Glossary of Trade Terms - S to Z
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Ss
Safeguards
Clause
A WTO member may take a "safeguard"
action (i.e., restrict imports of a product temporarily) to protect
a specific domestic industry from an increase in imports of any
product which is causing, or which is threatening to cause, serious
injury to the industry. Safeguard measures were always available
under the GATT Article XIX (the safeguards clause). In 1995, the
Agreement of Safeguards came into force.
The Agreement on the Application of Sanitary and
Phytosanitary Measures (the "SPS Agreement") entered into
force with the establishment of the World Trade Organisation on 1
January 1995. It concerns the application of food safety and animal
and plant health regulations.
It builds on previous GATT rules to restrict the
use of unjustified sanitary and phytosanitary measures for the
purpose of trade protection. The basic aim of the SPS Agreement is
to maintain the sovereign right of any government to provide the
level of health protection it deems appropriate, but to ensure that
these sovereign rights are not misused for protectionist purposes
and do not result in unnecessary barriers to international trade.
The SPS Agreement encourages governments to
establish national SPS measures consistent with international
standards, guidelines and recommendations. This process is often
referred to as "harmonisation". The WTO itself does not
and will not develop such standards.
Go to the WTO website for further
information or the full text of the SPS
Agreement
The view that a country is better off providing
for its own needs than depending on imports. It may be based on fear
that war or foreign governments will interrupt imports.
The ministerial conference can take decisions on
all matters under any of the multilateral trade agreements. This
conference has to meet at least once very two years. The ministers
met for the first time in Singapore in December 1996. This
conference included plenary meetings and various multilateral,
plurilateral and bilateral business sessions. These examined issues
related to the work of the WTO's first two years of activity and the
implementation of the Uruguay Round Agreements. The Singaporean
Government was the official host of the Ministerial.
The purpose of the meeting was:
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To assess the implementation of our commitments under the WTO
Agreements and decisions;
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To review the ongoing negotiations and Work Programme;
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To examine developments in world trade; and
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To address the challenges of an evolving world economy.
Go to the WTO website for the Ministerial
Declaration of this meeting
In December 1985 the heads of states of
Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri
Lanka adopted the charter that formally established the South Asian
Association of Regional Co-operation (SAARC). The main purpose of
SAARC is the acceleration of the process of economic and social
development in member states through collective action in agreed
areas of co-operation.
General provisions and principles of SAARC
include the following:
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Co-operation in SAARC is based on respect for the principles
of sovereign equality, territorial integrity, political
independence, non-interference in the internal affairs of the
other states and mutual benefit.
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The co-operation is complementary to and not a substitute for
bilateral or multilateral co-operation. This co-operation should
therefore be consistent with bilateral and multilateral
obligations of Member States.
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Bilateral and controversial issues will not be included in the
discussions/negotiations of the Association.
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All decisions of SAARC will be taken on the basis of
unanimity.
Regarding economic co-operation within SAARC, the
creation of the South Asian Preferential Trading Agreement (SAPTA)
in 1995 provided about 2000 tariff concessions. In 1997 Member
States of SAARC agreed to establish a South Asia Free Trade Area (SAFTA)
by 2001. An Intergovernmental Expert Group (IGEG) was set up to
identify the necessary steps towards moving into a free trade area
and has drawn up an action plan to achieve SAFTA. Political tensions
between India and Pakistan make it difficult to reach SAFTA by 2001
however.
For more information go to the SAARC
website
SADC was created in 1992 as the successor of
Southern African Development Co-ordination Conference (SADCC). SADCC
was originally created to reduce the dependence of the region on
South Africa and to seek foreign financial support for development
projects that could not economically be undertaken by any one of its
member countries individually. The political changes in South Africa
and the disappearance of the destabilisation policy of the Apartheid
era, however, brought about a gradual change in the philosophy of
SADCC. Thus, from a political alliance, SADCC (now called Southern
African Development Community or SADC) became yet another
preferential trade grouping in the region. Current member states are
Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho,
Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa,
Swaziland, Tanzania, Zambia and Zimbabwe.
SADC's objective is to create a common market
with completely free trade in goods and services and free factors
movement among the partners, although no precise timetable for
internal liberalisation is set.
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Specific legal provisions giving developing and
least-developed countries preferential treatment are included
throughout the WTO agreements.
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The special provisions include:
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longer time periods for implementing agreements and
commitments,
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measures to increase trading opportunities for these countries
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provisions requiring all WTO members to safeguard the trade
interests of developing countries,
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and support to help developing countries build the
infrastructure for WTO work, handle disputes, and implement
technical standards.
Rules and procedures specifying characteristics
that must be met for products to be sold in a country's domestic
market, typically to protect health and safety. When these put
foreign producers at a disadvantage, they may constitute a Non
Tariff Barrier.
The use of trade policies, including tariffs, subsidies, and even
export
subsidies, in a context of imperfect
competition and/or increasing
returns to scale to alter the outcome of international
competition in a country's favour, usually by allowing its firms to
capture a larger share of industry profits.
This is an important principle in the European
Union. It is intended to ensure that decisions are taken as closely
as possible to the citizen and that constant checks are made as to
whether action at Community level is justified in the light of the
possibilities available at national, regional or local level.
Specifically, it is the principle whereby the Union does not take
action (except in the areas which fall within its exclusive
competence) unless it is more effective than action taken at
national, regional or local level.
This agreement does two things: it disciplines
the use of subsidies, and it regulates the actions countries can
take to counter the effects of subsidies.
The agreement defines three categories of
subsidies: prohibited, actionable and non-actionable.
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Prohibited subsidies: subsidies that require recipients to
meet certain export targets, or to use domestic goods instead of
imported goods. If domestic producers are hurt by imports of
subsidised products, countervailing duty can be imposed.
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Actionable subsidies: in this category the complaining country
has to show that the subsidy has an adverse effect on its
interests. Otherwise the subsidy is permitted. Again, if
domestic producers are hurt by imports of subsidised products,
countervailing duty can be imposed.
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Non-actionable subsidies: these can either be non-specific
subsidies, or specific subsidies for industrial research and
pre-competitive development activity, assistance to
disadvantaged regions, or certain types of assistance for
adapting existing facilities to new environmental laws or
regulations. Non-actionable subsidies cannot be challenged in
the WTO’s dispute settlement procedure, and countervailing
duty cannot be used on subsidised imports. But the subsidies
have to meet strict conditions.
Go to the WTO website for the
full text of the SCM Agreement
A payment by government, perhaps implicit, to the
private sector in return for some activity that it wants to reward,
encourage, or assist.
In the balance of payments, or in any category of
international transactions within it, the surplus is the sum of
credits minus the sum of debits. Also called simply the
"balance" for that category.
The concept of sustainable development refers to
a form of economic growth, which satisfies society's needs in terms
of well-being in the short, medium and - above all - long terms. It
is founded on the assumption that development must meet today's
needs without jeopardising the prospects of future generations. In
practical terms, it means creating the conditions for long-term
economic development with due respect for the environment.
Tt
A tax on trade, usually an import tariff but
sometimes used to denote an export tax. Tariffs may be ad valorem
(i.e. defined as a percentage of the value of an imported good) or
specific/ lump sum (i.e. specified as an amount of currency per unit
of the good).
Commitment not to increase a rate of duty beyond
an agreed level. Once a rate of duty is bound, it may not be raised
without compensating the affected parties.
Refers to the tendency in a country’s tariff
schedule for import duties to be higher on semi-processed products
than on raw materials, and higher still on finished products. This
practice protects domestic processing industries and discourages the
development of processing activity in the countries where raw
materials originate.
Relatively high tariffs, usually on
"sensitive" (i.e. regarded as especially vulnerable to
import competition) products, amidst generally low tariff levels.
For industrialised countries, tariffs of 15 per cent and above are
generally recognised as "tariff peaks".
A lower (or zero) tariff on a product from one
country than is applied to imports from most countries. This
violation of the Most Favoured Nation (MFN) principle is permitted
in special cases, including some Preferential Trade Arrangements
(PTA) and the Generalised System of Preferences (GSP).
A combination of an import tariff and an import
quota in which imports below a specified quantity enter at a low (or
zero) tariff and imports above that quantity enter at a higher
tariff. Also called a tariff-rate quota.
The presence of (high) tariffs in a specific
industry in a country. The term is used to highlight the difficulty
foreign sellers have in getting their products past the tariff,
often in the context of the incentive therefore provided for ICM.
The process of one country raising its tariff to
secure some advantage, to which another country responds by raising
its tariff, the first raises its tariff still further, etc.
A requirement of characteristics (such as
dimensions, quality, performance, or safety) that an imported
product must meet.
This agreement extends and clarifies the
Agreement on Technical Barriers to Trade reached in the Tokyo Round.
It seeks to ensure that technical negotiations and standards, as
well as testing and certification procedures, do not create
unnecessary obstacles to trade. However, it recognises that
countries have the right to establish protection, at levels they
consider appropriate, for example for human, animal or plant life or
health or the environment, and should not be prevented from taking
measures necessary to ensure those levels of protection are met. The
agreement therefore encourages countries to use international
standards where these are appropriate, but it does not require them
to change their levels of protection as a result of standardisation.
Go to the WTO website for the full text of the TBT
Agreement
The relative price of a country's exports
compared to its imports.
The effect of a tariff on the terms of trade. By
reducing the demand for imports, a tariff levied by a large country
causes the prices of those imported goods to fall on the world
market relative to the country's exports, improving its terms of
trade.
The 7th round
of multilateral trade negotiations that took place under GATT
auspices, commencing 1973 and completed in 1979. The Tokyo Round was
the first major attempt to tackle trade barriers that do not take
the form of tariffs, and to improve the system.
The codes of behaviour negotiated in the Tokyo
Round covering several Non
Tariff Barriers, arising from customs
valuation, standards, government
procurement, etc. Participation was optional, each code covering
only those countries that chose to sign.
Trade that occurs between members of a Preferential
Trading Agreement (PTA) that replaces what would have been
production in the importing country were it not for the PTA.
Associated with welfare improvement for the importing country since
it reduces the cost of the imported good.
Trade facilitation is often defined as "the
simplification and harmonisation of international trade
procedures" with trade procedures being the "activities,
practices and formalities involved in collecting, presenting,
communicating and processing data required for the movement of goods
in international trade".
What goods a country trades, with whom, and in
what direction.
The agreement negotiated in the Uruguay Round
that incorporated issues of intellectual property into the WTO.
The three main features of the Agreement are:
The TRIPS Agreement is a minimum standards
agreement, which allows Members to provide more extensive protection
of intellectual property if they so wish. Members are left free to
determine the appropriate method of implementing the provisions of
the Agreement within their own legal system and practice. The
obligations under the Agreement will apply equally to all Member
countries, but developing countries will have a longer period to
phase them in.
Go to the WTO website for the full
text of the TRIPs Agreement
The Trade Related Investment Agreement,
negotiated during the Uruguay Round, applies only to measures that
affect trade in goods. Recognising that certain investment measures
can have trade-restrictive and distorting effects, it states that no
Member shall apply a measure that is prohibited by the provisions of
GATT Article III (national treatment) or Article XI (quantitative
restrictions). Examples of inconsistent measures, as spelled out in
the Annex's Illustrative List, include local content or trade
balancing requirements.
The agreement requires mandatory notification of
all non-conforming TRIMs and their elimination within two years for
developed countries, within five years for developing countries and
within seven years for least-developed countries.
For more information see the TRIMs
Agreement
A set of multilateral negotiations, held under
the auspices of the GATT/ WTO, in which countries exchanged
commitments to reduce tariffs and agreed to extensions of the GATT/
WTO rules. It discusses a package of issues instead of a single
issue.
Exports minus imports of goods and services, or
balance of trade.
Generally, a period in which each of two
countries alternate in further restricting trade from the other.
More specifically, it refers to the process of tariffs and
retaliation.
The average of a country's tariffs, weighted by
value of imports. It can be calculated as the ratio of total tariff
revenue to total value of imports.
A group of countries that are somehow closely
associated in international trade, usually in some sort of
Preferential Trade Agreement.
Degree to which trade policies and practices, and
the process by which they are established, are open and predictable.
The Treaty of Amsterdam entered into force on 1
May after ratification by all the EU Member States in accordance
with their respective constitutional requirements. The Treaty amends
certain provisions of the EU Treaty, the Treaties establishing the
European Communities and certain related acts. It does not replace
the other Treaties; rather, it stands alongside them.
The 1957 agreement among six countries of Western
Europe (Belgium, France, Germany, Italy, Luxembourg and the
Netherlands) to form the European Economic Community, which went
into effect January 1, 1958.
Uu
The United Nations was established on 24 October
1945 by 51 countries committed to preserving peace through
international co-operation and collective security. In February
2001, nearly every nation in the world belonged to the UN:
membership now totals 189 countries.
When States become Members of the United Nations,
they agree to accept the obligations of the UN Charter, an
international treaty, which sets out basic principles of
international relations. According to the Charter, the UN has four
purposes:
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to maintain international peace and security;
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to develop friendly relations among nations;
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to co-operate in solving international problems and in
promoting respect for human rights;
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to be a centre for harmonising the actions of nations.
UN Members are sovereign countries. The United
Nations is not a world government, and it does not make laws. It
does, however, provide the means to help resolve international
conflict and formulate policies on matters affecting all of us. At
the UN, all the Member States have a voice and vote in this process.
The International Monetary Fund, the World Bank
group and twelve other independent organisations known as "specialised
agencies" are linked to the UN through co-operative agreements.
These agencies are autonomous bodies created by intergovernmental
agreement. In addition, a number of UN offices, programmes and funds
work to improve the economic and social condition of people around
the world. All these organisations have their own governing bodies,
budgets and secretariats. Together with the United Nations, they are
known as the UN family, or the UN system.
For more information, see the United
Nations website
Established in 1964 as a permanent
intergovernmental body, UNCTAD is the principal organ of the United
Nations General Assembly in the field of trade and development.
Its main goals are:
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to maximise the trade, investment and development
opportunities of developing countries;
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to help developing countries face challenges arising from
globalisation and integrate into the world economy, on an
equitable basis.
UNCTAD pursues its goals through research and
policy analysis, intergovernmental deliberations, technical
co-operation, and interaction with civil society and the business
sector.
For more information, see the
UNCTAD website
The UN Development Programme (UNDP) is the UN's
largest provider of grants for sustainable human development, it
works in 174 countries and territories to facilitate technical
co-operation and eradicate poverty.
UNDP's mission is to provide the developing
countries with knowledge-based policy advice on the entire range of
issues that pertain to reducing poverty, building institutional
capacity, and managing the challenges of globalisation. UNDP has
special expertise and experience in several areas, including
democratic governance, pro-poor policies, conflict, post-conflict
and disaster situations, information and communications technology,
energy and environment policy and HIV/AIDS.
For more information, see the UNDP
website
The UN Environment Programme (UNEP) works to
encourage sound environmental practices everywhere. Its mission is
to provide leadership and encourage partnership in caring for the
environment by inspiring, informing, and enabling nations and
peoples to improve their quality of life without compromising that
of future generations. UNEP’s uniqueness lies in its advocacy of
environmental concerns within the international system.
For more information, see the UNEP
website
Multilateral trade negotiations, starting in
September 1986 in Punta del Este (Uruguay) and concluded in December
1993 in Geneva (Switzerland). The negotiations were signed in April
1994, in Marrakech (Marocco).
Go to the WTO for the Final
Act of the Uruguay Round
Vv
An arrangement whereby an exporting country
(government or industry) agrees to reduce or restrict exports
without the importing country having to make use of quotas, tariffs
or other import controls.
The use of policies to encourage imports, in
response to pressure from trading partners.
Same as a Voluntary Export Restraint (VER)
Ww
Permission granted by WTO members allowing a WTO
member not to comply with normal commitments. Waivers have time
limits and extensions have to be justified.
Founded in 1944, the World Bank Group is the
world's largest source of development assistance. The Bank is now
working in more than 100 developing economies, bringing a mix of
finance and ideas to improve living standards and eliminate the
worst forms of poverty. Through its loans, policy advice and
technical assistance, the World Bank supports a broad range of
programs aimed at reducing poverty and improving living standards in
the developing world.
The World Bank is made up of five institutions:
IBRD, IDA, IFC, MIGA, and ICSID.
For more information, see the World
Bank website
Established in 1952 as the Customs Co-operation
Council, the WCO is an independent intergovernmental body whose
mission is to enhance the effectiveness and efficiency of Customs
administrations. With 151 Member Governments, it is the only
intergovernmental world-wide organisation competent in Customs
matters. It promotes a transparent and predictable Customs
environment. Working closely together, the WCO, WTO and UNCTAD are
co-ordinating their efforts to remove the remaining barriers to
trade by simplifying and harmonising Customs procedures and
processes throughout the world. Combining the influence of the WTO,
UNCTAD and the WCO will contribute to both trade facilitation and
trade compliance.
For more information, see the WCO
website
A specialised agency of the United Nations with
191 Member States, WHO promotes technical co-operation for health
among nations, carries out programmes to control and eradicate
disease and strives to improve the quality of human life. The
objective of WHO is the attainment by all peoples of the highest
possible level of health.
WHO has four main functions:
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to give world wide guidance in the field of health;
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to set global standards for health;
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to co-operate with governments in strengthening national
health programmes;
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to develop and transfer appropriate health technology,
information and standards.
For more information, see the WHO
web-site:
With headquarters in Geneva, Switzerland, WIPO is
one of the 16 specialised agencies of the United Nations system of
organisations. It administers 21 international treaties dealing with
different aspects of intellectual property protection. The
Organisation counts 175 nations as member states.
WIPO is an international organisation dedicated
to helping to ensure that the rights of creators and owners of
intellectual property are protected world wide and that inventors
and authors are, thus, recognised and rewarded for their ingenuity.
This international protection stimulates human creativity, pushing
forward the boundaries of science and technology and enriching the
world of literature and the arts. By providing a stable environment
for the marketing of intellectual property products, it also
stimulates international trade.
For more information, see the WIPO
website
World
Trade Organisation (WTO)
The World Trade Organisation (WTO) is the only
global international organisation dealing with the rules of trade
between nations. At its heart are the WTO agreements, negotiated and
signed by the majority of the world’s trading nations and ratified
in their parliaments. The goal is to help producers of goods and
services, exporters, and importers conduct their business.
The World Trade Organisation came into being in
1995. The WTO is the successor of the General Agreement on Tariffs
and Trade (GATT) established in 1948. As of December 2000, the WTO
had 140 members.
For more information, see the WTO
website
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