Term
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Definition
| A certain number of goods that can be imported to a country. (limited amount) |
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Term
| World Trade Organization (WTO) |
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Definition
the international org. that administers multi-trade agreements and settle trade disputes
--> bans all members from using quotas |
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Term
| Reasons we still see quotas |
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Definition
1. Not all countries are members of WTO
2.Members are allowed an adjustment period from the time they join WTO
3. Some just break the rules and hope not to get caught
4. Originally agricultural products were exempt from WTO rules; still some adjustments in the area |
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Term
| Volunteer Export Restraint |
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Definition
When a country agrees to only export a certain number of goods to another country
(Not QUITE like a quota) |
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Term
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Definition
Quotas:
-Domestic gov. gets no revenue from quota
-Revenue that would've gone to domestic gov. goes to foreign producer |
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Term
| 2 ways gov. gets revenue from quota |
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Definition
1. Auction quota- the gov. can auction the right to import a certain number of goods to the country
2. Equivalent tariff- (what a quota can turn into) a tariff that causes imports to be restricted by the same amount as quota |
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Term
| Quotas in the long-run (how countries adjust) |
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Definition
1. Foreign firms may choose moving the company to the country to avoid quota (Foreign Direct Investment)
2. Foreign firm may decide to only export the only very expensive versions to get the most product |
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Term
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Definition
| the effect that gov. regulations have on the industrial structure of a country |
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Term
| 2 most important industrial policies |
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Definition
1. Taxes - national difference in business taxes have the potential to distort trade
2. Regulation- specifically labor regulation |
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Term
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Definition
2 countries: Germany & China
- Germany: ALL goods produced by German firms are taxed (Including goods sold domestically, as well as exported goods) |
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Term
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Definition
U.S. and France
- U.S. expanding output to meet demand is easier |
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Term
| Technical Barriers to Trade |
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Definition
| Laws that apply to goods or services that distort trade. Usually laws about health, safety, and product labeling standards (don't mean to block trade, but end up doing so) |
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Term
| Example of Tech. Barriers to Trade |
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Definition
| Caribbean countries produces bananas. U.S. laws prohibit fruti from having too much pesticides, which restricts some imports from those farmers because they put too much pesticide on it. |
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Term
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Definition
| Gov.pays the produces for every unit produced |
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Term
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Definition
| if gov gives cotton producers $2 a pound, they produce more than usual if they didn't have the tariff. They sell all they can domestically and can charge a lower price abroad because of the subsidy |
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Term
| Nontariff Trade Barriers (NTBs) |
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Definition
| Government policies other than tariffs that distort trade |
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Term
| Mulitfibre Arrangement (MFA) |
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Definition
A system of bilateral quotas for imports and exports of textiles
and apparel in which each country is allowed to send or receive a specific quantity of textiles |
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Term
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Definition
Laws that direct a government to buy domestic – made products
unless comparable foreign products are substantially cheaper |
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Term
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Definition
Government interference with normal trade and capital flows to
accomplish foreign policy goals |
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Term
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Definition
Laws that apply labor standards to manufactured products, resulting in some
cases in import restrictions |
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Term
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Definition
Laws that apply environmental standards to manufactured products,
resulting in some cases in import restrictions |
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Term
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Definition
Goods whose transportation charges are so large that they become
unprofitable to trade |
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Term
| Regional Trade Agreements |
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Definition
A trade agreements between two or more countries that provides
tariff reductions for only those countries that are members of the agreement |
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Term
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Definition
An agreement between countries to reduce or eliminate trade barriers
between countries while maintaining separate national tariff schedules |
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Term
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Definition
The diversion of exports to a country within a free trade area that has lower
tariffs on a good |
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Term
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Definition
An agreement between countries to maintain a free trade area and a common
external tariff |
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Term
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Definition
An agreement between countries to eliminate their respective
national tariff schedules and replace them with a common tariff schedule |
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Term
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Definition
An agreement between countries to maintain a free trade area, a common
external tariff, and free mobility of capital labor |
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Term
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Definition
An agreement between countries to maintain a free trade area, a common
external tariff, free mobility of capital and labor, and some degree of unification in government
policies and monetary policies |
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Term
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Definition
| Laws that determine what country actually produced a good |
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Term
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Definition
An efficiency gain that results from a free trade area because more
efficient member countries displace less efficient member countries |
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Term
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Definition
An efficiency loss that results from a free trade area because less efficient
member countries displace more efficient non – member countries |
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Term
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Definition
An association of European countries that agrees to a free trade area and
imposes a common external tariff |
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Term
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Definition
An agreement between six European countries to reduce tariffs and nontariff
barriers to trade. It was the beginning of the European Union |
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Term
| Common Agricultural Policy (CAP) |
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Definition
An agreement between the European countries to subsidize
agricultural uniformly. All EU member countries’ farmers are paid subsidies by the EU rather
than by each national government |
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Term
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Definition
An agreement between the European countries to establish an economic
union and common currency, the Euro |
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Term
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Definition
The new currency for eleven countries of the European Union. This currency replaced the
eleven national currencies in 2002 |
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Term
| North American Free Trade Agreement (NAFTA) |
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Definition
An agreement to establish a free trade area
consisting of the US, Canada and Mexico |
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Term
| Free Trade Area of the Americas (FTAA) |
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Definition
An agreement by thirty – four countries to pursue the
implementation of an FTA for the Western hemisphere |
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Term
| National Income Accounting |
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Definition
The process used by governments to keep track of GDP and its
components |
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Term
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Definition
| A measure of GDP adjusted for changes in price |
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Term
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Definition
| The value of GDP in current dollars |
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Term
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Definition
| Countries trading production for consumption at different points in time |
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Term
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Definition
Forms of income that are withdrawn from the circular flow of income (e.g.
savings, taxes and imports) |
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Term
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Definition
Additions to the circular flow of income that are not derived from current
income (e.g. investment, government spending and exports) |
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Term
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Definition
A summary of all the international transactions of a country’s residents
with the rest of the world during a year |
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Term
| Balance on Current Account |
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Definition
An accounting of international transactions that includes goods,
services, investments income and unilateral transfers |
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Term
| Balance on Financial Account |
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Definition
Records that difference between the holdings of foreign assets
by domestic residents and domestic assets by foreign residents |
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Term
| Balance on Capital Account |
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Definition
Records that changes in the holding of nonfinancial assets
including debt forgiveness and assets of immigrants |
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Term
| Merchandise Trade Balance |
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Definition
| The difference between exports and imports of goods |
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Term
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Definition
| The difference between exports and imports of services |
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Term
| Balance on Goods and Services |
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Definition
The difference between exports and imports on both goods
and services |
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Term
| Balance on Investment Income |
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Definition
The difference between income earned on foreign assets and
payments to foreign residents on their assets |
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Term
| Balance on Goods, Services, and Income |
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Definition
The summation of the merchandise trade balance,
the balance on services and the balance on investment income |
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Term
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Definition
| Grants or gifts extended to or received from other countries |
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Term
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Definition
The change in the total amount of assets that domestic residents
own |
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Term
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Definition
Government holdings of gold or foreign currency used to acquire
foreign assets |
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Term
| Special Drawing Rights (SDRs) |
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Definition
A form of international money created by the International
Monetary Fund |
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Term
| International Monetary Fund (IMF) |
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Definition
A multilateral agency created in 1946 to promote
international monetary stability and cooperation |
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Term
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Definition
The change in the amount of assets in a country that foreign
residents own |
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