Harmonization. Cutting tariffs in a way that results in
greater uniformity in rates applied to most items within each
country's tariff schedule. Most harmonization negotiations have
employed a formula approach for achieving relatively large cuts in high
"tariff peaks" and smaller cuts in lower tariffs.
This approach contrasts with linear reduction formulas,
which call for equal percentage cuts in all tariffs.
Harmonized System (HS). A system of tariff nomenclature for customs
within the Customs Cooperation Council (Sec.III). Participating countries classify goods for
customs purposes on the HS basis up to a level of product specificity
denoted by six-digit codes. Countries are free to introduce
national distinctions --for tariff or statistical purposes --for
more detailed product breakdowns beyond the six-digit level.
The United States adopted the Harmonized System in the Trade
Act of 1988
IV). The Harmonized System superseded the Brussels
Tariff Nomenclature (BTN) classification system.
Havana Charter. A multinational agreement concluded at
Havana in 1948, which called for establishment of an International
Trade Organization (ITO) to govern world trade. The ITO never
came into force, primarily because of opposition in the US Congress,
leaving the "provisional" GATT as the sole institution
providing a foundation for the multilateral trading system.
See entry under International Trade Organization in
High-Technology Trade. See high technology (Sec. 11).
Horizontal Reduction. Negotiated cuts in tariff rates by the
same percentage for all parties to an agreement. Also known
as equal-percentage of linear reduction.
Impairment. See nullification or impairment. Import
Deposits. See prior deposits.
Import Licensing. Procedures requiring the submission of
an application or other documentation (other than those normally
required for customs purposes) to an administrative body for
approval as a prior condition for importation into the customs
territory of a country. See also prior deposits.
Import Licensing Code. Formally known as the Agreement on Import
Licensing Procedures. A GAIT Code negotiated
during the Tokyo Round to
simplify and harmonize import licensing procedures of signatory governments, and to ensure that they
do not in themselves restrict imports. Signatories are required
to submit details of their licensing procedures and laws for
examination by the Committee on Import Licensing. Signatories
include Argentina, Australia, Austria, Canada, Chile, Czech
Republic, Egypt, the European Community, Finland, Hong Kong,
Hungary, India, Japan, Mexico, New Zealand, Nigeria, Norway,
Pakistan, Philippines, Poland, Romania, Singapore, Slovakia,
South Africa, Sweden, Switzerland, the United Kingdom, and the
Import Quota. A means of restricting or controlling imports
by specifying the quantity or value of a commodity, which may
be imported during a specified period. Such restrictions may
take the form of "global" or "basket quotas"
--limiting total imports from all sources, without differentiating
among originating countries --or of country-specific, "allocated
quotas" in which producing countries may be assigned a
portion of the total quantity permitted to be imported. Some
global quotas contain sub-quotas designating individual limits
for various supplier countries. Import quotas result in protection
that tends to be more predictable than with a tariff, and
can thus be "fine- tuned" by governments. As with
a tariff, domestic producers protected by a quota are able to
charge higher prices, and there are some efficiency losses --but
these are not offset by the additional government revenue that
a tariff provides, so that a greater deadweight loss (Sec.ll)
results. See also quantitative restrictions
Import Quota Auctioning. The process of allocating the right to
import a product subject to quantitative restrictions by auctioning
the quota among potential importers. Through the auction proceeds,
the importing government can extract some of the revenue it
might otherwise obtain by levying a tariff on the goods in question.
Import Relief. Governmental action to temporarily restrict
imports in order to prevent or remedy injury to domestic workers or firms producing goods
competitive with those being restricted. See safeguards.
Import Restrictions. Measures to limit or control the volume
of imports by means of tariffs or
non-tariff barriers --including
import quotas, exchange controls, import licensing, requirements for prior deposits, levies of import surcharges, or prohibitions of various categories of
Import Sensitivity. The vulnerability of a domestic industry
to injury from
foreign competition. See also sensitive products .
Import Surcharge. A temporary tax on imports over and above
established tariffs, usually enacted in times of economic crisis.
The United States, for example, imposed a 10 percent import
surcharge when the dollar-gold linkage was severed in 1971.
The Tokyo Round Framework Agreement legitimized
use of surcharges for balance-of- payments purposes, provided
they do not provide special protection for particular products
and do not discriminate among individual exporting countries.
Import Surge. A substantial and usually unforeseen increase
in imports above recent trends for a particular product or class
of goods, presenting serious adjustment costs (Sec . II) for domestic workers and firms producing
such goods. When an import surge is due to economic or commercial
factors other than unfair trade practices, governments
may resort to safeguards to
provide temporary import relief to
the domestic industry.
Indirect Tax. A tax levied on expenditures --such as
a sales tax, excise tax, or value- added tax --rather than a
direct tax on individual or corporate earnings. GA
TT rules permit countries to rebate indirect taxes on goods
destined for export, but not direct taxes.
Industrial Countries or Industrialized
(Also known as developed countries) A term used to distinguish
the more industrialized nations from developing countries
(LDCs) as well as the newly-industrializing economies (NIEs) and countries in transition. The International Monetary Fund categorizes
as industrial countries the United States, Canada, Japan, Australia,
New Zealand, and the member states of the EC and EFT A --i.e.,
all OECD member states except Turkey. South Africa in the past
has been categorized as an industrial country, but its status
is unclear at present. The industrial countries are sometimes
collectively designated as the "North" because most
of them are in the Northern Hemisphere.
Industrial Property. Encompasses most forms of intellectual
property with the exception of copyrights --e.g., patents,
trademarks, and trade secrets (Sec. II). See intellectual property rights.
Initial Negotiating Right (INR). A right held by a GA TT member to be compensated
by another member if a given bound tariff rate is raised by
the latter. INRs stem from past negotiating concessions and
allow the holder to seek compensation for an impairment of tariff
concessions whether or not the country holds status as a principal
supplier of the product in question.
Injury. In the GATT context, refers to economic
damage sustained by workers or firms in an industry as a consequence
of foreign competition or unfair trade practices. Under GATT rules and various GATT Codes as well as under US law, mechanisms are
established for determining whether injury has occurred or is
threatened, as a prerequisite for taking countermeasures (see
injury test). Different gradations of injury are referred
to in US law and international discussions; the two most prominent
Material injury --Antidumping and
countervailing duty cases
are based on findings of "material" injury (including
the threat of material injury, and the "material retardation"
of a new, emerging industry). Rather than define material injury,
the GATT Subsidies Code lists factors that may be taken into account
in determining its existence, including an actual or potential
decline in output, sales, market share, profits, prices, or
employment, and in the case of agricultural subsidies, whether
there has been an increased burden on government support programs.
Material injury is defined by the US Trade Act of 1979
(Sec.IV) as "harm which is not inconsequential,
immaterial or unimportant."
Serious injury --Safeguard or
escape clause actions
require a finding of "serious" injury to a domestic
industry .GA n jurisprudence is ambiguous on the meaning of
this term, but GATT legal experts assert that it is meant to
be a higher standard than material injury --reasoning that the
escape clause is designed to respond to situations which do
not involve allegations of unfair action by foreign exporters,
so that its standard for establishing injury should be the most
rigorous. Under US trade law (see escape clause, Sec.IV),
mentioned in determinations of serious injury include the significant
idling of productive facilities of an industry; the inability
of a significant number of firms in the industry to operate
at a reasonable level of profit; and significant unemployment
or underemployment within the industry.
Injury Test. An administrative determination establishing
that injury to
a domestic industry has occurred as a result of an import surge
or foreign unfair trade practices. Such a test is a prerequisite
for imposition of safeguards, countervailing duties, or
antidumping duties. By
requiring an industry seeking trade relief to establish that
it has been injured by foreign competition --a significant burden-of-proof
threshold --the injury test is intended to prevent abuse of
unfair-trade laws for protectionist purposes.
Intellectual Property Rights (IPRs). The right to possess and use intellectual
property, conferred by means of patents, trademarks, and copyrights.
Even though IPR laws are enacted and enforced on a strictly
national basis, once a patent or copyright has been granted
in one country and disclosure of an invention or creative work
has been made, information technology makes it available throughout
the world. As a result, cross- country differences in patent
and copyright laws can result in inadequate IPR protection.
In the Uruguay Round, negotiations
on trade-related intellectual property rights (referred to as
TRIPs) seek to balance goals of facilitating technology
diffusion with the objective of promoting innovation through
more effective IPR protection.
International Atomic Energy List. See COCOM List.
International Commodity Organization. An organization of nations engaged in international
trade involving a particular commodity. Principal motives for
such an organization, such as price collaboration among producers,
may be similar to those of a producer cartel (Sec. II); the organization may also establish buffer
stocks to prevent wide swings in the market price of the commodity.
Some international commodity organizations, established to implement
a commodity agreement, include
both producing and consuming nations. The principal international
commodity organizations (descriptive details of which may be
found in Section III) include:
* Association of Natural Rubber Producing
* Intergovernmental Council of Copper
* International Bauxite Association
* International Cocoa Organization
* International Coffee Organization
* International Cotton Advisory Committee
* International Jute Organization
* International Lead and Zinc Study Group
* International Natural Rubber Organization
* International Olive Oil Council
* International Sugar Organization
* International Tropical Timber Organization
* International Wheat Council.
See also International Rice Commission;
International Tea Committee; International Tin Council; International
Wool Secretariat; and
Organization of Petroleum Exporting Countries (Sec. III).
International Convention on the Simplification
and Harmonization of Customs Procedures. See Kyoto Convention.
International Dairy Arrangement. A Tokyo Round agreement covering trade in dairy products,
consisting of three protocols establishing minimum prices for
milk powder , milk fats (including butter), and certain cheeses.
The arrangement is overseen by the International Dairy Products
Council (Sec. III). Signatories include Argentina, Australia,
Botswana, Bulgaria, Egypt, the European Community, Finland,
Hungary, Japan, New Zealand, Norway, Poland, Romania, South
Africa, Sweden, Switzerland, and Uruguay.
International Import Certificate-Delivery
Verification System. See COCOM List.
International Munitions List. See COCOM List.
Intervention Price. See Common Agricultural Policy.
Investment Performance Requirements. See Performance Requirements.
Item-by-Item Negotiations. A method of tariff negotiations in which
the expected trade effects of each proposed tariff cut is evaluated
separately. At the end of the negotiations, participants are
expected to have achieved approximate balance in the total effect
of tariff cuts offered and received. The first five GATT
the item-by-item approach, but by the rnid-1960s it had become
too cumbersome for multilateral negotiations with increasing
numbers of participating countries. See formula approach.
J-List. A list originally established under the US Tariff
Act of 1930, indicating products that are exempted from requirements
that imported goods be marked to show country of origin. Items
on the list are difficult or impossible to mark. See marks
Judicial Review. In unfair trade cases, a mechanism for parties to a case
to appeal a finding of subsidization, dumping, or injury to
a court of law in the importing country.