IGNORE

General Concepts

Protectionism

This refers collectively to governmental actions taken to influence international trade flows.

Stakeholders

These are individuals or groups who believe they will be affected by trade regulations, such as workers, owners, suppliers, and local politicians.

Economic Rationales for Trade Intervention

Infant-industry argument

The position that a government should shield an emerging industry from foreign competition by guaranteeing it a large share of the domestic market until it is strong enough to compete on its own.

Industrialization argument

This argument presumes that a country will achieve economic growth by enabling the unemployed and underemployed to work in industry, even if that sector is initially inefficient.

Terms of trade

The quantity of imports that a given quantity of a country’s exports can buy.

Import substitution

A traditional strategy for industrialization where a country restricts imports to boost local production of products it would otherwise import.

Export-led development

An approach to rapid economic growth achieved by promoting the development of industries with high export potential.

Comparable access argument

This holds that domestic industries are entitled to the same access to foreign markets that foreign industries have to theirs; it is often presented as a matter of "fairness".

Dumping

The practice of exporting a product at a price below its cost or below its home-country price.

Optimum-tariff theory

A theory addressing whether a foreign producer will lower its export prices when an importing country imposes a tax, thereby shifting revenue to the importing nation.

Noneconomic Rationales for Trade Intervention

Essential-industry argument

The application of trade restrictions to protect crucial domestic industries (like defense) so the nation is not dependent on foreign supplies during hostile periods.

Instruments of Trade Control

Tariff (or duty)

A tax levied on a good shipped internationally.

Specific duty

A tariff assessed on a per-unit basis.

Ad valorem duty

A tariff assessed as a percentage of the item’s value.

Compound duty

A tariff assessed on both a per-unit and a value basis.

Export tariffs

Collected by the exporting country.

Transit tariffs

Collected by a country through which the goods pass.

Import tariffs

Collected by importing countries; these are the most common type of tariff.

Effective tariff

The argument that the processed portion of a commodity effectively faces a higher tariff than the published ad valorem rate.

Subsidies

Direct assistance offered to companies by the government to boost their competitiveness.

Tied aid (or tied loans)

A requirement that recipients of foreign aid or loans spend those funds in the donor country.

Quota

A limit on the quantity of a product that can be imported or exported within a specific time frame, usually a year.

Voluntary export restraint (VER)

A variation of a quota where one country asks another to "voluntarily" reduce its companies' exports to avoid tougher trade restrictions.

Embargo

A specific type of quota that prohibits all trade.

"Buy local" legislation

Rules whereby governments give preference to domestic production in their own purchases.

Import or export license

A government-issued permit required before trade is allowed.

Foreign exchange control

A requirement for an importer to apply to a government agency to secure the foreign currency needed to pay for a product.

Countertrade (or offsets)

A transaction where the importing country's government requires the exporter to provide additional economic benefits, such as jobs or technology.