Political Economy of International Trade – Vocabulary Flashcards

A comprehensive set of vocabulary flashcards summarizing key terms from the lecture on the Political Economy of International Trade.

Free Trade

A situation in which governments do not restrict what their citizens can buy from or sell to other countries.

Political Arguments for Trade Intervention

Government actions aimed at protecting jobs, national security industries, retaliating against unfair competition, safeguarding consumers, furthering foreign policy, and promoting human rights.

Economic Arguments for Trade Intervention

Government measures intended to increase national wealth, notably through the Infant Industry Argument and Strategic Trade Policy.

Infant Industry Argument

The claim that emerging industries should receive temporary protection until they become internationally competitive.

Strategic Trade Policy

Government support designed to help domestic firms gain first-mover advantages or overcome entry barriers in global industries.

Tariff

A tax levied on imports that raises the cost of foreign products relative to domestic ones.

Specific Tariff

A tariff charged as a fixed amount per unit of an imported good.

Ad Valorem Tariff

A tariff imposed as a percentage of the value of the imported good.

Subsidy

A government payment to domestic producers to help them compete against low-cost imports or gain export markets.

Import Quota

A direct limit on the quantity of a good that may be imported during a given period.

Tariff Rate Quota

A system that applies a lower tariff to imports within the quota and a higher tariff to those above it.

Voluntary Export Restraint (VER)

A quota on trade imposed by the exporting country, usually at the importing country’s request.

Quota Rent

Extra profit producers earn when supply is artificially limited by an import quota or VER.

Local Content Requirement

A rule that a specific proportion of a good be produced domestically, expressed in physical or value terms.

Administrative Trade Policies

Bureaucratic rules that make it difficult for imports to enter a country, often raising consumer costs.

Dumping

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

Antidumping Policy

Legislation intended to punish foreign firms that engage in dumping; often enforced through antidumping (countervailing) duties.

Countervailing Duty

An increased duty imposed to offset subsidies granted to producers in the exporting country.

Technical Standards & Regulations

Safety, health, or labeling rules that can delay or block imported products.

FDI and Ownership Restrictions

Rules that limit foreign firms’ ability to invest in or acquire local companies in certain industries.

Beggar-Thy-Neighbor Policy

Strategic trade actions that increase a nation’s income at other countries’ expense, often provoking retaliation.

General Agreement on Tariffs and Trade (GATT)

The 1947 multilateral agreement aimed at reducing trade barriers and promoting freer trade.

World Trade Organization (WTO)

The institution that replaced GATT, administering global trade rules on goods, services, and intellectual property.

General Agreement on Trade in Services (GATS)

WTO treaty extending multilateral trade rules to service industries.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

WTO agreement setting minimum standards for the protection and enforcement of intellectual property rights.

Mode 1: Cross-Border Supply

International trade in services where the service itself crosses a border (e.g., online insurance purchase).

Mode 2: Consumption Abroad

Services supplied in one country and consumed by residents of another (e.g., tourism, overseas education).

Mode 3: Commercial Presence

Services delivered through establishing a foreign-owned subsidiary or branch in another country.

Mode 4: Movement of Natural Persons

Temporary movement of individuals to another country to supply a service.

Patent

An exclusive right that protects an invention for about 20 years, preventing others from making, using, or selling it.

Trademark

A distinctive sign or symbol used to distinguish the products or services of one business from another.

Copyright

Protection for original literary or artistic works, granting exclusive rights to reproduce or adapt them.

Industrial Design

Protection for the aesthetic or outward appearance of a product, not its functionality.

Geographical Indication (GI)

A sign used on products with a specific geographic origin that possess qualities or reputation due to that origin.

Trade Secret

Undisclosed business information—such as formulas or processes—that provides a competitive advantage.