-------------- E -------------- EAEC. See East Asian Economic Caucus. EAI. See Enterprise for the Americas Initiative. EARNINGS. See Foreign Exchange Earnings; Profit. EAST ASIAN ECONOMIC CAUCUS (EAEC). A grouping of East Asian countries, proposed by Malaysia, to coordinate positions on economic issues of interest to the region. ASEAN would be at the core of the EAEC with other members not yet specified, although it is unlikely the United States would be included. See also Asia-Pacific Economic Cooperation; and Multilateral Agreement. 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; Non-Market Economy; and State Trading Nations. EBRD. See European Bank. EC. See European Community. EC 1992. A term used to describe the process within the European Community (EC) to conclude by December 31, 1992 all legal measures necessary to complete the opening of its internal market to the free flow of capital, goods, services and people as foreseen in the 1987 Single Act. See also European Community. ECDC. See Economic Cooperation Among Developing Countries. ECGF. See Export Credit Guarantee Facility. 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 Global System of Trade Preferences; Group of 77; South-South Trade; and United Nations Conference on Trade and Development. 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 Developing Countries; Infrastructure; Progress; Structural Change; and United Nations Development Program. ECS CARNET. See ATA Carnet. ECSC See European Coal and Steel Community. EEC. See European Community. EEP. See Export Enhancement Program. 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; and Tariff Escalation. EFFICIENCY. Narrowly, economic efficiency suggests the technical input-output relationship between the quantity of materials used and the quantity of goods produced. More broadly, it 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; and Welfare. EFTA. See European Free Trade Association. ELASTICITY. See Price Elasticity of Demand; and Price Elasticity of Supply. EMBARGO. In international trade, an embargo refers to 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 U.N. 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; and Supply Access. 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 Framework Agreement; Generalized System of Preferences; Most-Favored-Nation Treatment; and Preferences. ENTERPRISE FOR THE AMERICAS INITIATIVE (EAI). The Enterprise for the Americas Initiative is a United States 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. ENTREPRENEUR. A person who assumes responsibility for organization, management and risk in the production of goods and services. In theory, his enterprise should make a profit if it is economically efficient and incur losses if it is not. See also Efficiency; Management; Microeconomics; Profit; and Risk. EQUAL PERCENTAGE REDUCTION OF TARIFFS. See Linear Reduction of Tariffs. EQUILIBRIUM. A state in which economic forces, likely to cause change in opposing directions are in perfect balance,so that change is unlikely. A market is in equilibrium if the quantities of a product that consumers will buy at the prevailing price exactly match the amount suppliers will sell at that price. See also Market; and Price. EQUITY. Fairness, justice. Also the value of property beyond the total amount owed on it. See also Direct Tax. EQUITY JOINT VENTURE. See Joint Venture. EQUIVALENCE OF ADVANTAGES. See Reciprocity. ERs. See Export Restraints. ESCALATION. See Tariff Escalation. ESCAPE CLAUSE. 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 "safeguard" provisions to help firms and workers injured by increased imports adjust to the rising level of import competition. Section 201 of the U.S. Trade Act of 1974 requires the U.S. International Trade Commission (USITC) to investigate complaints formally known as "petitions" filed by domestic industries or workers claiming that they have been injured or are threatened with injury as a consequence of rising imports and to complete any such investigation within six months. The act provides that if the USITC finds that a domestic industry has been seriously injured or threatened with serious injury, it shall recommend to the president relief to the industry in the form of temporary import restrictions (tariffs, quotas, or tariff-rate quotas) or trade adjustment assistance. The president has discretion to follow the USITC's recommendations on relief, which normally takes the form of increased duties or quantitative restrictions. Such import relief cannot exceed eight years, including extensions. See also Adjustment Assistance; Concession; Import Relief; Protectionism; Safeguards; Trade Act of 1974; and U.S. International Trade Commission. ESP. See Exporter's Sales Price. EURATOM. See European Community. EURO-BONDS. See Euro-Dollars. EURO-CURRENCY. 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 that are sometimes issued by U.S. companies to finance their operations, especially those outside the United States. See also Bill; and Multinational Corporation. EUROPEAN BANK (EBRD). The European Bank for Reconstruction and Development (EBRD) is a regional development bank with the purpose of supporting market-oriented economic reforms in Central and Eastern Europe (including the former Soviet Union). The EBRD began operating in April 1991. EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD). See European Bank. EUROPEAN COAL AND STEEL COMMUNITY (ECSC). A common market in coal and steel, established by the 1951 Schuman Plan (named after Robert Schuman, French foreign minister), through which France, Italy, the Federal Republic of Germany, Belgium, the Netherlands and Luxembourg abolished 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. See also Customs Union; and European Community. EUROPEAN COMMUNITY (EC). The European Economic Community (EEC) came into being on January 1, 1958, based on the Treaty of Rome,with six participating member states (France, Italy, the Federal Republic of Germany, Belgium, the Netherlands and Luxembourg). From the beginning, a principal objective of the Community was the establishment of a customs union, other forms of economic integration, and political cooperation among member countries.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 labor and capital within the Community. The United Kingdom, Denmark and Ireland joined the Community in 1973, and Greece in 1981. Spain and Portugal became members in 1986. A number of other European countries have already, or are expected to apply for membership in the 1990s. Norway, Sweden, Finland and Austria are expected to join the Community in November 1995. Turkey's "Association Agreement" with the Community also calls for its eventual membership. In recent years, the Community made major efforts to "deepen" its integration by attempting to remove remaining barriers to the free movement of goods, people, capital and services within the EC via what became known as the "single market" or "1992" program. Part 1, Article 1 of the Maastricht Treaty on European Union formalized the use of "EC" as a reference to "European Community." The treaty also introduced the term "European Union" as a broader legal entity than the EC. The Community is headquartered in Brussels. The member states, acting through various Councils, set overall EC policy, which is executed by the Commission, the Community's permanent staff. Technical experts from Community capitals meet regularly to deal with specialized issues in such areas as agriculture, transportation,or trade policy. See also Common Agricultural Policy; Common External Tariff; Customs Union; European Coal and Steel Community; Lome Convention; and Variable Levy. EUROPEAN ECONOMIC AREA. See European Free Trade Association. EUROPEAN ECONOMIC COMMUNITY. See European Community. EUROPEAN FREE TRADE ASSOCIATION (EFTA). A regional grouping established in 1960 by the Stockholm Convention, headquartered in Geneva, now comprising Austria, Iceland, Norway, Portugal, Sweden and Switzerland. Finland is an Associate Member. Denmark and the United Kingdom were formerly members, but they withdrew from EFTA when they joined the European Community in 1973. EFTA member countries have gradually eliminated tariffs on manufactured goods originating and traded within EFTA and between EFTA and the EC. 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 European Community that provides for the mutual elimination of tariffs for most manufactured goods except for a few sensitive products. As a result, the European Community and EFTA form a de facto free trade area. The EC and EFTA countries have recently agreed to deepen their economic integration via a new treaty creating what is referred to as the European Economic Area (EEA). This treaty provides for the adoption by the EFTA countries of numerous EC laws and regulations with a view towards ensuring the freedom of movement of people, goods, services and capital within Europe. See also European Community; and Free Trade Area. EUROPEAN RECOVERY PROGRAM (ERP). Better known as the "Marshall Plan," after U.S. Secretary of State George C. Marshall, who proposed a broad range of trade reform and aid measures to hasten the rehabilitation of European economies after World War II in a speech at Harvard University in Cambridge, Massachusetts 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 17 participating European countries was implemented by the Organization for European Economic Cooperation (OEEC). (The original 16 participating European countries were joined by the Federal Republic of Germany in 1949.) Between 1948 and 1951, when the program was terminated, the 17 European countries received more than $12,000 million from the United States. See also Organization for European Economic Cooperation. EUROPEAN UNION. The EU is an umbrella reference to the European Community (EC) and to two European integration efforts introduced by the Maastricht Treaty: Common Foreign and Security Policy (including defense) and Justice and Home Affairs (principally cooperation between police and other authorities on crime, terrorism, and immigration issues). The term "European Union" was introduced in November 1993 (when the Maastricht Treaty on European Union entered into force). The term "European Community" (EC) continues to exist as a legal entity within the broader framework of the EU. EXCEPTIONS. See Generalized System of Preferences; and Linear Reduction of Tariffs. 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 non-tariff barriers to trade. See also Balance of Payments Consultations; Currency; Non-Tariff Barriers; and Specific Limitations on Trade. EXCHANGE RATE. The price (or rate) at which one currency is exchanged for another currency, for gold or for Special Drawing Rights (SDR's). See also Currency; International Monetary Fund; Par Value; and Special Drawing Rights. 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; and Tax. EXECUTING AGENCY. See United Nations Development Program. EXIMBANK. See Export-Import Bank of the United States. EXPORT ADMINISTRATION ACT OF 1979. This statute 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, or to further foreign policy objectives. It also prohibits compliance with foreign boycotts. See also Antiboycott Legislation; Boycott; and Coordinating Committee on Export Controls. EXPORT CREDIT GUARANTEE FACILITY (ECGF). A scheme developed in UNCTAD that would enable developing-country exporters to refinance their export credits extended to importers in other countries under an international guarantee. EXPORT CREDIT INSURANCE. Insurance designed to guarantee that the exporter will be paid for his 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 Insurance; and Underwriter. EXPORT CREDITS. See International Arrangement on Export Credits; Mixed Credits; and Subsidy. EXPORT EMBARGO. See Embargo; Supply Access. EXPORT ENHANCEMENT PROGRAM (EEP). The Export Enhancement Program provides direct U.S. response to export subsidies of other countries by subsidizing U.S.-produced agricultural products into the world market. The EEP was initiated in May 1985 under provisions of the Commodity Credit Corporation (CCC) 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 Export Subsidy; and Subsidy. EXPORT-IMPORT BANK OF THE UNITED STATES (EXIMBANK). A public corporation created by executive order of the president in 1934 and given a statutory basis in 1945.The Eximbank 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. See also Foreign Credit Insurance Association. EXPORT LICENSING. See Licensing. 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/GATT; Market; MITI; Supply; Trade Fair; and Trade Mission. EXPORT QUOTAS. Specific restrictions or ceilings imposed by an exporting country on the value or volume of certain exports imposed 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; and Voluntary Restraint Agreements. EXPORT RESTRAINT AGREEMENTS. See Voluntary Restraint Agreements. 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; and Voluntary Restraint Agreements. EXPORT SUBSIDY. A subsidy such as those described in the Illustrative List of Export Subsidies of the GATT Subsidies Code. 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 Countervailing Duty; Illustrative List; and Market Access. 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. anti-trust laws. See also Anti-Trust; and Webb-Pomerene Act. EXPORTER'S SALES PRICE (ESP). A statutory term used to refer to the U.S. sales price of merchandise which is sold or likely to be sold in the United States, before or after the time of importation, by or for the account of the exporter. Certain statutory adjustments are made to permit a meaningful comparison with the foreign market value of such or similar merchandise, e.g., import duties, U.S. selling and administrative expenses, and freight are deducted from the U.S. price. See also United States Price. 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; Macroeconomics; and MITI. EXPOSURE. See Reinsurance.