09 January 2008
Trade Glossary
Accession -- The process of adhering to a legal instrument such as a bilateral or multilateral agreement or a treaty.
African Growth and Opportunity Act (AGOA) -- Title I of the Trade and Development Act of 2000, which institutionalizes a process for strengthening U.S. relations with African countries that provides incentives for them to achieve political and economic reform and growth.
Bilateral Trade Agreement -- A formal or informal agreement involving commerce between two countries.
Boycott -- A refusal to deal commercially or otherwise with a person, firm or country.
Codes of Conduct -- Any international agreement that prescribes or recommends standards of behavior by nation-states or multinational corporations deemed desirable by the international community.
Commercial Counterfeiting -- The production or marketing of goods with the intent to defraud the purchaser by falsely conveying, directly or indirectly, that the goods are produced by a known and reputable manufacturer.
Commodity -- Broadly, any article exchanged in trade; most commonly used to refer to raw materials -- including minerals such as tin, copper and manganese -- and bulk-produced agricultural products such as coffee, tea and rubber.
Comparative Advantage -- A concept 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.
Countervailing Duties (CVD) -- Specific duties imposed on imports to offset the benefits of subsidies to producers or exporters in the exporting country.
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.
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.
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.
Distribution -- The dissemination of goods and services in a market through the ordinary channels of trade.
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.
East-West Trade -- 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).
Embargo -- In international trade, government actions limiting or prohibiting imports and/or exports of goods and/or services from or to a country.
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.
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.
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.
Fast Track -- Procedures enacted by the U.S. Congress under which it votes without amendment and within a fixed period of time 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.
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.
Free Trade -- A 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.
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.
General Tariff -- A tariff that applies to imports from countries that do not enjoy either preferential or normal trade relations (NTR, formerly called "most favored nation") tariff treatment. Where the general tariff rate differs from the NTR rate, the general tariff is usually an older and higher rate. Normal trade relations status is accorded to all U.S. trading partners that accede to World Trade Organization (WTO) rules.
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.
Grandfather Clause -- A provision in a legal instrument that allows countries that accede to it to maintain pre-existing domestic legislation inconsistent with provisions of that instrument.
Harmonization -- The process of making procedures applied by different countries -- especially those affecting international trade -- more compatible. An example would be implementing simultaneous tariff cuts by different countries to make their tariff structures more uniform.
Harmonized System -- 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.
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.
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.
Intellectual Property -- Ownership as evidenced by patents, trademarks and copyrights conferring the right to possess, use or dispose of products created by human ingenuity.
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.
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.
Levy -- As a verb, to assess or impose a tariff on imported merchandise; as a noun, the charge on imports.
Liberalization -- Unilateral or multilateral reductions in measures that restrict trade, such as tariffs.
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.
Market -- The area within which buyers and sellers interact for economic exchanges. The estimated or realized demand for a good or service may also be referred to as its "market."
Most-Favored-Nation (MFN) Treatment -- See Normal Trade Relations.
Multilateral Agreement -- An international compact involving three or more parties.
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.
Negotiations -- Bargaining between and among representatives of governments seeking a mutually beneficial exchange of concessions.
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.
Normal Trade Relations (NTR) -- The policy of nondiscrimination in trade policy, formerly known as most-favored-nation (MFN) treatment, that provides to all trading partners the same customs and tariff treatment given to a nation with NTR status. Normal trade relations status is accorded to all U.S. trading partners that accede to World Trade Organization (WTO) rules.
North-South Trade -- The exchange of goods and services between developed countries (the North) and developing countries (the South).
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.
Protectionism -- The deliberate use or encouragement of restrictions on imports to enable relatively inefficient domestic producers to compete successfully with foreign producers.
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.
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").
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.
Safeguards -- Temporary and selective measures (such as increased tariffs, tariff quotas or quantitative restrictions) explicitly designed to slow imports 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.
Sanitary and Phytosanitary Measures (SPS) -- 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.
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.
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.
South-South Trade -- Trade between developing countries.
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.
Standards -- Technical specifications that lay down characteristics of a product such as size, quality, performance or safety. Standards also may cover terminology, testing methods, packaging, labeling or marking requirements.
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).
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 principally is determined by the response of many individual entrepreneurs and firms to their perceptions of opportunities for earning profits.
Surplus -- The amount of a commodity that cannot be absorbed in a given market at the existing price.
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.
Terms of Trade -- The ratio of prices (unit values) of a country's exports to the prices (unit values) of its imports.
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.
Trade Barriers -- Government laws, regulations, policies or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products.
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.
Trade Diversion -- A shift in the pattern of origin of a country's imports resulting from changes in trade policies or practices that 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.
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 Mission -- Experts and/or businesspersons sent by a government or commercial interests in one country to encourage exports to the market of another country.
Unfair Trade Practices -- Unusual government support, such as export subsidies, to firms that results in competitive advantages for those firms in international trade. Unfair trade practices also can refer to certain anti-competitive practices by firms themselves such as dumping, boycott or discriminatory shipping arrangements.
United States Trade Representative (USTR) -- A Cabinet-level official with the rank of ambassador who serves as the president's principal trade adviser, negotiator and spokesperson on trade issues. 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 World Trade Organization (WTO), commodity issues, East-West and North-South trade, and direct investment related to 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.
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.
Source: USINFO The Language of Trade
