aid In trade relations, economic assistance by means of grants of credit for purchases generally from an industrialized nation to Third World countries. Aid may come from voluntary organizations or governmental agencies. antidumping regulation Rules to prevent the export f good and services to another nation at prices below the cost level. asset In the context of economics, any property that can be used to discharge a debt, including capital. automation The use in industry of machines that perform sequences of operations according to instructions supplied by other machines, with the minimum of human intervention. bankability Ease of access of a company or other organization to bank credit. bilateral treaty A treaty enacted between two countries. binding A commitment, usually negotiated, by a government not to impose a tariff rate higher than the rate agreed upon in a trade agreement. border tax adjustments The remission of taxes on exported goods, including sales and value-added taxes, designed to ensure that national taxes do no impede exports to goods and services. bound rates Most-favored-nation tariff rates resulting from GATT negotiations and incorporated in a country's schedule of concessions. A bound rate higher than the existing rate is called a "ceiling rate." buffer stock A number of commodities held under an international commodity agreement and increased or decreased with the goal of keeping the price of the commodity stable.  cartel A market arrangement between producers to manipulate prices, generally by controlling output. cash crop A crop grown for sale, often for export, and not for direct consumption. clearinghouse Institution for settling accounts between banks or trading nations. code of conduct A trade agreement that specifies acceptable standards for implementing national trade legislation and cooperating with governments on trade matters. collateral A pledge of assets accepted by a lender as guarantee for repayment of a loan. counterpart funds Money made available by a government to complement aid received from outside, such as the Marshall Fund. countertrade Any exchange of goods or services in which there is a nonmonetary element, such as barter. credit Funds provided, generally at a rate of interest, for goods or services or supplies before delivery of a commodity. currency Any form of money accepted as a means of exchange within a nation that can be converted to another currency used between nations. customs union A group of nations that have eliminated trade barriers among themselves and have imposed a common tariff on all goods imported from other countries. database Organized collection of information on specific topics, generally available in machine readable form. debt Money owed by an individual, organization, or government to another. deficit Sum by which outgoing funds exceed receipts. deflation Reduction of a price level, either by government in a national economy or by an industry, to a base year or to other set prices. demand In economics, the ability to buy a certain quantity of goods or services at an established price. depreciation The amount by which the value of goods has fallen over a period of time. division of labor Distribution of economic activities among persons or countries according to the theory of comparative economic advantage. dummy company Name applied to a company that does no business but invoices payments for goods or services moving between subsidiaries of a transnational company so as to conceal the profits being made.  dumping Exporting goods at prices below local costs of producing in order to gain international markets. economic boom A rapid increase in economic activity in one or more industries or nations. enterprise zone An area designated to increase the trade of a nation by providing special conditions. equal exchange The concept that trade should involve exchanges of equal value more fairly than the marketplace provides. equilibrium A situation in which supply and demand are in balance, achieved, for example, by varying the levy on imports and the refunds on exports. escalating tariffs The increase in the rate of taxation on imports based on the extra degree of processing applied to a primary product in the exporting country. escape clause Any one of a number of provisions of U.S. trade law designed to provide relief to domestic producers adversely affected by import competition. exchange rate The rate at which one country's currency is exchanged for another's, determined by the relative prices of goods and services trade between them. exclusivity The removal of rival suppliers of competing products. export promotion zone An area designated to display export commodities to potential buyers. export restitution A term applied to a refund or subsidy granted to European farmers in order to bring their prices down to world levels for agricultural exports. export subsidies A form of governmental assistance that benefits companies that export goods or services. fair trade mark An emblem made by accrediting organizations for goods or a service to indicate that it has complied with certain advertised criteria of fair treatment of the producers. fair value The established value compared to the U.S. purchase price of imported goods. farmgate price The price at which agricultural produce is sold by a farmer. First World Name given to the developed industrialized countries of the world. free trade International trade that is unrestricted by tariffs, subsidies, or other trade barriers. free trade zone A zone, usually in a port or airport, where imports may be stored free of tariffs. General Agreement on Tariffs and Trade (GATT) Initiated in 1944 a part of the Bretton Woods agreement in Washington, D.C., GATT established procedures to develop free international trade by removing barriers, tariffs, and other restrictive measures. gross national product (GNP) The total value of goods and services produced in a year before allowing for depreciation (capital consumption) of assets. gross trade Total trade applied to products, incomes expenditures, and other items before allowing for depreciation, taxes, and other deductions. growth rate Measure of economic activity, generally calculated by gross domestic product (GDP) per capita. A doubling of the GDP takes place in ten years at an interest rate of 7 percent each year. hard currency A convertible and widely accepted currency, such as U.S. dollars. hedging The buying or selling of futures with the aim of compensating for possible trading losses owing to price changes. imperialism Protection by advanced industrialized countries of their foreign trade by establishing colonial rule or economic dependency in other countries. incentive Extra wage, subsidy, tax concession, or other payment to encourage investment in international markets. index Number indicating relative price of volume changes at a particular date compared with a base rate. infant industry An industry established in a developing country and normally protected from outside competition in its early development. insider (trading) The use of knowledge gained as a privilege from a particular company or organization for personal gain in a market. International Cooperative Alliance (ICA) A worldwide organization of cooperatives. International Monetary Fund (IMF) An institution established by the United Nations at Bretton Woods in 1944 to provide finances for governments having short-term deficits on their foreign balance of payments Interpress A nongovernmental organization for encouraging international networking. leads and lags The transfer of funds either before or after delivery of goods or services, depending upon the advantage or disadvantage to be gained from the interest-rate levels and exchange rates. less developed country One of the 43 countries defied by the United Nations as having a low per capita income and little industrialization. letter of credit A promise of credit that may be used as collateral for borrowing. levy A tax on persons, capital, or goods entering a country. licensing Defined by the Tokyo Round of GATT on import licensing. It is the practice of requiring an application to the relevant administrative body for approval as a prior condition to import. market A specific place where commodities are assembled for sale. marketing board An organization to promote trade in certain commodities mainly for export. Marshall Plan Financial program to aid countries of Western Europe after World War II. merchanting Buying and selling of goods and services produced by others to make a profit. middlemen Intermediaries between direct producers of goods and services and the market. monopoly The dominance of a single seller of any goods or services in a market. monopsony A single or dominant buyer in the market. most-favored-nation treatment A country's commitment to another country that it will extend the lowest tariff rates or the most favorable nontariff policies it applies to any Third World country. All GATT countries agree to this policy. Multi-Fibre Agreement (MFA) An agreement whereby industrialized countries place quotas on import of textiles and clothing for less developed countries, one of the exceptions permissible under GATT. multilateral agreement Aid given through international agencies such as the World Bank. national income The total annual income of a nation. net The amount left after deduction of taxes, depreciation, or other changes. networks Horizontal linkages between organization for the purpose of exchanging information or coordinating action in trade. nondiscrimination Procedures in which no preference is given to any trading partner. nontariff barrier Barriers to trade such as import quotas or variable levies other than tariff barriers, and the restriction or prevention of the international exchange of goods or services. option In a market, the right to buy or sell by a certain date, not the actual purchase or sale of goods. Organization of Petroleum Exporting Countries (OPEC) An organization to control oil production and raise oil prices. parastatal Organization established by a government, but not a government department such as a nationalized industry. per capita From the Latin, meaning according to the number of heads. preference Advantages given to a nation in trade relations. premium Extra charge in trade relations due to special values or quality of a product. primary commodities Defined by GATT as "any product of farm, forest, or fishing or any mineral in its natural form which has undergone such processing as is customarily require to prepare it for marketing in substantial value in international trade." principal supplier The country that is the most important source of a particular product imported by another country. Under GATT, a country offering to reduce import duties or other barriers on a particular item and expecting the other country to respond in like manner. product differentiation A procedure to attract buyers to a particular product by advertising its advantages and using distinctive labeling. productivity Usually labor productivity, the measure of output per person, generally in relation to increased productivity due to the application of an advanced technology. profit margin An addition to the cost of producing or marketing goods or a service in order to increase the total income. Protocol of Provisional Accession (PPA) An agreement that enables the original GATT countries to accept general obligations and benefits despite the fact that some of their existing domestic legislation discriminated against imports in a manner inconsistent with GATT. quality mark (QM) A distinguishing mark, such as a trademark, of a high-quality product to designate a trading organization. quantum A term used in the United States to denote the volume of goods produced or moving in foreign trade. quarantine, sanitary, and health laws and regulations Government measure to protect human, animal, and plant health from specific disease. quota A fixed amount or share measured in monetary value or quantity of good permitted to be imported or exported as a result of agreements reached between national governments real terms Value of goods or services, e.g., imports or exports, expressed at the prices current in an established base year to enable year-by-year comparisons to be made. reciprocity principle In tariff reductions, one country's reductions are matched by reciprocal concessions in another country. re-exports Goods brought into custom areas in one country, not for importing into that country, but for re-export after being sold on the commodity market. regulations Rules applied by a government to control the workings of the market. rescheduling Delaying payment of part or all of a debt, either interest or principal, due in any one year, by adding to the principal sum to be repaid. reserves The monies, especially hard currency, held by a company, bank, or government, to finance foreign trade exchanges. restrictive action or agreement In foreign trade, an action or agreement that limits commodities, markets, or trading partners. retour A trade transaction financed by the exporter with credit from another transaction. reverse transfer Flow of funds back from borrowers to lenders or from poor to rich countries as a result of debt repayment for goods or services received. risk capital Capital provided by the owner of a business, who has the last claim to repayment in the event of failure. rolling over (of debt) Agreement by creditors to defer repayment of the principal and even the interest on loans made to businesses, organizations, or governments in financial difficulty. safeguards Temporary import trade restrictions to protect domestic industry. scale Refers to the production capacity of a business. slump Decline in economic activity of one or more industry or nation. special and differential treatment Special and differential treatment of imports from developing countries, permitted after 1964 GATT. special deposit reserve (SDR) A form of money issued by the World Bank and backed by member states to provide a common unit account that can provide gold or hard currency revenue to finance international trade. speculation Buying commodities, including money, not for use but for resale in the expectation that prices will rise, or selling in the expectation that price will fall. stabilization schemes Designed to correct volatile movements in the prices of commodities. standards Refers to a wide variety of technical barriers to trade, such as product standards such as food, plant, and animal health regulations, defined by the Tokyo Round Agreements as technical barriers to trade. staple The basic product of a country, either for domestic use or foreign trade. state trading The practice of conducting trade exclusively through a government agency. Nonmarket economies follow this practice exclusively. stocks Goods or money accumulated and held for further use. subsidies code The subsidies code, elaborated in the Tokyo Round Agreements, prohibits the use of export subsides on nonprimary products. The use of export subsidies on primary products is not to displace other exports from the market or undercut their prices. takeover Action by one company to obtain a majority of shares in another. tariff Tax imposed by a nation, generally ad valorem, on goods imported from other nations. tariff escalation A situation in which tariffs are high on manufactured goods, moderate on semimanufactured goods, and very low on raw materials. This situation normally discourages developing of manufacturing industries in Third World countries. tariff quotas Application of a higher tariff rate to imported goods after a certain quantity of items has entered the country at the usual tariff rate during a specified period. terms of trade Refers to the establishment of the volume and prices of the exports and imports of a nation. transfer pricing Prices determined by a company for goods and services moved from one place to another, sometimes between nations. trend Having a certain general direction of a period of time. unfair trade practices Unusual government support to firms, such as export subsidies, or certain anticompetitive practices by governments or companies, such as dumping, boycotts, or discriminary shipping arrangements, that benefit a company or nation. unilateral An action taken by a country independently of other countries. unit An individual item or quantity chosen as the minimum in production or trade for calculating price or quantity.  valuation The process of appraising the value of imported goods in which duties are assessed according to the tariff schedule of the country. The Tokyo Round Agreements established a custom valuation code based on transaction value.  value added Addition made to the value of a product due to processing, refining, packaging, and so on. value-added tax Tax placed on the value added to a commodity as a result of reefing or manufacturing. variable levy An import charge subject to change as world market prices change. The alterations are designed to assure that import price after payment of the charge will equal a predetermined domestic price. voluntary restraint agreements Informal bilateral or multilateral agreements in which exporting countries voluntarily limit exports of certain products to a particular country in order to avoid the imposition of import restrictions. wholesale Sale and purchase of goods in large quantities to be retailed by others. working party A committee made up of GATT countries that deals with special issues, normally other than dispute settlements. The GATT committee reports to the GATT Council and makes recommendations on the course of action. yield The return, usually expressed as money or as the return on investments in economic activity. zone An area specifically assigned to a particular purpose, such as trade or industry.