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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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.
DATA PROCESSING — See Services.
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.
DECLARATION OF MADRID — See Inter-American Development Bank.
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.
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.
DEMAND SCHEDULE — See Demand.
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.
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.
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.
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:
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.
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.
DIFFERENTIAL TREATMENT — See Framework Agreement; Special and Differential Treatment.
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.
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.
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.
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.
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.
DISRUPTION — See Market Disruption.
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.
DOMESTIC INTERNATIONAL SALES CORPORATION (DISC) — See Foreign Sales Corporation.
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.
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.
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.
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.
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.
DRY CARGO — See Bulk Carrier.
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.
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.
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.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
EAI — See Enterprise for the Americas Initiative.
EARNINGS — See Foreign Exchange Earnings; Profit.
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.
EBRD — See European Bank.
EC — See 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 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.
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.
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; Tariff Escalation.
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.
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.
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.
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.
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.
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.
EQUAL PERCENTAGE REDUCTION OF TARIFFS — See Linear Reduction of Tariffs.
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.
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 — 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.
ESP — See Constructed Export Price.
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-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, 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-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.
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.
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.
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.
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.
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 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.
EUROPEAN COURT OF JUSTICE — See European Community.
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.
EUROPEAN ECONOMIC AREA (EEA) — See European Free Trade Association.
EUROPEAN ECONOMIC COMMUNITY (EEC) — See European Community.
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.
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.
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.
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.
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.
EXCEPTIONS — See Generalized System of Preferences; 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 nontariff barriers to trade. See also Balance-of-Payments Consultations; Currency; Nontariff Barriers; 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. See also Currency; International Monetary Fund; Par Value; 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; Tax.
EXECUTING AGENCY — See United Nations Development Program.
EXIMBANK — See Export-Import Bank of the United States.
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.
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.
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.
EXPORT CREDITS — See Export Credit Guarantee Facility; International Arrangement on Export Credits; Mixed Credits; Subsidy.
EXPORT EMBARGO — See Embargo; Supply Access.
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.
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.
EXPORT LICENSING — See Licensing.
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.
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.
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.
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; Voluntary Restraint Agreements.
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.
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.
EXPORTER'S SALES PRICE (ESP) — See Constructed Export 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; Ministry of International Trade and Industry; U.S. Foreign and Commercial Service.
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.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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.
FACTORY SYSTEM OF PRODUCTION — See Industrial Revolution.
FAIR — See Trade Fair.
FAIR VALUE — See Dumping.
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.
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.
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.
FINAL ACT — See Uruguay Round; World Trade Organization.
FLOOR PRICES — See Buffer Stocks.
FLORENCE AGREEMENT — 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.
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.
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.
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.
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; Money.
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.
FOREIGN MARKET VALUE (FMV) — See Normal Value.
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.
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; Spot Market.
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:
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; Tariff.
FREE ON BOARD — See FOB.
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.
FREE TRADE AREA — See Free Trade Area 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.
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.
FREE TRADE ZONE (FTZ) — 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; Port of Entry; Tariff; Transit Zone.
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.
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.
FUSION, TREATY OF — See European Community.
FUTURES — See Forward Market.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
G-5 — See Group of 5.
G-7 — See Group of 7.
G-77 — See Group of 77.
GATE PRICE — See Variable Levy.
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.
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.
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.
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT) —
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.
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.
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.
GLOBAL ELECTRONIC COMMERCE (GEC) — See Electronic Commerce.
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.
GLOBAL QUOTAS — See Quantitative Restrictions.
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.
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.
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.
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.
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.
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.
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.
GRUNDY TARIFF — See Tariff Act of 1930.
GSP — See Generalized System of Preferences.
GSTP — See Global System of Trade Preferences.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
HARD FIBERS — Sisal, abaca, and coir. See also Integrated Program for Commodities.
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.
HARMONIZED COMMODITY DESCRIPTION AND CODING SYSTEM — See Customs Harmonization; Harmonized System.
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 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.
HAVANA CHARTER — See General Agreement on Tariffs and Trade.
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.
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.
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.
HORIZONTAL REDUCTION OF TARIFFS — See Linear Reduction of Tariffs.
HS — See Harmonized System.
HTSUS — See Harmonized Tariff Schedule of the United States.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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.
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.
IMF — See International Monetary Fund.
IMPAIRMENT — See Consultations; Dispute Settlement.
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.
IMPORT LICENSING — See Licensing.
IMPORT QUOTAS — See Quantitative Restrictions.
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.
IMPORT RESTRICTIONS — See Nontariff Barriers; Protection; Tariff.
IMPORT-SENSITIVE PRODUCTS — See Sensitive Products.
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.
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.
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.
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.
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.
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.
INDUSTRIALIZED COUNTRIES — See Developed Countries.
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.
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.
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.
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.
INHERITANCE TAX — See Direct Tax.
INJURY — See Countervailing Duties; Dumping; Escape Clause; Market Disruption; Peril Point; Safeguards; U.S. International Trade Commission.
INPUT DUMPING — See Downstream Dumping.
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.
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.
INTEGRATED TARIFF — The system used by a shipping conference to charge agreed upon rates for services.
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.
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.
INTER-AMERICAN INVESTMENT CORPORATION (IIC) — See Inter-American Development Bank.
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.
INTERMEDIATE GOODS — See Capital Goods.
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.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD) — See World Bank.
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.
INTERNATIONAL CONVENTION ON THE SIMPLIFICATION AND HARMONIZATION OF CUSTOMS PROCEDURES — See Kyoto Convention.
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.
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.
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.
INTERNATIONAL LABOR ORGANIZATION — See Core Labor Standards.
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.
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 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.
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.
INTERNATIONAL TRADE COMMISSION (ITC) — See U.S. International Trade Commission.
INTERNATIONAL TRADE ORGANIZATION (ITO) — See General Agreement on Tariffs and Trade.
INTERNATIONAL UNION FOR THE PROTECTION OF INDUSTRIAL PROPERTY — See World Intellectual Property Organization.
INTERNATIONAL UNION FOR THE PROTECTION OF LITERARY AND ARTISTIC WORKS — See World Intellectual Property Organization.
INTERNATIONAL WHEAT AGREEMENT — See Kennedy Round.
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.
INVESTOR — See Entrepreneur; Risk.
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.
IPC — See Integrated Program for Commodities.
ISLAND DEVELOPING COUNTRIES — See Least Developed Countries.
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.
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