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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
JAPAN EXTERNAL TRADE ORGANIZATION (JETRO) — An organization responsible for the day-to-day management and operation of Japan��s Ministry of International Trade and Industry's (MITI) import promotion programs. Established in 1958 to help Japanese firms export overseas, JETRO now assists foreign firms seeking to export or invest in Japan. JETRO has a network of 33 offices in Japan and 79 offices overseas in 56 countries. See also Ministry of International Trade and Industry.
JOINT VENTURE — A form of business partnership involving joint management and the sharing of risks and profits as between enterprises based in different countries. If joint ownership of capital is involved, the partnership is known as an equity joint venture. See also Capital; Equity; Risk.
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KEIRETSU — In the late 20th century, descendants of Japan��s pre-war zaibatsu, which were characterized by close, long-term business relationships between its members. Keiretsu typically include a bank, a trading company, manufacturing firms, and often an insurance company. Keiretsu firms are linked to one another through a network of formal and informal ties including cross-shareholdings, time-honored buyer-supplier arrangements, interlocking corporate directorates, interchange of personnel between member firms, and the sharing of information concerning product development and distribution. While keiretsu do have some positive aspects such as cost reduction and quality control, their exclusionary nature can act as an impediment to foreign market access. See also Codes of Conduct; Industrial Policy; Managed Trade; Market Access; Restrictive Business Practice.
KENNEDY ROUND — The popular name for the sixth and, at that time, most ambitious round of trade negotiations under the aegis of the GATT. The Kennedy Round, which lasted from 1963 to 1967, yielded agreements reducing prevailing tariff levels maintained by developed countries on industrial products by about one-third, an Anti-Dumping Code, and a short-lived International Wheat Agreement that was intended to stabilize world wheat prices. (The Wheat Agreement replaced the latest in a series of International Wheat Agreements going back to the 1950s.) See also Anti-Dumping Code; General Agreement on Tariffs and Trade; Linear Reduction of Tariffs; Round; Special and Differential Treatment; Tariff; Trade Expansion Act of 1962.
KEY CURRENCIES — See Currency; Reserve Currency.
KNOCKED DOWN (K.D.) — Merchandise that is imported complete with all parts but in an unassembled state (such as oversized machinery), usually to facilitate packing and shipping.
KNOWLEDGE-BASED INDUSTRY — An industry that is dependent on the protection of intellectual property, such as computer software, musical recordings, motion pictures, and pharmaceuticals. See also Agreement on Trade-Related Aspects of Intellectual Property Rights; Bern Convention; Commercial Counterfeiting; Copyright; Intellectual Property; Patent; Process Patent; Property; Trademark; Trafficking in Counterfeit Goods and Services; World Intellectual Property Organization.
KYOTO CONVENTION — The 1973 International Convention on the Simplification and Harmonization of Customs Procedures, whose goal is the development of compatible national customs procedures in different countries as a means of encouraging and facilitating international trade. See also Codes of Conduct; Customs; Customs Classification; Customs Cooperation Council Nomenclature; Customs Harmonization; Customs Union; Harmonization; Harmonized System; Harmonized Tariff Schedule of the United States; Imports; Most-Favored-Nation Treatment; Tariff; Tariff Schedules; Valuation; World Customs Organization; World Trade Organization.
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LAND-LOCKED DEVELOPING COUNTRIES — See Least Developed Countries; Transit Zone.
LARGE AIRCRAFT SECTOR UNDERSTANDING (LASU) — A 1985 agreement between the United States and the European Community providing for minimum terms and conditions for loans or loan guarantees for the support by government export-credit agencies of the export of aircraft of 70 seats or greater (or the equivalent in freight) and their engines and spare components. This agreement was later broadened to cover all size aircraft and supersedes previously existing "Standstill" and "Common Line" understandings covering government export-financing support for such articles. The understanding has since been incorporated as a sectoral annex into the OECD Arrangement on Guidelines for Officially Supported Export Credits. See also Aircraft Agreement; Domestic Subsidy; European Community; European Union; Export Subsidy; Organization for Economic Cooperation and Development; Market Access.
LASU — See Large Aircraft Sector Understanding.
LDCs — See Developing Countries; Least Developed Countries.
LEAST DEVELOPED COUNTRIES (LLDCs or LDCs) — Some 48 of the world's poorest countries, considered by the United Nations to be the "least developed" of the less developed countries. Most of them are small in terms of area and population, and some are land-locked or small island countries. They are generally characterized by low per capita incomes, low literacy levels and medical standards, subsistence agriculture, and a lack of exploitable minerals and competitive industries. Many suffer from aridity, floods, hurricanes, or excessive animal and plant pests, and most are situated in the zone 10 to 30 degrees north latitude. These countries have low prospect of rapid economic development in the foreseeable future and are likely to remain dependent upon official development assistance for many years. Most are in Africa, but a few are in Asia, the Pacific, and the Western Hemisphere. The abbreviation "LDCs" has increasingly been used in recent years to refer to the least developed countries (although in the 1950s and 1960s, the term "less developed countries" was more or less interchangeable with the term "developing countries"). See also Developing Countries; General Agreement on Tariffs and Trade; International Development Association; Official Development Assistance; Part IV of the GATT; Reciprocity; Soft Loan; Special and Differential Treatment; Substantial New Program of Action; Transit Zone.
LESS DEVELOPED COUNTRIES (LDCs) — See Developing Countries; Least Developed Countries.
LESS THAN FAIR VALUE (LTFV) — See Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code; Dumping; Normal Value; United States Price.
LESS-THAN-LOAD SHIPMENTS (LTL) — A shipment that has not been loaded to capacity for the particular container type or shipping method.
LEVEL OF TRADE ADJUSTMENT (LOT) — Under U.S. antidumping law, an adjustment to the U.S. sales price in an antidumping investigation that compensates for differences in the cost of selling at different commercial levels of trade. See also Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code; Dumping; United States Price.
LEVY — As a verb, to assess or impose a tariff on imported merchandise; as a noun, the charge on imports. See also Customs; Imports; Tariff; Tax.
LIBERAL — When referring to trade policy, relatively free of import controls or restraints and/or exhibiting a preference for reducing existing barriers to trade, often contrasted with the protectionist preference for retaining or raising selected barriers to imports. See also Free Trade; Liberalization; Protectionism.
LIBERALIZATION — Unilateral or multilateral reductions in tariffs and other measures that restrict trade. Trade liberalization has been the objective of all rounds of the GATT trade negotiations. See also Codes of Conduct; Free Trade; General Agreement on Tariffs and Trade; Liberal; Round; Sensitive Products.
LICENSING — The requirement by a country of making formal application for a special permit, usually called a "license," as a prior condition for importing or exporting certain goods. See also ATA Carnet; Consular Formalities and Documentation; Consular Invoice; Customs; Customs and Administrative Entry Procedures; Customs Bond; Customs Classification; Free Zone; Licensing Code; Liquidation; Nontariff Barriers; Port of Entry; Prior Deposits; Quarantine, Sanitary and Health Laws and Regulations; Suspension of Liquidation; Tokyo Round; Transit Zone; Valuation; World Customs Organization.
LICENSING CODE — A Tokyo Round code aimed at simplifying import licensing procedures and at ensuring their fair and equitable application. The code also seeks to improve the transparency of such proceedings by requiring the publication of relevant national laws and regulations. A Committee on Import Licensing, under the aegis of GATT, monitors adherence to the code. The WTO Agreement on Import Licensing Procedures, negotiated during the Uruguay Round, is the successor to the Licensing Code. See also Agreement on Import Licensing Procedures; Codes of Conduct; General Agreement on Tariffs and Trade; Licensing; Nontariff Barriers; Tokyo Round; Trade Agreements Act of 1979; Transparency; Uruguay Round; World Trade Organization.
LINEAR REDUCTION OF TARIFFS — A reduction by a given percentage in all tariffs maintained by countries participating in a round of trade negotiations, with or without exceptions for products deemed to be "sensitive." It is sometimes called "horizontal reduction of tariffs," "across-the-board reduction of tariffs," or "equal percentage reduction of tariffs." The complexity and implicit limitations in negotiating tariff reductions on an item-by-item basis in the Dillon Round encouraged negotiators to try a linear reduction formula during the Kennedy Round. The U.S. Trade Expansion Act of 1962, while not specifying an across-the-board formula for the negotiations, authorized reductions of up to 50 percent on virtually all items in the U.S. tariff schedules, hence permitting a linear application. See also Dillon Round; Harmonization; Kennedy Round; Sensitive Products; Tariff; Trade Expansion Act of 1962.
LIQUID HYDROCARBONS — See Bulk Carrier.
LIQUIDATION — Final payment of all duties owing on items imported into the United States. Where the amount of duty is not finally determined at the time that the item is entered, as during the pendency of an antidumping or countervailing duty investigation, liquidation is suspended until the investigation is completed and a final duty determination is issued. See also ATA Carnet; Codes of Conduct; Consular Formalities and Documentation; Consular Invoice; Customs; Customs and Administrative Entry Procedures; Customs Bond; Customs Classification; Imports; Free Zone; Licensing; Nontariff Barriers; Port of Entry; Quarantine, Sanitary, and Health Laws and Regulations; Suspension of Liquidation; Tariff; Tariff Schedules; Transit Zone; Valuation; World Customs Organization; World Trade Organization.
LLDCs — See Least Developed Countries.
LOAN — A sum of money borrowed by a person, company, government, or other organization. See also Capital Market; Interest; International Monetary Fund; Risk; Security; Soft Loan; Tied Loan; World Bank.
LOGISTICS INTERMEDIARY — A person who consolidates several small shipments from various sources into a larger shipment, usually up to a full truck, car, or container load.
LOGISTICS PROVIDER — A person who acts as an agent on behalf of the shipper.
LOMÉ CONVENTION — An agreement — originally signed in 1975 — through which the European Community provides financial and technical assistance to approximately 70 Associated Countries of Africa, the Caribbean, and the Pacific (the ACP Countries), as well as tariff preferences for many of their products in European markets. The ACP countries no longer grant reverse preferences, as they were required to under earlier the Yaoundé Convention, as a condition for receiving EC preferences. The Lomé Convention also created a mechanism known as STABEX, which was designed to stabilize the export earnings of individual ACP countries from selected commodities. Compensatory payments from the European Community under STABEX are based on the amount by which a country's earnings from exports of specified commodities fall below designated levels. The Lomé Convention, which is renegotiated periodically, was last renegotiated in 1995. See also ACP Countries; Commodity; Compensatory Finance; Developing Countries; European Community; Managed Trade; Reverse Preferences.
LONDON CLUB — An ad hoc group of commercial bank lenders that meets to negotiate debt restructuring agreements with debtor countries.
LONG-TERM AGREEMENT ON INTERNATIONAL TRADE IN COTTON TEXTILES (LTA) — See Agreement on Textiles and Clothing; Multi-Fiber Arrangement Regarding International Trade in Textiles.
LOT — See Level of Trade Adjustment.
LTA — See Multi-Fiber Arrangement Regarding International Trade in Textiles.
LTL — See Less Than Load Shipments.
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MAASTRICHT TREATY — See See European Community; European Union.
MACHINE TOOLS — See Capital Goods.
MANAGED TRADE — Attempts by governments at the national or international level to influence or control exports and imports based on the presumption that government perspectives are more likely to ensure optimal trade than is reliance on unmanaged market forces. Managed trade at the national level often reflects the political influence of protectionist elements in an economy. The term may also describe buffer stock and price stabilization arrangements, such as STABEX or the Integrated Program for Commodities. See also Buffer Stocks; Industrial Policy; Integrated Program for Commodities; Lomé Convention; Market Economy; Market Forces; Ministry of International Trade and Industry; Protectionism.
MAN-MADE FIBERS — See Multi-Fiber Arrangement Regarding International Trade in Textiles; Sensitive Products; Textiles.
MANUFACTURING PROCESSES — See Production; Property.
MARGIN OF PREFERENCE — The difference between the duty payable under a given system of tariff preferences and the duty that would be assessed in the absence of preferences. See also Generalized System of Preferences; Preferences; Special and Differential Treatment; Tariff.
MARKET — The area within which buyers and sellers interact to effect economic exchanges. The estimated or realized demand for a good or service may also be referred to as its "market." See also Demand; Distribution; Market Economy; Monopoly; Production; Purchasing Power; Supply.
MARKET ACCESS — The ability of domestic providers of goods and services to penetrate a related market in a foreign country. The extent to which the foreign market is accessible generally depends on the existence and extent of trade barriers. See also Market; Market Forces; Nonmarket Economy; Nontariff Barriers; Offer List; Restrictive Business Practices; Special and Differential Treatment.
MARKET DISRUPTION — A situation that occurs when a surge of imports of a particular product causes a precipitous decline in sales of similar domestically produced goods. See also Adjustment; Agreement on Safeguards; Agreement on Textiles and Clothing; Dumping; Escape Clause; Multi-Fiber Arrangement Regarding International Trade in Textiles; Orderly Marketing Agreements; Safeguards; Sensitive Products; U.S. International Trade Commission.
MARKET ECONOMY — The national economy of a country that relies on market forces to determine levels of production, consumption, investment, and savings without government intervention. See also Demand; Market Forces; Nonmarket Economy; Price; Private Sector; Profit; Supply.
MARKET FORCES — Shifts in demand and supply that are reflected in changing relative prices, thus serving as indicators and guides for enterprises that make investment, purchase, and sales decisions. See also Demand; Managed Trade; Market Access; Nonmarket Economy; Price; Private Sector; Supply.
MARSHALL PLAN — See European Recovery Program.
MEDIUM OF EXCHANGE — Documentary instrument used in commercial transactions between buyers and sellers to measure the value of the goods exchanged. The value of such instruments is usually expressed in terms of a national currency, such as the U.S. dollar. See also Bill; Currency; Euro; Market; Money.
MEMBER — See Contracting Party.
MERCANTILISM — An economic philosophy prominent in the 16th and 17th centuries that equated the accumulation and possession of gold and other international monetary assets, such as foreign currency reserves, with national wealth. Although this point of view is generally discredited among 20th century economists and trade policy experts, some contemporary politicians still favor policies designed to create trade surpluses, such as import substitution and tariff protection for domestic industries, as essential to national economic strength. See also Balance of Trade; Currency; Import Substitution; Industrial Policy; Managed Trade; Protectionism.
MERCANTILIST — A person who believes in or advocates mercantilism. See also Mercantilism.
MERCHANDISE EXPORTS AND IMPORTS — See Balance of Trade; Current Account.
MERCOSUR — The Spanish abbreviation for Mercado Común del Sur (Southern Common Market). Argentina, Brazil, Paraguay, and Uruguay officially inaugurated MERCOSUR in January 1991. On January 1, 1995, MERCOSUR designated itself as a customs union by establishing a common external tariff covering 85 percent of traded goods. MERCOSUR will gradually phase in coverage of the CET through 2006, when all products should be covered by the customs union. Chile became an associate member of MERCOSUR on October 1, 1996, and Bolivia did the same on April 1, 1997. Neither country participates in the CET. See also Common External Tariff; Customs; Customs Area; Customs Union; European Community; European Free Trade Association; Free Trade Area Agreement; Free Trade Area of the Americas; General Agreement on Tariffs and Trade; Kyoto Convention; North American Free Trade Agreement; Tariff; Tariff Schedules; Trade Diversion; U.S.-Canada Free Trade Agreement.
MERGER TREATY — See European Community.
MFA — See Multi-Fiber Arrangement Regarding International Trade in Textiles.
MFN — See Most-Favored-Nation Treatment.
MIGA — See Multilateral Investment Guarantee Agency.
MINIMUM VALUATION — Customs valuation of certain low-cost items at a higher-than-actual value. See also Agreement on Implementation of Article VII of GATT 1994; Codes of Conduct; Customs; Customs Classification; Free Zone; Imports; Liquidation; Most-Favored-Nation Treatment; Suspension of Liquidation; Tariff; Tariff Schedule; Valuation; World Customs Organization; World Trade Organization.
MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY (MITI) — The Japanese ministry that has adopted, for some years, a comprehensive economic growth and development strategy centering on export expansion. See also Export Promotion; Exports; Industrial Policy; Japan External Trade Organization; Managed Trade.
MITI — See Ministry of International Trade and Industry.
MIXED CREDITS — A financing package that involves official government credit to supplement normal commercial credit, thus enabling an exporter to deliver goods to a buyer in another country on credit terms comparable to those of his competitors. See also Competitive; Credit; Export Credit Guarantee Facility; Exports; International Arrangement on Export Credits.
MIXED ECONOMIES — See Nonmarket Economy; State Trading Companies.
MIXED TARIFF — See Compound Tariff.
MNC — See Multinational Corporation.
MONETARY AND FINANCIAL CONFERENCE — See Bretton Woods Conference.
MONEY — Any medium of exchange that is widely accepted in payment for goods and services or to settle debts. Money also serves as a standard of value for measuring the relative worth of different goods and services and as a means of storing wealth. The number of units of money required to buy a commodity is its price. Without money, trade would be reduced to barter. The "real" value of money declines during inflationary periods. See also Barter; Capital; Credit; Currency; Inflation; Medium of Exchange; Price; Purchasing Power; Value; Welfare.
MONOPOLY — The condition that exists in a market when a single supplier controls the supply of a product to such an extent that it can set quantity and prices for maximum profitability with little or no regard for the pressures of demand and supply that operate in competitive economic markets. A high tariff or nontariff barrier to imports can give a noncompetitive producer a monopoly position for a particular product within a domestic market. See also Antitrust; Cartel; Competition Policy; Competitive; Demand; Efficiency; Market; Nontariff Barriers; Price; Protection; Restrictive Business Practices; Supply; Tariff; Unfair Trade Practices.
MONTREAL MINISTERIAL — The mid-term review of progress in the Uruguay Round held in Montreal, Canada, in December 1988. During the ministerial meeting, frameworks for completing the negotiations were agreed in 11 out of the 15 negotiating areas, with no agreement reached on frameworks for agriculture, intellectual property, textiles, and safeguards. See also Brussels Ministerial; GATT Ministerial Meeting of 1982; Montreal Protocol; Punta del Este Ministerial; Round; Seattle Ministerial; Uruguay Round; World Trade Organization.
MONTREAL PROTOCOL — A multilateral agreement negotiated in 1988 to reduce and eventually eliminate the use of chlorofluorocarbons and halogens so as to prevent erosion of the ozone layer. The agreement is noteworthy for allowing the use of trade sanctions to enforce its provisions. See also Montreal Ministerial; Trade-Related Environmental Issues; Uruguay Round.
MOST-FAVORED-NATION (MFN) TREATMENT — The policy of nondiscrimination in trade policy that provides to all trading partners the same customs and tariff treatment given to the so-called most-favored-nation. This fundamental principle was a feature of U.S. trade policy as early as 1778. Since 1923 the United States has incorporated an unconditional most-favored-nation clause in its trade agreements, binding the contracting governments to confer upon each other all the most favorable trade concessions that either may grant to any other country subsequent to the signing of the agreement. The United States now applies this provision to its trade with all of its trading partners except for those specifically excluded by law. The MFN principle has also provided the foundation for the world trading system since the end of World War II under the GATT and, since 1995, under the WTO Agreement. See also Column 1 Rates; Concession; Conditional Most-Favored-Nation Treatment; Customs; Discrimination; Enabling Clause; General Agreement on Tariffs and Trade; Principal Supplier; Reciprocity; Tariff; Trade Agreements Act of 1934; World Trade Organization.
MTN — See Multilateral Trade Negotiations.
MTO — See Multilateral Trade Organization.
MULTI-FIBER ARRANGEMENT REGARDING INTERNATIONAL TRADE IN TEXTILES (MFA) — An internationally agreed derogation from GATT rules that was in effect from 1974 until the end of the Uruguay Round in 1994. The MFA succeeded the Long-Term Agreement on International Trade in Cotton Textiles (LTA), which had been in effect since 1962. The objective of these agreements was to reconcile the interests of textile-exporting and textile-importing countries by permitting an orderly expansion of trade while avoiding market disruption. Whereas the LTA applied only to cotton textiles, the MFA also applied to wool, man-made (synthetic) fiber, and silk blend and vegetable fiber textiles and apparel products. The MFA allowed an importing signatory country to apply quantitative restrictions on textile imports when it considered such restrictions, even though contrary to GATT rules, necessary to prevent market disruption. MFA rules provided that quantitative restrictions should not reduce imports to levels below those attained during the preceding year, and should, if continued, permit trade to expand by specified percentages. Since an importing country could impose such quotas unilaterally to restrict rapidly rising textiles imports, most important textile-exporting countries considered it advantageous to enter into bilateral agreements with the principal textile-importing countries. The MFA went into effect on January 1, 1974, was renewed in December 1977, in December 1981, in July 1986, and for the last time, in July 1991. In 1995, the WTO Agreement on Textiles and Clothing (ATC) began phasing out the global system of bilateral textile and apparel quotas permitted by the LTA and, later, the MFA. Under the ATC, WTO member countries have agreed to eliminate the MFA quotas in phases between July 1, 1995, and July 1, 2005. At the end of the 10-year transition period, rules on textile trade will be fully integrated into those of the World Trade Organization. All countries that are signatories to the WTO Agreement are now subject to the ATC whether or not they were signatories to the MFA. See also Agreement on Textiles and Clothing; Article 11 (GATT Article XI); Bilateral Trade Agreement; General Agreement on Tariffs and Trade; Market Disruption; Quantitative Restrictions; Residual Restrictions; Sensitive Products; Textiles; Tokyo Round; Uruguay Round; World Trade Organization.
MULTILATERAL — Having a number of participating parties, members, or countries. In the context of the World Trade Organization, "multilateral" has a special meaning. Multilateral agreements of the WTO are binding on all member countries, in contrast to plurilateral WTO agreements, which are binding only on those WTO members that have affirmatively acceded to such agreements. See also Bilateral; Multilateral Agreement; Multilateral Trade Negotiations; Unilateral; World Trade Organization.
MULTILATERAL AGREEMENT — An international compact involving three or more parties. For example, GATT sought, from its establishment in 1947, to promote trade liberalization through multilateral negotiations. See also Codes of Conduct; General Agreement on Tariffs and Trade; Liberalization; Multilateral Trade Negotiations; Negotiations; World Trade Organization.
MULTILATERAL AGREEMENT ON INVESTMENT (MAI) — A draft set of investment principles under consideration by OECD member countries and certain observer countries between 1995 and 1998. OECD consideration of these principles was informally suspended in late 1998. The principles are binding governmental commitments to afford certain basic protections to investors and investment from other OECD members similar to the protections found in a network of bilateral investment agreements, such as the model United States Bilateral Investment Treaty. Protections include commitments to expropriate only in accordance with due process, for a public purpose, and upon payment of compensation; they generally provide nondiscriminatory treatment to all investors to permit transfers associated with an investment. See also Balance of Payments; Bilateral Investment Treaty; Capital Account; Convertibility; Direct Investment; Exchange Controls; Foreign Investment; Industrial Policy; Investment Performance Requirements; Multilateral Investment Fund; Multilateral Investment Guarantee Agency; National Treatment; Organization for Economic Cooperation and Development; Performance Requirements; Restrictive Business Practices; Right of Establishment; Trade-Related Investment Measures.
MULTILATERAL AID — Development assistance given by donors to recipient countries through international institutions. See also Additionality; Asia-Pacific Economic Cooperation; Bilateral Aid; Developing Countries; Development Assistance Committee; Economic Development; Framework Agreement; General Agreement on Tariffs and Trade; Generalized System of Preferences; Inter-American Development Bank; International Finance Corporation; International Trade Center UNCTAD/WTO; Multilateral Investment Guarantee Agency; Official Development Assistance; Organization for Economic Cooperation and Development; Part IV of the GATT; Special and Differential Treatment; Tokyo Declaration; Tokyo Round; United Nations Conference on Trade and Development; United Nations Development Program; Uruguay Round; World Bank; World Trade Organization.
MULTILATERAL INVESTMENT FUND (MIF) — A special fund administered by the Inter-American Development Bank that was established in 1993 to accelerate private sector development and help improve the climate for private investment in Latin America and the Caribbean. Approved projects have focused on strengthening the policy and regulatory framework for the private sector, increasing worker skills and mobility, broadening the participation of micro and small enterprises, and demonstrating the role of equity as a development tool. See also Additionality; Bilateral Aid; Bilateral Investment Treaty; Developing Countries; Direct Investment; Economic Development; Foreign Investment; Industrial Policy; Inter-American Development Bank; Least Developed Countries; Multilateral Aid; Newly Industrializing Countries; Non-Aligned Movement; North-South Trade; Official Development Assistance; Soft Loan; South-South Trade.
MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA) — A part of the World Bank Group that began operations in April 1988 to encourage the flow of private foreign investment to its member developing countries by providing insurance against noncommercial risks and by providing promotional and advisory services. MIGA's guarantee program protects investors against losses from currency transfer, expropriation, war, and civil disturbance and from investment-related breaches of contract by host governments. MIGA works in close cooperation with the World Bank, the International Development Association, and the International Finance Corporation to promote sound investment policies, thereby assisting developing countries in creating attractive investment environments for private foreign direct investment. See also Developing Countries; Direct Investment; Economic Development; Foreign Investment; International Development Association; International Finance Corporation; Multilateral Agreement on Investment; Multilateral Aid; Official Development Assistance; World Bank.
MULTILATERAL SAFEGUARD SYSTEM — See Safeguards.
MULTILATERAL TRADE NEGOTIATIONS (MTN) — Negotiations held under the auspices of the GATT from 1947 to 1994, when the Uruguay Round was concluded. Each of eight rounds held represented a discrete and lengthy series of bargaining sessions among the participating contracting parties in search of mutually beneficial agreements aimed at reducing barriers to world trade. The agreements ultimately reached at the conclusion of each round became new GATT commitments and thus amounted to important steps in the evolution of the world trading system. The Uruguay Round resulted in the establishment in 1995 of the World Trade Organization (WTO). See also Dillon Round; Kennedy Round; Multilateral Trade Organization; Negotiations; Reciprocity; Round; Tokyo Round; Uruguay Round.
MULTILATERAL TRADE ORGANIZATION (MTO) — An umbrella organization, replacing GATT, to oversee implementation of the Uruguay Round results. Also known as the World Trade Organization (WTO) or International Trade Organization (ITO). See also Multilateral Trade Negotiations; Uruguay Round; World Trade Organization.
MULTINATIONAL CORPORATION (MNC) — A large commercial organization with affiliates operating in a number of different countries; sometimes referred to, especially in the United Nations, as a transnational corporation (TNC). See also Euro-Dollars; Subsidiary.
MUTATIS MUTANDIS — Latin phrase signifying "the necessary changes having been made"; "substituting new terms.".
MUTUAL RECOGNITION AGREEMENT (MRA) — Agreements that generally allow conformity assessment — for example, testing, inspecting, certifying — of manufactured goods to be performed in the United States to another country's standards and regulations, and vice versa. An MRA can save manufacturers time and expense by avoiding excessive assessments. It also conserves U.S. regulatory agencies' resources. The United States maintains its current high health and safety standards and can adopt even higher standards without in any way violating an MRA. See also Agreement on Preshipment Inspection; Agreement on Technical Barriers to Trade; Nontariff Barriers; Standards.
MUTUALITY OF BENEFITS — See Reciprocity.
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NAFTA — See North American Free Trade Agreement.
NAM — See Non-Aligned Movement.
NATIONAL TRADE DATA BANK (NTDB) — A compilation of international economic and export promotion information supplied by a number of U.S. agencies. Data are updated monthly and are presented in one of three standard formats: text, time series, or matrix. The NTDB contains data from the Departments of Agriculture (Foreign Agricultural Service), Commerce (Bureau of the Census, Bureau of Economic Analysis, International Trade Administration, and National Institute for Standards and Technology), Energy, and Labor (Bureau of Labor Statistics), the Central Intelligence Agency; the Ex-Im Bank; the Federal Reserve System; the U.S. International Trade Commission; the Overseas Private Investment Corporation; the Small Business Administration; and the U.S. Trade Representative; as well as by the University of Massachusetts (MISER data on state origins of exports). The NTDB provides access to country commercial guides, market research reports, and best market reports. The NTDB also provides U.S. import and export statistics, as well as over 75 other various reports and programs. See also Balance of Trade; Electronic Commerce; Exports; Export Promotion; Informatics; Imports; International Trade Administration; U.S. International Trade Commission; Overseas Private Investment Corporation; U.S. Foreign and Commercial Service; United States Trade Representative.
NATIONAL TRADE ESTIMATE REPORT (NTE) — An annual series prepared by the Office of the U.S. Trade Representative that surveys significant foreign barriers to U.S. exports in accordance with section 181 of the Trade Act of 1974 (the 1974 Trade Act), as amended. The National Trade Estimate Report on Foreign Trade Barriers is based on information compiled within USTR, the U.S. Departments of Commerce and Agriculture, and other U.S. government agencies, and supplemented with information provided in response to a notice in the Federal Register, and by members of the private sector trade advisory committees and U.S. embassies abroad. The NTE is an inventory of the most important foreign barriers affecting U.S. exports of goods and services, foreign direct investment by U.S. persons, and protection of intellectual property rights. The report also provides a valuable tool in enforcing U.S. trade laws, with the goal of expanding global trade. The report provides, where feasible, quantitative estimates of the impact of these foreign practices on the value of U.S. exports. Information is also included on actions being taken to eliminate any act, policy, or practice identified in the report. See also Omnibus Trade and Competitiveness Act of 1988; Section 301; Special 301; Super 301; Trade Act of 1974; Trade Agreements Act of 1979; Trade Policy Review Mechanism; United States Trade Representative.
NATIONAL TREATMENT — A basic principle of international trade rules and policy. The principle of national treatment generally prohibits discrimination on the basis of foreign nationality. This fundamental principle is found in the three WTO agreements: Article 3 of the General Agreement on Tariffs and Trade (incorporated by reference in GATT 1994), Article 17 of the General Agreement on Trade in Services (GATS), and Article 3 of the Agreement on Trade-Related Aspects of Intellectual Property Rights. The national treatment principle prohibits discrimination between imported and domestically produced goods with respect to internal taxation or other government regulation. See also Agreement on Trade-Related Aspects of Intellectual Property Rights; Codes of Conduct; General Agreement on Tariffs and Trade; General Agreement on Trade in Services; Restrictive Business Practices; Unfair Trade Practices; Uruguay Round; World Trade Organization.
NEGOTIATIONS — Bargaining between and among representatives of governments seeking a mutually beneficial exchange of concessions. See also Concession; Multilateral Trade Negotiations; Offer List; Principal Supplier; Reciprocity; Request List; Round; United States Trade Representative.
NEWLY INDUSTRIALIZING COUNTRIES (NICs) — A term coined by the Organization for Economic Cooperation and Development to describe those relatively advanced developing nations that have enjoyed rapid economic growth in recent years and can be described as middle-income countries. Examples include Brazil, Hong Kong, South Korea, Mexico, Singapore, and Taiwan. Newly industrializing countries are sometimes referred to as newly industrializing economies (NIEs). See also Developing Countries; Economic Cooperation Among Developing Countries; Economic Development; Graduation; Organization for Economic Cooperation and Development; Textiles.
NEWLY INDUSTRIALIZING ECONOMIES (NIEs) — See Newly Industrializing Countries.
NICs — See Newly Industrializing Countries.
NIEs — See Newly Industrializing Economies.
NOMINAL TARIFF RATE — The rate of duty charged on the gross value of a given product, rather than on the value of its components. See also Effective Tariff Rate; Tariff; Tariff Escalation.
NON-ALIGNED MOVEMENT (NAM) — A loose coalition of developing countries that met at the head-of-state level every few years between the 1950s and the 1980s in an attempt to coordinate positions on international political and economic issues. The movement traces its conceptual foundations to the Asian-African Conference at Bandung in 1955, under the inspiration of India (Nehru), Egypt (Nasser), and Yugoslavia (Tito). The first NAM summit conference took place in Belgrade in 1961; the second in Cairo in 1964; the third in Lusaka in 1970; the fourth in Algiers in 1973; the fifth in Colombo in 1976; the sixth in Havana in 1980; and the seventh in New Delhi in 1983. The member countries now meet under the auspices of the Group of 77. See also Developing Countries; Economic Cooperation Among Developing Countries; Economic Development; Global System of Trade Preferences; Group D; Group of 77; North-South Trade; Organization of Petroleum Exporting Countries; South-South Trade; United Nations Conference on Trade and Development.
NON-DISCRIMINATION — See Discrimination; General Agreement on Tariffs and Trade; Most-Favored-Nation Treatment; National Treatment.
NONMARKET ECONOMY (NME) — A national economy in which the government seeks to determine economic activity largely through a mechanism of central planning, as in the former Soviet Union, in contrast to a market economy, which depends heavily upon market forces to allocate productive resources. In a nonmarket economy, production targets, prices, costs, investment allocations, raw materials, labor, international trade, and most other economic aggregates are manipulated within a national economic plan drawn up by a central planning authority. Hence, the public sector makes the major decisions affecting demand and supply within the national economy. See also Demand; Group D; Industrial Policy; Market Economy; Market Forces; Private Sector; Public Sector; Supply.
NONRECIPROCITY — See Framework Agreement; Reciprocity.
NONTARIFF BARRIERS (NTBs) — Government measures other than tariffs that restrict imports or that have the potential for restricting international trade, even though they may not always do so. NTBs include import monitoring systems and variable levies, as well as measures that are internationally perceived as trade restrictive, even though a trade-restricting intent or effect cannot objectively be ascribed to them. Such measures have become relatively more conspicuous impediments to trade as tariffs have been reduced during the period since World War II. See also ATA Carnet; Codes of Conduct; Concession; Consular Formalities and Documentation; Consular Invoice; Customs; Customs and Administrative Entry Procedures; Customs Classification; Discrimination; Domestic Subsidy; Exchange Controls; Export Subsidy; Government Procurement Policies and Practices; Imports; Licensing; Liquidation; Packaging, Labeling, and Marking Regulations; Port of Entry; Prior Deposits; Quantitative Restrictions; Quarantine, Sanitary, and Health Laws and Regulations; Road Tax; Safeguards; Services; Special and Differential Treatment; Specific Limitations on Trade; Standards; Subsidy; Suspension of Liquidation; Tariff; Trade Agreements Act of 1979; Transit Zone; Transparency; U.S. International Trade Commission; Valuation; Variable Levy; World Customs Organization; World Trade Organization.
NONTARIFF MEASURES (NTMs) — See Nontariff Barriers.
NORMAL VALUE (NV) — The price at which merchandise is sold or offered for sale in the principal markets of the country from which it is exported. Under U.S. antidumping law, dumping consists of sales of merchandise exported to the United States at "less than fair value," when such sales materially injure or threaten material injury to producers of like merchandise in the United States. The determination that sales have been made at less than fair value involves a comparison of "normal value" — the price at which the merchandise is sold within the exporting country or to third countries (or a "constructed value") — and the "U.S. price" — the price at which the merchandise is sold in the U.S. market. If foreign home market sales are not usable, the normal value is based on prices to third countries or constructed value. A number of adjustments must be made to those prices to ensure a proper comparison with U.S. prices. Prior to the Uruguay Round Agreements Act, which implemented changes in U.S. trade law that resulted from the WTO Agreement concluded during the Uruguay Round, the equivalent term in U.S. trade law was "foreign market value." See also Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code; Constructed Export Price; Dumping; Export Price; United States Price; Uruguay Round; Uruguay Round Agreements Act; World Trade Organization.
NORTH — See Developed Countries.
NORTH AMERICAN DEVELOPMENT BANK (NADBank) — An institution established under the auspices of the North American Free Trade Agreement (NAFTA) to finance environmental infrastructure projects along the U.S.-Mexico border, as well as community adjustment and investment in both nations. The bank supports the goals of NAFTA primarily by tackling the problems of raw sewage, unsafe drinking water, and inadequate municipal waste disposal in the border region. The Community Adjustment and Investment Program (CAIP) of the NADBank supports the goals of NAFTA by providing financial assistance to create or retain jobs in communities experiencing temporary NAFTA-related job losses. See also Adjustment Assistance; North American Free Trade Agreement.
NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) — A comprehensive free trade agreement, based on the principle of national treatment, between the United States, Canada, and Mexico. The three countries met in June 1991 and initiated negotiations to:
NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM (NAICS) — An economic classification system developed jointly by the United States, Canada, and Mexico and implemented in 1997 to provide a uniform and consistent mechanism for collecting and analyzing industry statistics across North America. The NAICS replaces the 1987 U.S. Standard Industrial Classification (SIC).
NORTH-SOUTH TRADE — The exchange of goods and services between developed countries (the North) and developing countries (the South). The Generalized System of Preferences negotiated at UNCTAD-II and the GATT Framework Agreement negotiated in the Tokyo Round were intended to stimulate additional North-South trade. See also Caribbean Basin Initiative; Developed Countries; Developing Countries; Economic Development; Framework Agreement; General Agreement on Tariffs and Trade; Generalized System of Preferences; Group B; Group of 77; International Trade Center UNCTAD/WTO; Reciprocity; Special and Differential Treatment; Tokyo Declaration; Tokyo Round; Trade Agreements Act of 1979; United Nations Conference on Trade and Development; United States Trade Representative.
NTBs — See Nontariff Barriers.
NULLIFICATION — See Consultations; Dispute Settlement.
NV — See Normal Value.
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ODA — See Official Development Assistance.
OECD — See Organization for Economic Cooperation and Development.
OECD AGREEMENT ON EXPORT CREDITS — See International Arrangement on Export Credits.
OFFER LIST — A list of measures through which a country participating in trade negotiations proposes to broaden access to its market in exchange for comparable concessions from its trading partners. A country's initial offer list during a given round of negotiations represents its early response to the request lists submitted by its trading partners and may subsequently be lengthened or shortened, depending on the responses of other countries to its request list. In addition to proposals for broadening market access through tariff reductions and expanded coverage under codes of conduct, offer lists may suggest exceptions to an agreed formula for tariff reductions on all other products. See also Codes of Conduct; Concession; Linear Reduction of Tariffs; Market Access; Multilateral Trade Negotiations; Negotiations; Principal Supplier; Request List; Round; Sensitive Products.
OFFICIAL DEVELOPMENT ASSISTANCE (ODA) — Economic or technical assistance extended to developing countries by the governments of developed countries and by international organizations, as contrasted with gifts, loans, and investments financed by the private sector. Official development assistance is construed by the OECD Development Committee as including only "concessional" transfers to developing countries, meaning that all or part of each ODA transaction is a grant or is loaned at rate of interest and/or on repayment terms more beneficial to the recipient than market rates and terms. See also Additionality; Agency for International Development; Bilateral Aid; Developing Countries; Development Assistance Committee; Economic Development; European Bank for Reconstruction and Development; Graduation; Interest; Least Developed Countries; Multilateral Aid; Organization for Economic Cooperation and Development; Private Sector; Soft Loan; Transfer Payments.
OFFSET REQUIREMENTS — Conditions imposed on certain large exporters in other countries by importing governments, usually to reduce cash outflows, such as by requiring the exporter to purchase goods or services produced in the importing country, to establish manufacturing facilities in the country, or to use locally produced components in manufacturing. Offset requirements are frequently associated with sales of military equipment. See also Countertrade; Nontariff Barriers.
OFFSHORE MANUFACTURING — The foreign manufacture of goods by a domestic firm primarily for import into its home market.
OMAs — See Orderly Marketing Agreements.
OMNIBUS TRADE AND COMPETITIVENESS ACT OF 1988 — Legislation passed by the U.S. Congress in August 1988 and signed into law on August 23, 1988, to enhance the competitiveness of American industry. Its major purposes are to authorize the negotiation of reciprocal trade agreements, strengthen U.S. trade laws, improve development and management of U.S. trade strategy through these actions, and improve standards of living in the world. The act made many changes in U.S. trade law, including significant changes to Section 301 and the adoption of three Section 301 variants:
ONE HUNDRED THIRTEEN (113) COMMITTEE — A body of representatives from EC member states that assists the European Commission in trade negotiations with third countries. See also Priority Foreign Country; European Community.
OPEC — See Organization of Petroleum Exporting Countries.
OPIC — See Overseas Private Investment Corporation.
ORDERLY MARKETING AGREEMENTS (OMAs) — International compacts negotiated between two or more governments in which the trading partners agree to restrain the growth of trade in specified "sensitive" products, usually through the imposition of export quotas. Orderly marketing agreements are intended to ensure that future trade increases will not disrupt, threaten, or impair competitive industries or their workers in importing countries. See also Agreement on Safeguards; Escape Clause; Export Quotas; Market Disruption; Quantitative Restrictions; Safeguards; Sensitive Products; Voluntary Restraint Agreements.
ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD) — An international agency based in Paris through which some 24 developed countries (the United States, Canada, Japan, Australia, New Zealand, and countries of Western Europe) review international economic issues and coordinate their policies, looking toward the expansion of world trade and investment and the economic development of developing countries. The OECD succeeded the OEEC in 1961, after the post-World War II economic reconstruction of Europe had been largely accomplished. See also Developed Countries; Developing Countries; Development Assistance Committee; Economic Development; Group B; Group D; Group of 7; Group of 77; International Arrangement on Export Credits; Large Aircraft Sector Understanding; Multilateral Agreement on Investment; Newly Industrializing Countries; Official Development Assistance; Organization for European Economic Cooperation.
ORGANIZATION FOR EUROPEAN ECONOMIC COOPERATION (OEEC) — An intergovernmental organization created in 1948 by 16 Western European countries to plan and implement the European Recovery Program, better known as the Marshall Plan, following the economic devastation in Europe left by World War II. The OEEC was superseded in 1961 by the OECD. See also European Recovery Program; Organization for Economic Cooperation and Development.
ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC) — A cartel comprising 13 leading oil-producing countries that seek to coordinate oil production and pricing policies. See also Cartel; Developing Countries.
OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC) — A self-sustaining U.S. government agency whose purpose is to promote economic growth in developing countries by encouraging U.S. private investment in those nations through two principal programs: (1) financing investment projects through direct loans and/or loan guarantees and (2) insuring investment projects against a broad range of risks, such as expropriation. These programs are backed by the full faith and credit of the U.S. government. See also Additionality; Agency for International Development; Bilateral Aid; Developing Countries; Official Development Assistance; North-South Trade; Soft Loan; Transfer Payments.
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PACIFIC RIM — An informal, flexible term that generally has been regarded as a reference to countries and economies bordering the Pacific Ocean. At a minimum, the Pacific Rim includes Canada, Japan, the People's Republic of China, Taiwan, and the United States. It may also include Australia, Brunei, Cambodia, Hong Kong/Macau, Indonesia, Laos, North Korea, South Korea, Malaysia, New Zealand, the Pacific Islands, the Philippines, Russia (or the Commonwealth of Independent States), Singapore, Thailand, and Vietnam. As an evolutionary term, it also sometimes includes Mexico, the countries of Central America, and the Pacific coast countries of South America. See also Asia-Pacific Economic Cooperation (APEC).
PACKAGING, LABELING, AND MARKING REGULATIONS — The requirement or regulation, usually by an importing country, that imported goods be packaged, labeled, or marked according to particular guidelines. Although ostensibly required to protect consumers, nonstandard packaging, labeling, and marking requirements frequently pose problems for exporters and may function as nontariff barriers. See also Agreement on Technical Barriers to Trade; Nontariff Barriers; Quarantine, Sanitary, and Health Laws and Regulations; Standards.
PANEL OF EXPERTS — An ad hoc group of experienced individuals with specialized skills established for a specified purpose. Under WTO dispute settlement procedures, for example, panels composed of three or five trade policy experts may be designated to arbitrate disagreements over trade policy between governments with differing interpretations of their GATT and WTO obligations, examine the evidence, and determine which interpretations are correct or incorrect. See also Arbitration; Bilateral Trade Agreement; Codes of Conduct; Dispute Settlement; General Agreement on Tariffs and Trade; North American Free Trade Agreement; Understanding on Rules and Procedures Governing the Settlement of Disputes; U.S.-Canada Free Trade Agreement; U.S.-Canada Trade Commission; World Trade Organization.
PAR VALUE — The official fixed exchange rate between two currencies or between a currency and a specific weight of gold or a basket of currencies. See also Currency; Exchange Rate; International Monetary Fund; Special Drawing Rights.
PARIS CLUB — A popular designation for meetings between representatives of a developing country that wishes to renegotiate its "official" debt (normally excluding debts owed by and to the private sector without official guarantees) and representatives of the relevant creditor governments and international institutions. Such meetings normally take place at the initiative of a debtor country that wishes to consolidate all or part of its debt service payments falling due over a specified period. The meetings are traditionally chaired by a senior official of the French Treasury Department. Comparable meetings occasionally take place in London and in New York for countries that wish to renegotiate repayment terms for their debts to private banks. Such meetings are sometimes called "creditor clubs." See also Bilateral Aid; Development Assistance Committee; Economic Development; Graduation; Multilateral Aid; Official Development Assistance.
PARIS CONFERENCE ON THE LEAST DEVELOPED COUNTRIES — See Substantial New Program of Action.
PARIS UNION — See World Intellectual Property Organization.
PART IV OF THE GATT — Articles XXXVI, XXXVII, and XXXVIII of the GATT, added to the General Agreement in 1965, concerning the special needs of developing countries. Part IV outlines principles and objectives for GATT treatment of LDCs, committing contracting parties to assist these countries through trade liberalization and laying down the principle that developed countries should not expect LDCs, in the course of trade negotiations, to make contributions inconsistent with their individual needs. See also Articles of the GATT; Developing Countries; Economic Development; Enabling Clause; Framework Agreement; General Agreement on Tariffs and Trade; Least Developed Countries; Reciprocity; Special and Differential Treatment.
PATENT — A 17-year grant by the government to an inventor of the right to exclude others from making, using, or selling his or her invention for a specific period of time, after which the invention passes into the public domain. To be patentable, an invention must represent a new, useful, and non-obvious process, machine, manufacture, or composition of matter, or any new, useful, and obvious improvements thereof. See also Agreement on Trade-Related Aspects of Intellectual Property Rights; Intellectual Property; Knowledge-Based Industry; Omnibus Trade and Competitiveness Act of 1988; Process Patent; Property; Section 337; Special 301; Technology; Technology Transfer; World Intellectual Property Organization.
PERFORMANCE REQUIREMENTS — Measures that a government imposes on enterprises either as a condition of doing business or making an investment, or in return for a benefit or incentive. Examples include local content requirements, export requirements or incentives, import restrictions, trade-balancing requirements, foreign-exchange-balancing requirements, and measures that are intended to influence a company's decision regarding technology transfer and research and development. It is U.S. policy to seek to eliminate or limit such measures in international trade and investment agreements because of their distorting effects on trade, capital flows, and employment. See also Agreement on Trade-Related Investment Measures; Investment Performance Requirements; Restrictive Business Practices; Trade-Related Investment Measures.
PERIL POINT — A hypothetical limit beyond which a reduction in tariff protection would cause serious injury to a domestic industry. U.S. legislation in 1949 that extended the Trade Agreements Act of 1934 required the U.S. Tariff Commission to establish peril points for U.S. industries. This requirement, which was a constraint on U.S. negotiating positions in early GATT rounds, was eliminated by the Trade Expansion Act of 1962. See also Protection; Round; Safeguards; Trade Agreements Act of 1934; Trade Expansion Act of 1962; U.S. International Trade Commission.
PETITION — See Countervailing Duties; Dumping; Escape Clause.
PL 480 — See Public Law 480.
PLAZA ACCORD — An agreement in September 1985 by the G-5 (the United States, Japan, Germany, France, and the United Kingdom) to take concrete actions aimed at reducing external imbalances and achieving exchange rates consistent with underlying economic fundamentals. See also Group of 7.
PLURILATERAL — See Multilateral; World Trade Organization.
PORT OF ENTRY — Point at which individuals and imported goods enter a country and clear its national customs. See also ATA Carnet; Codes of Conduct; Consular Formalities and Documentation; Consular Invoice; Customs; Customs and Administrative Entry Procedures; Customs Classification; Imports; Free Zone; Licensing; Liquidation; Nontariff Barriers; Quarantine, Sanitary, and Health Laws and Regulations; Suspension of Liquidation; Tariff; Transit Zone; Valuation; World Customs Organization; World Trade Organization.
PPA — See Protocol of Provisional Application.
PREFERENCES — Special advantages extended by importing countries to exports from particular trading partners, usually by admitting their goods at tariff rates below those imposed on imports from other supplying countries. See also Double-Column Tariff; Framework Agreement; Generalized System of Preferences; Global System of Trade Preferences; Lomé Convention; Margin of Preference; Reciprocity; Single-Column Tariff; Special and Differential Treatment; Tariff.
PREMIUM — A regular payment paid for an insurance policy that provides protection against a risk. See also Insurance; Risk.
PRICE — The value of something expressed in terms of money, or the amount of money paid for it. Economists define the "equilibrium" price of goods and services in a competitive market economy as the level at which the demand for them will match their supply. See also Demand; Equilibrium; Goods; Inflation; Market Economy; Market Forces; Money; Monopoly; Services; Supply.
PRICE ELASTICITY OF DEMAND — The percentage change in demand for a given product likely to result if its price changes by 1 percent. A slight lowering or raising of a tariff will have a larger effect on the volume of imports of a product with a high price elasticity of demand than on a product with a low price elasticity of demand. See also Demand; Price; Price Elasticity of Supply; Purchasing Power.
PRICE ELASTICITY OF SUPPLY — The percentage change in supply for a given product likely to result if its price changes by 1 percent. See also Price; Price Elasticity of Demand; Supply.
PRICE STABILIZATION — See Buffer Stocks; Managed Trade.
PRIMARY COMMODITY — A commodity in its raw or unprocessed state, such as iron ore. In contrast, pig iron is considered a semi-processed product, and a steel girder is a manufactured item. See also Commodity; Integrated Program for Commodities; Production; Tariff Escalation.
PRINCIPAL SUPPLIER — The country that is the most important source of a particular product imported by another country. In trade negotiations, a country offering to reduce its tariff or other barriers to imports of a particular item generally expects the country that is the principal supplier of that item to reduce restrictions on its imports of a product for which the first country is the principal supplier. Depending on the trade negotiations, both countries then may grant the same concessions to all other countries to which they accord most-favored-nation treatment. See also Concession; General Agreement on Tariffs and Trade; Most-Favored-Nation Treatment; Negotiations; Offer List; Round; World Trade Organization.
PRIOR DEPOSITS — A deposit required by a government of a specified sum, in domestic or foreign currency, usually corresponding to a certain percentage of the value of the imported product. Such deposits are characteristically held without interest, sometimes for many months — from the time an order is placed until after the import transaction is completed — and hence represent a real cost to the importer. The purpose of prior deposits is usually to discourage imports, particularly for balance-of-payments reasons, and they generally are recognized as nontariff barriers that impede trade. Prior deposits must usually be made at the time an import license is granted. See also Licensing; Nontariff Barriers.
PRIORITY FOREIGN COUNTRY (PFC), PRIORITY WATCH LIST (PWL), WATCH LIST (WL) — Designations in the United States under Special 301 that describe the USTR's response to different levels of intellectual property (IP) problems in a given country. Countries having the most serious IP problems are designated as PFCs. If a country is designated a PFC, USTR must immediately initiate a Section 301 investigation and begin negotiations to resolve the IP problems either bilaterally or through initiation of WTO dispute settlement consultations. Should negotiations fail to accomplish this, USTR must decide whether to take trade action (withdraw GSP, raise tariffs, and the like). Countries designated PWL or WL are not necessarily subject to sanctions; however, trade action or dispute settlement proceedings can be launched against countries on the PWL or WL if warranted. See also Omnibus Trade and Competitiveness Act of 1988; Section 301; Special 301; Super 301; United States Trade Representative.
PRIORITY WATCH LIST (PWL) — See Priority Foreign Country.
PRIVATE SECTOR — The part of a national economy comprising privately owned enterprises and individuals and non-profit-making organizations, as contrasted with the public sector, comprising government and government-controlled entities. See also Market Economy; Public Sector.
PROCESS PATENT — A process or method that consists of an act, operation, or step or series thereof performed upon a specified subject matter to produce a physical result. See also Agreement on Trade-Related Aspects of Intellectual Property Rights; Commercial Counterfeiting; Copyright; Intellectual Property; Knowledge-Based Industry; Patent; Property; Trademark; Trafficking in Counterfeit Goods and Services; World Intellectual Property Organization.
PROCUREMENT — See Government Procurement Policies and Practices.
PRODUCER GOODS — See Capital Goods.
PRODUCTION — The process of creating or changing the form of commodities, as through fabrication, manufacture, extraction, processing, curing, or aging. See also Commodity; Consumption; Industrial Revolution; Primary Commodity; Profit; Tariff Escalation; Technology; Welfare.
PROFIT — The net earnings accruing from the successful production or sale of goods and services: that is, the residual remaining to the entrepreneur after all payments for capital (interest), land (rent), labor (including management costs, salaries, and wages), raw materials, taxes and depreciation. If a business fares poorly, profits may be negative, in which case they become losses. See also Entrepreneur; Market; Production; Risk.
PROGRESSIVE TARIFF — See Tariff Escalation.
PROMISSORY NOTES — See Commercial Paper.
PROPERTY — An asset whose ownership gives the right to present or future material benefits, as protected by law. The term property refers not only to the possession of material goods, such as land, buildings, and production facilities, but also to less tangible assets, such as manufacturing processes, design, and brand names. See also Agreement on Trade-Related Aspects of Intellectual Property Rights; Bern Convention; Commercial Counterfeiting; Copyright; Intellectual Property; Knowledge-Based Industry; National Treatment; Patent; Process Patent; Trademark; Trafficking in Counterfeit Goods and Services; World Intellectual Property Organization.
PROTECTION — Government measures — including tariff and nontariff barriers — that raise the cost of imported goods or otherwise restrict their entry into a market and thus strengthen the competitive position of domestic goods. See also Competitive; Import Relief; Infant Industry Argument; Market; Monopoly; Nontariff Barriers; Peril Point; Protectionism; Quantitative Restrictions; Safeguards; Tariff; Tariff Escalation.
PROTECTIONISM — The deliberate use or encouragement of restrictions on imports to enable relatively inefficient domestic producers to compete successfully with foreign producers. See also Competitive; Effective Tariff Rate; Escape Clause; Import Relief; Imports; Infant Industry Argument; Liberal; Liberalization; Managed Trade; Mercantilism; Nontariff Barriers; Orderly Marketing Agreements; Protection; Quantitative Restrictions; Safeguards; Tariff; Voluntary Restraint Agreements.
PROTOCOL OF ACCESSION — The legal document that records the obligations agreed to as a precondition of accession to an international accord or organization. See also Accession; Concession.
PROTOCOL OF PROVISIONAL APPLICATION (PPA) — The agreement among the original GATT contracting parties to exempt from GATT provisions trade measures established by domestic legislation that were in force at the time of the contracting party's acceptance of the GATT. The protocol was intended to be temporary, pending implementation of the Havana Charter or definitive acceptance of GATT provisions by the contracting parties, but it has remained in effect, and countries that signed the GATT in 1947 continue to invoke it to defend certain practices that are otherwise inconsistent with their GATT obligations. Countries that acceded to the GATT after 1947 have similar provisions incorporated in their protocols of accession. See also Accession; Contracting Party; Discrimination; General Agreement on Tariffs and Trade; Grandfather Clause; Protocol of Accession; Residual Restrictions.
PUBLIC LAW 480 — A short-hand designation for the Agricultural Trade Development and Assistance Act of 1954, which provides for the disposition of U.S. farm products outside the United States. Title I spells out conditions under which such products can be sold to developing countries for their own currencies and the purposes for which the proceeds of such sales can be used in the purchasing country. Title II authorizes the transfer of U.S. farm products to developing countries for economic development purposes. Title III permits the donation of surplus products through U.S. voluntary agencies that carry out relief operations in other countries. Title IV provides for agreements between the U.S. government and other governments and private organizations purchasing surplus U.S. farm products. See also Agency for International Development; Bilateral Aid; Developing Countries; Economic Development; North-South Trade; Section 22; Surplus.
PUBLIC SECTOR — The part of a national economy accounted for by government expenditures and state-owned or state-controlled enterprises. See also Nonmarket Economy; Private Sector.
PUNTA DEL ESTE MINISTERIAL — The Uruguay Round of multilateral trade negotiations that was launched in Punta del Este, Uruguay, in September 1986 and that produced the Punta del Este Declaration. The declaration, which included the objectives and agenda for the negotiations, was the result of consultations that began in 1985. See also Round; Uruguay Round.
PURCHASE PRICE (PP) — See Export Price.
PURCHASING POWER — The ability of consumers to acquire goods and services based on their possession of money and/or their recourse to credit. Aggregate purchasing power within a market or a national economy reflects total disposable income after taxes, and hence the level of employment. See also Consumers; Consumption; Credit; Demand; Inflation; Money; Price Elasticity of Demand.
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QRs — See Quantitative Restrictions.
QUANTITATIVE RESTRICTIONS (QRs) — Explicit limits, or quotas, on the quantity of a good that can be imported or exported during a specified time period. Such limits are usually measured by physical quantity but sometimes by value. A quota may be applied on a selective basis, with varying limits set according to the country of origin or destination, or on a global basis that specifies only the total limit and thus tends to benefit more efficient suppliers. Quotas are frequently administered through a system of licensing. GATT Article XI generally prohibits the use of quantitative restrictions, except under conditions specified by other GATT articles. For example, Article XIX permits quotas to safeguard certain industries from damage by rapidly rising imports; Articles XII and XVIII provide that quotas may be imposed for balance-of-payments reasons under circumstances laid out in Article XV; Article XX permits special measures to apply to public health, gold stocks, items of archaeological or historic interest, and several other categories of goods; Article XXI recognizes the overriding importance of national security. Article XIII provides that quantitative restrictions, whenever applied, should be nondiscriminatory. See also Agreement on Agriculture; Agreement on Textiles and Clothing; Agreement on Safeguards; Article 11 (GATT Article XI); Article 15 (GATT Article XV); Article 19 (GATT Article XIX); Balance of Payments Consultations; Discrimination; Export Quotas; Export Restraints; General Agreement on Tariffs and Trade; Import Relief; Licensing; Multi-Fiber Arrangement Regarding International Trade in Textiles; Market Access; Nontariff Barriers; Protection; Protectionism; Residual Restrictions; Safeguards; Section 22; Section 201; Section 406; Sensitive Products; Specific Limitations on Trade; Tariff Quota; Tariff-Rate Quota; World Trade Organization.
QUARANTINE, SANITARY, AND HEALTH LAWS AND REGULATIONS — Government measures to protect consumer, animal, and plant health by regulating the use of dangerous preservatives and other additives in foods. The lack of internationally accepted standards makes it difficult to distinguish between legitimate health standards and protectionist measures. The WTO Agreement on the Application of Sanitary and Phytosanitary Measures recognizes norms set by specified international standard-setting bodies as the baseline standards for trade, ensures to the maximum extent possible that standards are scientifically justifiable, and, for the first time, establishes a meaningful dispute settlement procedure for health and sanitary issues. See also Agreement on the Application of Sanitary and Phytosanitary Measures; Agreement on Technical Barriers to Trade; ATA Carnet; Codes of Conduct; Consular Formalities and Documentation; Consular Invoice; Customs; Customs and Administrative Entry Procedures; Customs Classification; Discrimination; Imports; Licensing; Nontariff Barriers; Packaging, Labeling,and Marking Regulations; Standards; Tariff; Transit Zone; World Trade Organization.
QUID PRO QUO — See Reciprocity.
QUOTAS — See Quantitative Restrictions; Tariff Quota.
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RBPs — See Restrictive Business Practices.
RECIPROCAL TRADE AGREEMENTS ACT OF 1934 — See Trade Agreements Act of 1934.
RECIPROCITY — The practice by which governments extend similar concessions to each other, as when one government lowers its tariffs or other barriers impeding its imports in exchange for equivalent concessions from a trading partner on barriers affecting its exports (a "balance of concessions"). Reciprocity was traditionally a principal objective of negotiators in GATT rounds. Reciprocity is also defined as "mutuality of benefits," "quid pro quo," and "equivalence of advantages." The Enabling Clause of the Tokyo Round Framework Agreement, GATT Part IV (especially GATT Article XXXVI), and the WTO Decision on Measures in Favour of Least-Developed Countries exempt developing countries from the rigorous application of reciprocity in their GATT and WTO obligations vis-à-vis developed countries. See also Competitive; Concession; Enabling Clause; Framework Agreement; Most-Favored-Nation Treatment; Multilateral Trade Negotiations; Negotiations; North-South Trade; Preferences; Principal Supplier; Reverse Preferences; Request List; Section 201; Special and Differential Treatment; Tariff Act of 1930; Tokyo Declaration; Trade Agreements Act of 1934; Trade Agreements Act of 1979; Welfare.
RE-EXPORTS — Under U.S. trade law, goods of non-U.S. origin that are imported into the United States and then shipped back either to the original country of origin or to a third country. See also ATA Carnet; Drawback; Free Zone; .
REGRESSIVE TAXATION — See Indirect Tax.
REINSURANCE — The shifting by agreement (known in the insurance industry as a "treaty") of part of the risk (or "exposure") of the original insurer (the ceding company) to another insurer (the reinsurer). Sometimes a reinsurer will, in turn, pass on part of its risk to another reinsurer through a process known as retrocession. International reinsurance is important to developed and developing countries alike. See also Insurance; Risk.
RELIEF — See Escape Clause; Import Relief; Safeguards.
REPRISALS — See Retaliation.
REQUEST LIST — A list submitted by a country to a trading partner at an early stage of trade negotiations identifying the concessions it seeks through the negotiations. See also Concession; Negotiations; Offer List; Reciprocity; Round.
RESERVE CURRENCY — A national currency such as the dollar or pound sterling, or international currency such as Special Drawing Rights, used by many countries to settle debit balances in their international accounts. Central banks generally hold a large portion of their monetary reserves in reserve currencies, which are sometimes called "key" currencies. See also CurrencyMercantilism; Special Drawing Rights.
RESERVES — See Mercantilism; Reserve Currency.
RESIDUAL RESTRICTIONS — Quantitative restrictions maintained by governments since they became contracting parties to GATT or members of the WTO, despite the general GATT and WTO prohibitions against such measures. See also General Agreement on Tariffs and Trade; Grandfather Clause; Protocol of Provisional Application; Quantitative Restrictions; World Trade Organization.
RESTITUTIONS — Payments to agricultural exporters in the European Community under the Common Agricultural Policy to cover the difference between internal and world market prices. See also Common Agricultural Policy; Domestic Subsidy; Dual Pricing; European Community; Export Subsidy; Threshold Price; Variable Levy.
RESTRAINTS ON TRADE — See Nontariff Barriers; Liberalization; Tariff.
RESTRICTIVE BUSINESS PRACTICES (RBPs) — Acts or behavior of enterprises — whether private or government controlled — that abuse a dominant economic position and limit access to markets or otherwise unduly restrain competition. Such practices include collusion to fix export or import prices, to allocate markets or customers, to practice discriminatory pricing, to set prices at which export goods can be resold, or to otherwise restrict imports and exports. A non-binding (or voluntary) code of conduct negotiated in UNCTAD — formally called the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices — lists business practices to be avoided and recommends steps that enterprises and governments should take to discourage such activity. See also Antitrust; Cartel; Competitive; Market; Market Access; Monopoly; Price; Protection; Supply; Unfair Trade Practices.
RETALIATION — The suspension of concessions or other obligations under a trade agreement, or the imposition of other barriers to trade, by a government in response to the violation of a trade agreement or the imposition of other unfair trade barriers by another government. In U.S. trade law, Section 301 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act, provides the legal authority for the United States to impose retaliatory measures in response to trade agreement violations or other discriminatory foreign trade practices that burden or restrict U.S. commerce. Such authority includes the authority to suspend trade agreement concessions, to impose duties or other import restrictions, to impose fees or restrictions on services, to enter into agreements with the subject country to eliminate the offending practice or to provide compensatory benefits for the United States,and to restrict service sector authorizations. The actions may be taken against all countries or solely against the subject country. Most actions may be taken against any goods or economic sectors, without regard to whether the goods or economic sectors were the subject of the investigation. See also Beggar-Thy-Neighbor Policy; Concession; Omnibus Trade and Competitiveness Act of 1988; Section 301; Special 301; Super 301; Tariff Act of 1930; Trade Act of 1974; Uruguay Round; Uruguay Round Agreements Act; World Trade Organization.
RETROCESSION — See Reinsurance.
REVERSE PREFERENCES — Tariff advantages once offered by developing countries to imports from certain developed countries that granted them preferences in turn. Reverse preferences characterized trading arrangements between the European Community and some developing countries (the ACP countries) prior to the advent of the Lomé Convention. See also ACP Countries; Caribbean Basin Initiative; Developing Countries; Economic Development; European Community; Generalized System of Preferences; Imports; Lomé Convention; North-South Trade; Preferences; Tariff.
RIGHT OF ESTABLISHMENT — A basic concept in bilateral investment treaties is that one party to the agreement will permit nationals and companies of the other party to establish (and maintain) investments on a nondiscriminatory (national/most-favored-nation treatment) basis. A government may not place any special obstacles, such as a screening process or equity limitations, in the way of a foreign investor making an investment. The foreign investor need comply only with the requirements placed on any other investor in that sector. See also Bilateral Investment Treaty; Most-Favored-Nation Treatment; National Treatment; Trade-Related Investment Measures.
RISK — The possibility of gain or loss, depending upon the success or failure of the financial or commercial venture in question (speculative risks). Banks also accept risks when they make loans, which may either be repaid or defaulted. Capital investors are sometimes referred to as risk-bearers; their investments may be considered "venture capital" if they appear to be subject to considerable risk, as in the case of new enterprises, or "security capital" if they appear to be subject to little risk. Pure risk is involved when there is no possibility of gain, but only the possibility of loss. Insurance is concerned with pure risks, not speculative risks. See also Credit; Entrepreneur; Insurance; Interest; Loan; Profit; Reinsurance.
ROAD TAX — A tax imposed by a government on the operation of motor vehicles, usually based on weight or engine displacement. Some have the effect of discriminating in favor of one type of vehicle over another. See also Discrimination; Excise Tax; Nontariff Barriers; Tax.
ROLL ON/ROLL OFF (RO-RO) — Cargo that is rolled on and off a vessel under its own power. Roll on/roll off shipping allows for quick and easy lading/unlading because the cargo does not need to be loaded and unloaded by winch or crane but can be driven on and off a vessel using a tractor trailer, van, or flatbed truck.
ROUND — A cycle of multilateral trade negotiations, under the aegis of GATT and now of the WTO, culminating in simultaneous trade agreements among participating countries to reduce tariff and nontariff barriers to trade. The GATT held eight rounds: Geneva, 1947-48; Annecy, France, 1949; Torquay, England, 1950-51; Geneva, 1956; Geneva, 1960-62 (the Dillon Round); Geneva, 1963-67 (the Kennedy Round); Geneva, 1973-79 (the Tokyo Round); Geneva, 1986-1993 (the Uruguay Round). The Uruguay Round resulted in the establishment of the World Trade Organization in 1994. See also Dillon Round; General Agreement on Tariffs and Trade; Kennedy Round; Liberalization; Multilateral Trade Negotiations; Negotiations; Offer List; Peril Point; Reciprocity; Request List; Tokyo Round; Trade Agreement; Trade Agreements Act of 1934; Uruguay Round; Williams Commission; World Trade Organization.
RULES OF ORIGIN — See Agreement on Rules of Origin.
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