RELATED TO TRADE POLICY AND NEGOTIATIONS
or financial restrictions imposed against an individual country
for political purposes, in an effort to influence its conduct
or policies. See blockade and embargo.
and Phytosanitary Measures.
Health and safety standards affecting imports. ("Sanitary"
regulations are those applying to human and animal products;
"phytosanitary" regulations apply to plants and plant
products.) Such standards are established to ensure that animals
and plants and their products are safe for consumption and not
damaging to the environment. See also Codex Alimentarius.
of Concessions. A
list of import duties applicable to specific goods which a GATT
Contracting Party maintains on an MFN basis
as a condition of its membership. See tariff schedule and binding.
The objective of equalizing levels of protection applying to
international trade in a particular class of products through
trade negotiations conducted on a sector-by-sector basis. Sectoral
reciprocity contrasts with the customary, across-the- board
approach to negotiations aimed at achieving mutually beneficial
agreements comprising concessions in one sector exchanged for
gains in another. See also selective reciprocity and zero1or-zero.
(Also known as "contingent reciprocity.") The provision
of market access to particular trading partners in particular
industries, linked to the granting of comparable access to foreign
markets. Examples include the GATT Civil Aircraft Code, Government
Procurement Code, and Subsidies Code, in each of which reciprocity is accorded only to other signatories
of the Code. In contrast, GATT is based on the premise that
members will grant comparable access across a broad range of
goods and trading partners (sometimes called "broad-based"
or "diffuse reciprocity.") Proponents argue that most
major trade policy problems facing the industrial countries
concern disputes in specific industries with specific trading
partners, where current international trade rules are seen to
be either inapplicable or unenforceable. Critics charge that
selective reciprocity risks undermining incentives for multilateral
trade-liberalizing efforts based on broad-based reciprocity
via MFN treatment.
of safeguards in
such a way as to restrict imports from a particular country
or group of countries, in contrast with non-discriminatory actions
taken according to the most-favored-nation principle. Proponents of selectivity argue
that the disruptive effects of safeguards should be minimized
by applying restrictions only to exporting countries that are
the source of disruption; opponents argue that selective safeguards
effectively penalize "efficient but law-abiding" foreign
bilateral agreement concluded in 1986 between the United States
and Japan to open the Japanese market to US integrated circuits
and semiconductor devices, and to deter the dumping of
Japanese semiconductors in the US market.
produced by a domestic industry employing large numbers of workers,
for which the costs of production are such that any reduction
in import protection would render the industry vulnerable to
deemed sensitive are most likely to be exempted from tariff
reduction formulas in trade negotiations --or subjected to export
restraints --since changes in the competitive position
of such industries could cause major economic and social dislocations
in the importing country.
distinctive mark used in the sale or advising of services to
distinguish them from the services of others. See also trademark.
Supply License. A
validated export license issued by the US government to a US
or foreign firm authorizing the export of spare and replacement
pans to controlled purchasers abroad who originally purchased
US equipment under license. See export controls.
meeting of GATT delegations from industrial and developing countries
(originally seven of each) convened by the Director-General
to clarify positions or resolve procedural issues. Sometimes
as many as 17 delegations may be invited, with care taken to
ensure representation of countries with strongly held views
on an issue. See also Green Room consultations.
of sub-cabinet rank from each of the major industrial countries
responsible for coordinating his or her government's preparatory
work for the annual G-7 Economic Summit.
tariff schedule specifying only one rate of duty for each imported
Common Agricultural Policy.
Snapback. Provisions in a trade agreement that allow
a signatory to temporarily rescind concessions under specified
circumstances, such as an import surge or unanticipated balance-of-payments disequilibria.
An unfair trade practice whereby an exporter achieves a cost
advantage over its rivals in foreign markets through inadequate
labor laws or lack of human rights protection in its home country
.A similar concept, referring to inadequate environmental regulations,
is refer-ed to as environmental dumping. Both have been suggested as topics for future
multilateral negotiations following the Uruguay Round.
Refers to interest-free loans granted to developing countries
by the International Development Association (Sec. III).
In the parlance of the 1970s and 1980s, refers to trade among
developing countries ("the South").
A legal doctrine in the United States, according to which antitrust
liability may be avoided when concerted action by private companies
is taken at the direction of a government agency, such as price
undertakings or voluntary restraint agreements.
and Differential Treatment (S&D). Preferential
treatment given to industrial countries in a trade agreement,
such as providing better access to developed countries' markets,
accelerating implementation of tariff cuts on products exported
by LDCs, or allowing LDCs longer time periods to phase in trade
See export processing lone. Specific Duty. See duty.
Limitations on Trade.
Measures that limit imports or exports of a product during a
specified period to a specific volume or value, or that require
specific authorization for each import or export transaction.
See import quota, quantitative restrictions, exchange controls,
licensing, quantitative restrictions, residual restrictions,
.tariff quota, boycott, and
Barriers to Trade.
An activity undertaken in conjunction with administration or
enforcement of technical barriers to trade, including
testing and certification of imports for conformity with officially-mandated
Formally known as the Agreement on Technical Barriers to Trade.
A GATT Code negotiated during the Tokyo Round to prevent technical requirements -- including
product standards and testing and certification procedures --from
functioning as impediments to trade unless they are necessary
for advancing a "legitimate domestic objective" such
as health, safety, or environmental protection. The Code does
not attempt to formulate standards themselves, nor to set up
specific testing and certification systems. Signatories include
Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile,
Czech Republic, Denmark, Egypt, the European Community, Finland,
France, Gern'1any, Greece, Hong Kong, Hungary, India, Ireland,
Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands,
New Zealand, Norway, Pakistan, Philippines, Portugal, Romania,
Rwanda, Singapore, Slovakia, Spain, Sweden, Switzerland, Tunisia,
the United Kingdom, and the United States.
See GATT Standing Committees.
Standstill. A commitment undertaken at the outset of
a GATT negotiation to refrain .from legislating or implementing
new trade-restricting or distorting actions inconsistent with
GATT rules or principles, or actions that would improve a participant's
Entities established by governments to import, export, or produce
certain products. GATT Article 17 requires members to operate
such entities on the basis of commercial considerations.
Countries that rely on government entities instead of private
corporations to conduct their trade with other countries. See
See European Free Trade Association (Sec. 111).
Strategic Trade Policy. See strategic trade policy argument
Impediments Initiative (SII).
A series of bilateral negotiations begun in 1989 by the United
States and Japan to identify and attempt to reduce "structural"
impediments to trade between the two countries.
Formally known as the Agreement on the Interpretation and Application
of Articles VI, XVI, and XXIII of the GATT. A Tokyo Round
designed to strengthen GATT rules relating to export subsidies
and countervailing duties, and to reduce the distortive effects of
subsidies on world trade (see GA1T Codes). The Code prohibits industrial-country signatories
from using export subsidies for t manufactured and semi-manufactured
goods, and attempts to regulate signatories' use of domestic
subsidies that have adverse effects on the economies of trading
partners. In addition, signatory countries are required to provide
details of their countervailing duty legislation, and of actions
taken pursuant to that legislation, to the GATT Committee on
Subsidies and Countervailing Measures. Signatories include Australia,
Austria, Brazil, Canada, Chile, Colombia, Egypt, the European
Community, Finland, Hong Kong, India, Indonesia, Israel, Japan,
Korea, New Zealand, Norway, Pakistan, Philippines, Poland, Sweden,
Switzerland, Turkey, the United States, and Uruguay.
Subsidy. A payment or economic benefit conferred
by a government on a specific industry or enterprise in order
to advance an economic objective deemed to be in the public
interest. Although escalating use of subsidies may be displacing
tariffs as the principal distortion of international trade --as
some trade experts assert --there is still no precise definition
of the ten "subsidy" in the GATT; see domestic
subsidy and export subsidy.
An exporting country accounting for at least 10 percent of a
country's imports of a given product. In GA n tariff negotiations,
countries with substantial supplier status may take precedence
over all other countries except principal & suppliers
holding initial negotiating rights in
claiming compensation for a change in a bound tariff.
valuation procedure (also known as the "further
processing method") that permits a deduction from the value
of imported merchandise to allow for further processing to be
undertaken in the importing country prior to final sale. Under
US Customs regulations, the super deductive can be applied to
goods sold between 90 and 180 days of importation, but may not
be applied if the processing destroys the identity of the product
as imported. See also deductive value.
additional duty that may be imposed under the European Community's
Common Agricultural Policy on
imports of pork, poultry , or eggs when the purchase price falls
below the established gate price. See
also variable levy.
See export credits.
that importing countries will have fair and equitable access
at reasonable prices to supplies of raw materials and other
essential imports. Pursuit of supply access commitments usually
includes seeking explicit constraints on the use of export
instruments of foreign policy. US efforts to negotiate supply
access commitments, such as during the 1973-79 Tokyo Round,
have generally not met with success.
Surcharge. See Import Surcharge.
Surveillance. The monitoring of trade practices to help
ensure that governments fulfill their obligations under trade
agreements. See Surveillance Body and
Trade Policy Review Mechanism.
A body created at the outset of the Uruguay Round to
monitor participating countries' trade practices and implementation
of their standstill and
Suspension. See duty suspension.
A legal agreement between an exporting firm and the government
of an importing country restraining the volume of exports to
avoid injury to producers of similar goods in the importing
country .Suspension agreements are designed to forestall imposition
of antidumping duties or
countervailing duties; under
US law, countervailing or antidumping proceedings may be suspended
when the exporters involved agree to change offending practices,
offset subsidies, raise prices, or cease shipments. See also
price undertaking .
textile agreements, refers to the shift of allowable imports
from a filled quota to an under-filled quota. Swing provisions
usually permit 5 to 10 percent of specified quota levels to
be shifted to another product heading.
See Common Agricultural Policy.
Tariff. A tax or duty levied upon goods imported
into a country or customs area. (The term also refers to a list
or "schedule" of articles of merchandise, specifying
the rate of duty to be paid to the government of the importing
country.) A "protective tariff' is one which is designed
to discourage foreign import competition; a "revenue tariff'
is primarily intended to raise money for the government of the
importing country .Tariffs increase prices paid by domestic
purchasers while reducing the total amount imported; domestic
producers of the product and the importing country's government
gain, but not by as much as domestic purchasers lose (see deadweight
loss, Sec. II). See also export duty.
A situation in which the tariff on raw materials or semi-manufactured
goods is higher than the tariff on the finished product. The
opposite of tariff escalation.
See binding .
The application of tariff rates on raw materials that are lower
than on processed versions of the same or derivative products.
Exporters of primary commodities argue that tariff escalation
in importing countries impedes their efforts to move "upstream"
to higher-value-added processing and manufacturing activities.
A two-stage tariff, providing a base tariff rate that applies
to goods up to a specified quantity imported during a certain
period --usually a calendar year --and a higher tariff rate
that "kicks in " once the quota threshold is reached.
Because tariff quotas focus their protective effects on import
surges, they tend to provide selective protection against highly
Rate Quota (TRQ).
Alternative term for tariff quota.
A comprehensive list of the goods, which a country imports,
and the import duties applicable to each product. See tariff.
See import surcharge.
Tariffication. Conversion of a quota or other non-tariff barrier (NTB) to a tariff providing an equivalent amount
of protection to domestic producers of the product in question.
In principle, conversion of NTBs to a tariff basis enhances
transparency, minimizes economic distortions, and facilitates
future negotiations aimed at reducing levels of protection.
Barriers to Trade (also referred to as Standards). Government-established specifications of
product characteristics --such as levels of quality or purity,
performance, safety, environmental impact, or physical dimensions
--that must be met in order to receive permission to import
the product. The specifications may cover testing and test methods,
terminology, symbols, packaging, marking, or labeling requirements.
Standards normally reflect policy criteria not purposely established
to impede imports, but some standards systems clearly function
as disguised trade barriers. See Standards. Code and sanitary and phytosanitary measures.
See developing countries. The
term originated during the Cold War, when it was applied to
countries that belonged neither to the Western industrialized
countries (the "First World") nor to the Communist
bloc (the "Second World").
See Common Agricultural Policy.
The monetary value of contracts above which government entities
are covered by the Government Procurement Code.
Foreign assistance that is linked to procurement of goods and
services from the donor country.
A loan made by a government agency that requires a foreign borrower
to spend the proceeds in the lender's country.
An international agreement designed to facilitate international
cargo movements across third countries en route to a final destination.
Originally established in 1949 as a means of facilitating West
European road transportation ("TIR" is a French acronym
for Transports Internationaux Routiers, or international long-haul
trucking), the convention now applies to other countries and
other modes of transport as well.
The statement signed in September 1973 in Tokyo by ministers
representing 105 countries,4 initiating the Tokyo Round of
The seventh GATT Round of
multilateral trade negotiations, held from September 1973 to
April 1979 with 99 countries participating. The Tokyo Round
achieved substantial tariff cuts covering $300 billion of trade,
and reduced the industrial countries' average tariff on manufactured
goods from 7 percent to 4.7 percent. For the first time, the
Round also focused on non-tariff measures, and a series of agreements regulating their use, called GAIT
negotiated. In addition, the Framework Agreement reforming certain aspects of the GATT system was adopted. Through
the various codes and agreements, the Tokyo Round completed
a major overhaul of the global trading system; however, the
Round did not settle controversial issues of international trade
policy so much as it provided ground rules and a mechanism for
resolving such issues. The Round derived its name from the site
of the ministerial meeting at which it was launched, but negotiations
took place in Geneva
The third GAIT Round of
multilateral trade negotiations, held at Torquay, England, from
September 1950 to Apri1195l. The Round dealt with institutional
matters and the accession of new members, but did not make significant
progress in reducing tariffs.
for consolidated negotiating activities in the final phase of
the Uruguay Round concerning market access in goods.
for consolidated negotiating activities in the final phase of
the Uruguay Round concerning market access in services.
for legal drafting sessions in the final phase of the Uruguay
for efforts by the GATT Director General to refine the Draft
Final Act (see Dunkel Draft) in
the final phase of the Uruguay Round.
and Investment Framework Agreement (TIFA). See Framework Agreement (2).
A general term referring to regional arrangements among countries
that have established formal mechanisms for cooperation on trade
issues. The term does not necessarily imply a protectionist
stance with respect to nonmember countries, although it is sometimes
used in this way. No widely accepted definition of "trade
bloc" exists, but it is commonly understood to include
six types of arrangements. In descending order of political-economic
integration, these categories are: economic union, common
market, customs union, free trade area, preferential arrangement,
Negotiations Committee (TNC). The body consisting of all countries
participating in a GAIT Round, with
responsibility for exercising overall supervision over the negotiations
and for establishing appropriate plans and negotiating procedures.
In the Uruguay Round, the
TNC is chaired by the foreign minister of Uruguay when .meeting
at the ministerial level; otherwise, it is chaired by the GA
An export promotion service of the US Department of Commerce.
Policy Review Mechanism (TPRM).
A process of examination in the GATT Council to provide information on and discuss the
trade policy regimes of individual Contracting Parties. Established
during the Uruguay Round on
a provisional basis, the goal of the TPRM process is to induce
compliance with GATT rules rather than to punish wrongdoers.
Thirteen country reviews were conducted under the TPRM during
1992. The TPRM is expected to be placed on a permanent basis
following conclusion of the Uruguay Round and the pace of examinations
increased so that all GATT members' trade regimes can be reviewed
at least every six years, with larger countries' regimes reviewed
at more frequent intervals.
Aspects of Intellectual Property Protection (TRIPs). Designation for a Uruguay Round negotiating
group considering new GATT rules to promote effective protection
of intellectual property rights and
to ensure that such protection is not implemented in ways that
Investment Measures (TRIMs).
Designation for a Uruguay Round "' negotiating group examining
the adequacy of current GATT rules with respect to investment
measures that restrict or distort trade --such as local content
and export performance requirements --and negotiating new rules to limit their
adverse trade effects.
An "unwinding" of the liberalization process, in which
countries impose trade restrictions for punitive purposes and
others retaliate in kind.
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,
refers to pricing practices by foreign firms.. The cornerstone
of the GATT Customs Valuation Code, which
obligates signatory governments to use transaction value, or
the price actually paid or payable for goods when sold for export
(subject to certain adjustments for costs or charges not reflected
in the price), as the principal basis for valuing goods for
customs purposes. In cases where the transaction value cannot
be used --for example, shipments between corporate affiliates
or related entities --the primary alternative method is the
transaction value of identical merchandise shipped from the
same country of origin; a secondary alternative is the transaction
value of similar goods sold from the country of origin. If none
of the foregoing methods can be used, the deductive value
or the computed value may be employed.
referring to the period of time during which provisions of a
trade agreement will be implemented (including, in some cases,
phasing out existing trade restrictions) by signatories Transit
Zone. A port of entry in a coastal country that is established
as a storage and distribution center for a neighboring country
lacking adequate port facilities or access to, the sea. Goods
in transit to and from the neighboring country are exempt from
customs duties, import controls, and many of the entry and exit
formalities of the host country. A transit zone is a more limited
type of facility than a free trade zone.
See pipeline protection.
Transshipment. Shipping goods through one country to
another country in order to conceal the true country of origin.
Transshipment may occur for circumvention purposes
or to take advantage of preferential tariff rates applied to
imports from the intermediary country.
Transparency. Openness, clarity, and predictability of
a country's trade laws and regulations. Transparency --especially
as it connotes freedom from capricious bureaucratic action or
manipulation of rules for protectionist purposes --is one of
the fundamental tenets of the GATT. Tariffication is
regarded by many GATT members as a key to promoting transparency.
The agreement, signed in Rome in 1957 by Belgium, France, Germany,
Italy, Luxembourg, and the Netherlands, by which the European
Economic Community --forerunner to the present European Community
established. The Treaty took effect 1 January 1958.
Price Mechanism (TPM).
Refers to a mechanism for controlling imports of sensitive products
by establishing a minimum "fair price" for the imported
goods. Under , the TPM established by the United States in 1978
for steel imports, the trigger price (or reference price) was
pegged to within 5 percent of the cost of production of the
most efficient international steel supplier --Japan --plus 8
percent nominal profit plus transportation costs. Imported steel
sold below the reference price would automatically "trigger"
an investigation of presumed dumping.
TRIMS. See trade related investment measures.
TRIPS. See trade-related aspects of intellectual
Agricultural and other products of export interest to countries
in tropical regions of Latin America, Africa, Asia, and Oceania.
Examples include coffee, tea, cocoa, bananas, spices, rubber,
and tropical timber. Liberalizing trade in these products is
a high priority for many developing countries, and was the subject
of both a Tokyo Round and
Uruguay Round negotiating