DEVELOPMENT ASSISTANCE COMMITTEE (DAC) — The OECD body that reviews and assesses resource transfers from developed to developing countries. See also Official Development Assistance; Organization for Economic Cooperation and Development.

DIFFERENTIAL EXPORT TAX — A multi-tier export tax usually structured so that the tax on exports of a raw material exceeds the tax (if any) on exports of processed goods made from the raw material, thereby creating an incentive to process the raw material domestically. See also Boycott; Embargo; Supply Access.

DIFFERENTIAL TREATMENT — See Framework Agreement; Special and Differential Treatment.

DILLON ROUND — Trade negotiations that took place under the aegis of GATT from 1960 to 1962, named after Douglas Dillon, then the U.S. under secretary of state, who publicly proposed the negotiations. See also General Agreement on Tariffs and Trade; Kennedy Round; Round; Tokyo Round; Uruguay Round.

DIRECT INVESTMENT — Defined in the International Monetary Fund's Balance of Payments Manual as "investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor, the investor's purpose being to have an effective voice in the management of the enterprise." The United States defines direct investment in different ways depending on the legal and factual context in which the term is used. For example, the International Investment and Trade in Services Survey Act defines direct investment as "the ownership or control, directly or indirectly, by one person of 10 percent or more of the voting securities of an incorporated business enterprise or an equivalent interest in an unincorporated business enterprise." Other statutes and international agreements to which the United States is a party use different definitions. See also Agreement on Trade-Related Investment Measures; Balance of Payments; Bilateral Investment Treaty; Capital Account; Foreign Investment; Framework Agreement; Industrial Policy; International Monetary Fund; Investment Performance Requirements; Multilateral Agreement on Investment; Multilateral Investment Fund; Multilateral Investment Guarantee Agency; National Treatment; North American Development Bank; Overseas Private Investment Corporation; Performance Requirements; Right of Establishment; Trade-Related Investment Measures.

DIRECT TAX — A tax that is levied on the wealth or income of individuals. Income, wealth, and inheritance taxes and social security charges are examples of direct taxes. See also Equity; Indirect Tax; Tax.

DISC — See Foreign Sales Corporation.

DISCRIMINATION — Inequality of treatment accorded imports from different trading partners, as through preferential tariff rates for imports from particular countries or trade restrictions that apply to the exports of certain countries but not to similar goods from other countries. See also Government Procurement Policies and Practices; Most-Favored-Nation Treatment; Preferences; Quarantine, Sanitary, and Health Laws and Regulations; Tariff.

DISPUTE SETTLEMENT — In the trade context, dispute settlement usually refers to procedures for consultation, conciliation, and possible referral to a neutral third party of a dispute between parties to a trade agreement. GATT articles XXII and XXIII contain provisions for consultations and for the GATT contracting parties to make recommendations and rulings in particular disputes. Under the auspices of the WTO, the Understanding on Rules and Procedures on Governing the Settlement of Disputes was concluded to strengthen the procedures established by the GATT. In addition, the U.S.-Canada Free Trade Agreement and the North American Free Trade Agreement contain detailed procedures for the settlement of disputes arising under those agreements. See also Arbitration; Article 23 (GATT Article XXIII); Binational Panel; Codes of Conduct; Compensation; Consultations; Framework Agreement; Government Procurement Policies and Practices; North American Free Trade Agreement; Panel of Experts; Tokyo Round; Understanding on Rules and Procedures Governing the Settlement of Disputes; Uruguay Round; U.S.-Canada Free Trade Agreement; World Trade Organization.

DISRUPTION — See Market Disruption.

DISTRIBUTION — The dissemination of goods and services in a market through the ordinary channels of trade. See also Export Promotion; Market; Sales Tax; Technology; Trade Fair.

DOMESTIC INTERNATIONAL SALES CORPORATION (DISC) — See Foreign Sales Corporation.

DOMESTIC SUBSIDY — Any act, practice, or measure other than an export subsidy by which a government confers a benefit upon a product and/or enterprise. For purposes of U.S. countervailing duty law, a domestic subsidy is considered countervailable if benefits under a program are provided or are required to be provided by government action, in law or in fact, to a specific enterprise or industry, or group of enterprises or industries. See also Agreement on Subsidies and Countervailing Measures; Bounties; Codes of Conduct; Countervailing Duties; Export Subsidy; Illustrative List; Subsidy; Sunset Review; Tokyo Round; Trade Agreements Act of 1979; U.S. International Trade Commission; Uruguay Round; Uruguay Round Agreements Act; World Trade Organization.

DOMESTIC SYSTEM OF PRODUCTION — The system of economic production that prevailed in Europe in the 16th and 17th centuries, prior to the Industrial Revolution, under which merchants supplied materials and sometimes tools and machines to workers who produced finished goods in their homes and turned them over to the merchants. See also Industrial Revolution; Production.

DOUBLE-COLUMN TARIFF — A tariff schedule listing two duty rates for some or all commodities. Under such arrangements, imports may be taxed at a higher or lower rate, depending upon the importing country's trade and other relationships with the exporting country. Some British Commonwealth countries maintain a double-column tariff that provides preferential tariff treatment to other members of the commonwealth. The United States and other countries also have lower tariffs for countries to which they grant most-favored-nation treatment. See also Column 1 Rates; Column 2 Rates; Most-Favored-Nation Treatment; Preferences; Single-Column Tariff; Tariff.

DOWNSTREAM DUMPING — Also known as "input dumping," the practice of exporting an end-product containing an input that has been purchased at less than normal value. U.S. antidumping law contains provisions for monitoring downstream dumping where the input is already the subject of an antidumping duty order. If monitoring reveals that imports of the end-product increase as a result of the diversion of the input product into the end-product, an antidumping investigation of the end-product may be initiated. See also Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code; Dumping.

DRAWBACK — Import duties or taxes repaid by a government, in whole or in part, when the imported goods are re-exported or used in the manufacture of exported goods. See also Re-exports.

DRY CARGO — See Bulk Carrier.

DUAL PRICING — Selling identical products for different prices in different markets. Dual pricing often reflects export subsidy and dumping practices. See also Domestic Subsidy; Dumping; Export Subsidy; Restitutions.

DUMPING — Under U.S. law, sales of merchandise exported to the United States at "less than fair value," when such sales materially injure or threaten material injury to producers of like merchandise in the United States. The determination that sales have been made at less than fair value involves a comparison of "normal value" — the price at which the merchandise is sold within the exporting country or to third countries (or a "constructed value") — and the "U.S. price" — the price at which the merchandise is sold in the U.S. market. A statutory cost-of-production provision requires that dumping determinations ignore sales in the home market of the exporting country or in third-country markets that are made below cost � that is, at prices that are too low to permit recovery of all costs within a reasonable period of time in the normal course of trade. Dumping is recognized by the WTO rules as a potentially unfair trade practice that can disrupt markets and injure producers of competitive products in the importing country. In the WTO Agreement on Implementation of Article VI of GATT 1994, WTO members created more detailed rules governing their ability to take action against imports sold at an unfairly discounted export price. Members agreed to establish procedures for termination under certain conditions of antidumping duty orders after five years (which resulted in a corresponding change in U.S. law) and to raise the de minimis rule (the lowest rate at which a dumping margin can be determined) to 2 percent (U.S. law, which had previously defined it at 0.5 percent, was modified accordingly). The agreement also established a new Committee on Anti-Dumping Practices, which countries must promptly notify of all dumping actions. Economists disagree as to the harmful effects of dumping. Some consider the practice of dumping to establish a toehold in a new market to be an economically rational commercial practice. See also Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code; Dual Pricing; International Trade Administration; Market Disruption; Sunset Review; Trigger Price Mechanism; Uruguay Round; Uruguay Round Agreements Act; U.S. International Trade Commission; World Trade Organization.

DUTY — See Tariff.

DUTY SUSPENSION — A unilateral nonapplication of a customs duty, or its application at a reduced level, usually on a temporary basis. See also Tariff; Unilateral.

A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

EAI Earnings East-West Trade EBRD EC ECDC ECGF Economic Cooperation Among    Developing Countries Economic Development ECS Carnet ECSC EEC EEP Effective Tariff Rate Efficiency EFTA Elasticity Electronic Commerce Embargo Enabling Clause Enterprise for the Americas    Initiative Entrepreneur Equal Percentage Reduction    of Tariffs Equilibrium Equity Equity Joint Venture Equivalence of Advantages ERs Escalation Escape Clause ESP EU EURATOM Euro Euro-Bonds Euro-Currency Euro-Dollars Euro-Zone European Bank

European Bank for Reconstruction    and Development European Central Bank European Coal and Steel Community European Commission European Community European Council European Court of Justice European Currency Unit European Economic Area European Economic Community European Free Trade Association European Parliament European Recovery Program European System of Central Banks European Union Exceptions Exchange Controls Exchange Rate Excise Tax Executing Agency Eximbank Export Administration Act of 1979 Export Credit Guarantee Facility Export Credit Insurance Export Credits Export Embargo Export Enhancement Program Export-Import Bank of the    United States Export Licensing Export Price Export Promotion Export Quotas Export Restraint Agreements Export Restraints Export Subsidy Export Trading Company Exporter's Sales Price Exports Exposure EXW

EAI — See Enterprise for the Americas Initiative.

EARNINGS — See Foreign Exchange Earnings; Profit.

EAST-WEST TRADE — Referred to trade between the former Soviet Union and the socialist countries of Eastern Europe (East) on the one hand, and the developed market economy countries of Western Europe, North America, and Japan on the other (West). See also Countertrade; Nonmarket Economy.

EBRD — See European Bank.

EC — See European Community.

ECDC — See Economic Cooperation Among Developing Countries.

ECGF — See Export Credit Guarantee Facility.

ECONOMIC COOPERATION AMONG DEVELOPING COUNTRIES (ECDC) — Attempts by developing countries, especially the Group of 77, to increase South-South trade and other economic relationships among themselves. See also Andean Pact; Asia-Pacific Economic Cooperation; Developing Countries; Global System of Trade Preferences; Group of 77; MERCOSUR; Newly Industrializing Countries; Non-Aligned Movement; Preferences; South-South Trade; United Nations Conference on Trade and Development.

ECONOMIC DEVELOPMENT — The process of growth in total and per capita income, especially in developing countries, accompanied by increased infrastructure, more industrial activity, improved agricultural practices, migration of labor from rural to urban industrial areas, rising literacy, broadened employment opportunities, and gradually diminishing reliance on official development assistance. See also ACP Countries; Agency for International Development; Bilateral Aid; Caribbean Basin Initiative; Developed Countries; Developing Countries; Development Assistance Committee; Domestic System of Production; Economic Cooperation Among Developing Countries; Enabling Clause; Enterprise for the Americas Initiative; Framework Agreement; General Agreement on Tariffs and Trade; Generalized System of Preferences; Global System of Trade Preferences; Graduation; Group B; Group D; Group of 7; Group of 77; Industrial Revolution; Infrastructure; Inter-American Development Bank; International Trade Center UNCTAD/WTO; Least Developed Countries; Lomé Convention; Market Economy; Newly Industrializing Countries; North-South Trade; Official Development Assistance; Paris Club; Part IV of the GATT; Production; Public Law 480; Reciprocity; Reverse Preferences; Soft Loan; South-South Trade; Special and Differential Treatment; Structural Change; Substantial New Program of Action; Textiles; Transfer Payments; Tropical Products; United Nations Conference on Trade and Development; United Nations Development Program; Williamsburg Summit; World Bank.

ECS CARNET — See ATA Carnet.

ECSC — See European Coal and Steel Community.

EEC — See European Community.

EEP — See Export Enhancement Program.

EFFECTIVE TARIFF RATE — The concept that "effective" protection reflected in a tariff rate is the sum of the protection for the component parts of the final manufactured unit. This concept implies that the nominal tariff rate of the finished good significantly understates the de facto protection for the value added in the production process. Several academic studies in the late 1960s and early 1970s established the theoretical basis for the effective tariff rate concept, but most trade policy experts see little practical utility in the theory, since the many different circumstances affecting the component parts comprising most industrial products make it difficult to establish their actual effective rates. See also Nominal Tariff Rate; Tariff; Tariff Escalation.

EFFICIENCY — Narrowly, the input-output relationship between the quantity of materials used and the quantity of goods produced. More broadly, economic efficiency implies the best result (taking quality as well as quantity into account) in the production or distribution of goods and services at the least cost. Most economists believe the reduction of barriers to trade contributes to international economic efficiency by encouraging countries to specialize in the production of those goods and services in which they have a comparative advantage, thus making the world's most competitive goods and services available to consumers outside the area that produces them. See also Comparative Advantage; Competitive; Entrepreneur; Textiles; Trade Diversion; Welfare.

EFTA — See European Free Trade Association.

ELASTICITY — See Price Elasticity of Demand; Price Elasticity of Supply.

ELECTRONIC COMMERCE — Any activity that utilizes some form of electronic communication in the inventory, exchange, advertisement, and distribution of, and the payment for, goods and services. All forms of commercial transactions are based upon the transmission of digitized data, including text, sound, and visual images. See also Global Information Infrastructure; Informatics; Technology.

EMBARGO — In international trade, government actions limiting or prohibiting imports and/or exports of goods and/or services from or to a country. Such limitations may be applied by the embargoing country against its own nationals, such as the United States� embargo against trade from Cuba, or in concert with other countries against a third country, such as the 1990 United Nations embargo against trade in any form with Iraq or the earlier UN embargo against trade with South Africa. Embargoes may also be applied just against trade in certain products regardless of origin, such as the ban on trade in ivory. See also Boycott; Helms-Burton Act; International Emergency Economic Powers Act; Supply Access.

ENABLING CLAUSE — Formally, the "Decision on Differential and More Favorable Treatment, Reciprocity, and Fuller Participation of Developing Countries" that was negotiated during the Tokyo Round as Part I of a new Framework Agreement on International Trade. The enabling clause legalized the extension by developed contracting parties of GATT of preferences to developing countries, notwithstanding the most-favored-nation treatment required under GATT Article 1. See also Articles of the GATT; Contracting Party; Developing Countries; Framework Agreement; General Agreement on Tariffs and Trade; Generalized System of Preferences; Most-Favored-Nation Treatment; Part IV of the GATT; Preferences; Reciprocity; Tokyo Round.

ENTERPRISE FOR THE AMERICAS INITIATIVE (EAI) — A U.S. program designed to strengthen the economies of countries in Latin America and the Caribbean through debt reduction and increased trade and investment. The investment component is intended to help countries make reforms necessary to attract increased capital flows. The debt component seeks to reward broad economic reforms undertaken by countries in Latin America and the Caribbean by reducing official debt owed to the United States. The trade component is designed to promote a liberalized trading system and is based on the ultimate goal of hemispheric free trade.

ENTREPRENEUR — A person who assumes responsibility for organization, management, and risk in the production of goods and services. In theory, his or her enterprise should make a profit if it is economically efficient and should incur losses if it is not. See also Demand; Efficiency; Profit; Risk.

EQUAL PERCENTAGE REDUCTION OF TARIFFS — See Linear Reduction of Tariffs.

EQUILIBRIUM — A state in which economic forces that are likely to cause change in opposing directions are in perfect balance, so that change is unlikely. A market is in equilibrium if the quantity of a product that consumers will buy at the prevailing price exactly matches the amount suppliers will sell at that price. See also Demand; Market; Market Economy; Market Forces; Price; Supply.

EQUITY — Fairness, justice. Also, the value of property beyond the total amount owed on it. See also Direct Tax.

EQUITY JOINT VENTURE — See Joint Venture.

EQUIVALENCE OF ADVANTAGES — See Reciprocity.

ERs — See Export Restraints.

ESCALATION — See Tariff Escalation.

ESCAPE CLAUSE — Also known as a safeguard provision, a provision in a bilateral or multilateral commercial agreement permitting a signatory nation to suspend tariff or other concessions when increased imports cause or threaten to cause serious injury to the producers of competitive domestic goods. GATT Article XIX sanctions such escape clause provisions to help firms and workers injured by increased imports adjust to the rising level of import competition. The WTO's escape clause provisions are contained in its Agreement on Safeguards. Section 201 of the Trade Act of 1974 is the main escape clause in U.S. trade law. See also Adjustment; Adjustment Assistance; Agreement on Safeguards; Agreement on Textiles and Clothing; Article 19 (GATT Article XIX); Concession; Import Relief; Market Access; Protectionism; Quantitative Restrictions; Safeguards; Section 22; Section 201; Section 406; Trade Act of 1974; U.S. International Trade Commission; World Trade Organization.

ESP — See Constructed Export Price.

EU — See European Union.

EURATOM — See European Community.

EURO — The common currency of those European Union countries that have elected to participate in the third stage of economic and monetary union. The euro was launched on January 1, 1999, with 11 participating countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain) converting their previous currencies at an irrevocably fixed conversion rate. The geographic area of the participating countries is popularly referred to as the "Euro Zone." The euro replaces the ECU (European currency unit) as the unit of account for the European Union. Existing national notes and coins will continue to circulate until July 1, 2002. Euro notes and coins will begin to circulate on January 1, 2002. See also European Currency Unit; European Central Bank; European Community; European System of Central Banks; European Union.

EURO-BONDS — See Euro-Dollars.

EURO-CURRENCY — See Euro-Dollars.

EURO-DOLLARS — Claims for U.S. dollars held against banking institutions outside the United States. The claims arise when, through the purchase of bills of exchange or similar transactions, a foreign bank credits a dollar deposit account. Such deposit accounts (euro-dollars) are extensively used outside the United States for financial transactions such as short-term loans or the purchase of dollar bonds called euro-bonds, which are sometimes issued by U.S. companies to finance their operations, especially those outside the United States. See also Bill; Broker; Capital Market; Commercial Paper; Convertibility; Currency; Exchange Rate; Loan; Market; Medium of Exchange; Money; Multinational Corporation; Security.

EURO-ZONE — An informal designation of the 11 European Union countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain) that use the common single currency, the euro. See also ECU; Euro; European Central Bank; European Community; European System of Central Banks; European Union.

EUROPEAN BANK (EBRD) — See European Bank for Reconstruction and Development.

EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD) — A regional development bank that supports market-oriented economic reforms in Central and Eastern Europe, including the former Soviet Union. The EBRD began operating in April 1991. See also Agency for International Development; Bilateral Aid; Economic Cooperation Among Developing Countries; Economic Development; European Recovery Program; Group D; Multilateral Aid; Official Development Assistance; Overseas Private Investment Corporation; Organization for Economic Cooperation and Development; Transfer Payments.

EUROPEAN CENTRAL BANK (ECB) — The common central bank, located in Frankfurt, Germany, of the European Union countries that use the common single currency, the euro. The ECB, in combination with the national central banks of the Euro Zone countries, forms the European System of Central Banks (ESCB). The ESCB is responsible for defining and implementing monetary policy, for conducting foreign exchange operations, for holding and managing official foreign reserves, and for promoting the smooth operation of the payments systems of the member countries. See also European Currency Unit; Euro; Euro Zone; European Community; European System of Central Banks; European Union.

EUROPEAN COAL AND STEEL COMMUNITY (ECSC) — A common market in coal and steel based on the 1951 Schuman Plan (named after Robert Schuman, French foreign minister). Its original members included France, Italy, the Federal Republic of Germany, Belgium, the Netherlands, and Luxembourg. ECSC member states agreed to abolish tariffs, quotas, and currency restrictions affecting intracommunity trade in coal, iron ore, and scrap metal. The ECSC subsequently served as a model for the institutions of the European Community and now constitutes part of the first pillar of the European Union. The ECSC will expire in 2002, 50 years after its entry into force. See also Customs Union; European Community; European Union.

EUROPEAN COMMISSION — A body that proposes legislation, is responsible for administration, and ensures that provisions of the European Union's treaties and the decisions of the EU's institutions are properly implemented. The European Commission has investigative powers and can take legal actions against persons, companies, or member states that violate EU rules. The commission manages the EU budget and represents the EU in international trade negotiations. The president and 20 commissioners (two of whom are vice presidents) are appointed for five-year terms and oversee a staff of approximately 15,000 employees, most of whom are based in Brussels. The commission's responsibilities are divided among more than 25 directorates-general and other administrative services. See also Council of the European Union; European Community; European Council; European Parliament; European Union.

EUROPEAN COMMUNITY (EC) — A regional organization of European countries, originally called the European Economic Community (EEC), that came into being on January 1, 1958, with the entry into force of the Treaty of Rome, now known as the EC Treaty. From the beginning, a principal objective of the Community has been the establishment of a customs union, other forms of economic integration, and political cooperation among member states. The Treaty of Rome provided for the gradual elimination of customs duties and other internal trade barriers, the establishment of a common external tariff, and guarantees of free movement of goods, services, persons, and capital within the Community. The six founding EC member states were France, Italy, the Federal Republic of Germany, Belgium, the Netherlands, and Luxembourg. Nine additional countries have acceded to the EC: Austria, Denmark, Finland, Greece, Ireland, Portugal, Spain, Sweden, and the United Kingdom. Formal accession negotiations are under way with the Czech Republic, Cyprus, Estonia, Hungary, Malta, Poland, and Slovenia. These countries may accede as early as 2002, and it is probable that, in the near future, additional European countries will be invited to join. While commonly referred to as the "European Community" or "EC," the European Community is in actuality made up of three communities — the European Community (formerly called the European Economic Community, or EEC), the European Atomic Energy Community (Euratom), and the European Coal and Steel Community (ECSC). (Accordingly, the EC is occasionally referred to in the plural, as the "European Communities.") In 1967, the institutions of the three communities were fused together by the entry into force of the Merger Treaty, sometimes called the Treaty of Fusion. The Treaty on European Union (TEU, or Maastricht Treaty), which entered into force on November 1, 1993, formalized the use of "EC" as a reference to the European Economic Community. The TEU also introduced the term "European Union" as a broader, framework entity. Although the EC is part of the European Union, it is not synonymous with the EU but has a separate identity within the European system and is functionally and legally different. (For a discussion of when to use "EC" and when to use the term "EU," see European Union.) With the advent of the Single European Act (SEA) in 1987, the EC further deepened European economic integration by removing remaining barriers to free movement and completing the internal market. Perhaps the most significant EC undertaking, has been the introduction of a common currency, the euro. EC governing institutions include the European Commission, the Council of the European Union, the European Parliament, and the European Court of Justice. Most Community institutions are headquartered in Brussels, Belgium, with the exception of the European Parliament, which is headquartered in Strasbourg, France, and the European Court of Justice, which is headquartered in Luxembourg City, Luxembourg. See also Common Agricultural Policy; Common External Tariff; Council of the European Union; Customs; Customs Area; Customs Union; Euro; Euro-Zone; European Coal and Steel Community; European Commission; European Council; European Free Trade Association; European Parliament; European Union; Free Trade Area Agreement; Lomé Convention; Tariff; Tariff Schedules; Trade Diversion; Variable Levy.

EUROPEAN COUNCIL — The heads of state or government of the EU member states. (It should not be confused with the Council of Ministers of the European Union.) While EU leaders met informally for a number of years, the European Council was formalized as a result of entry into force of the Single European Act and the Treaty on European Union. The European Council meets at least twice a year in conjunction with the rotating presidency of the Council of the European Union. In addition, the president of the European Commission attends and participates as a full member of the European Council, which reviews and establishes broad objectives for Community policy. In fact, the European Council has often provided the EU with much needed impetus in developing policy initiatives and furthering European integration. The Treaty on European Union gave the European Council responsibility for the EU intergovernmental pillars of the Common Foreign and Security Policy and Justice and Home Affairs. See also Council of the European Union; European Commission; European Community; European Parliament; European Union.

EUROPEAN COURT OF JUSTICE — See European Community.

EUROPEAN CURRENCY UNIT (ECU) — A currency "basket" or composite of member state currencies used by the European Union as the unit of account prior to the January 1, 1999, creation of the euro. See also Euro; European Central Bank; European Community; European System of Central Banks; European Union.

EUROPEAN ECONOMIC AREA (EEA) — See European Free Trade Association.

EUROPEAN ECONOMIC COMMUNITY (EEC) — See European Community.

EUROPEAN FREE TRADE ASSOCIATION (EFTA) — A regional grouping, established in 1960 by the Stockholm Convention, that now includes Iceland, Liechtenstein, Norway, and Switzerland. A number of European Union member states, including Austria, Denmark, Sweden, and the United Kingdom, were previously members of EFTA but withdrew when they became members of the EU. EFTA member countries have gradually eliminated tariffs on manufactured goods originating and traded within EFTA and between EFTA and the EU. Agricultural products, for the most part, are not included on the EFTA schedule for internal tariff reductions. Each member country maintains its own external tariff schedule, and each has concluded a trade agreement with the EU that provides for the mutual elimination of tariffs for most manufactured goods except a few sensitive products. As a result, the EU and EFTA form a de facto free trade area. The EU and EFTA countries have deepened their economic integration with the creation of the European Economic Area (EEA). The EEA provides for the adoption by the EFTA countries of numerous EU laws and regulations with a view toward ensuring the freedom of movement of people, goods, services, and capital within Europe. See also Customs Area; Customs Union; European Community; European Free Trade Association; European Union; Sensitive Products.

EUROPEAN PARLIAMENT — An official institution of the European Union. Currently, it has 626 members who are elected by constituencies in the respective member states. Some members of the European Parliament (MEPs) are also members of their national parliaments. The first direct elections to the European Parliament took place in June 1979, and such elections have continued since that time. The European Parliament, working with the European Commission and the Council of the European Union, assists in drafting, amending, and adopting European legislation and the EU budget. MEPs generally belong to national or pan-European political parties. In addition, the European Parliament uses a system of committees. Early in its existence, the European Parliament had little ability to influence legislation since the Commission and Council of Ministers were required only to consult the Parliament but not to obtain its approval. In subsequent treaties, however, the European Parliament has been granted significant new powers in the legislative process. Now, as a result, the European Commission and Council of the European Union must consult the European Parliament and, depending on the matter at issue, may be required to adhere to the Parliament's opinion before adopting final legislation. The European Parliament is based in Strasbourg, France, but holds a number of sessions in Brussels, Belgium. See also Council of the European Union; European Commission; European Community; European Council; European Union.

EUROPEAN RECOVERY PROGRAM (ERP) — A broad range of trade reform and aid measures to hasten the rehabilitation of European economies after World War II. The European Recovery Program is better known as the "Marshall Plan," after U.S. Secretary of State George C. Marshall, who proposed the program in a speech at Harvard University on June 5, 1947. The aid program was first administered by the Economic Cooperation Administration (ECA) in Paris, while the program of economic cooperation among the 16 participating European countries was implemented by the Organization for European Economic Cooperation (OEEC). Between 1948 and 1952, when the program was terminated, the participating European countries received some $13,000 million from the United States. See also Organization for European Economic Cooperation.

EUROPEAN SYSTEM OF CENTRAL BANKS (ESCB) — The framework organization that administers monetary policy in the European Union. The European System of Central Banks came into existence on January 1, 1999. It is composed of the European Central Bank and national central banks from the member states. However, national central banks from member states that are not a part of the Euro Zone may not participate in monetary policy-making as regards the euro. The ESCB's primary objective is to maintain price stability in the EU. See also European Currency Unit; Euro; Euro-Zone; European Central Bank; European Community; European Union.

EUROPEAN UNION (EU) — The overarching entity encompassing the modern attempt at European integration. Created by the Treaty on European Union (also known as the Maastricht Treaty), which entered into force on November 1, 1993, the European Union is often described as a building supported by three pillars. Specifically, the pillars include the European Community (essentially the European Communities as they existed in pre-Maastricht Europe), the Common Foreign and Security Policy (establishing common foreign policy positions and developing a common defense policy), and Justice and Home Affairs (principally providing for cooperation between police and other authorities on crime, terrorism, and immigration issues). Some confusion exists as to when the terms European Union, European Community, and European Economic Community (EEC) may be properly used. The delimitation between these entities is far from clear, but generally, EU, EC, and EEC may not be used interchangeably. As noted, the EC continues to constitute part of the EU; however, the EC possesses a legal personality while the EU currently does not. As a result, the term EU should be used when referring to the system as a whole. The term EC is most properly used when referring to the laws and institutions falling within the first pillar of the EU. The term EEC should be used only when referring to the historical entity that preceded the EC. See also European Community; Euro-Zone.

EXCEPTIONS — See Generalized System of Preferences; Linear Reduction of Tariffs.

EXCHANGE CONTROLS — The rationing of foreign currencies, bank drafts, and other instruments for settling international financial obligations by countries seeking to ameliorate acute balance-of-payments difficulties. When such measures are imposed, importers must apply for prior authorization from the government to obtain the foreign currency required to bring in designated amounts and types of goods. Since such measures have the effect of restricting imports, they are considered nontariff barriers to trade. See also Balance-of-Payments Consultations; Currency; Nontariff Barriers; Specific Limitations on Trade.

EXCHANGE RATE — The price (or rate) at which one currency is exchanged for another currency, for gold, or for Special Drawing Rights. See also Currency; International Monetary Fund; Par Value; Special Drawing Rights.

EXCISE TAX — A selective tax — sometimes called a consumption tax — on certain goods produced within or imported into a country. See also Border Tax Adjustments; Indirect Tax; Road Tax; Tax.

EXECUTING AGENCY — See United Nations Development Program.

EXIMBANK — See Export-Import Bank of the United States.

EXPORT ADMINISTRATION ACT OF 1979 (EAA — A statute that authorizes the U.S. president to control exports to specific foreign destinations of U.S. commodities and technical data, especially high-technology products, to protect the national security, to ensure against an excessive drain of scarce goods, and to further foreign policy objectives. It also prohibits compliance with foreign boycotts. See also Antiboycott Legislation; Boycott; Bureau of Export Administration; Coordinating Committee on Export Controls; Embargo.

EXPORT CREDIT GUARANTEE FACILITY (ECGF) — A scheme developed in the United Nations Conference on Trade and Development that would enable developing country exporters to refinance their export credits extended to importers in other countries under an international guarantee. See also United Nations Conference on Trade and Development.

EXPORT CREDIT INSURANCE — Insurance designed to guarantee that an exporter will be paid for his/her goods after delivery. If the exporter has such insurance, responsibility for collecting payment from the company that imports the goods in another country, or the company's agent, rests with the underwriter of the export credit insurance. See also Export-Import Bank of the United States; Insurance; Underwriter.

EXPORT CREDITS — See Export Credit Guarantee Facility; International Arrangement on Export Credits; Mixed Credits; Subsidy.

EXPORT EMBARGO — See Embargo; Supply Access.

EXPORT ENHANCEMENT PROGRAM (EEP) — A direct U.S. response to export subsidies of other countries that subsidizes U.S.-produced agricultural products in the world market. The EEP was initiated in May 1985 under provisions of the Commodity Credit Corporation Charter Act and mandated by provisions of the Food Security Act of 1985 and the Food, Agricultural, Conservation, and Trade Act of 1990. Subsidies are paid to exporting operations in the form of either commodity certificates redeemable for stocks held by the CCC or cash payments. See also Commodity Credit Corporation; Domestic Subsidy; Export Subsidy; Subsidy.

EXPORT-IMPORT BANK OF THE UNITED STATES (EX-IM BANK) — A public corporation created by executive order of the president of the United States in 1934 and given a statutory basis in 1945. The Ex-Im Bank makes guarantees and insures loans to help finance U.S. exports, particularly for equipment to be used in capital improvement projects. It also provides short-term, political risk guarantees, either directly or in cooperation with U.S. commercial banks. It is not an aid or development agency. Under the administration of President Bill Clinton, the Ex-Im Bank has focused on emphasizing exports to developing countries, countering trade subsidies of other governments, stimulating small business transactions, promoting the export of environmentally beneficial goods and services, and expanding project finance capabilities.

EXPORT LICENSING — See Licensing.

EXPORT PRICE (EP) — The price at which particular merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the merchandise outside of the United States to an unaffiliated purchaser in the United States, or to an unaffiliated purchaser for exportation to the United States. Under U.S. antidumping law, dumping consists of sales of merchandise exported to the United States at "less than fair value," when such sales materially injure or threaten material injury to producers of like merchandise in the United States. The determination that sales have been made at less than fair value involves a comparison of "normal value" — the price at which the merchandise is sold within the exporting country or to third countries (or a "constructed value") — and the "U.S. price" — the price at which the merchandise is sold in the U.S. market. U.S. price may be derived either from the export price or the constructed export price. The price used to establish the EP can be adjusted to take into account certain costs, charges, taxes, duties, and expenses. The term EP was introduced along with other changes to U.S. antidumping law resulting from the Uruguay Round Agreements Act in implementation of the WTO Agreement concluded during the Uruguay Round. The term EP replaces the term Purchase Price (PP), which was its counterpart under the pre-URAA law. See also Agreement on Implementation of Article VI of GATT 1994; Anti-Dumping Code; Constructed Export Price; Dumping; Normal Value; United States Price; Uruguay Round; Uruguay Round Agreements Act; World Trade Organization.

EXPORT PROMOTION — Public or private sector support for foreign sales through such activities as trade missions and trade fairs, based on available market information and analysis. See also Common Fund; Competitive; Distribution; International Commodity Agreement; International Trade Center UNCTAD/WTO; Market; Ministry of International Trade and Industry; Supply; Trade Fair; Trade Mission; U.S. Foreign and Commercial Service.

EXPORT QUOTAS — Specific restrictions or ceilings imposed by an exporting country on the value or volume of certain exports to protect domestic producers and consumers from temporary shortages of the goods affected or to bolster their prices in world markets. Some international commodity agreements explicitly indicate when producers should apply such restraints. Export quotas are also often applied in orderly marketing agreements and voluntary restraint agreements, and to promote domestic processing of raw materials in countries that produce them. See also International Commodity Agreement; Orderly Marketing Agreements; Organization of Petroleum Exporting Countries; Voluntary Restraint Agreements.

EXPORT RESTRAINT AGREEMENTS — See Voluntary Restraint Agreements.

EXPORT RESTRAINTS — Quantitative restrictions imposed by exporting countries to limit exports to specified foreign markets, usually pursuant to a formal or informal agreement concluded at the request of the importing countries. See also Orderly Marketing Agreements; Quantitative Restrictions; Voluntary Restraint Agreements.

EXPORT SUBSIDY — A subsidy such as those described in the Illustrative List of Export Subsidies of the WTO Agreement on Subsidies and Countervailing Measures. For purposes of U.S. countervailing duty law, an export subsidy is considered countervailable when the eligibility for, or the amount of benefits under, a program is tied to the actual or anticipated exportation of merchandise or export earnings. See also Agreement on Subsidies and Countervailing Measures; Bounties; Codes of Conduct; Countervailing Duties; Domestic Subsidy; Illustrative List; Subsidy; Sunset Review; Tokyo Round; Trade Agreements Act of 1979; U.S. International Trade Commission; Uruguay Round; Uruguay Round Agreements Act; World Trade Organization.

EXPORT TRADING COMPANY — A corporation or other business unit organized and operated principally for the purpose of exporting goods and services or of providing export-related services to other companies. The Export Trading Company Act of 1982 exempts authorized trading companies from certain provisions of U.S. antitrust laws. See also Antitrust; Webb-Pomerene Act.

EXPORTER'S SALES PRICE (ESP) — See Constructed Export Price.

EXPORTS — Goods and services produced in one country and sold in other countries in exchange for goods and services, gold, foreign exchange, or settlement of debt. Countries devote their domestic resources to exports because they can obtain more goods and services with the international exchange they earn from the exports than they would from devoting the same resources to the domestic production of goods and services. See also Comparative Advantage; Export Promotion; Ministry of International Trade and Industry; U.S. Foreign and Commercial Service.

EXPOSURE — See Reinsurance.

EXW — An international commercial term (Incoterm), meaning "ex-works," that is used in international sales contracts to signify a seller's obligation to make the goods available to a buyer only at the seller's premises (that is, works, factory, warehouse, and the like). Thus, the seller is not responsible for loading, shipping, export clearance, etc. unless otherwise agreed. All costs, risks, and obligations incurred from moving the goods from the seller's premises to the buyer's destination are borne by the buyer. See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ; DES; FAS; FCA; FOB; Incoterms.

A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

Factors of Production Factory System of Production Fair Fair Value FARA FAS Fast Track FCA FCN Final Act Floor Prices Florence Agreement FMV FOB FOR Foreign Agents Registration Act Foreign Exchange Foreign Exchange Controls Foreign Exchange Earnings Foreign Investment Foreign Market Value

Foreign Sales Corporation Foreign Trade Zone Forward Market FOT Framework Agreement Free Alongside Ship Free List Free on Board Free Port Free Trade Free Trade Area Free Trade Area Agreement Free Trade Area of the Americas Free Trade Zone Free Warehouse Free Zone Freedom, Commerce and    Navigation Treaty Freight Forwarder Fusion, Treaty of Futures

FACTORS OF PRODUCTION — All inputs — materials, labor, capital goods, and capital — necessary to produce a product. "Materials" refers to non-manmade materials, including raw materials, trees, energy, and land. "Labor" includes all forms of human productive effort. "Capital goods" represents manmade inputs, such as machines, equipment, and buildings. "Capital" is the money used to purchase other inputs, as well as interest costs. See also Capital; Capital Goods; Comparative Advantage; Infrastructure.

FACTORY SYSTEM OF PRODUCTION — See Industrial Revolution.

FAIR — See Trade Fair.

FAIR VALUE — See Dumping.

FARA — See Foreign Agents Registration Act.

FAS — An international commercial term (Incoterm), meaning "free alongside ship," that is used in sales contracts to signify a seller's obligation to pay the costs and assume all risks for transporting goods from his or her place of business to the point of embarkation where a vessel or plane selected by the buyer will accept the goods. In trade statistics, "FAS value" means that the import or export figures are calculated on this basis, regardless of the nature of individual transactions reflected in the statistics. See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FCA; FOB; Incoterms.

FAST TRACK — Procedures enacted by the U.S. Congress under which it votes without amendment and within a fixed period on legislation submitted by the president to approve and implement U.S. international trade agreements. The procedures apply only if the president consulted with the Congress as the agreement was negotiated and fulfilled other statutory requirements. Fast track procedures were used in negotiating the Tokyo Round agreements; the United States-Israel Free Trade Area Agreement; the United States-Canada Free Trade Agreement; the North American Free Trade Agreement; and the Uruguay Round agreements. In 1997, Congress failed to renew fast track authority. See also Multilateral Trade Negotiations; North American Free Trade Agreement; Tokyo Round; U.S.-Canada Free Trade Agreement; U.S.-Israel Free Trade Area Agreement; Uruguay Round.

FCA — An international commercial term (Incoterm), meaning "free carrier," that is used in international sales contracts to signify that a seller must deliver goods sold, cleared for export, to a carrier or freight forwarder specified by the buyer. The seller has no obligation with respect to import licensing or insurance. See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FAS; FOB; Incoterms.

FCN — See Freedom, Commerce, and Navigation Treaty.

FINAL ACT — See Uruguay Round; World Trade Organization.

FLOOR PRICES — See Buffer Stocks.

FLORENCE AGREEMENT — Officially known as the Agreement on the Importation of Educational, Scientific, and Cultural Materials. The Florence Agreement entered into force in 1952. It is sponsored by the United Nations Educational, Scientific, and Cultural Organization (UNESCO), which has a mandate under its charter to facilitate the exchange of publications, objects of artistic and scientific interest, and other materials or information, and to recommend international agreements that will promote the free flow of ideas. The agreement provides for the duty-free entry, under specified conditions, of various categories of materials for educational, scientific, and cultural use.

FMV — See Normal Value.

FOB — An international commercial term (Incoterm), meaning "free on board," used in international sales contracts. In an FOB contract, a buyer and a seller agree on a designated FOB point. The seller assumes the cost of having goods packaged and ready for shipment from the FOB point, whether this is his/her own place of business or some intermediate point. The buyer assumes the costs and risks from the FOB point, including inland transportation costs and risks in the exporting country, as well as all subsequent transportation costs, including the costs of loading the merchandise on a vessel. If the contract stipulates "FOB vessel," the seller bears all transportation costs to the vessel named by the buyer, as well as the costs of loading the goods on that vessel. The same principle applies to the abbreviations "FOR" ("free on rail") and "FOT" ("free on truck"). See also CFR; CIF; CIP; CPT; DAF; DDP; DDU; DEQ; DES; EXW; FAS; FCA; Incoterms.

FOR — See FOB.

FOREIGN AGENTS REGISTRATION ACT (FARA) — Legislation designed to guard against undue foreign influence on U.S. policy. FARA mandates public disclosure, through various reports to the U.S. Department of Justice, of certain relationships between individuals and entities in the United States and foreign interests. Subject to certain limited exemptions, there are four types of activities that require registration with the Justice Department when performed for a foreign interest by a person or firm in the United States (whether or not U.S. citizens or incorporated in the United States). First, registration is required when engaging in certain political activities, including all attempts to influence U.S. policy or public opinion on behalf of, or even at the request of, a foreign individual or entity. Second, those acting as public relations agents or political consultants in the interests of a foreigner must register. Third, those soliciting or disbursing funds or contributions in the interest of a foreigner must register. Finally, registration is required when representing the interests of a foreigner before the U.S. government.

FOREIGN EXCHANGE — Claims on a foreign country held in the form of the currency of that country or interest-bearing bonds. See also Currency; Money.

FOREIGN EXCHANGE CONTROLS — See Exchange Controls.

FOREIGN EXCHANGE EARNINGS — The proceeds from a country's exports of goods, services, and capital, normally denominated in convertible currencies. See also Currency; Foreign Exchange; Money.

FOREIGN INVESTMENT — Direct and portfolio investment. The International Investment and Trade in Services Survey Act defines foreign direct investment as "the ownership or control, directly or indirectly, by one person of 10 percent or more of the voting securities of a foreign incorporated business enterprise or an equivalent interest in a foreign unincorporated business enterprise." It defines portfolio investment as "any international investment which is not direct investment." It would generally represent an interest in a business enterprise that is less than 10 percent of the business enterprise's voting securities or equivalent interest. See Direct Investment.

FOREIGN MARKET VALUE (FMV) — See Normal Value.

FOREIGN SALES CORPORATION (FSC) — An offshore corporation, authorized by the Deficit Reduction Act of 1984, that is eligible for an exemption from U.S. federal income taxes on part of its related income. An FSC earns export-related trade income by selling or leasing export property or by supplying export-related services. The exempt portion of the FSC's foreign trade income is also not taxed when it is distributed to U.S. corporate shareholders. An FSC must be organized under the laws of a country that has an exchange of information agreement with the United States or in a qualifying U.S. possession. The FSC is the successor to the Domestic International Sales Corporation (DISC), which was authorized by the U.S. Revenue Act of 1971.

FOREIGN TRADE ZONE — See Free Zone.

FORWARD MARKET — A market in which contracts for future deliveries of goods and securities on a specified date are entered into at fixed prices. The contracts themselves are popularly known as "futures." Many commodity exchanges — wool, cotton, and wheat, for example — have established forward markets that permit interested parties to hedge against changes in the prices of the raw materials they use or deal in. See also Commodity; Hedge; Market; Spot Market.

FOT — See FOB.

FRAMEWORK AGREEMENT — A bilateral agreement between the United States and a trading partner that establishes certain principles that apply to that trade and investment relationship and that also establishes a consultative mechanism that can be used to clarify respective trade policies, resolve specific disputes, or negotiate the reduction or removal of trade or investment barriers. The United States signed its first such agreement with Mexico in November 1987, with similar agreements subsequently signed with the Philippines and numerous countries in South America, Central America, and the Caribbean. With reference to the GATT and the WTO, framework agreement refers collectively to four separate decisions concluded during the Tokyo Round and intended to improve the working of some fundamental provisions of the GATT. The four decisions are:

• "Differential and More Favorable Treatment, Reciprocity, and Fuller Participation of Developing Countries." Expands on the concept of special and beneficial treatment for developing countries (LDCs) in the international trading system first established in Part IV of the GATT, reiterating the commitment that concessions should not be expected of LDCs that would be inconsistent with their economic development. The decision also provides guidelines for trade preferences among LDCs and for the generalized system of preferences granted by developed countries for LDC imports. Developing countries recognize that, as their economies grow stronger, it is expected that they will participate more fully in the framework of GATT rights and obligations.
  
• "Declaration on Trade Measures Taken for Balance of Payments Purposes." States principles and codifies practices and procedures regarding the use of trade measures and restrictions applied by governments under GATT Articles XII and XVIII to defend the balance of payments.
• "Safeguard Action for Development Purposes." Elaborates on provisions in Article XVIII, allowing for protection of LDC "infant industries," and gives LDCs more flexibility in applying trade measures to meet their essential development needs.
• "Understanding Regarding Notification, Consultation, Dispute Settlement, and Surveillance." Provides for improvements in the existing mechanisms concerning notification of trade measures, consultations, dispute settlement, and surveillance of developments in the international trading system.