201.

ARTICLE 15 (GATT ARTICLE XV) — See Balance-of-Payments Consultations.

ARTICLE 19 (GATT ARTICLE XIX) — A GATT safeguard provision that prescribes

when emergency action (for example, restrictive measures other than normal tariffs)
can be taken against imports that are injuring domestic producers. See also
Agreement on Safeguards; Agreement on Textiles and Clothing; Article 11 (GATT
Article XI); Codes of Conduct; Competitive; Concession; Escape Clause; General
Agreement on Tariffs and Trade; Import Relief; U.S. International Trade
Commission; Market Access; Omnibus Trade and Competitiveness Act of 1988;
Orderly Marketing Agreements; Protectionism; Quantitative Restrictions;
Safeguards; Section 22; Section 201; Section 406; Selective Quotas; Sensitive
Products; Specific Limitations on Trade; Trade Barriers; Trade Act of 1974;
Voluntary Restraint Agreements.

ARTICLE 22 — See Article 23 (GATT Article XXIII).

ARTICLE 23 (GATT ARTICLE XXIII) — Along with Article XXII, the provision of
the GATT that requires GATT members to consult with each other concerning
disputes that arise under GATT rules. Article XXIII also sets the basic provisions for
resolving disputes that cannot be settled through bilateral consultations. See also
Consultations; Dispute Settlement; General Agreement on Tariffs and Trade;
Quantitative Restrictions; Understanding on Rules and Procedures Governing the
Settlement of Disputes.

ARTICLE 24 (GATT ARTICLE XXIV) — Regulates how customs unions and free
trade areas may be formed as exceptions to the most-favored-nation provisions of
Article I. Provides for notification to the GATT contracting parties, review in a
Working Party, and the application of substantive criteria to the formation of such
regional trade associations. See also Customs Union; Free Trade; Free Trade Area
Agreement; Most-Favored-Nation Treatment.

ARTICLES OF THE GATT —

ARTICLE I. See Enabling Clause; Most-Favored-Nation Treatment.

ARTICLE II. See Concession.

ARTICLES III THROUGH XXIII. See Codes of Conduct.

ARTICLE VI. See Border Tax Adjustments; Countervailing Duties; Dumping.

ARTICLE XI. See Article 11 (GATT Article XI); Quantitative Restrictions; Section
22; Section 201.

ARTICLE XII. See Quantitative Restrictions.

ARTICLE XIII. See Quantitative Restrictions.

ARTICLE XV. See Balance-of-Payments Consultations.

ARTICLE XVI. See Border Tax Adjustments; Export Subsidy.

ARTICLE XVIII. See Quantitative Restrictions.

ARTICLE XIX. See Article 19 (GATT Article XIX); Escape Clause; Safeguards..

ARTICLE XX. See Quantitative Restrictions.

ARTICLE XXI. See Quantitative Restrictions.

ARTICLES XXII, XXIII. See Article 23 (GATT Article XXIII); Consultations;

Dispute Settlement.

ARTICLE XXIV. See Article 24 (GATT Article XXIV); Customs Union; Free Zone.

ARTICLES XXXVI, XXXVII, XXXVIII. See Part IV of the GATT.

UNDERWRITER — As used in the insurance industry, an insurance company,

investment banker, or other financial agent that accepts the risk of insuring specified
goods, especially in shipping. See also Capital Market; Insurance; Risk.
ADJUSTMENT ASSISTANCE — Financial, technical, or other assistance to firms,
workers, and communities to help them cope with difficulties arising from increased
import competition or other changes in the economic environment. The objective of
the assistance is usually to help an industry to become more competitive in the same
line of production or to move into other economic activities. The aid to workers can
take the form of training (to qualify the affected individuals for employment in new
or expanding industries), relocation allowances (to help them move from areas
characterized by high unemployment to areas where employment may be
available), or unemployment compensation (to tide them over while they are
searching for new jobs). The aid to firms can take the form of loans or guarantees of
loans, tax benefits or other assistance. The benefits of increased trade to an importing
country generally exceed the costs of adjustment, but the benefits are widely shared
and the adjustment costs are sometimes narrowly — and some would say unfairly
— concentrated on a few domestic producers and communities. Both import
restraints and adjustment assistance can be designed to reduce these hardships, but
adjustment assistance — unlike import restraints — allows the economy to enjoy the
full benefits of lower-cost imported goods. Adjustment assistance can also be
designed to facilitate structural shifts of resources from less productive to more
productive industries, contributing further to greater economic efficiency and
improved standards of living. See also Adjustment; Agreement on Safeguards;
Agreement on Textiles and Clothing; Article 19 (GATT Article XIX); Codes of
Conduct; Competitive; Concession; Escape Clause; Market Access; Protectionism;
Quantitative Restrictions; Section 201; Structural Change; Trade Act of 1974.

OFFICIAL DEVELOPMENT ASSISTANCE (ODA) — Economic or technical

assistance extended to developing countries by the governments of developed
countries and by international organizations, as contrasted with gifts, loans, and
investments financed by the private sector. Official development assistance is
construed by the OECD Development Committee as including only "concessional"
transfers to developing countries, meaning that all or part of each ODA transaction
is a grant or is loaned at rate of interest and/or on repayment terms more beneficial
to the recipient than market rates and terms. See also Additionality; Agency for
International Development; Bilateral Aid; Developing Countries; Development
Assistance Committee; Economic Development; European Bank for Reconstruction
and Development; Graduation; Interest; Least Developed Countries; Multilateral
Aid; Organization for Economic Cooperation and Development; Private Sector; Soft
Loan; Transfer Payments.
EUROPEAN FREE TRADE ASSOCIATION (EFTA) — A regional grouping,
established in 1960 by the Stockholm Convention, that now includes Iceland,
Liechtenstein, Norway, and Switzerland. A number of European Union member
states, including Austria, Denmark, Sweden, and the United Kingdom, were
previously members of EFTA but withdrew when they became members of the EU.
EFTA member countries have gradually eliminated tariffs on manufactured goods
originating and traded within EFTA and between EFTA and the EU. Agricultural
products, for the most part, are not included on the EFTA schedule for internal tariff
reductions. Each member country maintains its own external tariff schedule, and
each has concluded a trade agreement with the EU that provides for the mutual
elimination of tariffs for most manufactured goods except a few sensitive products.
As a result, the EU and EFTA form a de facto free trade area. The EU and EFTA
countries have deepened their economic integration with the creation of the
European Economic Area (EEA). The EEA provides for the adoption by the EFTA
countries of numerous EU laws and regulations with a view toward ensuring the
freedom of movement of people, goods, services, and capital within Europe. See also
Customs Area; Customs Union; European Community; European Free Trade
Association; European Union; Sensitive Products.

INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) — An affiliate of the

World Bank, established in 1960, that extends concessional loans to the least
developed countries and other relatively poor countries to finance long-term high-
priority development projects. IDA resources are contributed by 33 donor countries.
The World Bank would not be able to make loans to many of the poorest countries,
including most countries in Africa, without IDA resources. See also Least Developed
Countries; Official Development Assistance; Soft Loan; World Bank.

BILATERAL AID — Development assistance provided directly by a donor country

to a recipient country (as opposed to aid channeled through a multilateral
institution). See also Additionality; Agency for International Development;
Developing Countries; Least Developed Countries; Multilateral Aid; Newly
Industrializing Countries; Official Development Assistance; Overseas Private
Investment Corporation.

CONCESSIONAL AID — See Official Development Assistance.

MULTILATERAL AID — Development assistance given by donors to recipient
countries through international institutions. See also Additionality; Asia-Pacific
Economic Cooperation; Bilateral Aid; Developing Countries; Development
Assistance Committee; Economic Development; Framework Agreement; General
Agreement on Tariffs and Trade; Generalized System of Preferences; Inter-American
Development Bank; International Finance Corporation; International Trade Center
UNCTAD/WTO; Multilateral Investment Guarantee Agency; Official Development
Assistance; Organization for Economic Cooperation and Development; Part IV of
the GATT; Special and Differential Treatment; Tokyo Declaration; Tokyo Round;
United Nations Conference on Trade and Development; United Nations
Development Program; Uruguay Round; World Bank; World Trade Organization.

B
BALANCE OF TRADE (BOT) — A component of the balance of payments, the
surplus or deficit that results from comparing a country's expenditures on
merchandise imports with the receipts derived from its merchandise exports. See
also Balance of Payments; Credit; Mercantilism.

BALANCE OF CONCESSIONS — See Concession; Reciprocity.

BALANCE OF PAYMENTS — A tabulation of a country's credit and debit

transactions with other countries and international institutions. These transactions
are divided into two broad groups: current account and capital account. The main
items included are exports and imports of goods and services (the balance of trade),
foreign direct investments, intergovernmental loans, transfer payments, capital
inflows and outflows, and changes in official gold holdings and foreign exchange
reserves. See also Adjustment; Balance of Trade; Capital Account; Current Account;
International Monetary Fund; Invisible Trade; Quantitative Restrictions; Transfer
Payments; Visible Trade.

BANKING — See Credit; Interest; Loan; Services.

EUROPEAN CENTRAL BANK (ECB) — The common central bank, located in
Frankfurt, Germany, of the European Union countries that use the common single
currency, the euro. The ECB, in combination with the national central banks of the
Euro Zone countries, forms the European System of Central Banks (ESCB). The
ESCB is responsible for defining and implementing monetary policy, for conducting
foreign exchange operations, for holding and managing official foreign reserves, and
for promoting the smooth operation of the payments systems of the member
countries. See also European Currency Unit; Euro; Euro Zone; European
Community; European System of Central Banks; European Union.

EXPORT-IMPORT BANK OF THE UNITED STATES (EX-IM BANK) — A public

corporation created by executive order of the president of the United States in 1934
and given a statutory basis in 1945. The Ex-Im Bank makes guarantees and insures
loans to help finance U.S. exports, particularly for equipment to be used in capital
improvement projects. It also provides short-term, political risk guarantees, either
directly or in cooperation with U.S. commercial banks. It is not an aid or
development agency. Under the administration of President Bill Clinton, the Ex-Im
Bank has focused on emphasizing exports to developing countries, countering trade
subsidies of other governments, stimulating small business transactions, promoting
the export of environmentally beneficial goods and services, and expanding project
finance capabilities.

BANK FOR INTERNATIONAL SETTLEMENTS (BIS) — An organization

established at the Hague Conference in January 1930 to serve as a forum for
international monetary and regulatory cooperation, as a bank for central banks, as a
center for monetary and economic research, and as agent or trustee to facilitate the
implementation of various international financial agreements. Initial members
included six central banks and a U.S. financial institution. Membership currently
includes 45 central banks. See also Credit; European Central Bank; European System
of Central Banks; Foreign Exchange; Inflation; Interest; Loan; Reserve Currency.

EUROPEAN BANK (EBRD) — See European Bank for Reconstruction and

Development.

EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD) —

A regional development bank that supports market-oriented economic reforms in
Central and Eastern Europe, including the former Soviet Union. The EBRD began
operating in April 1991. See also Agency for International Development; Bilateral
Aid; Economic Cooperation Among Developing Countries; Economic Development;
European Recovery Program; Group D; Multilateral Aid; Official Development
Assistance; Overseas Private Investment Corporation; Organization for Economic
Cooperation and Development; Transfer Payments.

INTER-AMERICAN DEVELOPMENT BANK (IADB or IDB) — A regional

development institution established in 1959 to help promote and finance economic
and social development in Caribbean and Latin American countries by utilizing its
own funds to finance member-countries' development; to subsidize private
enterprises when private capital is not available; and to provide technical assistance
in the preparation, financing, and implementation of development projects. The
IADB's membership originally comprised the United States and 19 Latin American
and Caribbean countries. Eight other Western Hemisphere countries, including
Canada, joined later. In 1974, the Declaration of Madrid allowed the entry of
countries from outside the inter-American region, and 18 additional countries joined
between 1976 and 1993, bringing the IADB's membership to 46 nations. The IADB
has established the autonomous Inter-American Investment Corporation (IIC) to
finance small and medium-sized private enterprises, as well as the Multilateral
Investment Fund (MIF) to promote investment reforms and to stimulate private
sector projects. See also Additionality; Bilateral Aid; Developing Countries;
Economic Development; Least Developed Countries; Multilateral Aid; Multilateral
Investment Fund; Newly Industrializing Countries; Non-Aligned Movement;
North-South Trade; Official Development Assistance; Soft Loan; South-South Trade.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

(IBRD) — See World Bank.

WORLD BANK — Formally, the International Bank for Reconstruction and

Development (IBRD), an intergovernmental financial institution located in
Washington, D.C. The World Bank’s objectives are to help raise productivity and
incomes and reduce poverty in developing countries. It was established in
December 1945 on the basis of a plan developed at the Bretton Woods Conference of
1944. The World Bank loans financial resources to creditworthy developing
countries. It raises most of its funds by selling bonds in the world's major capital
markets. Its bonds have, over the years, earned a quality rating enjoyed only by
sound governments and leading corporations. Projects supported by the World
Bank normally receive high priority within recipient governments and are usually
well planned and supervised. The World Bank earns a profit, which is plowed back
into its capital. See also Bond; Bretton Woods Conference; Capital Market;
Developing Countries; Economic Development; Graduation; International
Development Association; International Finance Corporation; International
Monetary Fund; Loan; Multilateral Aid; Multilateral Investment Guarantee Agency.

NATIONAL TRADE DATA BANK (NTDB) — A compilation of international

economic and export promotion information supplied by a number of U.S. agencies.
Data are updated monthly and are presented in one of three standard formats: text,
time series, or matrix. The NTDB contains data from the Departments of Agriculture
(Foreign Agricultural Service), Commerce (Bureau of the Census, Bureau of
Economic Analysis, International Trade Administration, and National Institute for
Standards and Technology), Energy, and Labor (Bureau of Labor Statistics), the
Central Intelligence Agency; the Ex-Im Bank; the Federal Reserve System; the U.S.
International Trade Commission; the Overseas Private Investment Corporation; the
Small Business Administration; and the U.S. Trade Representative; as well as by the
University of Massachusetts (MISER data on state origins of exports). The NTDB
provides access to country commercial guides, market research reports, and best
market reports. The NTDB also provides U.S. import and export statistics, as well as
over 75 other various reports and programs. See also Balance of Trade; Electronic
Commerce; Exports; Export Promotion; Informatics; Imports; International Trade
Administration; U.S. International Trade Commission; Overseas Private Investment
Corporation; U.S. Foreign and Commercial Service; United States Trade
Representative.

NORTH AMERICAN DEVELOPMENT BANK (NADBank) — An institution

established under the auspices of the North American Free Trade Agreement
(NAFTA) to finance environmental infrastructure projects along the U.S.-Mexico
border, as well as community adjustment and investment in both nations. The bank
supports the goals of NAFTA primarily by tackling the problems of raw sewage,
unsafe drinking water, and inadequate municipal waste disposal in the border
region. The Community Adjustment and Investment Program (CAIP) of the
NADBank supports the goals of NAFTA by providing financial assistance to create
or retain jobs in communities experiencing temporary NAFTA-related job losses. See
also Adjustment Assistance; North American Free Trade Agreement.
TRADE BARRIERS — Government laws, regulations, policies, or practices that
either protect domestic products from foreign competition or artificially stimulate
exports of particular domestic products. The United States Trade Representative
classifies trade barriers into eight general categories:

1. Import policies (tariffs and other import charges, quantitative restrictions,

import licensing, and customs barriers);
2. Standards, testing, labeling, and certification;
3. Government procurement;
4. Export subsidies;
5. Lack of intellectual property protection;
6. Service barriers;
7. Investment barriers;
8. Other barriers (for example, barriers encompassing more than one category
or barriers affecting a single sector).

See also Codes of Conduct; Consular Formalities and Documentation; Consular

Invoice; Customs; Customs and Administrative Entry Procedures; Discrimination;
Domestic Subsidy; Exchange Controls; Export Subsidy; Government Procurement
Policies and Practices; Licensing; National Trade Estimate Report; Nontariff
Barriers; Packaging, Labeling, and Marking Regulations; Prior Deposits; Priority
Foreign Country; Quantitative Restrictions; Quarantine, Sanitary, and Health Laws
and Regulations; Restrictive Business Practices; Road Tax; Safeguards; Section 301;
Special 301; Super 301; Services; Specific Limitations on Trade; Standards; Subsidy;
Trade Policy Review Mechanism; Transparency; United States Trade
Representative.

NONTARIFF BARRIERS (NTBs) — Government measures other than tariffs that

restrict imports or that have the potential for restricting international trade, even
though they may not always do so. NTBs include import monitoring systems and
variable levies, as well as measures that are internationally perceived as trade
restrictive, even though a trade-restricting intent or effect cannot objectively be
ascribed to them. Such measures have become relatively more conspicuous
impediments to trade as tariffs have been reduced during the period since World
War II. See also ATA Carnet; Codes of Conduct; Concession; Consular Formalities
and Documentation; Consular Invoice; Customs; Customs and Administrative
Entry Procedures; Customs Classification; Discrimination; Domestic Subsidy;
Exchange Controls; Export Subsidy; Government Procurement Policies and
Practices; Imports; Licensing; Liquidation; Packaging, Labeling, and Marking
Regulations; Port of Entry; Prior Deposits; Quantitative Restrictions; Quarantine,
Sanitary, and Health Laws and Regulations; Road Tax; Safeguards; Services; Special
and Differential Treatment; Specific Limitations on Trade; Standards; Subsidy;
Suspension of Liquidation; Tariff; Trade Agreements Act of 1979; Transit Zone;
Transparency; U.S. International Trade Commission; Valuation; Variable Levy;
World Customs Organization; World Trade Organization.

TECHNICAL BARRIERS TO TRADE (TBT) — See Agreement on the Application of

Sanitary and Phytosanitary Measures; Agreement on Technical Barriers to Trade;
Nontariff Barriers; Quarantine, Sanitary, and Health Laws and Regulations;
Standards.

GOODS — Inherently useful and relatively scarce articles or commodities produced

by the manufacturing, mining, construction, and agricultural sectors of the
economy. Goods are important economically because they may be exchanged for
money or other goods and services. See also Capital Goods; Commodity; Consumer
Goods; Demand; Market Economy; Money; Price; Production; Services; Supply;
Utility.

BOGUS GOODS — See Commercial Counterfeiting.

BONDED GOODS — Imported goods stored in a bonded warehouse, usually after

the owners of the goods have deposited a bond guaranteeing that the duty will be
paid when and if the goods are withdrawn for domestic sale. See also Bonded
Warehouse; Customs Bond; Free Zone.

CAPITAL GOODS — Industrial products or other goods that are used in the creation
of additional wealth, such as machine tools. Capital goods are sometimes called
intermediate goods because they only indirectly satisfy human wants (as opposed
to consumer goods, which satisfy human wants directly), and they are sometimes
called producer goods, because they are used to produce other goods. See also
Capital; Consumer Goods; Production.

CONSUMER GOODS — Goods that directly satisfy human desires (as opposed to
capital goods). An automobile used for pleasure is considered a consumer good. An
automobile used by a business person to deliver wares is considered a capital good.
See also Capital Goods; Consumers; Goods.

PRODUCER GOODS — See Capital Goods.

INTERMEDIATE GOODS — See Capital Goods.

WELFARE — State or degree of economic well-being. According to classical

economists, advances in the overall welfare of a country is the proper objective of
economic and trade policy. The term is associated with the work of Arthur Cecil
Pigou, a British economist who conceived of the costs of production as including
social costs. See also Capital; Comparative Advantage; Economic Development;
Efficiency; Imports; Infrastructure; Money; Production; Property; Structural
Change; Trade Diversion; Value; Wealth.

BILATERAL — An agreement or arrangement involving two sides or parties. See

also Multilateral; Unilateral.

BIT — See Bilateral Investment Treaty.

BOYCOTT — A refusal to deal commercially or otherwise with a person, firm, or

country. See also Antiboycott Legislation; Coordinating Committee for Multilateral
Export Controls; Embargo; Export Administration Act of 1979.

COMMODITY EXCHANGE — See Forward Market.

BOND — An interest-bearing certificate issued by a government or a business
promising to pay the holder a specified sum on a specified date. A bond is a common
means of raising capital. See also Capital Market; Credit; Customs Bond.

BTN — See Customs Cooperation Council Nomenclature.

BXA — See Bureau of Export Administration.

C
C&F — See CFR.

DEMAND SCHEDULE — See Demand.

STRUCTURAL CHANGE — Long-term trends in the principal elements of an

economic system, including its patterns of production, consumption, trade, and
relative prices. Structural change can take place within national economies and is
reflected in the ever wider and deeper linkages among them and the consequent
increasing interdependence of the world economy. Expansion in the economy as a
whole and temporary, cyclical shifts of its components are not considered structural
changes. Since the Industrial Revolution, structural change within most national
economies has resulted principally from developments in comparative advantage
associated with technological advance, improved infrastructure, and changing
consumer preference, factors that have characteristically reflected movement from
subsistence to commercial agriculture; reduction in the percentage of the labor force
engaged in agriculture and increases in the relative significance of manufacturing
(and, at a later stage, a further development toward service industries); changes in
the relative economic importance of various industries; the rise and decline of
specific economic activities in different countries and regions; and evolution in the
composition of exports and imports. See also Adjustment; Adjustment Assistance;
Comparative Advantage; Competitive; Demand; Developing Countries; Economic
Development; Industrial Revolution; Infrastructure; Services; Technology; Trade
Diversion; Technology Transfer; Welfare.
BASKET OF CURRENCIES — See Par Value; Special Drawing Rights.

CAP — See Common Agricultural Policy.

CAPITAL — Property or wealth that yields income expressed in terms of money.

Also, the accumulated stock of tools, machinery, equipment, buildings, and other
goods employed, in turn, to produce other goods and services. See also Capital
Goods; Infrastructure; Interest; Money; Profit; Risk.

VENTURE CAPITAL — See Risk.

SECURITY CAPITAL — See Risk.

SOCIAL OVERHEAD CAPITAL — See Infrastructure.

ROLL ON/ROLL OFF (RO-RO) — Cargo that is rolled on and off a vessel under its
own power. Roll on/roll off shipping allows for quick and easy lading/unlading
because the cargo does not need to be loaded and unloaded by winch or crane but
can be driven on and off a vessel using a tractor trailer, van, or flatbed truck.

CARGO SHARING — The reservation and division of maritime traffic between

designated trading partners who agree that vessels owned or controlled by either
will carry a specified percentage of the cargo moving between them.

BREAK BULK — Loose, noncontainerized cargo imported in bulk, usually because

of size or weight considerations (such as raw materials or oversized machinery).
These shipments are often separated into individual lots and routed to different
destinations and/or importers.

DRY CARGO — See Bulk Carrier.

CARNET — See ATA Carnet.

ATA CARNET — An international customs document that is recognized as an

internationally valid guarantee and may be used in lieu of national customs
documents and as security for import duties and taxes to cover the temporary
admission of goods and sometimes the transit of goods. The ATA (Admission
Temporaire — Temporary Admission) Convention of 1961 authorized the ATA
Carnet to replace the ECS (Echantillons Commerciaux — Commercial Samples)
Carnet that was created by a 1956 convention sponsored by the Customs
Cooperation Council. ATA Carnets are issued by National Chambers of Commerce
affiliated with the International Chamber of Commerce, which also guarantees
payment of duties in the event of failure to re-export. See also Codes of Conduct;
Consular Invoice; Consular Formalities and Documentation; Customs; Customs and
Administrative Entry Procedures; Customs Classification; Imports; Free Zone;
Licensing; Liquidation; Nontariff Barriers; Port of Entry; Suspension of Liquidation;
Tariff; Transit Zone; Valuation; World Customs Organization; World Trade
Organization.

ECS CARNET — See ATA Carnet.

HAVANA CHARTER — See General Agreement on Tariffs and Trade.

CARTEL — An alliance or arrangement among industrial, commercial, or state-

controlled enterprises producing the same commodity, aimed at regulating the
purchase, production, or marketing of the commodity. A cartel agreement is often
accompanied by output and investment quotas. When a cartel gains monopoly
power, it will normally seek to maximize profits by raising prices and limiting
supply. See also Commodity; Monopoly; Organization of Petroleum Exporting
Countries.

CBI — See Caribbean Basin Initiative.

CCC — See Commodity Credit Corporation.

CCCN — See Customs Cooperation Council Nomenclature.

TRADE COMPLIANCE CENTER (TCC) — An office of the U.S. Department of

Commerce that monitors, investigates, and evaluates foreign compliance with
multilateral, bilateral, and other international trade agreements and standards of
conduct. The TCC also acts within the International Trade Administration’s Market
Access and Compliance unit to coordinate and promote foreign government
compliance with trade agreements.

INTERNATIONAL TRADE CENTER UNCTAD/WTO (ITC) — A quasi-

autonomous, Geneva-based organization within the United Nations system
(reporting to both the WTO and to the United Nations Conference on Trade and
Development) that provides a wide range of technical assistance to developing
countries seeking to develop and promote their export potential. The ITC is the
recognized United Nations Development Program executing agency in the field of
trade promotion. See also Developing Countries; Export Promotion; General
Agreement on Tariffs and Trade; Graduation; Group of 77; United Nations
Conference on Trade and Development; United Nations Development Program.

CEP — See Constructed Export Price.

CER — See Australia-New Zealand Closer Economic Relations Agreement.

CERTIFICATE OF ORIGIN — See Customs and Administrative Entry Procedures.

COUNTRY OF ORIGIN CERTIFICATE — See Customs and Administrative Entry

Procedures.

CET — See Common External Tariff.

CFR — An international commercial term (Incoterm) meaning "cost and freight."
The term is used in international sales contracts to signify that the seller must pay
the cost and freight necessary to bring goods to a port of destination, but that the
risk of loss or damage passes from the seller to the buyer when the goods pass the
ship's rail in the port of shipment. Because a CFR selling price includes the cost of
the goods and freight but not the cost of insurance, this term of sale is often used
when the government in an importing country requires that insurance be supplied
by a company subject to its jurisdiction. Prior to the 1990 version of the Incoterms,
C&F was used instead of CFR, with the same meaning. See also CIF; CIP; CPT; DAF;
DDP; DDU; DEQ; DES; EXW; FAS; FCA; FOB; Incoterms.

CFTA — See U.S.-Canada Free Trade Agreement.

CIF — An international commercial term (Incoterm), used in international sales

contracts, meaning that the selling price includes all "costs, insurance, and freight"
for any goods sold. The seller arranges and pays for all relevant expenses involved
in shipping goods from their point of exportation to a given point of importation. In
trade statistics, "CIF value" means that all figures for imports or exports are
calculated on this basis, regardless of the nature of individual transactions. See also
CFR; CIP; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FAS; FCA; FOB; CFR; Incoterms.

CIP — An international commercial term (Incoterm), meaning "carriage and

insurance" that is used in international sales contracts to impose the same
obligations on the seller as "carriage paid to" (CPT), with the exception that the seller
is also responsible for contracting and paying for cargo insurance. Hence, in addition
to this obligation, the seller will clear for export and pay the freight and all costs
incurred for the carriage of goods to a destination named by the buyer. The risk of
loss or damage passes to the buyer when the goods are delivered to the carrier. See
also CFR; CIF; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FAS; FCA; FOB; Incoterms.

CIT — See Court of International Trade.

CUSTOMS CLASSIFICATION — The particular category in a tariff nomenclature in

which a product is classified for tariff purposes. Also, the procedure for determining
the appropriate tariff category in a country's nomenclature system used for the
classification, coding, and description of internationally traded goods. Most major
trading nations classify imported goods in conformity with the Harmonized
Commodity Description and Coding System, also called the Harmonized System.
The United States adopted the Harmonized System on January 1, 1989. See also
Customs; Customs Bond; Customs Classification; Customs Cooperation Council
Nomenclature; Customs Harmonization; Harmonization; Harmonized System;
Harmonized Tariff Schedule of the United States; Imports; Kyoto Convention; Most-
Favored-Nation Treatment; Tariff; Tariff Schedules; Valuation; World Customs
Organization; World Trade Organization.

STANDARD INDUSTRIAL CLASSIFICATION (SIC) — See North American

Industry Classification System.

STANDARD INTERNATIONAL TRADE CLASSIFICATION (SITC) — An

international foreign data scheme that permits international comparisons of foreign
trade data. It was developed by the United Nations in 1950 and is used solely by
international organizations for reporting international trade.

ESCAPE CLAUSE — Also known as a safeguard provision, a provision in a bilateral

or multilateral commercial agreement permitting a signatory nation to suspend
tariff or other concessions when increased imports cause or threaten to cause serious
injury to the producers of competitive domestic goods. GATT Article XIX sanctions
such escape clause provisions to help firms and workers injured by increased
imports adjust to the rising level of import competition. The WTO's escape clause
provisions are contained in its Agreement on Safeguards. Section 201 of the Trade
Act of 1974 is the main escape clause in U.S. trade law. See also Adjustment;
Adjustment Assistance; Agreement on Safeguards; Agreement on Textiles and
Clothing; Article 19 (GATT Article XIX); Concession; Import Relief; Market Access;
Protectionism; Quantitative Restrictions; Safeguards; Section 22; Section 201; Section
406; Trade Act of 1974; U.S. International Trade Commission; World Trade
Organization.

ENABLING CLAUSE — Formally, the "Decision on Differential and More Favorable

Treatment, Reciprocity, and Fuller Participation of Developing Countries" that was
negotiated during the Tokyo Round as Part I of a new Framework Agreement on
International Trade. The enabling clause legalized the extension by developed
contracting parties of GATT of preferences to developing countries,
notwithstanding the most-favored-nation treatment required under GATT Article 1.
See also Articles of the GATT; Contracting Party; Developing Countries; Framework
Agreement; General Agreement on Tariffs and Trade; Generalized System of
Preferences; Most-Favored-Nation Treatment; Part IV of the GATT; Preferences;
Reciprocity; Tokyo Round.

GRANDFATHER CLAUSE — A provision in a legal instrument, such as GATT, that

allows countries that accede to it to maintain preexisting domestic legislation
inconsistent with provisions of that instrument. See also Accession; General
Agreement on Tariffs and Trade; Protocol of Provisional Application; Residual
Restrictions.

LONDON CLUB — An ad hoc group of commercial bank lenders that meets to

negotiate debt restructuring agreements with debtor countries.

PARIS CLUB — A popular designation for meetings between representatives of a

developing country that wishes to renegotiate its "official" debt (normally excluding
debts owed by and to the private sector without official guarantees) and
representatives of the relevant creditor governments and international institutions.
Such meetings normally take place at the initiative of a debtor country that wishes
to consolidate all or part of its debt service payments falling due over a specified
period. The meetings are traditionally chaired by a senior official of the French
Treasury Department. Comparable meetings occasionally take place in London and
in New York for countries that wish to renegotiate repayment terms for their debts
to private banks. Such meetings are sometimes called "creditor clubs." See also
Bilateral Aid; Development Assistance Committee; Economic Development;
Graduation; Multilateral Aid; Official Development Assistance.

CREDITOR CLUBS — See Paris Club.

SOCIAL SECURITY CHARGES — See Direct Tax.

COCOM — See Coordinating Committee on Multilateral Export Controls.

ANTI-DUMPING CODE — A code of conduct negotiated under the auspices of
GATT during the Tokyo Round (replacing an earlier code negotiated during the
Kennedy Round) that establishes both substantive and procedural standards for
antidumping proceedings in signatory countries. The Anti-Dumping Code was
implemented in the United States through the U.S. Trade Agreements Act of 1979,
which repealed the Anti-Dumping Law of 1921 and inserted new antidumping
provisions in the Tariff Act of 1930 providing for the imposition of special duties
equivalent to the margin of dumping of imported merchandise. Goods imported
into the United States are considered dumped when they are found to have been
sold at less than fair value and to have caused or threatened to cause material injury
to a U.S. industry. The WTO Agreement on Implementation of Article VI of GATT
1994 clarifies and refines certain provisions of the 1979 Anti-Dumping Code. See also
Agreement on Implementation of Article VI of GATT 1994; Codes of Conduct;
Dumping; General Agreement on Tariffs and Trade; Kennedy Round; Sunset
Review; Tokyo Round; Trade Agreements Act of 1979; Uruguay Round; World
Trade Organization.

AIRCRAFT CODE — See Aircraft Agreement.

LICENSING CODE — A Tokyo Round code aimed at simplifying import licensing

procedures and at ensuring their fair and equitable application. The code also seeks
to improve the transparency of such proceedings by requiring the publication of
relevant national laws and regulations. A Committee on Import Licensing, under
the aegis of GATT, monitors adherence to the code. The WTO Agreement on Import
Licensing Procedures, negotiated during the Uruguay Round, is the successor to the
Licensing Code. See also Agreement on Import Licensing Procedures; Codes of
Conduct; General Agreement on Tariffs and Trade; Licensing; Nontariff Barriers;
Tokyo Round; Trade Agreements Act of 1979; Transparency; Uruguay Round;
World Trade Organization.

STANDARDS CODE — See Standards.

SUBSIDIES CODE — See Agreement on Subsidies and Countervailing Measures;

Countervailing Duties.
CUSTOMS VALUATION CODE — See Agreement on Implementation of Article
VII of GATT 1994.

CODES OF CONDUCT — In general usage in trade law, any international

agreement that prescribes or recommends standards of behavior by nation-states or
multinational corporations deemed desirable by the international community. For
example, the United Nations has encouraged the negotiation of several voluntary
codes of conduct (meaning that they are not legally binding), including one that
seeks to specify the rights and obligations of transnational corporations. More
narrowly, "codes of conduct" refers to the six agreements that were negotiated
during the Tokyo Round to liberalize and harmonize domestic measures that might
impede or distort trade: the Agreement on Technical Barriers to Trade, or Standards
Code; the Agreement on Government Procurement, or Government Procurement
Code; the Agreement on Interpretation and Application of Articles VI, XVI, and
XXIII of the General Agreement on Tariffs and Trade, or Subsidies Code; the
Agreement on Implementation of Article VII, or Customs Valuation Code; the
Agreement on Import Licensing Procedures, or Import Licensing Code; and the
Agreement on Implementation of Article VI, or Anti-Dumping Code. See also
Agreement on Government Procurement; Agreement on Import Licensing
Procedures; Agreement on Implementation of Article VI of GATT 1994; Agreement
on Implementation of Article VII of GATT 1994; Agreement on Subsidies and
Countervailing Measures; Agreement on Technical Barriers to Trade; Aircraft
Agreement; Anti-Dumping Code; Articles of GATT; Consultations; Countervailing
Duties; Customs; Customs Classification; Customs Valuation Code; Dispute
Settlement; Domestic Subsidy; Export Subsidy; Government Procurement Policies
and Practices; Liberalization; Licensing Code; Multilateral Agreement;
Multinational Corporation; Nontariff Barriers; Restrictive Business Practices;
Safeguards; Standards; Tariff; Tariff Schedules; Tokyo Round; Transparency;
Valuation; World Customs Organization; World Trade Organization.

COMECON — See Council for Mutual Economic Assistance.

COMPENSATION TRADE — See Countertrade.

COUNTERTRADE (CT) — Arrangements under which the sale of goods or services
from one country to another are linked to sales in the opposite direction.
Countertrade arrangements frequently characterize East-West trade. Such
transactions include:

 Counterpurchase contracts that stipulate that the vendor must purchase

goods from the importer equivalent in value to a specified percentage of the
value of the exported goods;
 Reverse countertrade contracts that require an importer (a U.S. buyer of
machine tools from Eastern Europe, for example) to export goods equivalent
in value to a specified percentage of the value of the imported goods — an
obligation that can be sold to an exporter in a third country;
 Buy-back (or compensation) arrangements through which a company selling
equipment, licenses, technology, or a turnkey plant agrees to accept in full or
partial payment products manufactured with such equipment, licenses,
technology, or plant;
 Clearing agreements between two countries that agree to purchase specific
amounts of each other's products over a certain period of time, using a
designated "clearing currency" in the transactions;
 Switch arrangements that permit the sale of unpaid balances in a clearing
account to be sold to a third party, usually at a discount, that may be used for
producing goods in the country holding the balance;
 Swap schemes through which products from different locations are traded to
save transportation costs (for example, Russian oil may be swapped for oil
from a Latin American producer, so the Russian oil is shipped to a country in
South Asia, while the Latin American oil is shipped to Cuba);
 Barter arrangements through which two parties directly exchange goods
deemed to be of approximately equivalent value without any flow of money
taking place.

See also Barter; East-West Trade; Nonmarket Economy; Offset Requirements; Tied
Loan; Turnkey Contract.

MANAGED TRADE — Attempts by governments at the national or international

level to influence or control exports and imports based on the presumption that
government perspectives are more likely to ensure optimal trade than is reliance on
unmanaged market forces. Managed trade at the national level often reflects the
political influence of protectionist elements in an economy. The term may also
describe buffer stock and price stabilization arrangements, such as STABEX or the
Integrated Program for Commodities. See also Buffer Stocks; Industrial Policy;
Integrated Program for Commodities; Lomé Convention; Market Economy; Market
Forces; Ministry of International Trade and Industry; Protectionism.

ELECTRONIC COMMERCE — Any activity that utilizes some form of electronic

communication in the inventory, exchange, advertisement, and distribution of, and
the payment for, goods and services. All forms of commercial transactions are based
upon the transmission of digitized data, including text, sound, and visual images.
See also Global Information Infrastructure; Informatics; Technology.

GLOBAL ELECTRONIC COMMERCE (GEC) — See Electronic Commerce.

EAST-WEST TRADE — Referred to trade between the former Soviet Union and the
socialist countries of Eastern Europe (East) on the one hand, and the developed
market economy countries of Western Europe, North America, and Japan on the
other (West). See also Countertrade; Nonmarket Economy.

INVISIBLE TRADE — Items such as freight, insurance, and financial services that
are included in a country's balance-of-payments accounts (in the "current" account),
even though they are not recorded as physically visible exports and imports. See
also Balance of Payments; Capital Account; Current Account; Services; Visible
Trade.

NORTH-SOUTH TRADE — The exchange of goods and services between

developed countries (the North) and developing countries (the South). The
Generalized System of Preferences negotiated at UNCTAD-II and the GATT
Framework Agreement negotiated in the Tokyo Round were intended to stimulate
additional North-South trade. See also Caribbean Basin Initiative; Developed
Countries; Developing Countries; Economic Development; Framework Agreement;
General Agreement on Tariffs and Trade; Generalized System of Preferences; Group
B; Group of 77; International Trade Center UNCTAD/WTO; Reciprocity; Special
and Differential Treatment; Tokyo Declaration; Tokyo Round; Trade Agreements
Act of 1979; United Nations Conference on Trade and Development; United States
Trade Representative.
SOUTH-SOUTH TRADE — Trade between developing countries. See also Andean
Pact; Asia-Pacific Economic Cooperation; Economic Cooperation Among
Developing Countries; Global System of Trade Preferences; Group of 77;
MERCOSUR; Non-Aligned Movement; Preferences; United Nations Conference on
Trade and Development.

VISIBLE TRADE — Imports, exports, and re-exports of merchandise. See also

Balance of Payments; Goods; Invisible Trade.

TARIFF COMMISSION — See U.S. International Trade Commission.

U.S. TARIFF COMMISSION — See U.S. International Trade Commission.

U.S.-CANADA TRADE COMMISSION — An organization created under chapter

18 of the U.S.-Canada Free Trade Agreement to consult on all matters affecting the
implementation and operation of the FTA. See also North American Free Trade
Agreement; U.S.-Canada Free Trade Agreement.

INTERNATIONAL TRADE COMMISSION (ITC) — See U.S. International Trade

Commission.

U.S. INTERNATIONAL TRADE COMMISSION (USITC) — Formerly the U.S. Tariff

Commission, an organization created in 1916 by an act of Congress. Its mandate was
broadened and its name changed by the Trade Act of 1974. The USITC is an
independent fact-finding agency of the U.S. government, reporting to Congress, that
studies the effects of tariffs and other restraints to trade on the U.S. economy. It
conducts public hearings to assist in determining whether particular U.S. industries
are injured or threatened with injury by dumping, export subsidies in other
countries, or rapidly rising imports. It also studies the probable economic impact on
specific U.S. industries of proposed reductions in U.S. tariffs and nontariff barriers
to imports. Its six commissioners are appointed by the president, with the advice
and consent of the U.S. Senate, for nine-year terms. See also Countervailing Duties;
Domestic Subsidy; Dumping; Escape Clause; Export Subsidy; Imports; Peril Point;
Tariff; Trade Act of 1974.

COMMISSION OF THE EUROPEAN COMMUNITY — See European Commission.

UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW

(UNCITRAL) — A body charged with furthering the progressive harmonization of
international trade law in order to reduce the disparities in national laws that inhibit
the free flow of international trade. UNCITRAL, which was created in 1966 by the
UN General Assembly, works in a number of areas including the international sale
and transport of goods, international commercial arbitration, public procurement,
and international payments. Some of UNCITRAL's best known contributions
include the United Nations Convention on Contracts for the International Sale of
Goods (Vienna, 1980) and the UNCITRAL Arbitration Rules. The Secretariat for
UNCITRAL is located in Vienna, Austria. See also Harmonization.

EUROPEAN COMMISSION — A body that proposes legislation, is responsible for

administration, and ensures that provisions of the European Union's treaties and the
decisions of the EU's institutions are properly implemented. The European
Commission has investigative powers and can take legal actions against persons,
companies, or member states that violate EU rules. The commission manages the EU
budget and represents the EU in international trade negotiations. The president and
20 commissioners (two of whom are vice presidents) are appointed for five-year
terms and oversee a staff of approximately 15,000 employees, most of whom are
based in Brussels. The commission's responsibilities are divided among more than
25 directorates-general and other administrative services. See also Council of the
European Union; European Community; European Council; European Parliament;
European Union.

WILLIAMS COMMISSION — A prestigious panel appointed by President Richard

Nixon in 1970 to explore U.S. trade policy interests. The commission's basic 1971
recommendation — that the U.S. government should initiate a major round of trade
negotiations — ultimately led to the Trade Act of 1974 and the Tokyo Round of
Trade Negotiations. See also Tokyo Round; Trade Act of 1974.
COORDINATING COMMITTEE FOR MULTILATERAL EXPORT CONTROLS
(COCOM) — A committee consisting of representatives from all NATO countries
(except Iceland) that, between 1949 and 1994, coordinated policies restricting exports
of products of potential strategic value to the former Soviet Union and certain other
countries. Created in 1949, the committee not only reviewed military technology
transfer for potential embargo but also tried to anticipate the end use of products
manufactured for civilian purposes, such as computers and transistors. For reasons
including the disintegration of the Soviet Union and the goal of assisting economic
and political reform in Russia and the Newly Independent States, the COCOM
partners agreed in 1993 to end the Cold War regime effective March 31, 1994, and to
work toward a new arrangement to enhance transparency and restraint in exporting
conventional weapons and sophisticated technologies to countries whose behavior
is cause for serious concern and to regions of potential instability. The successor
regime to COCOM is the Wassenaar Arrangement on Export Controls for
Conventional Arms and Dual-Use Goods and Technologies, which began operations
in September 1996 and is headquartered in Vienna, Austria. See also Boycott;
Embargo; Export Administration Act of 1979; Wassenaar Arrangement.

ADVISORY COMMITTEE FOR TRADE POLICY AND NEGOTIATIONS (ACTPN)

— A group of eminent individuals appointed by the U.S. president to advise him on
trade agreements and trade policy. See also United States Trade Representative.

DEVELOPMENT ASSISTANCE COMMITTEE (DAC) — The OECD body that

reviews and assesses resource transfers from developed to developing countries. See
also Official Development Assistance; Organization for Economic Cooperation and
Development.

ONE HUNDRED THIRTEEN (113) COMMITTEE — A body of representatives from

EC member states that assists the European Commission in trade negotiations with
third countries. See also Priority Foreign Country; European Community.

TRADE POLICY COMMITTEE (TPC) — A senior interagency committee of the U.S.

government, chaired by the U.S. Trade Representative, that provides broad
guidance to the president on trade policy issues. Members include the secretaries of
State, Treasury, Commerce, Agriculture, and Labor. See also United States Trade
Representative.
U.S. TRADE POLICY COMMITTEE — See Trade Policy Committee.

EXPORT TRADING COMPANY — A corporation or other business unit organized

and operated principally for the purpose of exporting goods and services or of
providing export-related services to other companies. The Export Trading Company
Act of 1982 exempts authorized trading companies from certain provisions of U.S.
antitrust laws. See also Antitrust; Webb-Pomerene Act.

STATE TRADING COMPANIES — Government-owned or government-controlled

enterprises that export and/or import goods and services. State-trading companies
exist in countries with mixed economies — in which privately owned enterprises
also play an important economic role — as well as in socialist countries. See also
Nonmarket Economy; Public Sector; Unfair Trade Practices.

COMPENSATION — The principle, central to GATT and the WTO, that any country
that raises a tariff above its bound rate, withdraws a binding on a tariff, or otherwise
impairs a trade concession must lower other tariffs or make other trade concessions
to compensate for the disadvantage suffered by countries whose exports are
affected. See also Binding; Bound Rates; Concession; Consultations; Dispute
Settlement; General Agreement on Tariffs and Trade; Section 201; Understanding on
Rules and Procedures Governing the Settlement of Disputes; World Trade
Organization.

COMPETITIVE — Refers to a product that can be sold in an appropriate quantity

within a specific market because buyers consider its price and quality acceptable,
taking account of support services, credit, delivery terms, guaranteed repairs,
promotion, or a combination of such factors, in comparison with other available
goods. See also Comparative Advantage; Efficiency; Export Promotion; Market;
Monopoly; Safeguards; Structural Change; Tariff.

PROCUREMENT — See Government Procurement Policies and Practices.

BUY-BACK — See Countertrade.

EUROPEAN ECONOMIC COMMUNITY (EEC) — See European Community.

EUROPEAN COMMUNITY (EC) — A regional organization of European countries,

originally called the European Economic Community (EEC), that came into being
on January 1, 1958, with the entry into force of the Treaty of Rome, now known as
the EC Treaty. From the beginning, a principal objective of the Community has been
the establishment of a customs union, other forms of economic integration, and
political cooperation among member states. The Treaty of Rome provided for the
gradual elimination of customs duties and other internal trade barriers, the
establishment of a common external tariff, and guarantees of free movement of
goods, services, persons, and capital within the Community. The six founding EC
member states were France, Italy, the Federal Republic of Germany, Belgium, the
Netherlands, and Luxembourg. Nine additional countries have acceded to the EC:
Austria, Denmark, Finland, Greece, Ireland, Portugal, Spain, Sweden, and the
United Kingdom. Formal accession negotiations are under way with the Czech
Republic, Cyprus, Estonia, Hungary, Malta, Poland, and Slovenia. These countries
may accede as early as 2002, and it is probable that, in the near future, additional
European countries will be invited to join. While commonly referred to as the
"European Community" or "EC," the European Community is in actuality made up
of three communities — the European Community (formerly called the European
Economic Community, or EEC), the European Atomic Energy Community
(Euratom), and the European Coal and Steel Community (ECSC). (Accordingly, the
EC is occasionally referred to in the plural, as the "European Communities.") In 1967,
the institutions of the three communities were fused together by the entry into force
of the Merger Treaty, sometimes called the Treaty of Fusion. The Treaty on European
Union (TEU, or Maastricht Treaty), which entered into force on November 1, 1993,
formalized the use of "EC" as a reference to the European Economic Community.
The TEU also introduced the term "European Union" as a broader, framework entity.
Although the EC is part of the European Union, it is not synonymous with the EU
but has a separate identity within the European system and is functionally and
legally different. (For a discussion of when to use "EC" and when to use the term
"EU," see European Union.) With the advent of the Single European Act (SEA) in
1987, the EC further deepened European economic integration by removing
remaining barriers to free movement and completing the internal market. Perhaps
the most significant EC undertaking, has been the introduction of a common
currency, the euro. EC governing institutions include the European Commission,
the Council of the European Union, the European Parliament, and the European
Court of Justice. Most Community institutions are headquartered in Brussels,
Belgium, with the exception of the European Parliament, which is headquartered in
Strasbourg, France, and the European Court of Justice, which is headquartered in
Luxembourg City, Luxembourg. See also Common Agricultural Policy; Common
External Tariff; Council of the European Union; Customs; Customs Area; Customs
Union; Euro; Euro-Zone; European Coal and Steel Community; European
Commission; European Council; European Free Trade Association; European
Parliament; European Union; Free Trade Area Agreement; Lomé Convention; Tariff;
Tariff Schedules; Trade Diversion; Variable Levy.

EUROPEAN COAL AND STEEL COMMUNITY (ECSC) — A common market in

coal and steel based on the 1951 Schuman Plan (named after Robert Schuman,
French foreign minister). Its original members included France, Italy, the Federal
Republic of Germany, Belgium, the Netherlands, and Luxembourg. ECSC member
states agreed to abolish tariffs, quotas, and currency restrictions affecting
intracommunity trade in coal, iron ore, and scrap metal. The ECSC subsequently
served as a model for the institutions of the European Community and now
constitutes part of the first pillar of the European Union. The ECSC will expire in
2002, 50 years after its entry into force. See also Customs Union; European
Community; European Union.

CONCESSION — A grant of a position, privilege, or right by a party to a negotiation

to induce the other party to yield an equivalent position, privilege, or right. In GATT
trade negotiations, a country normally made concessions in the form of reductions
in its tariff and nontariff import barriers, in exchange for reductions in the barriers
of other countries to its exports. A country's "schedule of concessions," accepted as
part of its obligations to other contracting parties, would become an integral part of
GATT under Article II of the General Agreement on Tariffs and Trade. GATT Article
II continues to govern the obligations of country members under the WTO, where it
is incorporated by reference into GATT 1994. See also Binding; Bound Rates;
Compensation; Conditional Most-Favored-Nation Treatment; Escape Clause;
General Agreement on Tariffs and Trade; Most-Favored-Nation Treatment;
Negotiations; Offer List; Principal Supplier; Reciprocity; Safeguards; Section 301;
Special 301; Super 301; Tariff; Tariff Schedules of the United States; World Trade
Organization.
BINDING CONCESSION— A provision in a trade agreement that no tariff rate
higher than the rate specified in the agreement will be imposed during the life of the
agreement. See also Bound Rates; Compensation; Concession; Tariff.

CONDITIONALITY — The set of conditions attached to the use of its resources by

the International Monetary Fund, involving undertakings and adjustment policies
that will restore a sustainable balance-of-payments position within a one- to three-
year period. See also Adjustment; Balance of Payments; International Monetary
Fund.

BRETTON WOODS CONFERENCE — A meeting of central bank economists and

other government officials, formally known as the United Nations Monetary and
Financial Conference, that took place in Bretton Woods, New Hampshire, in July
1944. The conference was convened to consider alternative proposals put forward
by British and American financial experts relating to international payments
problems, the economic reconstruction needs of Europe upon the conclusion of
World War II, and the need to ensure stable exchange rates and free convertibility
of currencies. The compromise solution negotiated at Bretton Woods led to the
establishment of an International Monetary Fund and an International Bank for
Reconstruction and Development (the World Bank). The presumed need for an
International Trade Organization was also informally considered at Bretton Woods.
See also General Agreement on Tariffs and Trade; International Monetary Fund;
World Bank.

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

(UNCTAD) — A subsidiary organ of the UN General Assembly that seeks to focus
international attention on economic measures that might accelerate Third World
development. Its first conference, UNCTAD-I, was convened in Geneva in 1964, and
sessions were held quadrennially up to 1976: UNCTAD-II, New Delhi, 1968;
UNCTAD-III, Santiago, 1972; and UNCTAD-IV, Nairobi, 1976. UNCTAD-V met in
Manila in 1979, UNCTAD-VI in Belgrade in 1983, UNCTAD-VII in Geneva in 1987,
UNCTAD VIII in Cartagena, Colombia, in 1992, and UNCTAD-IX in Midrand, South
Africa, in 1996. UNCTAD-X is scheduled for Thailand in 2000. The UNCTAD Trade
and Development Board, which exercises the powers of the conference between its
sessions, meets twice a year; the main UNCTAD committees — which include those
concerned with commodities, shipping, manufactures, invisibles, and financing
related to trade and the transfer of technology — meet several times between
sessions of the conference. Negotiations in UNCTAD take place principally between
Group B (developed countries) and the Group of 77 (developing countries), which
separately determine their own positions through intra-group discussions prior to
the negotiations. UNCTAD is supported by a permanent secretariat based in
Geneva. UNCTAD has been an executing agency for United Nations Development
Program technical assistance projects since 1968 and now administers such projects
as ports management, regional economic integration, the transfer of technology, the
improvement of customs procedures, and other fields related to its programs and
activities. As of 1999, UNCTAD had 188 member states. See also Common Fund;
Customs; Economic Cooperation Among Developing Countries; Economic
Development; Export Credit Guarantee Facility; Generalized System of Preferences;
Global System of Trade Preferences; Group B; Group D; Group of 77; Integrated
Program for Commodities; International Trade Center UNCTAD/GATT; Non-
Aligned Movement; North-South Trade; Restrictive Business Practices; United
Nations Development Program.

UNITED NATIONS CONFERENCE ON THE LEAST DEVELOPED COUNTRIES

— See Substantial New Program of Action.

PARIS CONFERENCE ON THE LEAST DEVELOPED COUNTRIES — See

Substantial New Program of Action.

MONETARY AND FINANCIAL CONFERENCE — See Bretton Woods Conference.

UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE — See

Bretton Woods Conference.

SHIPPING CONFERENCE — An alliance made up of a number of carriers that

provide service from point to point for a defined route, which is distributed based
upon market share.

COUNCIL FOR MUTUAL ECONOMIC ASSISTANCE (COMECON) — An

intergovernmental organization established in 1949 to coordinate the economies of
member states, consisting of the Soviet Union, Bulgaria, Czechoslovakia, the
German Democratic Republic (East Germany), Hungary, Mongolia, Poland,
Romania, Cuba, and Vietnam. The purpose of the council, according to its charter,
was to improve economic cooperation among participating countries and to
accelerate their economic and technological progress. This organization was
formally disbanded in June 1991. See also Group D.

CUSTOMS COOPERATION COUNCIL (CCC) — See Customs Harmonization;

Harmonized System.

COUNCIL OF THE EUROPEAN UNION — Usually referred to as the Council of

Ministers, one of the official institutions of the European Union. (It should not be
confused with the European Council of the European Union.) While the European
Commission is charged with proposing legislation, the Council of Ministers has the
power to adopt it, although in certain cases only with the approval of the European
Parliament. Depending on the matter at issue, the Council of Ministers must take
decisions either by qualified majority voting or by unanimity. The Council of
Ministers is made up of representatives — usually government ministers — from all
EU member states. As a result, the council is a forum in which EU member states
attempt to assert their interests. The Council of Ministers, which is based in Brussels,
Belgium, addresses the major areas of EU policy, including agriculture, economy,
environment, foreign affairs, finance, industry, and transport. See also European
Community; European Commission; European Council; European Parliament;
European Union.

COUNCIL OF MINISTERS — See Council of the European Union.

EUROPEAN COUNCIL — The heads of state or government of the EU member

states. (It should not be confused with the Council of Ministers of the European
Union.) While EU leaders met informally for a number of years, the European
Council was formalized as a result of entry into force of the Single European Act and
the Treaty on European Union. The European Council meets at least twice a year in
conjunction with the rotating presidency of the Council of the European Union. In
addition, the president of the European Commission attends and participates as a
full member of the European Council, which reviews and establishes broad
objectives for Community policy. In fact, the European Council has often provided
the EU with much needed impetus in developing policy initiatives and furthering
European integration. The Treaty on European Union gave the European Council
responsibility for the EU intergovernmental pillars of the Common Foreign and
Security Policy and Justice and Home Affairs. See also Council of the European
Union; European Commission; European Community; European Parliament;
European Union.

CONSULTATIONS — Formal discussions between two or more parties to an

agreement with respect to their rights under the agreement. Typically, consultations
are requested by a party that believes that its rights under an agreement have been
nullified or impaired and are the first — and often mandatory — step in dispute
settlement. If consultations are unsuccessful in resolving the dispute within a
specified time, the dispute normally is submitted to a panel for a ruling. The most
important multilateral agreements providing for consultations are the WTO's
Understanding on Rules and Procedures Governing the Settlement of Disputes and
GATT Articles XXII and XXIII. See also Article 23 (GATT Article XXIII); Balance-of-
Payments Consultations; Compensation; Dispute Settlement; Panel of Experts;
Understanding on Rules and Procedures Governing the Settlement of Disputes;
World Trade Organization.

BALANCE-OF-PAYMENTS CONSULTATIONS — Consultations in accordance

with Article XV of GATT, which requires coordination between the General
Agreement on Tariffs and Trade and the International Monetary Fund to ensure that
the trade and payments implications of any quantitative restrictions imposed for
balance-of-payments reasons are fully analyzed within the respective jurisdictions
of both organizations. Any contracting party that imposes such quantitative
restrictions for balance-of-payments reasons is expected to hold consultations with
other interested contracting parties. The framework agreement concluded during
the Tokyo Round provided that any other trade restrictive measures imposed for
balance-of-payments reasons should also be discussed in such consultations. See
also Consultations; Contracting Party; Exchange Controls; Framework Agreement;
General Agreement on Tariffs and Trade; International Monetary Fund; Prior
Deposits; Quantitative Restrictions; Tokyo Round.

CONSUMERS — Individuals or groups that use economic goods and services, thus
deriving utility from them. See also Consumer Goods; Utility.
CONSUMPTION — The purchase and utilization of goods or services for the
gratification of human desires or in the production of other goods or services. The
consumer may be an individual, a business firm, a public body, or other entity. See
also Consumers; Demand; Goods; Production; Services; Utility.

PACIFIC RIM — An informal, flexible term that generally has been regarded as a
reference to countries and economies bordering the Pacific Ocean. At a minimum,
the Pacific Rim includes Canada, Japan, the People's Republic of China, Taiwan, and
the United States. It may also include Australia, Brunei, Cambodia, Hong
Kong/Macau, Indonesia, Laos, North Korea, South Korea, Malaysia, New Zealand,
the Pacific Islands, the Philippines, Russia (or the Commonwealth of Independent
States), Singapore, Thailand, and Vietnam. As an evolutionary term, it also
sometimes includes Mexico, the countries of Central America, and the Pacific coast
countries of South America. See also Asia-Pacific Economic Cooperation (APEC).

TURNKEY CONTRACT — A compact under which a contractor assumes

responsibility to a client for constructing productive installations and ensuring that
they operate effectively before turning them over to the client. By centering
responsibility for the contributions of all participants in the project in his own hands,
the contractor is often able to arrange more favorable financing terms than the client
could. The responsibility of the contractor ends when he hands over the completed
installation to the client. See also Countertrade.

COUNTERPURCHASE CONTRACTS — See Countertrade.

EXCHANGE CONTROLS — The rationing of foreign currencies, bank drafts, and

other instruments for settling international financial obligations by countries
seeking to ameliorate acute balance-of-payments difficulties. When such measures
are imposed, importers must apply for prior authorization from the government to
obtain the foreign currency required to bring in designated amounts and types of
goods. Since such measures have the effect of restricting imports, they are
considered nontariff barriers to trade. See also Balance-of-Payments Consultations;
Currency; Nontariff Barriers; Specific Limitations on Trade.

FOREIGN EXCHANGE CONTROLS — See Exchange Controls.

HEALTH AND SANITARY CONTROLS — See Agreement on the Application of
Sanitary and Phytosanitary Measures; Customs and Administrative Entry
Procedures; Quarantine, Sanitary, and Health Laws and Regulations; Standards.

BERN CONVENTION — The International Union for the Protection of Literary and
Artistic Works, signed at Bern, Switzerland, on September 9, 1886, with additional
protocols and revisions signed in 1914, 1928, 1948, 1967, and 1971. The Bern
Convention is a major multinational treaty concerning the scope of copyright
protection to be afforded works prepared by foreign persons whose countries are
signatories. It provides copyright protection in the form of national treatment and
also requires member countries to provide certain minimum protections for
specified types of works. For instance, it requires that literary works be protected for
the life of the author plus 50 years and forbids imposition of formalities (for example,
a copyright notice) as a condition of protection. The other major copyright treaty,
the Universal Copyright Convention, is somewhat less protective of the rights of
authors. After decades of refusing to join, the United States became a signatory of
the Bern Convention in 1989. See also Agreement on Trade-Related Aspects of
Intellectual Property Rights; Commercial Counterfeiting; Copyright; Intellectual
Property; Knowledge-Based Industry; National Treatment; Property; Trademark;
Trafficking in Counterfeit Goods and Services; World Intellectual Property
Organization.

STOCKHOLM CONVENTION — See European Free Trade Association.

KYOTO CONVENTION — The 1973 International Convention on the Simplification

and Harmonization of Customs Procedures, whose goal is the development of
compatible national customs procedures in different countries as a means of
encouraging and facilitating international trade. See also Codes of Conduct;
Customs; Customs Classification; Customs Cooperation Council Nomenclature;
Customs Harmonization; Customs Union; Harmonization; Harmonized System;
Harmonized Tariff Schedule of the United States; Imports; Most-Favored-Nation
Treatment; Tariff; Tariff Schedules; Valuation; World Customs Organization; World
Trade Organization.
UNITED NATIONS CONVENTION ON CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS — See United Nations Commission on
International Trade Law.

LOMÉ CONVENTION — An agreement — originally signed in 1975 — through

which the European Community provides financial and technical assistance to
approximately 70 Associated Countries of Africa, the Caribbean, and the Pacific (the
ACP Countries), as well as tariff preferences for many of their products in European
markets. The ACP countries no longer grant reverse preferences, as they were
required to under earlier the Yaoundé Convention, as a condition for receiving EC
preferences. The Lomé Convention also created a mechanism known as STABEX,
which was designed to stabilize the export earnings of individual ACP countries
from selected commodities. Compensatory payments from the European
Community under STABEX are based on the amount by which a country's earnings
from exports of specified commodities fall below designated levels. The Lomé
Convention, which is renegotiated periodically, was last renegotiated in 1995. See
also ACP Countries; Commodity; Compensatory Finance; Developing Countries;
European Community; Managed Trade; Reverse Preferences.

YAOUNDÉ CONVENTION — See Lomé Convention.

INTERNATIONAL CONVENTION ON THE SIMPLIFICATION AND

HARMONIZATION OF CUSTOMS PROCEDURES — See Kyoto Convention.

UNIVERSAL COPYRIGHT CONVENTION — See Bern Convention.

WASSENAAR ARRANGEMENT — An agreement adopted by the United States

and 32 other countries in July 1996 as the successor to the Coordinating Committee
for Multilateral Export Controls (COCOM). The Wassenaar Arrangement on Export
Controls for Conventional Arms and Dual-Use Goods and Technologies established
a multilateral export control arrangement to enhance regional and international
security by promoting transparency and greater responsibility in transfers of
conventional arms and dual-use goods and technologies, thus preventing
destabilizing accumulations of such items. Participating states have committed to
exchange information on exports of dual-use goods and technologies to
nonparticipating states for the purposes of enhancing transparency and assisting in
developing common understandings of the risks associated with the transfer of
these items. See also Coordinating Committee for Multilateral Export Controls;
Embargo.

INTERNATIONAL ARRANGEMENT ON EXPORT CREDITS — An agreement

among 22 OECD governments that they will not lower interest rates for export
credits below specified levels or offer most tied-aid credits without informing other
OECD governments. The arrangement seeks to minimize subsidization of exports
through official export credits offered at less than market rates of interest and to curb
the use of tied-aid credits that distort trade patterns. It contains no enforcement
provisions, but procedures encouraging transparency in official export credit and
aid activities encourage compliance. See also Credit; Domestic Subsidy; Export
Subsidy; Interest; Organization for Economic Cooperation and Development;
Subsidy; Transparency.

MULTI-FIBER ARRANGEMENT REGARDING INTERNATIONAL TRADE IN

TEXTILES (MFA) — An internationally agreed derogation from GATT rules that
was in effect from 1974 until the end of the Uruguay Round in 1994. The MFA
succeeded the Long-Term Agreement on International Trade in Cotton Textiles
(LTA), which had been in effect since 1962. The objective of these agreements was to
reconcile the interests of textile-exporting and textile-importing countries by
permitting an orderly expansion of trade while avoiding market disruption.
Whereas the LTA applied only to cotton textiles, the MFA also applied to wool, man-
made (synthetic) fiber, and silk blend and vegetable fiber textiles and apparel
products. The MFA allowed an importing signatory country to apply quantitative
restrictions on textile imports when it considered such restrictions, even though
contrary to GATT rules, necessary to prevent market disruption. MFA rules
provided that quantitative restrictions should not reduce imports to levels below
those attained during the preceding year, and should, if continued, permit trade to
expand by specified percentages. Since an importing country could impose such
quotas unilaterally to restrict rapidly rising textiles imports, most important textile-
exporting countries considered it advantageous to enter into bilateral agreements
with the principal textile-importing countries. The MFA went into effect on January
1, 1974, was renewed in December 1977, in December 1981, in July 1986, and for the
last time, in July 1991. In 1995, the WTO Agreement on Textiles and Clothing (ATC)
began phasing out the global system of bilateral textile and apparel quotas permitted
by the LTA and, later, the MFA. Under the ATC, WTO member countries have
agreed to eliminate the MFA quotas in phases between July 1, 1995, and July 1, 2005.
At the end of the 10-year transition period, rules on textile trade will be fully
integrated into those of the World Trade Organization. All countries that are
signatories to the WTO Agreement are now subject to the ATC whether or not they
were signatories to the MFA. See also Agreement on Textiles and Clothing; Article
11 (GATT Article XI); Bilateral Trade Agreement; General Agreement on Tariffs and
Trade; Market Disruption; Quantitative Restrictions; Residual Restrictions; Sensitive
Products; Textiles; Tokyo Round; Uruguay Round; World Trade Organization.

STEEL VOLUNTARY RESTRAINT ARRANGEMENTS (VRAs) — Formal

agreements between the United States and the governments of 16 countries plus the
EC. Although the structure of the arrangements varied, exports to the United States
of both carbon and specialty steel products were restricted either to a specified quota
or to a percentage of U.S. import penetration, based on quarterly estimates of U.S.
domestic consumption. The VRA program was initiated for five years beginning
October 1, 1984, and was subsequently extended in September 1989 for two and one-
half more years. The last VRA program terminated March 31, 1992. See also Export
Quotas; Export Restraints; International Commodity Agreement; Multilateral
Agreement; Orderly Marketing Agreements; Sensitive Products; Voluntary
Restraint Agreements.

CONVERTIBILITY — A characteristic of a currency when it may be legally

exchanged by its holder for other currencies through banks in the issuing country.
See also Currency; International Monetary Fund.

ASIA-PACIFIC ECONOMIC COOPERATION (APEC) — A forum established as a

vehicle for multilateral cooperation among the market-oriented economies of the
Asia-Pacific region to better manage their growing interdependence and sustain
economic growth. Begun in 1989 as an informal grouping of 12 Asia-Pacific
economies (Australia, Brunei, Canada, Indonesia, Japan, South Korea, Malaysia,
New Zealand, Philippines, Singapore, Thailand, and the United States), APEC
admitted the People's Republic of China, Chinese Taipei, and Hong Kong in
November 1991, and Mexico and Papua New Guinea in November 1993. Chile
became a full APEC member in 1994 and Peru, Russia, and Vietnam joined in 1998.
APEC's annual meetings of foreign political leaders and economic ministers have
often served as catalysts for further cooperation and integration among APEC
member nations. The most important meetings of the group are the annual leaders
summits, though APEC meetings are held throughout the year in a variety of
spheres: economic, infrastructure, business, education, resources. The annual
leaders summits have set the direction for APEC's work program and continued
development into a multilateral regional economic forum. The 1993 Blake Island
Summit brought the political leaders of the APEC nations together for the first time
and, in combination with the 1994 Bogor Summit, firmly committed APEC members
to creating a free trade and investment zone in the APEC region by 2020. The
framework for achieving this goal was established by the 1995 Osaka Summit's
Action Agenda and the 1996 Manila Action Plan. The 1997 Vancouver Summit saw
the adoption of a plan of early voluntary sectoral liberalization (EVSL) in 15 market
sectors (nine by 1998), the modernizing and harmonizing of customs systems
throughout the region by 2002, and the creation of an APEC work program on
electronic commerce. In addition to its work on furthering regional cooperation and
development, APEC has focused closely on monitoring and ameliorating the Asian
economic crisis via a cooperative growth strategy including such elements as
expanded international financial assistance and further efforts toward corporate
sector restructuring and free and open trade and investment. Current focuses of
APEC include trade and investment liberalization and facilitation, strengthening
markets, and increasing support for APEC among the business community and
other groups. APEC is also working toward extending its EVSL agreement to non-
APEC members through the WTO. See also Codes of Conduct; Countertrade;
Customs; Customs Harmonization; Customs Union; Developed Countries;
Developing Countries; Economic Development; Electronic Commerce; Foreign
Investment; Free Trade; Free Trade Area Agreement; Harmonization; Liberalization;
Multilateral; Multilateral Agreement; Multilateral Aid; Pacific Rim; Seattle
Ministerial.

ECONOMIC COOPERATION AMONG DEVELOPING COUNTRIES (ECDC) —

Attempts by developing countries, especially the Group of 77, to increase South-
South trade and other economic relationships among themselves. See also Andean
Pact; Asia-Pacific Economic Cooperation; Developing Countries; Global System of
Trade Preferences; Group of 77; MERCOSUR; Newly Industrializing Countries;
Non-Aligned Movement; Preferences; South-South Trade; United Nations
Conference on Trade and Development.

COMMODITY CREDIT CORPORATION (CCC) — A public corporation attached

to the U.S. Department of Agriculture that provides financial and other services
associated with public price-support activities for certain agricultural commodities,
including loans, guarantees, purchases, sales, storage, transport, and export
programs. See also Export Enhancement Program.

INTERNATIONAL FINANCE CORPORATION (IFC) — An affiliate of the World

Bank established in 1956 to promote commercial enterprises in developing countries
through loans and equity financing comparable to those extended by investment
banks. It also facilitates the establishment of partnerships between private investors,
wherever they may be located, and capital markets in the Third World. It does not
require government guarantees. See also Capital Market; Developing Countries;
Market Economy; Multilateral Investment Guarantee Agency; Private Sector; World
Bank.

FOREIGN SALES CORPORATION (FSC) — An offshore corporation, authorized by

the Deficit Reduction Act of 1984, that is eligible for an exemption from U.S. federal
income taxes on part of its related income. An FSC earns export-related trade income
by selling or leasing export property or by supplying export-related services. The
exempt portion of the FSC's foreign trade income is also not taxed when it is
distributed to U.S. corporate shareholders. An FSC must be organized under the
laws of a country that has an exchange of information agreement with the United
States or in a qualifying U.S. possession. The FSC is the successor to the Domestic
International Sales Corporation (DISC), which was authorized by the U.S. Revenue
Act of 1971.

INTER-AMERICAN INVESTMENT CORPORATION (IIC) — See Inter-American

Development Bank.

MULTINATIONAL CORPORATION (MNC) — A large commercial organization

with affiliates operating in a number of different countries; sometimes referred to,
especially in the United Nations, as a transnational corporation (TNC). See also
Euro-Dollars; Subsidiary.

DOMESTIC INTERNATIONAL SALES CORPORATION (DISC) — See Foreign

Sales Corporation.
OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC) — A self-sustaining
U.S. government agency whose purpose is to promote economic growth in
developing countries by encouraging U.S. private investment in those nations
through two principal programs: (1) financing investment projects through direct
loans and/or loan guarantees and (2) insuring investment projects against a broad
range of risks, such as expropriation. These programs are backed by the full faith
and credit of the U.S. government. See also Additionality; Agency for International
Development; Bilateral Aid; Developing Countries; Official Development
Assistance; North-South Trade; Soft Loan; Transfer Payments.

TRANSNATIONAL CORPORATION — See Multinational Corporation.

BROKER — An intermediary between a buyer and a seller in a highly organized

market, as in the case of a stockbroker. See also Capital Market; Market; Security.

STOCKBROKER — See Broker.

COST AND FREIGHT — See CFR.

COST, INSURANCE, AND FREIGHT — See CIF.

CPT — An international commercial term (Incoterm), meaning "carriage paid to,"

that is used in international sales contracts to signify that a seller must clear for
export and pay the freight and all associated costs to transport goods to a destination
named by the buyer. While the seller is responsible for the risk of loss or damage
that might be incurred in conveying the goods to a carrier, such risk is transferred
to the buyer when the goods are delivered to the carrier. The seller is not obligated
to contract or to pay for insurance. See also CFR; CIF; CIP; DAF; DDP; DDU; DEQ;
DES; EXW; FAS; FCA; FOB; Incoterms.

TRADE CREATION — See Trade Diversion.

CREDIT — A promise of future payment, usually with interest, given in exchange
for present delivery of money, goods, or services. Interest is set at a rate that varies
with the risk involved and with the reputation as a risk that a particular borrower
enjoys with an actual or potential lender. See also Bond; Bridging Credit; Demand;
Interest; Mixed Credits; Purchasing Power; Risk.

BRIDGING CREDIT — Borrowing ahead of receiving payment for a sale, or short-

term credit to a customer pending his or her receipt of funds from another source.
See also Credit.

EXPORT CREDITS — See Export Credit Guarantee Facility; International

Arrangement on Export Credits; Mixed Credits; Subsidy.

MIXED CREDITS — A financing package that involves official government credit to

supplement normal commercial credit, thus enabling an exporter to deliver goods
to a buyer in another country on credit terms comparable to those of his competitors.
See also Competitive; Credit; Export Credit Guarantee Facility; Exports;
International Arrangement on Export Credits.

ASIAN ECONOMIC CRISIS — A series of economic events that resulted in the

severe devaluation of a number of Asian currencies and destabilization of a number
of Asian economies, most notably Thailand, Indonesia, South Korea, the Philippines,
and Malaysia. The Asian economic crisis caused shock waves throughout the global
economy. Many economists consider that one factor in the region's difficulties was
its economic success during the preceding decade, which featured robust economic
growth, increasing capital inflows, and macroeconomic management. The
substantial capital inflows into the region from the mid-1980s to the mid-1990s led
to rapid economic expansion that, in turn, resulted in increased investment and
increased local lending based on unrealistically optimistic expectations and
economic projections. Structural and policy distortions created fundamental
imbalances in these economies that led to the market corrections experienced during
the crisis. Some also believe that the macroeconomic difficulties facing the region
were not as severe as many regional and international investors feared and that the
crisis was exacerbated by the overreaction of market participants, who withdrew
investment monies from the region. By 1999, capital inflows into the region had
begun to increase again, and there were other signs that economies most directly
affected by the crisis were beginning to recover. See also Adjustment; Asia-Pacific
Economic Cooperation; Balance of Payments; Currency; Devaluation; Electronic
Commerce; International Monetary Fund; Market Economy; Market Forces; Money;
Newly Industrializing Countries.

CURRENT ACCOUNT — That portion of a country's balance of payments that

records current (as opposed to capital) transactions, including visible trade (exports
and imports), invisible trade (income and expenditures for services), profits earned
from foreign operations, interest, and transfer payments. See also Balance of
Payments; Capital Account; Invisible Trade; Transfer Payments; Visible Trade.

CAPITAL ACCOUNT — That portion of a country's balance of payments that

includes the inward and outward flow of money for investment and international
grants and loans (public and private). See also Balance of Payments; Current
Account.

TRADE-RELATED ENVIRONMENTAL ISSUES — Elements of environmental

policy with important implications for or impacts on the trading system. These can
include:

 Environmental standards, on either product or process and production

method (for example, pesticide residue standards on foodstuffs, energy
efficiency standards for office machines, clean air requirements for gasoline);
 The use of trade restrictions for environmental purposes (for example, trade
bans, reporting requirements, requirements to obtain prior consent of
importing government before export) taken either in the context of
multilateral environmental agreements or as national actions;
 Voluntary programs (eco-labeling).

This can also include issues regarding the relationship between environmental
policy and the rules of the trading system, and how they interact. For example, the
WTO agreements recognize the right of member countries to establish and enforce
their desired level of environmental, health, and safety protection, subject to the
general discipline that such measures not be a form of protectionism. See also
Agreement on the Application of Sanitary and Phytosanitary Measures; Agreement
on Technical Barriers to Trade; Codes of Conduct; Customs and Administrative
Entry Procedures; Discrimination; Licensing; Nontariff Barriers; Packaging,
Labeling, and Marking Regulations; Quarantine, Sanitary, and Health Laws and
Regulations; Standards.

SUMMITS OF THE AMERICAS — Meetings of 34 democratically elected heads of

state and government in the Western Hemisphere. In December 1994, at the
invitation of President Bill Clinton, the group met in Miami, Florida, for the First
Summit of the Americas. The leaders agreed on an agenda of economic integration
that includes the creation of the Free Trade Area of the Americas (FTAA); joint
efforts to strengthen democracy and the rule of law; cooperation against corruption,
narcotics trafficking, and terrorism; and raising the welfare of member populations
through better education, health care, and protection of the environment. The
leaders met in Santiago, Chile, at the Second Summit of the Americas in April 1998
and initiated the negotiating phase of the FTAA. Recognizing the need to seek
broad-ranging input into the FTAA process, the leaders established a committee of
government officials from all 34 countries to give interested members of the public
throughout the Western Hemisphere the means to have their views considered by
the trade ministers and trade negotiators as they construct the FTAA. Such a
committee is unprecedented in an international trade negotiation. The Santiago
Summit devoted much of its other work to education; democracy, justice, and
human rights; and eradication of poverty and discrimination. See also Customs
Area; Customs Union; Free Trade Area of the Americas; North American Free Trade
Agreement; U.S.-Canada Free Trade Agreement.

TARIFF QUOTA — Application of a reduced or zero duty rate for a specified

quantity of imported goods, or for goods imported during a given period. See also
Specific Limitations on Trade; Tariff.

TARIFF-RATE QUOTA — A quota that is determined on the basis of the applicable

tariff rate applied to imports. A predetermined amount of a good is allowed to enter
at a reduced or zero tariff rate. After the quota has been filled, all subsequent
shipments of that good during a specific period of time, such as a calendar year, are
assessed a higher import tariff, usually the normal most-favored-nation tariff. See
also Ad Valorem Tariff; Bound Rates; Compound Tariff; Conventional Tariff;
Effective Tariff Rate; General Tariff; Market; Most-Favored-Nation Treatment;
Nominal Tariff Rate; Specific Tariff; Tariff; Tariff Quota.
QUOTAS — See Quantitative Restrictions; Tariff Quota.

EXPORT QUOTAS — Specific restrictions or ceilings imposed by an exporting

country on the value or volume of certain exports to protect domestic producers and
consumers from temporary shortages of the goods affected or to bolster their prices
in world markets. Some international commodity agreements explicitly indicate
when producers should apply such restraints. Export quotas are also often applied
in orderly marketing agreements and voluntary restraint agreements, and to
promote domestic processing of raw materials in countries that produce them. See
also International Commodity Agreement; Orderly Marketing Agreements;
Organization of Petroleum Exporting Countries; Voluntary Restraint Agreements.

IMPORT QUOTAS — See Quantitative Restrictions.

GLOBAL QUOTAS — See Quantitative Restrictions.

SELECTIVE QUOTAS — See Quantitative Restrictions; Safeguards.

CXT — See Common External Tariff.

D
DAC — See Development Assistance Committee.

DAF — An international commercial term (Incoterm), meaning "delivered at

frontier," that is used in international sales contracts to signify that the seller must
clear for export, pay for the freight, and bear all costs and risks for the carriage of
goods to a named destination at a frontier but before the customs border of the
adjoining country. A DAF contract is used primarily when conveyance of the goods
is by rail or road. See also CFR; CIF; CIP; CPT; DDP; DDU; DEQ; DES; EXW; FAS;
FCA; FOB; Incoterms.
INJURY — See Countervailing Duties; Dumping; Escape Clause; Market Disruption;
Peril Point; Safeguards; U.S. International Trade Commission.

DDP — An international commercial term (Incoterm), meaning "delivered duty

paid," that is used in international sales contracts to signify the maximum obligation
(just as EXW signifies the minimum obligation) on the seller's part. The seller is
responsible for all risks and costs incurred to have goods delivered to a named
destination. This includes the obligation to contract and pay for freight and
transportation costs, unloading fees, export and import licensing fees, and other
taxes. The buyer is obligated only to assist in obtaining any import license or other
official authorization necessary to import the goods. See also CFR; CIF; CIP; CPT;
DAF; DDU; DEQ; DES; EXW; FAS; FCA; FOB; Incoterms.

DDU — An international commercial term (Incoterm), meaning "delivered duty

unpaid," that is used in international sales contracts to signify that the seller is
responsible for all risks and costs incurred to have goods delivered to a named
destination in the country of importation. This includes the obligation to contract
and pay for freight and transportation costs, export licensing fees, and other taxes
(unless specifically excluded in the contract). The buyer is responsible for obtaining
import licensing, carrying out the customs formalities necessary for the importation
of the goods, and paying any import duties on the goods. See also CFR; CIF; CIP;
CPT; DAF; DDP; DEQ; DES; EXW; FAS; FCA; FOB; Incoterms.

STATEMENT OF ADMINISTRATIVE ACTION (SAA) — See Uruguay Round

Agreements Act.

DECLARATION OF MADRID — See Inter-American Development Bank.

TOKYO DECLARATION — A statement signed in September 1973 by ministers of

105 countries that formally initiated the Tokyo Round of Multilateral Trade
Negotiations. The declaration stressed the intent of the participants to give special
priority to the trade interests of developing countries throughout the negotiations.
See also Framework Agreement; General Agreement on Tariffs and Trade; North-
South Trade; Special and Differential Treatment; Tokyo Round.
DEMAND — The quantity of an economic good that will be bought at a given price
at a particular time in a specific market. A demand schedule indicates the quantity
of an economic good that will be bought at all possible prices at a particular time in
the market. Demand in a market economy is strongly influenced by consumer
preference or the individual choices of many independent buyers, based upon their
perceptions of value for price. See also Goods; Market; Market Economy; Price;
Purchasing Power; Supply; Trade Diversion; Utility; Value.

PRIOR DEPOSITS — A deposit required by a government of a specified sum, in

domestic or foreign currency, usually corresponding to a certain percentage of the
value of the imported product. Such deposits are characteristically held without
interest, sometimes for many months — from the time an order is placed until after
the import transaction is completed — and hence represent a real cost to the
importer. The purpose of prior deposits is usually to discourage imports,
particularly for balance-of-payments reasons, and they generally are recognized as
nontariff barriers that impede trade. Prior deposits must usually be made at the time
an import license is granted. See also Licensing; Nontariff Barriers.

DEQ — An international commercial term (Incoterm), meaning "delivered ex quay,"

that is used in international sales contracts to signify that the seller is responsible for
all risks and costs incurred to have the goods delivered and unloaded at a named
port of destination. This includes the obligation to contract and pay for freight and
transportation costs by sea or inland waterway, unloading fees, export and import
licensing fees, and other taxes (unless specifically excluded in the contract). The
buyer is obligated only to assist in obtaining any import license or other official
authorization necessary to import the goods. See also CFR; CIF; CIP; CPT; DAF;
DDP; DDU; DES; EXW; FAS; FCA; FOB; Incoterms.

DUTY — See Tariff.

CUSTOMS DUTY — See Tariff.

RIGHT OF ESTABLISHMENT — A basic concept in bilateral investment treaties is

that one party to the agreement will permit nationals and companies of the other
party to establish (and maintain) investments on a nondiscriminatory
(national/most-favored-nation treatment) basis. A government may not place any
special obstacles, such as a screening process or equity limitations, in the way of a
foreign investor making an investment. The foreign investor need comply only with
the requirements placed on any other investor in that sector. See also Bilateral
Investment Treaty; Most-Favored-Nation Treatment; National Treatment; Trade-
Related Investment Measures.

SPECIFIC DUTY — See Specific Tariff.

COUNTERVAILING DUTIES (CVD) — Specific duties imposed on imports to offset

the benefits of subsidies to producers or exporters in the exporting country. The
executive branch of the U.S. government has been legally empowered since the
1890s to impose countervailing duties in amounts equal to any "bounties" or "grants"
reflected in products imported into the United States. Under U.S. law and the Tokyo
Round Agreement on Interpretation and Application of Articles VI, XVI, and XXIII
of the General Agreement on Tariffs and Trade, usually referred to as the Subsidies
Code, a wide range of practices are recognized as constituting subsidies that may be
offset through the imposition of countervailing duties. The United States, which was
a signatory to the 1979 Subsidies Code, modified U.S. trade law to conform to the
code. Thus, the Trade Agreements Act of 1979 amended the Tariff Act of 1930 to
establish rigorous procedures and deadlines for determining the existence of
subsidies in response to petitions filed by interested parties such as domestic
producers of competitive products and their workers. When the WTO Agreement
on Subsidies and Countervailing Measures was concluded as a part of the Uruguay
Round, the United States further modified U.S. trade law to conform to the new
agreement. The 1995 Uruguay Round Agreements Act introduced a definition of
subsidy, criteria for proving harm and determining whether the harm is caused by
the subsidy at issue, and a method for calculating its impact. In cases involving
subsidized products from countries that are signatories to the 1979 Subsidies Code,
from member countries of the WTO, or from countries that have negotiated
substantially equivalent obligations in a bilateral agreement with the United States,
U.S. law permits countervailing duties to be imposed only after the U.S.
International Trade Commission (USITC) determines that the imports are causing
or threatening to cause material injury to an industry in the United States.
Otherwise, where evidence of subsidization is found, countervailing duties may be
imposed without the necessity for a material injury investigation by the USITC. See
also Agreement on Subsidies and Countervailing Measures; Bounties; Codes of
Conduct; Domestic Subsidy; Export Subsidy; Illustrative List; Subsidy; Sunset
Review; Tokyo Round; Trade Agreements Act of 1979; U.S. International Trade
Commission; Uruguay Round; Uruguay Round Agreements Act; World Trade
Organization.

ANTIDUMPING DUTIES — See Agreement on Implementation of Article VI of

GATT 1994; Anti-Dumping Code; Dumping; Sunset Review.

COPYRIGHT — An exclusive right conferred by a government for a specified period

to the creator of literary or artistic works such as books, maps, articles, drawings,
charts, photographs, musical compositions, motion pictures, recordings, or
computer programs. The WTO Agreement on Trade-Related Aspects of Intellectual
Property Rights incorporates all substantive trade-related protection afforded under
the Bern Convention for the Protection of Literary and Artistic Works, clarifying that
computer programs are protected as literary works and compilations of databases
as intellectual creation. Protection extends for the duration of the life of the author
plus 70 years, and includes rights of translation, reproduction, public performance,
broadcasting, adaptation and arrangement, and rental. See also Agreement on
Trade-Related Aspects of Intellectual Property Rights; Bern Convention; General
Agreement on Tariffs and Trade; Intellectual Property; Knowledge-Based Industry;
National Treatment; Omnibus Trade and Competitiveness Act of 1988; Property;
Section 337; Special 301; Technology; Technology Transfer; Uruguay Round;
Uruguay Round Agreements Act; World Intellectual Property Organization; World
Trade Organization.

WORKERS' RIGHTS — Certain job conditions that workers are entitled to, such as
a safe and clean workplace or reasonable hours. The 1974 Trade Act, as amended by
the 1988 Trade Act, specifies acts, policies, and practices of a foreign government
that may be considered unreasonable because they deny such rights. These practices
can be actionable under Section 301 of the Trade Act of 1974 if they also burden or
restrict U.S. commerce. See also Core Labor Standards; Trade Act of 1974; Section
301; Trade Act of 1988.

SPECIAL DRAWING RIGHTS (SDRs) — A supplemental monetary reserve asset

created in 1969 by the International Monetary Fund (IMF). SDRs are available to
governments through the IMF and may be used in transactions between the IMF
and member governments. IMF member countries have agreed to regard SDRs as
complementary to gold and reserve currencies in settling their international
accounts. The unit value of an SDR reflects the foreign exchange value of a "basket"
of currencies of several major trading countries (the U.S. dollar, the German mark,
the French franc, the Japanese yen, and the British pound). The SDR has become the
unit of account used by the IMF, and several national currencies are pegged to it.
Some commercial banks accept deposits denominated in SDRs. See also Currency;
International Monetary Fund; Reserve Currency.

DES — An international commercial term (Incoterm), meaning "delivered ex ship,"

that is used in international sales contracts to signify that the seller must clear for
export and must contract and pay for delivery of goods by sea or inland waterway
transport to a named port of destination, but not for unloading. The seller assumes
risks and costs up to arrival at the named destination, at which time the buyer, upon
taking delivery of the goods, assumes all risks and responsibilities for the unloading
and clearance of the goods. See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ;
EXW; FAS; FCA; FOB; Incoterms.

ECONOMIC DEVELOPMENT — The process of growth in total and per capita

income, especially in developing countries, accompanied by increased
infrastructure, more industrial activity, improved agricultural practices, migration
of labor from rural to urban industrial areas, rising literacy, broadened employment
opportunities, and gradually diminishing reliance on official development
assistance. See also ACP Countries; Agency for International Development; Bilateral
Aid; Caribbean Basin Initiative; Developed Countries; Developing Countries;
Development Assistance Committee; Domestic System of Production; Economic
Cooperation Among Developing Countries; Enabling Clause; Enterprise for the
Americas Initiative; Framework Agreement; General Agreement on Tariffs and
Trade; Generalized System of Preferences; Global System of Trade Preferences;
Graduation; Group B; Group D; Group of 7; Group of 77; Industrial Revolution;
Infrastructure; Inter-American Development Bank; International Trade Center
UNCTAD/WTO; Least Developed Countries; Lomé Convention; Market Economy;
Newly Industrializing Countries; North-South Trade; Official Development
Assistance; Paris Club; Part IV of the GATT; Production; Public Law 480;
Reciprocity; Reverse Preferences; Soft Loan; South-South Trade; Special and
Differential Treatment; Structural Change; Substantial New Program of Action;
Textiles; Transfer Payments; Tropical Products; United Nations Conference on
Trade and Development; United Nations Development Program; Williamsburg
Summit; World Bank.
TECHNOLOGICAL DEVELOPMENT — The acquisition by a country's nationals of
the knowledge, skills, and organizational ability that enable them to produce goods
and services more efficiently than they were able to prior to such acquisition. See
also Technology.

TRADE DIVERSION — A shift in the pattern of origin of a country's imports,

resulting from changes in trade policies or practices, which may or may not involve
change in the overall volume or composition of the imports involved. Trade creation
results when increased economic activity generates a larger total demand for
imports. The establishment of a customs union causes participating countries to
import goods from other countries in the union in place of traditional imports from
countries outside the union; at the same time, however, greater economic efficiency
may increase the total level of imports into the countries comprising the union.
Trade theorists say the customs union will be beneficial to outside suppliers as well
as participating countries if the trade creation resulting from the customs union
exceeds the trade diversion, because this would entail a more efficient allocation of
productive resources. See also Customs Union; Demand; Efficiency; Imports;
Structural Change; Welfare.

DEVALUATION — The lowering of the value of a national currency in terms of the

currencies of other nations. Devaluation tends to reduce domestic demand for
imports in a country by raising their prices in terms of the devalued currency and to
raise foreign demand for the country's exports by reducing their prices in terms of
foreign currencies. Devaluation can therefore help to correct a balance-of-payments
deficit and sometimes provide a short-term basis for economic adjustment of a
national economy. See also Adjustment; Beggar-Thy-Neighbor Policy; Balance of
Payments; Currency.

COMPETITIVE DEVALUATION — See Beggar-Thy-Neighbor Policy.

DRAWBACK — Import duties or taxes repaid by a government, in whole or in part,

when the imported goods are re-exported or used in the manufacture of exported
goods. See also Re-exports.
TRANSATLANTIC BUSINESS DIALOGUE (TABD) — A government-business
initiative that aims to facilitate closer economic relations between the European
Union and the United States by lowering trade and investment barriers that impede
competitiveness on both sides of the Atlantic. The U.S. Department of Commerce
acts as the lead agency for the U.S. government, and the European Commission acts
as the lead for the European Union. The goal of the TABD is to focus governments'
attention on issues for which consensus exists within the transatlantic business
community and identify specific actions required from governments to facilitate the
movement of goods and services. See also European Commission; European
Community; European Union; Nontariff Barriers.

MONEY — Any medium of exchange that is widely accepted in payment for goods
and services or to settle debts. Money also serves as a standard of value for
measuring the relative worth of different goods and services and as a means of
storing wealth. The number of units of money required to buy a commodity is its
price. Without money, trade would be reduced to barter. The "real" value of money
declines during inflationary periods. See also Barter; Capital; Credit; Currency;
Inflation; Medium of Exchange; Price; Purchasing Power; Value; Welfare.

DISC — See Foreign Sales Corporation.

DISCRIMINATION — Inequality of treatment accorded imports from different

trading partners, as through preferential tariff rates for imports from particular
countries or trade restrictions that apply to the exports of certain countries but not
to similar goods from other countries. See also Government Procurement Policies
and Practices; Most-Favored-Nation Treatment; Preferences; Quarantine, Sanitary,
and Health Laws and Regulations; Tariff.

DISTRIBUTION — The dissemination of goods and services in a market through the

ordinary channels of trade. See also Export Promotion; Market; Sales Tax;
Technology; Trade Fair.

FOREIGN EXCHANGE — Claims on a foreign country held in the form of the

currency of that country or interest-bearing bonds. See also Currency; Money.
COMMERCIAL PAPER — Short-term financial instruments that can be bought and
sold, particularly promissory notes that call for the payment of specified amounts of
money at a given time. See also Bond; Capital Market; Loan; Security.

GRANTS — See Bounties.

DUMPING — Under U.S. law, sales of merchandise exported to the United States at
"less than fair value," when such sales materially injure or threaten material injury
to producers of like merchandise in the United States. The determination that sales
have been made at less than fair value involves a comparison of "normal value" —
the price at which the merchandise is sold within the exporting country or to third
countries (or a "constructed value") — and the "U.S. price" — the price at which the
merchandise is sold in the U.S. market. A statutory cost-of-production provision
requires that dumping determinations ignore sales in the home market of the
exporting country or in third-country markets that are made below cost – that is, at
prices that are too low to permit recovery of all costs within a reasonable period of
time in the normal course of trade. Dumping is recognized by the WTO rules as a
potentially unfair trade practice that can disrupt markets and injure producers of
competitive products in the importing country. In the WTO Agreement on
Implementation of Article VI of GATT 1994, WTO members created more detailed
rules governing their ability to take action against imports sold at an unfairly
discounted export price. Members agreed to establish procedures for termination
under certain conditions of antidumping duty orders after five years (which resulted
in a corresponding change in U.S. law) and to raise the de minimis rule (the lowest
rate at which a dumping margin can be determined) to 2 percent (U.S. law, which
had previously defined it at 0.5 percent, was modified accordingly). The agreement
also established a new Committee on Anti-Dumping Practices, which countries
must promptly notify of all dumping actions. Economists disagree as to the harmful
effects of dumping. Some consider the practice of dumping to establish a toehold in
a new market to be an economically rational commercial practice. See also
Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code;
Dual Pricing; International Trade Administration; Market Disruption; Sunset
Review; Trigger Price Mechanism; Uruguay Round; Uruguay Round Agreements
Act; U.S. International Trade Commission; World Trade Organization.

DOWNSTREAM DUMPING — Also known as "input dumping," the practice of

exporting an end-product containing an input that has been purchased at less than
normal value. U.S. antidumping law contains provisions for monitoring
downstream dumping where the input is already the subject of an antidumping
duty order. If monitoring reveals that imports of the end-product increase as a result
of the diversion of the input product into the end-product, an antidumping
investigation of the end-product may be initiated. See also Agreement on
Implementation of Article VI of GATT 1994; Anti-Dumping Code; Dumping.

INPUT DUMPING — See Downstream Dumping.

THIRD-COUNTRY DUMPING — A situation in which the exports of a product

from one country are being injured or threatened with injury as a result of exports
of the same product from a second country into a third country at less than fair value.
The Omnibus Trade and Competitiveness Act of 1988 established procedures for
U.S. industries to petition the U.S. Trade Representative to request a foreign
government that is a signatory to the GATT Anti-Dumping Code to initiate an
antidumping investigation on behalf of a U.S. industry that claims it is being injured
by dumping in that country's market. See also Anti-Dumping Code; Dumping;
Market Disruption; Omnibus Trade and Competitiveness Act of 1988; United States
Trade Representative.

E
EAI — See Enterprise for the Americas Initiative.

EBRD — See European Bank.

EC — See European Community.

ECGF — See Export Credit Guarantee Facility.

MARKET ECONOMY — The national economy of a country that relies on market
forces to determine levels of production, consumption, investment, and savings
without government intervention. See also Demand; Market Forces; Nonmarket
Economy; Price; Private Sector; Profit; Supply.

NONMARKET ECONOMY (NME) — A national economy in which the

government seeks to determine economic activity largely through a mechanism of
central planning, as in the former Soviet Union, in contrast to a market economy,
which depends heavily upon market forces to allocate productive resources. In a
nonmarket economy, production targets, prices, costs, investment allocations, raw
materials, labor, international trade, and most other economic aggregates are
manipulated within a national economic plan drawn up by a central planning
authority. Hence, the public sector makes the major decisions affecting demand and
supply within the national economy. See also Demand; Group D; Industrial Policy;
Market Economy; Market Forces; Private Sector; Public Sector; Supply.

NEWLY INDUSTRIALIZING ECONOMIES (NIEs) — See Newly Industrializing

Countries.

MIXED ECONOMIES — See Nonmarket Economy; State Trading Companies.

SOCIALIST ECONOMIES — See Nonmarket Economy.

ECSC — See European Coal and Steel Community.

EEC — See European Community.

EEP — See Export Enhancement Program.

EFFICIENCY — Narrowly, the input-output relationship between the quantity of

materials used and the quantity of goods produced. More broadly, economic
efficiency implies the best result (taking quality as well as quantity into account) in
the production or distribution of goods and services at the least cost. Most
economists believe the reduction of barriers to trade contributes to international
economic efficiency by encouraging countries to specialize in the production of
those goods and services in which they have a comparative advantage, thus making
the world's most competitive goods and services available to consumers outside the
area that produces them. See also Comparative Advantage; Competitive;
Entrepreneur; Textiles; Trade Diversion; Welfare.

EFTA — See European Free Trade Association.

ELASTICITY — See Price Elasticity of Demand; Price Elasticity of Supply.

PRICE ELASTICITY OF DEMAND — The percentage change in demand for a given

product likely to result if its price changes by 1 percent. A slight lowering or raising
of a tariff will have a larger effect on the volume of imports of a product with a high
price elasticity of demand than on a product with a low price elasticity of demand.
See also Demand; Price; Price Elasticity of Supply; Purchasing Power.

PRICE ELASTICITY OF SUPPLY — The percentage change in supply for a given

product likely to result if its price changes by 1 percent. See also Price; Price Elasticity
of Demand; Supply.

EMBARGO — In international trade, government actions limiting or prohibiting

imports and/or exports of goods and/or services from or to a country. Such
limitations may be applied by the embargoing country against its own nationals,
such as the United States’ embargo against trade from Cuba, or in concert with other
countries against a third country, such as the 1990 United Nations embargo against
trade in any form with Iraq or the earlier UN embargo against trade with South
Africa. Embargoes may also be applied just against trade in certain products
regardless of origin, such as the ban on trade in ivory. See also Boycott; Helms-
Burton Act; International Emergency Economic Powers Act; Supply Access.

EXPORT EMBARGO — See Embargo; Supply Access.

LESS-THAN-LOAD SHIPMENTS (LTL) — A shipment that has not been loaded to
capacity for the particular container type or shipping method.

EQUITY JOINT VENTURE — See Joint Venture.

JOINT VENTURE — A form of business partnership involving joint management

and the sharing of risks and profits as between enterprises based in different
countries. If joint ownership of capital is involved, the partnership is known as an
equity joint venture. See also Capital; Equity; Risk.

ENTREPRENEUR — A person who assumes responsibility for organization,

management, and risk in the production of goods and services. In theory, his or her
enterprise should make a profit if it is economically efficient and should incur losses
if it is not. See also Demand; Efficiency; Profit; Risk.

LARGE AIRCRAFT SECTOR UNDERSTANDING (LASU) — A 1985 agreement

between the United States and the European Community providing for minimum
terms and conditions for loans or loan guarantees for the support by government
export-credit agencies of the export of aircraft of 70 seats or greater (or the equivalent
in freight) and their engines and spare components. This agreement was later
broadened to cover all size aircraft and supersedes previously existing "Standstill"
and "Common Line" understandings covering government export-financing
support for such articles. The understanding has since been incorporated as a
sectoral annex into the OECD Arrangement on Guidelines for Officially Supported
Export Credits. See also Aircraft Agreement; Domestic Subsidy; European
Community; European Union; Export Subsidy; Organization for Economic
Cooperation and Development; Market Access.

UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE

SETTLEMENT OF DISPUTES (DSU) — A WTO agreement that provides a
mechanism for settling disputes. The DSU sets forth actions WTO members may
take in response to nullification or impairment of their rights under any of the WTO
agreements. The DSU takes a four-step approach to the settlement of disputes:
consultation and conciliation, establishment of dispute panels, adoption of panel
decisions, and follow-up surveillance. The first step is consultations between or
among the parties concerned. The DSU provides rules for both normal and urgent
consultations. If consultations are unsuccessful in resolving the dispute within
established time limits, the WTO member that requested consultations may request
the establishment of a panel to review the facts and recommend compensation or
other appropriate action. A panel's rulings may be appealed to an independent
appellate body established by the DSU. The DSU is designed to make dispute
settlement more secure and predictable than under Articles XXII and XXIII of the
GATT, where there were no fixed timetables, rulings were easier to block, and cases
could drag on for long periods. The DSU introduced a more structured process with
fixed deadlines and more clearly defined procedures. Under the GATT procedures,
rulings could be adopted only by a consensus of the contracting parties, meaning
that a single objection — including the objection of a party to the dispute — could
block the ruling. Under the DSU, rulings are automatically adopted unless there is a
consensus to reject a ruling. This means that a member country that wants to block
a ruling must persuade all other WTO members (including its adversary in the case)
to adopt its view. By reducing the scope for unilateral actions, the DSU is intended
to guarantee fair trade for less powerful countries. A WTO member is also expected
to hold consultations with other interested members to discuss any trade restrictive
measures it imposes for balance-of-payments reasons. The Dispute Settlement Body
also monitors the implementation of the rulings and recommendations, and has the
power to authorize retaliation when a country does not comply with a panel ruling.
See also Arbitration; Article 23 (GATT Article XXIII); Consultations; Dispute
Settlement; Framework Agreement; Panel of Experts; Uruguay Round.

UNDERSTANDING ON NOTIFICATION, CONSULTATION, DISPUTE

SETTLEMENT, AND SURVEILLANCE — See Framework Agreement.

EQUITY — Fairness, justice. Also, the value of property beyond the total amount
owed on it. See also Direct Tax.

EQUILIBRIUM — A state in which economic forces that are likely to cause change
in opposing directions are in perfect balance, so that change is unlikely. A market is
in equilibrium if the quantity of a product that consumers will buy at the prevailing
price exactly matches the amount suppliers will sell at that price. See also Demand;
Market; Market Economy; Market Forces; Price; Supply.
EQUIVALENCE OF ADVANTAGES — See Reciprocity.

AD VALOREM EQUIVALENT — The duty collected under a specific tariff or a

compound tariff expressed as a percentage of the value of the imported item. Since
a specific tariff is calculated on the basis of units (of volume or weight), rather than
value, and since prices can change over time, the ad valorem equivalent could differ
when calculated for different time periods. See also Ad Valorem Tariff; Compound
Tariff; Specific Tariff.

ERs — See Export Restraints.

ESCALATION — See Tariff Escalation.

TARIFF ESCALATION — A situation in which tariffs on raw materials are

nonexistent or relatively low, tariffs on semi-processed goods are moderate, and
tariffs on manufactured goods are relatively high. Such escalation — which exists in
the tariff schedules of many developed countries — amounts to greater protection
of the manufacturing processes involved than is implied by the actual tariff rate and
may therefore have the effect of discouraging the development of production
facilities in developing countries. See also Effective Tariff Rate; Primary Commodity;
Production; Protection; Tariff; Tariff Schedules.

ESP — See Constructed Export Price.

SPECIAL 301 — A statute that requires the U.S. Trade Representative to identify, on
an annual basis, those foreign countries that deny adequate and effective protection
of intellectual property rights or fair and equitable market access for Americans
relying on intellectual property protection. Section 182 of the Trade Act of 1974,
added by section 1303 of the Omnibus Trade and Competitiveness Act of 1988, is
intended to present a comprehensive approach to intellectual property and market
access and to enhance the administration's ability to negotiate improvements in
foreign intellectual property regimes through bilateral and/or multilateral
initiatives. On the basis of the USTR’s review, countries not making significant
progress or not entering into good faith negotiations may be placed in one of three
categories — Priority Foreign Country; Priority Watch List; and Watch List. Priority
Foreign Countries are subject to investigation under Section 301 conducted on an
accelerated time frame. In addition, USTR makes "other observations" about the
situation in certain counties, including noting growing concern about piracy,
highlighting recent developments, or identifying expectations for further progress,
where this is appropriate. See also Agreement on Trade-Related Aspects of
Intellectual Property Rights; Commercial Counterfeiting; Concession; Copyright;
Intellectual Property; Knowledge-Based Industry; National Trade Estimate Report;
National Treatment; Omnibus Trade and Competitiveness Act of 1988; Patent;
Priority Foreign Country; Priority Watch List; Process Patent; Property; Section 301;
Section 337; Super 301; Technology; Technology Transfer; Trade Act of 1974;
Trademark; Trafficking in Counterfeit Goods and Services; Uruguay Round;
Uruguay Round Agreements Act; Watch List; World Intellectual Property
Organization; World Trade Organization.

PRICE STABILIZATION — See Buffer Stocks; Managed Trade.

ASSOCIATED STATES — See ACP Countries; European Community; Lomé

Convention.

EU — See European Union.

EURATOM — See European Community.

EURO — The common currency of those European Union countries that have
elected to participate in the third stage of economic and monetary union. The euro
was launched on January 1, 1999, with 11 participating countries (Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and
Spain) converting their previous currencies at an irrevocably fixed conversion rate.
The geographic area of the participating countries is popularly referred to as the
"Euro Zone." The euro replaces the ECU (European currency unit) as the unit of
account for the European Union. Existing national notes and coins will continue to
circulate until July 1, 2002. Euro notes and coins will begin to circulate on January 1,
2002. See also European Currency Unit; European Central Bank; European
Community; European System of Central Banks; European Union.
EURO-BONDS — See Euro-Dollars.

EURO-DOLLARS — Claims for U.S. dollars held against banking institutions

outside the United States. The claims arise when, through the purchase of bills of
exchange or similar transactions, a foreign bank credits a dollar deposit account.
Such deposit accounts (euro-dollars) are extensively used outside the United States
for financial transactions such as short-term loans or the purchase of dollar bonds
called euro-bonds, which are sometimes issued by U.S. companies to finance their
operations, especially those outside the United States. See also Bill; Broker; Capital
Market; Commercial Paper; Convertibility; Currency; Exchange Rate; Loan; Market;
Medium of Exchange; Money; Multinational Corporation; Security.

EURO-CURRENCY — See Euro-Dollars.

APPRAISAL — See Valuation.

SURPLUS — The amount of a commodity that cannot be absorbed in a given market

at the existing price. See also Demand; Market; Market Forces; Public Law 480;
Supply.

EXCEPTIONS — See Generalized System of Preferences; Linear Reduction of

Tariffs.

EXIMBANK — See Export-Import Bank of the United States.

BUFFER STOCKS — Commodity stockpiles managed in such a way as to moderate

price fluctuations. Goods may be sold from a stockpile when prices reach or
approach predetermined ceiling prices, and they may be purchased for the stockpile
when prices reach or approach predetermined floor levels. Rubber and cocoa are
among the commodities considered most likely to benefit from buffer stocks, and
international commodity agreements exist for both of these products. See also
Commodity; Common Fund; International Commodity Agreement; Strategic
Stockpiles.

EXPORTS — Goods and services produced in one country and sold in other
countries in exchange for goods and services, gold, foreign exchange, or settlement
of debt. Countries devote their domestic resources to exports because they can
obtain more goods and services with the international exchange they earn from the
exports than they would from devoting the same resources to the domestic
production of goods and services. See also Comparative Advantage; Export
Promotion; Ministry of International Trade and Industry; U.S. Foreign and
Commercial Service.

MERCHANDISE EXPORTS AND IMPORTS — See Balance of Trade; Current

Account.

EXPOSURE — See Reinsurance.

EXW — An international commercial term (Incoterm), meaning "ex-works," that is

used in international sales contracts to signify a seller's obligation to make the goods
available to a buyer only at the seller's premises (that is, works, factory, warehouse,
and the like). Thus, the seller is not responsible for loading, shipping, export
clearance, etc. unless otherwise agreed. All costs, risks, and obligations incurred
from moving the goods from the seller's premises to the buyer's destination are
borne by the buyer. See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ; DES; FAS;
FCA; FOB; Incoterms.

F
FACTORS OF PRODUCTION — All inputs — materials, labor, capital goods, and
capital — necessary to produce a product. "Materials" refers to non-manmade
materials, including raw materials, trees, energy, and land. "Labor" includes all
forms of human productive effort. "Capital goods" represents manmade inputs, such
as machines, equipment, and buildings. "Capital" is the money used to purchase
other inputs, as well as interest costs. See also Capital; Capital Goods; Comparative
Advantage; Infrastructure.

CONSULAR INVOICE — See Consular Formalities and Documentation; Customs

and Administrative Entry Procedures.

COMMERCIAL COUNTERFEITING — The production or marketing of goods with

the intent of defrauding the purchaser by falsely conveying, directly or indirectly,
that the goods are produced by a known and reputable manufacturer. Counterfeit
goods are usually distinguished from bogus goods in that, in addition to replicating
the legitimate good, they bear a forged trademark. The WTO Agreement on Trade-
Related Aspects of Intellectual Property Rights includes provisions to discipline
counterfeiting. See also Agreement on Trade-Related Aspects of Intellectual
Property Rights; General Agreement on Tariffs and Trade; Intellectual Property;
Knowledge-Based Industry; Property; Trademark; Section 337; Special 301;
Trafficking in Counterfeit Goods and Services; Uruguay Round; Uruguay Round
Agreements Act; World Intellectual Property Organization; World Trade
Organization.

FARA — See Foreign Agents Registration Act.

FAS — An international commercial term (Incoterm), meaning "free alongside ship,"

that is used in sales contracts to signify a seller's obligation to pay the costs and
assume all risks for transporting goods from his or her place of business to the point
of embarkation where a vessel or plane selected by the buyer will accept the goods.
In trade statistics, "FAS value" means that the import or export figures are calculated
on this basis, regardless of the nature of individual transactions reflected in the
statistics. See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FCA;
FOB; Incoterms.

FCA — An international commercial term (Incoterm), meaning "free carrier," that is

used in international sales contracts to signify that a seller must deliver goods sold,
cleared for export, to a carrier or freight forwarder specified by the buyer. The seller
has no obligation with respect to import licensing or insurance. See also CFR; CIF;
CIP; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FAS; FOB; Incoterms.
FCN — See Freedom, Commerce, and Navigation Treaty.

COMMONWEALTH OF INDEPENDENT STATES (CIS) — A political group

comprising the following independent nations formerly a part of the Soviet Union:
Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia,
Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.

FAIR — See Trade Fair.

TRADE FAIR — A market or trade exhibition, usually arranged under public or

semi-public auspices, at which manufacturers and traders display their products to
stimulate sales. Trade fairs were particularly popular in Europe during the Middle
Ages, when they provided important large-scale markets. Since World War II,
general trade fairs have served chiefly as international exhibitions of wares rather
than as markets. Specialized trade fairs have played an important and increasing
role in recent years as meeting places for buyers and sellers of specialized
merchandise. See also Demand; Distribution; Export Promotion; Market; Supply.

CUSTOMS BOND — A bond that, in certain circumstances, importers must post to

effect the entry of imported goods. A customs bond usually must be guaranteed by
an approved surety. The bond acts as a security in order to ensure the collection of
duties and taxes owed on imports and to facilitate compliance with other
importation requirements. Customs bonds fall into three general categories: single
entry bonds, continuous bonds, and carnets. See also ATA Carnet; Bonded Goods;
Bonded Warehouse; Customs Classification; Customs and Administrative Entry
Procedures; Imports; Liquidation; Port of Entry; Tariff.

MAN-MADE FIBERS — See Multi-Fiber Arrangement Regarding International

Trade in Textiles; Sensitive Products; Textiles.

HARD FIBERS — Sisal, abaca, and coir. See also Integrated Program for
Commodities.
COMPENSATORY FINANCE — A loan or transfer of financial resources on
concessional terms to a country when its export receipts — either total receipts from
merchandise exports or receipts from a component of total exports, such as an
individual commodity or a stated group of commodities — fall below a
predetermined level. The loan, to be repaid according to a previously agreed
formula, is intended to stabilize the country's export receipts over an indicated
period. Compensatory arrangements exist under the International Monetary Fund
and the Lomé Convention. See also Commodity; International Monetary Fund;
Lomé Convention.

FMV — See Normal Value.

FOB — An international commercial term (Incoterm), meaning "free on board," used

in international sales contracts. In an FOB contract, a buyer and a seller agree on a
designated FOB point. The seller assumes the cost of having goods packaged and
ready for shipment from the FOB point, whether this is his/her own place of
business or some intermediate point. The buyer assumes the costs and risks from
the FOB point, including inland transportation costs and risks in the exporting
country, as well as all subsequent transportation costs, including the costs of loading
the merchandise on a vessel. If the contract stipulates "FOB vessel," the seller bears
all transportation costs to the vessel named by the buyer, as well as the costs of
loading the goods on that vessel. The same principle applies to the abbreviations
"FOR" ("free on rail") and "FOT" ("free on truck"). See also CFR; CIF; CIP; CPT; DAF;
DDP; DDU; DEQ; DES; EXW; FAS; FCA; Incoterms.

EXPORT PROMOTION — Public or private sector support for foreign sales through
such activities as trade missions and trade fairs, based on available market
information and analysis. See also Common Fund; Competitive; Distribution;
International Commodity Agreement; International Trade Center UNCTAD/WTO;
Market; Ministry of International Trade and Industry; Supply; Trade Fair; Trade
Mission; U.S. Foreign and Commercial Service.

COMMON FUND — An international institution designed as the centerpiece of the

UNCTAD Integrated Program for Commodities. Its first account (sometimes called
its "first window" and financed from mandatory contributions of member
governments) provides funds to help finance buffer stocks maintained under
international commodity agreements to stabilize commodity prices. Its second
account (sometimes called its "second window" and largely financed by voluntary
contributions) supports research and development and export promotion for
selected commodities. See also Buffer Stocks; International Commodity Agreement;
United Nations Conference on Trade and Development.

INTERNATIONAL MONETARY FUND (IMF) — An international financial

institution proposed at the 1944 Bretton Woods Conference and established in 1946
that seeks to stabilize the international monetary system as a basis for the orderly
expansion of international trade. Specifically, the IMF monitors exchange rate
policies of member countries, lends them foreign exchange resources to support
their adjustment policies when they experience balance-of-payments difficulties,
and provides them financial assistance through a special "compensatory financing
facility" when they experience temporary shortfalls in commodity export earnings.
See also Adjustments; Balance-of-Payments Consultations; Bretton Woods
Conference; Compensatory Finance; Conditionality; Convertibility; Exchange Rate;
Special Drawing Rights.

MULTILATERAL INVESTMENT FUND (MIF) — A special fund administered by

the Inter-American Development Bank that was established in 1993 to accelerate
private sector development and help improve the climate for private investment in
Latin America and the Caribbean. Approved projects have focused on strengthening
the policy and regulatory framework for the private sector, increasing worker skills
and mobility, broadening the participation of micro and small enterprises, and
demonstrating the role of equity as a development tool. See also Additionality;
Bilateral Aid; Bilateral Investment Treaty; Developing Countries; Direct Investment;
Economic Development; Foreign Investment; Industrial Policy; Inter-American
Development Bank; Least Developed Countries; Multilateral Aid; Newly
Industrializing Countries; Non-Aligned Movement; North-South Trade; Official
Development Assistance; Soft Loan; South-South Trade.

FOR — See FOB.

CONSULAR FORMALITIES AND DOCUMENTATION — Certain documents or

procedures required by some countries before their customs authorities will permit
goods produced in other countries to enter their markets, such as special invoices
approved by a consul or another official of the importing country. These procedures
impede trade, particularly when fees are charged for the authorizations. The number
of countries that apply consular formalities has declined in recent years, and most
countries that still apply them are developing countries. See also ATA Carnet; Codes
of Conduct; Consular Invoice; Customs; Customs and Administrative Entry
Procedures; Customs Classification; Free Zone; Imports; Licensing; Liquidation;
Nontariff Barriers; Port of Entry; Quarantine, Sanitary, and Health Laws and
Regulations; Suspension of Liquidation; Tariff; Tokyo Round; Transit Zone;
Valuation; World Customs Organization; World Trade Organization.

FOT — See FOB.

FREE ON BOARD — See FOB.

FREE ALONGSIDE SHIP — See FAS.

MARKET FORCES — Shifts in demand and supply that are reflected in changing
relative prices, thus serving as indicators and guides for enterprises that make
investment, purchase, and sales decisions. See also Demand; Managed Trade;
Market Access; Nonmarket Economy; Price; Private Sector; Supply.

FUSION, TREATY OF — See European Community.

FUTURES — See Forward Market.

G
G-5 — See Group of 5.
G-7 — See Group of 7.

G-77 — See Group of 77.

PROFIT — The net earnings accruing from the successful production or sale of
goods and services: that is, the residual remaining to the entrepreneur after all
payments for capital (interest), land (rent), labor (including management costs,
salaries, and wages), raw materials, taxes and depreciation. If a business fares
poorly, profits may be negative, in which case they become losses. See also
Entrepreneur; Market; Production; Risk.

FOREIGN EXCHANGE EARNINGS — The proceeds from a country's exports of

goods, services, and capital, normally denominated in convertible currencies. See
also Currency; Foreign Exchange; Money.

SECURITY — A document giving title to property as collateral for a bank loan. Also,
saleable income-yielding paper traded in a stock exchange, such as stocks and
shares. See also Broker; Capital Market; Commercial Paper; Loan; Property; Spot
Market.

GATT — See General Agreement on Tariffs and Trade.

GATT 1947 — See General Agreement on Tariffs and Trade.

GATT 1994 — See General Agreement on Tariffs and Trade.

GRADUATION — The presumption that individual developing countries are

capable of assuming greater responsibilities and obligations in the international
community — within the context of the WTO or the World Bank, for example — as
their economies advance, as through industrialization, export development, and
rising living standards. In this sense, graduation implies that donor countries may
remove the more advanced developing countries from eligibility for all or some
products under the Generalized System of Preferences. Within the World Bank,
graduation moves a country from dependence on concessional grants to
nonconcessional loans from international financial institutions and private banks.
See also Developing Countries; Economic Cooperation Among Developing
Countries; Generalized System of Preferences; Group B; Group D; Group of 77;
Integrated Program for Commodities; Inter-American Development Bank;
International Trade Center UNCTAD/GATT; Loan; Newly Industrializing
Countries; Official Development Assistance; United Nations Conference on Trade
and Development; United Nations Development Program; World Bank.

LEVY — As a verb, to assess or impose a tariff on imported merchandise; as a noun,

the charge on imports. See also Customs; Imports; Tariff; Tax.

VARIABLE LEVY — Under the European Community's Common Agricultural

Policy, a duty that increases or decreases as domestic or world prices fluctuate to
ensure that the price of the imported product after payment of duty will equal a
predetermined "gate" price. See also Common Agricultural Policy; European
Community; Restitutions; Threshold Price.

GROUP A — See Group of 77.

GROUP B — Originally, a designation for the developed market economy countries

participating in the United Nations Conference on Trade and Development. In
recent years, the term has also been used to refer to these same countries when they
meet in the OECD and other international organizations to develop positions
relevant to North-South economic issues. See also Market Economy; North-South
Trade; Organization for Economic Cooperation and Development; United Nations
Conference on Trade and Development.

GROUP C — See Group of 77.

CAIRNS GROUP — A group of agricultural-exporting nations — comprising

Australia, Argentina, Brazil, Canada, Chile, Colombia, Fiji, Hungary, Indonesia,
Malaysia, New Zealand, the Philippines, Thailand, and Uruguay — established to
develop a common negotiating position for the Uruguay Round. See also
Multilateral Trade Negotiations; Uruguay Round.

GROUP D — Prior to their 1989-1991 conversion to market-oriented policies, the

socialist countries of Eastern Europe participating in UNCTAD, excluding Romania
and Yugoslavia (which were considered members of the Group of 77) and Albania
(which did not actively participate in UNCTAD and other elements of the United
Nations system). Group D countries showed a particular interest in the division of
the UNCTAD Secretariat concerned with "Trade Between Countries With Different
Economic Systems." See also United Nations Conference on Trade and
Development.

GROUP OF 5 (G-5) — See Group of 8.

GROUP OF 7 (G-7) — The finance ministers from the United States, Japan, Germany,
France, Italy, the United Kingdom, and Canada. See Group of 8.

GROUP OF 8 (G-8) — The heads of state or government of the leading industrial

democracies who have met annually since 1975 to coordinate economic policies to
achieve sustained economic growth with price stability, to foster stability in
exchange markets, and to promote adjustment in external imbalances. The group
also addresses other pressing international economic issues that affect global
economic performance. In 1973 and 1974, the finance ministers of the United States,
Japan, Germany, France, and the United Kingdom met informally in a group
referred to as the Group of 5. In 1975, when the group became a group of heads of
state, what was then called the Group of 6 comprised the United States, Japan,
Germany, France, Italy, and the United Kingdom. Canada joined the group in 1976,
transforming it into the Group of 7. The group has recently come to be known as the
Group of 8 because, since the end of the Cold War in 1992, Russia has been attending
these meetings where it has participated at an ever higher level. In recent times,
representatives of the European Union have also attended as observers. See also
Plaza Accord.

GROUP OF 77 — Originally, the 77 developing countries represented at UNCTAD-

I in 1964. The delegates established the precedent of meeting together to attempt to
develop common positions on major conference agenda items in advance of plenary
UNCTAD meetings. The Group of 77 comprises UNCTAD Groups A (the African
and Asian groups, with the notable exceptions of Israel and South Africa) and C (the
Latin American group). As of 1999, 132 developing countries were members of the
Group of 77, which seeks to develop common positions on trade and development
issues under consideration in UNCTAD and other United Nations bodies. See also
Developing Countries; Global System of Trade Preferences; Group D; Non-Aligned
Movement; North-South Trade; South-South Trade; United Nations Conference on
Trade and Development.

GSP — See Generalized System of Preferences.

GSTP — See Global System of Trade Preferences.

H
LIQUID HYDROCARBONS — See Bulk Carrier.

YARNS — See Multi-Fiber Arrangement Regarding International Trade in Textiles;

Sensitive Products; Textiles.

HS — See Harmonized System.

HTSUS — See Harmonized Tariff Schedule of the United States.

I
IA — See Import Administration.

IADB — See Inter-American Development Bank.

IBRD — See World Bank.

ICA — See International Commodity Agreement.

ICITO — See General Agreement on Tariffs and Trade.

IDA — See International Development Association.

IDB — See Inter-American Development Bank.

IEEPA — See International Emergency Economic Powers Act.

IFC — See International Finance Corporation.

IMF — See International Monetary Fund.

IMPAIRMENT — See Consultations; Dispute Settlement.

IMPORTS — The inflow of goods and services into a country's market for
consumption. A country enhances its welfare by importing a broader range of
higher-quality goods and services at lower cost than it could produce domestically.
The expansion of world trade since the end of World War II has therefore been a
principal factor underlying a general rise in living standards in most countries. See
also Comparative Advantage; Consumption; Customs; Levy; Market; Price
Elasticity of Demand; Protectionism; U.S. International Trade Commission; Welfare.
TAX — A payment exacted on persons, corporations, and other economic entities
by a government to help pay for government operations or to discourage the
consumption of goods or services taxed by raising their cost. Taxes are distinguished
by their compulsory character and by the lack of correlation between the amount
paid and the value of the public services financed by the taxes to the taxpayers. See
also Border Tax Adjustments; Direct Tax; Excise Tax; Indirect Tax; Road Tax; Sales
Tax; Tariff; Value-Added Tax.

VALUE-ADDED TAX (VAT) — An indirect tax on consumption that is levied at

each discrete point in the chain of production and distribution, from the raw
material stage to final consumption. Each processor or merchant pays a tax
proportional to the amount by which he or she increases the value of the goods
purchased for resale after making his or her own contribution. The value-added tax
is imposed throughout the European Community and EFTA countries, as well as in
many other trading nations, but not the United States. See also Border Tax
Adjustments; Consumption; Distribution; Harmonization; Indirect Tax; Sales Tax;
Tax; Value.

ROAD TAX — A tax imposed by a government on the operation of motor vehicles,

usually based on weight or engine displacement. Some have the effect of
discriminating in favor of one type of vehicle over another. See also Discrimination;
Excise Tax; Nontariff Barriers; Tax.

EXCISE TAX — A selective tax — sometimes called a consumption tax — on certain

goods produced within or imported into a country. See also Border Tax
Adjustments; Indirect Tax; Road Tax; Tax.

DIFFERENTIAL EXPORT TAX — A multi-tier export tax usually structured so that

the tax on exports of a raw material exceeds the tax (if any) on exports of processed
goods made from the raw material, thereby creating an incentive to process the raw
material domestically. See also Boycott; Embargo; Supply Access.
DIRECT TAX — A tax that is levied on the wealth or income of individuals. Income,
wealth, and inheritance taxes and social security charges are examples of direct
taxes. See also Equity; Indirect Tax; Tax.

INDIRECT TAX — A tax that is levied on expenditure, such as a sales tax imposed
at the retail level, excise tax, or value-added tax. Some economists say indirect taxes
are regressive (in that taxes on commodities burden the poor more than the rich)
and inflationary (since they raise prices). See also Border Tax Adjustment; Direct
Tax; Excise Tax; Inflation; Tax; Value-Added Tax.

CONSUMPTION TAX — See Excise Tax.

INHERITANCE TAX — See Direct Tax.

WEALTH TAX — See Direct Tax.

SALES TAX — A tax levied on the exchange of goods and services at one or more
stages in the process of distribution. See also Distribution; Excise Tax; Indirect Tax;
Value-Added Tax.

TAX INCENTIVES — See Industrial Policy.

INCOTERMS — An abbreviation of "international commercial terms." Incoterms are

a uniform set of international rules, promulgated by the International Chamber of
Commerce in Paris, for the interpretation of the terms most commonly used in
international contracts for the sale of goods. Incoterms define the obligations of
buyer and seller at every stage of an international sale of goods transaction. The
Incoterms were first issued in 1953; they were last revised effective January 1, 2000.
See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FAS; FCA; FOB.

KNOWLEDGE-BASED INDUSTRY — An industry that is dependent on the

protection of intellectual property, such as computer software, musical recordings,
motion pictures, and pharmaceuticals. See also Agreement on Trade-Related
Aspects of Intellectual Property Rights; Bern Convention; Commercial
Counterfeiting; Copyright; Intellectual Property; Patent; Process Patent; Property;
Trademark; Trafficking in Counterfeit Goods and Services; World Intellectual
Property Organization. INFLATION — A general increase in the prices of most
goods and services within a market, resulting in diminishing purchasing power of a
given nominal sum of the currency used in the market. Inflation results when
demand increases more rapidly than supply, as when salaries and wages increase
more rapidly than production. Since World War II, inflation has been a persistent
phenomenon in many countries. See also Currency; Demand; Indirect Tax; Money;
Price; Purchasing Power; Supply.

INFORMATICS — A term used to describe the complex of industries and products

based on digital information processing technologies. This includes computers,
computer peripherals, computer software, data processing, and most categories of
microelectronic components. See also Electronic Commerce; Knowledge-Based
Industry; Technology.

NATIONAL TRADE ESTIMATE REPORT (NTE) — An annual series prepared by

the Office of the U.S. Trade Representative that surveys significant foreign barriers
to U.S. exports in accordance with section 181 of the Trade Act of 1974 (the 1974
Trade Act), as amended. The National Trade Estimate Report on Foreign Trade
Barriers is based on information compiled within USTR, the U.S. Departments of
Commerce and Agriculture, and other U.S. government agencies, and
supplemented with information provided in response to a notice in the Federal
Register, and by members of the private sector trade advisory committees and U.S.
embassies abroad. The NTE is an inventory of the most important foreign barriers
affecting U.S. exports of goods and services, foreign direct investment by U.S.
persons, and protection of intellectual property rights. The report also provides a
valuable tool in enforcing U.S. trade laws, with the goal of expanding global trade.
The report provides, where feasible, quantitative estimates of the impact of these
foreign practices on the value of U.S. exports. Information is also included on actions
being taken to eliminate any act, policy, or practice identified in the report. See also
Omnibus Trade and Competitiveness Act of 1988; Section 301; Special 301; Super
301; Trade Act of 1974; Trade Agreements Act of 1979; Trade Policy Review
Mechanism; United States Trade Representative.
INFRASTRUCTURE — The underlying capital of a society embodied in its roads
and other transportation and communications systems, as well as its electric power,
water supplies, sewage systems, and other public services. Sometimes called social
overhead capital, infrastructure may also include health, education, and the skills of
a country's population. See also Capital; Economic Development; Welfare.

GLOBAL INFORMATION INFRASTRUCTURE (GII) — A concept advanced by

U.S. Vice President Al Gore in a speech to the ITU World Telecommunication
Development Conference in Buenos Aires, Argentina, in March 1994. Gore outlined
an action plan for the GII based on five fundamental principles: encourage private
investment, promote competition, create a flexible regulatory framework to keep
pace with technological and market changes, provide open access to the network for
all network providers, and ensure universal service. The GII will be composed of
local, national, and regional telecommunications networks. As a network of
networks, the GII will facilitate the global sharing of information, interconnection,
and communication, creating a global information marketplace. As a cooperative
effort among countries, the GII will afford economic and social benefits to all
participants, ranging from job creation, economic growth, and infrastructure
improvements to advanced services at lower prices for consumers. See also
Electronic Commerce; Informatics; Technology.

ENTERPRISE FOR THE AMERICAS INITIATIVE (EAI) — A U.S. program designed

to strengthen the economies of countries in Latin America and the Caribbean
through debt reduction and increased trade and investment. The investment
component is intended to help countries make reforms necessary to attract increased
capital flows. The debt component seeks to reward broad economic reforms
undertaken by countries in Latin America and the Caribbean by reducing official
debt owed to the United States. The trade component is designed to promote a
liberalized trading system and is based on the ultimate goal of hemispheric free
trade.

CARIBBEAN BASIN INITIATIVE (CBI) — A broad program to promote economic

development through private sector initiative in Central America and the Caribbean
islands. The goal is to expand foreign and domestic investment in nontraditional
sectors, diversifying CBI country economies and expanding their exports. The major
elements of the program are duty-free entry to the United States in perpetuity for a
wide-ranging group of products; U.S. economic assistance to the region; continuing
self-help efforts to improve investment climate and trade; a deduction on U.S. taxes
for companies that hold conventions in qualifying CBI countries to increase tourism;
and U.S. government, state government, and private sector promotion program
support from other trading partners and from multinational development
institutions. See also ACP Countries; Agency for International Development;
Bilateral Aid; Developing Countries; Economic Development; Enterprise for the
Americas Initiative; Liberalization; Lomé Convention; Multilateral Aid; North-
South Trade; Official Development Assistance; Overseas Private Investment
Corporation; Reverse Preferences; Soft Loan; Special and Differential Treatment;
Tariff Quota.

SELF-INITIATION — Initiation of a trade action by the U.S. agency charged with

enforcing the relevant trade laws, rather than in response to a complaint or petition
by the Congress or by a private party. For example, the Office of the U.S. Trade
Representative may self-initiate a Section 301 investigation or may initiate it in
response to a petition from an interested party. See also Section 301; United States
Trade Representative.

STRUCTURAL IMPEDIMENTS INITIATIVE (SII) — U.S.-Japan bilateral talks

aimed at identifying and removing internal impediments that inhibit external
account adjustment and market access. See also Bilateral Trade Agreement; Market;
Market Access; Market Forces; Nontariff Barriers; Restrictive Business Practices.

INTERDEPENDENCE — See Structural Change.

INTEREST — A sum paid for the use of borrowed capital, usually expressed in terms
of a rate or percentage of the capital involved (the interest rate), which is normally
higher when the risk (including both the risk of non-payment and the probability of
inflation) is greater. See also Capital; Capital Market; Credit; Inflation; Loan; Profit;
Risk.

LOGISTICS INTERMEDIARY — A person who consolidates several small

shipments from various sources into a larger shipment, usually up to a full truck,
car, or container load.
DIRECT INVESTMENT — Defined in the International Monetary Fund's Balance of
Payments Manual as "investment that is made to acquire a lasting interest in an
enterprise operating in an economy other than that of the investor, the investor's
purpose being to have an effective voice in the management of the enterprise." The
United States defines direct investment in different ways depending on the legal and
factual context in which the term is used. For example, the International Investment
and Trade in Services Survey Act defines direct investment as "the ownership or
control, directly or indirectly, by one person of 10 percent or more of the voting
securities of an incorporated business enterprise or an equivalent interest in an
unincorporated business enterprise." Other statutes and international agreements to
which the United States is a party use different definitions. See also Agreement on
Trade-Related Investment Measures; Balance of Payments; Bilateral Investment
Treaty; Capital Account; Foreign Investment; Framework Agreement; Industrial
Policy; International Monetary Fund; Investment Performance Requirements;
Multilateral Agreement on Investment; Multilateral Investment Fund; Multilateral
Investment Guarantee Agency; National Treatment; North American Development
Bank; Overseas Private Investment Corporation; Performance Requirements; Right
of Establishment; Trade-Related Investment Measures.

FOREIGN INVESTMENT — Direct and portfolio investment. The International

Investment and Trade in Services Survey Act defines foreign direct investment as
"the ownership or control, directly or indirectly, by one person of 10 percent or more
of the voting securities of a foreign incorporated business enterprise or an equivalent
interest in a foreign unincorporated business enterprise." It defines portfolio
investment as "any international investment which is not direct investment." It
would generally represent an interest in a business enterprise that is less than 10
percent of the business enterprise's voting securities or equivalent interest. See
Direct Investment.

INVESTOR — See Entrepreneur; Risk.

IPC — See Integrated Program for Commodities.

ITA — See International Trade Administration.

ITC — See International Trade Center UNCTAD/WTO.

ITC — See U.S. International Trade Commission.

ITO — See General Agreement on Tariffs and Trade; Multilateral Trade

Organization.

VAT — See Value-Added Tax.

K
KEIRETSU — In the late 20th century, descendants of Japan’s pre-war zaibatsu,
which were characterized by close, long-term business relationships between its
members. Keiretsu typically include a bank, a trading company, manufacturing
firms, and often an insurance company. Keiretsu firms are linked to one another
through a network of formal and informal ties including cross-shareholdings, time-
honored buyer-supplier arrangements, interlocking corporate directorates,
interchange of personnel between member firms, and the sharing of information
concerning product development and distribution. While keiretsu do have some
positive aspects such as cost reduction and quality control, their exclusionary nature
can act as an impediment to foreign market access. See also Codes of Conduct;
Industrial Policy; Managed Trade; Market Access; Restrictive Business Practice.

L
LASU — See Large Aircraft Sector Understanding.

LDCs — See Developing Countries; Least Developed Countries.

ANTIBOYCOTT LEGISLATION — The Export Administration Act was
promulgated in 1969, amended in 1977 and 1979, and expired in 1990 but was
continued by Executive Order 12730 under the International Emergency Economic
Powers Act. It declares the policy of the United States to oppose restrictive trade
practices or boycotts by foreign countries against countries friendly to the United
States. The U.S. Department of Commerce, Bureau of Export Administration, Office
of Antiboycott Compliance enforces regulations prohibiting U.S. citizens from
engaging in activities that comply with, further, or support unsanctioned foreign
boycotts. Prohibited activities include refusing and agreeing to refuse to do business
for boycott reasons, taking discriminatory actions that are boycott based, furnishing
information about business relationships with or in a boycotted country or with
blacklisted persons, and engaging in evasion activities, such as devices or schemes
intended to place a blacklisted person at a commercial disadvantage. The principal
focus of the regulatory activities of the Office of Antiboycott Compliance relate to
the Arab boycott of Israel. In addition, the U.S. Treasury Department enforces the
antiboycott provisions of the Tax Reform Act of 1976, which deny certain tax benefits
to those who agree to "participate in or cooperate with an international boycott." See
also Boycott; Export Administration Act of 1979; International Emergency Economic
Powers Act.

TARIFF ACT OF 1930 — U.S. trade legislation that raised tariff rates on most articles
imported by the United States, triggering comparable tariff increases by U.S. trading
partners. The Tariff Act of 1930, which has been amended by subsequent trade
legislation, is also known as the Smoot-Hawley Act, after the two legislators who
sponsored it, and sometimes as the Grundy Tariff, after Joseph Grundy, president
of the Pennsylvania Manufacturers Association, who was the chief lobbyist for it.
See also Beggar-Thy-Neighbor Policy; Column 2 Rates; Countervailing Duties;
Imports; Protectionism; Reciprocity; Retaliation; Tariff; Trade Agreements Act of
1934.

SMOOT-HAWLEY TARIFF ACT OF 1930 — See Tariff Act of 1930.

TRADE AGREEMENTS ACT OF 1934 — Legislation that amended the Tariff Act of
1930, providing authority for the United States to negotiate agreements with other
countries for reciprocally beneficial tariff reductions. The resulting agreements were
then applied to other countries through most-favored-nation clauses. The original
1934 legislation, as extended by several further acts of the U.S. Congress, provided
authority for U.S. participation in the first five rounds of GATT trade negotiations,
from 1947 through the Dillon Round. It was superseded by the Trade Expansion Act
of 1962. See also Bilateral Trade Agreement; Dillon Round; Negotiations; Peril Point;
Reciprocity; Tariff Act of 1930; Trade Agreement; Trade Expansion Act of 1962.

TRADE AGREEMENTS ACT OF 1979 — Legislation authorizing the United States

to implement trade agreements dealing with nontariff barriers negotiated during the
Tokyo Round, including agreements that required changes in existing U.S. laws and
certain concessions that had not been explicitly authorized by the Trade Act of 1974.
Specifically, the Trade Agreements Act of 1979 incorporated into U.S. law the Tokyo
Round agreements on dumping, customs valuation, import licensing, government
procurement practices, product standards, civil aircraft, meat and dairy products,
and liquor duties. In addition, it extended the president's authority to negotiate
trade agreements with foreign countries to reduce or eliminate nontariff barriers to
trade. See also Aircraft Agreement; Anti-Dumping Code; Countervailing Duties;
Customs Valuation Code; Dumping; Government Procurement Policies and
Practices; Licensing Code; Nontariff Barriers; North-South Trade; Reciprocity;
Safeguards; Special and Differential Treatment; Standards; Technical Regulations;
Tokyo Round; Trade Act of 1974; Trade Agreement; Transparency; Valuation.

RECIPROCAL TRADE AGREEMENTS ACT OF 1934 — See Trade Agreements Act

of 1934.

U.S. STRATEGIC AND CRITICAL STOCKPILING ACT OF 1946 — See Strategic

Stockpiles.

AGRICULTURAL ADJUSTMENT ACT OF 1933 — See Section 22.

TRADE ACT OF 1974 — Legislation enacted by the U.S. Congress in late 1974 and
signed into law on January 3, 1975, granting the U.S. president broad authority to
enter into international agreements to reduce import barriers. The act stated that its
major purposes were:
  To stimulate U.S. economic growth and to maintain and enlarge foreign
markets for the products of U.S. agriculture, industry, mining, and
commerce;
 To strengthen economic relations with other countries through open and
nondiscriminatory trading practices;
 To protect American industry and workers against unfair or injurious import
competition;
 To provide "adjustment assistance" to industries, workers, and communities
injured or threatened by increased imports.

The act also granted the president authority to extend tariff preferences to certain
imports from developing countries and to set conditions under which most-favored-
nation treatment could be extended to nonmarket economy countries that
previously had not received MFN treatment from the United States. See also
Adjustment; Adjustment Assistance; Countervailing Duties; Dumping; Escape
Clause; Generalized System of Preferences; Most-Favored-Nation Treatment;
Safeguards; Section 301; Tokyo Round; U.S. International Trade Commission;
Williams Commission.

TRADE ACT OF 1988 — See Omnibus Trade and Competitiveness Act of 1988.

AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954 —

See Public Law 480.

TRADE EXPANSION ACT OF 1962 — The legislative authority for U.S.

participation in the Kennedy Round of multilateral trade negotiations (1963-67). The
legislation itself heavily influenced the content and procedures of the round,
especially by granting the U.S. president general authority to negotiate — on a
reciprocal basis — reductions of up to 50 percent in U.S. tariffs. (This authority
expired June 30, 1967, thus predetermining the concluding date of the Kennedy
Round.) U.S. duties below 5 percent ad valorem, duties on certain agricultural
commodities, and duties on tropical products exported by developing countries
could be reduced to zero under the act. The 1962 legislation explicitly eliminated the
"peril point" provision that had limited U.S. negotiating positions in earlier GATT
rounds, and instead called on the Tariff Commission and other agencies of the U.S.
government to provide the president and his negotiators with information
regarding the probable economic effects of specific tariff concessions. This act
superseded the Trade Agreements Act of 1934, as amended. Some parts of the Trade
Expansion Act were subsequently amended by the Trade Agreements Act of 1979.
See also Kennedy Round; Linear Reduction of Tariffs; Peril Point; Round; Trade
Agreements Act of 1934; United States Trade Representative.

INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT (IEEPA) — U.S.

legislation enacted in 1977 that extends emergency powers previously granted to the
U.S. president by the Trading With the Enemy Act of 1917. Specifically, the
legislation enables the president, after declaring that a national emergency exists
because of a threat from a source outside the United States, to investigate, regulate,
compel, or prohibit virtually any economic transaction involving property in which
a foreign country or national has an interest. Since its enactment, the authority
conferred by the IEEPA has been exercised to impose a variety of economic sanctions
on foreign countries and to continue in force the authority of the Export
Administration Act during several periods when statutory authority has lapsed. As
of 1999, sanctions were in place against Cuba and North Korea under the authority
of TWEA and against Burma, Libya, Iraq, Iran, the Federal Republic of Yugoslavia
(Serbia and Montenegro), Sudan, the Taliban, and UNITA (including sanctions
relating to Middle Eastern terrorism, to narcotics, and to the proliferation of nuclear,
chemical, and biological weapons) under the authority of IEEPA.

BUY AMERICAN ACT — U.S. legislation passed in 1933 that mandates preference
for the purchase of domestically produced goods over foreign goods in U.S.
government procurement. The president has the authority to waive the Buy
American Act within the terms of a reciprocal agreement or otherwise in response
to the provision of reciprocal treatment to U.S. producers. Under the 1979 GATT
Government Procurement Code, the U.S.-Israel FTA, the U.S.-Canada FTA, and the
WTO Agreement on Government Procurement, the United States provides access to
the government procurement of certain U.S. agencies for goods from the other
parties to those agreements. Other "buy-national" legislative provisions exist
separately from the Buy American Act requirements. See also Agreement on
Government Procurement; Government Procurement Policies and Practices; U.S.-
Israel Free Trade Agreement; U.S.-Canada Free Trade Agreement.

FOREIGN AGENTS REGISTRATION ACT (FARA) — Legislation designed to

guard against undue foreign influence on U.S. policy. FARA mandates public
disclosure, through various reports to the U.S. Department of Justice, of certain
relationships between individuals and entities in the United States and foreign
interests. Subject to certain limited exemptions, there are four types of activities that
require registration with the Justice Department when performed for a foreign
interest by a person or firm in the United States (whether or not U.S. citizens or
incorporated in the United States). First, registration is required when engaging in
certain political activities, including all attempts to influence U.S. policy or public
opinion on behalf of, or even at the request of, a foreign individual or entity. Second,
those acting as public relations agents or political consultants in the interests of a
foreigner must register. Third, those soliciting or disbursing funds or contributions
in the interest of a foreigner must register. Finally, registration is required when
representing the interests of a foreigner before the U.S. government.

U.S. REVENUE ACT OF 1971 — See Domestic International Sales Corporation.

SINGLE EUROPEAN ACT (SEA) — See European Community.

HELMS-BURTON ACT — A 1996 U.S. legislative act strengthening international

sanctions against the government of Cuba under the leadership of Fidel Castro. The
act reaffirms a provision of the Cuban Democracy Act of 1992 that states that the
president should encourage foreign countries to restrict trade and credit relations
with Cuba, and it features provisions regarding the enforcement of the economic
embargo against Cuba. In addition, the act addresses, among other issues, U.S.
opposition to Cuban membership in international financial institutions, TV
broadcasting to Cuba, importation safeguards against certain Cuban products,
withholding of foreign assistance from countries supporting the Juragua nuclear
plant in Cuba, and a policy toward a transition government and a democratically
elected government in Cuba. As promulgated, this legislation also permits U.S.
citizens to sue overseas corporations with investments in property confiscated by
the Castro government in Cuba and bans executives from companies owning such
property from entering the United States. Both of these provisions, contained in Title
IV of the act, were repeatedly waived by President Bill Clinton for periods of six
months after a 1997 agreement with the European Union to deter new investment in
properties that have been seized illegally worldwide. See also Boycott; Embargo;
International Emergency Economic Powers Act.
OMNIBUS TRADE AND COMPETITIVENESS ACT OF 1988 — Legislation passed
by the U.S. Congress in August 1988 and signed into law on August 23, 1988, to
enhance the competitiveness of American industry. Its major purposes are to
authorize the negotiation of reciprocal trade agreements, strengthen U.S. trade laws,
improve development and management of U.S. trade strategy through these actions,
and improve standards of living in the world. The act made many changes in U.S.
trade law, including significant changes to Section 301 and the adoption of three
Section 301 variants:

 "Super" 301 (§ 1302 of the act) provisions require the U.S. Trade
Representative to identify priority practices (trade-distorting practices whose
elimination might substantially increase U.S. exports) and priority countries
(countries with the highest trade barriers and best markets for U.S. exports)
and to initiate Section 301 investigations of such practices;
 "Special 301" (§ 1303 of the act) requires USTR to identify and self-initiate
expedited Section 301 investigations of countries that deny adequate
protection of intellectual property rights;
 "Telecommunications 301" (§ 1377 of the act) requires USTR to review, on an
annual basis, trade agreements that involve telecommunications products or
services to determine whether a foreign country is failing to comply with the
agreement or is otherwise denying opportunities to U.S. telecommunications
products and services.

See also Commercial Counterfeiting; Concession; Copyright; Domestic Subsidy;

European Commission; Export Subsidy; Intellectual Property; Patent; Priority
Foreign Country; Property; Safeguards; Section 201; Section 301; Section 406; Special
301; Super 301; Technology; Trafficking in Counterfeit Goods and Services;
Technology Transfer; Unfair Trade Practices; Welfare; World Intellectual Property
Organization.

EXPORT ADMINISTRATION ACT OF 1979 (EAA — A statute that authorizes the

U.S. president to control exports to specific foreign destinations of U.S. commodities
and technical data, especially high-technology products, to protect the national
security, to ensure against an excessive drain of scarce goods, and to further foreign
policy objectives. It also prohibits compliance with foreign boycotts. See also
Antiboycott Legislation; Boycott; Bureau of Export Administration; Coordinating
Committee on Export Controls; Embargo.
PUBLIC LAW 480 — A short-hand designation for the Agricultural Trade
Development and Assistance Act of 1954, which provides for the disposition of U.S.
farm products outside the United States. Title I spells out conditions under which
such products can be sold to developing countries for their own currencies and the
purposes for which the proceeds of such sales can be used in the purchasing country.
Title II authorizes the transfer of U.S. farm products to developing countries for
economic development purposes. Title III permits the donation of surplus products
through U.S. voluntary agencies that carry out relief operations in other countries.
Title IV provides for agreements between the U.S. government and other
governments and private organizations purchasing surplus U.S. farm products. See
also Agency for International Development; Bilateral Aid; Developing Countries;
Economic Development; North-South Trade; Section 22; Surplus.

TRADING WITH THE ENEMY ACT (TWEA) — See International Emergency

Economic Powers Act.

URUGUAY ROUND AGREEMENTS ACT — The act that implemented in U.S. law
the trade agreements resulting from the Uruguay Round. Enacted in 1994 with an
effective date of January 1, 1995, the URAA includes provisions amending the U.S.
antidumping and countervailing duty laws in response to the WTO Agreement on
Implementation of Article VII of the GATT 1994 and the Agreement on Subsidies
and Countervailing Measures. It also contains provisions implementing the
Uruguay Round agreements relating to import safeguard measures; foreign trade
barriers and unfair trade practices in import trade; textiles and apparel trade;
government procurement; technical barriers to trade (product standards); trade in
agricultural products; and the trade-related aspects of intellectual property rights.
Among the domestic laws affected were the Tariff Act of 1930, the Trade Act of 1974,
the Trade Agreements Act of 1979, the Agricultural Trade Act of 1978, and U.S.
copyright, trademark, and patent law. See also Agreement on Agriculture;
Agreement on the Application of Sanitary and Phytosanitary Measures; Agreement
on Import Licensing Procedures; Agreement on Implementation of Article VI of
GATT 1994; Agreement on Implementation of Article VII of GATT 1994; Agreement
on Preshipment Inspection; Agreement on Rules of Origin; Agreement on
Safeguards; Agreement on Subsidies and Countervailing Measures; Agreement on
Technical Barriers to Trade; Agreement on Textiles and Clothing; Agreement on
Trade-Related Aspects of Intellectual Property Rights; Agreement on Trade-Related
Investment Measures; General Agreement on Trade in Services; Omnibus Trade and
Competitiveness Act of 1988; Sunset Review; Tariff Act of 1930; Trade Act of 1974;
Trade Agreements Act of 1979; Understanding on Rules and Procedures Governing
the Settlement of Disputes; Uruguay Round; World Trade Organization.

WEBB-POMERENE ACT — U.S. legislation enacted in 1918 that exempts

associations of U.S. firms engaged in export trade from U.S. antitrust laws, so long
as they do not restrain any U.S. competitor of the association. See also Antitrust;
Competition Policy; Export Trading Company; Monopoly; Restrictive Business
Practices; Unfair Trade Practices.

QUARANTINE, SANITARY, AND HEALTH LAWS AND REGULATIONS —

Government measures to protect consumer, animal, and plant health by regulating
the use of dangerous preservatives and other additives in foods. The lack of
internationally accepted standards makes it difficult to distinguish between
legitimate health standards and protectionist measures. The WTO Agreement on the
Application of Sanitary and Phytosanitary Measures recognizes norms set by
specified international standard-setting bodies as the baseline standards for trade,
ensures to the maximum extent possible that standards are scientifically justifiable,
and, for the first time, establishes a meaningful dispute settlement procedure for
health and sanitary issues. See also Agreement on the Application of Sanitary and
Phytosanitary Measures; Agreement on Technical Barriers to Trade; ATA Carnet;
Codes of Conduct; Consular Formalities and Documentation; Consular Invoice;
Customs; Customs and Administrative Entry Procedures; Customs Classification;
Discrimination; Imports; Licensing; Nontariff Barriers; Packaging, Labeling, and
Marking Regulations; Standards; Tariff; Transit Zone; World Trade Organization.

LIBERAL — When referring to trade policy, relatively free of import controls or

restraints and/or exhibiting a preference for reducing existing barriers to trade,
often contrasted with the protectionist preference for retaining or raising selected
barriers to imports. See also Free Trade; Liberalization; Protectionism.

LIBERALIZATION — Unilateral or multilateral reductions in tariffs and other

measures that restrict trade. Trade liberalization has been the objective of all rounds
of the GATT trade negotiations. See also Codes of Conduct; Free Trade; General
Agreement on Tariffs and Trade; Liberal; Round; Sensitive Products.
FREE TRADE — A theoretical concept that assumes international trade unhampered
by government measures such as tariffs or nontariff barriers. The objective of trade
liberalization is to achieve "freer trade" rather than "free trade," it being generally
recognized among trade policy officials that some restrictions on trade are likely to
remain in effect for the foreseeable future. See also Liberalization; Nontariff Barriers;
Protectionism; Tariff.

LICENSING — The requirement by a country of making formal application for a

special permit, usually called a "license," as a prior condition for importing or
exporting certain goods. See also ATA Carnet; Consular Formalities and
Documentation; Consular Invoice; Customs; Customs and Administrative Entry
Procedures; Customs Bond; Customs Classification; Free Zone; Licensing Code;
Liquidation; Nontariff Barriers; Port of Entry; Prior Deposits; Quarantine, Sanitary
and Health Laws and Regulations; Suspension of Liquidation; Tokyo Round; Transit
Zone; Valuation; World Customs Organization.

EXPORT LICENSING — See Licensing.

IMPORT LICENSING — See Licensing.

SPECIFIC LIMITATIONS ON TRADE — Government measures that restrict

imports or exports of a product during a given period to an explicitly stated volume
or value, usually by requiring a license or other government authorization for each
export or import transaction. See also Boycott; Embargo; Exchange Controls; Export
Quotas; Licensing; Nontariff Barriers; Quantitative Restrictions; Tariff Quota.

LIQUIDATION — Final payment of all duties owing on items imported into the
United States. Where the amount of duty is not finally determined at the time that
the item is entered, as during the pendency of an antidumping or countervailing
duty investigation, liquidation is suspended until the investigation is completed and
a final duty determination is issued. See also ATA Carnet; Codes of Conduct;
Consular Formalities and Documentation; Consular Invoice; Customs; Customs and
Administrative Entry Procedures; Customs Bond; Customs Classification; Imports;
Free Zone; Licensing; Nontariff Barriers; Port of Entry; Quarantine, Sanitary, and
Health Laws and Regulations; Suspension of Liquidation; Tariff; Tariff Schedules;
Transit Zone; Valuation; World Customs Organization; World Trade Organization.

WATCH LIST (WL) — See Priority Foreign Country.

PRIORITY WATCH LIST (PWL) — See Priority Foreign Country.

OFFER LIST — A list of measures through which a country participating in trade

negotiations proposes to broaden access to its market in exchange for comparable
concessions from its trading partners. A country's initial offer list during a given
round of negotiations represents its early response to the request lists submitted by
its trading partners and may subsequently be lengthened or shortened, depending
on the responses of other countries to its request list. In addition to proposals for
broadening market access through tariff reductions and expanded coverage under
codes of conduct, offer lists may suggest exceptions to an agreed formula for tariff
reductions on all other products. See also Codes of Conduct; Concession; Linear
Reduction of Tariffs; Market Access; Multilateral Trade Negotiations; Negotiations;
Principal Supplier; Request List; Round; Sensitive Products.

REQUEST LIST — A list submitted by a country to a trading partner at an early stage

of trade negotiations identifying the concessions it seeks through the negotiations.
See also Concession; Negotiations; Offer List; Reciprocity; Round.

ILLUSTRATIVE LIST — Contained in Annex I to the WTO Agreement on Subsidies

and Countervailing Measures, a list that enumerates certain practices that constitute
countervailable export subsidies within the terms of the agreement when provided
or mandated by a government or special institution controlled by a government with
respect to goods produced for export. These include direct subsidies to a firm or
industry contingent upon export performance, currency retention schemes, and
other practices that involve a bonus; preferential internal transport and freight
charges on export shipments; remission of direct taxes specifically related to exports;
provision of services or goods on preferential terms for use in the production of
exported goods; and export credit guarantees. See also Agreement on Subsidies and
Countervailing Measures; Countervailing Duties; Domestic Subsidy; Export
Subsidy; Subsidy; World Trade Organization.
FREE LIST — A list of goods not subject to import duties or import-licensing
requirements in a particular country. See also Licensing; Tariff.

LLDCs — See Least Developed Countries.

LOT — See Level of Trade Adjustment.

LTA — See Multi-Fiber Arrangement Regarding International Trade in Textiles.

LTL — See Less Than Load Shipments.

M
OFFSHORE MANUFACTURING — The foreign manufacture of goods by a
domestic firm primarily for import into its home market.

MACHINE TOOLS — See Capital Goods.

TRADEMARK — A mark or symbol secured by legal registration used by a

manufacturer or trader to distinguish his or her goods from competing goods. See
also Agreement on Trade-Related Aspects of Intellectual Property Rights;
Commercial Counterfeiting; Property; Omnibus Trade and Competitiveness Act of
1988; Property; Trafficking in Counterfeit Goods and Services.

MARGIN OF PREFERENCE — The difference between the duty payable under a

given system of tariff preferences and the duty that would be assessed in the absence
of preferences. See also Generalized System of Preferences; Preferences; Special and
Differential Treatment; Tariff.
TRIGGER PRICE MECHANISM (TPM) — A U.S. system for monitoring imported
steel to identify imports that are possibly being dumped in the United States or
subsidized by the governments of exporting countries. The minimum price under
this system is based on the estimated landed cost at the U.S. port of entry of steel
produced by the world's most efficient producers. Imported steel entering the
United States below that price may trigger formal antidumping investigations by
the U.S. Department of Commerce and the U.S. International Trade Commission.
The TPM was in effect between early 1978 and March 1980. It was reinstated in
October 1980 and suspended in January 1982. Between April 1982 and June 1988,
TPM was used for imports of stainless steel round wire only. See also Domestic
Subsidy; Dumping; Export Subsidy; Sensitive Products; Steel Voluntary Restraint
Arrangements; Subsidy.

TRADE POLICY REVIEW MECHANISM (TPRM) — An annex to the WTO

Agreement, a mechanism that provides for periodic review of each WTO member's
trade policy regime. The country under review and the WTO produce documents
describing the trade policy regime of the country, and all interested members
participate in a special meeting where these documents are reviewed. The frequency
with which a particular WTO member is reviewed is based on its share of world
trade in goods and services. The four largest members are reviewed every two years.
The next 16 largest members are reviewed every four years. Other members are
reviewed every six years. The intervals between reviews for least developed
members are even greater. See also Uruguay Round; World Trade Organization.

TRADE-RELATED INVESTMENT MEASURES (TRIMS) — Restrictions on direct

investment by foreign investors that have the effect of distorting trade and
investment (for example, performance and local content requirements). See also
Agreement on Trade-Related Investment Measures; Convertibility; Exchange
Controls; Investment Performance Requirements.

NONTARIFF MEASURES (NTMs) — See Nontariff Barriers.

SANITARY AND PHYTOSANITARY MEASURES (SPS) — Any measures applied

to protect human or animal life from risks arising from additives, contaminants,
toxins, or disease-causing organisms in their food; to protect human life from plant-
or animal-carried diseases; to protect animal or plant life from pests, diseases, or
disease-causing organisms; and to prevent or limit other damage to a country from
the entry, establishment, or spread of pests. These include measures taken to protect
the health of fish and wild fauna, as well as of forests and wild flora. The WTO’s
Agreement on the Application of Sanitary and Phytosanitary Measures, which
entered into force with the establishment of the World Trade Organization on
January 1, 1995, is intended to prevent SPS measures from restricting or distorting
international trade. See also Agreement on Agriculture; Agreement on the
Application of Sanitary and Phytosanitary Measures; Agreement on Technical
Barriers to Trade; Nontariff Barriers; Quarantine, Sanitary, and Health Laws and
Regulations; Standards.

MEDIUM OF EXCHANGE — Documentary instrument used in commercial

transactions between buyers and sellers to measure the value of the goods
exchanged. The value of such instruments is usually expressed in terms of a national
currency, such as the U.S. dollar. See also Bill; Currency; Euro; Market; Money.

MARKET — The area within which buyers and sellers interact to effect economic
exchanges. The estimated or realized demand for a good or service may also be
referred to as its "market." See also Demand; Distribution; Market Economy;
Monopoly; Production; Purchasing Power; Supply.

ACCESS, MARKET — See Market Access.

COMMON MARKET — See Customs Union; European Coal and Steel Community;
European Community.

CAPITAL MARKET — The market for longer-term loanable funds. The capital
market in a country is not one institution; rather, it includes securities exchanges,
underwriters, investment banks, and insurance companies that canalize supply and
demand for long-term capital and claims on capital, especially when concentrated
in such major financial centers as New York City and London. The marketing of
securities is an important element in the efficient working of a capital market. See
also Capital; Developing Countries; Insurance; International Finance Corporation;
Market; Security; Underwriter; World Bank.
FORWARD MARKET — A market in which contracts for future deliveries of goods
and securities on a specified date are entered into at fixed prices. The contracts
themselves are popularly known as "futures." Many commodity exchanges — wool,
cotton, and wheat, for example — have established forward markets that permit
interested parties to hedge against changes in the prices of the raw materials they
use or deal in. See also Commodity; Hedge; Market; Spot Market.

SPOT MARKET — A market in which goods or securities are traded for immediate
delivery. The spot price is, therefore, the price for immediate delivery. See also
Forward Market; Market; Price; Security.

COMMODITY — Broadly defined, any article exchanged in trade but most

commonly used to refer to raw materials, including such minerals as tin, copper,
and manganese, and bulk-produced agricultural products such as coffee, tea, and
rubber. See also Buffer Stocks; Common Fund; Forward Market; International
Commodity Agreement; Primary Commodity; Tropical Products.

MERCANTILISM — An economic philosophy prominent in the 16th and 17th

centuries that equated the accumulation and possession of gold and other
international monetary assets, such as foreign currency reserves, with national
wealth. Although this point of view is generally discredited among 20th century
economists and trade policy experts, some contemporary politicians still favor
policies designed to create trade surpluses, such as import substitution and tariff
protection for domestic industries, as essential to national economic strength. See
also Balance of Trade; Currency; Import Substitution; Industrial Policy; Managed
Trade; Protectionism.

MERCANTILIST — A person who believes in or advocates mercantilism. See also

Mercantilism.

MERCOSUR — The Spanish abbreviation for Mercado Común del Sur (Southern
Common Market). Argentina, Brazil, Paraguay, and Uruguay officially inaugurated
MERCOSUR in January 1991. On January 1, 1995, MERCOSUR designated itself as
a customs union by establishing a common external tariff covering 85 percent of
traded goods. MERCOSUR will gradually phase in coverage of the CET through
2006, when all products should be covered by the customs union. Chile became an
associate member of MERCOSUR on October 1, 1996, and Bolivia did the same on
April 1, 1997. Neither country participates in the CET. See also Common External
Tariff; Customs; Customs Area; Customs Union; European Community; European
Free Trade Association; Free Trade Area Agreement; Free Trade Area of the
Americas; General Agreement on Tariffs and Trade; Kyoto Convention; North
American Free Trade Agreement; Tariff; Tariff Schedules; Trade Diversion; U.S.-
Canada Free Trade Agreement.

MFA — See Multi-Fiber Arrangement Regarding International Trade in Textiles.

MFN — See Most-Favored-Nation Treatment.

MEMBER — See Contracting Party.

MIGA — See Multilateral Investment Guarantee Agency.

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY (MITI) — The

Japanese ministry that has adopted, for some years, a comprehensive economic
growth and development strategy centering on export expansion. See also Export
Promotion; Exports; Industrial Policy; Japan External Trade Organization; Managed
Trade.

TRADE MISSION — Experts and/or businessmen sent by a government or by

commercial interests in one country to encourage exports to the market of another
country. See also Distribution; Export Promotion; Exports; Market.

MITI — See Ministry of International Trade and Industry.

MNC — See Multinational Corporation.

CURRENCY — The circulating media of exchange in a country. Prior to World War
I, currency generally meant coins and paper money. But with the expanding use of
credit instruments, it has come to include checks drawn on bank accounts, postal
money orders, and prepaid travelers checks that usually require identification of
maker or endorser. Most business transactions are carried out by means of bank
checks. See also Convertibility; Devaluation; Mercantilism; Money; Par Value;
Reserve Currency.

RESERVE CURRENCY — A national currency such as the dollar or pound sterling,

or international currency such as Special Drawing Rights, used by many countries
to settle debit balances in their international accounts. Central banks generally hold
a large portion of their monetary reserves in reserve currencies, which are
sometimes called "key" currencies. See also CurrencyMercantilism; Special Drawing
Rights.

KEY CURRENCIES — See Currency; Reserve Currency.

MONOPOLY — The condition that exists in a market when a single supplier

controls the supply of a product to such an extent that it can set quantity and prices
for maximum profitability with little or no regard for the pressures of demand and
supply that operate in competitive economic markets. A high tariff or nontariff
barrier to imports can give a noncompetitive producer a monopoly position for a
particular product within a domestic market. See also Antitrust; Cartel; Competition
Policy; Competitive; Demand; Efficiency; Market; Nontariff Barriers; Price;
Protection; Restrictive Business Practices; Supply; Tariff; Unfair Trade Practices.

NON-ALIGNED MOVEMENT (NAM) — A loose coalition of developing countries

that met at the head-of-state level every few years between the 1950s and the 1980s
in an attempt to coordinate positions on international political and economic issues.
The movement traces its conceptual foundations to the Asian-African Conference at
Bandung in 1955, under the inspiration of India (Nehru), Egypt (Nasser), and
Yugoslavia (Tito). The first NAM summit conference took place in Belgrade in 1961;
the second in Cairo in 1964; the third in Lusaka in 1970; the fourth in Algiers in 1973;
the fifth in Colombo in 1976; the sixth in Havana in 1980; and the seventh in New
Delhi in 1983. The member countries now meet under the auspices of the Group of
77. See also Developing Countries; Economic Cooperation Among Developing
Countries; Economic Development; Global System of Trade Preferences; Group D;
Group of 77; North-South Trade; Organization of Petroleum Exporting Countries;
South-South Trade; United Nations Conference on Trade and Development.

MTN — See Multilateral Trade Negotiations.

MTO — See Multilateral Trade Organization.

MULTILATERAL — Having a number of participating parties, members, or

countries. In the context of the World Trade Organization, "multilateral" has a
special meaning. Multilateral agreements of the WTO are binding on all member
countries, in contrast to plurilateral WTO agreements, which are binding only on
those WTO members that have affirmatively acceded to such agreements. See also
Bilateral; Multilateral Agreement; Multilateral Trade Negotiations; Unilateral;
World Trade Organization.

MUTATIS MUTANDIS — Latin phrase signifying "the necessary changes having

been made"; "substituting new terms.".

MUTUALITY OF BENEFITS — See Reciprocity.

N
NAFTA — See North American Free Trade Agreement.

NAM — See Non-Aligned Movement.

COMPETITIVE NEED — See Generalized System of Preferences.

NEGOTIATIONS — Bargaining between and among representatives of
governments seeking a mutually beneficial exchange of concessions. See also
Concession; Multilateral Trade Negotiations; Offer List; Principal Supplier;
Reciprocity; Request List; Round; United States Trade Representative.

MULTILATERAL TRADE NEGOTIATIONS (MTN) — Negotiations held under the

auspices of the GATT from 1947 to 1994, when the Uruguay Round was concluded.
Each of eight rounds held represented a discrete and lengthy series of bargaining
sessions among the participating contracting parties in search of mutually beneficial
agreements aimed at reducing barriers to world trade. The agreements ultimately
reached at the conclusion of each round became new GATT commitments and thus
amounted to important steps in the evolution of the world trading system. The
Uruguay Round resulted in the establishment in 1995 of the World Trade
Organization (WTO). See also Dillon Round; Kennedy Round; Multilateral Trade
Organization; Negotiations; Reciprocity; Round; Tokyo Round; Uruguay Round.

NICs — See Newly Industrializing Countries.

NIEs — See Newly Industrializing Economies.

NON-DISCRIMINATION — See Discrimination; General Agreement on Tariffs and

Trade; Most-Favored-Nation Treatment; National Treatment.

NONRECIPROCITY — See Framework Agreement; Reciprocity.

BRUSSELS TARIFF NOMENCLATURE (BTN) — See Customs Cooperation Council

Nomenclature.

CUSTOMS COOPERATION COUNCIL NOMENCLATURE (CCCN) — A system

for classifying goods for customs purposes, formerly known as the Brussels Tariff
Nomenclature (BTN). See also Agreement on Implementation of Article VII of GATT
1994; Codes of Conduct; Consular Formalities and Documentation; Customs;
Customs Classification; Customs Harmonization; Harmonized System;
Harmonized Tariff Schedule of the United States; Imports; Kyoto Convention; Tariff;
Tariff Schedules; Valuation; World Customs Organization.

SCHEDULE — See Concession; Demand; Supply; Tariff Schedules.

HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTSUS) — A

comprehensive classification of goods specifying the duty that U.S. Customs
authorities assess against each imported item. On January 1, 1989, the United States
converted its tariff nomenclature structure, known as the Tariff Schedules of the
United States, to conform with the Harmonized Commodity Description and
Coding System, better known as the Harmonized System, developed by the
Customs Cooperation Council. See also Bound Rates; Codes of Conduct; Column 1
Rates; Column 2 Rates; Customs; Customs Classification; Customs Cooperation
Council Nomenclature; Customs Harmonization; Harmonization; Harmonized
System; Kyoto Convention; Most-Favored-Nation Treatment; Tariff; Tariff
Schedules; Tokyo Round; Valuation; World Customs Organization; World Trade
Organization.

SCHEDULE OF CONCESSIONS — See Accession; Bound Rates; Concession.

SUPPLY SCHEDULE — See Supply.

TARIFF SCHEDULES — Comprehensive lists of the tariffs a country applies to

imported goods. See also Ad Valorem Tariff; Bound Rates; Compound Tariff;
Conventional Tariff; Effective Tariff Rate; General Tariff; Levy; Most-Favored-
Nation Treatment; Nominal Tariff Rate; Single-Column Tariff; Specific Tariff; Tariff;
Tariff Quota.

TARIFF SCHEDULES OF THE UNITED STATES (TSUS) — See Bound Rates;

Customs; Harmonized Tariff Schedule of the United States; Tariff.

STANDARDS — Technical specifications that lay down characteristics of a product

such as size, quality, performance, or safety. Standards may also cover terminology,
testing methods, packaging, labeling, or marking requirements. The Tokyo Round
Agreement on Technical Barriers to Trade — usually known as the "Standards Code"
— seeks to ensure that national standards are not used to impede trade. See also
Codes of Conduct; Nontariff Barriers; Packaging, Labeling, and Marking
Regulations; Quarantine, Sanitary, and Health Laws and Regulations; Trade
Agreements Act of 1979.

CORE LABOR STANDARDS — Core labor standards are human rights agreed by
the International Labor Organization and other groups to include freedom of
association, the right to organize and bargain collectively, a prohibition on forced
labor, a prohibition on discrimination in employment, and a prohibition on
exploitive child labor. Founded in 1919, the ILO is the United Nations’ specialized
agency established to promote social justice and internationally recognized human
and labor rights. See also United Nations Development Program; Workers' Rights.

NORTH — See Developed Countries.

NTBs — See Nontariff Barriers.

SUBSTANTIAL NEW PROGRAM OF ACTION (SNPA) — A comprehensive

statement of economic measures to be taken by the international community to
enhance the outlook for economic development in the least developed countries, as
agreed at the United Nations Conference on the Least Developed Countries, which
was held in Paris in August 1981. See also Developing Countries; Economic
Development; Least Developed Countries; United Nations Conference on Trade and
Development.

NV — See Normal Value.

O
WEST — See East-West Trade.
ODA — See Official Development Assistance.

OECD — See Organization for Economic Cooperation and Development.

SUPPLY — The quantity of an economic good that sellers will make available at a
given price at a certain time in a specific market. A supply schedule indicates the
quantity of an economic good that might enter the market at all possible prices at a
particular time. Supply in a market economy is principally determined by the
response of many individual entrepreneurs and firms to their perceptions of
opportunities for earning profits. See also Demand; Entrepreneur; Goods; Market;
Market Economy; Price Elasticity of Supply; Private Sector; Profit.

ACCESS TO SUPPLIES — See Supply Access.

U.S. BUREAU OF EXPORT ADMINISTRATION (BXA) — See Bureau of Export

Administration.

OMAs — See Orderly Marketing Agreements.

OPEC — See Organization of Petroleum Exporting Countries.

OPIC — See Overseas Private Investment Corporation.

JAPAN EXTERNAL TRADE ORGANIZATION (JETRO) — An organization

responsible for the day-to-day management and operation of Japan’s Ministry of
International Trade and Industry's (MITI) import promotion programs. Established
in 1958 to help Japanese firms export overseas, JETRO now assists foreign firms
seeking to export or invest in Japan. JETRO has a network of 33 offices in Japan and
79 offices overseas in 56 countries. See also Ministry of International Trade and
Industry.
MULTILATERAL TRADE ORGANIZATION (MTO) — An umbrella organization,
replacing GATT, to oversee implementation of the Uruguay Round results. Also
known as the World Trade Organization (WTO) or International Trade Organization
(ITO). See also Multilateral Trade Negotiations; Uruguay Round; World Trade
Organization.

ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT

(OECD) — An international agency based in Paris through which some 24
developed countries (the United States, Canada, Japan, Australia, New Zealand, and
countries of Western Europe) review international economic issues and coordinate
their policies, looking toward the expansion of world trade and investment and the
economic development of developing countries. The OECD succeeded the OEEC in
1961, after the post-World War II economic reconstruction of Europe had been
largely accomplished. See also Developed Countries; Developing Countries;
Development Assistance Committee; Economic Development; Group B; Group D;
Group of 7; Group of 77; International Arrangement on Export Credits; Large
Aircraft Sector Understanding; Multilateral Agreement on Investment; Newly
Industrializing Countries; Official Development Assistance; Organization for
European Economic Cooperation.

ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC) — A cartel

comprising 13 leading oil-producing countries that seek to coordinate oil production
and pricing policies. See also Cartel; Developing Countries.

ORGANIZATION FOR EUROPEAN ECONOMIC COOPERATION (OEEC) — An

intergovernmental organization created in 1948 by 16 Western European countries
to plan and implement the European Recovery Program, better known as the
Marshall Plan, following the economic devastation in Europe left by World War II.
The OEEC was superseded in 1961 by the OECD. See also European Recovery
Program; Organization for Economic Cooperation and Development.

INTERNATIONAL TRADE ORGANIZATION (ITO) — See General Agreement on

Tariffs and Trade.
INTERNATIONAL LABOR ORGANIZATION — See Core Labor Standards.

WORLD CUSTOMS ORGANIZATION — A 93-member international organization,

with headquarters in Brussels, Belgium, whose purpose is to obtain, in the interest
of international trade, the highest possible degree of uniformity among the customs
systems of member nations. The World Customs Organization was established in
1952 as the Customs Cooperation Council and subsequently renamed. The United
States became a member on November 5, 1970. The U.S. Customs Service is the lead
U.S. government agency in dealing with the various activities of the council,
including the work of the Harmonized System Committee. See also ATA Carnet;
Codes of Conduct; Customs; Customs and Administrative Entry Procedures;
Customs Classification; Customs Cooperation Council Nomenclature; Customs
Harmonization; Harmonization; Harmonized System; Harmonized Tariff Schedule
of the United States; Kyoto Convention; Most-Favored-Nation Treatment; Nontariff
Barriers; Port of Entry; Quarantine, Sanitary, and Health Laws and Regulations;
Tariff; Valuation.

WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO) — A specialized

agency of the United Nations system that seeks to promote international cooperation
in the protection of intellectual property. WIPO has some 170 member states and
currently administers 21 intellectual property treaties, including the 1883
International Union for the Protection of Industrial Property (Paris Convention, or
Paris Union) and the 1886 International Union for the Protection of Literary and
Artistic Works (Bern Convention, or Bern Union). As an organization, WIPO has
recently taken an aggressive role in harmonizing intellectual property law with the
introduction, in 1996, of the WIPO Copyright Treaty (WCT) and the WIPO
Performances and Phonograms Treaty (WPPT). Also in 1996, the Agreement
Between the World Intellectual Property Organization and the World Trade
Organization entered into force. This agreement facilitates cooperation between
WIPO and the WTO in implementing the TRIPS Agreement. WIPO is located in
Geneva, Switzerland. See also Agreement on Trade-Related Aspects of Intellectual
Property Rights; Bern Convention; Commercial Counterfeiting; Copyright;
Intellectual Property; Knowledge-Based Industry; Patent; Process Patent; Property;
Technology; Technology Transfer; Trademark; Trafficking in Counterfeit Goods and
Services.
WORLD TRADE ORGANIZATION (WTO) — A single institutional framework
encompassing the General Agreement on Tariffs and Trade and all the agreements
and legal instruments negotiated in the Uruguay Round. As part of the agreement
reached at the culmination of the Uruguay Round, the GATT contracting parties
agreed to create a new, permanent umbrella organization — the World Trade
Organization — to replace the GATT organization. The WTO facilitates the
implementation and administration of the agreements concluded during the
Uruguay Round. Like the GATT organization that it replaced, the WTO provides a
forum for multilateral trade negotiations, conducts reviews of member country
trade policies, and cooperates with the World Bank and the International Monetary
Fund in an attempt to achieve greater coherence in global economic policy-making.
However, the WTO goes beyond the GATT organization in several ways, all
intended to limit the scope for unilateral action by members. First, the range of trade
issues that the WTO addresses has been significantly expanded. Second, the WTO
has instituted a much stronger dispute settlement procedure. Third, the WTO
provides a sense of permanence that the GATT organization, which was intended to
be only a temporary institution, did not supply. Finally, under the WTO, member
countries are no longer permitted to accede selectively to some but not all of the
multilateral agreements that constitute the Uruguay Round Agreements, as was the
case with the Tokyo Round Agreements. Instead, nations that join the WTO must
agree to be bound by all the Uruguay Round Agreements (with the exception of four
plurilateral agreements). See also Codes of Conduct; Consultations; Dispute
Settlement; General Agreement on Tariffs and Trade; Tokyo Round; Uruguay
Round; Working Party.

ORGANIZATION OF THE WTO: Like GATT, the WTO maintains a secretariat

headed by a director-general. It meets in ministerial session at least once every two
years. Between these ministerial sessions, the WTO's General Council, composed of
representatives of all WTO members, meets monthly. The General Council oversees
the running of the dispute settlement body and the trade policy review mechanism,
under which the trade policies of individual WTO members are examined
periodically. Under the General Council are several subsidiary bodies, including a
Council on Trade in Goods, a Council on Trade-Related Intellectual Property Rights,
and a Council for Trade in Services. See also Brussels Ministerial; Codes of Conduct;
Consultations; Dispute Settlement; GATT Ministerial Meeting of 1982; Illustrative
List; Montreal Ministerial; Multilateral Trade Negotiations; Panel of Experts; Punta
del Este Ministerial; Seattle Ministerial; Working Party.

RELATIONSHIP BETWEEN GATT AND WTO: The terms "WTO" and "GATT" each
designate both an entity and a multilateral agreement governing international trade.
From 1947 to 1994, GATT referred to the organization headquartered in Geneva
through which the contracting parties to the General Agreement on Tariffs and
Trade would consult regarding the application of the agreement's provisions, as well
as a multilateral trade agreement among autonomous economic entities — the
General Agreement on Tariffs and Trade, sometimes referred to as GATT 1947 —
aimed at expanding international trade as a means of raising world welfare. With
the establishment of the WTO in 1995, however, the GATT organization ceased to
exist. In contrast, as discussed below, the GATT agreement was incorporated in total
into the constituent agreements of the WTO in a document referred to as GATT 1994.
The parties obligated under the GATT and WTO agreements are not identical, but
WTO members must, as a prerequisite to membership, be contracting parties to the
GATT. Moreover, the entry into force of the WTO Agreement, with its various
substantive agreements, did not terminate the force and effect of the GATT
provisions to which contracting parties are obligated. Indeed, many WTO
agreements currently in force build on, clarify, or strengthen provisions contained
in the GATT agreement. See also Accession; Contracting Party; General Agreement
on Tariffs and Trade; Protocol of Accession; Trade Policy Review; Uruguay Round.

CONSTITUENT AGREEMENTS OF THE WTO: The Uruguay Round concluded on

April 15, 1995, with the signing at Marrakesh, Morocco, of the Final Act Embodying
the Results of the Uruguay Round of Multilateral Trade Negotiations. The 119
nations that signed the final act agreed to submit to their governments for approval
the Agreement Establishing the World Trade Organization (the WTO Agreement),
which contained the substantive agreements negotiated during the Uruguay Round
or carried over (sometimes in renegotiated form) from the GATT organization. The
WTO Agreement sets out the general rules governing the structure and function of
the new WTO and contains in four annexes the new and continued substantive
agreements. Annex 1 contains all multilateral agreements on trade per se, including
trade in goods, trade in services, and trade in intellectual property. Specifically,
Annex 1A contains the following 13 multilateral agreements on trade in goods:
General Agreement on Tariffs and Trade 1994 (GATT 1994); Agreement on
Agriculture; Agreement on the Application of Sanitary and Phytosanitary Measures
(SPS); Agreement on Textiles and Clothing; Agreement on Technical Barriers to
Trade; Agreement on Trade-Related Investment Measures (TRIMS); Agreement on
Implementation of Article VI of GATT 1994 (Antidumping); Agreement on
Implementation of Article VII of GATT 1994 (Customs Valuation); Agreement on
Preshipment Inspection; Agreement on Rules of Origin; Agreement on Import
Licensing Procedures; Agreement on Subsidies and Countervailing Measures; and
Agreement on Safeguards.
Annex 1B contains the General Agreement on Trade in Services (GATS), and Annex
1C contains the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS). Annex 2 contains the Understanding on Rules and Procedures Governing
the Settlement of Disputes. Annex 3 contains the WTO's Trade Policy Review
Mechanism. Annex 4 contains the four plurilateral trade agreements: Agreement on
Trade in Civil Aircraft, Agreement on Government Procurement, International
Dairy Agreement, and International Bovine Meat Agreement.

The multilateral agreements in Annexes 1, 2, and 3 are integral parts of the WTO
Agreement that are binding on all members. The plurilateral agreements in Annex
4, on the other hand, are binding only on those members that have accepted to be
bound by them. The Dairy and Bovine Meat agreements were terminated at the end
of 1997. See also Agreement on Agriculture; Agreement on the Application of
Sanitary and Phytosanitary Measures; Agreement on Implementation of Article VI
of GATT 1994; Agreement on Import Licensing Procedures; Agreement on
Implementation of Article VII of GATT 1994; Agreement on Preshipment Inspection;
Agreement on Rules of Origin; Agreement on Safeguards; Agreement on Subsidies
and Countervailing Measures; Agreement on Technical Barriers to Trade;
Agreement on Textiles and Clothing; Agreement on Trade-Related Aspects of
Intellectual Property Rights; Agreement on Trade-Related Investment Measures;
Aircraft Agreement; Basic Telecommunications Services Agreement; Codes of
Conduct; Customs; Customs Classification; Free Zone; General Agreement on
Tariffs and Trade; General Agreement on Trade in Services; Imports; Information
Technology Agreement; Liquidation; Minimum Valuation; Most-Favored-Nation
Treatment; Multilateral Trade Organization; Sunset Review; Suspension of
Liquidation; Tariff; Tokyo Round; Trade Policy Review Mechanism; Trade-Related
Environment Issues; Trade-Related Investment Measures; Understanding on Rules
and Procedures Governing the Settlement of Disputes; Uruguay Round; Uruguay
Round Agreements Act; Valuation; World Customs Organization.

P
ANDEAN PACT — An arrangement between Bolivia, Colombia, Ecuador, Peru,
and Venezuela for the coordination of economic policies, including the formation of
a free trade zone in the Andean region. See also Customs Union; Free Trade Area
Agreement.

PROMISSORY NOTES — See Commercial Paper.

TRANSFER PAYMENTS — Within a national economy, payments made by the

government or the wealthier sectors of a population to the poorer people in the
country, as through social security payments, unemployment benefits, and widows'
pensions. Such payments are not made in return for goods or services but to
redistribute income. International transfer payments include grant aid by
governments to developing countries and programs and activities of private
voluntary agencies based in one country that bring financial benefits to people in
another country and are considered part of the current account in the balance of
payments. See also Additionality; Balance of Payments; Current Account; Direct
Tax; Official Development Assistance; Overseas Private Investment Corporation.

DEFICIENCY PAYMENTS — Government payments to compensate farmers for all

or part of the difference between producer prices actually paid for a specific
commodity and higher guaranteed target prices. See also Common Agricultural
Policy; Variable Levy.

PRIORITY FOREIGN COUNTRY (PFC), PRIORITY WATCH LIST (PWL), WATCH

LIST (WL) — Designations in the United States under Special 301 that describe the
USTR's response to different levels of intellectual property (IP) problems in a given
country. Countries having the most serious IP problems are designated as PFCs. If
a country is designated a PFC, USTR must immediately initiate a Section 301
investigation and begin negotiations to resolve the IP problems either bilaterally or
through initiation of WTO dispute settlement consultations. Should negotiations fail
to accomplish this, USTR must decide whether to take trade action (withdraw GSP,
raise tariffs, and the like). Countries designated PWL or WL are not necessarily
subject to sanctions; however, trade action or dispute settlement proceedings can be
launched against countries on the PWL or WL if warranted. See also Omnibus Trade
and Competitiveness Act of 1988; Section 301; Special 301; Super 301; United States
Trade Representative.
ACP COUNTRIES — African, Caribbean, and Pacific countries associated with the
European Community under the Lomé Convention. See also Developing Countries;
European Community; European Union; Lomé Convention; Reverse Preferences;
Tropical Products.

NEWLY INDUSTRIALIZING COUNTRIES (NICs) — A term coined by the

Organization for Economic Cooperation and Development to describe those
relatively advanced developing nations that have enjoyed rapid economic growth
in recent years and can be described as middle-income countries. Examples include
Brazil, Hong Kong, South Korea, Mexico, Singapore, and Taiwan. Newly
industrializing countries are sometimes referred to as newly industrializing
economies (NIEs). See also Developing Countries; Economic Cooperation Among
Developing Countries; Economic Development; Graduation; Organization for
Economic Cooperation and Development; Textiles.

LEAST DEVELOPED COUNTRIES (LLDCs or LDCs) — Some 48 of the world's

poorest countries, considered by the United Nations to be the "least developed" of
the less developed countries. Most of them are small in terms of area and population,
and some are land-locked or small island countries. They are generally characterized
by low per capita incomes, low literacy levels and medical standards, subsistence
agriculture, and a lack of exploitable minerals and competitive industries. Many
suffer from aridity, floods, hurricanes, or excessive animal and plant pests, and most
are situated in the zone 10 to 30 degrees north latitude. These countries have low
prospect of rapid economic development in the foreseeable future and are likely to
remain dependent upon official development assistance for many years. Most are in
Africa, but a few are in Asia, the Pacific, and the Western Hemisphere. The
abbreviation "LDCs" has increasingly been used in recent years to refer to the least
developed countries (although in the 1950s and 1960s, the term "less developed
countries" was more or less interchangeable with the term "developing countries").
See also Developing Countries; General Agreement on Tariffs and Trade;
International Development Association; Official Development Assistance; Part IV of
the GATT; Reciprocity; Soft Loan; Special and Differential Treatment; Substantial
New Program of Action; Transit Zone.

DEVELOPED COUNTRIES — A term used to distinguish the more industrialized

nations — including most OECD member countries — from developing or less
developed countries. The developed countries are sometimes collectively
designated as the Group B countries or the North, because most of them are in the
Northern Hemisphere. See also Developing Countries; Group B; Group of 7;
Industrial Revolution; Organization for Economic Cooperation and Development;
Plaza Accord; Williamsburg Summit.

DEVELOPING COUNTRIES — A broad range of countries that generally lack a high

degree of industrialization, infrastructure, and other capital investment,
sophisticated technology, widespread literacy, and advanced living standards
among their populations as a whole. The developing countries are sometimes
collectively designated as the Third World and sometimes as the South, because a
large number of them are in the Southern Hemisphere. All of the countries of Africa
(except South Africa), Asia (except Hong Kong, Singapore, South Korea, and
Taiwan), and Oceania (except Australia, Japan, and New Zealand), Latin America,
and the Middle East are generally considered developing countries, as are a few
European countries (Cyprus, Malta, Turkey, Poland, and Hungary, for example).
Some experts have identified four subcategories of developing countries as having
different economic needs and interests:

 A few relatively wealthy OPEC countries — sometimes referred to as oil-

exporting developing countries — share a particular interest in a financially
sound international economy and open capital markets.
 Newly Industrializing Economies (NIEs) have a growing stake in an open
international trading system.
 A number of middle-income countries — principally commodity exporters
— have shown a particular interest in commodity stabilization schemes.
 Some 48 very poor countries (least developed countries) are predominantly
agricultural, have sharply limited development prospects during the near
future, and tend to be heavily dependent on official development assistance.

See also ACP Countries; Additionality; Agency for International Development;

Bilateral Aid; Caribbean Basin Initiative; Development Assistance Committee;
Economic Cooperation Among Developing Countries; Economic Development;
Enabling Clause; Enterprise for the Americas Initiative; Framework Agreement;
Generalized System of Preferences; Global System of Trade Preferences; Graduation;
Group of 77; International Finance Corporation; International Trade Center
UNCTAD/WTO; Least Developed Countries; Lomé Convention; Multilateral Aid;
Newly Industrializing Countries; Non-Aligned Movement; North-South Trade;
Official Development Assistance; Paris Club; Part IV of the GATT; Public Law 480;
Reciprocity; Reverse Preferences; Soft Loan; South-South Trade; Special and
Differential Treatment; Structural Change; Substantial New Program of Action;
Textiles; Transfer Payments; Tropical Products; United Nations Conference on
Trade and Development; United Nations Development Program.

ADVANCED DEVELOPING COUNTRIES — See Developing Countries; Newly

Industrializing Countries.

LAND-LOCKED DEVELOPING COUNTRIES — See Least Developed Countries;

Transit Zone.

INDUSTRIALIZED COUNTRIES — See Developed Countries.

ISLAND DEVELOPING COUNTRIES — See Least Developed Countries.

LESS DEVELOPED COUNTRIES (LDCs) — See Developing Countries; Least

Developed Countries.

BINATIONAL PANEL — A panel established under the U.S.-Canada Free Trade

Agreement to assist in the resolution of trade disputes. Subsequently incorporated
into the North American Free Trade Agreement, review by the binational panel is
the principal mechanism to settle disputes among or between the United States,
Canada, and Mexico arising from antidumping duty, countervailing duty, and final
injury determinations. Chapter 19 of the NAFTA proffers the binational panel
review as an alternative to judicial review. To this end, in article 1904, the signatories
have established rules of procedure, as well as an "extraordinary challenge
procedure," to safeguard against any panel impropriety or gross error. In addition,
article 1903 provides the opportunity for a party to request that any amendment to
another party's antidumping or countervailing duty law be referred to a panel for a
declaratory opinion on whether the amendment is consistent with the NAFTA. See
also Bilateral Trade Agreement; Dispute Settlement; North American Free Trade
Agreement; U.S.-Canada Free Trade Agreement; U.S.-Canada Trade Commission.
PANEL OF EXPERTS — An ad hoc group of experienced individuals with
specialized skills established for a specified purpose. Under WTO dispute settlement
procedures, for example, panels composed of three or five trade policy experts may
be designated to arbitrate disagreements over trade policy between governments
with differing interpretations of their GATT and WTO obligations, examine the
evidence, and determine which interpretations are correct or incorrect. See also
Arbitration; Bilateral Trade Agreement; Codes of Conduct; Dispute Settlement;
General Agreement on Tariffs and Trade; North American Free Trade Agreement;
Understanding on Rules and Procedures Governing the Settlement of Disputes;
U.S.-Canada Free Trade Agreement; U.S.-Canada Trade Commission; World Trade
Organization.

GATT PANEL — A group of trade experts convened by the GATT contracting

parties to investigate any trade measures in dispute, make findings about the
consistency of the measures under the GATT, and provide recommendations as to
what, if anything, the contracting parties should request the disputing parties to do
to meet their obligations under the GATT. Generally, the contracting parties select
three officials of contracting parties that are not participants in the dispute; while
they serve on the panel, these officials are expected to act independently of their
governments' interests. See also Arbitration; General Agreement on Tariffs and
Trade; Dispute Settlement; Panel of Experts.

KNOCKED DOWN (K.D.) — Merchandise that is imported complete with all parts
but in an unassembled state (such as oversized machinery), usually to facilitate
packing and shipping.

EUROPEAN PARLIAMENT — An official institution of the European Union.

Currently, it has 626 members who are elected by constituencies in the respective
member states. Some members of the European Parliament (MEPs) are also
members of their national parliaments. The first direct elections to the European
Parliament took place in June 1979, and such elections have continued since that
time. The European Parliament, working with the European Commission and the
Council of the European Union, assists in drafting, amending, and adopting
European legislation and the EU budget. MEPs generally belong to national or pan-
European political parties. In addition, the European Parliament uses a system of
committees. Early in its existence, the European Parliament had little ability to
influence legislation since the Commission and Council of Ministers were required
only to consult the Parliament but not to obtain its approval. In subsequent treaties,
however, the European Parliament has been granted significant new powers in the
legislative process. Now, as a result, the European Commission and Council of the
European Union must consult the European Parliament and, depending on the
matter at issue, may be required to adhere to the Parliament's opinion before
adopting final legislation. The European Parliament is based in Strasbourg, France,
but holds a number of sessions in Brussels, Belgium. See also Council of the
European Union; European Commission; European Community; European Council;
European Union.

CONTRACTING PARTY — A country or economic entity that has adhered to the

General Agreement on Tariffs and Trade, thereby accepting the body of specified
obligations and benefits contained therein. The signatories to the GATT are referred
to in GATT documents as the CONTRACTING PARTIES, in full capital letters, when
they act collectively within the framework of the GATT. The corresponding term for
entities that have adhered to the WTO Agreement is "Member." See also General
Agreement on Tariffs and Trade; Protocol of Provisional Application; World Trade
Organization.

PART IV OF THE GATT — Articles XXXVI, XXXVII, and XXXVIII of the GATT,
added to the General Agreement in 1965, concerning the special needs of developing
countries. Part IV outlines principles and objectives for GATT treatment of LDCs,
committing contracting parties to assist these countries through trade liberalization
and laying down the principle that developed countries should not expect LDCs, in
the course of trade negotiations, to make contributions inconsistent with their
individual needs. See also Articles of the GATT; Developing Countries; Economic
Development; Enabling Clause; Framework Agreement; General Agreement on
Tariffs and Trade; Least Developed Countries; Reciprocity; Special and Differential
Treatment.

WORKING PARTY — A specialized intergovernmental body established by a

higher body to study a particular set of issues and report its findings and
recommendations. As was the case under the GATT, under the WTO a working
party may be designated by members to consider a specialized trade policy problem,
such as the formation of a customs union. Its recommendations may include
suggestions regarding actions that specific WTO members might take. Such working
parties are customarily open to all countries that wish to participate. See also Dispute
Settlement; General Agreement on Tariffs and Trade; World Trade Organization.

PATENT — A 17-year grant by the government to an inventor of the right to exclude

others from making, using, or selling his or her invention for a specific period of
time, after which the invention passes into the public domain. To be patentable, an
invention must represent a new, useful, and non-obvious process, machine,
manufacture, or composition of matter, or any new, useful, and obvious
improvements thereof. See also Agreement on Trade-Related Aspects of Intellectual
Property Rights; Intellectual Property; Knowledge-Based Industry; Omnibus Trade
and Competitiveness Act of 1988; Process Patent; Property; Section 337; Special 301;
Technology; Technology Transfer; World Intellectual Property Organization.

PROCESS PATENT — A process or method that consists of an act, operation, or step

or series thereof performed upon a specified subject matter to produce a physical
result. See also Agreement on Trade-Related Aspects of Intellectual Property Rights;
Commercial Counterfeiting; Copyright; Intellectual Property; Knowledge-Based
Industry; Patent; Property; Trademark; Trafficking in Counterfeit Goods and
Services; World Intellectual Property Organization.

LOSS — See Profit; Risk.

DISRUPTION — See Market Disruption.

MARKET DISRUPTION — A situation that occurs when a surge of imports of a

particular product causes a precipitous decline in sales of similar domestically
produced goods. See also Adjustment; Agreement on Safeguards; Agreement on
Textiles and Clothing; Dumping; Escape Clause; Multi-Fiber Arrangement
Regarding International Trade in Textiles; Orderly Marketing Agreements;
Safeguards; Sensitive Products; U.S. International Trade Commission.

PETITION — See Countervailing Duties; Dumping; Escape Clause.

PL 480 — See Public Law 480.

MARSHALL PLAN — See European Recovery Program.

SCHUMAN PLAN — See European Coal and Steel Community.

CENTRAL PLANNING — See Non-Market Economy.

PLURILATERAL — See Multilateral; World Trade Organization.

PURCHASING POWER — The ability of consumers to acquire goods and services

based on their possession of money and/or their recourse to credit. Aggregate
purchasing power within a market or a national economy reflects total disposable
income after taxes, and hence the level of employment. See also Consumers;
Consumption; Credit; Demand; Inflation; Money; Price Elasticity of Demand.

COMMON AGRICULTURAL POLICY (CAP) — A comprehensive system of

production targets and market regulations adopted by the European Community
covering most agricultural goods produced within the EC. Its purposes are to
achieve fair and rising standards of living for the farm populations of member states,
stable agricultural markets, and increased farm productivity and food security
within the EC. To achieve these objectives, the CAP relies on uniform prices and the
free circulation of agricultural goods among member states; preferences for
agricultural products produced within the EC; the imposition of variable levies on
imported goods to bring their prices to the level of EC prices; and subsidization of
exports to countries outside the EC. (In practice, agricultural prices sometimes vary
from one member state to another, principally because exchange rates applied to
goods moving from one country to another do not always reflect market exchange
rates.) The European Community finances the CAP through receipts from customs
duties, including variable levies, and the value-added tax. See also Conversion
Product; Deficiency Payments; Domestic Subsidy; European Community; Export
Subsidy; Restitutions; Threshold Price; Value-Added Tax; Variable Levy.
COMPETITION POLICY — A framework of rules and regulations designed to foster
the efficient allocation of resources as a means of promoting certain objectives, such
as economic vitality, consumer welfare and/or other desirable public policy goals.
Generally, antitrust laws and other competition laws and policies focus on efficient
resource allocation at the national level. The extent to which restraints on
competition, public or private, impair cross-border competition is being examined
in a variety of international trade and economic forums such as the WTO. See also
Antitrust; Export Trading Company; Monopoly; Restrictive Business Practices;
Unfair Trade Practices; Webb-Pomerene Act.

BEGGAR-THY-NEIGHBOR POLICY — A course of action through which a country

tries to reduce unemployment and increase domestic output by raising tariffs and
instituting nontariff barriers that impede imports, or by accomplishing the same
objective through competitive devaluation. Countries that pursued such policies in
the early 1930s found that other countries retaliated by raising their own barriers
against imports, which, by reducing export markets, tended to worsen the economic
difficulties that precipitated the initial protectionist action. The United States’
Smoot-Hawley Tariff Act of 1930 is often cited as a conspicuous example of this
approach. See also Column 2 Rates; Devaluation; Protectionism; Retaliation; Tariff
Act of 1930.

INDUSTRIAL POLICY — Traditional government policies intended to provide a

favorable economic climate for the development of industry in general or specific
industrial sectors. Instruments of industrial policy may include tax incentives to
promote investments or exports, direct or indirect subsidies, special financing
arrangements, protection against foreign competition, worker training programs,
regional development programs, assistance for research and development, and
measures to help small business firms. Historically the term "industrial policy" has
been associated with at least some degree of centralized economic planning or
indicative planning, but this connotation is not always intended by its contemporary
advocates. See also Infant Industry Argument; Investment Performance
Requirements; Managed Trade; Ministry of International Trade and Industry;
Mercantilism; Protection; Subsidy.

GOVERNMENT PROCUREMENT POLICIES AND PRACTICES — The means and

mechanisms through which official government agencies purchase goods and
services. Government procurement policies and practices can constitute nontariff
barriers to trade if they discriminate in favor of domestic suppliers when
competitive imported goods are cheaper or of better quality. The United States
pressed for an international agreement on government procurement during the
Tokyo Round to ensure that government purchases of goods entering into
international trade should be based on specific, published regulations that prescribe
open procedures for submitting bids. Most governments had traditionally awarded
such contracts on the basis of bids solicited from selected domestic suppliers or
through private negotiations with suppliers that involved little, if any, competition.
Other countries, including the United States, gave domestic suppliers a specified
preferential margin, as compared with foreign suppliers. The GATT Government
Procurement Code negotiated during the Tokyo Round sought to reduce, if not
eliminate, the "buy national" bias underlying such practices by improving
transparency and equity in national procurement practices and by ensuring effective
recourse to dispute settlement procedures. The WTO Agreement on Government
Procurement, a plurilateral agreement binding only on WTO members that have
signed it, provides competition rules covering purchases by government entities in
those member countries. In addition, it extends beyond the scope of the GATT
Government Procurement Code by covering services (including construction
services) and by opening procurement practices of state, provincial, and
departmental authorities, as well as public utilities, to international competition. See
also Agreement on Government Procurement; Buy American Act; Codes of
Conduct; Conditional Most-Favored-Nation Treatment; Discrimination; Dispute
Settlement; Nontariff Barriers; Tokyo Round; Trade Agreements Act of 1979;
Transparency.

PPA — See Protocol of Provisional Application.

UNFAIR TRADE PRACTICES — Unusual government support to firms — perhaps

export subsidies or certain anti-competitive practices by firms themselves, such as
dumping, boycotts, or discriminatory shipping arrangements — that result in
competitive advantages for those firms in international trade. See also Antitrust;
Boycott; Cartel; Competition Policy; Competitive; Demand; Domestic Subsidy;
Dumping; Efficiency; Export Subsidy; Market; Monopoly; Nontariff Barriers; Price;
Protection; Restrictive Business Practices; Section 301.

RESTRICTIVE BUSINESS PRACTICES (RBPs) — Acts or behavior of enterprises —

whether private or government controlled — that abuse a dominant economic
position and limit access to markets or otherwise unduly restrain competition. Such
practices include collusion to fix export or import prices, to allocate markets or
customers, to practice discriminatory pricing, to set prices at which export goods can
be resold, or to otherwise restrict imports and exports. A non-binding (or voluntary)
code of conduct negotiated in UNCTAD — formally called the Set of Multilaterally
Agreed Equitable Principles and Rules for the Control of Restrictive Business
Practices — lists business practices to be avoided and recommends steps that
enterprises and governments should take to discourage such activity. See also
Antitrust; Cartel; Competitive; Market; Market Access; Monopoly; Price; Protection;
Supply; Unfair Trade Practices.

PRICE — The value of something expressed in terms of money, or the amount of

money paid for it. Economists define the "equilibrium" price of goods and services
in a competitive market economy as the level at which the demand for them will
match their supply. See also Demand; Equilibrium; Goods; Inflation; Market
Economy; Market Forces; Money; Monopoly; Services; Supply.

PURCHASE PRICE (PP) — See Export Price.

GATE PRICE — See Variable Levy.

EXPORT PRICE (EP) — The price at which particular merchandise is first sold (or
agreed to be sold) before the date of importation by the producer or exporter of the
merchandise outside of the United States to an unaffiliated purchaser in the United
States, or to an unaffiliated purchaser for exportation to the United States. Under
U.S. antidumping law, dumping consists of sales of merchandise exported to the
United States at "less than fair value," when such sales materially injure or threaten
material injury to producers of like merchandise in the United States. The
determination that sales have been made at less than fair value involves a
comparison of "normal value" — the price at which the merchandise is sold within
the exporting country or to third countries (or a "constructed value") — and the "U.S.
price" — the price at which the merchandise is sold in the U.S. market. U.S. price
may be derived either from the export price or the constructed export price. The
price used to establish the EP can be adjusted to take into account certain costs,
charges, taxes, duties, and expenses. The term EP was introduced along with other
changes to U.S. antidumping law resulting from the Uruguay Round Agreements
Act in implementation of the WTO Agreement concluded during the Uruguay
Round. The term EP replaces the term Purchase Price (PP), which was its
counterpart under the pre-URAA law. See also Agreement on Implementation of
Article VI of GATT 1994; Anti-Dumping Code; Constructed Export Price; Dumping;
Normal Value; United States Price; Uruguay Round; Uruguay Round Agreements
Act; World Trade Organization.

CONSTRUCTED EXPORT PRICE (CEP) — The price at which particular

merchandise is first sold (or agreed to be sold) in the United States before or after
the date of importation by or for the account of the producer or exporter of such
merchandise or by a seller affiliated with the producer or exporter, to a purchaser
not affiliated with the producer or exporter. Under U.S. antidumping law, dumping
consists of sales of merchandise exported to the United States at less than fair value,
when such sales materially injure or threaten material injury to producers of like
merchandise in the United States. The determination that sales have been made at
less than fair value involves a comparison of "normal value" — the price at which
the merchandise is sold within the exporting country or to third countries (or a
"constructed value") — and the "U.S. price" — the price at which the merchandise is
sold in the U.S. market. The U.S. price may be derived either from the "export price"
(EP) or the "constructed export price" (CEP). The price used to establish the CEP can
be adjusted to take into account certain costs, charges, taxes, duties, commissions,
and expenses. The term "CEP" was introduced into U.S. antidumping law by the
Uruguay Round Agreements Act (URAA) in implementation of the WTO
Agreement concluded during the Uruguay Round. The term CEP replaces the term
"exporter's sales price" (ESP), which was its counterpart under pre-URAA law. See
also Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping
Code; Dumping; Export Price; Normal Value; United States Price; Uruguay Round;
Uruguay Round Agreements Act; World Trade Organization..

THRESHOLD PRICE — A minimum price. In the case of the European Community,

the price for grains and other agricultural products under which EC’s Common
Agricultural Policy operates. The threshold price is fixed at a level that will bring
the selling price of grains up to the existing price level in the marketing region within
the European Community where supplies are lowest. See Common Agricultural
Policy; European Community; Price; Restitutions; Variable Levy.

EXPORTER'S SALES PRICE (ESP) — See Constructed Export Price.

DUAL PRICING — Selling identical products for different prices in different
markets. Dual pricing often reflects export subsidy and dumping practices. See also
Domestic Subsidy; Dumping; Export Subsidy; Restitutions.

UNITED STATES PRICE (USP) — The price at which merchandise is sold in the U.S.
market. Under U.S. antidumping law, dumping consists of sales of merchandise
exported to the United States at "less than fair value," when such sales materially
injure or threaten material injury to producers of like merchandise in the United
States. The determination that sales have been made at less than fair value involves
a comparison of "normal value" — the price at which the merchandise is sold within
the exporting country or to third countries (or a "constructed value") — and the "U.S.
price." USP is either the export price or the constructed export price. See also
Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code;
Constructed Export Price; Dumping; Export Price; Level of Trade Adjustments;
Normal Value; Uruguay Round Agreements Act.

CEILING PRICE — See Buffer Stocks.

FLOOR PRICES — See Buffer Stocks.

CONSUMER PREFERENCE — See Demand; Structural Change.

PREFERENCES — Special advantages extended by importing countries to exports

from particular trading partners, usually by admitting their goods at tariff rates
below those imposed on imports from other supplying countries. See also Double-
Column Tariff; Framework Agreement; Generalized System of Preferences; Global
System of Trade Preferences; Lomé Convention; Margin of Preference; Reciprocity;
Single-Column Tariff; Special and Differential Treatment; Tariff.

REVERSE PREFERENCES — Tariff advantages once offered by developing

countries to imports from certain developed countries that granted them preferences
in turn. Reverse preferences characterized trading arrangements between the
European Community and some developing countries (the ACP countries) prior to
the advent of the Lomé Convention. See also ACP Countries; Caribbean Basin
Initiative; Developing Countries; Economic Development; European Community;
Generalized System of Preferences; Imports; Lomé Convention; North-South Trade;
Preferences; Tariff.

COLLATERAL — See Security.

APPAREL — See Multi-Fiber Arrangement Regarding International Trade in

Textiles; Textiles.

LOAN — A sum of money borrowed by a person, company, government, or other

organization. See also Capital Market; Interest; International Monetary Fund; Risk;
Security; Soft Loan; Tied Loan; World Bank.

TIED LOAN — A loan made by a government agency that requires a foreign

borrower to spend the proceeds in the lender's country or to buy the lender's
products. See also Countertrade; Loan.

SOFT LOAN — A credit providing for significantly easier repayment terms than
credits that are normally obtainable from commercial banks. A soft loan frequently
involves a grace period of several years and only a small servicing charge. See also
Additionality; Credit; Inter-American Development Bank; Interest; International
Development Association; International Monetary Fund; Loan; Multilateral Aid;
Multilateral Investment Fund; Official Development Assistance; Overseas Private
Investment Corporation; Risk; Security; Tied Loan; World Bank.

PREMIUM — A regular payment paid for an insurance policy that provides

protection against a risk. See also Insurance; Risk.

CUSTOMS AND ADMINISTRATIVE ENTRY PROCEDURES — Clearance

formalities at national ports of entry. These may be considered nontariff barriers if
they result in undue procedural delays that raise import costs. Such formalities may
include licensing procedures, health and sanitary controls designed to protect
consumers, certificates indicating the country of origin, and consular invoices
confirming that the shipment is what it appears to be. See also ATA Carnet; Consular
Formalities and Documentation; Consular Invoice; Customs; Customs
Classification; Customs Bond; Free Zone; Imports; Licensing; Liquidation; Nontariff
Barriers; Port of Entry; Quarantine, Sanitary, and Health Laws and Regulations;
Suspension of Liquidation; Tariff; Tariff Schedules; Transit Zone; Valuation; World
Customs Organization; World Trade Organization.

DATA PROCESSING — See Services.

MANUFACTURING PROCESSES — See Production; Property.

PRODUCTION — The process of creating or changing the form of commodities, as

through fabrication, manufacture, extraction, processing, curing, or aging. See also
Commodity; Consumption; Industrial Revolution; Primary Commodity; Profit;
Tariff Escalation; Technology; Welfare.

CONVERSION PRODUCT — A product, such as pork, eggs, or poultry, whose price

is affected under the EC’s Common Agricultural Policy by the price of feed grains.
Its value is determined by the feed cost per unit produced. See also Common
Agricultural Policy.

PRIMARY COMMODITY — A commodity in its raw or unprocessed state, such as

iron ore. In contrast, pig iron is considered a semi-processed product, and a steel
girder is a manufactured item. See also Commodity; Integrated Program for
Commodities; Production; Tariff Escalation.

SEMI-PROCESSED PRODUCT — See Primary Commodity; Tariff Escalation.

CORE COMMODITIES — See Integrated Program for Commodities.

SENSITIVE PRODUCTS — Domestically produced goods considered economically
and politically important in a country whose competitive position would be
threatened if protection against the imports of similar goods were reduced. The steel
and textiles industries in many developed countries, for example, employ large
numbers of workers, often in communities that cannot in the short term offer
alternative employment. For these reasons, there has been strong opposition to the
reduction of tariff and other trade-restricting measures affecting sensitive products.
See also Adjustment; Competitive; Escape Clause; Generalized System of
Preferences; Liberalization; Linear Reduction of Tariffs; Orderly Marketing
Agreements; Protection; Safeguards; Specific Limitations on Trade; Textiles;
Voluntary Restraint Agreements.

IMPORT-SENSITIVE PRODUCTS — See Sensitive Products.

TROPICAL PRODUCTS — Traditionally, agricultural goods of export interest to

developing countries in the tropical zones of Africa, Latin America, and East Asia,
such as coffee, tea, spices, natural rubber, palm oil, bananas, and tropical
hardwoods. See also Commodity; ACP Countries; Caribbean Basin Initiative;
Common Fund; Forward Market; Integrated Program for Commodities;
International Commodity Agreement; Lomé Convention; North-South Trade;
Primary Commodity.

EXPORT ENHANCEMENT PROGRAM (EEP) — A direct U.S. response to export

subsidies of other countries that subsidizes U.S.-produced agricultural products in
the world market. The EEP was initiated in May 1985 under provisions of the
Commodity Credit Corporation Charter Act and mandated by provisions of the
Food Security Act of 1985 and the Food, Agricultural, Conservation, and Trade Act
of 1990. Subsidies are paid to exporting operations in the form of either commodity
certificates redeemable for stocks held by the CCC or cash payments. See also
Commodity Credit Corporation; Domestic Subsidy; Export Subsidy; Subsidy.

UNITED NATIONS DEVELOPMENT PROGRAM (UNDP) — The arm of the

United Nations that provides financial resources to support technical assistance
activities designed to stimulate economic development in developing countries,
normally through such specialized agencies of the United Nations system as the
World Health Organization, the International Labor Organization, and the Food and
<Agriculture Organization, which serve as "executing agencies" for the UNDP. See
also Core Labor Standards; United Nations Conference on Trade and Development.

EUROPEAN RECOVERY PROGRAM (ERP) — A broad range of trade reform and

aid measures to hasten the rehabilitation of European economies after World War
II. The European Recovery Program is better known as the "Marshall Plan," after
U.S. Secretary of State George C. Marshall, who proposed the program in a speech
at Harvard University on June 5, 1947. The aid program was first administered by
the Economic Cooperation Administration (ECA) in Paris, while the program of
economic cooperation among the 16 participating European countries was
implemented by the Organization for European Economic Cooperation (OEEC).
Between 1948 and 1952, when the program was terminated, the participating
European countries received some $13,000 million from the United States. See also
Organization for European Economic Cooperation.

INTEGRATED PROGRAM FOR COMMODITIES (IPC) – A program established by

UNCTAD-IV to promote price stabilization for 18 commodities of particular interest
to developing countries: bananas, bauxite, cocoa, coffee, copper, cotton and cotton
yarn, hard fibers and products, iron ore, jute and jute products, manganese, meat,
phosphates, rubber, sugar, tea, tropical timber, tin, and vegetable oils. Of eight
active agreements, those on cocoa, coffee, and natural rubber contain price-
stabilization measures; five other agreements on tropical timber, jute, sugar, wheat,
and olive oil contain no economic provisions.

PROPERTY — An asset whose ownership gives the right to present or future

material benefits, as protected by law. The term property refers not only to the
possession of material goods, such as land, buildings, and production facilities, but
also to less tangible assets, such as manufacturing processes, design, and brand
names. See also Agreement on Trade-Related Aspects of Intellectual Property
Rights; Bern Convention; Commercial Counterfeiting; Copyright; Intellectual
Property; Knowledge-Based Industry; National Treatment; Patent; Process Patent;
Trademark; Trafficking in Counterfeit Goods and Services; World Intellectual
Property Organization.

INTELLECTUAL PROPERTY — Ownership as evidenced by patents, trademarks,

and copyrights conferring the right to possess, use, or dispose of products created
by human ingenuity. See also Bern Convention; Commercial Counterfeiting;
Copyright; General Agreement on Tariffs and Trade; Knowledge-Based Industry;
Omnibus Trade and Competitiveness Act of 1988; Patent; Process Patent; Property;
Section 337; Special 301; Technology; Technology Transfer; Trademark; Trafficking
in Counterfeit Goods and Services; Uruguay Round; Uruguay Round Agreements
Act; World Intellectual Property Organization; World Trade Organization.

PROTECTION — Government measures — including tariff and nontariff barriers

— that raise the cost of imported goods or otherwise restrict their entry into a market
and thus strengthen the competitive position of domestic goods. See also
Competitive; Import Relief; Infant Industry Argument; Market; Monopoly;
Nontariff Barriers; Peril Point; Protectionism; Quantitative Restrictions; Safeguards;
Tariff; Tariff Escalation.

TARGETING — A comprehensive mobilization of technology, capital, and skilled

labor involving direct or indirect government intervention in the marketplace in
support of a specific industry. Tax benefits, government loans, and government
procurement policies that restrict foreign competition, as well as more subtle means
of restricting competition and directing resources, are but a few of the practices that
support domestic industries targeted for growth. The end result is an allocation of
resources to specifically defined priority sectors of industry. See also Government
Procurement Policies and Practices; Industrial Policy; Managed Trade; Market
Access; Restrictive Business Practices; Unfair Trade Practice.

PROTECTIONISM — The deliberate use or encouragement of restrictions on

imports to enable relatively inefficient domestic producers to compete successfully
with foreign producers. See also Competitive; Effective Tariff Rate; Escape Clause;
Import Relief; Imports; Infant Industry Argument; Liberal; Liberalization; Managed
Trade; Mercantilism; Nontariff Barriers; Orderly Marketing Agreements; Protection;
Quantitative Restrictions; Safeguards; Tariff; Voluntary Restraint Agreements.

PROTOCOL OF ACCESSION — The legal document that records the obligations

agreed to as a precondition of accession to an international accord or organization.
See also Accession; Concession.
PROTOCOL OF PROVISIONAL APPLICATION (PPA) — The agreement among
the original GATT contracting parties to exempt from GATT provisions trade
measures established by domestic legislation that were in force at the time of the
contracting party's acceptance of the GATT. The protocol was intended to be
temporary, pending implementation of the Havana Charter or definitive acceptance
of GATT provisions by the contracting parties, but it has remained in effect, and
countries that signed the GATT in 1947 continue to invoke it to defend certain
practices that are otherwise inconsistent with their GATT obligations. Countries that
acceded to the GATT after 1947 have similar provisions incorporated in their
protocols of accession. See also Accession; Contracting Party; Discrimination;
General Agreement on Tariffs and Trade; Grandfather Clause; Protocol of
Accession; Residual Restrictions.

MONTREAL PROTOCOL — A multilateral agreement negotiated in 1988 to reduce

and eventually eliminate the use of chlorofluorocarbons and halogens so as to
prevent erosion of the ozone layer. The agreement is noteworthy for allowing the
use of trade sanctions to enforce its provisions. See also Montreal Ministerial; Trade-
Related Environmental Issues; Uruguay Round.

LOGISTICS PROVIDER — A person who acts as an agent on behalf of the shipper.

PRINCIPAL SUPPLIER — The country that is the most important source of a

particular product imported by another country. In trade negotiations, a country
offering to reduce its tariff or other barriers to imports of a particular item generally
expects the country that is the principal supplier of that item to reduce restrictions
on its imports of a product for which the first country is the principal supplier.
Depending on the trade negotiations, both countries then may grant the same
concessions to all other countries to which they accord most-favored-nation
treatment. See also Concession; General Agreement on Tariffs and Trade; Most-
Favored-Nation Treatment; Negotiations; Offer List; Round; World Trade
Organization.

ADVERTISING — See Services.

PORT OF ENTRY — Point at which individuals and imported goods enter a country
and clear its national customs. See also ATA Carnet; Codes of Conduct; Consular
Formalities and Documentation; Consular Invoice; Customs; Customs and
Administrative Entry Procedures; Customs Classification; Imports; Free Zone;
Licensing; Liquidation; Nontariff Barriers; Quarantine, Sanitary, and Health Laws
and Regulations; Suspension of Liquidation; Tariff; Transit Zone; Valuation; World
Customs Organization; World Trade Organization.

FREE PORT — See Free Zone.

PERIL POINT — A hypothetical limit beyond which a reduction in tariff protection

would cause serious injury to a domestic industry. U.S. legislation in 1949 that
extended the Trade Agreements Act of 1934 required the U.S. Tariff Commission to
establish peril points for U.S. industries. This requirement, which was a constraint
on U.S. negotiating positions in early GATT rounds, was eliminated by the Trade
Expansion Act of 1962. See also Protection; Round; Safeguards; Trade Agreements
Act of 1934; Trade Expansion Act of 1962; U.S. International Trade Commission.

Q
QRs — See Quantitative Restrictions.

QUID PRO QUO — See Reciprocity.

R
RBPs — See Restrictive Business Practices.
REINSURANCE — The shifting by agreement (known in the insurance industry as
a "treaty") of part of the risk (or "exposure") of the original insurer (the ceding
company) to another insurer (the reinsurer). Sometimes a reinsurer will, in turn, pass
on part of its risk to another reinsurer through a process known as retrocession.
International reinsurance is important to developed and developing countries alike.
See also Insurance; Risk.

RECIPROCITY — The practice by which governments extend similar concessions to

each other, as when one government lowers its tariffs or other barriers impeding its
imports in exchange for equivalent concessions from a trading partner on barriers
affecting its exports (a "balance of concessions"). Reciprocity was traditionally a
principal objective of negotiators in GATT rounds. Reciprocity is also defined as
"mutuality of benefits," "quid pro quo," and "equivalence of advantages." The
Enabling Clause of the Tokyo Round Framework Agreement, GATT Part IV
(especially GATT Article XXXVI), and the WTO Decision on Measures in Favour of
Least-Developed Countries exempt developing countries from the rigorous
application of reciprocity in their GATT and WTO obligations vis-à-vis developed
countries. See also Competitive; Concession; Enabling Clause; Framework
Agreement; Most-Favored-Nation Treatment; Multilateral Trade Negotiations;
Negotiations; North-South Trade; Preferences; Principal Supplier; Reverse
Preferences; Request List; Section 201; Special and Differential Treatment; Tariff Act
of 1930; Tokyo Declaration; Trade Agreements Act of 1934; Trade Agreements Act
of 1979; Welfare.

EXPORT CREDIT GUARANTEE FACILITY (ECGF) — A scheme developed in the

United Nations Conference on Trade and Development that would enable
developing country exporters to refinance their export credits extended to importers
in other countries under an international guarantee. See also United Nations
Conference on Trade and Development.

EARNINGS — See Foreign Exchange Earnings; Profit.

EQUAL PERCENTAGE REDUCTION OF TARIFFS — See Linear Reduction of

Tariffs.
HORIZONTAL REDUCTION OF TARIFFS — See Linear Reduction of Tariffs.

LINEAR REDUCTION OF TARIFFS — A reduction by a given percentage in all

tariffs maintained by countries participating in a round of trade negotiations, with
or without exceptions for products deemed to be "sensitive." It is sometimes called
"horizontal reduction of tariffs," "across-the-board reduction of tariffs," or "equal
percentage reduction of tariffs." The complexity and implicit limitations in
negotiating tariff reductions on an item-by-item basis in the Dillon Round
encouraged negotiators to try a linear reduction formula during the Kennedy
Round. The U.S. Trade Expansion Act of 1962, while not specifying an across-the-
board formula for the negotiations, authorized reductions of up to 50 percent on
virtually all items in the U.S. tariff schedules, hence permitting a linear application.
See also Dillon Round; Harmonization; Kennedy Round; Sensitive Products; Tariff;
Trade Expansion Act of 1962.

COMPENSATORY TARIFF REDUCTIONS — See Special and Differential

Treatment.

ACROSS-THE-BOARD TARIFF REDUCTIONS — See Linear Reduction of Tariffs.

RE-EXPORTS — Under U.S. trade law, goods of non-U.S. origin that are imported
into the United States and then shipped back either to the original country of origin
or to a third country. See also ATA Carnet; Drawback; Free Zone;

PACKAGING, LABELING, AND MARKING REGULATIONS — The requirement

or regulation, usually by an importing country, that imported goods be packaged,
labeled, or marked according to particular guidelines. Although ostensibly required
to protect consumers, nonstandard packaging, labeling, and marking requirements
frequently pose problems for exporters and may function as nontariff barriers. See
also Agreement on Technical Barriers to Trade; Nontariff Barriers; Quarantine,
Sanitary, and Health Laws and Regulations; Standards.

TECHNICAL REGULATIONS — Regulations that lay down characteristics for

products or related processes and production methods, including applicable
administrative provisions, with which compliance is mandatory. It may also include
or deal exclusively with terminology, symbols, packaging, marking, or labeling
requirements as they apply to a product, process, or production method. The WTO
Agreement on Technical Barriers to Trade obliges all WTO members to accord
national treatment to fellow members in the administration of its technical
regulations and to not apply technical regulations to create unnecessary obstacles to
international trade, among other things. This agreement strengthens the provisions
of its predecessor, the Tokyo Round Standards Code established in 1979 under the
auspices of the GATT. See also Agreement on the Application of Sanitary and
Phytosanitary Measures; Agreement on Government Procurement; Codes of
Conduct; Customs and Administrative Entry Procedures; Government Procurement
Policies and Practices; Licensing; Most-Favored-Nation; Nontariff Barriers;
Packaging, Labeling, and Marking Regulations; Quarantine, Sanitary, and Health
Laws and Regulations; Standards; Transparency.

UNCITRAL ARBITRATION RULES — See United Nations Commission on

International Trade Law.

RULES OF ORIGIN — See Agreement on Rules of Origin.

WAIVER — A formal exemption of a right or claim. A waiver in GATT is a formal

agreement of the contracting parties to relinquish or forego legal rights or to suspend
the application of specific GATT provisions. See also General Agreement on Tariffs
and Trade; Section 22.

RETALIATION — The suspension of concessions or other obligations under a trade

agreement, or the imposition of other barriers to trade, by a government in response
to the violation of a trade agreement or the imposition of other unfair trade barriers
by another government. In U.S. trade law, Section 301 of the Trade Act of 1974, as
amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay
Round Agreements Act, provides the legal authority for the United States to impose
retaliatory measures in response to trade agreement violations or other
discriminatory foreign trade practices that burden or restrict U.S. commerce. Such
authority includes the authority to suspend trade agreement concessions, to impose
duties or other import restrictions, to impose fees or restrictions on services, to enter
into agreements with the subject country to eliminate the offending practice or to
provide compensatory benefits for the United States,and to restrict service sector
authorizations. The actions may be taken against all countries or solely against the
subject country. Most actions may be taken against any goods or economic sectors,
without regard to whether the goods or economic sectors were the subject of the
investigation. See also Beggar-Thy-Neighbor Policy; Concession; Omnibus Trade
and Competitiveness Act of 1988; Section 301; Special 301; Super 301; Tariff Act of
1930; Trade Act of 1974; Uruguay Round; Uruguay Round Agreements Act; World
Trade Organization.

UNITED STATES TRADE REPRESENTATIVE (USTR) — A cabinet-level official,

with the rank of ambassador, who is the principal adviser to the U.S. president on
international trade policy. The U.S. Trade Representative is concerned with the
formulation of U.S. trade policy, the expansion of U.S. exports, U.S. participation in
the WTO (and formerly in the GATT), commodity issues, East-West and North-
South trade, and direct investment related to trade. As chairman of the U.S. Trade
Policy Committee, he/she is also the primary official responsible for U.S.
participation in all international trade negotiations. Prior to the Trade Agreements
Act of 1979, which created the Office of the U.S. Trade Representative, the
comparable official was known as the president's special representative for trade
negotiations, a position first established by the Trade Expansion Act of 1962. See also
General Agreement on Tariffs and Trade; National Trade Estimate Report;
Negotiations; Trade Agreements Act of 1979; Trade Expansion Act of 1962; Trade
Policy Committee.

SPECIAL REPRESENTATIVE FOR TRADE NEGOTIATIONS (STR) — See United

States Trade Representative.

OFFSET REQUIREMENTS — Conditions imposed on certain large exporters in

other countries by importing governments, usually to reduce cash outflows, such as
by requiring the exporter to purchase goods or services produced in the importing
country, to establish manufacturing facilities in the country, or to use locally
produced components in manufacturing. Offset requirements are frequently
associated with sales of military equipment. See also Countertrade; Nontariff
Barriers.
PERFORMANCE REQUIREMENTS — Measures that a government imposes on
enterprises either as a condition of doing business or making an investment, or in
return for a benefit or incentive. Examples include local content requirements,
export requirements or incentives, import restrictions, trade-balancing
requirements, foreign-exchange-balancing requirements, and measures that are
intended to influence a company's decision regarding technology transfer and
research and development. It is U.S. policy to seek to eliminate or limit such
measures in international trade and investment agreements because of their
distorting effects on trade, capital flows, and employment. See also Agreement on
Trade-Related Investment Measures; Investment Performance Requirements;
Restrictive Business Practices; Trade-Related Investment Measures.

INVESTMENT PERFORMANCE REQUIREMENTS — Special conditions imposed

on direct foreign investment by recipient governments, sometimes requiring
commitments to export a certain percentage of the output, to purchase given
supplies locally, or to ensure the employment of a specified percentage of local labor
and management. See also Agreement on Trade-Related Investment Measures;
Bilateral Investment Treaty; Convertibility; Exchange Controls; General Agreement
on Tariffs and Trade; Industrial Policy; Investment Performance Requirements;
Multilateral Agreement on Investments; Performance Requirements; Restrictive
Business Practices; Trade-Related Investment Measures; Uruguay Round; World
Trade Organization.

RESERVES — See Mercantilism; Reserve Currency.

DISPUTE SETTLEMENT — In the trade context, dispute settlement usually refers

to procedures for consultation, conciliation, and possible referral to a neutral third
party of a dispute between parties to a trade agreement. GATT articles XXII and
XXIII contain provisions for consultations and for the GATT contracting parties to
make recommendations and rulings in particular disputes. Under the auspices of
the WTO, the Understanding on Rules and Procedures on Governing the Settlement
of Disputes was concluded to strengthen the procedures established by the GATT.
In addition, the U.S.-Canada Free Trade Agreement and the North American Free
Trade Agreement contain detailed procedures for the settlement of disputes arising
under those agreements. See also Arbitration; Article 23 (GATT Article XXIII);
Binational Panel; Codes of Conduct; Compensation; Consultations; Framework
Agreement; Government Procurement Policies and Practices; North American Free
Trade Agreement; Panel of Experts; Tokyo Round; Understanding on Rules and
Procedures Governing the Settlement of Disputes; Uruguay Round; U.S.-Canada
Free Trade Agreement; World Trade Organization.

RESTITUTIONS — Payments to agricultural exporters in the European Community

under the Common Agricultural Policy to cover the difference between internal and
world market prices. See also Common Agricultural Policy; Domestic Subsidy; Dual
Pricing; European Community; Export Subsidy; Threshold Price; Variable Levy.

EXPORT RESTRAINTS — Quantitative restrictions imposed by exporting countries

to limit exports to specified foreign markets, usually pursuant to a formal or
informal agreement concluded at the request of the importing countries. See also
Orderly Marketing Agreements; Quantitative Restrictions; Voluntary Restraint
Agreements.

IMPORT RESTRICTIONS — See Nontariff Barriers; Protection; Tariff.

RESTRAINTS ON TRADE — See Nontariff Barriers; Liberalization; Tariff.

QUANTITATIVE RESTRICTIONS (QRs) — Explicit limits, or quotas, on the

quantity of a good that can be imported or exported during a specified time period.
Such limits are usually measured by physical quantity but sometimes by value. A
quota may be applied on a selective basis, with varying limits set according to the
country of origin or destination, or on a global basis that specifies only the total limit
and thus tends to benefit more efficient suppliers. Quotas are frequently
administered through a system of licensing. GATT Article XI generally prohibits the
use of quantitative restrictions, except under conditions specified by other GATT
articles. For example, Article XIX permits quotas to safeguard certain industries
from damage by rapidly rising imports; Articles XII and XVIII provide that quotas
may be imposed for balance-of-payments reasons under circumstances laid out in
Article XV; Article XX permits special measures to apply to public health, gold
stocks, items of archaeological or historic interest, and several other categories of
goods; Article XXI recognizes the overriding importance of national security. Article
XIII provides that quantitative restrictions, whenever applied, should be
nondiscriminatory. See also Agreement on Agriculture; Agreement on Textiles and
Clothing; Agreement on Safeguards; Article 11 (GATT Article XI); Article 15 (GATT
Article XV); Article 19 (GATT Article XIX); Balance of Payments Consultations;
Discrimination; Export Quotas; Export Restraints; General Agreement on Tariffs and
Trade; Import Relief; Licensing; Multi-Fiber Arrangement Regarding International
Trade in Textiles; Market Access; Nontariff Barriers; Protection; Protectionism;
Residual Restrictions; Safeguards; Section 22; Section 201; Section 406; Sensitive
Products; Specific Limitations on Trade; Tariff Quota; Tariff-Rate Quota; World
Trade Organization.

RESIDUAL RESTRICTIONS — Quantitative restrictions maintained by

governments since they became contracting parties to GATT or members of the
WTO, despite the general GATT and WTO prohibitions against such measures. See
also General Agreement on Tariffs and Trade; Grandfather Clause; Protocol of
Provisional Application; Quantitative Restrictions; World Trade Organization.

RETROCESSION — See Reinsurance.

SNAPBACK — A return to earlier and usually higher tariff levels. See also Tariff;
Tariff Schedules.

WILLIAMSBURG SUMMIT — A meeting in May 1983 of the heads of state of seven

major developed countries at Williamsburg, Virginia, which concluded, among
other things, that international consultations should be initiated, looking toward a
new GATT round of trade negotiations and on conditions for improving the
international monetary system. See also General Agreement on Tariffs and Trade;
Liberalization; Round.

BRUSSELS MINISTERIAL — An EC-hosted ministerial meeting scheduled for

Brussels, December 3-7, 1990, to conclude the Uruguay Round of multilateral trade
negotiations. However, discussions broke down, and the conclusion of the round
was postponed. See also GATT Ministerial Meeting of 1982; General Agreements on
Tariffs and Trade; Montreal Ministerial; Punta del Este Ministerial; Seattle
Ministerial; Uruguay Round; World Trade Organization.
MONTREAL MINISTERIAL — The mid-term review of progress in the Uruguay
Round held in Montreal, Canada, in December 1988. During the ministerial meeting,
frameworks for completing the negotiations were agreed in 11 out of the 15
negotiating areas, with no agreement reached on frameworks for agriculture,
intellectual property, textiles, and safeguards. See also Brussels Ministerial; GATT
Ministerial Meeting of 1982; Montreal Protocol; Punta del Este Ministerial; Round;
Seattle Ministerial; Uruguay Round; World Trade Organization.

PUNTA DEL ESTE MINISTERIAL — The Uruguay Round of multilateral trade

negotiations that was launched in Punta del Este, Uruguay, in September 1986 and
that produced the Punta del Este Declaration. The declaration, which included the
objectives and agenda for the negotiations, was the result of consultations that began
in 1985. See also Round; Uruguay Round.

SEATTLE MINISTERIAL — The WTO's third ministerial conference, held from

November 30 to December 3, 1999, in Seattle, Washington. The first ministerial
conference of the WTO was held at Singapore in December 1996. At the second WTO
ministerial conference, held in May 1998 in Geneva, ministers established a process
under the WTO General Council to prepare for the third ministerial conference. This
process called on the WTO General Council to submit recommendations regarding
the WTO's work program to ministers, enabling them to take decisions in Seattle.
However, those attending the Seattle ministerial failed to reach agreement on a new
round of trade negotiations. See also Brussels Ministerial; GATT Ministerial Meeting
of 1982; General Agreement on Tariffs and Trade; Montreal Ministerial; Multilateral
Trade Negotiations; Punta del Este Ministerial; Round; World Trade Organization.

GATT MINISTERIAL MEETING OF 1982 — The first meeting of the GATT

contracting parties at the ministerial level since the Tokyo Round in 1973. The 1982
meeting approved a GATT work program for the 1980s looking toward continued
liberalization of world trade, with particular attention to trade policy issues that
previously received relatively little attention in GATT, such as barriers to
agricultural trade, services, and obstacles to developing country exports. See also
General Agreement on Tariffs and Trade; Liberalization; Services; Tokyo Round;
Williamsburg Summit.

REPRISALS — See Retaliation.

ADMINISTRATIVE REVIEW — A review that may be conducted by the U.S.
Department of Commerce, 12 months after an antidumping or countervailing duty
order is issued in an investigation, to determine whether entries should be
liquidated at the duty rate specified in the order — which is, in effect, an estimate of
the final duty rate — or at a different rate. Thereafter, annual reviews may be
conducted on request to determine whether the existing duty rate should be
modified. Under certain circumstances, the Department of Commerce may
determine, on the basis of a series of administrative reviews, that an order should be
revoked entirely. See also Countervailing Duties; Dumping; Liquidation; Sunset
Review; Suspension of Liquidation.

HEDGE — Action taken by a buyer or seller to protect his or her business or assets
against a change in prices. A miller, for example, might buy a quantity of wheat to
convert into flour at a given point in time and agree at the same time to sell a similar
quantity of wheat that he does not own, at the same price, for delivery at a
designated future point in time. If the price of wheat falls, he will lose on the flour
while making a profit on the wheat he can later buy at the lower price. But if the
price of wheat rises, he will make an extra profit on his flour, which he will have to
sacrifice by purchasing wheat at the current high price. In either case, his production
profits are protected. See also Forward Market; Risk.

SUNSET REVIEW — A determination regarding the termination of antidumping

and countervailing duty orders and suspension agreements. Article 11 of the WTO
Agreement on Implementation of Article VI of GATT 1994 and Article 21 of the WTO
Agreement on Subsidies and Countervailing Measures provide for the termination,
or sunset, of such orders and suspension agreements after five years unless the
authorities determine that this would be likely to lead to the continuation or
recurrence of dumping, subsidization, or injury. Accordingly, section 220 of the
Uruguay Round Agreements Act provides that orders may be revoked and
suspension agreements terminated after five years if the terms are met. In
antidumping cases, the U.S. Department of Commerce is to determine whether
revocation of an order or termination of a suspension agreement could lead to
continuation or recurrence of dumping. In addition, it is to provide to the U.S.
International Trade Commission the magnitude of the margin of likely dumping if
the order is revoked or the suspended investigation terminated. In countervailing
duty cases, the Commerce Department is to determine whether revocation of an
order or termination of a suspension agreement could lead to continuation or
recurrence of a countervailable subsidy. In addition, the department is to provide to
the USITC the amount of the net countervailable subsidy that is likely to prevail if
the order is revoked or the suspended investigation terminated. In both
antidumping and countervailing duty cases, the USITC is to determine whether
revocation could lead to the continuation or recurrence of material injury within a
reasonably foreseeable period of time. See also Agreement on Implementation of
Article VI of GATT 1994; Agreement on Subsidies and Countervailing Measures;
Anti-Dumping Code; Countervailing Duties; Dumping; International Trade
Administration; Uruguay Round Agreements Act; U.S. International Trade
Commission.

INDUSTRIAL REVOLUTION — The emergence of the factory system of

production, in which workers were brought together in one plant and supplied with
tools, machines, and materials with which they worked in return for wages.
Narrowly speaking, the Industrial Revolution was spearheaded by the rapid
changes in the manufacture of textiles, particularly in England, between about 1770
and 1830. More broadly, the term applies to continuing structural economic change
in the world economy. Before the Industrial Revolution, the "domestic system" of
production prevailed in the 16th and 17th centuries. See also Domestic System of
Production; Production; Structural Change; Textiles.

RISK — The possibility of gain or loss, depending upon the success or failure of the
financial or commercial venture in question (speculative risks). Banks also accept
risks when they make loans, which may either be repaid or defaulted. Capital
investors are sometimes referred to as risk-bearers; their investments may be
considered "venture capital" if they appear to be subject to considerable risk, as in
the case of new enterprises, or "security capital" if they appear to be subject to little
risk. Pure risk is involved when there is no possibility of gain, but only the possibility
of loss. Insurance is concerned with pure risks, not speculative risks. See also Credit;
Entrepreneur; Insurance; Interest; Loan; Profit; Reinsurance.

SPECULATIVE RISK — See Risk.

PURE RISK — See Risk.

WEALTH — Capital, money, property, possessions, evidence of ownership, access
to benefits, or anything else that has material value. See also Capital; Money;
Property; Value.

ROUND — A cycle of multilateral trade negotiations, under the aegis of GATT and
now of the WTO, culminating in simultaneous trade agreements among
participating countries to reduce tariff and nontariff barriers to trade. The GATT
held eight rounds: Geneva, 1947-48; Annecy, France, 1949; Torquay, England, 1950-
51; Geneva, 1956; Geneva, 1960-62 (the Dillon Round); Geneva, 1963-67 (the
Kennedy Round); Geneva, 1973-79 (the Tokyo Round); Geneva, 1986-1993 (the
Uruguay Round). The Uruguay Round resulted in the establishment of the World
Trade Organization in 1994. See also Dillon Round; General Agreement on Tariffs
and Trade; Kennedy Round; Liberalization; Multilateral Trade Negotiations;
Negotiations; Offer List; Peril Point; Reciprocity; Request List; Tokyo Round; Trade
Agreement; Trade Agreements Act of 1934; Uruguay Round; Williams Commission;
World Trade Organization.

DILLON ROUND — Trade negotiations that took place under the aegis of GATT
from 1960 to 1962, named after Douglas Dillon, then the U.S. under secretary of state,
who publicly proposed the negotiations. See also General Agreement on Tariffs and
Trade; Kennedy Round; Round; Tokyo Round; Uruguay Round.

KENNEDY ROUND — The popular name for the sixth and, at that time, most
ambitious round of trade negotiations under the aegis of the GATT. The Kennedy
Round, which lasted from 1963 to 1967, yielded agreements reducing prevailing
tariff levels maintained by developed countries on industrial products by about one-
third, an Anti-Dumping Code, and a short-lived International Wheat Agreement
that was intended to stabilize world wheat prices. (The Wheat Agreement replaced
the latest in a series of International Wheat Agreements going back to the 1950s.) See
also Anti-Dumping Code; General Agreement on Tariffs and Trade; Linear
Reduction of Tariffs; Round; Special and Differential Treatment; Tariff; Trade
Expansion Act of 1962.
S
SAFEGUARDS — Temporary and selective measures (such as increased tariffs, tariff
quotas,or quantitative restrictions) explicitly designed to slow imports in order to
enable a particular domestic industry to adjust to heightened competition from
foreign suppliers. Safeguard actions are known in the United States as "escape
clause" actions, and the authority to take such actions is provided for in various U.S.
laws, most prominently Section 201 of the Trade Act of 1974, as amended. The
GATT's safeguard provision, Article XIX (Emergency Action on Imports of
Particular Products), recognizes a country's right to withdraw or modify concessions
granted earlier or to impose new restrictions if a product is "being imported in such
increased quantities...as to cause or threaten serious injury to domestic producers"
and to maintain such restrictions "for such time as may be necessary to prevent or
remedy such injury." Exporters have a complementary right under GATT not to be
deprived arbitrarily of access to foreign markets. The WTO Agreement on
Safeguards establishes rules for the application of the safeguard measures contained
in GATT Article XIX. See also Adjustment; Agreement on Safeguards; Agreement
on Textiles and Clothing; Article 11 (GATT Article XI); Article 19 (GATT Article
XIX); Codes of Conduct; Competitive; Concession; Escape Clause; Framework
Agreement; General Agreement on Tariffs and Trade; Import Relief; Market Access;
Omnibus Trade and Competitiveness Act of 1988; Orderly Marketing Agreements;
Protectionism; Quantitative Restrictions; Section 22; Section 201; Section 406;
Selective Quotas; Sensitive Products; Specific Limitations on Trade; Special and
Differential Treatment; Tokyo Round; Trade Barriers; Trade Act of 1974; Uruguay
Round; U.S. International Trade Commission; Voluntary Restraint Agreements;
World Trade Organization.

SANCTIONS — See Embargo.

SDRs — See Special Drawing Rights.

SECTION 22 — A provision of the Agricultural Adjustment Act of 1933, as

amended, that authorizes the U.S. president to impose quantitative restrictions on
imports of agricultural products when such imports appear likely to affect price
support programs operated by the U.S. Department of Agriculture. The president
has imposed such quotas on imports of wheat, flour, cotton, peanuts, cheese, butter,
and other dairy products. In 1956 the GATT contracting parties authorized a waiver
of Article XI prohibitions against quantitative restrictions for U.S. actions under
Section 22. Since that time, the United States has submitted an annual report to the
contracting parties on all relevant actions and the reasons for them. See also Article
11 (GATT Article XI); Import Relief; Public Law 480; Quantitative Restrictions;
Safeguards; Sensitive Products; Waiver.

SECTION 201 — A provision of the U.S. Trade Act of 1974, as amended by the
Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round
Agreements Act of 1994, known as an "escape clause." Section 201 is the United
States' implementation of Article XIX, the safeguard provision of the 1994 GATT, as
interpreted by the WTO Agreement on Safeguards. It sets forth the authority and
procedures for the president to take action, including import relief, to facilitate
efforts by a domestic industry that has been seriously injured by imports to make a
positive adjustment to import competition. Under Section 201, the U.S. International
Trade Commission (USITC) investigates whether an article is being imported into
the United States in such increased quantities, absolute or relative to domestic
production, as to be a substantial cause of serious injury, or threat thereof, to a
domestic industry. If the USITC finds that a domestic industry has been seriously
injured or threatened with serious injury, it recommends to the president relief to
the industry in the form of temporary import restrictions (tariffs, quotas, or tariff-
rate quotas) or trade adjustment assistance. Such import relief cannot exceed eight
years, including extensions. See also Adjustment; Adjustment Assistance;
Agreement on Safeguards; Article 19 (GATT Article XIX); Compensation; Escape
Clause; Import Relief; Omnibus Trade and Competitiveness Act of 1988; Reciprocity;
Safeguards; Section 406; Trade Act of 1974; Uruguay Round Agreements Act; U.S.
International Trade Commission.

SECTION 232 INVESTIGATIONS — A provision under the U.S. Trade Expansion

Act of 1962, as amended, under which the U.S. Department of Commerce's Bureau
of Export Administration conducts investigations of the effect of imports on U.S.
national security. Investigations may be initiated at the request of an interested party
or may be initiated by the Commerce Department. Among the most important
criteria considered are:

•Requirements of the defense and essential civilian sectors;

•Maximum domestic production capacity;

•Quantity, quality, and availability of imports;

•Impact of foreign competition on the economic welfare of the essential domestic

industry;

•Other factors relevant to the unique circumstances of the specific case.

The Secretary of Commerce has 270 days to present his/her findings and
recommendations to the president. During this time, the Commerce Department
may provide the public with an opportunity to comment and present information
and advice relevant to the application. Upon receipt of the Commerce Department
report, the president has 90 days to determine whether he agrees with the
department's findings and to determine whether to use his/her statutory authority
to "adjust imports" to remove any identified national security threat. Commerce has
had authority for conducting Section 232 investigations since 1980. See also General
Agreement on Tariffs and Trade; Nontariff Barriers; Quantitative Restrictions; Trade
Expansion Act of 1962.

SECTION 301 — A provision of the U.S. Trade Act of 1974, as amended, that gives
the U.S. Trade Representative the authority to negotiate to eliminate a large range of
foreign trade practices. The authority to take such action requires a finding that a
foreign government has denied U.S. rights under a trade agreement, has taken action
that is inconsistent with or otherwise denies benefits to the United States under a
trade agreement; or has engaged in an act, policy, or practice that is unjustifiable,
unreasonable, or discriminatory and that burdens or restricts U.S. commerce. See
also Concession; Domestic Subsidy; Export Subsidy; Omnibus Trade and
Competitiveness Act of 1988; Special 301; Super 301; Trade Act of 1974; Unfair Trade
Practices.

SECTION 332 — A provision of the U.S. Tariff Act of 1930 that provides the basic
statutory authority for the U.S. International Trade Commission (USITC) to conduct
fact-finding investigations and issue reports on any matter relating to trade. Such
reports do not contain recommendations unless they have been specifically
requested, and they do not provide a legal basis for other trade actions by the
president. Investigations conducted by the USITC under Section 332 are instituted
in response to a request from the Ways and Means Committee of the U.S. House of
Representatives, the Finance Committee of the U.S. Senate, either branch of the
Congress, the president, the U.S. Trade Representative under authority delegated by
the president, or upon the commission's own motion. See also Tariff Act of 1930;
United States Trade Representative; U.S. International Trade Commission.

SECTION 337 — A provision of the U.S. Tariff Act of 1930 that protects U.S.
industries from imports that infringe valid patents, copyrights, trademarks, and
other intellectual property rights. Parties can obtain relief in the form of cease-and-
desist and exclusion orders if they succeed in showing they are a "domestic industry"
under the statute and that their intellectual property right is valid and infringed.
Economic injury does not need to be demonstrated regarding patents, federally
registered trademarks, copyrights, and semiconductor mask works. For other forms
of intellectual property, economic injury must be demonstrated. The president may
approve, disapprove, or fail to disapprove any U.S. International Trade Commission
(USITC) order within a 60-day review period. The president may disapprove a
USITC exclusion order for policy reasons, which include the effect of the order on
the public health and welfare, competitive conditions in the U.S. economy, the
production of like or directly competitive items in the United States, the effect of the
order on U.S. consumers, and the impact of the order on foreign relations. See also
Commercial Counterfeiting; Copyright; Intellectual Property; Knowledge-Based
Industry; Patent; Process Patent; Property; Special 301; Tariff Act of 1930;
Trademark; Trafficking in Counterfeit Goods and Services.

SECTION 406 — A provision of the U.S. Trade Act of 1974 established to provide a
remedy against market disruption caused by imports into the United States from
communist countries. The provisions of Section 406, as amended by the Omnibus
Trade and Competitiveness Act of 1988, are similar to those under Sections 201 to
203 of the Trade Act of 1974. However, Section 406 provides a lower standard of
injury causation and, unlike Section 201, the investigation can be brought against
imports from a specific country rather than all imports of a specific product. Section
406 requires the U.S. International Trade Commission (USITC) to investigate
complaints filed by domestic industries or workers claiming that imports from a
communist country are causing market disruption with respect to a domestically
produced article. If the USITC finds that market disruption exists, it must
recommend to the president relief in the form of temporary import restrictions such
as tariffs, quotas, or tariff-rate quotas to prevent or remedy such market disruption.
See also Agreement on Safeguards; Article 19 (GATT Article XIX); Import Relief;
Market Disruption; Nonmarket Economy; Protectionism; Safeguards; Section 201;
Trade Act of 1974; U.S. International Trade Commission.

PRIVATE SECTOR — The part of a national economy comprising privately owned

enterprises and individuals and non-profit-making organizations, as contrasted
with the public sector, comprising government and government-controlled entities.
See also Market Economy; Public Sector.

PUBLIC SECTOR — The part of a national economy accounted for by government

expenditures and state-owned or state-controlled enterprises. See also Nonmarket
Economy; Private Sector.

INSURANCE — An agreement or contract (commonly called a policy) between the

insured, who pays a premium, and the insurer, who in return promises to
compensate the insured if he suffers specified losses, as through fire, theft, or
automobile accident. The premiums are so calculated that the total amount paid by
all insured parties will enable the insurer to pay claims of policy holders and
administrative costs. In effect, insurance spreads risk so that an individual who
suffers loss is compensated at the expense of all those who insure against it. See also
Capital Market; Export Credit Insurance; Premium; Reinsurance; Risk; Services;
Underwriter.

EXPORT CREDIT INSURANCE — Insurance designed to guarantee that an

exporter will be paid for his/her goods after delivery. If the exporter has such
insurance, responsibility for collecting payment from the company that imports the
goods in another country, or the company's agent, rests with the underwriter of the
export credit insurance. See also Export-Import Bank of the United States; Insurance;
Underwriter.

U.S. FOREIGN AND COMMERCIAL SERVICE (USF&CS) — An organization

within the U.S. Department of Commerce that has offices in more than 220 cities
worldwide to assist U.S. exporters by providing expert counseling and advice,
information on markets abroad, international contacts, and advocacy services.
Overseas, the Commercial Service is present in 78 countries. In the United States, the
Commercial Service operates 92 Export Assistance Centers that offer companies a
comprehensive range of export facilitation services in one location. The Commercial
Service promotes U.S. exports through government-to-government representation;
supports the National Export Strategy's emphasis on big emerging markets through
specialized export counseling and facilitation services, including customized market
research covering specific industry sectors and current business trends; location of
potential overseas representatives and distributors; and the provision of export
promotion assistance in key industries, including environmental technologies and
defense conversion. See also Balance of Trade; Bureau of Export Administration;
Exports; Export-Import Bank of the United States; Imports; International Trade
Administration; National Trade Data Bank; Overseas Private Investment
Corporation.

SERVICES — Economic activities — such as transportation, banking, insurance,

tourism, telecommunications, advertising, entertainment, data processing, and
consulting — that normally are consumed as they are produced, as contrasted with
economic goods that are more tangible. Service industries, which are usually labor
intensive, have become increasingly important in domestic and international trade
since at least the 1920s. Services account for about two-thirds of the economic
activity of the United States and for a rapidly increasing percentage of U.S. exports.
Traditional GATT rules have not applied the same discipline to restrain the
imposition of nontariff barriers to trade in services that has been applied to
international trade in goods. The establishment and incorporation into GATT of
disciplines on trade in services was a major objective of the Uruguay Round. The
WTO General Agreement on Trade in Services (GATS) established a framework to
permit freer trade in over 140 sectors including construction and tourism. It sets
some basic rules including national treatment, transparency, and recognition
requirements for purposes of permitting foreign nationals to be professionally
licensed or certified in another market. See also GATT Ministerial Meeting of 1982;
General Agreement on Trade in Services; Insurance; Invisible Trade; Price;
Structural Impediments Initiative; Uruguay Round; Utility.

CONSULTING SERVICES — See Services.

BUY NATIONAL BIAS — See Government Procurement Policies and Practices.

HARMONIZED SYSTEM (HS) — A complete product classification system,
formally known as the Harmonized Commodity Description and Coding System,
that is organized in a particular framework and that employs a numbering or coding
system consistent with its organizational arrangement. At the international level, the
HS comprises approximately 5,000 article descriptions that appear as headings and
subheadings, arranged in 97 chapters grouped in 21 sections. Sections of the HS
group together articles from branches of industry and commerce (for example,
animals and animal products, or textiles and textile articles) or by their functions or
use (for example, footwear, arms and ammunition). The HS was developed by the
Customs Cooperation Council and has been adopted by most major trading nations.
See also Codes of Conduct; Customs; Customs Classification; Customs Cooperation
Council Nomenclature; Customs Harmonization; Harmonization; Harmonized
Tariff Schedule of the United States; Imports; Kennedy Round; Kyoto Convention;
Most-Favored-Nation Treatment; Tariff; Tariff Schedules; Tokyo Round; Valuation;
World Customs Organization; World Trade Organization.

HARMONIZED COMMODITY DESCRIPTION AND CODING SYSTEM — See

Customs Harmonization; Harmonized System.

NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM (NAICS) — An

economic classification system developed jointly by the United States, Canada, and
Mexico and implemented in 1997 to provide a uniform and consistent mechanism
for collecting and analyzing industry statistics across North America. The NAICS
replaces the 1987 U.S. Standard Industrial Classification (SIC).

FACTORY SYSTEM OF PRODUCTION — See Industrial Revolution.

EUROPEAN SYSTEM OF CENTRAL BANKS (ESCB) — The framework

organization that administers monetary policy in the European Union. The
European System of Central Banks came into existence on January 1, 1999. It is
composed of the European Central Bank and national central banks from the
member states. However, national central banks from member states that are not a
part of the Euro Zone may not participate in monetary policy-making as regards the
euro. The ESCB's primary objective is to maintain price stability in the EU. See also
European Currency Unit; Euro; Euro-Zone; European Central Bank; European
Community; European Union.

GENERALIZED SYSTEM OF PREFERENCES (GSP) — A concept developed within

the United Nations Conference on Trade and Development to encourage the
expansion of manufactured and semi-manufactured exports from developing
countries by making such goods more competitive in developed country markets
through tariff preferences. The GSP reflects international agreement, negotiated at
UNCTAD-II (New Delhi, 1968), that a temporary and nonreciprocal grant of
preferences by developed countries to developing countries would be equitable and,
in the long term, mutually beneficial. To meet its GSP commitment, each
industrialized nation determined its own system of preferences, specifying the
goods, the margins of preference, and, in some cases, the value or volume of goods
that would benefit from preferential treatment. Twenty-seven industrialized
countries, including the United States, now maintain GSP programs. Historically,
the United States’ GSP program has been implemented under legislation providing
for set terms and, therefore, requiring renewal. The U.S. Trade Act of 1974
authorized the first U.S. GSP arrangement for the period of January 1, 1976, until
January 4, 1985. The U.S. program was extended through July 4, 1993, by the Trade
and Tariff Act of 1984. Since 1994, legislative renewals have authorized only one-
year extensions of the program. Approximately 4,100 categories of articles in the
tariff schedule have been designated as eligible for duty-free entry into the United
States under GSP. But the 1974 legislation explicitly indicated a number of
exceptions, including textiles, clothing, watches, steel, footwear, glass, some
electronic articles, and other sensitive products that could not enter the United States
duty free under the GSP authority. The Trade Act of 1974 also stated that any
country supplying more than 50 percent of total U.S. imports of a particular item in
one year, or exceeding a specified dollar amount for that item, would be ineligible
for GSP benefits for that product during the following year because it had no
"competitive need" for such benefits. The U.S. Trade Agreements Act of 1979
provided that the 50 percent limit could be waived for a product falling below a
certain dollar amount that was to be adjusted annually to reflect changes in the U.S.
gross national product. Some developing countries are ineligible to receive U.S. GSP
benefits — those that participate in OPEC or "other cartel-like arrangements"; those
that nationalize property of U.S. citizens without providing satisfactory
compensation; those that fail to cooperate in international drug control efforts; those
that exceed a certain per capita GNP; those that fail to maintain reasonable and
equitable market access or adequate intellectual property protection for U.S. goods,
services, and investment; those that fail to ensure internationally recognized worker
rights. The Enabling Clause, adopted as a consequence of the Tokyo Round,
established a legal basis within GATT for extending GSP benefits, notwithstanding
GATT's most-favored-nation clause. See also Competitive; Enabling Clause;
Framework Agreement; General Agreement on Tariffs and Trade; Graduation;
Infant Industry Argument; Lomé Convention; Margin of Preference; North-South
Trade; Preferences; Reverse Preferences; Sensitive Products; Special and Differential
Treatment; Trade Act of 1974; Trade Agreements Act of 1979; United Nations
Conference on Trade and Development.

MULTILATERAL SAFEGUARD SYSTEM — See Safeguards.

GLOBAL SYSTEM OF TRADE PREFERENCES (GSTP) — An objective developed

by the Group of 77 within UNCTAD’s Economic Cooperation Among Developing
Countries program looking toward the negotiation of special intra-developing
country preferences and the reduction of nontariff barriers impeding South-South
trade. See also Economic Cooperation Among Developing Countries; Group of 77;
Nontariff Barriers; Preferences; South-South Trade; United Nations Conference on
Trade and Development.

DOMESTIC SYSTEM OF PRODUCTION — The system of economic production

that prevailed in Europe in the 16th and 17th centuries, prior to the Industrial
Revolution, under which merchants supplied materials and sometimes tools and
machines to workers who produced finished goods in their homes and turned them
over to the merchants. See also Industrial Revolution; Production.

SNPA — See Substantial New Program of Action.

TRANSATLANTIC ECONOMIC PARTNERSHIP (TEP) — An initiative that builds

on the New Transatlantic Agenda, adopted in 1995, to expand U.S.-EU cooperation
on diplomatic, trade, and global concerns. The Transatlantic Economic Partnership
was announced jointly by President Bill Clinton and his EU counterparts at the U.S.-
EU Summit on May 18, 1998, in London. Under the TEP, the United States and the
EU plan to reduce persistent barriers in manufacturing, services, and agriculture and
tackle a wide range of bilateral and multilateral trade issues. See also European
Community; European Union; Nontariff Barriers.
STABEX — See Lomé Convention.

SUBSIDIARY — A company controlled by another company, usually through

ownership of 50 to 100 percent of its shares or through other organizational or
managerial arrangement. See also Multinational Corporation; Restrictive Business
Practices; Unfair Trade Practices.

SUBSIDY — An economic benefit granted by a government to domestic producers

of goods or services, often to strengthen their competitive position. The subsidy may
be direct (a cash grant) or indirect (low-interest export credits guaranteed by a
government agency, for example). The Illustrative List of Export Subsidies, an annex
to the WTO Agreement on Subsidies and Countervailing Measures, enumerates
certain practices that, under certain circumstances, constitute countervailable export
subsidies within the terms of the agreement. These include direct subsidies to a firm
or industry contingent upon export performance, currency retention schemes, or
other practices that involve a bonus, preferential internal transport and freight
charges on export shipments, remission of direct taxes specifically related to exports,
provision of services or goods on preferential terms for use in the production of
exported goods, and export credit guarantees. See also Agreement on Subsidies and
Countervailing Measures; Bounties; Competitive; Countervailing Duties; Domestic
Subsidy; Export Subsidy; Illustrative List; Industrial Policy; Infant Industry
Argument; International Arrangement on Export Credits; Nontariff Barriers.

EXPORT SUBSIDY — A subsidy such as those described in the Illustrative List of

Export Subsidies of the WTO Agreement on Subsidies and Countervailing
Measures. For purposes of U.S. countervailing duty law, an export subsidy is
considered countervailable when the eligibility for, or the amount of benefits under,
a program is tied to the actual or anticipated exportation of merchandise or export
earnings. See also Agreement on Subsidies and Countervailing Measures; Bounties;
Codes of Conduct; Countervailing Duties; Domestic Subsidy; Illustrative List;
Subsidy; Sunset Review; Tokyo Round; Trade Agreements Act of 1979; U.S.
International Trade Commission; Uruguay Round; Uruguay Round Agreements
Act; World Trade Organization.
DOMESTIC SUBSIDY — Any act, practice, or measure other than an export subsidy
by which a government confers a benefit upon a product and/or enterprise. For
purposes of U.S. countervailing duty law, a domestic subsidy is considered
countervailable if benefits under a program are provided or are required to be
provided by government action, in law or in fact, to a specific enterprise or industry,
or group of enterprises or industries. See also Agreement on Subsidies and
Countervailing Measures; Bounties; Codes of Conduct; Countervailing Duties;
Export Subsidy; Illustrative List; Subsidy; Sunset Review; Tokyo Round; Trade
Agreements Act of 1979; U.S. International Trade Commission; Uruguay Round;
Uruguay Round Agreements Act; World Trade Organization.

UPSTREAM SUBSIDIES — Subsidies provided to a manufacturer's supplier of

inputs for a product. To be included in the calculation of the countervailing duty,
the upstream subsidy must provide a competitive benefit, or be passed through, to
the downstream producer of the product under investigation and must have a
significant effect on the cost of manufacturing the product under investigation.
Petitioners must submit substantial argumentation and evidence before an
upstream subsidy investigation is started. See also Countervailing Duties; Subsidies
Code; Subsidy.

BOUNTIES — Payments by governments to producers of goods, often to strengthen

the producer's competitive position. See also Countervailing Duties.

SUPER 301 — A trade law provision under which the U.S. Trade Representative
identifies, in an annual report, those "priority foreign country practices" that, if
eliminated, have the greatest potential for the expansion of U.S. exports. Section 301
of the Trade Act of 1974, as added by section 1302 of the Omnibus Trade and
Competitiveness Act of 1988, required the USTR in 1989 and 1990 to identify trade
liberalization priorities and to initiate Section 301 investigations with respect to such
priority practices in all countries where these liberalization priorities had not been
met. This particular aspect of U.S. trade law expired in 1991. On March 3, 1994,
President Bill Clinton signed an executive order reinstituting the Super 301 trade
law provision; he later extended the provision to calendar years 1996 and 1997.
However, authority under Super 301 expired in 1997 at which time it again expired.
On January 26, 1999, USTR announced the re-institution of Super 301, identifying its
significance in addressing market access issues. After identification, the priority
foreign country practices become the subject of investigations under Section 301. The
first step of that process is consultations with the foreign government in an effort to
reach agreement on the elimination of the practices in question or, in appropriate
cases, on compensation for the damage done by the practices. If no agreement is
reached, the investigation continues. Where the foreign practices at issue constitute
violations of trade agreements such as the GATT or the WTO, the United States takes
those practices to the dispute-resolution process created in those agreements. At the
end of the investigation, USTR determines if the practices are actionable under
Section 301 and, if so, what action should be taken in response to them. See also
Liberalization; National Trade Estimate Report; Omnibus Trade and
Competitiveness Act of 1988; Priority Foreign Country; Section 301; Trade Act of
1974; Unfair Trade Practices; United States Trade Representative; World Trade
Organization.

SOUTH — See Developing Countries.

SUSPENSION OF LIQUIDATION — Delay of the final payment of all duties owing

on items imported into the United States. Where the amount of duty is not finally
determined at the time that the item is entered, such as when an antidumping or
countervailing duty investigation is pending, liquidation is "suspended" until the
investigation is completed and a final duty determination is issued. When the U.S.
Customs Service is instructed to suspend liquidation, each district director is
directed to require a cash deposit, or the posting of a bond or other security, for each
entry concerned equal to the amount by which the normal value exceeds the U.S.
price. Under U.S. law, the preliminary determination in an antidumping
investigation (or final determination after a negative preliminary determination), if
affirmative, provides for the suspension of liquidation of all entries of covered
merchandise that are entered or withdrawn from warehouse for consumption on or
after the date of publication of the notice of the determination in the Federal Register.
Other U.S. antidumping duty determinations, such as final results in administrative
reviews and affirmative preliminary scope determinations, also result in the
suspension of liquidation, as do certain countervailing duty determinations, such as
a final affirmative determination in the context of an investigation or an affirmative
preliminary scope determination. See also Anti-Dumping Code; Countervailing
Duties; Customs; Dumping; Normal Value; Liquidation; Port of Entry; Tariff; United
States Price; Valuation.
DUTY SUSPENSION — A unilateral nonapplication of a customs duty, or its
application at a reduced level, usually on a temporary basis. See also Tariff;
Unilateral.

IMPORT SUBSTITUTION — An attempt by a country to reduce imports (and hence

foreign exchange expenditures) by encouraging the development of domestic
industries regardless of domestic inefficiencies. See also Balance of Payments;
Balance of Trade; Capital Account; Comparative Advantage; Current Account;
Efficiency; Imports; Industrial Policy; Infant Industry Argument; International
Monetary Fund; Invisible Trade; Mercantilism; Quantitative Restrictions; Transfer
Payments; Visible Trade.

T
TARIFF EXTERIEUR COMMUN (TEC) — See Common External Tariff.

EFFECTIVE TARIFF RATE — The concept that "effective" protection reflected in a

tariff rate is the sum of the protection for the component parts of the final
manufactured unit. This concept implies that the nominal tariff rate of the finished
good significantly understates the de facto protection for the value added in the
production process. Several academic studies in the late 1960s and early 1970s
established the theoretical basis for the effective tariff rate concept, but most trade
policy experts see little practical utility in the theory, since the many different
circumstances affecting the component parts comprising most industrial products
make it difficult to establish their actual effective rates. See also Nominal Tariff Rate;
Tariff; Tariff Escalation.

NOMINAL TARIFF RATE — The rate of duty charged on the gross value of a given
product, rather than on the value of its components. See also Effective Tariff Rate;
Tariff; Tariff Escalation.

COLUMN 1 RATES — U.S. tariff rates (nearly all of which are "bound" rates)
established through trade negotiations. They are usually substantially lower than
column 2 rates and apply to all countries to which the United States grants most-
favored-nation treatment. See also Bound Rates; Column 2 Rates; Most-Favored-
Nation Treatment.

COLUMN 2 RATES — U.S. statutory tariff rates, generally set by the Smoot-Hawley
Tariff Act of 1930, as amended. These rates are substantially higher than column 1
rates. For countries receiving most-favored-nation treatment, they have been
supplanted by lower tariffs established through concessions, which are set out in
column 1 of the tariff schedule. Column 2 rates are currently assessed only on
imports from countries that do not receive most-favored-nation treatment from the
United States, all of which are state-trading nations. See also Column 1 Rates;
Concession; Most-Favored-Nation Treatment; Tariff Act of 1930.

BOUND RATES — Tariff rates resulting from GATT negotiations that are
incorporated in a country's schedule of concessions and are thus enforceable as an
integral element of the WTO regime. If a WTO member raises a tariff to a higher
level than its bound rate, the major beneficiaries of the earlier binding have a right
to receive compensation, usually in the form of reduced tariffs on other products
they export to the country. If the beneficiaries do not receive such compensation,
they may retaliate by raising their own tariffs against an equivalent value of the
original country's exports. See also Binding; Compensation; Concession; General
Agreement on Tariffs and Trade; Retaliation; Tariff; World Trade Organization.

TECHNOLOGY — Knowledge of the means and methods of producing goods and

services, or the application of science to production or distribution, resulting in the
creation of new products, new manufacturing processes, or more efficient methods
of distribution. See also Adjustment; Distribution; Efficiency; Intellectual Property;
Knowledge-Based Industry; Patent; Production; Structural Change; Trademark;
Technology Transfer.

THIRD WORLD — See Developing Countries.

TERMS OF TRADE — The ratio of prices (unit values) of a country's exports to the
prices (unit values) of its imports. Some economists have discerned a deteriorating
trend in this ratio for developing countries as a whole. Other economists maintain
that whereas the terms of trade may have become less favorable for certain countries
during certain periods — and even for all developing countries during some periods
— the same terms of trade have improved for other developing countries in the same
periods and perhaps for most developing countries during other periods. See also
Balance of Payments; Balance of Trade; Developing Countries; Export Price; Unit
Value.

TEXTILES — As defined by the Multi-Fiber Arrangement Regarding International

Trade in Textiles, yarns, piece-goods, made-up articles, garments, and other
products made of cotton, wool, manmade fibers, or blends thereof, in which any or
all of those fibers in combination represent either the chief value of the fibers or 50
percent or more by weight (or 17 percent or more by weight for wool) of the product.
Historically, the production of textiles has required more unskilled labor and less
sophisticated capital goods and technology than other manufacturing industries.
The textiles industry has thus often been among the first industries to operate
efficiently in many developing countries. The structure of the industry has changed
in recent years as textiles manufacturers in developed countries and the newly
industrializing countries have increasingly adopted more capital-intensive mass
production methods, especially for the latest synthetic fibers and complex knit
cloths. In 1995, the WTO Agreement on Textiles and Clothing (ATC) superseded the
MFA. Under the ATC, WTO members agreed to phase out the MFA's global system
of bilateral textile and apparel quotas by the year 2005. See also Agreement on
Textiles and Clothing; Capital Goods; Efficiency; Multi-Fiber Arrangement
Regarding International Trade in Textiles; Sensitive Products; Technology.

COTTON TEXTILES — See Multi-Fiber Arrangement Regarding International

Trade in Textiles; Textiles.

WOOLEN TEXTILES — See Multi-Fiber Arrangement Regarding International

Trade in Textiles; Sensitive Products; Textiles.

EXCHANGE RATE — The price (or rate) at which one currency is exchanged for
another currency, for gold, or for Special Drawing Rights. See also Currency;
International Monetary Fund; Par Value; Special Drawing Rights.
BILL — A document giving evidence of indebtedness of one party to another, as, for
example, a written order for goods that can be used as security for a loan to the
supplier of the goods from a bank, or a security such as a Treasury bill. See also
Euro-Dollars; Medium of Exchange; Security; Trade Agreements Act of 1934.

TPC — See Trade Policy Committee.

TPM — See Trigger Price Mechanism.

TPRM — See Trade Policy Review Mechanism.

TRAFFICKING IN COUNTERFEIT GOODS AND SERVICES — Intentionally

dealing or attempting to deal in goods or services while knowingly using a mark
that is identical to or substantially indistinguishable from a mark registered for those
goods or services, the use of which is likely to cause confusion, to cause mistakes, or
to deceive the consumer. Counterfeit trademark goods are generally regarded as any
goods, including packaging, bearing without authorization a trademark identical to
the validly registered trademark for such goods or that cannot be distinguished in
its essential aspects from such a trademark, and which, thereby, infringes the rights
of the owner of a trademark in question under the law of the country of importation.
The WTO TRIPS Agreement obligates members to provide minimum standards of
intellectual property rights protection in national laws and to enforce minimum
standards for protecting intellectual property. TRIPS also establishes a
comprehensive set of international rules and stronger measures at international
borders to stop trade in counterfeit goods and services. See also Agreement on
Trade-Related Aspects of Intellectual Property Rights; Commercial Counterfeiting;
Intellectual Property; Knowledge-Based Industry; Property; Section 337; Special 301;
Trademark; Uruguay Round Agreements Act; World Intellectual Property
Organization.

TRANSSHIPMENT — A shipment that has been moved through, imported,

transferred, or unladen in one or more intermediary countries (other than their
originating country) prior to importation into the final destination country.
TECHNOLOGY TRANSFER — The movement of modern or scientific methods of
production or distribution from one enterprise, institution, or country to another, as
through foreign investment, international trade, licensing of patent rights, technical
assistance, or training. Technology may also be transferred by giving it away
(technical journals, conferences, emigration of technical experts, technical assistance
programs) or by industrial espionage. See also Distribution; Production; Property;
Structural Change; Technology.

TRANSPARENCY — Visibility and clarity of laws, regulations, and procedures.

Some of the codes of conduct negotiated during the Tokyo Round sought to increase
the transparency of nontariff barriers that impede trade. See also Codes of Conduct;
Government Procurement Policies and Practices; International Arrangement on
Export Credits; Nontariff Barriers.

TRANSPORTATION — See Services.

BULK CARRIER — A transporter (usually an ocean-going vessel) of large, heavy

cargoes. "Dry" cargoes are usually mineral ores (such as phosphates or manganese),
as opposed to "liquid hydrocarbons," a phrase that usually refers to petroleum.

BILATERAL INVESTMENT TREATY (BIT) — An agreement establishing the terms

and conditions for private investment by nationals and companies of one country in
the country of the other.

FUSION/MERGER, TREATY OF — See European Community.

FREEDOM, COMMERCE, AND NAVIGATION TREATY (FCN) — A bilateral

establishment treaty defining the legal and commercial rights of the citizens of each
country under the laws of the other.

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) — A comprehensive

free trade agreement, based on the principle of national treatment, between the
United States, Canada, and Mexico. The three countries met in June 1991 and
initiated negotiations to:

•Eliminate, over a mutually agreed upon time period, all tariffs on trade between
the three countries;

•Reduce impediments to trade in services;

•Remove most restrictions on foreign investment among the signatory countries;

•Ensure adequate intellectual property protection;

•Provide substantially increased access to government procurement opportunities

not only in goods, but also in services, including construction services;

•Provide an effective dispute settlement mechanism for the settlement or

determination of remedies regarding antidumping and countervailing duty
disputes through international arbitration rather than through domestic courts.

The negotiations were concluded in August 1992, and the draft text was structured
along the lines of the U.S.-Canada Free Trade Agreement. The Clinton
administration negotiated supplemental agreements on labor and environmental
issues, and Congress approved the whole package of NAFTA agreements in
November 1993. NAFTA went into effect January 1, 1994. It is being viewed as a
testing ground for possible future agreements to be negotiated under the Enterprise
for the Americas Initiative. As of 1999, negotiations were under way for Chilean
accession to the NAFTA, and other South American countries had expressed interest
in acceding to the NAFTA. See also Common External Tariff; Customs Area;
Customs; Customs Union; European Community; European Free Trade Association;
Free Trade Area Agreement; Free Trade Area of the Americas; General Agreement
on Tariffs and Trade; Kyoto Convention; MERCOSUR; Tariff; Tariff Schedules;
Trade Diversion; U.S.-Canada Free Trade Agreement.

MAASTRICHT TREATY — See See European Community; European Union.

TREATY OF ROME — See European Community.

CONDITIONAL MOST-FAVORED-NATION TREATMENT — The extension of

concessions by an importing country to other countries that provide equivalent
benefits for its exports. The United States applied conditional most-favored-nation
treatment in its trade relations with other countries from 1789 to 1923, when it first
applied unconditional most-favored-nation treatment in a commercial treaty with
Germany. See also Agreement on Government Procurement; Concession;
Government Procurement Policies and Practices; Most-Favored-Nation Treatment.

DIFFERENTIAL TREATMENT — See Framework Agreement; Special and

Differential Treatment.

SPECIAL AND DIFFERENTIAL TREATMENT (S&D) — The concept that exports

of developing countries should be given preferential access to markets of developed
countries and that developing countries participating in trade negotiations need not
fully reciprocate concessions they receive. This principle was first discussed widely
during the Kennedy Round, leading to the adoption of Part IV of GATT, which
obligated developed countries to pursue trade policies that take into account the
development needs of developing countries. The Tokyo Declaration subsequently
proclaimed that exports of developing countries should receive particular benefits
consistent with their trade, financial, and development needs. Among proposals
considered during the Tokyo Round negotiations for accomplishing this were
compensatory tariff reductions for exports of developing countries to offset any
reductions in their margin of preference that might result from Tokyo Round tariff
cuts; advance implementation of Tokyo Round tariff cuts affecting developing
country exports; substantial reduction or elimination of tariff escalation; special
provisions for developing country exports in any new codes of conduct covering
nontariff barriers; assurance that any new multilateral safeguard system would
contain special provisions for developing country exports; and the principle that
developed countries would expect less than full reciprocity for trade concessions
granted to developing countries. The Framework Agreement concluded at the end
of the Tokyo Round provides a legal basis for special and differential treatment in
favor of exports from developing countries, and some of the codes of conduct
negotiated in the Tokyo Round provided for such treatment. Under the WTO
agreements and the WTO Decision on Measures in Favor of Least Developed
Countries, developing countries are given much longer than developed countries
for phasing in trade liberalization measures in several areas, including agriculture,
intellectual property, investment, dumping, and subsidization. See also Codes of
Conduct; Compensation; Concession; Framework Agreement; Generalized System
of Preferences; Graduation; Kennedy Round; Margin of Preference; Market Access;
Multilateral Trade Negotiations; North-South Trade; Part IV of the GATT;
Preferences; Reciprocity; Request List; Safeguards; Tariff Escalation; Tokyo
Declaration.

NATIONAL TREATMENT — A basic principle of international trade rules and

policy. The principle of national treatment generally prohibits discrimination on the
basis of foreign nationality. This fundamental principle is found in the three WTO
agreements: Article 3 of the General Agreement on Tariffs and Trade (incorporated
by reference in GATT 1994), Article 17 of the General Agreement on Trade in
Services (GATS), and Article 3 of the Agreement on Trade-Related Aspects of
Intellectual Property Rights. The national treatment principle prohibits
discrimination between imported and domestically produced goods with respect to
internal taxation or other government regulation. See also Agreement on Trade-
Related Aspects of Intellectual Property Rights; Codes of Conduct; General
Agreement on Tariffs and Trade; General Agreement on Trade in Services;
Restrictive Business Practices; Unfair Trade Practices; Uruguay Round; World Trade
Organization.

COURT OF INTERNATIONAL TRADE (CIT) — A court (formerly the U.S. Customs

Court) established under Article III of the U.S. Constitution to provide a single
forum with expertise in international trade law for the judicial review of
administrative actions of government agencies arising from import transactions. The
court reviews decisions of the United States Customs Service, the International
Trade Administration of the U.S. Department of Commerce, and the U.S.
International Trade Commission. Such cases include, among others, challenges to
classification rates and duties charged, antidumping and countervailing duty
determinations, and embargoes or other quantitative restrictions. Generally, in the
review of administrative determinations of record, the court will uphold an agency
decision unless it is found to be unsupported by substantial evidence or otherwise
not in accordance with law. A party can appeal a decision by the CIT to the Court of
Appeals for the Federal Circuit, which will apply the same standard of review.
Finally, a party can appeal a decision of the Court of Appeals for the Federal Circuit
by filing a writ of certiorari with the United States Supreme Court. See also Customs;
International Trade Administration; U.S. International Trade Commission.

EUROPEAN COURT OF JUSTICE — See European Community.

REGRESSIVE TAXATION — See Indirect Tax.

TRIMS — See Trade-Related Investment Measures.

TRIPS — See Agreement on Trade-Related Aspects of Intellectual Property Rights.

BARTER — The direct exchange of goods for other goods, without the use of money as a
medium of exchange and without the involvement of a third party. See also Countertrade;
Money.

TSUS — See Harmonized Tariff Schedule of the United States.

TOURISM — See Services.

TWEA — See International Emergency Economic Powers Act.

U
UNCITRAL — See United Nations Commission on International Trade Law.

UNCTAD — See United Nations Conference on Trade and Development.

UNCTAD/GATT INTERNATIONAL TRADE CENTER (ITC) — See International Trade
Center UNCTAD/GATT.

UNDP — See United Nations Development Program.

EUROPEAN CURRENCY UNIT (ECU) — A currency "basket" or composite of member

state currencies used by the European Union as the unit of account prior to the January 1,
1999, creation of the euro. See also Euro; European Central Bank; European Community;
European System of Central Banks; European Union.

UNILATERAL — An action taken by a single country on its own initiative, and not in any
way dependent upon or conditional upon the actions of any other country or countries. See
also Bilateral; Multilateral; Reciprocity.

CUSTOMS UNION — A group of nations that have eliminated tariffs and sometimes other
barriers that impede trade with each other, while maintaining a common external tariff on
goods imported from outside the union. GATT Article XXIV defines the meaning of a
customs union in GATT and the application of other GATT provisions to customs unions.
See also Common External Tariff; Customs Area; Customs; European Community; Free
Trade Area Agreement; Free Trade Area of the Americas; Free Zone; General Agreement on
Tariffs and Trade; Kyoto Convention; MERCOSUR; North American Free Trade
Agreement; Tariff; Tariff Schedules; Trade Diversion; U.S.-Canada Free Trade Agreement;
Welfare.

BERN UNION — See Bern Convention.

PARIS UNION — See World Intellectual Property Organization.

EUROPEAN UNION (EU) — The overarching entity encompassing the modern attempt at
European integration. Created by the Treaty on European Union (also known as the
Maastricht Treaty), which entered into force on November 1, 1993, the European Union is
often described as a building supported by three pillars. Specifically, the pillars include the
European Community (essentially the European Communities as they existed in pre-
Maastricht Europe), the Common Foreign and Security Policy (establishing common foreign
policy positions and developing a common defense policy), and Justice and Home Affairs
(principally providing for cooperation between police and other authorities on crime,
terrorism, and immigration issues). Some confusion exists as to when the terms European
Union, European Community, and European Economic Community (EEC) may be properly
used. The delimitation between these entities is far from clear, but generally, EU, EC, and
EEC may not be used interchangeably. As noted, the EC continues to constitute part of the
EU; however, the EC possesses a legal personality while the EU currently does not. As a
result, the term EU should be used when referring to the system as a whole. The term EC is
most properly used when referring to the laws and institutions falling within the first pillar
of the EU. The term EEC should be used only when referring to the historical entity that
preceded the EC. See also European Community; Euro-Zone.

INTERNATIONAL TELECOMMUNICATIONS UNION (ITU) — A United Nations

organization, headquartered in Geneva, Switzerland, within which governments and the
private sector coordinate global telecommunication networks and services. Its work is
performed through three groups or sectors: telecommunication standardization, radio
communication, and telecommunication development. See also Basic Telecommunications
Services Agreement; General Agreement on Trade in Services; Global Information
Infrastructure; Information Technology Agreement; Omnibus Trade and Competitiveness
Act of 1988; Services.

INTERNATIONAL UNION FOR THE PROTECTION OF INDUSTRIAL PROPERTY —

See World Intellectual Property Organization.

UR — See Uruguay Round.

USITC — See U.S. International Trade Commission.

USP — See United States Price.

USTR — See United States Trade Representative.

UTILITY — The capacity of goods and services to satisfy human wants or desires. Since
utility involves subjective appraisal and depends on the personal tastes of the consumer, it
cannot be measured by any standard yardstick. See also Consumption; Demand; Goods;
Price; Services; Value; Welfare.
V
VALUE — The intrinsic worth of specific goods or services, generally identifiable as the
amount of money they can be exchanged for at any given time. See also Money; Price; Utility.

PAR VALUE — The official fixed exchange rate between two currencies or between a
currency and a specific weight of gold or a basket of currencies. See also Currency; Exchange
Rate; International Monetary Fund; Special Drawing Rights.

ADDED-VALUE TAX — See Value-Added Tax.

CONSTRUCTED VALUE — See Dumping.

TRANSACTION VALUE — See Customs Valuation Code; Valuation.

FOREIGN MARKET VALUE (FMV) — See Normal Value.

LESS THAN FAIR VALUE (LTFV) — See Agreement on Implementation of Article VI of

GATT 1994; Anti-Dumping Code; Dumping; Normal Value; United States Price.

FAIR VALUE — See Dumping.

NORMAL VALUE (NV) — The price at which merchandise is sold or offered for sale in
the principal markets of the country from which it is exported. Under U.S. antidumping law,
dumping consists of sales of merchandise exported to the United States at "less than fair
value," when such sales materially injure or threaten material injury to producers of like
merchandise in the United States. The determination that sales have been made at less than
fair value involves a comparison of "normal value" — the price at which the merchandise is
sold within the exporting country or to third countries (or a "constructed value") — and the
"U.S. price" — the price at which the merchandise is sold in the U.S. market. If foreign home
market sales are not usable, the normal value is based on prices to third countries or
constructed value. A number of adjustments must be made to those prices to ensure a proper
comparison with U.S. prices. Prior to the Uruguay Round Agreements Act, which
implemented changes in U.S. trade law that resulted from the WTO Agreement concluded
during the Uruguay Round, the equivalent term in U.S. trade law was "foreign market value."
See also Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code;
Constructed Export Price; Dumping; Export Price; United States Price; Uruguay Round;
Uruguay Round Agreements Act; World Trade Organization.

UNIT VALUE — The quotient showing the total value of a particular trade flow during a
specified period divided by its volume. Unit values are often reflected in international trade
statistics instead of prices. See also Terms of Trade.

VALUATION — The appraisal of the worth of imported goods by customs officials for the
purpose of determining the amount of duty payable in the importing country. Previously, the
GATT Customs Valuation Code and, currently, the WTO Agreement on Implementation of
Article VII of the GATT 1994, obligate governments of signatories to use the transaction
value of imported goods — or the price actually paid or payable for them — as the principal
basis for valuing the goods for customs purposes. See also Agreement on Implementation of
Article VII of GATT 1994; Codes of Conduct; Customs; Customs Classification; Free Zone;
Imports; Liquidation; Minimum Valuation; Most-Favored-Nation Treatment; Suspension of
Liquidation; Tariff; Tariff Schedules; World Customs Organization.

MINIMUM VALUATION — Customs valuation of certain low-cost items at a higher-than-

actual value. See also Agreement on Implementation of Article VII of GATT 1994; Codes
of Conduct; Customs; Customs Classification; Free Zone; Imports; Liquidation; Most-
Favored-Nation Treatment; Suspension of Liquidation; Tariff; Tariff Schedule; Valuation;
World Customs Organization; World Trade Organization.

COMPARATIVE ADVANTAGE — A central concept in international trade theory that

holds that a country or a region should specialize in the production and export of those goods
and services that it can produce relatively more efficiently than other goods and services, and
that it should import those goods and services in which it has a comparative disadvantage.
This theory was first propounded by David Ricardo in 1817 as a basis for increasing the
economic welfare of a population through international trade. The comparative advantage
theory normally favors specialized production in a country based on intensive utilization of
those factors of production in which the country is relatively well endowed (such as raw
materials, fertile land, or skilled labor), and perhaps also the accumulation of physical capital
and the pace of research. See also Competitive; Efficiency; Exports; Imports; Structural
Change; Welfare.
FAST TRACK — Procedures enacted by the U.S. Congress under which it votes without
amendment and within a fixed period on legislation submitted by the president to approve
and implement U.S. international trade agreements. The procedures apply only if the
president consulted with the Congress as the agreement was negotiated and fulfilled other
statutory requirements. Fast track procedures were used in negotiating the Tokyo Round
agreements; the United States-Israel Free Trade Area Agreement; the United States-Canada
Free Trade Agreement; the North American Free Trade Agreement; and the Uruguay Round
agreements. In 1997, Congress failed to renew fast track authority. See also Multilateral
Trade Negotiations; North American Free Trade Agreement; Tokyo Round; U.S.-Canada
Free Trade Agreement; U.S.-Israel Free Trade Area Agreement; Uruguay Round.

VRA — See Steel Voluntary Restraint Arrangements; Voluntary Restraint Agreements.

W
WIPO — See World Intellectual Property Organization.

WTO — See Agreement on Trade-Related Aspects of Intellectual Property Rights;

Trafficking in Counterfeit Goods and Services; World Trade Organization.

Z
FOREIGN TRADE ZONE — See Free Zone.

FREE TRADE ZONE (FTZ) — See Free Zone.

TRANSIT ZONE — The area surrounding a port of entry in a coastal country that serves as
a storage and distribution center for the convenience of a neighboring country — a land-
locked country, for example — lacking adequate port facilities or access to the sea. A transit
zone is administered so that goods in transit to and from the neighboring country are not
subject to the customs duties, import controls, or many of the entry and exit formalities of
the host country. A transit zone is a more limited facility than either a free trade zone or free
port. See also Customs; Free Zone; Port of Entry.

EURO-ZONE — An informal designation of the 11 European Union countries (Austria,

Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and
Spain) that use the common single currency, the euro. See also ECU; Euro; European Central
Bank; European Community; European System of Central Banks; European Union.

FREE ZONE — An area within a country (a seaport, airport, warehouse, or any designated
area) regarded as being outside its customs territory. Importers may therefore bring goods of
foreign origin into such an area without paying customs duties and taxes, pending their
eventual processing, transshipment, or re-exportation. Free zones were numerous and
prosperous during an earlier period when tariffs were high. Some still exist in capital cities,
transport junctions, and major seaports, but their number and prominence have declined as
tariffs have fallen in recent years. Free zones may also be known as "free ports," "free
warehouses," "free trade zones," and "foreign trade zones." See also Customs; Port of Entry;
Tariff; Transit Zone.

ACRONYMS USED IN INTERNATIONAL

COMMERCE

ACP African, Caribbean, and Pacific Countries

ACTPN Advisory Committee for Trade Policy and Negotiations

AD Antidumping

ADB Asian Development Bank

A/DS Agent Distributor Service, U.S. Department of Commerce

AD VAL Ad Valorem Tariff Rate

AECA Arms Export Control Act

AFDB African Development Bank

AFDF African Development Fund

AIT American Institute in Taiwan

APCAC Asia-Pacific Council of American Chambers of Commerce

APEC Asia-Pacific Economic Cooperation

APTA Automotive Products Trade Act

ASEAN Association of Southeast Asian Nations

ATA Admission Temporaire (temporary admission)

ATAC(s) Agricultural Technical Advisory Committee(s)

ATC Agreement on Textiles and Clothing

ATCA Agreement on Trade in Civil Aircraft

ATPA Andean Trade Preference Act

AUI ASEAN-United States Initiative

AVE Ad Valorem Equivalent

BAR Buy American Restrictions

BDV Brussels Definition of Value

BEA Bureau of Economic Analysis, U.S. Department of Commerce

BFC Business Facilitation Center, U.S. Department of Commerce

BIA Best Information Available

BIRPI United International Bureaux for the Protection of Intellectual Property

BIS Bank for International Settlements

BISNET Business Information Service for the Newly Independent States, U.S.
Department of Commerce

BIT Bilateral Investment Treaty

BNC Binational Commission

BOND Business Outreach to New Democracies (program)

BOP Balance of Payments

BOT Balance of Trade

BSP Business Sponsored

BSP Between-show Promotion

BTN Brussels Tariff Nomenclature

BXA Bureau of Export Administration, U.S. Department of Commerce

C&F Cost and Freight (Incoterm)

CACM Central American Common Market

CADIC Comparative Analysis of Domestic Industry's Condition

CAFC Court of Appeals for the Federal Circuit

CAIP Community Adjustment Investment Program

CAP Common Agricultural Policy (EU)

CAP Country Action Plan

CARIBCAN Canadian-Caribbean Basin Initiative

CARICOM Caribbean Common Market

CBERA Caribbean Basin Economic Recovery Act

CBI Caribbean Basin Initiative

CCC Commodity Credit Corporation

CCC Customs Cooperation Council

CCCN Customs Cooperation Council Nomenclature

CCL Commerce Control List (formerly Commodity Control List)

CCNAA Coordination Council for North American Affairs (Taiwan)

CCPIT China Council for the Promotion of International Trade

CEA Chinese Economic Area

CEA Council of Economic Advisers

CEP Constructed Export Price

CER Australia-New Zealand Closer Economic Relations

CET Common External Tariff

CFIUS Committee on Foreign Investment in the United States

CFR Cost and Freight (Incoterm)

CFTA United States-Canada Free Trade Agreement

CG-18 Consultative Group of Eighteen (GATT)

CIF Cost, Insurance, and Freight (Incoterm)

CIME Committee on International Investment and Multinational Enterprises (OECD)

CIMS Commercial Information Management System, U.S. Department of Commerce

CIP Carriage and Insurance Paid (Incoterm)

CIS Commonwealth of Independent States

CIT United States Court of International Trade

CITA Committee for the Implementation of Textile Agreements

CITIC China International Trust and Investment Corporation

CITT Canadian International Trade Tribunal

CIV Customs Import Value

CMP Country Marketing Plan

CNUSA Commercial News USA, U.S. Department of Commerce

COCOM Coordinating Committee for Multilateral Export Controls

CODEX Codex Alimentarius Commission

COE Council of Europe

COMECON Council for Mutual Economic Assistance

COP Cost of Production

CP Contracting Party

CPE Centrally Planned Economy

CPT Carriage Paid to (Incoterm)

CSCE Conference on Security and Cooperation in Europe

CT Countertrade

CTA Committee on Trade in Agriculture (GATT)

CTF Certified Trade Fair, U.S. Department of Commerce

CV Constructed Value

CVD Countervailing Duty

CXT Common External Tariff

DAC Development Assistance Committee (OECD)

DAF Delivered at Frontier (Incoterm)

DAV Domestic Added Value

DDP Delivered Duty Paid (Incoterm)

DDU Delivered Duty Unpaid (Incoterm)

DEQ Delivered Ex Quay (Incoterm)

DES Delivered Ex Ship (Incoterm)

DF Duty Free

DISC Domestic International Sales Corporation

DOC United States Department of Commerce

DS Dispute Settlement

DSU Dispute Settlement Understanding (i.e., WTO Understanding on Rules and

Procedures Governing the Settlement of Disputes)

EAA Export Administration Act (United States)

EAEC East Asia Economic Caucus

EAI Enterprise for the Americas Initiative

EAPC Euro-Atlantic Partnership Council

EAR Export Administration Regulations (United States)

EBRD European Bank for Reconstruction and Development

EC European Community

ECA Economic Cooperation Administration

ECB European Central Bank

ECCN Export Control Classification Number

ECDC Economic Cooperation Among Developing Countries

ECE Economic Commission for Europe

ECGF Export Credit Guarantee Facility

ECS Échantillons Commerciaux (commercial samples)

ECS European Cooperation System

ECSB European System of Central Banks

ECSC European Coal and Steel Community

ECU European Currency Unit

EDI Electronic Data Interchange

EEA European Economic Area

EEC European Economic Community

EEP Export Enhancement Program (United States)

EFTA European Free Trade Association

EIB European Investment Bank

EITCA United States-Soviet Union Agreement to Facilitate Economic, Industrial, and
Technical Cooperation

EMS European Monetary System

EMU European Monetary Unit

EP Export Price

EPC Economic Policy Council (United States)

EPC European Patent Convention

ER Export Restraint

ERM Exchange Rate Mechanism

ERP European Recovery Program

ESA European Space Agency

ESAF Enhanced Structural Adjustment Facility

ESCB European System of Central Banks

ESP Exporter's Sales Price

ETC Export Trading Company

ETSI European Telecommunications Standards Institute

EU European Union

EXW Ex-works (Incoterm)

EX-IM BANK Export-Import Bank of the United States

FA Facts Available

FAO Food and Agriculture Organization, United Nations

FARA Foreign Agents Registration Act

FAS Foreign Agricultural Service, U.S. Department of Agriculture

FAS Free Alongside Ship (Incoterm)

FCA Free Carrier (Incoterm)

FCIA Foreign Credit Insurance Association (United States)

FCN Freedom, Commerce, and Navigation Treaty

FCO Foreign and Commonwealth Office (United Kingdom)

FCPA Foreign Corrupt Practices Act (United States)

FCS Foreign Commercial Service, U.S. Department of Commerce

FDI Foreign Direct Investment

FDIUS Foreign Direct Investment in the United States

FICA Federal Insurance Corporation of America

FISC Foreign International Sales Corporation

FMC Federal Maritime Commission (United States)

FMS Foreign Military Sales

FMSCR Foreign Military Sales Credit

FMV Foreign Market Value

FOB Free on Board (Incoterm)

FOGS Functioning of the GATT System

FOR Free on Rail (Incoterm)

FOREX Foreign Exchange

FOT Free on Truck (Incoterm)

FR Federal Register (United States)

FSC Foreign Sales Corporation

FTA Free Trade Area

FTA Free Trade Agreement

FTAA Free Trade Area of the Americas

FTC Federal Trade Commission (United States)

FTZ Foreign Trade Zone

FTZ-BOARD Federal Trade Zone Board

FTZ-SZ FTZ-Subzone

FV Fair Value

FX Foreign Exchange Service

G-5 Group of Five (the United States, Japan, Germany, France, and the United Kingdom)
G-7 Group of Seven (the United States, Japan, Germany, France, Italy, the United
Kingdom, and Canada)

G-8 Group of Eight (the United States, Japan, Germany, France, Italy, the United
Kingdon, Canada, and Russia)

G-77 Group of Seventy-seven [all countries within UNCTAD Groups "A" (African and
Asian countries, with the exception of Israel and South Africa) and "C" (Latin America) —
now comprising more than 120 developing countries]

GAB General Agreement to Borrow

GATS General Agreement on Trade in Services

GATT General Agreement on Tariffs and Trade

GCC Gulf Cooperation Council

GDP Gross Domestic Product

GEC Global Electronic Commerce

GEF Global Environmental Facility

GII Global Information Infrastructure

GNG Group of Negotiations on Goods

GNP Gross National Product

GNP Government Procurement

GNS Group of Negotiations on Services

GPA WTO Agreement on Government Procurement

GP-ZONE General Purpose Free Trade Zone

GSP Generalized System of Preferences

GSTP Global System of Trade Preferences

HM Home Market

HS Harmonized System

HTS Harmonized Tariff Schedule

HTSUS Harmonized Tariff Schedule of the United States

IA Import Administration, U.S. Department of Commerce

IADB (or IDB) Inter-American Development Bank

IAEA International Atomic Energy Agency

IBRD International Bank for Reconstruction and Development (World Bank)

IC Industry Committee of the OECD

ICA International Coffee Agreement

ICA International Cocoa Agreement

ICA International Commodity Agreement

ICAO International Civil Aviation Organization

ICB International Competitive Bidding

ICC International Chamber of Commerce

ICITO Interim Commission of the International Trade Organization

ICO International Coffee Organization

ICSID International Center for the Settlement of Investment Disputes

IDA International Development Association

IDB (or IADB) Inter-American Development Bank

IEC International Electrotechnical Commission

IEEPA International Emergency Economic Powers Act

IESC International Executive Service Corps

IFAD International Fund for Agricultural Development

IFC International Finance Corporation

IFI International Finance Institution

IIC Inter-American Investment Corporation

IIPA International Intellectual Property Alliance

ILO International Labor Organization

IMF International Monetary Fund

IMO International Maritime Organization

INCOTERMS International Commercial Terms

INR Initial Negotiating Right

INRA International Natural Rubber Agreement

INRO International Natural Rubber Organization

INTELSAT International Telecommunications Satellite Organization

IOS International Organization for Standardization

IP Intellectual property

IPAC Industry Policy Advisory Committee (United States)

IPC Integrated Program for Commodities

IPR Intellectual property rights

ISA International Sugar Agreement

ISAC Industry Sector Advisory Committee (United States)

ISO International Standards Organization

ITA International Trade Administration, U.S. Department of Commerce

ITA International Tin Agreement

ITA Information Technology Agreement

ITAR International Traffic in Arms Regulations

ITC International Trade Commission (United States)

ITC International Trade Center, UNCTAD/WTO

ITO International Trade Organization

ITU International Telecommunication Union

JCCT United States-Mexico Joint Commission on Commerce and Trade

JCP Japan Corporate Program

JETRO Japan External Trade Organization

K.D. Knocked Down

LAFTA Latin America Free Trade Area

LASU Large Aircraft Sector Understanding

LC Letter of Credit
LIBOR London Interbank Offered Rate

LOT Level of Trade Adjustment

LTA Long-Term Agreement on International Trade in Cotton Textiles

LTL Less Than Load (Shipment)

LTFV Less Than Fair Value

MAC Market Access and Compliance Unit, U.S. Department of Commerce

MAI Multilateral Agreement on Investment

MDB Multilateral development bank

MERCOSUR Mercado Común del Sur (Southern Common Market)

MFA Multi-Fiber Arrangement

MFN Most-Favored Nation

MIF Multilateral Investment Fund

MIGA Multilateral Investment Guarantee Agency

MITI Ministry of International Trade and Industry (Japan)

MNC Multinational Corporation

MOFERT Ministry of Foreign Economic Relations and Trade (People's Republic of

China)

MOSS Market-oriented sector-specific negotiation process (United States-Japan)

MOU Memorandum of Understanding

MPT Ministry of Posts and Telecommunications

MRA Mutual Recognition Agreement

MSA Multilateral Steel Agreement

MT Metric Ton

MTN Multilateral Trade Negotiations

MTO Multilateral Trade Organization

NADBANK North American Development Bank

NAFTA North American Free Trade Agreement

NAICS North American Industry Classification System

NME Nonmarket Economy

NP Nairobi Protocol

NSC National Security Council (United States)

NTB Nontariff Barrier

NTDB National Trade Data Bank (United States)

NTE New to Export

NTE National Trade Estimates Report

NTM New to Market

NTM Nontariff Measure

NV Normal Value

OAS Organization of American States

ODA Official Development Assistance

OECD Organization for Economic Cooperation and Development

OEEC Organization for European Economic Cooperation

OEM Original Equipment Manufacturer

OFAC Office of Foreign Assets Control, U.S. Department of the Treasury

OMA Orderly Marketing Agreement

OPEC Organization of Petroleum Exporting Countries

OPIC Overseas Private Investment Corporation (United States)

PCG Policy Coordinating Group

PEC President's Export Council (United States)

PFC Priority Foreign Country

PL Public Law

PL 480 Public Law 480, Agricultural Trade Development and Assistance Act ("Food
For Peace") (United States)

POI Period of Investigation

POR Period of Review

PPA Protocol of Provisional Application

PRC People's Republic of China

PSI Pre-shipment Inspection

PUDD Potential Uncollected Dumping Duty

PWL Priority Watch List

QR Quantitative Restriction

R&D Research and Development

RBP Restrictive Business Practice

RO-RO Roll On-Roll Off

S&D Special and Differential Treatment

SAA Statement of Administrative Action

SAF Structural Adjustment Facility

SB Surveillance Body

SBA Small Business Administration (United States)

SCM Subsidies and Countervailing Measures

SDN Specially Designated National

SDR Special Drawing Rights

SECOFI Secretarнa de Comercio y Fomento Industrial (Mexico)

SED Shipper's Export Declaration

SIC Standard Industrial Classification

SII Structural Impediments Initiative (United States-Japan)

SIMIS Single Internal Market Information Systems

SIMS Single Internal Market Service

SITC Standard International Trade Classification

SNPA Substantial New Program of Action

SPS Sanitary and Phytosanitary Measures

STC Security Trade Control

STE State Trading Enterprise

STR Special Representative for Trade Negotiations

TAA Trade Adjustment Assistance (United States)

TABD Transatlantic Business Dialogue

TBT Technical Barriers to Trade

TCC Trade Compliance Center, U.S. Department of Commerce

TCMD Third Country Meat Directive

TD Trade Development (U.S. Department of Commerce)

TDP Trade and Development Program

TEC Tariff Extйrieur Commun (Common External Tariff)

TEP Transatlantic Economic Partnership

TEU Treaty on European Union (Maastricht Treaty)

TNC Trade Negotiations Committee

TNC Transnational Corporation

TPC Trade Policy Committee (United States)

TPM Trigger-Price Mechanism

TPRG Trade Policy Review Group (United States)

TPRM Trade Policy Review Mechanism

TPSC Trade Policy Staff Committee (United States)

TPSC Trade Policy Subcommittee (United States)

TRIMS Trade-Related Investment Measures

TRIPS Trade-Related Aspects of Intellectual Property Rights

TSB Textile Surveillance Body

TSUS Tariff Schedule of the United States

TVA Value-Added Tax (Taxe à la Valeur Ajoutée)

TWA Trade-Weighted Average

TWEA Trading With the Enemy Act

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

UNCTAD United Nations Conference on Trade and Development

UNCTC United Nations Center on Transnational Corporations

UNDP United Nations Development Program

UNEP United Nations Environment Program

UNESCO United Nations Educational, Scientific, and Cultural Organization

UNIDO United Nations Industrial Development Organization

UR Uruguay Round

URAA Uruguay Round Agreements Act

USAID U.S. Agency for International Development

USF&CS United States Foreign and Commercial Service

USC United States Code

USDA United States Department of Agriculture

USDOC United States Department of Commerce

USEC United States Mission to European Communities

USITC United States International Trade Commission

USOECD United States Mission to the Organization for Economic Cooperation and
Development

USP United States Price

USTR United States Trade Representative, or Office of the United States Trade
Representative

USTTA United States Travel and Tourism Administration, U.S. Department of

Commerce

USUN United States Mission to the United Nations

V
VAR Value-Added Reseller

VAT Value-Added Tax

VER Voluntary Export Restraint

VL Variable Levy

VRA Voluntary Restraint Agreement

WCO World Customs Organization

WCT WIPO Copyright Treaty

WEPZA World Export Processing Zones Association

WIPO World Intellectual Property Organization

WL Watch List

WPPT WIPO Performances and Phonograms Treaty

WTDR World Traders Data Report

WTO World Trade Organization

WTO World Tourism Organization