Glossary

African Growth and Opportunity Act (AGOA): A United States law that amended its GSP to sub-Saharan African countries in 2000, to provide duty-free and quota-free market access to certain African products, such as textiles and apparel, until 2008. In July 2004, this was extended to 2015.

Comparative advantage exists when (in a world of perfect competition) a nation or economic region is able to produce a product at a lower cost relative to other goods, compared to another nation or region. The idea is that each country should specialise in goods that it is able to produce most efficiently.

Competitive advantage refers to the ability to produce a good at lower cost, in terms of its real resources, than another country.

Doha Development Agenda was agreed at the 4th WTO Ministerial in Doha, Qatar and is the basis of negotiations for the Doha Round. It emphasises that 'development' should be the primary result of the final trade negotiations.

Economic Partnership Agreements (EPA) are currently being negotiated between the EU and groups of ACP countries. EPAs try to shift the current non-reciprocal EU trade preferences to ACP countries to that which requires domestic market access for almost all products from the EU within a twelve-year period (2008 -2020).

Everything But Arms (EBA) Initiative is a preferential trade arrangement in the EU's revised GSP scheme that allows least developed countries to export all products (except arms and ammunition) duty-free and quota free to EU markets.

General System of Preferences (GSP) are tariff preferences granted by developed countries to let certain manufactured and semi-manufactured goods from developing countries enter their makets at lower tariffs than other developed or developing countries.

Multifibre Arrangement (MFA) is among developed country importers and developing country exporters of textiles and clothing to regulate and restrict the quantities traded. This was first negotiated in 1973 and was superseded in 1995 by the Agreement on Textiles and Clothing (ATC) to phase it out by 2005.

Non-tariff barriers are any policies or practices, other than tariffs, that interfere with exports or imports between countries. For example, globally agreed standards on quality of products and production processes can be considered non-tariff barriers.

Preference erosion is a process whereby countries enjoying trade preferences with a developed country begin to lose their advantage over other developing countries as a result of liberalisation. This can occur when the developed country eliminates preferences, expands the number of countries benefiting from preferential agreements or when it lowers its tariffs multilaterally or unilaterally without lowering preferential tariffs proportionately.

Rules of origin are used to determine in what country or customs union a product is considered to be made.

Special and Differential treatment (SDT) specifies that the rights and obligations of developing countries within the WTO should differ from those of developed countries. These provisions usually entail longer timeframes for complying with agreements and less stringent liberalisation requirements. SDT forms part of the overall WTO negotiations.

Terms of trade is the relative price of a country's exports compared to its imports. To improve the terms of trade means to increase the relative price of exports compared to imports because that would mean that a country earns more through exports than what it spends on imports.

Trade preferences are special advantages accorded to another country's exports, usually in order to promote that country's development. For instance,the EU may apply a lower (or zero) tariff on a product from one country than from the others.

Compiled by Shefali Sharma
shefali2005@gmail.com

For a complete glossary see:
www.economist.com/research/Economics/
www.smenetwork.net/marketing/tradeterms.htm

Views expressed on these pages are not necessarily those of DFID, IDS, id21 or other contributing institutions. Copyright remains with the original authors but (unless stated otherwise) any article may be copied or quoted without restriction, provided both source (id21, insights) and authors are properly acknowledged and informed. Copyright © 2004 id21. All rights reserved.