Int'l Trade - Ch 8

mercantilism

economic theory and a political ideology opposed to free trade; it shares with realism the belief that each state must protect its own interests without seeking mutual gains through international organizations.

economic liberalism

approach that generally shares the assumption of anarchy (the lack of a world government) but does not see this condition as precluding extensive cooperation to realize common gains from economic exchanges; emphasizes absolute over relative gains and, in practice, a commitment to free trade, free capital flows, and an “open” world economy.

free trade

The flow of goods and services across national boundaries unimpeded by tariffs or other restrictions; in principle (if not always in practice), free trade was a key aspect of Britain’s policy after 1846 and of U.S. policy after 1945.

balance of trade

value of a state’s exports relative to its imports

comparative advantage

principle that says states should specialize in trading goods that they produce with the greatest relative efficiency and at the lowest relative cost (relative, that is, to other goods produced by the same state).

autarky

policy of self-reliance, avoiding or minimizing trade and trying to produce everything one needs (or the most vital things) by oneself.

protectionism

protection of domestic industries against international competition, by trade tariffs and other means

dumping

sale of products in foreign markets at prices below the minimum level necessary to make a profit (or below cost)

tariff

duty or tax levied on certain types of imports (usually as a percentage of their value) as they enter a country.

nontariff barriers

Forms of restricting imports other than tariffs, such as quotas (ceilings on how many goods of a certain kind can be imported).

World Trade Organization (WTO)

An organization begun in 1995 that replaced the GATT and expanded its traditional focus on manufactured goods. The WTO created monitoring and enforcement mechanisms

General Agreement on Tariffs and Trade (GATT)

A world organization established in 1947 to work for freer trade on a multilateral basis; the GATT was more of a negotiating framework than an administrative institution; became the World Trade Organization (WTO) in 1995

most-favored nation (MFN)

principle by which one state, by granting another state MFN status, promises to give it the same treatment given to the first state’s most-favored trading partner

Generalized System of Preferences (GSP)

mechanism by which some industrialized states began, in the 1970s, to give tariff concessions to third world states on certain imports; an exception to the most- favored nation (MFN) principle.

Uruguay Round

A series of negotiations under the General Agreement on Tariffs and Trade (GATT) that began in Uruguay in 1986 and concluded in 1994 with agreement to create the World Trade Organization. The Uruguay Round followed earlier GATT negotiations such as the Kennedy Round and the Tokyo Round.

Doha Round

series of negotiations under the World Trade Organization that began in Doha, Qatar, in 2001. It followed the Uruguay Round and has focused on agricultural subsidies, intellectual property, and other issues

North American Free Trade

Agreement (NAFTA

free trade zone encompassing the United States, Canada, and Mexico since 1994; it aimed to eliminate trade barriers and promote economic integration among the three countries.

cartel

An association of producers or consumers (or both) of a certain product, formed for the purpose of manipulating its price on the world market.

Organization of Petroleum Exporting Countries (OPEC)

The most prominent cartel in the international economy; its members control about half the world’s total oil exports, enough to affect the world price of oil significantly.

industrial policy

strategies by which a government works actively with industries to promote their growth and tailor trade policy to their needs.

intellectual property rights

legal protection of the original works of inventors, authors, creators, and performers under patent, copyright, and trademark law; became a contentious area of trade negotiations in the 1990s

service sector

part of an economy that concerns services (as opposed to the production of tangible goods); the key focus in international trade negotiations is on banking, insurance, and related financial services

industrialization

use of fossil- fuel energy to drive machinery and the accumulation of such machinery along with the products created by it.

centrally planned economy

economy in which political authorities set prices and decide on quotas for production and consumption of each commodity according to a long-term plan. (ex: Soviet Union, North Korea)

transitional economies

Countries in Russia and Eastern Europe that are trying to convert from communism to capitalism, with various degrees of success

state-owned industries

Industries such as oil-production companies and airlines that are owned wholly or partly by the state because they are thought to be vital to the national economy

mixed economies

Economies such as those in the industrialized West that contain both some government control and some private ownership