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Cairns Group. See entry in Section III.

Call. A request by an importing country for consultations with an exporting country concerning products whose shipments during a specified period are at or near a limit specified in a textile agreement. See Multifiber arrangement (MF A).

Caribbean Basin Initiative (CBI). A non-reciprocal preferential arrangement established by the United States in 1984 to promote economic development in Caribbean countries; it was made a permanent program in 1990 under the Caribbean Basin Economic Recovery Act. Under the CBI, US duties are eliminated on all imports from beneficiary countries except textile and apparel products, canned tuna, footwear, certain leather goods, and certain watches and watch parts. Beneficiary countries are Antigua and Barbuda, the Bahamas, Barbados, Belize, British Virgin Islands, Costa Rica, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Montserrat, Netherlands Antilles, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago.

Caribbean-Canadian Common Market (CARIBCAN). A non-reciprocal preferential arrangement established by Canada in 1986 to extend tariff preferences to Commonwealth countries in the Caribbean region. Beneficiary countries are Antigua and Barbuda, Bahamas, Barbados, Belize, British Virgin Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago. Under CARIBCAN, Canadian duties are eliminated on all products imported from beneficiary countries except textiles, clothing, footwear, luggage and handbags, leather garments, lubricating oils, methanol and alcohol, and tobacco products. Product eligibility requires 60 percent local content.

Central and East European Countries (CEECs). Includes Albania, Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia, and the former Yugoslav republics. In some recent applications, this term has been used to also include some of .the Newly Independent States (NIS) of the former Soviet Union, e.g., Belarus, Moldova, Ukraine, and the Baltic republics.

Ceiling Binding. See binding.

Centre William Rappard. Formal name of the GATT headquarters building in Geneva.

Check Price System. A device used by a government agency to avoid charges of dumping in foreign markets by establishing floor prices for exporting firms.

Chicken War. A trade war that occurred in 1962-63 between the United States and the European Community. Prior to 1962, US chicken exports had entered many European countries at a bound tariff rate. Adoption of the Common Agricultural Policy imposed minimum import prices on all imported chicken, nullifying prior tariff concessions and causing an estimated $26 million in losses to US poultry farmers. When attempts to achieve a negotiated resolution failed, the United States imposed retaliatory duties on European trucks, brandy, and other products.

Circumvention. Measures taken by exporting companies to forestall or evade the payment of penalty charges in an importing country such as countervailing or antidumping duties. Examples include false labeling, transshipment, and screwdriver assemblies (Sec.ll). See also diversionary dumping and downstream dumping.

Civil Aircraft Agreement. Formally known as the Agreement on Trade in Civil Aircraft. The only sectoral agreement covering manufactures to result from the Tokyo Round negotiations. Under the agreement, signatory countries eliminated tariffs on civil (i.e., nonmilitary) aircraft, engines, and components; established rules covering governments' involvement in civil aircraft purchases; and applied the GA TT Standards Code and Subsidies Code to the aircraft sector. Code signatories are proscribed from pressuring airlines to buy from particular suppliers, and may not grant or deny landing rights in attempts to influence aircraft purchases. Signatories include Austria, Belgium, Canada, Denmark, Egypt, the European Community, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, Norway, Portugal, Romania, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

Clearing Agreements. See Countertrade.

COCOM List. A list compiled by the Coordinating Committee for Multilateral Export Controls, or COCOM (Sec.III), designating strategic or sensitive products to be denied exportation to potentially hostile countries. The COCOM List encompasses the International Atomic Energy List; the International Munitions List; and the International List, which includes both military items and dual-use goods. A uniform control procedure, known as the International Import Certificate-Delivery Verification System was established by COCOM member countries to prevent diversion of restricted products. See also Commodity Control List.

Code of Conduct. An international agreement establishing standards of behavior --by countries, corporations, or individuals --deemed desirable by the international community. Such codes are essentially normative statements of principle and, unlike " treaties or commercial agreements, have no binding force. Not to be confused with GAIT Codes.

Codex Alimentarius. See Codex Alimentarius Commission (Sec.III). The compilation of minimum grades and standards for raw and processed food products published by the Commission is known as the Codex Alimentarius. Upon adherence by a government, all "codex standards" become minimum standards by that country .See sanitary and phytosanitary standards.

Column 1 Rates. US tariff rates which have been established through international negotiation and approved by Congress. Column I rates are applied on a most favored- nation basis and are usually subject to binding in GA TT .

Column 2 Rates. US tariff rates assessed on imports from countries not receiving most- favored-nation treatment. Most Column 2 rates date from the Smoot-Hawley Act of 1930 (Sec. IV) and are substantially higher than Column 1 rates.

Commercial Counterfeiting. A deceptive trade practice involving trademark piracy, false labeling, or other fraudulent means of claiming manufacture by a reputable producer. See Counterfeit Code.

Commodity Agreement. A formal international arrangement among exporters and importers of a commodity. Such agreements have often been advocated by commodity exporting countries for the purpose of stabilizing price fluctuations, but few arrangements have been successful in doing so. The United States currently participates in commodity agreements covering coffee, wheat, jute, rubber, lead and zinc, tropical timber, copper, and cotton; of these, only the International Natural Rubber Agreement currently contains economic stabilization measures. See international commodity organization; see also buffer stocks and export quota agreement.

Commodity Control List. A listing of products subject to export controls administered by the US Department of Commerce. The list includes items on the multilateral COCOM List as well as those subject to unilateral US restrictions.

Common Agricultural Policy (CAP). The system of production targets and marketing mechanisms maintained by the European Community to manage farm trade within the EC and with the rest of the world. Article 39 of the Treaty of Rome established the CAP as a mechanism merging the individual member states' agricultural policies into a unified program to promote regional agricultural development, fair and rising standards of living for the farm population, stable agricultural markets, increased agricultural productivity, and methods of dealing with security of food supply. The main categories of CAP market-management and support mechanisms are:

* Support Prices covering most grains, sugar, milk, beef, veal, pork, certain fruits and vegetables, table wine, and fishery products.

* External Protection without price supports, applying to eggs, poultry , certain fruits and vegetables, flowers, and wine other than table wine.

* Deficiency Payments or supplementary product aid to producers, covering olive oil, some oilseeds, tobacco, sheep meat, tomatoes, and raisins.

* Flat-Rate Aid based on acreage or output, covering durum wheat, cottonseed, flax seed, hempseed, hops, and dehydrated fodder.

The CAP was designed as a policy that relied extensively on trade measures to maintain and stabilize internal prices. Thus, two of the most prominent features of the CAP in terms of its effects on international trade are the variable levy, and export subsidies to promote exports of farm products that cannot be sold within the EC at target prices. The CAP mechanisms for managing the domestic market and regulating imports are based on a variety of price concepts, the main types of which are:

* Target Price. An optimum wholesale price established with reference to the income requirements of EC farmers and consumer interests as well as to world market prices. The products concerned are grain, sugar, milk, olive oil, rapeseed, and sunflower seed. When the commodity price falls below the target price, the EC intervenes to purchase supplies and raise prices. To encourage distribution, the target price for a commodity in an area experiencing shortages may be reduced by the cost of transport from areas within the EC where excess supplies exist.

* Guide Price. Corresponds to the target price, but applies to beef, veal, and wine.

* Base Price or Basic Price. Corresponds to the target price, but applies to pork.

* Norm Price. Corresponds to the target price, but applies to tobacco.

* Threshold Price. A minimum import price for grain, sugar, milk products, and olive oil, calculated so that the imported product (after payment of transport costs) cannot be sold at less than the target price; the difference between the world price and the threshold price is covered by a variable levy. The threshold price for grain is computed by subtracting from the target price the costs of inland transportation from the nearest ocean port to the EC market center showing the greatest shortage of the commodity.

* Gate Price (also known as a "Sluice-Gate Price" or "Lock-Gate Price"). A minimum import price established for pork, poultry, and eggs. The gate price is derived by computing the cost of feed --adjusted quarterly in relation to world market prices -- and other factors constructed to represent producer costs in the non-EC country with the highest technical efficiency. When the price of an imported product falls below the gate price, a supplementary levy is imposed to neutralize the presumed price advantage of the foreign producer.

* Reference Price. A minimum import price established for fruit and vegetables, wine, and certain fishery products. The reference price is established in relation to EC producer prices in a way similar to the gate price, but modified to reflect the special characteristics of the relevant commodity markets. A countervailing charge (not to be confused with a countervailing duty) may be levied in addition to the normal customs duty to cover the difference between the entry price of an imported product and the reference price.

* Intervention Price. The price at which EC intervention agencies are obliged to purchase commodities offered on the market. The products concerned are grain, sugar, butter, powdered milk, certain cheeses, olive oil, rapeseed, beef, veal, pork, and tobacco.

The CAP came into effect in 1961; at that time, the original EC member states were large net importers of most agricultural products. While variable levies under the CAP isolated EC producers and consumers from world market forces, it was not seriously disruptive to world trade for products in which the EC was a net importer. Since the 1970s, however, a combination of CAP price incentives and technological advances led to increased agricultural investment and domestic production increases at a time when European demand for farm products was stagnant or falling. The EC consequently went from a net importer to a major net exporter of grains, sugar, meat, and poultry, leading to escalating trade frictions with other countries. At the same time, the CAP has been beset with problems arising from monetary fluctuations, costly subsidies, overproduction, and high price support levels.


Common External Tariff. A uniform tariff schedule applied by members of a customs & union or common market to imports from nonmember countries.


Common Market. A group of countries formally committed to the unrestricted movement of goods, services, and factors of production traded among themselves. Features of a common market include elimination of tariffs and other barriers to internal trade, including harmonization of national standards that regulate the sale and distribution of goods; establishment of a common external tariff; and abolition of capital controls and restrictions on labor mobility among members. A common market may seek to harmonize macroeconomic policies or promote political unification, but this is not a necessary feature. See also customs union and economic union.


Compensation. Trade concessions granted by a GATT member to offset the disadvantage caused to other members whose exports are affected by its withdrawal or suspension of previously agreed trade concessions or bindings. Compensation usually takes the form of reductions of tariffs on other products of commercial interest to the countries being compensated. See also consultations and dispute settlement.


Compensatory Tax. An import levy applied by the European Community to certain agricultural products when the import price is below a reference (or minimum target) price and reflects an export subsidy. Not the same as a variable levy.


Complementation Agreement. An agreement between a manufacturing firm and two or more governments to reduce or eliminate duties on specified items produced by the firm in one of the signatory countries. Complementation agreements are usually granted to induce a firm to establish manufacturing facilities in one of the signatory countries, by ensuring access to all of the signatories' markets for its output.


Compulsory Licensing. A term used in the context of intellectual property rights, primarily with regard to licensing of pharmaceutical patents. It refers to the legal authority to compel a holder of a patent to license production to a local firm as a condition of patent protection and sale in that country. Compulsory licenses may be granted by a government allowing local parties to use a patent, copyright, or trademark with or without the owner's consent, and are usually granted on grounds of national security or overriding national interests, or of non-working by the original owner. Proponents argue that compulsory licensing can lead to increased competition and reduced prices by encouraging production among a larger number of producers. Critics argue that such measures have the same trade-distorting effect as a local-content requirement or performance requirement.


Compound Tariff. A combination of a specific duty and an ad valorem tariff on the same imported item (e.g., $100 per unit plus 5 percent of the assessed value). Sometimes called a "mixed tariff."


Computed Value. (Not to be confused with constructed value.) An alternative method permitted by the Customs Valuation Code for establishing the value of imported merchandise for customs purposes when neither the transaction value nor the deductive value can be determined. The computed value is the sum of various production costs and charges associated with preparing goods for export, together with imputed profit and overhead.


Concession. An agreement to reduce import restrictions --such as through a tariff reduction or binding --granted in negotiations in return for equivalent concessions by trading partners. See reciprocity.


Conditional MFN. The granting of most favored-nation treatment subject to the recipient country's compliance with specific terms or conditions. Because all members of GA TT are expected to accord unconditional MFN treatment to other members, conditional MFN is normally applied only to countries that do not belong to GATT.


Confrontation and Justification. In negotiating parlance, refers to the process of defining country positions through multilateral cross-examination. Following confrontation, or questioning of a country's policy position or negotiating offers by other countries, the country being confronted is expected to respond with justification of its stand on the points raised.


Consensus. In GATT parlance, the outcome of a negotiated decision among contracting parties in which sufficiently generalized support for a position is achieved to permit action. A decision in GA TT is made by consensus if no party formally objects to the decision, and is almost always achieved by avoiding rather than utilizing voting. Because GATT is a contractual arrangement, members cannot normally be bound through voting procedures in "majority rule" fashion. As a result, virtually all GATT decisions are by consensus except decisions on amendments, waivers, and accessions. In any given case, a dissatisfied GATT member must decide whether the issue warrants expending negotiating capital in blocking a consensus. Consensus decisions in GATT are not necessarily optimal; one former negotiator referred to the GATT consensus process as a "balance of dissatisfaction." See also reverse consensus.


Constructed Value. See fair value; not to be confused with computed value.


Consular Fees and Formalities. Special charges and procedures --such as documents that must be approved by a designated official--.required by importing countries as a prerequisite for permission to import merchandise. Cumbersome consular formalities are especially widespread among developing countries and, because substantial fees are often charged for required authorizations, they can function as a significant non-tariff barrier to trade. See also customs and administrative entry procedures.


Consultations. Any GATT member that believes its trade interests have been adversely affected by changes in the trade policy of another member, or by failure of another member to live up to its obligations, may request consultations with the offending country:

* Article 22 stipulates that contracting parties must be receptive to requests for consultation "on any matter affecting the operation of the Agreement" --i.e., even if no violation of GATT rules or commitments is at issue. Article 22 consultations are important because they give members an opportunity to negotiate solutions to trade problems on a bilateral basis within the framework of the GATT. Should bilateral consultations under Article 22 fail to resolve a dispute, one or both of the parties may "raise the ante" by invoking Article 23.

* Article 23 also provides for bilateral consultations --as a prerequisite for invoking the multilateral dispute settlement process --if a GATT member believes that the actions or inaction of another member have caused nullification or impairment of benefits r expected under GATT .As such, Article 23 consultations represent a higher threshold of "seriousness" since they can culminate in multilateral review and recommendations from the GATT Council on how to resolve a dispute.

Consumer Subsidy Equivalent (CSE). The percentage by which consumer prices on an item are affected by direct or indirect government supports to producers.


Contingent Reciprocity. See selective reciprocity.


Contracting Party (CP). Formal term designating a signatory to the GATT (the term "member" of the GATT is often used informally). As signatories, contracting parties have accepted specific obligations and benefits of the General Agreement and have agreed to follow GATT rules in conducting their trade policy. Because of the most- favored-nation principle, all CPs receive the benefits of lower tariffs and trade barriers that have been negotiated in GATT, as well as recourse to GATT procedures for settling disputes with other members. CPs need not be independent, sovereign countries --Hong Kong and Macau are GATT members, for example --but must be autonomous in setting their trade policies. When written in capital letters, "CONTRACTING PARTIES" in GATT documents refers to the collective membership of the GATT , acting jointly rather than in their individual capacities. This entity is the only legally recognized body in GATT, as the Agreement itself makes no provision for a secretariat or for any subsidiary organs.


Conventional Duty. A tariff or customs duty arising out of an international agreement, as contrasted with an "autonomous duty" unilaterally levied by a government. '"


Convention on International Trade in Endangered Species of Flora and Fauna (CUES). A multilateral agreement signed in 1973 to suppress international trade in endangered species of wildlife and plants. Signatories committed themselves to interdict exports or imports of species listed in the agreement, with limited exceptions.


Convention on Settlement of Investment Disputes Between States and Nationals of Other States. A multilateral agreement, signed among World Bank member states in 1965, that established the International Center for Settlement of Investment Disputes (Sec. IIl). Signatories committed themselves to recognize decisions and arbitral awards in investment disputes referred to the Center as binding.


Copyright. The exclusive right of authors, composers, playwrights, artists, publishers, or distributors to publish and dispose of their work for a specified time. Copyright protection varies from country to country , and its enforcement is a major issue in international negotiations concerning intellectual property rights.


Counterfeit Code. A draft agreement, initiated in the closing stages of the Tokyo Round but never concluded, which would have addressed commercial counterfeiting problems in international trade. The initiative set the stage for subsequent work in the Uruguay Round on protecting intellectual property rights.


Counterpurchase Contracts. See Countertrade.


Countertrade. An international commercial agreement in which a buyer pays for purchases wholly or partly with something other than money. Countertrade transactions can take various forms:

* Counterpurchase contracts obligate the foreign seller to purchase from the buyer goods and services unrelated to the goods and services sold.

* Reverse countertrade contracts require the importer to export goods equivalent in value to a specified percentage of the value of the imported goods.

* Buyback arrangements obligate the foreign seller of a plant, machinery, or technology to buy from the purchaser a portion of the subsequent production during a specified time period.

* Clearing agreements between two countries stipulate that each signatory is required to purchase certain amounts of each other's products over a specified period using a designated "clearing currency."

* Switch trading involves a purchaser in one country assigning to a seller in another country an obligation due from a third party as compensation for goods purchased.

* Swap schemes involve parties exchanging equivalent goods at different locations to minimize transportation costs.

Countervailing Charge. A charge in addition to normal import duties that may be imposed under the European Community's Common Agricultural Policy on imports of certain fishery products, fruits and vegetables, and wine, to match the difference between the reference price and the entry price (for fishery products and fruits and vegetables) or the free-at-frontier price plus customs duty (for wine).


Countervailing Duty (CVD). A special duty levied on imports to enable domestic producers to compete on an equal footing with subsidized foreign producers. CVDs are levied in addition to normal tariffs, in an amount necessary to offset government subsidies in the exporting country .US trade law empowers the President to levy CVDs equal in amount to any "bounties or grants" extended by other governments to exporters, although the law does not specify what kinds of government practices should be considered actionable; see export subsidies. GATT Article 6 permits and regulates the use of CVDs; additionally, signatories to the GA 1T Subsidies Code are required to meet an injury test before levying CVDs on imports from another signatory nation. Because foreign subsidies usually reflect broader government policies and programs, countervailing duties are frequently the object of intense and sometimes acrimonious bilateral diplomacy. CVDs are not used as a remedy to dumping, which refers to pricing practices by foreign firms.


Countries in Transition (CITs). A group of countries classed by the International Monetary Fund as countries in transition to market economies. The CITs include Albania, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Poland, Romania, Russia, Slovakia, Slovenia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. Prior to 1993, the IMP had used the term "former centrally planned economies" in referring to these countries. See former East Bloc countries.


Country of Origin. For purposes of customs administration, the country in which an imported product was manufactured, produced, or grown. When goods pass through more than one country in the manufacturing process, the country of origin does not change unless the product has been substantially transformed. In general, a product is considered to have originated in the country in which at least 50 percent of its final value was derived, although higher percentage thresholds are sometimes used. In the case of goods entering the United States under the Caribbean Basin Initiative or the Generalized System of Preferences, lower levels of local value-added may be allowed in establishing eligibility .See rules of origin.


Coverage. The extent of applicability of a trade action, agreement, or policy.


Cross-Retaliation. Retaliation in one sector of trade, such as agriculture, to counter unfair actions or violations of agreements affecting trade in another sector, such as services.


Currency Controls. See exchange controls.


Customs and Administrative Entry Procedures. Formalities applying to customs clearance of imported goods at national ports of entry, including health and sanitary certificates, certificates of origin disclosing the name and location of the manufacturer, and consular invoices. Such procedures can result in increased import costs that inhibit trade even when not intended to do so. See also consular formalities and documentation and Kyoto Convention.


Customs Classification. The determination of the appropriate category in which a traded product is classified for tariff purposes. Also refers to the coding system or "nomenclature" used by customs officials as a guide in determining which tariff rate applies to a particular item. See dutiable status.


Customs Harmonization. International efforts to increase the uniformity of customs procedures such as valuation, nomenclature, and enforcement by participating countries. See Harmonized System.


Customs Territory. The geographical area within which a country1s customs authority is empowered to impose duties and controls upon foreign merchandise entering the territory .The customs territory does not necessarily encompass all the territory over which the nation asserts sovereignty. The customs territory of the United States, for example, does not include the Virgin Islands, American Samoa, or various foreign trade zones established within the United States. On the other hand, a country's customs territory may extend to other sovereign states. Monaco, for example, is part of the customs territory of France.


Customs Union. A group of countries that have agreed to eliminate barriers to trade among themselves while harmonizing their tariffs on imports from nonmember countries into a common external tariff. A customs union represents a level of economic cooperation intermediate between a free trade area and a more closely integrated common market. Unlike a common market, it does not provide for free movement of capital and labor among members.


Customs Valuation. The process of appraising the value of imported goods on which duties are to be assessed, according to the tariff schedule of the importing country.


Customs Valuation Code. Formally known as the Agreement on Implementation of Article VII of the GA TT. A GAIT Code establishing rules for the determination of value for customs purposes, designed to provide a fair, uniform, and neutral system of valuation, and to preclude use of arbitrary or fictitious values as a disguised form of protectionism. The cornerstone of the Code is the presumption that the actual sale price - -or transaction value --will be used whenever possible for valuation purposes; the deductive value or the computed value methods may be used in cases where the transaction value cannot be determined. Signatories include Argentina, Australia, Austria, Brazil, Canada, Cyprus, Czech Republic, the European Community, Finland, Hong Kong, Hungary, India, Japan, Korea, Lesotho, Malawi, Mexico, New Zealand, Norway, Poland, Romania, Slovakia, South Africa, Sweden, Switzerland, Turkey, the United Kingdom, the United States, and Zimbabwe.

Customs Value. A method of valuing imported goods which excludes shipping costs from the final price.



DAEs. See Dynamic Asian Economies.


Decoupling. A concept aimed at making government agricultural programs trade-neutral - by breaking the link between assistance to farmers and farmers' decisions to produce and sell agricultural products. Direct income supports are a form of decoupled assistance.


Deductive Value. An alternative method of valuing imported merchandise for customs purposes, permitted under the Customs Valuation Code if none of the methods for establishing transaction value is appropriate. Under the deductive value method, the customs value is determined by using the first sale price of the goods in the importing country, and deducting certain costs incurred after importation; it is not normally used on goods destined for further processing or manufacturing within the importing country (see super deductive). An alternative to the deductive value method is computed value.


De Facto Member of GATT. A former dependency of a GATT member that since attaining independence has applied the GATT on a de facto basis, pending final determination of its commercial policy. Based on its previous association with the GATT as a colony or protectorate of another member, a de facto member may become a .full Contracting Party --without engaging in lengthy accession negotiations --simply by notifying the Director-General of its intention to accede. In September 1993, there were 20 de facto members of GATT.


Deficiency Payments. Government payments to compensate producers --usually farmers --for all or part of the difference between domestic market price levels for a commodity and a higher, governmentally guaranteed price. See variable levy.


Degressivity. The characteristic of a trade restriction, which diminishes in severity over time. A degressive measure could take the form of an import quota with a "growth provision" to enlarge progressively the amount permitted to be imported, or a tariff the rate of which automatically declines according to a specified timetable.


Demarche. A formal diplomatic communication of a country's position on an issue, presented to an official representative of another country .


Derogation. In negotiating parlance, an exemption from part of an agreement demanded by a country as a condition for its acceptance of the remaining obligations or commitments.


Developed Countries. See industrial countries.


Developing Countries or Less-Developed Countries (LDCs). A broad range of 130 countries that are distinguished from the industrial countries by their lack of a high degree of industrialization, infrastructure and other capital investment, or of advanced living standards among their populations as a whole. The LDCs are sometimes collectively designated as the "South" because a large number of them are in the Southern Hemisphere. All of the countries of the Western Hemisphere (except Canada and the United States); Africa (except South Africa); and Asia and Oceania (except Japan, Australia, and New Zealand) are usually classed as LDCs, as are Cyprus, Malta, and Turkey in Europe. Current usage has not produced a consensus on whether the "industrial" or "developing" term applies to countries of Eastern Europe and the former Soviet republics, although the International Monetary Fund classes the latter as countries in transition.


The World Bank categorizes the developing countries and countries in transition (in ascending order of GNP per capita) as follows:

* Low-income countries: Mozambique, Tanzania, Ethiopia, Uganda, Bhutan, Guinea-Bissau, Nepal, Burundi, Chad, Madagascar, Sierra Leone, Bangladesh, Laos, Malawi, Rwanda, Mali, Burkina Faso, Niger, India, Kenya, Nigeria, China, Haiti, Benin, Central African Republic, Ghana, Pakistan, Togo, Guinea, Nicaragua, Sri Lanka, Mauritania, Yemen, Honduras, Lesotho, Indonesia, Egypt, Zimbabwe, Sudan, and Zambia.

* Lower-middle-income countries: Bolivia, Cote d'Ivoire, Senegal, Philippines, Papua New Guinea, Cameroon, Guatemala, Dominican Republic, Ecuador, Morocco, Jordan, Tajikistan, Peru, El Salvador, Congo, Syria, Colombia, Paraguay, Uzbekistan, Jamaica, Romania, Namibia, Tunisia, Kyrgyzstan, Thailand, Georgia, Azerbaijan, Turkmenistan, Turkey, Poland, Bulgaria, Costa Rica, Algeria, Panama, Armenia, Chile, Iran, Moldova, Ukraine, Mauritius, Czech Republic and Slovakia, , Kazakhstan, and Malaysia.

* Upper-middle-income countries: Botswana, South Africa, Lithuania, Hungary, Venezuela, Argentina, Uruguay, Brazil, Mexico, Belarus, Russia, Latvia, Trinidad and Tobago, Gabon, Estonia, Oman, South Korea, Saudi Arabia, and the former Yugoslav republics.

In addition, Israel, Hong Kong, and Singapore --which are usually included among the LDCs --are classed by the World Bank as "high-income countries" along with OECD members. On the other hand, Portugal and Greece --which are classed as industrial countries by the I1vIF --are placed by the World Bank in the "upper-middle-income" category.


Within GATT articles, numerous references are made to "developed contracting parties" and to "less-developed contracting parties," but few criteria are given for establishing which category a particular country belongs to;2 as in most GATT decisions, such a determination is achieved by consensus. See also industrial countries, newly-industrialized economies (NIEs), and least-developed countries (LLDCs), as well as graduation.


Development Subsidies. See Green Box.


Differential Exchange Rates. See multiple exchange rates.


Dillon Round. The fifth GAIT Round of multilateral trade negotiations, held in Geneva

from May 1959 through July 1962. The Round focused on revision of the GATT agreements and the addition of new countries. Tariff reductions, which were based on item-by-item negotiations, averaged roughly 10 percent on $4.9 billion of trade among the 45 participating countries. The Round was named for C. Douglas Dillon, then US Under Secretary of State, who led moves to launch the Round.


Direct Taxes. Taxes on all forms of income including wages, profits, interest, rents, and royalties, or on the ownership of real property. Under GATT Article 6 and the Subsidies Code, the rebate of direct taxes on exported products --but not of indirect taxes --can be considered an export subsidy and be penalized by a countervailing duty. The direct tax/indirect tax distinction in GATT creates a disadvantage for US firms, since other countries tend to rely on indirect taxes while the United States relies more on direct taxes for revenue purposes.


Disciplines. In GATT parlance, refers to members' substantive obligations undertaken by members to refrain from discriminatory trade practices. Generally refers to the key principles upon: which GATT rules are based, notably non-discrimination, national treatment, and transparency.


Discrimination. Inequality in trade treatment accorded by an importing country to one or more exporting countries. Some forms of discrimination may be sanctioned by GATT, such as preferential tariff rates for imports from LDCs or from partners in a free- trade area. Discrimination may also involve trade restrictions that apply to the exports of certain countries but not to similar goods from other countries (see selectivity and grey area measures). The opposite of discrimination is most1avored-nation (MFN) treatment.


Dispute Panel. See panel of experts.


Dispute Settlement. The process of negotiation, consultation, conciliation or mediation, and resolution of trade-policy conflicts between GATT Contracting Parties, usually through a negotiated compromise between opposing claims. GATT Articles 22 and 23 establish the basis for procedures a Contracting Party may follow --sometimes including referral to an impartial panel of experts or working party of countries not involved in the dispute --to obtain redress if it believes its benefits under GATT have been impaired. See consultations.


Diversionary Dumping. Sales by a firm at less than fair value in a foreign country, where the product is further processed and exported to a third country .See also downstream dumping.


Domestic Content Requirement. A requirement that foreign firms selling a particular product must use goods produced within the importing country as a specified minimum percentage of their inputs. Similar measures relating to inward direct investments are referred to as local-content requirements.


Domestic Subsidy. Government aid to a domestic manufacturer, grower, or producer to " maintain or increase production. Common incentives include direct payments, tax relief, and low-interest loans. As distinguished from an export subsidy, a domestic subsidy is not explicitly or solely directed at exports, although it may nonetheless have a significant trade impact GATT Article 16 establishes substantive obligations or disciplines only regarding the use of export subsidies, not domestic subsidies. The GATT Subsidies Code recognized that domestic subsidies are widely used for the promotion of social and economic policy objectives, but requires signatories applying them to "seek to avoid" creating adverse affects on the trade interests of other signatories.


Double-Column Tariff. A tariff schedule listing two duty rates for some or all commodities. In any given case, the applicable rate depends on the exporting country's trade relationship with the importing country.


Downstream Dumping. Sales at below cost in a firm's home country to a "downstream producer," which further processes the product and exports it Similar transactions involving a downstream producer located in another country are referred to as diversionary dumping.


Draft Final Act (DFA). See Dunkel Draft.


Drawback. Also known as duty drawback. The partial or total reimbursement of import duties by a government when the imported goods are re-exported or used in the manufacture of exported goods. Drawback can also refer to the refund of a domestic tax upon exportation of an article, which has been subjected to it. Drawbacks may be, considered export subsidies. See also duty remission.


Dual Pricing. The selling of identical products in different countries for different prices. When not based on factors such as differences in shipping costs or exchange rates, dual pricing is often presumed to reflect export subsidies or dumping practices. See also price discrimination (Sec. II).


Dumping. The sale of a product in a foreign market at less than fair value, presumably in order to capture or hold market share, or for other economic motives (see price discrimination, predation, and shakeout in Section II). Different forms of dumping can be categorized as:

* Sporadic or distress dumping. The disposal abroad of unanticipated inventory accumulations of a given product Such dumping follows no fixed pattern, although it can be expected to be prevalent in the early stages of an economic downturn or business-cycle contraction.

* Persistent dumping. An ongoing dumping effort over an extended time period, usually reflecting a desire to compete in a foreign market that is more price elastic than the exporter's home market

* Predatory dumping. A willful effort to undersell foreign producers in their home market, for the purpose of eliminating rivals and establishing market power.


Dumping is widely considered to be an unfair trade practice because it can disrupt markets and injure producers of competitive products in the importing country. When dumping occurs, adversely affected firms in the importing country may seek redress through imposition of an antidumping duly. See also diversionary dumping and downstream dumping.


Dumping Margin. In a dumping investigation, the percentage by which the price charged in the importing country's market falls below a product's fair value.


Dunkel Draft or Dunkel Text. Efforts to conclude the Uruguay Round in 1991 culminated in December of that year with the tabling of a "Draft Final Act" (DFA) by GATT Director-General Arthur Dunkel, embodying all of the rule-making agreements under negotiation in the Round. In some portions of the DFA --commonly referred to as the Dunkel Draft or Dunkel Text --the texts had been fully negotiated among participating countries; in others where this was not possible, Dunkel put forward his own proposed solutions after extensive consultations with delegations.


Dutiable Status. A determination made by an importing country's customs authorities whether a particular article is subject to duty and, if so, at what rate. The dutiable status is determined by "classifying" the merchandise --i.e., determining into which category of the tariff schedules the product falls. See customs classification.


Duties Collected. A criterion for evaluating the comparability or reciprocity of concessions in a tariff negotiation. Refers to the amount of duties collected for a particular product at a specified duty rate over a given time period.


Duty. A tax imposed on imports or exports. Duties can be "ad valorem" (applied as a percentage of value), "specific" (applied on a quantitative basis, such as dollars per ton), or "compound" (a combination of both). See also tariff


Duty Drawback. See drawback.


Duty Remission. A system allowing a firm to import goods into a country for processing and, when exported to a third country, to receive a repayment of duties paid at the time of the original importation. Unlike drawbacks , duty remissions do not require that the exported products contain elements of the imported product. Duty remissions may be considered export subsidies.


Duty Suspension. A temporary , unilateral reduction in tariffs. Duties are sometimes suspended to ease shortages of needed imports, or "to lower the cost of products not available domestically.


Dynamic Asian Economies (DAEs). In recent OECD discussions and publications, this term has been used to refer to Hong Kong, South Korea, Malaysia, Singapore, Taiwan, and Thailand. As such, the term is broader than and may eventually supersede NIEs.


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