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Free Trade
A policy where governments do not restrict what their citizens can buy from or sell to other countries.
Tariffs
Taxes levied on imports to raise the cost of imported products.
Subsidies
Government payments to domestic producers to help them compete against low-cost foreign imports.
Import Quotas
Direct restrictions on the quantity of goods imported into a country.
Voluntary Export Restraints
Quotas on trade imposed by the exporting country at the request of the importing country's government.
Local Content Requirements
Demands that a specific fraction of a product be produced domestically.
Administrative Policies
Trade policies designed to make it difficult for imports to enter a country.
Dumping
Selling goods in a foreign market below their cost of production or fair market value.
World Trade Organization (WTO)
An international organization that regulates trade between nations and emerged from GATT in 1995.
Political Arguments for Trade Intervention
Arguments that focus on protecting certain groups, like producers, at the expense of consumers.
Economic Arguments for Trade Intervention
Arguments aimed at boosting the overall wealth of a nation to benefit both producers and consumers.
Infant Industry Argument
Supporting new industries until they are established and can compete independently.
Strategic Trade Policy Argument
Seeking to establish advantages or dominance in a particular industry.
Quota Rent
The extra profit that domestic producers make when supply is artificially limited by an import quota.
Antidumping Duties
Tariffs imposed to counteract the effects of dumping by foreign firms.
