CH 7 Vocab: Gov. Policy and International Trade

These flashcards cover key vocabulary terms related to government policy and international trade as presented in Chapter 7.

Free Trade

A situation in which a government does not attempt to restrict or influence what its citizens can buy from or sell to another country.

General Agreement on Tariffs and Trade (GATT)

A multilateral agreement aimed at liberalizing international trade by eliminating tariffs, subsidies, and import quotas.

Import Tariff

A tax levied on imports into a nation, aimed at protecting domestic producers by increasing the cost of foreign goods.

Specific Tariff

A fixed charge levied on each unit of a good imported, such as a set dollar amount per barrel of oil.

Ad Valorem Tariff

A tariff levied as a proportion of the value of the imported good.

Export Tariff

A tax placed on the export of a good, often used to ensure sufficient supply within a country.

Subsidy

A direct or indirect payment by the government to benefit private firms, often to lower production costs and stimulate domestic industry.

Import Quota

A direct restriction on the quantity of a good that can be imported into a country.

Voluntary Export Restraint (VER)

A quota on trade imposed by the exporting country, typically at the request of the importing country's government.

Local Content Requirement (LCR)

A regulation requiring a specific fraction of a good to be produced domestically.

Administrative Trade Policies

Bureaucratic rules designed to make it difficult for imports to enter a country.

Dumping

Selling goods in a foreign market at below their cost of production or below their 'fair' market value.

Antidumping Policies

Regulations designed to protect domestic producers from unfair foreign competition through the imposition of special tariffs.

Infant Industry Argument

The rationale for government protection of new industries until they can compete against established foreign competitors.

Strategic Trade Policy

Government intervention aimed at helping domestic firms gain first-mover advantages in industries with significant economies of scale.

Smoot-Hawley Act

A U.S. law enacted in 1930 that imposed high tariffs on foreign goods, leading to reduced international trade.

Bilateral Trade Agreements

Reciprocal trade agreements between two partners aimed at reducing trade barriers.

Multilateral Trade Agreements

Trade agreements between multiple countries to facilitate trade and reduce tariffs on goods.

World Trade Organization (WTO)

An organization that oversees international trade agreements and provides a framework for resolving trade disputes.

Trade War

A situation in which countries engage in retaliatory tariffs against one another, often leading to reduced trade.