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US Trade Legislation: | A-Z |


I. TERMS RELATED TO TRADE POLICY AND NEGOTIATIONS

Kennedy Round. The sixth GAIT Round of multilateral trade negotiations, held in Geneva from June 1963 to June 1967 with 48 countries participating. Tariff reductions -- based for the first time on a formula approach --covered $40 billion in trade and led to an average tariff reduction among the participating countries of about 35 percent. The Kennedy Round was the first GATT negotiation in which the member states of the European Community participated as a single entity. Moreover, developing countries for the first time played an important part in the negotiations, which resulted in the addition of Part Four to the GATT. The Round was named for President John F. Kennedy, who first sounded the call for the negotiations.

 

Kyoto Convention. Formal name is the International Convention on the Simplification and Harmonization of Customs Procedures. An international agreement sponsored in 1973 by the Customs Cooperation Council (Sec. Ill) to harmonize the methods and procedures of national customs authorities. The convention consists of a set of principles, which apply to all signatories, together with 30 individual annexes dealing with various aspects of customs and administrative entry procedures, rules of origin, transshipment, duty drawback, and free trade zones. A signatory may accept or reject any of the annexes, but must adopt at least one of them and must endeavor to implement all of the annexes as soon as feasible.

 

Law of Similars. Regulations limiting importation of a product or altering its tariff treatment if a "similar" item is produced domestically. Also known as Market Reserve Policies.

LDCs. See developing countries.

Least Developed Countries (LLDCs). Refers to those developing countries experiencing no significant economic growth, very low per capita incomes, and low literacy rates. The UN General Assembly has designated 46 countries as LLDCs: Afghanistan, Bangladesh, Benin, Bhutan, Botswana, Burkina Faso, Burma, Burundi, Cambodia, Cape Verde, Central African Republic, Chad, Comoros, Djibouti, Equatorial Guinea, Ethiopia, The Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Sao Tome and Principe, Sierra Leone, Solomon Islands, Somalia, Sudan, Tanzania, Togo, Tuvalu, Uganda, Vanuatu, Western Samoa, Yemen, Zaire, and Zambia.

Less-Developed Countries (LDCs). An alternative term for developing countries.

Less- Than-Fair- Value. See fair value and dumping.

Licensing. See import licensing. See also cross-licensing (Sec.II). Licensing Code. See Import Licensing Code.

Linear Reduction. A tariff negotiating procedure based on reduction of tariffs by a specified percentage on an entire range of goods (also known as horizontal reduction). A linear reduction in tariff negotiations is the simplest form of a formula approach, and is far broader than an item-by-item approach.

Liner Code. Formal name is the United Nations Code of Conduct for Liner Conferences. Adopted in 1974, the Code seeks to allocate international shipping among ship owners in industrial and developing countries. The 59 signatories of the Code account for about 30 percent of world liner tonnage; the United States is not a signatory. See also liner conference (Sec.II).

Local Content Requirements. Government-imposed conditions on inward direct investments, requiring that a minimum proportion of value-added of the resulting output be derived from host-country goods or services. See performance requirements. Similar measures applying to imports are referred to as domestic content requirements.

Lome Convention. A series of preferential trade and economic assistance agreements -- the first of which was signed in 1975 in Lome, Togo --between the European Community and 69 former colonies of the EC member states (the ACP countries). Superseded the Yaounde Conventions of 1963 and 1969.

Madrid Agreement. Formal name is the Madrid Agreement Concerning the International Registration of Marks. An international agreement signed in 1891 establishing a system for standardized registration of and protection for trademarks and service marks (see intellectual property rights). The agreement is administered by the World Intellectual Property Organization (Sec.lll) and is open to all states adhering to the Paris Convention.

Madrid Union. Formal name is the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods. An international agreement, signed in 1891 and revised several times subsequently, concluded for the purpose of suppressing false or misleading origin markings on internationally traded goods. Signatories are obligated to seize and deny importation to merchandise bearing false markings indicating origin in any other signatory country. The agreement is administered by the World Intellectual Property Organization (Sec.III) and is open to all states adhering to the Paris Convention. See also commercial counterfeiting.

Margin of Preference. The difference between the duty paid under a system of tariff preferences and the duty payable on an MFN basis. Some LDCs have complained that as average tariff levels in the industrial countries have been lowered through successive GATT Rounds, the margin of preference enjoyed by GSP beneficiaries has been eroded.

Market Access. The ability of foreign flnI1s to compete in a country's markets for given products, reflecting the extent of formal trade barriers --including tariffs as well as non-tariff barriers --and the government's willingness to tolerate unimpeded foreign competition with domestic firms (see national treatment).

Market Access Negotiations. In the context of the Uruguay Round as well as bilateral trade negotiations, refers broadly to efforts to lower tariffs and non-tariff barriers on manufactured and agricultural goods.

Market Disruption. A situation arising when a surge of imports of a particular product causes sales of domestically produced goods to decline to such an extent that the domestic producers and their employees suffer major economic reversals. The existence of market disruption is the basis for escape clause actions providing temporary import relief. As specified in Section 406 of the Trade Act of 1974 (Sec.lV), market disruption is considered to exist within a US industry whenever imports "are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat thereof' to that industry.

Market Reserve Policies. See Law of Similars.

Marketing Orders. Official directives concerning the size and quality of fresh fruits and vegetables, which may be marketed during specified periods within a given region. The effect of marketing orders is to maintain prices at high levels by restricting supply. In the United States, marketing orders are issued by regional boards established by the Department of Agriculture, and include agricultural producers as members.

Marking Duties. A special charge on imported good, in addition to normal duties, imposed on merchandise not properly marked so as to indicate the country of origin. Under US law, marking duties are not considered to be penalty duties, and are not eligible for drawback should the foreign article be re-exported.

Marks of Origin. Physical markings indicating where an article was produced, as required by most countries' customs regulations (see rules of origin).

Material Injury. See injury.

Material Retardation. See injury.

Minimum Import Price. See variable levy.

Minimum Valuation. A form of valuation for tariff purposes in which all items below a certain threshold value in an import category are valued as if they were of the minimum value.

Ministerial Declaration. A decision by trade ministers of GATT members to launch a GATT Round of multilateral trade negotiations, establishing the agenda for the negotiations and setting out general objectives.

Mixed Credits. Exceptionally liberal financing terms for an export sale. Ostensibly provided for foreign aid purposes, mixed credits can have effects similar to export subsidies.

Mixed Tariff. See compound tariff.

Modifications. Alteration or withdrawal of trade concessions previously made within GATT. Contracting Parties are permitted by Article 28 to modify concessions in their tariff schedules every three years by renegotiating changes with those GATT members that would be primarily affected. By introducing some flexibility to the structure of GATT obligations, this provision allows members to adapt to changing conditions in world trade while proscribing frequent tariff changes that would create uncertainty and instability. See also rectifications.

Montreal Protocol. Full title is the Montreal Protocol on Substances That Deplete the Ozone Layer. Signed in 1987, the Montreal Protocol was the first major international agreement to establish environmental trade measures. Under the Protocol, trade with non-signatory countries of products containing chlorofluorocarbons (CFCs) --principally used in refrigerators and air conditioners --and fire-extinguishing halons are to be limited or banned. The Protocol also discouraged relocation of CFC plants to non-signatory countries. As of September 1993,94 industrial countries and LDCs were parties to the Protocol.

Moral Rights. An artist's ability to control use of creative works such as books and films, even after relinquishing economic rights to another copyright holder such as a publisher or producer. Differences in countries' treatment of moral rights pose obstacles to international negotiations on protection of intellectual property rights.

Most-Favored-Nation (MFN). The principle according to which each signatory of a trade agreement will apply its trade restrictions or concessions equally among all other signatories. MFN is the fundamental principle of the GATT; all Contracting Parties agree to apply MFN treatment to one another, although exceptions exist --for example, in granting preferential treatment to developing countries, or for members of a customs union or free trade area (see waiver). When a country agrees to reduce tariffs on a particular product imported from one country, the tariff reduction automatically applies to imports of that product from any other country eligible for MFN treatment. Because of this, MFN serves as a powerful inducement for countries to join GA 1T , as well as a facilitator of trade liberalization generally. MFN terminology dates from the sixteenth century --when it was used in commercial agreements according the most advantageous customs treatment extended by a government to any trading partner, i.e., to the "most- favored nation" --but in modern usage it refers to nondiscrimination in international trade relations. Despite occasional misinterpretation in press reports, MFN does not entail "favored" (i.e., preferential) treatment of a trading partner.

MTN Codes. See multilateral trade negotiations.

Multifiber Arrangement (MFA). (See textiles, Sec. II.) Full name is the Multifiber Arrangement Regarding International Trade in Textiles. An international arrangement under which GATT members apply quantitative restrictions on imports of textiles and clothing when importing countries consider them necessary to prevent market disruption. The MFA --covering cotton, wool, and man-made fiber textiles and apparel products -- establishes a framework for negotiating bilateral voluntary export restraints (VERs) or orderly marketing agreements (OMAs) among textile exporting and importing countries to prevent market disruption or to counter market-disruptive import surges originating from low-wage producing countries. It provides standards for determining market disruption, minimum levels of import restraints, and annual growth of imports. The MFA also provides that restrictions should not reduce imports to levels below those of the preceding year; because of this --and the fact that an importing country may impose quotas unilaterally to restrict rapidly rising textile imports from countries with which it .has no bilateral agreements --most important textile exporting countries consider it advantageous to negotiate bilateral agreements under the MFA with the principal textile importing countries. Critics claim that the MFA amounts to a bureaucratically rigged market that distorts prices; proponents argue that it is the only realistic alternative to more draconian protection of a politically sensitive sector. Under the proposed Uruguay Round agreement, the MFA would be phased out over a 10-year period.

The MFA was negotiated under GATT auspices even though its provisions for quantitative import restrictions would otherwise be illegal under GATT. It went into effect in 1974, superseding the Long-term Agreement on International Trade in Cotton Textiles, which had been in effect since 1962. As of September 1993,43 countries were participating in the MFA: Argentina, Austria, Bangladesh, Brazil, Canada, China, Colombia, Costa Rica, Czech Republic, Dominican Republic, the European Community, Egypt, El Salvador, Fiji, Finland, Guatemala, Honduras, Hong Kong, Hungary, India, Indonesia, Jamaica, Japan, Korea, Lesotho, Macau, Malaysia, Mexico, Norway, Pakistan, Panama, Peru, Philippines, Poland, Romania, Singapore, Slovakia, Sri Lanka, Switzerland, Thailand, Turkey, the United States, and Uruguay. See also Textiles Surveillance Board and International Textiles and Clothing Bureau (Sec. /V).

Multilateral Acceptance of Test Data. Recognition by signatories of the GATT Standards Code of test data and certification markings from other signatories. The Code recognized that governments may require prior consultations with other signatories to arrive at mutually acceptable understanding of testing methods and results. Negotiations in the Uruguay Round to strengthen and expand the Code are considering ways to improve arrangements for acceptance of foreign-generated test data.

Multilateral Steel Agreement (MSA). A proposed agreement that would phase out tariffs, eliminate non-tariff barriers, and end direct state subsidies to the steel sector. MSA negotiations collapsed in March 1992 and resumed in mid-1993 among 37 steel-producing nations.

Multilateral Trade Negotiations. See GATT Round. The 1974-79 Tokyo Round was referred to formally as the Multilateral Trade Negotiations (MTN). As a result, the various GATT Codes negotiated during the Tokyo Round are sometimes referred to as "MTN Codes."

Multilateral Trade Organization (MTO). A proposed organizational arrangement that would implement the results of the Uruguay Round, including agreements in areas such as services and intellectual property rights that would go beyond the scope of the existing GATT .See discussion under Multilateral Trade Organization in Section Ill.

Multiple Exchange Rates (also known as Differential Exchange Rates). A system of officially prescribed rates of exchange for a country's currency that varies depending on the type of transaction involved. For example, a government may assign its currency a given value for capital transfers, but provide for a less favorable rate of exchange for imports of luxury items, thereby increasing the price of the latter and discouraging their importation. As with other forms of exchange controls, multiple exchange rates can function as a disguised trade barrier, and their use is discouraged by the IMP.

National Trade Estimate (NTE) Report. A report on significant foreign trade barriers published in the spring of each year by the Office of the US Trade Representative, with contributions from other Executive Branch departments and agencies and US embassies overseas. The NTE Report is required by the Trade Act of 1974, as amended by the Trade Acts of 1984 and 1988 (Sec.IV), and inventories the most important barriers affecting US exports of goods and services, US direct investment in other countries, and foreign protection of intellectual property rights. The NTE Report covers barriers deemed to have a significant bearing on US interests, whether or not they are consistent with international trading rules. Many countries are excluded from the NTE Report, due either to the relatively small size of their markets or to the lack of major complaints from US industry and agriculture groups.

National Treatment. The principle that foreign goods, services, or investment are to be treated "no less favorably" within a nation's domestic markets than competing products or services produced locally, once import duties have been paid and applicable customs regulations are satisfied. National treatment is one of the fundamental principles of the GATT.

Natural Resource-Based Products. Designation for one of the negotiating groups in the Uruguay Round that focused on trade barriers affecting non-agricultural primary products, including forestry products, fishery products, and nonferrous metals and minerals.

Negotiating Group. A group of country delegates in a GATT Round charged with planning and managing multilateral negotiations concerning a particular issue or product sector. At the outset of the Uruguay Round, two major groups were established --the Group on Negotiations of Goods (GNG) and the Group on Negotiations of Services (GNS) --with 14 issue-oriented subgroups. In Apri11991, these activities were consolidated into seven negotiating groups; work in the final phase of the Round has been organized within four major issue-clusters or Tracks.

Net Subsidy Test. A proposed modification of rules governing application of countervailing duties, whereby an importing country could impose duties on the margin by which export subsidies exceed subsidies provided to producers of competing goods in the importing country.

New Economic Partnership. See Framework Initiative.

New International Economic Order (NIEO). An agenda for discussions between industrial and developing countries focusing on restructuring of the world's economy to permit greater participation by and benefits to LDCs (also known as the "North-South Dialogue"). The term is derived from the Declaration for the Establishment of a New International Economic Order, adopted by the United Nations General Assembly in 1974, and refers to a wide range of trade, financial, commodity, and debt-related issues. While the term continues to have currency in academia, it has fallen into disuse in policy-related discussions.

Newly Industrialized Countries (NICs). Now generally obsolete term; has been superseded by NIEs, since inclusion of Taiwan and Hong Kong made use of the word "countries" inappropriate.

Newly Industrializing Economies (NIEs). A subgroup of developing countries that have experienced particularly rapid industrialization of their economies, with industrial production and exports expanding accordingly. Current usage tends to limit the term NIEs to Hong Kong, South Korea, Singapore, and Taiwan, although texts dating from the early 1980s often extended the related term NICs to Mexico and Brazil, and sometimes India and Argentina. The East Asian NIEs are sometimes referred to as the Four Tigers or Four Dragons. See also Dynamic Asian Economies (DAEs).

Newly Independent States (NIS). The successor states to the former Soviet Union, i.e., Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.

Nomenclature. See customs classification.

Non-application. In the context of Uruguay Round discussions of a proposed Multilateral Trade Organization, refers to a signatory's right to "non-apply" portions of the MTO agreements to any other country at the time it becomes a member. Preservation of such a right can have an important effect on ongoing negotiations in various areas that would be incorporated in an MTO --e.g., on market access for goods and services, and on intellectual property protection --because it prevents free-riders and maintains incentives for countries to exchange reciprocal concessions within each area.

Nondiscrimination. Equal application of tariffs, quotas, or other trade restrictions to products from different trading partners. The principle of nondiscrimination is enshrined in Article 1 of the GATT (see most-favored-nation principle). See also national treatment.

Nondumping Certificate. A document or notation on a shipper's invoice attesting that the merchandise described is being sold at a price no lower than that applying to sales of ~ similar products in the country of origin.

Nonmarket-Economy Country. A country in which economic activity is regulated by central planning, in contrast to a market economy that relies principally upon market- based prices to allocate productive resources. In such a country, tariffs have no meaningful impact on import decisions. In GATT contexts, the term applies to members that were not market economies at the time of their accession --i.e., Poland, Hungary, and Romania. These countries joined under special provisions designed to prevent disruption of other members' trade, together with arrangements to ensure steady expansion of the nonmarket-economy country's imports from other GATT members. Poland is renegotiating its accession protocol in light of its abandonment of central planning, and Hungary has announced its intention to follow suit. See also State Trading Nation.

Non-Paper. In GATT parlance, a proposed agreement or negotiating text circulated informally among delegations for discussion without committing the originating delegation's country to the contents.

Non-tariff Barriers (NTBs). Measures other than tariffs that burden or restrict international trade. NTBs may be financial (e.g., internal taxes and customs fees) or non-financial (e.g. quantitative restrictions and excessive documentation requirements). The term is sometimes used in reference to nongovernmental actions or impediments to trade, such as internal distribution systems that discourage imports, but in GATT contexts the term refers to measures imposed by governments. Negotiations involving reduction of NTBs are generally more difficult than tariff negotiations since NTBs are almost always closely linked to other national policies or programs.

Non-tariff Measures (NTMs). A broader term than NTBs, including not only import-restricting barriers but also measures that distort trade by stimulating exports. See GATT Codes.

Nonviolation Complaints. In GATT dispute settlement negotiations, refers to provisions allowing the Contracting Parties to investigate and rule upon complaints concerning measures that are not in violation of GATT or are outside its scope, but which may affect the balance of a member's rights and benefits under the General Agreement. Because any country that considers itself harmed by such measures would claim the right to alter its GATT legal obligations in response, Article 23 provides a way of adjudicating such situations in a multilateral forum. Nevertheless, GATT supervision of nonviolation complaints has proven difficult to implement since it implies altering GATT legal relationships already consented to among contracting parties.

Norm Price. See Common Agricultural Policy.

Normal Value. An alternative term for fair value.

North-South Dialogue. See New International Economic Order (NIEO ).

North-South Trade. In the parlance of the 1970s and 1980s, trade between the developed market economies ("the North") and developing countries ("the South").

Note Verbale. A formal diplomatic communication delivered orally to an official representative of another country. The written form is a demarche.

Notification. In the context of GATT, refers to the procedure of informing the GATT Secretariat of a change in a country's trade policies, such as application of a new or revised trade-restrictive measure, and of subsequently informing other member countries of the change by the Secretariat.

Nullification or Impairment. The adverse effect on a GA TI member's trade interests caused by changes in the trade regime of another member, or by another member's failure to carry out its obligations under GATI .In GATT parlance, "nullification or impairment" is the basis for initiating formal action under the dispute settlement procedures.



 

 

 

 

 


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