Chapter 9 Textbook

spiral of high tariffs and protectionism
the cycle in the early 1930s where countries imposed high tariffs and quotas, leading to retaliatory measures and worsening economic conditions

great depression and protectionism
economic downturn exacerbated by protectionist policies, where countries raised tariffs and restricted imports, leading to global economic decline

bilateral tariff negotiations
slow process where countries negotiated tariff reductions with each other on thousands of items before world war ii

multilateralism in trade
post-world war ii approach involving multiple nations negotiating trade agreements, reducing barriers, and establishing dispute resolution mechanisms

gatt (general agreement on tariffs and trade)
a multilateral trade agreement aimed at reducing tariffs and other trade barriers, later replaced by the world trade organization

world trade organization (wto)
global organization that oversees international trade rules, settles trade disputes, and promotes free trade among member nations

trade agreement
a nation's legal commitment to other nations to align its laws and regulations with the terms of an international trade pact

impact of trade agreements
affects businesses of all sizes by shaping regulations on tariffs, services, and intellectual property in international markets

trade regulation
each country establishes its own trade policies to serve national interests, often influenced by domestic politics

trade barrier
any restriction that impedes the trade of goods or services, including tariffs, quotas, and regulatory hurdles

import trade barrier
any restriction that makes it harder or more costly to import foreign goods or services

reasons for regulating imports
economic, political, and public policy reasons such as revenue collection, domestic industry protection, and national security

tariff
a tax imposed on imported goods, either as a percentage of value (ad valorem) or based on quantity (specific tariff)

ad valorem tariff
a tariff calculated as a percentage of the value of imported goods

specific tariff
a tariff imposed based on physical units, such as weight or quantity, rather than value

global tariff
a tariff applied uniformly to a specific category of goods, regardless of the country of origin

nontariff barriers
trade restrictions other than tariffs, including quotas, licensing requirements, and complex regulations

direct nontariff barriers
explicit restrictions on imports, such as quotas, embargoes, and discriminatory licensing requirements

indirect nontariff barriers
seemingly neutral regulations that disadvantage foreign goods, such as differing safety standards or labeling requirements

trade disputes
conflicts between nations arising from protectionist policies or violations of international trade agreements

import licensing
government-imposed requirement for importers to obtain approval before bringing goods into the country

technical regulations as trade barriers
national standards for products that may unintentionally or intentionally restrict foreign imports

country of origin labeling
requirement that imported goods be labeled with their country of production, often serving as a nontariff trade barrier

example of indirect trade barrier
japan's 1974 large-scale retail stores law, which restricted large foreign retailers from entering the japanese market under the guise of protecting small businesses

repeal of japan's large-scale retail stores law
led to increased entry of american and european retail chains, transforming japan’s retail sector

bretton woods conference (1944)
A meeting of Allied nations in New Hampshire to establish international economic institutions, including the IMF, World Bank, and a vision for the International Trade Organization

general agreement on tariffs and trade (GATT 1947)
A multilateral trade agreement among 23 nations to reduce tariffs and trade barriers, becoming the most significant trade agreement of the 20th century

GATT organization formation
Although the International Trade Organization never materialized, GATT developed an administrative body and headquarters in Geneva by default

GATT multilateral trade negotiations
Trade negotiations conducted in rounds to reduce tariffs and trade barriers, beginning in 1947 with the Geneva Round

kennedy round (1964–1967)
A GATT round that resulted in significant tariff cuts, particularly on manufactured goods, involving 62 nations

tokyo round (1973–1979)
GATT round where over 100 nations agreed to tariff cuts averaging 34% and established codes to remove nontariff barriers

uruguay round (1986–1994)
A GATT round leading to widespread tariff reductions, elimination of nontariff barriers, and ultimately the creation of the WTO

transition from GATT to WTO
The Uruguay Round addressed GATT's deficiencies and led to the formation of the WTO, expanding trade regulations to services, agriculture, and intellectual property

world trade organization (WTO) formation (1995)
Replaced GATT as the primary international trade body, incorporating over 60 agreements to regulate global trade

key WTO agreements
Includes GATT 1994, GATS (General Agreement on Trade in Services), and WTO Dispute Settlement Understanding

functions of the WTO
Facilitates trade cooperation, administers agreements, monitors trade policies, assists developing nations, and settles trade disputes

WTO dispute settlement process
Provides a binding mechanism for resolving trade disputes between member nations

WTO and U.S. law
WTO agreements were enacted into U.S. law through congressional-executive approval but do not provide private rights to litigants

major principles of WTO trade law
Includes multilateral negotiations, transparency, reciprocal tariff reductions, most-favored-nation status, national treatment, and dispute resolution

tariff concession
each country’s promise to reduce tariffs on imports of a given item in exchange for tariff reductions from other countries

tariff bindings
maximum tariff rates a country may charge on an item, recorded in the country’s schedule of concessions at the wto

bound rate
the highest tariff rate a country can impose on a product as agreed in its schedule of concessions

tariff schedules
detailed listings of all tariffs for a country, including bound rates, published as legal commitments under gatt

harmonized tariff schedule of the united states
official document listing all us tariff rates, available from the united states international trade commission

modifying tariff bindings
countries must negotiate with affected nations and offer offsetting concessions if they want to raise bound tariff rates

european economic community—import regime for bananas (1995)
gatt panel case where the eec violated its tariff commitments by increasing banana tariffs and imposing a licensing scheme

eec bound rate for bananas
20 percent ad valorem tariff negotiated with developing banana-exporting countries

eec tariff violation
raised banana tariffs from 20 to 180 percent and imposed a restrictive licensing system, impairing foreign exporters’ rights

article ii—schedules of concessions
requires that countries provide trading partners with no less favorable tariff treatment than what is bound in their schedules

impact of eec tariff changes
latin american banana producers had made strategic investments based on the original bound tariff and suffered economic harm due to the new system

legal basis for latin america’s objections
violations of article ii (tariff commitments), article i (mfn principle), and other gatt provisions

importance of tariff commitments
ensures stability and predictability in trade; without them, exporters face uncertainty, disrupted markets, and potential financial losses

conversion of tariff types
switching between specific and ad valorem tariffs can impact the value of concessions and requires negotiation under gatt rules

collaboration
working jointly with others to achieve a common goal

supply chain relationships
connections between companies and their suppliers, customers, and other partners

sustainability reporting
disclosure of environmental, social, and governance (ESG) performance metrics

organizational culture
shared values, beliefs, and norms influencing business behavior

stakeholders
individuals or groups affected by a company’s actions and decisions

government
a key stakeholder in sustainability, setting regulations and policies

people perspective of sustainability
focuses on social responsibility, including employees, communities, and customers

metrics
quantitative measures used to assess sustainability performance

transparency
openness in reporting sustainability efforts and impacts

supply chain sustainability
integrating environmental, social, and economic concerns into supply chain management

sustainable procurement
purchasing goods and services with consideration for environmental and social impact

corporate social responsibility (CSR)
business approach that contributes to sustainable development and societal well-being

environmental impact
effect of business activities on natural resources and ecosystems

regulatory compliance
adherence to laws and regulations affecting sustainability practices

risk management
identifying and addressing potential sustainability-related risks in operations

carbon footprint
total greenhouse gas emissions caused directly or indirectly by an organization

circular economy
economic system aimed at minimizing waste and maximizing resource efficiency

resource efficiency
using materials and energy effectively to reduce environmental impact

social responsibility
company's duty to act in the best interest of society as a whole

corporate governance
system of rules and practices guiding business ethics and accountability

supply chain resilience
ability of a supply chain to adapt and recover from disruptions

life cycle assessment
evaluation of environmental impact throughout a product’s life cycle

ethical sourcing
obtaining materials and products responsibly, considering labor and environmental factors

greenwashing
misleading claims about a company’s sustainability efforts

carbon neutrality
achieving net-zero carbon emissions through reduction and offsetting strategies

balance-of-payments (BOP) deficit
when a nation's outflow of foreign exchange exceeds its receipts

quantitative restrictions
limits on imports or exports, such as quotas or licensing schemes

GATT Article XII
allows quotas only in severe national BOP emergencies and for a limited time

foreign exchange reserves
a country’s holdings of foreign currencies used for international transactions

developing countries and foreign exchange
historically relied on major currencies for trade and needed foreign reserves to import essential goods

India—Quantitative Restrictions on Imports of Agricultural, Textile, & Industrial Products
WTO case where the U.S. challenged India's import licensing system as violating GATT rules

negative list
list of goods restricted from import without special licenses

actual user condition
requirement that only end users, not distributors, could import certain goods

import licensing as a trade barrier
complex, discretionary systems that restrict trade by limiting import approvals

balance-of-payments argument in WTO cases
a defense for import restrictions that must show actual economic necessity

India’s balance-of-payments justification
rejected because India had sufficient reserves and did not need trade restrictions

GATT Article XI
prohibits quantitative restrictions on imports and exports except in specific situations

quantitative restrictions on exports
limits on exports, often used to control scarce resources and manipulate markets

rare earth elements case
WTO ruled China’s export quotas on rare earths violated trade rules

protectionist import licensing
restrictive schemes disguised as trade regulations to shield domestic industries

United States—Shrimp and Sea Turtle Case
WTO ruled that U.S. import restrictions on shrimp violated Article XI due to arbitrary implementation

GATT Article XX
allows trade restrictions for specific public policy goals, such as protecting health and preventing deception

GATT Article XXI
permits trade restrictions for national security reasons, including arms control

WTO dispute-settlement procedures
a quasi-judicial process for resolving trade disputes when countries cannot reach a settlement, preventing unilateral retaliatory actions and trade wars

nullification or impairment
when a WTO member violates its commitments, negatively impacting other member nations’ rights under WTO agreements

WTO Dispute Settlement Body (WTO-DSB)
the entity that oversees dispute resolution, appoints panels, adopts decisions, and authorizes withdrawal or suspension of concessions

binding WTO-DSB decisions
decisions that cannot be vetoed by involved parties, ensuring compliance with WTO agreements

WTO dispute resolution process
begins with consultations; if unresolved in 60 days, a panel is formed; decisions can be appealed to the WTO Appellate Body

WTO dispute resolution panel
consists of three to five individuals who determine if WTO agreements have been violated and issue reports on findings

WTO Appellate Body
a permanent body of seven judges that reviews panel decisions on legal issues, with decisions upheld unless rejected by consensus

compliance with WTO rulings
the violating country must respond within 30 days and comply within a reasonable time; compensatory adjustments or sanctions may follow

trade sanctions in WTO disputes
temporary penalties imposed by the complaining party if the violating country does not comply with WTO rulings

European Communities—Regime for the Importation, Sale & Distribution of Bananas
a WTO dispute where the U.S. challenged EU import restrictions favoring former European colonies over Latin American producers

legal interest in WTO cases
the WTO ruled that a country does not need direct economic harm to file a complaint under GATT

Banana Wars
a prolonged trade dispute between the U.S. and the EU over banana import restrictions, resulting in retaliatory tariffs and eventual resolution in 2012

WTO reports as legal precedent
not binding in future cases but cited for persuasive value in subsequent WTO decisions

WTO decisions and U.S. law
not binding on U.S. courts, though they may be cited for persuasive reasoning; compliance is determined by Congress or the executive branch

exceptions to normal WTO trade rules
allow for special trading arrangements such as trade preferences for developing countries and regional trade agreements like free trade areas

most-favored-nation (MFN) tariff rates
standard tariff rates granted to all WTO members unless exceptions apply, ensuring nondiscrimination in trade

trade preferences for developing countries
WTO agreements allow trade preferences to help developing countries with social and economic development through reduced tariffs or duty-free imports

generalized system of preferences (GSP)
A U.S. program that allows duty-free or reduced-rate imports from developing countries to support their economic growth, benefiting both U.S. consumers and businesses

eligibility for GSP status
Criteria for GSP eligibility include tariff preferences, direct imports from approved countries, and compliance with specific laws like narcotics enforcement, workers’ rights, and child labor prohibition

caribbean basin initiative (CBI)
A U.S. program providing trade preferences to Caribbean nations, offering duty-free imports on various goods like textiles, agricultural products, and electrical parts

africa growth and opportunity act (AGOA)
A U.S. initiative promoting economic growth in sub-Saharan Africa by granting duty-free access to the U.S. for eligible African products, emphasizing human rights and free-market development

free trade areas
Regions where countries agree to reduce or eliminate tariffs and trade barriers on goods among them, such as NAFTA or KORUS FTA

customs union
A free trade area with a common external tariff, often a step towards deeper economic integration

common market
An advanced form of a customs union that allows the free movement of money, labor, and factors of production, such as the European Union

caribbean community (CARICOM)
A political and economic union of Caribbean nations working towards a fully integrated single market economy, with legal and dispute-resolution systems

common market of the south (MERCOSUR)
A South American trade bloc with Argentina, Brazil, Paraguay, and Uruguay, aiming for economic integration with associate members like Chile and Peru

andean community of nations (CAN)
A regional trade agreement between Bolivia, Colombia, Ecuador, and Peru, promoting the free movement of people and favorable trade preferences among member nations

african regional economic communities
Multiple small trading blocs across Africa, including COMESA, the largest free trade area, and the African Union aiming for pan-African economic integration

asian free trade initiatives
Economic cooperation initiatives in the Asia-Pacific region, such as ASEAN, which reduces tariffs on goods but lacks the legal structure of common markets like the EU

middle east economic integration
Economic cooperation in the Gulf Cooperation Council (GCC) and the Greater Arab Free Trade Area (GAFTA), which reduce tariffs and promote regional integration in the Middle East and North Africa

gatt/wto system
The global framework for regulating international trade, promoting trade liberalization and reducing tariff and nontariff barriers since the end of World War II

doha development round
A WTO initiative aimed at reducing tariffs and trade barriers, particularly for developing countries, that has stalled over issues like agricultural subsidies

regionalism
The growing trend of bilateral and regional trade agreements as countries find common interests at the regional level, often bypassing multilateral agreements like the WTO