I. TERMS RELATED TO TRADE POLICY AND NEGOTIATIONS
East-West Trade. In the parlance of the 1970s and 1980s, trade between the former East Bloc countries ("the East") and industrial and developing countries outside the East Bloc ("the West").
Eco-labeling. Government or privately-sponsored labels or markings (also known as eco-seals or green seals) signifying that products or packaging are "environment- friendly," allowing consumers to discriminate among products in terms of their environmental impact Labels signifying "dolphin safe" tuna are an example. See also eco-packaging.
Eco-packaging. Refers to national regulations and programs to encourage recycling or reuse of product packaging and containers, together with associated labeling designed to promote use of "environment-friendly" packaging. Discussions in the GA TT Group on Environmental Measures and International Trade (Sec. III) have addressed application of eco-packaging and labeling requirements in ways that do not discriminate against foreign products.
Economic Summit. Although the term can be used more generally, its most prominent use is in referring to the annual meetings of leaders of the seven leading industrial countries (see Group of Seven, Sec. III).
Economic Union. The highest level of economic integration between sovereign countries, in which members proceed beyond the requirements of a common market to unify their fiscal, monetary, and socioeconomic policies. Belgium and Luxembourg, for example, have been joined in an economic union since 1921.
Embargo. A prohibition upon exports or imports, either with respect to specific products, or to specific countries. An embargo is usually applied for political reasons, although it may also be intended for economic or regulatory (e.g., environmental or sanitary) purposes. The term also applies to an official edict prohibiting entry or departure from the nation's ports of vessels flying the flag of a particular country. In cases where ports are closed only to commercial vessels of the targeted nation, a "civil embargo" exists; when ports are closed to military or public vessels as well, the condition is a "hostile embargo." Both an embargo and a blockade are particular forms of a broader category of economic countermeasures known as sanctions.
Enabling Clause. Pan of the 1979 Framework Agreement providing a legal basis in GATT for industrial countries to grant tariff preferences to LDCs. The enabling clause amounted to a permanent waiver of the GA TT most favored-nation provision for the Generalized System of Preferences (GSP ). LDCs sought agreement on the enabling clause as a key objective in the Tokyo Round, but were obliged to accept inclusion of language in the agreement that also recognized the graduation principle.
Enterprise for the Americas Initiative. A program launched in 1990 as a vehicle for defining a new US economic relationship with Latin America, including eventual free trade within the Western Hemisphere. The three pillars of the EAI are trade, debt, and investment. See Framework Agreement (2).
Enterprise Zones. See export processing zone.
Entities. In the context of the GA TT Government Procurement Code, refers to government departments or ministries and their subsidiary agencies, as well as state-owned monopolies or other state trading enterprises.
Environmental Dumping. Refers to an unfair trade practice whereby an exporter achieves a cost advantage over its rivals in foreign markets through inadequate environmental protection in its home country .A similar concept, referring to inadequate labor regulations, is referred to as social dumping. Both have been suggested as topics for future multilateral negotiations following the Uruguay Round.
Environmental Trade Measures. Trade measures applied by importing or exporting countries in conjunction with environmental policies. In 1987, parties to the Montreal Protocol enacted a series of restrictions to curtail trade in products employing ozone- damaging chemicals. Within GA TT , international discussions on such measures are conducted in the Group on Environmental Measures and International Trade (Sec. III). See also Green Round.
Escape Clause. A provision in a bilateral or multilateral commercial agreement permitting a signatory temporarily to suspend concessions it has granted when imports threaten harm to its domestic workers or firms producing competing goods or services (see safeguards). Also used in reference to procedures in the United States for applying for import relief.
Exceptions. Products specifically exempted from an international agreement to liberalize trade through multi-product duty reductions or other commitments. Exceptions are usually made by importing countries to protect workers and firms engaged in production of sensitive products.
Exchange Controls. The rationing of foreign currencies and other instruments for settling international financial obligations by a country facing balance of payments difficulties. Exchange controls require importers to apply for prior government authorization to obtain the foreign currency needed to bring in designated amounts and types of goods. Since such measures can easily be manipulated by governments to restrict imports, they are often viewed as non-tariff barriers to trade.
Exhaustion. Refers to the doctrine that protection of intellectual property rights (IPR) is "exhausted" or confined to the country in which protection is granted. The exhaustion principle specifically implies that IPR holders may not seek to curb parallel imports from other countries. In Uruguay Round IPR negotiations, some LDCs have demanded international extension of the exhaustion principle in order to ensure access to industrial- country markets for goods they produce under license.
Exonerated Cargo. Otherwise dutiable merchandise permitted duty-free entry into certain countries in furtherance of a particular government policy. The exonerations are, in effect, licenses to import specified quantities of the desired articles --usually raw materials or unfurnished goods not available locally but deemed essential to local industry. Imports in excess of the quantities authorized in the exoneration may be prohibited or may be permitted only at high rates of duty.
Export Controls. Regulations or restrictions applied to exports by the government of the exporting country to limit foreign access to sensitive technologies, or to protect domestic producers and consumers from temporary shortages of certain materials. See: COCOM List and export restrictions; see also Export Administration Acts of 1969 and 1977 (Sec. IV).
Export Credits. Deferred payment arrangements provided by exporters for goods or services sold internationally. Official export credits are deferred payment arrangements financed or underwritten by an exporter's government, and can have the same effect as an outright export subsidy. Export credits are generally divided into short term (less than two years), medium term (two to five years), and long-term (over five years) credits. They may take the form of "supplier credits" extended by the exporter, or "buyer credits," in which the exporter's bank or other financial institution lends to the buyer. Export credit agencies may give official support to both supplier and buyer credits; such support may be limited to "pure cover" --insurance or guarantees given to exporters or lending institutions --or it may take the form of "financing support," including direct credits, refinancing, and interest subsidies. All major industrialized countries are signatories to the OECD Export Credits Arrangement. See Group on Export Credits and Credit Guarantees (Sec.I/l).
Export Credits Arrangement. Formal title is the Arrangement on Guidelines for Officially Supported Export Credits. An international understanding negotiated under the auspices of the OECD, providing the institutional framework for an orderly export credit market. Its purpose is to prevent an "export credit race" in which exporting countries compete for sales to third-country markets on the basis of their financing terms rather than on the basis of providing competitively priced goods. The Arrangement deals, with actions and policies of official export credit and insurance agencies, covering only the conditions or terms of insurance or guarantees. It limits trade finance subsidies, setting standards for minimum interest rates, maximum repayment periods, and down payments. The Arrangement took effect in April 1978, and includes all OECD member countries except Turkey. It replaced a less elaborate understanding that had been in effect among a more limited number of countries since 1976. See also Berne Union (Sec. III).
Export Duty. A tax imposed on exports. Although export duties are sometimes a convenient source of revenue, in some circumstances they can discourage exports and place producers at a competitive disadvantage in world markets. The United States is constitutionally proscribed from imposing export duties; resource-exporting countries such as Canada, Australia, and many LDCs tend to favor them. See also export restrictions.
Export Enhancement Program (EEP). A system of agricultural export subsidies maintained by the United States. The EEP, which is linked to stock disposal policies, is partial and discretionary in nature. Payments are not automatically accorded to all exports of a given commodity or to all commodities, and payment rates may vary widely from sale to sale. Congress restored $1 billion in EEP export subsidies in mid- 1992 as a result of failure to conclude a Uruguay Round agreement covering foreign agricultural trade practices.
Export Guarantees. Assurances by an exporter's government that financing provided by a private lender will be repaid with official funds if a buyer defaults.
Export Performance Requirements. See performance requirements.
Export Processing Zone. A special form of free trade zone in which certain exemptions from duties and regulations are granted as an inducement to export-oriented manufacturing. Usually a manufacturer within the zone may import equipment and raw materials free of duty for goods that are ultimately exported as finished products. Other inducements may include abatement of taxes on profits derived from export sales or relaxation of minimum wage regulations. Also known as "special economic zones," "enterprise zones," and "industrial free zones."
Export Quota. A specific restriction or ceiling imposed by an exporting country on the value or volume of certain exports. Some international commodity agreements explicitly indicate when producers should apply such restrictions. Export quotas are also often applied in orderly marketing agreements and voluntary restraint agreements.
Export Quota Agreement. An arrangement arising under an international commodity agreement whereby each participating exporting country is allocated a portion of the global market for the commodity. The purpose of the arrangement is to maintain price stability and ensure producer incomes.
Export Restraints. Also referred to as bilateral restraint agreements. Quantitative restrictions applied by exporting countries to curtail shipments of sensitive products to a specified foreign market for a fixed time period, usually pursuant to a formal or informal agreement with the importing country (see voluntary restraint agreements and orderly marketing agreements.) Their economic effects --unlike those of "traditional" trade restrictions such as tariffs or import quotas --include significant benefits to established foreign producers. VRAs and OMAs have no explicit sanction under GA TI' (see grey area measures).
Export Restrictions. While usage varies, this term is often used to denote quantitative limits or charges on exports purely for domestic purposes, such as protecting producers and consumers from temporary shortages of certain materials, promoting processing of raw materials within the producing country, or bolstering export prices by limiting supplies in world markets. They are thus distinguished from export restraints, which are designed primarily to forestall frictions with the exporting country's major trading partners. US efforts in the Tokyo Round to have GATT rules and disciplines extended to export restrictions were largely unsuccessful. See also export controls and supply access.
Export Subsidy. Any form of government payment or other benefit provided to domestic producers of goods destined for sale in foreign markets. Examples include preferential government financing, income tax holidays, and rebates of direct taxes on exported products. Reflecting the belief among the founders of GA TT that export subsidies can distort normal trading patterns, GATI' Article 16 proscribes export subsidies on non-primary products that result in lower prices in foreign markets than prices charged for the "like product" in the domestic market. The Tokyo Round yielded an agreement that extended Article 16 by banning all export subsidies by industrial countries on manufactured and semi-manufactured goods (see Subsidies Code). See also domestic subsidy and countervailing duty.
Fair Trade. See entry in Section II.
Fair Value. The benchmark against which selling prices of imported merchandise are compared in a dumping investigation. In US practice, fair value is generally expressed as the weighted average of the exporter's home market prices or prices to third countries during the period of investigation. In some cases it is the "constructed value" --a derived figure used if there are few home-market or third-country sales of the product in question, or if the number of such sales made at prices above the cost of production is so few that they provide an inadequate basis for comparison. See also dumping margin.
Financing Support. See export credits.
Floor prices. See buffer stocks.
FOGS. See Functioning of the GATT System.
Former Centrally Planned Economies. See countries in transition.
Former East Bloc Countries. Countries that comprised the now-defunct East Bloc (i.e., those "dominated by international communism," in the language of the US Trade Act of 1974), many but not all of which have now abandoned central planning and moved to establish market economies. Includes the East European countries (CEECs), the former Soviet republics (NIS), China, Mongolia, North Korea, Vietnam, Laos, Cambodia, and Cuba. In the parlance of the 1960s, these countries comprised the "Second World," between the industrialized "First World" countries and the underdeveloped "Third World." Usage in the 1990s is still evolving; see countries in transition.
Formula Approach. A tariff negotiating procedure in which a general formula for calculating tariff reductions on all products is agreed by the participants, with limited exceptions allowed for sensitive items. The most straightforward formula approach is a linear reduction, although more complicated formulas have been used. Negotiations based on a formula approach tend to achieve tariff cuts across a broader range of products than item-by-item negotiations, but are vulnerable to becoming bogged down by demands for exceptions. See also harmonization.
Forum Shopping. Refers to the ability of countries to take advantage of differing procedures for dispute settlement under GATT and various GATT Codes by pursuing a trade complaint in a venue in which it believes it can exploit procedural or tactical advantages.
Four Dragons or Four Tigers. See newly-industrializing economies (NIEs).
Framework Agreement (I). A package of agreements negotiated during the Tokyo Round, dealing with (a) differential and more favorable treatment for LDCs; (b) trade restrictions applied for balance-of-payments purposes; (c) safeguard actions for "infant industry" development purposes; and (d) the process of dispute settlement in GAIT. The agreement took its name from the paragraph in the Tokyo Declaration calling for "improvements in the international framework for the conduct of world trade." The GATT Contracting Parties adopted the four texts making up the Framework Agreement in November 1979. See also enabling clause and graduation.
Framework Agreement (2). Also known as a Trade and Investment Framework Agreement, or TIF A. A bilateral agreement establishing a mechanism for consultations on trade and investment policy in conjunction with the Enterprise for the Americas Initiative (EA/). The EAI framework agreements set up intergovernmental councils to discuss and negotiate the removal of trade and investment barriers; the councils also serve as fora to prepare for subsequent stages of trade liberalization, including the possible negotiation of free trade agreements (FTAs). Since the EAI was launched, the United States has concluded framework agreements with Bolivia, Colombia, the Dominican Republic, Ecuador, El Salvador, Chile, Costa Rica, Guatemala, Honduras, Nicaragua, Panama, Peru, and Venezuela, as well as with MERCOSUR and CARICOM (Sec. III). The United States has signed similar framework agreements with Australia and New Zealand.
Framework Initiative. (Also known as the New Economic Partnership). An initiative launched by the United States in May 1993 to address bilateral trade problems with Japan.
Free List. A list of goods that have been designated as free from tariffs or licensing requirements by an importing country.
Free-Riders. In the context of the Uruguay Round discussions of a proposed Multilateral Trade Organization, refers to provisions to ensure that participating countries will not have the option of "free-riding" --i.e., of signing only some of the Uruguay Round agreements while avoiding the obligations of others --but instead would require countries to accept or reject the results of the Round as a "single undertaking." See non-application.
Free Trade vs. Fair Trade. See entries under respective headings in Section II.
Free Trade Agreement. An agreement between two or more countries establishing a free trade area (FTA).
Free Trade Area (FTA). A group of two or more countries that agree to remove barriers affecting substantially all trade with each other, while each maintains its own schedule of tariffs and other regulations on imports from non-member countries. Because some goods --such as farm products --may not be traded in significant quantities between partners in an FTA, coverage of " substantially all " of their trade does not necessarily mean trade barriers are eliminated in all sectors. Indeed, agriculture is exempted from coverage in many FTAs.
Free Trade Zone. (Not to be confused with a free trade area or FTA.) A designated area within a country in which goods can be imported, stored, or processed without being subject to customs duties and taxes. Also known as a "foreign trade zone," a "free port," or a "bonded warehouse." See also transit lone and export processing lone."
Functioning of the GATT System (FOGS). Designation for a negotiating group in the Uruguay Round that dealt with measures to strengthen the GATT process, particularly by improving surveillance of members' trade policies; encouraging greater involvement of trade ministers in the GATT; and strengthening GATT's relationship with other international organizations such as the IMF. See Trade Policy Review Mechanism.
Further Processing Method. See superdeductive .
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