Glossary of Trade Terms - M to R
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Mm
The Treaty signed in Maastricht on 7 February 1992
made progress towards a single currency (and monetary union)
irreversible, by splitting the timetable of achievements into three
stages. It defines five criteria -in the field of price stability,
budget deficits, government debt, interest rates and exchange rate
stability- that need to be met for the adoption of the Euro. This
resulted in the adoption of the Euro.
The three stages are the following:
Stage I (July 1990- January 1993): preparatory
period, in which capital restrictions were removed and convergence
programmes were adopted with objectives for inflation and budgetary
variables.
Stage II (January 1994-December 1999): a
transitional stage, in which the European Monetary Institute, a
forerunner of the European Central Bank, was set up. Member States
adapted their legislation, adopted budgetary requirements and
further prepared for the adoption of the Euro.
Stage III (January 1999-): adoption of the Euro.
Conversion rates of the countries participating in the Euro were
fixed irrevocably. The Euro will replace the national currencies in
January 2002. In addition, the European Central Bank was set up.
The ability of firms from one country to sell in
another.
Refers to the results in the "Final Act"
of the Uruguay Round. These Agreements are also called the Marrakesh
Agreements, because the Ministerial-level representatives of the 125
countries that took part in the Uruguay Round put their signatures
to the whole package of agreements that their negotiators had
reached four months earlier in April 1994, in Marrakesh, Morocco.
The Agreement establishes the WTO and defines the
institutional framework, objectives and functions of the new
organisation. In addition, a number of important specific Agreements
and Understandings negotiated during the Uruguay Round are
incorporated into this Agreement as Annexes: Annex 1 contains the
Multilateral Agreements on Trade in Goods (including GATT 1994, the
Agreements on Textiles and Clothing and on Agriculture, and other
agreements relating to non-tariff barriers, market access and
contingent trade remedies), the General Agreement on Trade in
Services (GATS) and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPs). Annex 2 of the Marrakesh
Agreement contains the Understanding on Rules of Procedures
Governing the Settlement of Disputes (DSU). Annex 3 contains the
provisions relating to the Trade Policy Review Mechanism (TPRM), and
Annex 4, the plurilateral agreements.
For the full text of these agreements,
see the WTO website
With the signing of the Treaty of Asuncion in 1991,
Argentina, Brazil, Paraguay and Uruguay created Mercosur. The
objective was to create a common market/customs union between the
four countries. In 1996 the Mercosur countries signed an association
agreement with Chile and Bolivia, establishing free trade areas with
these countries.
In 1994 the countries decided to start to realise a
common market and established an institutional structure in the
Treaty of Ouro Preto. While the institutional structure was inspired
by the EU model, the main difference between the EU and Mercosur
model being that Mercosur is based on a 100 percent
intergovernmental structure, i.e. there are no supranational central
institutions.
For more information, see the Mercosur
website
The permanent relocation of people from one country
to another.
Article I of GATT 1994 is an obligation that
requires not to discriminate between goods, services or companies on
the basis of their origin or destination.
The Multifibre Arrangement (MFA), more formally the
Arrangement Regarding International Trade in Textiles, entered into
force in 1974. It extended the coverage of the restrictions on
textiles and clothing from cotton products to wool and man-made
fibre products (and from 1986, certain vegetable fibre products).
Operationally, the MFA provided rules for the imposition of quotas,
either through bilateral agreements or unilateral actions, when
surges of imports caused market disruption or threat thereof in
importing countries
The Multifibre Arrangement was a major departure
from the basic GATT rules and particularly the principle of
non-discrimination. On 1 January 1995 it was replaced by the WTO
Agreement on Textiles and Clothing.
There are about 200 international agreements dealing
with various environmental issues currently in force. They are
called multilateral environmental agreements (MEAs). About 20 of
these include provisions that can affect trade: for example they ban
trade in certain products, or allowing countries to restrict trade
in certain circumstances. Among them are the Montreal Protocol for
the protection of the ozone layer, the Basel Convention on the trade
or transportation of hazardous waste across international borders,
and the Convention on International Trade in Endangered Species
(CITES).
In 1985 the Convention for establishing the
Multilateral Investment Guarantee Agency (MIGA) was concluded at the
World Bank. MIGA was established in April 1988. It is a multilateral
development agency and a member of the World Bank. According to the
Convention, the mission of MIGA is to enhance the flow to developing
countries of capital and technology for productive purposes under
conditions consistent with their development needs, policies and
objectives, on the basis of fair and stable standards for the
treatment of foreign investment.
MIGA carries out the following activities:
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supplementing national and private agencies that
support ICM through their own investment insurance programmes;
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providing viable alternatives in investment
insurance against non-commercial risks in developing countries,
thereby increasing investment opportunities in developing
countries;
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providing technical assistance to improve the
environment for ICM to developing countries, by dissemination of
information on investment opportunities, enhancing national
investment promotion capabilities and the provision of
programmes.
For more information, see the MIGA
website
The Multilateral Trade System (MTS) is based on the
rule of non-discrimination, which is reflected in two basic
principles:
1) National Treatment: No discrimination between
national and foreign products.
2) Most-Favoured Nation treatment: no discrimination
among the like products of different WTO Members.
Both principles are, in addition, progressively
expanding beyond "products" towards non discrimination
among "producers".
A firm, usually a corporation, that operates in two
or more countries. In practice the term is used interchangeably with
multilateral corporation.
Nn
Article III of GATT 1994, which is an obligation
that requires imports to be no treated less favourably than
domestically produced goods once they have entered the country.
Refers to a group of countries previously regarded
as developing countries that have recently achieved high rates and
levels of economic growth.
Non Governmental Organisation.
Any policy that interferes with exports or imports
other than a simple tariff, prominently including quotas and VERs
Other examples are import licensing systems,
sanitary regulations, prohibitions, etc.
The agreement to form a free trade area among the
United States, Canada, and Mexico that went into effect January 1,
1994. The objectives of this Agreement are to:
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eliminate barriers to trade in, and facilitate
the cross-border movement of, goods and services between the
territories of the Parties;
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promote conditions of fair competition in the
free trade area;
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increase substantially investment opportunities
in the territories of the Parties;
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provide adequate and effective protection and
enforcement of intellectual property rights in each Party's
territory;
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create effective procedures for the
implementation and application of this Agreement, for its joint
administration and for the resolution of disputes; and
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establish a framework for further trilateral,
regional and multilateral co-operation to expand and enhance the
benefits of this Agreement.
For more information, see the NAFTA
secretariat website
O
An agreement among a group of exporting and
importing countries (government or industry) to restrict the
quantities traded of a good or group of goods without the importing
country having to make use of quotas, tariffs or other import
controls. Since the impetus normally comes from the importers
protecting their domestic industry, an OMA is effectively a
multi-country VER.
An international organisation of developed countries
that "provides governments a setting in which to discuss,
develop and perfect economic and social policy." Membership is
limited only by a country's commitment to a market economy and a
pluralistic democracy.
In January 2001, it had 29 member countries.
Exchanges between OECD governments flow from
information and analysis provided by a Secretariat in Paris. Parts
of the OECD Secretariat collect data, monitor trends, analyse and
forecast economic developments, while others research social changes
or evolving patterns in trade, environment, agriculture, technology,
taxation and more. This work, in areas that mirror the policy-making
structures in ministries of governments, is done in close
consultation with policy-makers who will use the analysis, and it
underpins discussion by member countries when they meet in
specialised committees of the OECD. Much of the research and
analysis is published.
For more information, see the OECD,
website
OPEC is an international Organisation of eleven
developing countries, which are heavily reliant on oil revenues as
their main source of income. Membership is open to any country which
is a substantial net exporter of oil and which shares the ideals of
the Organisation. The Members are Algeria, Indonesia, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab
Emirates and Venezuela (January 2001).
Since oil revenues are so vital for the economic
development of these nations, they aim to bring stability and
harmony to the oil market by adjusting their oil output to help
ensure a balance between supply and demand. Twice a year, or more
frequently if required, the Oil and Energy Ministers of the OPEC
Members meet to decide on the Organisation's output level, and
consider whether any action to adjust output is necessary in the
light of recent and anticipated oil market developments.
For more information, see the
OPEC website:
Pp
The Agreement in Agriculture contains a "due
restraint" or "peace clause" which regulates the
application of other WTO agreements to subsidies in respect of
agricultural products (Article 13).
The provisions provide that Green Box domestic
support measures cannot be the subject of countervailing duty action
or other subsidy action under the WTO Agreement on Subsidies and
Countervailing Measures, nor can they be subject to actions based on
non-violation nullification or impairment of tariff concessions
under the GATT. Other domestic support measures which are in
conformity with the provisions of the Agreement on Agriculture may
be the subject of countervailing duty actions, but due restraint is
to be exercised by Members in initiating such investigations.
Further, in so far as the support provided to individual products
does not exceed that decided in the 1992 marketing year, these
measures are exempt from other subsidy action or nullification or
impairment action. Corresponding provisions cover, to the extent
relevant, export subsidies conforming to the Agreement on
Agriculture.
This principle can be applied to manage risks in
situations where there is scientific uncertainty of the effects on
human health and the environment. This principle is often applied by
restricting imports that might have adverse effects on health or the
environment. Because it is applied in cases where there is
scientific uncertainty, there is a risk that the principle is used
in an arbitrary way or as a form of protectionism
A group of countries that levies lower (or zero)
tariffs against imports from members than outsiders. Includes Free
Trade Agreements (FTAs), Custom Unions and Common Markets.
Price discrimination is when a firm charges
different prices to different consumers for the same goods or
services. When this occurs internationally and the lower price is
charged for export, it is regarded as dumping.
A firm's product that is not identical to products
of other firms in the same industry. The term is sometimes applied
to products produced by a country, even though there are many firms
within the country whose products are the same, if buyers
distinguish products based on country of origin. This is called the
Armington assumption.
A tariff that reduces imports to zero.
Qq
The United States, Canada, the European Union, and
Japan.
A restriction on trade, usually imports, limiting
the quantity or value of the good or service that is traded. A quota
is the most common example, but VERs usually take the form of QRs.
A government-imposed quantitative restriction. An
import respectively an export quota specifies the quantity of an
imported respectively an exported good or service that may enter
respectively exit a country during a specified time period.
Typically, a quota is administered by issuing licenses that may be
sold or directly allocated to individuals or firms, domestic or
foreign.
Rr
The nominal exchange rate adjusted for inflation.
Unlike most other real variables, this adjustment requires
accounting for price levels in two currencies. The real exchange
rate (R) is: R = EP*/P where E is the nominal domestic-currency
price of foreign currency, P is the domestic price level, and P* is
the foreign price level
The use of an increased trade barrier in response to
another country increasing its trade barrier, either as a way of
undoing the adverse effects of the latter's action or of punishing
it. The term is also used for the formal procedure permitted under
the GATT whereby a country may raise discriminatory tariffs above
bound levels against a GATT member that has violated GATT rules and
not provided compensation.
Measure of relative export performance by country
and industry, defined as a country's share of world exports of a
good divided by its share of total world exports.
Laws, regulations and administrative procedures that
determine a product's country of origin. Such rules are included in
an agreement to form a Preferential Trade Agreement (PTA) specifying
when a good will cross between members without tariff. A decision by
a customs authority on origin can determine whether a shipment falls
within a quota limitation, qualifies for a tariff preference or is
affected by an anti-dumping duty. These rules can vary from country
to country. A typical ROO would be that a certain minimum percentage
of the value of the good must represent value added from within the
PTA; otherwise it is subject to the tariff that the importing
country applies to imports from outside the PTA.
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