-------------- F -------------- FACTORY SYSTEM OF PRODUCTION. See Industrial Revolution. FAIR. See Trade Fair. FAIR VALUE. See Dumping. FARA. See Foreign Agents Registration Act. FAS. The term "Free Alongside Ship," in international trade, refers to the point of embarkation from which the vessel or plane selected by the buyer will transport the goods. Under this system, the seller is obligated to pay the costs and assume all risks for transporting the goods from his place of business to the FAS point. 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 CIF; and FOB. FCIA. See Foreign Credit Insurance Association. FCN. See Freedom, Commerce and Navigation Treaty. FINAL ACT. Term used in describing the bringing together of the results of the Uruguay Round Group of Negotiations on Goods (GNG) and Group on Negotiations on Services (GNS) through the Trade Negotiating Committee (TNC). The Final Act provides a framework for the implementation of the results of the Uruguay Round negotiations. See also Uruguay Round. FLOOR PRICES. See Buffer Stocks. FLORENCE AGREEMENT. Officially known as the Agreement on the Importation of Educational, Scientific and Cultural Materials, entered into force in 1952. The agreement 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 of information, and to recommend international agreements which 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. FMV. See Foreign Market Value. FOB. An abbreviation used in some international sales contracts, when imports are valued at a designated point,as agreed between buyer and seller, that is considered "Free on Board." In such contracts, the seller is obligated to have the goods packaged and ready for shipment from the agreed point, whether his own place of business or some intermediate point, and the buyer normally assumes the burden of all inland transportation costs and risks in the exporting country, as well as all subsequent transportation costs, including the costs of loading the merchandise on the vessel. However, 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 to that vessel. The same principle applies to the abbreviations "FOR" ("Free on Rail") and "FOT" ("Free on Truck"). See also C And F; CIF; and FAS. FOR. See FOB. FOREIGN AGENTS REGISTRATION ACT (FARA). The Foreign Agents Registration Act was designed to guard against undue foreign influence on U.S. policy. FARA mandates public disclosure, through various reports to the 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 which 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. FOREIGN CREDIT INSURANCE ASSOCIATION. An association formed in 1961 to offer export credit insurance backed by the Export-Import Bank of the United States (Eximbank) for U.S. exporters. The association acted as agent for Eximbank offering short-and medium-term insurance coverage. In the fall of 1991, FICA Management Company, Inc. was formed, employing the staff of the association, to act as the servicing company for Eximbank under a two-year contract. FICA Management Company, Inc. will issue Eximbank export credit insurance policies -- representing the full faith and credit of the U.S. government -- and privately backed association policies. See also Export-Import Bank of the United States; and Insurance. FOREIGN EXCHANGE. Claims on a foreign country held in the form of the currency of that country or interest-bearing bonds. See also Currency; and Money. FOREIGN EXCHANGE CONTROLS. See Exchange Controls. 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; and Money. FOREIGN MARKET VALUE (FMV). The price, as defined in the Tariff Act of 1930, as amended, at which merchandise is sold, or offered for sale,in the principal markets of the country from which it is exported. If foreign home market sales are not usable,the foreign market value is based on prices to third countries or constructed value. A number of adjustments must be made to those prices to insure a proper comparison with U.S. prices. See also Adjustment. FOREIGN SALES CORPORATION (FSC). An offshore corporation, authorized by the Deficit Reduction Act of 1984, that is eligible for an exemption from 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 the 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. FOREIGN TRADE ZONE. See Free Zone. 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; and Spot Market. FOT. See FOB. FRAMEWORK AGREEMENT (BILATERAL). A bilateral framework agreement is an agreement between the United States and a trading partner(s) that establishes certain principles which apply to that trade and investment relationship and that also establishes a consultative mechanism which can be used to clarify respective trade policies, resolve specific disputes,or negotiate the reduction or removal of trade or investment barriers. The first such agreement was signed with Mexico in November 1987, with similar agreements subsequently signed with the Philippines and numerous countries in South America, Central America and the Caribbean. See also Bilateral; and Bilateral Trade Agreement. FRAMEWORK AGREEMENT (GATT). With reference to the GATT, the "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 General Agreement. 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) inthe 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. It also provided guidelines or trade preferences among LDCs and for the generalized system of preferences granted by developed countries for LDC imports. Developing countries recognized that, as their economies grow stronger, it was expected that they would 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 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, disputesettlement and surveillance of developments in the international trading system. See also Balance of Payments Consultations; Dispute Settlement; Enabling Clause; General Agreement on Tariffs and Trade; Preferences; Reciprocity; Safeguards; Special and Differential Treatment; Tokyo Declaration; and Tokyo Round. FREE ALONGSIDE SHIP. See FAS. FREE LIST. A list of goods not subject to import duties or import-licensing requirements in a particular country. See also Licensing. FREE ON BOARD. See FOB. FREE PORT. See Free Zone. FREE TRADE. A theoretical concept that assumes international trade unhampered by government measures such as tariffs or non-tariff 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; Non-Tariff Barriers; Protectionism; and Tariff. FREE TRADE AREA AGREEMENT. Agreement between two or more countries to eliminate tariff and non-tariff 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 U.S.-Israel Free Trade Area Agreement, and the U.S.-Canada Free Trade Agreement. The United States, Canada and Mexico completed negotiations on a proposed North American Free Trade Agreement (NAFTA) in August 1992. 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 Union; European Free Trade Association; General Agreement on Tariffs and Trade; North American Free Trade Agreement; and U.S.-Canada Free Trade Agreement. FREE TRADE ZONE. See Free Zone. FREE WAREHOUSE. See Free Zone. 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. 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. FUSION, TREATY OF. See European Community. FUTURES. See Forward Market.