Table 1 Glossary of trade policy terminology and definitions

Customs valuation

Customs procedure applied to determine the customs value of imports.

Foreign direct investment (FDI)

An investment in a country other than that of the investor, involving a long-term relationship and substantial, but not necessarily majority, interest in an enterprise by the investor. Foreign direct investment can take place through direct entry or investment in existing firms.

General Agreement on Trade in Services (GATS)

WTO agreement governing services trade. Requires member countries to provide national treatment to foreign service providers in those service industries that they have agreed to liberalise under GATS.

General Agreement on Tariffs and Trade (GATT)

Multilateral FTA first signed in 1947 between 23 countries. Superceded by the WTO in 1995. Updated GATT (1994) is now one of the WTO’s agreements.

Import licensing

Controls imposed by the state on importers.

National treatment (NT)

The principle of giving foreign firms ‘no less favourable’ treatment than domestic firms/goods once border measures have been applied. Internal tax and regulatory measures must be applied equally to imported and domestic goods or committed (scheduled) services in order to avoid trade disputes.

Non-tariff measures/barriers to trade

Government measures other than tariffs that restrict trade flows (e.g. quantitative restrictions on goods or services, import licensing, variable levies, import barriers and Technical Barriers to Trade.

Policy space

The freedom, scope and mechanisms that governments have to choose, design and implement public policies to fulfil their aims.

Pre-shipment Inspection

WTO Agreement focussing on quality control to check shipment details such as price, quantity and quality of goods ordered overseas.

Rules of Origin (ROO)

Criteria needed to determine the national source of a product. ROO is particularly important for the enforcement of duties and restrictions depending on the source of products.

Sanitary and phytosanitary (SPS) measures

Technical barriers designed for the protection of human health or the control of animal and plant pests and diseases.

Subsidies and Countervailing Measures/Safeguards

WTO member countries agreed to the use of disciplinary measures against subsidies and this agreement also regulates actions WTO member countries can take to counter the effects of subsidies.

Tariffs, applied tariffs/rates, and bound tariffs/rates

An applied tariff/rate is a custom duty (tax) applied on imported goods at the border. Tariffs are levied either on an ad valorem basis (percentage of value) or on a specific basis (e.g. by weight or volume). Bound tariffs/rates are enforceable and are the highest rate that a WTO member country can charge on imports without attracting an appeal for compensation by the affected country. For this reason, tariffs/rates actually applied on imports are typically lower than bound tariffs/rates.

Technical Barriers to Trade (TBT)

Non-tariff regulations, standards, testing and certification procedures, which can create obstacles to trade. WTO member countries agreed to the use of disciplinary measures against TBTs on both industrial and agricultural products as part of the Uruguay Round of multilateral trade negotiations (1986–1993).

Trade agreement

A negotiated agreement between two or more countries to limit or alter their policies with respect to trade. Trade agreements can be bilateral, regional or multilateral.

Trade liberalization

The reduction or removal of barriers to trade in order to create a ‘free’ market in goods, services or finance.

TRIMs

The WTO’s Agreement on Trade-Related Investment Measures, which requires member countries to phase out (and refrain from implementing) trade distorting or restricting investment measures that are inconsistent with GATT principles.

TRIPS

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights which stipulates minimum standards of intellectual property protection.

World Trade Organization

Replaced the GATT in 1995 as the legal and institutional foundation of the multilateral trading system of member countries following the Uruguay Round.