Glossary

This glossary defines key terms used in NREC4410: International Agricultural Trade. The definitions are intentionally short and course-focused.

A

Absolute advantage
The ability of a country to produce a good using fewer resources than another country.

Ad valorem tariff
A tariff charged as a percentage of the value of an imported good.

Agricultural trade
International trade in primary agricultural products, processed food, livestock, fisheries, and related inputs.

Amber Box
Domestic support under the WTO Agreement on Agriculture that is considered trade-distorting and normally subject to limits.

Antidumping duty
An extra import duty imposed when dumping causes material injury to domestic producers.

Applied tariff
The tariff rate actually charged at the border.

Autarky
A situation in which a country does not trade internationally.

B

Binding
A WTO commitment not to raise a tariff above an agreed ceiling.

Bound tariff
The maximum tariff rate a WTO member has committed not to exceed.

Bilateral trade
Trade between two countries.

Bilateral revealed comparative advantage
A measure of whether one country exports a product to another country more intensively than it exports that product to the world on average.

C

CEPA
Comprehensive Economic Partnership Agreement. A broad trade agreement that may cover goods, services, investment, and cooperation.

Common market
A trade arrangement with free movement of goods and factors of production among members.

Comparative advantage
The ability of a country to produce a good at a lower opportunity cost than another country.

Compound tariff
A tariff that combines a specific tariff and an ad valorem tariff.

Consumer surplus
The difference between what consumers are willing to pay and what they actually pay.

Countervailing duty
A tariff imposed to offset the effect of a foreign subsidy that injures domestic producers.

Customs union
A trade agreement in which members remove internal trade barriers and adopt a common external tariff.

D

Deadweight loss
A loss of total welfare caused by inefficient production or consumption decisions.

Demand curve
A relationship showing how much consumers are willing to buy at different prices.

Depreciation
A fall in the value of a currency under a flexible exchange-rate system.

Diversification
Expansion of production or exports across a wider set of sectors or products.

Dumping
Selling exports at a price below normal value, such as below the domestic price or below cost.

E

Economic union
A deep form of regional integration with coordinated economic policies.

Effective rate of protection
Protection measured in terms of value added, considering tariffs on both final goods and imported inputs.

Equivalence
Under the SPS Agreement, recognition that another country’s measure achieves the same level of protection even if it uses a different method.

Exchange rate
The price of one currency in terms of another currency.

Excess demand
The amount by which domestic demand exceeds domestic supply at a given price. It is import demand.

Excess supply
The amount by which domestic supply exceeds domestic demand at a given price. It is export supply.

Export
A good or service produced in one country and sold to another country.

Export subsidy
A payment or incentive given by the government to encourage exports.

F

Factor abundance
The relative availability of factors of production, such as labor or capital, in a country.

Factor intensity
The relative use of factors of production in producing a good.

Fixed exchange rate
An exchange-rate system where the government or central bank maintains the currency at a target value.

Floating exchange rate
An exchange-rate system where the currency value is determined mainly by market demand and supply.

Food security
A situation in which people have reliable physical and economic access to sufficient, safe, and nutritious food.

Free trade
Trade without artificial restrictions such as tariffs, quotas, or unnecessary barriers.

Free trade area
An agreement in which members remove trade barriers among themselves but keep their own external tariffs.

G

GATT
General Agreement on Tariffs and Trade. The pre-WTO framework for multilateral trade rules.

Gravity model
A trade model in which trade increases with economic size and decreases with distance and trade costs.

Green Box
Domestic support under the WTO Agreement on Agriculture that has minimal or no trade-distorting effects.

H

Harmonization
The use of common or internationally recognized standards across countries.

Heckscher-Ohlin model
A trade model explaining trade patterns using differences in factor endowments and factor intensities.

HS code
Harmonized System code used to classify traded products.

I

Import
A good or service bought from another country.

Import demand
The quantity a country wants to import at each price.

Import quota
A quantitative limit on how much of a product can be imported.

Infant industry argument
The argument that young domestic industries may need temporary protection until they become competitive.

L

Large country
A country whose trade policy can affect world prices.

Local content requirement
A rule requiring a specified share of a product to be produced domestically.

M

Managed float
An exchange-rate regime in which the currency is mostly market-determined but the government may intervene.

Market access
The conditions under which exports can enter another country’s market.

MFN principle
Most-favored nation treatment. A WTO rule requiring equal treatment among WTO members unless an allowed exception applies.

Multilateral trade system
The global trade system based on rules negotiated among many countries.

N

National treatment
A WTO principle requiring imported goods to be treated no less favorably than similar domestic goods after entering the market.

Non-tariff measure
A policy other than a tariff that affects trade, such as standards, licensing, inspections, or quotas.

Normal value
The benchmark price used to assess dumping, often based on the domestic market price or production cost.

O

Opportunity cost
The value of what must be given up to produce one more unit of a good.

P

Partial equilibrium
Analysis of one market while holding other markets constant.

Preferential trade agreement
An agreement in which members give each other better market access than they give to non-members.

Producer surplus
The difference between the price producers receive and the minimum price they would accept.

Protectionism
Government policy that restricts trade to protect domestic producers.

Q

Quota rent
Profit earned by those who hold import licenses under a quota.

R

Regional trade agreement
A trade agreement among two or more countries that grants preferential treatment to members.

Ricardian model
A trade model explaining trade through differences in labor productivity and opportunity cost.

Risk assessment
Under the SPS Agreement, evaluation of risks to human, animal, or plant life or health.

S

Safeguard
Temporary import protection used when a surge in imports threatens serious injury to domestic producers.

Sanitary and phytosanitary measures
Measures used to protect human, animal, or plant life or health from risks such as pests, diseases, contaminants, or unsafe food.

Small country
A country whose trade policy does not affect world prices.

Specific tariff
A fixed monetary charge per unit of an imported good.

Stolper-Samuelson theorem
The result that trade raises the real return to a country’s abundant factor and lowers the real return to its scarce factor.

Supply curve
A relationship showing how much producers are willing to sell at different prices.

T

Tariff
A tax on imports or exports.

Tariff-rate quota
A two-tier tariff system with a lower tariff up to a quota quantity and a higher tariff above it.

TINA
Trade Intelligence and Negotiation Adviser. A platform used for tariff and trade-policy simulation.

Trade balance
Exports minus imports.

Trade creation
An increase in efficient trade caused by lower trade barriers within a trade agreement.

Trade diversion
A shift of imports from a lower-cost non-member to a higher-cost member because of preferential tariffs.

Trade liberalization
Reduction of trade barriers.

Trade openness
Exports plus imports relative to GDP.

W

Welfare
Economic well-being measured using concepts such as consumer surplus, producer surplus, government revenue, and total surplus.

World price
The price at which a good is traded internationally.

WTO
World Trade Organization. The international organization that administers multilateral trade rules.

--- title: "Glossary" --- This glossary defines key terms used in **NREC4410: International Agricultural Trade**. The definitions are intentionally short and course-focused. ## A **Absolute advantage** The ability of a country to produce a good using fewer resources than another country. **Ad valorem tariff** A tariff charged as a percentage of the value of an imported good. **Agricultural trade** International trade in primary agricultural products, processed food, livestock, fisheries, and related inputs. **Amber Box** Domestic support under the WTO Agreement on Agriculture that is considered trade-distorting and normally subject to limits. **Antidumping duty** An extra import duty imposed when dumping causes material injury to domestic producers. **Applied tariff** The tariff rate actually charged at the border. **Autarky** A situation in which a country does not trade internationally. ## B **Binding** A WTO commitment not to raise a tariff above an agreed ceiling. **Bound tariff** The maximum tariff rate a WTO member has committed not to exceed. **Bilateral trade** Trade between two countries. **Bilateral revealed comparative advantage** A measure of whether one country exports a product to another country more intensively than it exports that product to the world on average. ## C **CEPA** Comprehensive Economic Partnership Agreement. A broad trade agreement that may cover goods, services, investment, and cooperation. **Common market** A trade arrangement with free movement of goods and factors of production among members. **Comparative advantage** The ability of a country to produce a good at a lower opportunity cost than another country. **Compound tariff** A tariff that combines a specific tariff and an ad valorem tariff. **Consumer surplus** The difference between what consumers are willing to pay and what they actually pay. **Countervailing duty** A tariff imposed to offset the effect of a foreign subsidy that injures domestic producers. **Customs union** A trade agreement in which members remove internal trade barriers and adopt a common external tariff. ## D **Deadweight loss** A loss of total welfare caused by inefficient production or consumption decisions. **Demand curve** A relationship showing how much consumers are willing to buy at different prices. **Depreciation** A fall in the value of a currency under a flexible exchange-rate system. **Diversification** Expansion of production or exports across a wider set of sectors or products. **Dumping** Selling exports at a price below normal value, such as below the domestic price or below cost. ## E **Economic union** A deep form of regional integration with coordinated economic policies. **Effective rate of protection** Protection measured in terms of value added, considering tariffs on both final goods and imported inputs. **Equivalence** Under the SPS Agreement, recognition that another country’s measure achieves the same level of protection even if it uses a different method. **Exchange rate** The price of one currency in terms of another currency. **Excess demand** The amount by which domestic demand exceeds domestic supply at a given price. It is import demand. **Excess supply** The amount by which domestic supply exceeds domestic demand at a given price. It is export supply. **Export** A good or service produced in one country and sold to another country. **Export subsidy** A payment or incentive given by the government to encourage exports. ## F **Factor abundance** The relative availability of factors of production, such as labor or capital, in a country. **Factor intensity** The relative use of factors of production in producing a good. **Fixed exchange rate** An exchange-rate system where the government or central bank maintains the currency at a target value. **Floating exchange rate** An exchange-rate system where the currency value is determined mainly by market demand and supply. **Food security** A situation in which people have reliable physical and economic access to sufficient, safe, and nutritious food. **Free trade** Trade without artificial restrictions such as tariffs, quotas, or unnecessary barriers. **Free trade area** An agreement in which members remove trade barriers among themselves but keep their own external tariffs. ## G **GATT** General Agreement on Tariffs and Trade. The pre-WTO framework for multilateral trade rules. **Gravity model** A trade model in which trade increases with economic size and decreases with distance and trade costs. **Green Box** Domestic support under the WTO Agreement on Agriculture that has minimal or no trade-distorting effects. ## H **Harmonization** The use of common or internationally recognized standards across countries. **Heckscher-Ohlin model** A trade model explaining trade patterns using differences in factor endowments and factor intensities. **HS code** Harmonized System code used to classify traded products. ## I **Import** A good or service bought from another country. **Import demand** The quantity a country wants to import at each price. **Import quota** A quantitative limit on how much of a product can be imported. **Infant industry argument** The argument that young domestic industries may need temporary protection until they become competitive. ## L **Large country** A country whose trade policy can affect world prices. **Local content requirement** A rule requiring a specified share of a product to be produced domestically. ## M **Managed float** An exchange-rate regime in which the currency is mostly market-determined but the government may intervene. **Market access** The conditions under which exports can enter another country’s market. **MFN principle** Most-favored nation treatment. A WTO rule requiring equal treatment among WTO members unless an allowed exception applies. **Multilateral trade system** The global trade system based on rules negotiated among many countries. ## N **National treatment** A WTO principle requiring imported goods to be treated no less favorably than similar domestic goods after entering the market. **Non-tariff measure** A policy other than a tariff that affects trade, such as standards, licensing, inspections, or quotas. **Normal value** The benchmark price used to assess dumping, often based on the domestic market price or production cost. ## O **Opportunity cost** The value of what must be given up to produce one more unit of a good. ## P **Partial equilibrium** Analysis of one market while holding other markets constant. **Preferential trade agreement** An agreement in which members give each other better market access than they give to non-members. **Producer surplus** The difference between the price producers receive and the minimum price they would accept. **Protectionism** Government policy that restricts trade to protect domestic producers. ## Q **Quota rent** Profit earned by those who hold import licenses under a quota. ## R **Regional trade agreement** A trade agreement among two or more countries that grants preferential treatment to members. **Ricardian model** A trade model explaining trade through differences in labor productivity and opportunity cost. **Risk assessment** Under the SPS Agreement, evaluation of risks to human, animal, or plant life or health. ## S **Safeguard** Temporary import protection used when a surge in imports threatens serious injury to domestic producers. **Sanitary and phytosanitary measures** Measures used to protect human, animal, or plant life or health from risks such as pests, diseases, contaminants, or unsafe food. **Small country** A country whose trade policy does not affect world prices. **Specific tariff** A fixed monetary charge per unit of an imported good. **Stolper-Samuelson theorem** The result that trade raises the real return to a country’s abundant factor and lowers the real return to its scarce factor. **Supply curve** A relationship showing how much producers are willing to sell at different prices. ## T **Tariff** A tax on imports or exports. **Tariff-rate quota** A two-tier tariff system with a lower tariff up to a quota quantity and a higher tariff above it. **TINA** Trade Intelligence and Negotiation Adviser. A platform used for tariff and trade-policy simulation. **Trade balance** Exports minus imports. **Trade creation** An increase in efficient trade caused by lower trade barriers within a trade agreement. **Trade diversion** A shift of imports from a lower-cost non-member to a higher-cost member because of preferential tariffs. **Trade liberalization** Reduction of trade barriers. **Trade openness** Exports plus imports relative to GDP. ## W **Welfare** Economic well-being measured using concepts such as consumer surplus, producer surplus, government revenue, and total surplus. **World price** The price at which a good is traded internationally. **WTO** World Trade Organization. The international organization that administers multilateral trade rules.