Also known as the escape clause, safeguards are a form of trade-remedy law. Unlike the antidumping and countervailing duty laws, which are intended to combat unfair trade practices, safeguards provide a remedy for imports that are fair but injurious. GATT Article XIX allows a country to suspend tariff or other concessions when certain imports injure or threaten to injure domestic producers of competitive goods or services. That article is now supplemented by the Uruguay Round Agreement on Safeguards. Article 5 of the Uruguay Round Agreement on Agriculture provides a safeguard provision as well, but the GATS safeguard provisions in Article X have yet to be fully defined. Section 201 of the Trade Act of 1974 (as amended) is the U.S. domestic counterpart to GATT Article XIX; click here to see the law. See also perishable products and selective safeguard.
The term has similar meanings in two different contexts. The most typical usage is in the imposition of sanctions for political or security reasons, which usually take the form of complete or partial embargoes. For example, Iraq has been subject to United Nations-approved trade sanctions since the invasion of Kuwait in 1990, and Cuba has been subject to unilateral U.S. sanctions since 1960. Sanctions of this sort are generally outside the scope of WTO law, where the security exception in GATT Article XXI provides a significant loophole.
The term is also used to described penalties that may be imposed on a country in disputes arising over its trade-related policies. The more correct term here is either the suspension of concessions or retaliation, but a policy debate in the United States has led in recent years to invest new meaning into the term “sanctions.” A key question in the consideration of the proposed linkages between trade, labor, and environmental policies is whether these newest issues should be incorporated in the body of trade agreements, and (if so) whether any disciplines in these areas should be enforceable through the same means that apply to other, more traditional trade issues. WTO law is much more relevant here than it is in the case of traditional sanctions policy, with some major controversies arising from high-profile cases involving U.S. environmental laws and the general exception in GATT Article XX(b) for measures “necessary to protect human, animal or plant life or health.”
According to Annex A of the Agreement on the Application of Sanitary and Phytosanitary Measures, SPS measures are those that are applied (a) to protect animal or plant life or health within the territory of the Member from risks arising from the entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms; (b) to protect human or animal life or health within the territory of the Member from risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs; (c) to protect human life or health within the territory of the Member from risks arising from diseases carried by animals, plants or products thereof, or from the entry, establishment or spread of pests; or (d) to prevent or limit other damage within the territory of the Member from the entry, establishment or spread of pests.
Article 2 of that agreement provides that “Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health,” but must also “ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence” (sometimes called “sound science”). See also risk assessment.
The term has had various meanings, but is most often employed to mean a tariff that is set at a level calculated to maximize government revenue. This level should not be so high that it discourages imports altogether, or encourages smuggling.
These are “internal quantitative regulations relating to exposed cinematograph films,” according to GATT Article IV, which permits their use under certain circumstances. These preferences in favor of national films and television programs are an important manifestation of the cultural exception.
The third ministerial of the WTO held in Seattle, Washington, in late 1999. It was hoped that a new round of trade negotiations would be launched at this ministerial, but trade ministers from WTO member countries could not reach consensus on issues to be addressed and the talks were suspended.
Critics of regional trade arrangements generally describe them as “second best” alternatives to nondiscriminatory liberalization, insofar as trade diversion imposes costs on countries that are outside the arrangement.
In any international organization, the institutional support structure (i.e., the staff). The WTO’s secretariat is quite small when compared to most other international organizations. It is provided for under Article VI of the Agreement Establishing the WTO, and is headed by a Director General. See also member-driven.
Section 301 of the Trade Act of 1974 (as amended) is the principal U.S. reciprocity statute for addressing foreign unfair practices affecting U.S. exports of goods or services. Section 301 may be used to enforce U.S. rights under international trade agreements and may also be used to respond to unreasonable, unjustifiable, or discriminatory foreign government practices that burden or restrict U.S. commerce. Click here to see the law.
Section 332 of the Hawley-Smoot Tariff Act of 1930 is the general investigations authority under which the U.S. International Trade Commission conducts research into issues on behalf of the executive and legislative branches. While this provision of law is unlike the USITC’s responsibilities in injury tests, insofar as it does not have any immediate consequences for the regulation of trade, the preparation of a section 332 report is sometimes the prelude to the development of a new policy, the negotiation of an agreement, etc.
A U.S. intellectual property law. This section of the Tariff Act of 1930 makes it unlawful to import or sell articles that infringe a valid and enforceable U.S. patent, a registered trademark, a registered copyright, or a registered mask work, for which a domestic industry exists or is in the process of being established. Most section 337 investigations involve allegations of patent or trademark infringement. Click here to see the U.S. law.
As provided under various trade agreements, a security exception (or security clause) generally permits countries to employ certain trade-restricting measures that are taken in pursuit of their essential national security interests. GATT Article XXI, which continues to be a part of WTO law, establishes a general exception for measures that countries impose in order to safeguard their essential security interests. This is a relatively open-ended clause providing inter alia that nothing in GATT shall be construed “to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests.” While a literal reading of the article would suggest that these interests are limited to three sets of circumstances, in actual practice this provision has been employed quite liberally. It does not explicitly require the prior approval of the other WTO members, nor indeed any explicit notification by a country that invokes it in defense of a measure. See also NAFTA Article 2102 and section 232 of the (U.S.) Trade Expansion Act of 1962.
Even Adam Smith agreed that security concerns trump economic efficiency, declaring that “defence … is of much more importance than opulence.”
In contrast to the normal operation of a global safeguard, in which (at leat theoretically) any restrictions on imports are suppposed to be imposed on an MFN basis, a selective safeguard aims specifically at one supplier. One such example is the selective safeguard that was provided for ten years upon China's accession to the WTO; see the U.S. law providing for such a mechanism.
A treaty that does not require the enactment of implementing legislation. Examples of self-executing agreements include those that do not impose extensive obligations on countries (which in the United States will usually mean obligations that the executive already has the constitutional authority to fulfill) or impose obligations that the country already meets (e.g., its existing laws are fully consistent with the obligations in the agreement).
In general, products that a country deems (whether for economic or political reasons) to be too sensitive to be subject to import liberalization. In bilateral negotiations for a free trade agreement, for example, a country will typically identify certain products as being "off the table" due to concerns over import competition. More specifically in the Doha Round, one of the key issues in the agricultural negotiations concerns the extent to which countries will be permitted to isolate certain sensitive products from liberalization in whole or in part. See also special products.
The underlying doctrine of the U.S. Constitution, under which the various powers of government are separated among the legislative, executive, and judicial branches. This separation is also expressed as a series of checks and balances. See also comity.
Under Article 2 of the Agreement on Safeguards, restrictive measures can be imposed on a product “only if … such product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products.” This is defined in Article 4 to be “a significant overall impairment in the position of a domestic industry.” See also injury test.
Services comprise the tertiary sector, and are the most significant part of any advanced economy. GATS Article I.3(b) more narrowly defines “services” for purposes of the agreement to include “any service in any sector except services supplied in the exercise of governmental authority.” This exception is further refined in I.3(c), which specifies that “a service supplied in the exercise of governmental authority” means “any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.” In effect, the provision “carves out” a potentially wide category of services from the scope of GATS rules. It does not precisely define the scope of this category.
Generically, an agreement that is reached in conjunction with some other agreement. The most notable examples of side agreements are three pacts reached by Canada, Mexico, and the United States following their conclusion of the North American Free Trade Agreement. The side agreements on labor rights, the environment, and import surges were negotiated in response to the Clinton administration’s demand for changes in the terms of an agreement negotiated by its predecessor.
Named for issues raised in the Singapore Ministerial Declaration of 1996, this is a shorthand reference for the "new issues" of competition policy, investment, trade facilitation, and transparency in government procurement. These are among the issues for which the Doha Ministerial Declaration postponed decisions until the fifth (Cancún) ministerial, and that provided the proximate cause for the breakdown of the latter conference (although disagreements over agriculture were another important cause for the failure).
Of these four issues, only trade facilitation remains on the Doha Round agenda.
The term might arguably be extended to cover trade and the environment, insofar as this too was raised in the declaration, but the grouping is formally limited to the four topics mentioned above. It clearly does not include trade and labor rights, which were dealt with only obliquely in the declaration.
A country in which the tariff schedule has only one column practices non-discrimination among its trading partners by setting just one level for imports from all sources. To be distinguished from a two-column tariff schedule. The United States had a single-column tariff schedule (except for 1908-1913) until 1934, after which time it drew a distinction between column 1 and column 2 treatment (i.e., MFN and non-MFN).
A single undertaking is a comprehensive negotiation that produces a single “package deal” or agreement on multiple issues. All of the multilateral agreements in the WTO (but not the plurilateral agreements) fall within the scope of the single undertaking. This was a major institutional innovation of the Uruguay Round, and helped to overcome the free-rider problem that the practice of code reciprocity had contributed to in the multilateral system.
See the provisions on a single undertaking in the Doha Ministerial Declaration.
Some statesmen urge that, in place of the established principle of special and differential treatment for all developing countries, emphasis be placed on the unique needs of island states and other small economies. See the provisions on small economies in the Doha Ministerial Declaration.
A subset of the developing country members of the WTO. Countries in this category advocate various means by which SVEs would be subject to less demanding liberalization in the Doha Round; in the agricultural negotiations, for example, they call for the designation of special products and the establishment of a special safeguard mechanism. The SVEs are characterized by such factors as a minimal share of total world trade; physical isolation, geographical dispersal and distance from the main markets; high transport and transit costs; small, fragmented and highly imperfect markets; minimal or no export product diversification; dependency upon very few export markets and lack of adequate market access opportunities; high degree of vulnerability; low competitiveness; considerable difficulties to attract foreign investment; and susceptibility to natural disasters. Among the countries that self-identify as SVEs and sign on to some (though not necessarily all) of the joint submissions are Antigua and Barbuda, Barbados, Belize, Bolivia, Cuba, Dominica, Dominican Republic, El Salvador, Fiji, Grenada, Guatemala, Guyana, Honduras, Jamaica, Mauritius, Mongolia, Nicaragua, Paraguay, Papua New Guinea, Solomon Islands, Sri Lanka, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago.
The common transposition of what is more properly entitled the Hawley-Smoot Tariff Act of 1930.
The illicit importation of goods into a country, intended to evade the payment of tariffs or otherwise circumvent restrictions. See also scientific tariff.
Like the “race to the bottom,” this term is often used by those who contend that the trading system works to the detriment of workers (and sometimes consumers as well). Imports from countries where wages are low and/or legal protections are weak are alleged to be a form of dumping, though not in the traditional sense of this term.
Article 2 of the SPS Agreement requires that any sanitary or phytosanitary measures that members adopt be “applied only to the extent necessary to protect human, animal or plant life or health,” be “based on scientific principles,” and not be “maintained without sufficient scientific evidence.” This is often referred to as the requirement that such measures be based on “sound science.” Not to be confused with acoustics.
Under this reciprocity law, the USTR at least annually identifies those countries that deny adequate and effective protection for intellectual property rights or deny fair and equitable market access for persons that rely on intellectual property protection. Countries that have the most onerous or egregious practices and whose practices have the greatest adverse impact on the relevant U.S. products are designated as “priority foreign countries,” and are subject to section 301 investigations and possible retaliation. Other countries with particular problems of protection or enforcement of intellectual property rights are placed on a “watch list” or “priority watch list” and are monitored closely for progress. Click here to see the text of the law.
Preferential treatment for developing countries through such instruments as non-reciprocal trade concessions and exoneration from certain disciplines and obligations of the trading system. This phrase is not employed anywhere in GATT 1947, before or after the addition of Part IV (Trade and Development) in 1966, but has come into common usage. The precursors to this approach consisted simply of the assertion that infant industries should be protected from competition; the more recent doctrine of import substitution industrialization is based upon the same idea. Other, more active approaches were proposed in the decades following the Second World War. The S&D provisions in trade agreements generally take the form of preferential access for exports to industrialized countries’ markets (see for example the Generalized System of Preferences), exonerations and flexibility of commitments, transitional periods for the implementation of commitments, or technical and financial assistance.
The S&D principle has a checkered history in the GATT/WTO system. Although some provision was made for S&D treatment in GATT Article XVIII, the notion generally languished until the early 1960s, when the GATT and its subsidiary instruments came to incorporate limited concessions to the principle. GATT Part IV came into force in 1966. Its provisions, which comprise GATT articles XXXVI-XXXVIII, encourage developed countries to give high priority to the needs of developing countries. Many of these provisions were simply best-endeavors clauses. See also the Enabling Clause that was negotiated in the Tokyo Round. By the 1980s the extension of special privileges was increasingly seen as an excuse for countries to remain outside the mainstream of trade liberalization, and S&D was perceived to contribute to a growing free-rider problem in the GATT. Developing countries also came to realize that in actual practice this principle generally produced very limited concessions. These views were reflected in the changing approach to S&D treatment in the Uruguay Round, where negotiators avoided special derogations and dispensations from generally applicable rules. They instead approved various provisions that allow longer periods for implementing obligations, more favorable thresholds for undertaking certain commitments, and greater flexibility in the implementation of agreements and procedures. Compare for example the exemptions provided under Article 15 of the Uruguay Round Agreement on Agriculture with the best-endeavors language of GATS Article IV. Emphasis is now placed on the special needs of the least-developed countries, for whom many more exceptions are now provided. The principle of a single undertaking further reinforced this aspect of the Uruguay Round agreements.
See the provisions on S&D treatment in the Doha Ministerial Declaration.
See the CENTRAL guide to Discrimination and Preferences.
A type of sensitive product. In the Doha Round, many developing countries insist that they be allowed to designate certain import-sensitive agricultural goods as special products that, due to their role in food security and livelihood security, must be exempt from liberalization. This approach is favored by, among other countries, the small and vulnerable economies.
A unique feature in the Uruguay Round Agreement on Agriculture that allows members to protect their agricultural producers when certain conditions are met. This protective mechanism, which is easier to invoke than the ordinary safeguard of GATT Article XIX, is provided under Article 5. Several countries in the Doha Round negotiations, including the small and vulnerable economies, insist upon even readier access to protection under this mechanism.
The original title for what later became the Office of the U.S. Trade Representative. The term “STR” is still often, but incorrectly, used to refer to the agency.
Precious metals, especially gold and silver. The aim of historical mercantilism was to attain a favorable balance of trade in order to accumulate specie, which might in turn be used to fund wars or other undertakings.
A tariff that is denominated in specific numbers or quantities, such as so many cents or dollars per kilogram, liter, dozen, hundred, unit, etc. The advantages or disadvantages of this approach depend on what one seeks to achieve. On the one hand, specific tariffs might be preferable insofar as they are easier to administer than ad valorem tariffs, are less susceptible to fraud (undervaluation), and (if we assume inflation) tend to decrease over time. On the other hand, they are less transparent from the perspective of an analyst or a negotiator; it is not immediately apparent whether a tariff of $5 per liter is relatively high or relatively low. See also ad valorem equivalent.
As provided under Article 2 of the Agreement on Subsidies and Countervailing Measures, an actionable subsidy generally must be found to be made available to specific enterprises or industries in order to be subject to countervailing duties. For the meaning of this term in the context of U.S. antidumping and countervailing duty law, see the definition given in section 1677 of Title 19 of the U.S. Code.
A formatting tool used in a draft text to indicate areas where agreement has not been reached. Consider the following hypothetical example: "Tariffs will be reduced in [X] equal annual stages." This indicates that the parties have not yet agreed on the number of years that the phase-down period will last. Brackets will sometimes be blank (thus leaving the reader free to imagine any potential text or number), or indicate a range of potential values (e.g., "Tariffs will be reduced in [5-10] equal annual stages"), or provide draft text that is suggested but yet to be agreed upon by the parties.
Square Meter Equivalent
A unit of measure for trade in apparel. It measures finished goods according to the volume of fabric that they incorporate.
In a trade-remedy case, a petitioner must have standing in order for the petition to be accepted. Under U.S. law, standing generally requires that the petitioner(s) account for at least one-fourth of the domestic production of the like product. See also respondent.
A principle sometimes employed in trade negotiations to ensure that relations between the participants do not worsen during the talks. Countries pledge not to impose new restrictions (standstill) and to work for the reduction or elimination on existing restrictions (rollback).
A vital consumer product, especially foodstuffs. In Latin American countries, for example, staples include rice, beans, corn, etc. In some countries, restrictions or prohibitions are placed on the export of staples.
In textiles and apparel, short fibers that typically range from ½ inch to 18 inches long. Wool, cotton, and flax exist only as staple fibers. Manufactured staple fibers are cut to a specific length from the continuous filament fiber. A group of staple fibers are twisted together to form a yarn, which is then woven or knit into fabrics.
Trade conducted by state-owned or -directed enterprises (see definition). It is to be distinguished from government procurement. GATT Article XVII provides rules for state-trading enterprises, and is supplemented by the Agreement on the Implementation of GATT Article XVII.
Paragraph 1 of the Agreement on the Implementation of Article XVII of GATT 1994 provides the following "working definition" of this term: "Governmental and non-governmental enterprises, including marketing boards, which have been granted exclusive or special rights or privileges, including statutory or constitutional powers, in the exercise of which they influence through their purchases or sales the level or direction of imports or exports."
In a lengthy negotiation, a stock-taking meeting is often held sometime between the launch of the talks and the (hoped-for) initialing of the agreement. A stock-making meeting is generally held at a higher level (often the ministerial level) than most negotiating sessions, and is intended to identify and, if possible, resolve outstanding problems. Stock-taking meetings are generally seen as action-forcing events.
The term has two meanings. In an economic context, “strategic trade policy” refers to the use of government intervention (subsidies, trade barriers, etc.) in order to improve the terms of trade for a country’s industries. In a security context, strategic trade consists of trade in strategically vital goods such as arms and ammunition, fissionable materials, items that are necessary to the operation of the military, etc. See contraband and security exception.
While trade policy is generally conducted at the level of national governments, in some countries smaller units of government can exercise a degree of control over certain issues. This is true for Swiss cantons, German länder, Canadian provinces, and so forth. Even in the United States, where the Constitution generally prohibits state governments from engaging in foreign policy (Article I, Section 10) or imposing restrictions on trade (Article I, Section 10, Clause 2), some aspects of economic policy (e.g., the regulation of financial services) are under the exclusive or the joint authority of state governments.
WTO obligations generally apply to sub-national as well as national governments. GATS Article I(3)(a), for example, specifies that the measures subject to GATS disciplines include those taken by “central, regional or local governments and authorities,” as well as “non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities.” Countries that accede to the WTO are asked to make an explicit commitment regarding the enforcement of WTO disciplines and commitments throughout their customs territories and other territories under their control.
The regime governing subsidies and countervailing measures has grown more complicated since GATT Article XVI was drafted. As now defined in Article 1 of the Agreement on Subsidies and Countervailing Measures, a subsidy exists whenever there is a financial contribution by a government or any public body or there is any form of income or price support, and a benefit is thereby conferred. Subsidies are variously categorized as prohibited (especially export subsidies), actionable (i.e., subject to countervailing duties), and non-actionable. See also the requirements regarding injury and specificity. A special regime applies in the case of agricultural subsidies, which are distinguished by a series of “boxes” that define their legal status. The subsidies rules for services, as provided for in GATS Article XV, remain ill-defined but could be taken up in the GATS 2000 negotiations.
For the classic economic argument against the provision of subsidies see Book IV, Chapter V of Smith's The Wealth of Nations.
A key component in the rules of origin
employed in many trade agreements and national laws. An item is
deemed to be the product of the last country in which it underwent a
substantial transformation. The meaning of this term is further
defined in law and by the precedents of past rulings, but this
approach generally leaves more administrative discretion than do
other forms of rules of origin.
In order to be consistent with the requirements of GATT Article XXIV, a regional trade arrangement must cover “substantially all” of the trade between its members. The meaning of this phrase is unfortunately vague, and there is no clear indication of what might be the minimum necessary level in either quantitative terms (e.g., percentage of tariff lines or total trade) or qualitative terms (e.g., some overall sense of the coherence of the commitments).
The majority of
developing countries that joined the GATT did not
accede under the terms of
Article XXXIII, but
rather succeeded to GATT status. Many
of the countries that gained their independence from colonial powers
in the post-war period — which included most of the Caribbean and
Africa, as well as parts of Asia — had the option of entering GATT
under the special terms of
Article XXVI:5(c). This provision, which now has no equivalent
in the WTO, offered a very easy route by which former colonies of
GATT contracting parties could acquire de
facto GATT status upon their achievement of independence. A
country could then convert this de facto status into full
GATT contracting party status by succession, a process that involved
much less stringent scrutiny of its trade regime and fewer new
commitments than did the ordinary accession process of GATT Article
XXXIII. Some countries succeeded to GATT shortly after gaining
independence, while others waited years before taking this step.
A meeting that is held at the very highest levels of government, being attended by presidents and prime ministers. For example, the Group of Eight holds annual summit meetings.
A provision in U.S. trade-remedy law that can lead to the revocation of orders. As provided under section 751(c) of the Tariff Act of 1930, the ITA and the USITC must conduct reviews no later than five years after an antidumping or countervailing duty order is issued to determine whether the revocation of the order would be likely to lead to continuation or recurrence of dumping or subsidies and of material injury to the U.S. industry.
A now-defunct U.S. reciprocity law under which section 301 cases were self-initiated by the USTR, rather than being petitioned for by firms and industry associations. Click here to see the text of the law.
In antidumping cases involving nonmarket economies, the investigating authority uses the values in a surrogate country to determine values for the exporting country. The surrogate is a market economy country that is at a level of economic development comparable to that of the nonmarket economy country and is a significant producer of the subject merchandise or comparable merchandise nonmarket economy country. Also known as an analogue country.
An agreement reached with the respondent(s) in an antidumping or countervailing duty investigation, under which the investigation is suspended in exchange for certain commitments. These generally consist of voluntary limits on exports or price undertakings by firms, or involve the elimination of subsidies. An agreement with a WTO member to suspend antidumping investigations may involve only price undertakings; agreements with respect to countervailing measure investigations may also involve quantitative restrictions. These agreements are subject to administrative reviews.
The formal term for retaliation. When one WTO member has won a ruling in the Dispute-Settlement Body that another member’s measures nullify or impair its rights, and that other member does not either bring its measures into conformity with the ruling or offer compensation to the complaining member, then the complaining member can ask that it be permitted to retaliate by imposing some sanction (e.g., increased tariffs) on imports from that country.
Suspension of Liquidation
The withholding of a final determination of the duties owed for a product subject to a trade-remedy investigation. For example, liquidation will be suspended for imports of a product when dumping is alleged, pending a determination on whether and to what extent that product is indeed being dumped.
An approach to development that seeks to balance economic and ecological objectives. While some critics charge that trade liberalization encourages a regulatory “race to the bottom” and hence contributes to environmental degradation, a provision of the Doha Ministerial Declaration states that “the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of sustainable development can and must be mutually supportive.”
An approach to formula cuts for tariffs. It is expressed as
where "a" is a maximum coefficient; no tariff that is subject to
negotiation can be higher than this coefficient. The Swiss formula
tends to reduce peak tariffs more sharply than other tariffs. In the
Tokyo Round, the Swiss formula was
generally used for industrial products, using a coefficient of 16.
In this case, the "a" coefficient is a relatively low number to be
used for developed countries, and the "b" coefficient is a higher
number to be used for developing countries.
A terms of parliamentary procedure that has very different meanings in British and American English. In British English — which is in general usage in international organizations — to table a proposal is to submit it formally for consideration. For example, “Japan tabled a proposal regarding trade in construction services.” In American English, to table a proposal is to dispose of it (i.e., “lay it on the table”). For example, “Debate on the proposal ended when the committee approved a motion to table.” The difference can sometimes lead to confusion, especially when U.S. trade negotiators attempt to explain the state of play for certain initiatives in the WTO to legislators or others who are more accustomed to the U.S. meanings of the terms.
A tax levied on imported goods, also known as a duty. Tariffs can be distinguished in various ways, including their legal status (bound or applied), their form (ad valorem, specific, or compound), and their relationship to other tariffs (escalated or inverted).
Ambrose Bierce defined a tariff as a “scale of taxes on imports, designed to protect the domestic producer against the greed of his consumer.”
It is a general practice in the WTO to limit import restrictions (other than those that are justified under the various exceptions clauses) to tariffs. In the Uruguay Round Agreement on Agriculture, for example, non-tariff barriers are subject to tariffication, and Article 4 specifies that “Members shall not maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties.” This amounts to a ban on quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, and voluntary export restraints. Once non-tariff barriers have been converted into tariffs, they can then be reduced progressively over time.
The origin of the term lies in the Spanish promontory of Tarifa, which juts out into the Straits of Gibraltar. This is the chokepoint where the Moors levied duties on all ships passing through the strait.
The term is applied to many areas outside of trade, and has the general meaning of a schedule or list of prices. For example, the list of prices for transporting different quantities of goods can be called the tariff.
Tariff Act of 1930
Another name for the Hawley-Smoot Tariff Act of 1930.
In most countries’ tariff schedules the rates tend to increase as the production process moves from raw materials (which are generally duty-free or subject to low duties) to intermediate goods (somewhat higher duties) to finished goods (high duties). This practice of tariff escalation is a holdover from the mercantilist era, when policymakers sought to manipulate this and other instruments to encourage the maximum degree of processing in their own country. See also tariff inversion.
The opposite of tariff escalation. For example, if the tariff on crude oil is higher than the tariff on gasoline these two rates are inverted. When tariffs are inverted, importers have an incentive to use free trade zones in order to enjoy the lower duties imposed on the processed product. For example, tariffs on some automotive parts in the United States are higher than the 2.5 percent tariff that is imposed on finished automobiles. This creates an incentive to import the high-tariff parts into an FTZ for assembly (together with other imported or domestic parts), with the finished product either being exported (and thus avoiding duties altogether) or entering the customs territory of the United States at the lower tariff rate of 2.5 percent. Also known as a tariff anomaly.
Extraordinarily high tariff rates applied to protected products. There is no universally accepted standard regarding what constitutes a peak rate, with various authorities suggesting 10 percent, 12 percent, or other absolute or relative figures.
A form of quantitative restriction. The application of a higher tariff rate to imported goods after a specified quantity of the item has entered the country at a lower rate. For example, the first 100 tons of sugar imported into a country from all sources might be subject to a relatively low tariff, but all subsequent imports for the rest of the year might face a much higher tariff.
The transformation of a non-tariff barrier into a tariff. See the procedures provided for by the Attachment to Annex 5 of the Uruguay Round Agreement on Agriculture. This device was employed in the Uruguay Round for two reasons. First, economic theory holds that ceteris paribus a tariff will ordinarily be less restrictive than a quantitative restriction. Second, a barrier that has been converted into a tariff can more easily be reduced over time through formula cuts of other tariff negotiations.
Annex 1 of the TBT Agreement defines a technical regulation as a “[d]ocument which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.” Article 2 of that agreement provides for national treatment in TBT measures, and requires that members “ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.”
GATS commitments are technologically neutral. This notion was most fully developed in the telecommunications negotiations, where it was stipulated (unless otherwise noted by a country) that commitments would cover services that “may be provided through any means of technology (i.e., cable, wireless, satellites).” For example, a commitment to permit foreign providers to offer long-distance voice communications services would take no account of the specific technical means through which those calls were carried. The same might be done in audiovisual negotiations, where a commitment to permit foreign providers to offer pay-television services in the local market would not (unless otherwise specified) discriminate between such services according to the means by which they were delivered (cable, telephone, satellite, the Internet, or via technology that is still just a twinkle in some inventor’s eye). Note however that there is no formal definition for this term, which does not appear in any existing WTO agreements and has not yet been the subject of any dispute-settlement proceedings. Its real meaning may therefore be in a process of development. See also convergence.
Terms of Trade
The ratio of export prices to import prices in a given country. See Prebisch thesis.
In its narrow meaning, fabric. The term is often used casually to mean both textiles and apparel. See the Agreement on Textiles and Clothing.
A formula approach to tariff negotiations in which different formulas, or different coefficients in the same formula, are applied to different types of products or countries. For example, one type of tiered formula might reduce the tariffs of industrialized countries more aggressively than the tariffs of developing countries; alternatively (or additionally), the tiering might deal differently with existing tariffs according to their height (e.g., higher-tariff products are subject to more aggressive reductions), the type of product, etc. For an example of a tiered approach, see the Swiss formula with "a" and "b" coefficients.
The practice of establishing different tiers of trading partners that are distinguished according to the level of preferential treatment that they receive. The tiers may include some levels that are superior to MFN treatment (e.g., one’s partners in FTAs, or countries that are granted non-reciprocal preferences) and/or others that are inferior to MFN treatment (e.g., the denial of MFN, the imposition of sanctions, etc.).
An item in a negotiated document, such as a bullet point or an incision. Tirets will usually be plural, and will generally be part of a numbered paragraph or article (e.g., someone may refer to "the second tiret in Paragraph 26" of a given document).
This seventh round of GATT negotiations technically began in 1972, but the substantive negotiations lasted from 1974 to 1979. It was far more ambitious than any previous round. In addition to tariff cuts, a revised antidumping code, and a new customs valuation code, this round produced codes on subsidies and countervailing measures, technical barriers to trade, government procurement, licensing, and other matters. It was the last round in which agreements were negotiated, adopted, and implemented on the basis of code reciprocity.
See positive list.
The third round of GATT negotiations (1950-1951).
The movement across international borders (i.e., imports and exports), on commercial terms, of tradeables. The term is generally not applied to non-commercial transactions, such as those that take the form of foreign assistance, are conducted by military forces or in diplomatic pouches, etc., but does include transnational government procurement.
A U.S. omnibus trade bill that revised many aspects of existing U.S. law (especially the trade-remedy and reciprocity laws), made the first grant of fast-track negotiating authority, authorized the Generalized System of Preferences, and established the Jackson-Vanik conditions for extending MFN treatment to most Communist countries. The title of the law is somewhat misleading, insofar as it was not signed into law until January, 1975. The law is properly cited as Public Law 93-618, or as 88 Stat. 1978.
Click on the links below to access the principal provisions of this
law, as amended by later omnibus trade bills:
A U.S. omnibus trade bill that inter alia renewed the president's trade promotion authority, expanded the trade adjustment assistance program, and renewed and expanded the benefits of the Andean Trade Promotion Act.
A program under which special assistance is made available to firms, workers, and communities that have lost jobs as a result of trade liberalization. In the United States these programs tend to be supported by Democrats but opposed by Republicans. The first TAA program was approved by the Trade Expansion Act of 1962. Click here to see the TAA provisions of the Trade Act of 2002, which greatly expanded the scope of this program.
Click here to see the full text of the law (PDF file).
Trade and Development Agency
The mission of this U.S. Government agency is to advance economic development and U.S. commercial interest in developing and middle-income countries in the following regions of the world: Africa/Middle East, Asia, Central and Eastern Europe, Latin America and the Caribbean, and Eurasia.
A TIFA is a consultative mechanism established between the United States and a partner country. The focus of such an agreement is more procedural than substantive; rather than providing for detailed and enforceable commitments on matters of trade and investment (e.g., tariff concessions), the agreement establishes an institutional structure in which to discuss matters of mutual interest. These dicusssions may then lead to more consequential agreements. For example, the United States treats TIFAs as prerequisites to the possible negotiation of free trade agreements with countries in Southeast Asia or the Middle East; TIFAs preceded the launch of FTA negotiations with Jordan, Morocco, and Thailand. In recent years, the United States has concluded TIFA with such countries as Algeria, Bahrain, Brunei, Ghana, Kuwait, Nigeria, Pakistan, Saudi Arabia, South Africa, Sri Lanka, Tunisia, Turkey, Uruguay, and Yemen.
A U.S. omnibus trade bill that extended a new grant of fast-track authority (used to approve the FTAs with Israel and Canada), reauthorized and amended the Generalized System of Preferences, mandated the annual National Trade Estimate reports, and made substantial amendments to the trade-remedy and reciprocity laws.
Groups of countries that literally act en bloc in their dealings with third countries (on some matters if not on others). This is most apparent in the WTO, where the EU acts on behalf of its member states (although they all retain distinct representation as well in that body). A customs union or common market is in a better position to speak collectively than is a simple FTA. Both the EU and EFTA also negotiate regional FTAs with third countries and regions.
The positive effect that a regional trade arrangement can have on trade among its members. The replacement in international trade of a high-cost source of production by a lower-cost source as the result of a change in tariffs, quotas, or other impediments to trade on a geographical basis (e.g., formation of a custom union). Trade creation is efficient. See also trade diversion.
The redirection of trade for the purpose of exploiting any differences in the level of trade restrictions among the members of a regional trade arrangement. It is one form of transshipment, although that term is used in other contexts as well. Deflection will be attractive to an exporter whenever the tariff rate in one RTA member is lower than it is in another member, and the difference between these two rates is greater than the additional shipping costs and other inconveniences that may be incurred by routing the goods in a roundabout fashion. This problem never arises in a customs union because the common external tariff ensures that there are no differences in tariff rates. In an FTA, however, rules of origin are needed to ensure that the FTA does not become a de facto customs union in which the CET is set for each product at the lowest rate among the member countries.
The negative effect that a regional trade arrangement can have on trade between members of the RTA and third countries. Commodities are subject to trade diversion when an RTA member imports them from another RTA member even though that partner is less efficient than some third-country producer, but does so because it was the cheapest possible source of supply even after payment of duty. Trade diversion is inefficient. Compare with trade creation.
An omnibus trade bill that inter alia made the last renewal of RTAA tariff-cutting authority, provided the predecessor statute for the section 301 statute, enacted the national security clause of U.S. trade law, and established the first trade adjustment assistance program.
Measures that are intended to facilitate trade by simplifying customs procedures or otherwise reducing the administrative burdens imposed on goods at the border. This is one of the Singapore issues.
See the provisions on trade facilitation in the Doha Ministerial Declaration.
The policies and laws (both national and international) that govern a country's trade, as well as the objectives that countries seek when dealing with one another through consultations, negotiations, or dispute-settlement procedures. Whereas trade is principally the province of private firms, trade policy is a governmental responsibility.
The range of issues that fall within the scope of trade policy expanded greatly in the 1970s through the 1990s, both through technological advances that widened the array of tradeables as well as through the political process by which demandeurs brought new issues to the table and persuaded their partners to treat them as the subject of trade negotiations and rules. Prior to the 1970s, trade policy consisted almost entirely of tariffs, non-tariff barriers, and other border measures affecting imports and exports of goods. Since that time, the array of issues that fall within the jurisdiction of trade policy has grown to include services, government procurement, investment, intellectual property rights, and ― arguably ― labor rights and the environment.
The trade regimes of all WTO members are subject to examination under the TPRM, in which formal reports are prepared by the WTO Secretariat and reviewed by the membership. These reviews are among the WTO’s basic functions, and can serve to identify potential problem areas without the institution of consultations or invocation of the dispute-settlement mechanism. Annex 3 of the Marrakesh Agreement provides that the basic goals of the TPRM are to facilitate the smooth functioning of the multilateral trading system by enhancing the transparency of members’ trade policies. Reviews are conducted by the Trade Policy Review Body on the basis of a policy statement by the member under review and a report prepared by the Trade Policy Review Division. The reports examine the trade policies and practices of the member and describe its trade policymaking institutions and the macroeconomic situation.
The TPRM reports are handled on a revolving schedule. Each of the Quad members is supposed to be reviewed every two years. The first of these came in 1995, with reports on Japan and the European Union, followed by the first reports on the United States and Canada in 1996. The next sixteen largest countries are reviewed every four years, and all other countries (except for least-developed countries) are reviewed every six years.
The term preferred by the Bush administration for what had been known for a generation as fast-track authority. The Trade Act of 2002 made a grant of TPA through mid-2005, with a possible two-year extension. Click here to see the law; see also the negotiating objectives in that law by clicking here.
Forms of intellectual property rights that are protected by the Uruguay Round Agreement on Trade-Related Aspects of Intellectual Property Rights. Note that in the United States the final letter is usually written in lower case (TRIPs), while in general WTO usage it is often written in capital letters (TRIPS).
The principal focus of the Uruguay Round TRIMs Agreement is on the abolition of certain defined “performance requirements” that, prior to the recent wave of economic reforms, were frequently employed by developing countries in an attempt to improve their trade balances, generate foreign exchange, encourage higher levels of processing within the country, and foster the transfer of technology. Such requirements might mandate a minimum local content for manufactured goods in terms of local materials, labor, or equity, or else establish minimum export levels or maximum import content for finished goods. Other investment restrictions include outright bans on foreign ownership in certain fields, required local capital participation, and the mandatory transfer of advanced technologies.
Note that in the United States the final letter is usually written in lower case (TRIMs), while in general WTO usage it is often written in capital letters (TRIPS).
See the provisions on the relationship between trade and investment in the Doha Ministerial Declaration.
A heterogeneous body of law that has its origins in the late 19th Century, but did not become a key aspect of trade policy until the 1940s. Also referred to as administered protection, continent protection, or simply as protectionism. The most important of these are the antidumping law (which is aimed at predatory pricing by private foreign firms), the countervailing duty law (which targets the subsidy practices of foreign governments), and safeguards or the escape clause (under which a country can temporarily impose import restraints to defend a beleaguered domestic industry). Less significant trade-remedy laws in the United States are intended to deal with unfair trading practices such as violation of U.S. patents and trademarks (section 337 of the Tariff Act of 1930), the disruption of agricultural price supports (section 22 of the Agricultural Adjustment Act of 1933), perceived threats to national security (section 232 of the Trade Expansion Act of 1962), and trade with Communist countries (section 406 of the Trade Act of 1974). Most of the laws are handled on an administrative track, in which petitions are granted or rejected according to objective criteria laid out in statute. A few, most notably the escape clause, give the president the ultimate decision over whether to impose import restrictions.
Note that the various trade-remedy laws are not mutually exclusive. While GATT Article VI:5 provides that “No product of the territory of any contracting party imported into the territory of any other contracting party shall be subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidization,” in actual practice it is common for petitioners to claim that imports are both dumped and subsidized.
See the provisions on trade-remedy negotiations in the Doha Ministerial Declaration.
A cycle of retaliatory and counter-retaliatory acts between two partners, usually started when one claims that the other has illegally acted to restrict some trade that had earlier been relatively free. See for example the chicken war.
Goods or services that are capable of being traded across borders, and hence may be the subject of trade policy. Technological advances are the principal determinant of what is tradeable and what is not; just as it took improvements in shipping and refrigeration to transform perishable agricultural products from untradeable to tradeable goods in the nineteenth century, many services were untradeable before the information and communications revolutions of the late twentieth century.
A form of intellectual property right. The owner of a registered trademark has the legal right to exclude others from using the trademark (the registered name, sign, symbol, etc.) or similar trademark, in the course of trade. The TRIPs agreement affords trademark protection. See also the provisions of GATT Article IX:9 regarding marks of origin and trade names.
The primary basis for customs value, as provided under the preamble to the Agreement on the Implementation of Article VII of GATT 1994. Article 1 of that agreement further defines it as “the price actually paid or payable for the goods when sold for export to the country of importation.” Click here to see the more detailed definition given in U.S. trade law.
A regional trade negotiations that brings together Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States. Other countries may join as well, including Canada, Japan, and Mexico. Most TPP participants already have FTAs in place with sevral of the other participants. The United States, for example, has FTAs in place with Australia, Chile, Peru, Singapore, as well as candidate countries Canada and Mexico.
The general principle that information should be openly available;
when possible, it should also be presented in an understandable
fashion. In some usages, it may also be likened to the principle
that President Woodrow Wilson proposed in the first of his
Fourteen Points (1918): "Open
covenants of peace, openly arrived at, after which there shall be no
private international understandings of any kind, but diplomacy
shall proceed always frankly and in the public view." In other
words, the commitments that countries enter into should be made
openly and available for public inspection.
Transparency also applies to the WTO itself. The institution makes proposals and other documents available for public review, and engages in outreach with non-governmental organizations and other segments of civil society.
In legitimate trade, the term refers to the unloading of goods at one point for further transportation to another. Transshipment through a coastal country may be necessary, for example, to move goods into a land-locked country. This traffic falls within the terms of GATT Article V, which provides for freedom of transit. See also entrepôt trade.
The term also refers to a transaction, often criminal, that is designed to evade the restrictions of trade restrictions such as country-specific import quotas or sanctions. Products are transshipped from one country to another by traveling through a third country, often with the intent of acquiring fictitious origin. See also rules of origin and trade deflection.
A State Department publication that provides the full texts of all treaties and other international agreements between the United States and its partners. Individual agreements are initially printed in pamphlet form, and larger volumes are later published on an irregular (and often very delayed) basis. The TIAS numbers that are assigned sequentially to each agreement are an important identifier and finding aid.
Treaties in Force (TIF)
An annual State Department publication listing all of the treaties and other international agreements in force between the United States and its partners at the start of the year. TIF supplies only the titles and basic information on each agreement, not the texts themselves. See Treaties and Other International Agreements Series. To access TIF, go to the page on Treaties and Agreements.
A treaty is formally defined in
Article 2 of the
Vienna Convention of the Law of Treaties to be "an international
agreement concluded between States in written form and governed by
international law, whether embodied in a single instrument or in two
or more related instruments and whatever its particular
designation." Treaties may variously be called agreements,
conventions, declarations, protocols, understandings, etc.
The term has a much more restricted meaning under the constitutional law of the United States, where only those international agreements that are submitted to the Senate for its advice and consent under the treaty power are deemed to be treaties.
Treaty of Westphalia
This 1648 peace treaty between the Holy Roman Emperor and the King of France is generally credited with establishing the modern system of state sovereignty. Trade was among the many issues covered in the treaty, with Article LXIX abolishing the many tariffs and other barriers that the belligerents had imposed upon one another, and Article LXX providing for "a full Liberty of Commerce, a secure Passage by Sea and Land."
Article II, Section 2, Clause 2 of the U.S. Constitution provides that the president “shall have Power, by and with the Advice and Consent of the Senate to make Treaties, provided two thirds of the Senators present concur.” Provided that he has secured the Senate’s approval, the president can then ratify the treaty. Although this provision does not so specify, the Senate also created for itself the power to amend treaties by deleting, adding, or rewriting articles, or by making reservations or understandings. The Senate is under no obligation to vote on a treaty; the initiative can be withheld by the chairman of the Senate Foreign Relations Committee, and is subject to filibuster on the floor of the Senate. The shortcomings of the treaty power are one reason why special forms of negotiating authority such as the RTAA (from the 1930s to the 1960s) and the fast track (since the 1970s) are considered a necessary part of U.S. trade policy. See also the reading entitled Summary of the U.S. Legislative Process and Advantages of the Fast-Track Procedures.
A country in which the tariff schedule has more than one column practices discrimination by establishing different rates for different partners. A two-column schedule might distinguish between those countries that are granted or are denied MFN treatment, as in the case of the U.S. schedule, or might distinguish between MFN and more preferential treatment. A tariff schedule can have any number of columns, and hence any number of tiers. To be distinguished from a single-column tariff schedule. Also called a double-column tariff schedule.
In devising its schedule of services commitments under GATS, a country may indicate that certain sectors are “unbound” under one or more mode of delivery. This means that the country makes no commitments (i.e., its measures are not bound) for that sector and mode, and hence is free to employ existing restrictions or impose new ones. The opposite of unbound is “none” (i.e., no limits).
A deliberate misstatement of the value of an imported good. This fraud is generally intended to reduce the payment of tariffs collected on an ad valorem basis.
In general diplomatic practice, another word for a treaty or agreement. Many instruments of WTO law are referred to as understandings (e.g., the Understanding on Rules and Procedures Governing the Settlement of Disputes).
In U.S. diplomatic practice, an understanding is one of the means by which the Senate can modify or interpret the treaties for which it has been asked to give its advice and consent under the Treaty Power. An understanding is less severe than an amendment or a reservation, and is generally interpretive in nature.
The term is generally used to refer to dumping and subsidization, but can also mean the violation of intellectual property rights and other unfair practices. The trade-remedy laws are meant to address unfair practices (although some of these laws also deal with imports that are alleged to be injurious but not unfair). See fair trade. The term is also used to refer to the unfair practice provision of U.S. trade law (section 337).
Actions taken by a single country in trade policy. While the term can encompass market-opening measures that are done on the basis of autonomous liberalization, it is most often employed to describe actions that are deemed to be either protectionist or unduly aggressive (e.g., under the reciprocity laws). Compare with multilateralism.
UNCTAD is both a quadrennial conference and the United Nations secretariat that, among other duties, administers the conference. Prior to the 1980s and early 1990s, when many developing countries were either not contracting parties to the GATT or not active within that organization, UNCTAD was widely seen as the developing countries' answer to GATT. In recent decades, when nearly all developing countries have either been WTO members or actively negotiating for their accession, the relationship between UNCTAD and the WTO has been more complex. UNCTAD is still widely seen as either the more development-friendly or trade-skeptical institution (depending upon one's perspective), but the differences betweem WTO and UNCTAD perspectives on trade and development are generally less sharp today than they were in the past.
The first UNCTAD conference (UNCTAD I) was held in Geneva in 1964. Later conferences were UNCTAD-II, New Delhi, 1968; UNCTAD-III, Santiago, 1972; and UNCTAD-IV, Nairobi, 1976. UNCTAD-V met in Manila in 1979, UNCTAD-VI in Belgrade in 1983, UNCTAD-VII in Geneva in 1987, UNCTAD VIII in Cartagena, Colombia, in 1992, and UNCTAD-IX in Midrand, South Africa, in 1996; UNCTAD-X in Thailand, in 2000; and UNCTAD-XI in São Paulo, in 2004. UNCTAD promoted the notions of special and differential treatment for developing countries (including the Generalized System of Preferences) and a New International Economic Order; more recently, it has sought to advance a positive agenda in trade negotiations. The organization also provides capacity building and other technical assistance to its developing country members. UNCTAD's members include all members of the United Nations plus the Holy See.
UNCTAD has observer status in the WTO.
The arm of the United Nations that provides financial resources to support technical assistance activities designed to stimulate economic development in developing countries, normally through such specialized agencies of the United Nations system as the World Health Organization, the International Labor Organization, and the Food and Agriculture Organization.
A Paris-based arm of the United Nations. Trade issues do not fall within the primary jurisdiction of UNESCO, but the organization has dealt with trade-related issues since negotiation of the Florence Agreement in 1950. See also the UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export, and Transfer of Ownership of Cultural Property. Debates within UNESCO tend to focus more on the problems caused by trade than on the advantages of open markets. The United States withdrew from UNESCO in 1984 but rejoined in 2003.
UNESCO does not have observer status in the WTO.
A business association with semi-official status, insofar as it is the representative of U.S. employers in the International Labor Organization’s tripartite system of representation. The organization has other duties as well, such as the issuance of carnets for temporary importation.
For the meaning of this term in the context of U.S. countervailing duty law, see the definition given in section 1677-1 of Title 19 of the U.S. Code.
The last of the multilateral trade negotiations (rounds) conducted under the auspices of GATT. The Uruguay Round was so named because it was launched at Punta del Este, Uruguay in 1986. The negotiations were concluded in Marrakesh, Morocco in 1994. In addition to leading to the establishment of the WTO, the Uruguay Round produced many significant agreements on matters such as services, intellectual property rights, the settlement of disputes, agriculture, and textiles.
Known as CBP, this is the U.S. successor agency to what had been known for generations as the Customs Service (but revenue functions of the predecessor agency remain within the Department of the Treasury). It was created when in 2002 the Homeland Security Act consolidated many government agencies into the new Department of Homeland Security.
An independent commission that advises the executive and legislative branches on issues in trade policy (see section 332), and is also responsible for conducting injury tests in trade-remedy cases. It bore the title U.S. Tariff Commission during 1917-1974. Click here to see the USITC's organizational chart, or here to see the law governing the USITC's practices.
The term refers both to the Office of the U.S. Trade Representative and to the person who leads this agency. That person holds ambassadorial rank and is a member of the president’s cabinet.
The value or satisfaction that one derives from a good or service. When generalized in the philosophical school of utilitarianism — the philosophy that gave rise to modern, liberal economics — utility can be seen as a materialist basis for reaching ethical judgments and making public policy.
See customs valuation.
The term has a general meaning in economics, and a more specific meaning in trade policy.
Classical economics drew a distinction between a thing’s value in use and its value in exchange. While the difference is most famously described in a key passage of Smith’s Wealth of Nations, Aristotle drew precisely the same distinction more than two millennia earlier. “Of everything which we possess there are two uses,” he wrote in Politics (Book I, Chapter 9), such that (for example) “a shoe is used for wear, and is used for exchange.”
In trade policy, the principal use of the term value arises with respect to the often contentious topic of customs valuation.
The term used to describe differentiated integration, especially within the European Union. This concept acknowledges that there are irreconcilable differences within the integration structure, and therefore allows for a permanent separation between a group of member states and a number of less developed integration units.
The formal process by which a policy proposal, statement, etc. is approved by the various agencies or individuals that have an interest in the matter. For example, a country will generally not make a proposal in the WTO, or respond formally to the proposals made by other countries, until the initiative has been vetted by the various participants in its inter-agency process.
A multilateral treaty that defines the rights and obligations of states. The Vienna Convention entered into force in 1980. Although the United States signed the Vienna Convention in 1970, it has not ratified the treaty and thus is not formally bound by its terms. Click here to see the text of the treaty.
A form of quantitative restriction in which the exporting country limits its exports of a specific commodity. Not to be confused with a cartel, the purpose of which is to restrict supplies of a scarce commodity in order to maximize prices and exporter welfare. VERs are generally imposed out of the exporting countries’ concern that the importing country would otherwise restrict imports, perhaps in a stricter fashion and through a means (such as tariffs) that do not allow the exporting country to appropriate some of the resulting quota rents. VERs were often employed in the 1970s and 1980s, especially in the footwear and automotive areas, despite their incompatibility with the spirit (if not necessarily the letter) of GATT Article XI. These “grey area measures” are now explicitly forbidden under Article 11 of the Agreement on Safeguards. See also voluntary restraint agreement.
A VRA is essentially the same as a voluntary export restraint, except that in this instance the terms of the restraint are explicitly negotiated and administered by both the exporting and the importing country.
GATT Article XXV provides for waivers that permit members to take action that would otherwise be in violation of their obligations. See also the Understanding In Respect of Waivers of Obligations Under The General Agreement on Tariffs And Trade 1994. The most frequent use of the waiver is to approve non-reciprocal preferences for developing countries; without such a waiver, these programs would be in violation of the MFN obligation.
The consensus that emerged in the 1980s among Latin American countries regarding the advisability of pro-market policies, include trade liberalization.
The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies was adopted by the United States and 32 other countries in 1996 as the successor to the Coordinating Committee for Multilateral Export Controls (COCOM). It established a multilateral export control arrangement to enhance regional and international security by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilizing accumulations of such items. Participating states have committed to exchange information on exports of dual-use goods and technologies to nonparticipating states for the purposes of enhancing transparency and assisting in developing common understandings of the risks associated with the transfer of these items.
The difference between an applied tariff rate and a bound tariff rate. If the bound rate is significantly higher than the applied rate, it is possible for a country to make a commitment to reduce its binding that appears to have a large effect, but in fact leads to little or no reduction in the applied rate.
The counterpart to the Senate Finance Committee, this committee in the U.S. House of Representatives has jurisdiction over most trade-related issues. This jurisdiction stems from the fact that trade policy originally consisted of little more than the adjustment of tariffs, and tariffs are revenue measures. It is the oldest committee in the House, having been established as a select committee in 1789 and a standing committee in 1802.
A hypothetical product often used for purposes of illustrating concepts. While it is commonly used to illustrate trade concepts (see the use in Friends Group), the term is also employed in many other areas of economics and policy analysis. For example, the Committee on Standards of Official Conduct of the U.S. House of Representatives used the following example to explain an ethical rule: “The Widget Manufacturers’ Association establishes a non-profit educational foundation. The foundation sponsors a monthly Widget Wonks’ Forum, at which experts from the widget field explain aspects of their industry and the ramifications of various legislative proposals for that industry. Approximately a dozen congressional staff persons are invited to each of these presentations, which occur over lunch. If staff persons wish to attend, they must bring or buy their own lunch, or not eat.”
GATT/WTO law provides both for the withdrawal of specific concessions (see articles XXVII and XXVIII) and for the withdrawal of countries (see GATT Article XXXI and WTO Article XV). A few countries did withdraw from GATT: China in 1949, Syria and Lebanon when their customs union dissolved in 1951, and Liberia in 1953. See also accession and expulsion.
A body established to deal with a specific issue, and will dissolve upon the completion of that task. For example, all WTO accessions are handled by working parties.
Founded in 1944, the World Bank Group consists of five closely associated institutions: the International Bank for Reconstruction and Development (IBRD); International Development Association (IDA); International Finance Corporation (IFC); Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID).
The World Bank has observer status in the WTO.
Previously known as the Customs Cooperation Council, the goal of this intergovernmental body is to enhance the effectiveness and efficiency of customs administration. The Brussels-based organization produced and administers inter alia the International Convention on the Simplification and Harmonization of Customs Procedures. More commonly known as the Kyoto Convention, Annex D.1 of this instrument establishes standards and recommended practices for rules of origin.
WIPO's website is at http://www.wipo.int/portal/index.html.en.
World Meteorology Organization (WMO)
Created in 1995, the WTO is the key institution of the multilateral trading system. The fundamental principles of this Geneva-based organization are non-discrimination through most-favored-nation and national treatment, freer trade, and transparency. It is a rules-based and member-driven organization. The WTO built significantly upon the GATT foundation. The principal differences between GATT and the WTO are that the new body is a bona fide organization in which countries are members and not merely contracting parties; the issues covered by WTO agreements are much wider than those of the GATT, including such topics as services and intellectual property rights; the WTO dispute-settlement rules are much stricter; and membership is now nearly universal, with nearly all countries either having acceded or now seeking accession. GATT 1947 remains the chief trade agreement within the WTO system.
The WTO's website is at http://www.wto.org/.
In textiles and apparel, fabrics that are composed of two sets of yarns. One set of yarns (the warp) runs along the length of the fabric, while the other (the fill or weft) is perpendicular to the warp. Woven fabrics are held together by weaving the warp and the fill yarns over and under each other.
When used in the singular, the term refers to the Agreement Establishing the World Trade Organization. When used in the plural, it refers collectively to all of the agreements administered by the WTO. See also multilateral trade agreements and plurilateral trade agreements.
This rather elastic term has very different meanings among different groups of users. Within the OECD, it is often expressed in a very positive light: WTO-Plus commitments are those that go beyond the minimum required under the WTO rules. Within UNCTAD, proposals for WTO-Plus agreements are often seen either as threats to the principle of special and differential treatment or as means by which industrialized countries might reach discriminatory agreements that exclude developing countries.
The fear or hatred of foreigners. Although not technically a trade-related concept, this word does serve the useful purpose of ensuring that there is at least one term in the dictionary that begins with the letter "X."
In textiles and apparel, a continuous strand of textile fibers created when a cluster of individual fibers are twisted together. These long yarns are used to create fabrics, either by knitting or weaving.
In the rules of origin governing trade in textiles and apparel, a yarn-forward rule requires that in order for a product to benefit from preferential treatment all of the processing from the yarn stage forward be performed in the country of origin. This approach is less strict than a fiber-forward rule, but stricter than a fabric-forward rule.
Year in Trade
This approach to tariff negotiations can be seen as a variation on the formula cut. The principal differences between this method and the older approach are that (1) it deals separately with individual sectors, rather than most or all products, and (2) the end result of the formula is the complete elimination of tariffs. The older formula approach might indeed result in duty-free treatment for a product, especially if the base rate were low in the first place, but a formula might produce a cut and not complete elimination. Although they were not all successful, several product sectors that were subject to zero-for-zero offers during the Uruguay Round. These included agricultural equipment, construction equipment, distilled spirits, electronics, furniture, medical equipment, non-ferrous metals, oilseeds and oilseed products, paper and paper products, pharmaceuticals, scientific equipment, steel, toys, and wood products. Post-Uruguay Round agreements have covered information technology and distilled spirits.
A relationship in which there are a fixed number of “winnable goods” is said to be a zero-sum game. The gains of any one player in such a game come at the expense of other players. This is the case, for example, in poker games (where players compete for chips), famines (food), elections (votes), and budgets (money). The major intuitive leap made by Adam Smith and his successors was that the mercantilist conception of trade erroneously focused on the zero-sum nature of the precious metals (specie) that they sought to hoard rather than the positive-sum possibilities opened up when countries cooperatively exploit their differing comparative advantages through trade.