Chapter 9 vocabulary
common market
A ____ takes the integration one step further: it is a customs union that also removes restrictions on the free movement of money, labor, and factors of production. The European Union is a ____ and monetary union that functions at a high level of economic, legal, and political integration.
schedule of concessions
A country's tariff bindings are recorded in that country's _____ at the WTO. The schedules are legal commitments considered part of the GATT agreement itself.
tariff schedules
Bound rates are published in each country's _____, which are the detailed product-by-product listings of all tariffs for that country. ____ for the US are found in the Harmonized Tariff Schedule of the United States, available online from the United States International Trade Commission
modify or withdraw a concession
If a country later wishes to _____ and raise its bound rate on an item, it must negotiate directly with the countries most affected (those countries which are the major suppliers of that item) and by agreement reduce or offset tariffs on other items equal to an equivalent amount in trade
Dispute Settlement Body (WTO-DSB)
If no resolution from the trade consultation, the affected nation may request binding dispute resolution before the _____
withdrawal or suspension of a concession
If no settlement is reached or if the trade violation is not removed, the panel may recommend that the General Council authorize the ____ by the complaining party. This is the equivalent of a trade sanction.
International Monetary Fund World Bank United Nations International Trade Organization
In 1944, the Allied nations met at the Bretton Woods Conference in New Hampshire to create several important international economic and political institutions, including the ______, and the International Bank for Reconstruction and Development, also called the ______. The _____ was created at about the same time. In addition to these economic and political institutions, world leaders had a vision of another international organization dedicated to preventing the kinds of protectionism and rising tariffs seen in the 1930s. So, a third specialized organization, the ______, was planned to promote and stabilize world trade by reducing tariffs.
normal trade relations or NTR
In the US, the term "most favored nation" is now referred to as ______ because Congress considers it to more accurately describe the "normal" tariff treatment for most countries. The term "most favored nation" is still in use in international documents and in other countries.
tariffication
Nations must first "convert" their nontariff barriers to tariffs (through a process called _____) and then engage in negotiations to reduce the tariff rates
tariff-rate quota
Not really a quota at all, but a tariff rate that increases according to the quantity of goods imported.
multilateral trade negotiations
One of the cornerstones of the GATT system was a commitment by member countries to conduct _______, and on a regular basis, under the auspices of the GATT organization. Negotiating sessions are called "rounds."
trade preferences
The WTO agreements permit the granting of _____, or preferential tariff treatment, to developing countries to help further their social and economic developments. Most developed nations grant ____ to developing countries, not only in their own hemispheres but also around the world.
tariff bindings
The agreed tariff rates are known as _____ because the rates become bound, or capped, at that rate.
negotiating rounds negotiating rounds trade liberalization
The following is an overview of the most important ____ from 1947 to the present. Although the focus of each ____ was different, they all had the same goal of ______ - the process of reducing tariffs and removing artificial barriers and restrictions on trade 1. Geneva, Switzerland, 1947 2. Annecy, France, 1949 3. Torquay, England, 1951 4. Geneva, Switzerland, 1956 5. Geneva, (Dillon Round) 1960-1961 6. Geneva, (Kennedy Round) 1964-1967 7. Tokyo Round, 1973-1979 8. Uruguay Round, 1986-1994 9. Doha Development Round (a WTO round), 2001-present (as of 2016)
flat-rate tariffs
What kind of tariffs are fungible (crude oil, wheat, or standard size graded lumber) usually subject to?
ad valorem tariffs
What kind of tariffs are nonfungible goods (chairs, machinery, or specialize steel) usually subject to?
balance-of-payments or BOP
When a nation's outflow of foreign exchange exceeds receipts, a ____ deficit can arise. This can be due to normal inflows and outflows of foreign currencies and is usually never a problem.
most-favored-nation trading status
When one country grants _____ to another country, it is agreeing to accord items imported from that country the most favorable treatment or the lowest tariff rates that it gives to like products imported from other ____ trading nations. In US, this status is usually granted by an act of Congress.
Indirect nontariff barriers
While _____ may seem perfectly neutral and nondiscriminatory on their face, their effect is to discriminate against foreign-made products or firms. They may take the form of laws, regulations, or rules of administrative agencies that make it difficult or costly to import foreign-made goods or services
Direct nontariff barriers
____ specifically limit imports of goods or services or deny access of foreign firms to local markets. Examples are embargoes, quotas, complex and discriminatory import licensing schemes, and other prohibitions on trade. Most _____ are non permitted unless they fit into certain exceptions
global tariffs
_____ are imposed on a particular classification of goods without regard to the country of origin of the goods
zero quota
a complete ban on the import of a product in that it permits ZERO quantities to be imported
customs union
a free trade area with a common external tariff
competitive need limitation
a quantitative limit on imports from each beneficiary country called _____. However, these can be waived and are not applicable to "least developed" countries.
quota
a quantitative restriction on imports
ad valorem
a tariff calculated as a percentage of value
specific or flat tariffs
a tariff computed on the basis of phsyical units
tariff
a tax levied on goods by the country of importation
trade barrier
any impediment to trade in goods or services
Nontariff barriers
any impediment to trade other than tariffs
import trade barrier
any impediment, direct or indirect, to the entrance or sale of imported goods or services existing in the country of importation.
free trade area
consists of two or more countries that are party to a free trade agreement that reduces or eliminates tariffs on goods, removes trade barriers, and usually addresses other common concerns affecting trade between them
beneficiary developing countries
developing countries that are eligible for preferential treatment under the Generalized System of Preferences (GSP) are known as ______
tariff concession
each country's promise to reduce tariffs on imports of a given item in return for tariff concessions from other countries
Global quotas
imposed by an importing nation on a particular product regardless of its country of origin
bound rate
maximum tariff rate a country may charge on an item, although tariff rates may be reduced below the bound rate
auctioned quota
one in which a country sells the quota rights through bidding
allocated quota
one in which the total limit is "allocated" among several specific countries
Nondiscrimination
one of the basic rights of membership in the WTO--every WTO member country must treat the goods and services from all other WTO member countries equally. No playing "favorites"
global digital trade
refers to international transactions in which the goods, services, or information are DELIVERED online. (Internet search or social media)
global e-commerce
refers to online transactions for the cross-border sale of goods or services
transparency
refers to the degree to which a foreign government's import laws or regulations are made readily available to the public, including foreign firms.
Unconditional MFN trade
requires that if a nation negotiates a reduced tariff rate on a certain product imported from one WTO member, that rate of duty automatically becomes applicable to like products imported from any and all other WTO members
trade consultations
the first step in dealing with a potential nullification/impairment of a WTO member nation (pre-WTO dispute settlement)
trade liberalization
the process of reducing tariffs and removing artificial barriers and restrictions on trade
absolute quotas
those that strictly prohibit imports of an item above a predetermined limit, based either on the value or quantity of specific goods (weight, number of pieces, etc.), or as a percentage of the domestic market for that item
nullification or impairment
when one WTO member nation acts contrary to its commitments in a GATT/WTO agreement, such as raising a tariff above the bound rate or imposing an unjustified quota on imports. It may result in ______