International Trade Glossary

The ability of a country to produce a good more efficiently (using fewer resources) than another country.

A tariff imposed on imports that are priced below fair market value to counteract the effects of dumping.

A comprehensive record of all economic transactions between a country's residents and the rest of the world over a given period.

The component of the balance of payments that records capital transfers and the acquisition or disposal of non-produced, non-financial assets.

The ability of a country to produce a good at a lower opportunity cost than another country, forming the basis for mutually beneficial trade.

The balance of payments component that tracks trade in goods and services, net income from abroad, and net current transfers.

A trade agreement in which members eliminate tariffs among themselves and adopt a common external tariff on imports from non-members.

The practice of exporting a good at a price below its normal value in the home market or below its cost of production.

The rate at which one national currency can be exchanged for another, affecting the relative prices of imports and exports.

A government payment to domestic producers to encourage exports by reducing their production costs and making their goods cheaper in foreign markets.

A treaty between two or more countries to reduce or eliminate tariffs and other trade barriers on goods and services traded between them.

The General Agreement on Tariffs and Trade, a multilateral treaty (1947-1994) that promoted trade liberalization through successive negotiating rounds.

The full sequence of activities required to bring a product from conception to end use, with stages distributed across multiple countries.

A trade model predicting that countries export goods that intensively use their abundant factors and import goods that use their scarce factors.

A new or emerging domestic industry that is not yet competitive with established foreign firms and may justify temporary trade protection.

A WTO principle requiring that any trade concession granted to one member nation must be extended equally to all other members.

Any trade restriction other than a tariff, including quotas, licensing requirements, product standards, and sanitary or phytosanitary regulations.

The value of the next best alternative forgone when a choice is made. In trade, it determines comparative advantage.

Government policies designed to restrict imports and protect domestic industries from foreign competition through tariffs, quotas, and other barriers.

A quantitative limit imposed by a government on the amount of a particular good that may be imported or exported.

A theorem stating that trade liberalization raises the real return to the abundant factor and reduces the real return to the scarce factor within a country.

A tax levied by a government on imported goods, which raises their price in the domestic market and protects local producers.

The ratio of a country's average export price to its average import price, indicating how much a country can import per unit of exports.

The increase in trade that occurs when a trade agreement shifts production from a less efficient domestic producer to a more efficient partner country producer.

The international organization established in 1995 that oversees global trade rules, facilitates trade negotiations, and resolves trade disputes among its 164 member nations.