A Glossary of Agricultural
and World Trade Organization Terms
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Accession. The process of a country
becoming a member of an international agreement, such as the World Trade
Organization (WTO). Negotiations determine the specific obligations a nonmember
country must meet before it is entitled to full WTO membership benefits.
tariff. A government tax on imports
assessed as a percentage of the value of the goods cleared through customs. For
example, 10 percent ad valorem means the tariff is 10 percent of the
value of the goods.
Agenda 2000. An
across-the-board initiative by the European Union (EU) to reform its Common
Agricultural Policy (CAP), to prepare for future enlargement, to meet internal
budgetary concerns, to help meet its Uruguay Round Commitments (specifically
export subsidies), and to prepare for the new WTO round.
Aggregate Measure of Support (AMS).
Measure of the monetary value of the extent of government support to a sector.
The AMS, as defined in the Uruguay Round Agreement on Agriculture, includes both
budgetary outlays as well as revenue transfers from consumers to producers as a
result of policies that distort market prices. The AMS includes actual or
calculated amounts of direct payments to producers (such as deficiency
payments), input subsidies (on irrigation water, for example), the estimated
value of revenue transferred from consumers to producers as a result of policies
that distort market prices (market price supports), and interest subsidies on
commodity loan programs.
Agreement on Agriculture.
The Agreement on Agriculture is one of the 29 individual legal texts included
under an umbrella agreement establishing the WTO. The Agreement covers three
major areas related to agriculture: market access, export subsidies, and
Articles (of the GATT).
Clauses of the General Agreement that lay out the rules and procedures that
Contracting Parties will observe in their conduct of international trade and
trade policy. Each of the 38 Articles in the GATT deals with a different aspect
of trade. The GATT is now known as the World Trade Organization.
Balance of trade.
The difference between the value of goods and services that a nation exports and
the value of the goods and services it imports. A trade surplus occurs when a
country=s exports exceed its imports, resulting in a favorable trade balance.
Similarly, a trade deficit implies that imports total more than exports for a
country, producing an unfavorable trade balance.
Bound tariff rates, tariff binding.
Tariff rates resulting from GATT/WTO negotiations or accessions that are
incorporated as part of a country=s schedule of concessions. Bound rates are
enforceable under Article II of GATT. If a WTO member raises a tariff above the
bound rate, the affected countries have the right to retaliate against an
equivalent value of the offending country's exports or receive compensation,
usually in the form of reduced tariffs on other products they export to the
Amber box policies. A
popular expression to represent the set of provisions in the Agreement on
Agriculture that describes the domestic support policies presumed to have
the greatest potential effects on production and trade. Examples of these
policies in the United States include market price supports, marketing loans
and deficiency payments, and storage payments.
Blue box policies.
A popular expression to represent the set of provisions in the Agreement on
Agriculture that exempts from reduction commitments those payments from
production-limiting programs, such as diversion payments on set-aside land.
Green box policies.
A popular term that describes domestic support policies that are not subject
to reduction commitments under the Uruguay Round Agreement on Agriculture.
These policies are assumed to affect trade minimally, and include such
activities as research, extension, food security stocks, disaster payments,
the environment, and structural adjustment programs.
An informal association of 17 agricultural exporting countries, formed in 1986
at Cairns, Australia. The Cairns Group was a strong coalition in the Uruguay
Round of multilateral trade negotiations, seeking removal of trade barriers and
substantial reductions in subsidies affecting agricultural trade. Cairns Group
members are Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia,
Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, Philippines,
South Africa, Thailand, and Uruguay.
CCC commercial credit.
Refers to short- and intermediate-term commercial credit guarantee programs
operated by the U.S. Department of Agriculture's Commodity Credit Corporation (CCC).
The Export Credit Guarantee Program (GSM-102) guarantees repayment of private,
short-term credit (up to 3 years), while the Intermediate Export Credit
Guarantee Program (GSM-103) covers credit extended for 3 to 10 years. The
Supplier Credit Program offers short-term financing (up to 180 days). The
Facility Credit Program provides payment guarantees to facilitate the financing
of manufactured goods and services exported from the United States to improve or
establish agriculture-related facilities in emerging markets.
Codex Alimentarius Commission.
Created in 1962 by the Food and Agriculture Organization (FAO) and the World
Health Organization (WHO) to negotiate agreements among member countries on
international standards and safety practices for foods. The Codex standards are
minimum safety and hygiene levels that countries voluntarily apply to their
exports and imports of commodities for human consumption. The standards are
published in a listing called the Codex Alimentarius. Approximately 130
countries are members.
Common Agricultural Policy (CAP).
A set of regulations by which members of the European Union (EU) seek to merge
their individual agricultural programs into a unified effort to promote regional
agricultural development, fair and rising standards of living for the farm
population, stable agricultural markets, increased agricultural productivity,
and methods of dealing with food supply security.
A WTO principle that requires a member country that raises a tariff above its
bound rate, withdraws a binding, or otherwise violates a trade concession, to
lower other tariffs or make other concessions to offset the disadvantage
suffered by trading partners. The WTO provides that any country that believes
its trade interests have been adversely affected by changes in the import regime
of another country may request consultations with the offending country. If such
government-to-government consultations do not yield results satisfactory to the
concerned parties, the complaining country may seek the establishment of a
dispute settlement panel that, under the supervision of the WTO, will review the
facts and recommend compensations or other appropriate action.
A tariff reduction, tariff binding, or other agreement to reduce import
restrictions. In negotiations, a country may offer to reduce its own tariff and
nontariff trade barriers to induce other countries to reciprocate.
Discussions between two WTO members for the purpose of avoiding or resolving a
Countervailing duty (CVD).
An additional levy imposed on imported goods to offset subsidies provided to
producers or exporters by the government of the exporting country. A wide range
of practices are recognized as constituting subsidies that may be offset.
However, under WTO law, countervailing duties can only be imposed if it is
determined that the imports are causing or threatening to cause material injury
to a U.S. industry. Countervailing duties are permitted under Article VI of the
General Agreement on Tariffs and Trade (GATT) as long as they are in accordance
with the WTO Agreement on implementation of that article. The U.S. Department of
Commerce is responsible for investigating whether unfair subsidies exist. The
U.S. International Trade Commission is responsible for determining if a U.S.
industry has been injured.
The official schedule of subsidy commitments and tariff bindings as agreed to
under the WTO for member countries.
USDA programs that protect U.S. exporters or financial institutions against loss
due to nonpayment by a foreign buyer. See also CCC Commercial Credit.
Payments to farmers that are not linked to current production decisions. When
payments are decoupled, farmers make production decisions based on expected
provision. The total AMS includes a
specific commodity support only if it equals more than 5 percent of its value of
production, and noncommodity-specific support only if it exceeds 5 percent of
the value of total agricultural output. The de minimis rule excludes
support from the AMS if it does not exceed the 5-percent threshold.
Countries whose economies are mostly dependent on agriculture and primary
resources and do not have a strong industrial base. The term is often used
synonymously with less developed countries and underdeveloped countries. In the
WTO, developing country status is by self-designation and includes, for
agricultural products, countries such as Korea, Israel, and Singapore. The least
developed countries are a subset of developing countries.
Dispute Settlement Body (DSB).
The General Council of the WTO, composed of representatives of all member
countries, convenes as the Dispute Settlement Body to administer rules and
procedures agreed to in various agreements. The DSB has authority to establish
panels, adopt panel and appellate body reports, maintain surveillance of
implementation of rulings and recommendations, and authorize suspension of
concessions or other obligations under the various agreements.
Technically, the sale of products on the world market below the cost of
production to dispose of surpluses or gain access to a market. Dumping is
generally recognized as an unfair trade practice because it can disrupt markets
and injure producers of competitive products in an importing country.
European Union (EU).
An organization established by the Treaty of Rome in 1957. Originally composed
of the six European nations of Belgium, France, Germany, Italy, Luxembourg, and
the Netherlands, it has expanded to 15 nations. The EU attempts to unify and
integrate member economies by establishing a customs union and common economic
policies, including the Common Agricultural Policy (CAP). Member nations include
the original six nations plus Austria, Denmark, Finland, Greece, Ireland,
Portugal, Spain, Sweden, and the United Kingdom. In May of 2004, the following
additional countries will become members: Cyprus, Czech Republic, Estonia,
Hungary, Malta, Latvia, Lithuania, Poland, Slovakia, and Slovenia.
Special incentives, such as cash payments, extended by governments to encourage
increased foreign sales; often used when a nation's domestic price for a good is
artificially raised above world market prices.
Fast-track negotiating authority.
Presidential authority granted by Congress to negotiate trade agreements with
the understanding that the negotiated agreement will go before Congress for an
Aup@ or Adown@ vote without possibility of amendment and within a specified time
period. Also known as Trade Promotion Authority, this negotiating authority was
most recently passed by Congress in August 2002.
Food and Agriculture Organization (FAO).
An agency of the United Nations concerned with the distribution and production
of food and agricultural products around the world. Founded in 1945, FAO is
responsible for collecting, analyzing, and disseminating country data on food,
agriculture, and rural affairs. The agency also offers technical assistance and
operates training projects in many developing countries. Officially known as the
United Nation's Food and Agriculture Organization.
GATT (General Agreement on Tariffs and Trade).
An agreement originally negotiated in Geneva, Switzerland, in 1947 among 23
countries, including the United States, to increase international trade by
reducing tariffs and other trade barriers. The agreement provides a code of
conduct for international commerce and a framework for periodic multilateral
negotiations on trade liberalization and expansion. Before the formation of the
WTO, adherents to the GATT were referred to as AContracting Parties.@ Refers
also to the institution responsible for organizing and overseeing multilateral
trade negotiations and dispute resolution that was superseded by the WTO.
Cycles of multilateral trade negotiations conducted under the General Agreement
on Tariffs and Trade. Eight rounds have been completed since the GATT was
established in 1947.
Geneva, Switzerland. The GATT was created during this round.
Annecy, France. This round involved negotiations with nations that desired
GATT membership. Principal emphasis was on tariff reductions.
Torquay, England. This round continued accession and tariff reduction
Geneva, Switzerland. This round proceeded along the same track as earlier
rounds. The round also included the first revisions to the original GATT
Geneva, Switzerland. This round, referred to as the Dillon Round, involved
further revision of the GATT and the addition of more countries.
Geneva, Switzerland. Known as the Kennedy Round, this round was a hybrid of
the earlier product-by-product approach to negotiations and the new formula
tariff reduction approach with across-the-board tariff reductions.
Geneva, Switzerland. This round, also called the Tokyo Round, centered on
the negotiation of additional tariff cuts and developed a series of
agreements governing the use of a number of nontariff measures. More
countries were involved in the Tokyo Round than previous rounds (including
many developing countries and several East European countries).
Geneva, Switzerland. This round, termed the Uruguay Round because it was
launched in Punta del Este, Uruguay, focused on strengthening the GATT and
expanding its disciplines to new areas, including agriculture. The Agreement
on Agriculture is one of the 29 individual legal texts under an umbrella
agreement establishing the WTO.
Doha Development Agenda, or Doha Round, was initiated in Doha, Qatar, in
Generalized System of Preferences (GSP).
A policy that permits duty-free entry of certain imports from designated
developing countries. Among other things, the GSP may increase economic growth
in developing countries, help maintain favorable foreign relations with free
world developing countries, and may serve as a low-cost means of providing aid
to these nations. It is part of a coordinated effort of the industrial trading
nations to bring developing countries more fully into the international trading
system. Under the GSP, the United States provides nonreciprocal tariff
preferences for designated developing nations.
The partial or total loss of a benefit that was negotiated between WTO
contracting parties, due to an action, policy, or lack of action by one of the
parties. Impairment of WTO rights and obligations is subject to formal action
under WTO dispute settlement procedures. Also called nullification. See also bound
Quotas, tariffs, and embargoes used by a country to restrict the quantity or
value of a good that may enter that country.
The maximum quantity or value of a commodity allowed to enter a country during a
specified time period. A quota may apply to amounts of a commodity from specific
International trade barriers.
Regulations imposed by governments to restrict imports from, and exports to,
other countries. Tariffs, embargoes, import quotas, and unnecessary sanitary
restrictions are examples of such barriers.
The extent to which a country permits imports. A variety of tariff and
non-tariff trade barriers can be used to limit the entry of foreign products.
Most Favored Nation (MFN).
A core principle of the WTO, most recently referred to as Normal Trade Relations
Non-tariff trade barriers.
Government measures other than tariffs that restrict trade flows. Examples of
non-tariff barriers include quantitative restrictions, import licensing,
variable levies, import quotas, and technical barriers to trade.
Normal Trade Relations (NTR).
An agreement between countries to extend the same trading privileges to each
other that they extend to any other country. Under an NTR agreement, for
example, a country will extend to another country the lowest tariff rates it
applies to any third country. A country is under no obligation to extend NTR
treatment to another country, unless both are members of the WTO, or unless NTR
is specified in an agreement between them. In the WTO, NTR was formerly known as
The process by which member countries report to the WTO information on
commitments, changes in policies, and other related matters as required by the
Organization for Economic Cooperation and
Development (OECD). An organization
established in December 1960 to study and discuss trade and related matters.
Members include the United States, Canada, 15 member states of the European
Union, Norway, Iceland, Switzerland, Poland, Hungary, Czech Republic, Australia,
New Zealand, Mexico, Japan, Korea, Slovak Republic, and Turkey.
Producer subsidy equivalents (PSEs).
An economic concept used to estimate the effect of government policy by
measuring the amount of the cash subsidy or tax needed to hold farmers' incomes
at current levels if all government agricultural programs were removed. PSEs and
consumer subsidy equivalents (CSEs) are used to compare different policy tools
and their effects on farmer revenue and consumer costs across countries.
group of four trade ministers from the United States, EU, Canada, and Japan that
coordinates positions on trade issues in the WTO.
A group of five agriculture ministers from the United States, Canada, the
Japan, and Australia that meets periodically to
discuss current agriculture issues.
An action taken by one country against another for imposing a tariff or other
trade barrier. Forms of retaliation include imposing a higher tariff, import
restrictions, or withdrawal of previously agreed upon trade concessions. Under
the WTO, restrictive trade action by one country entitles the harmed nation to
Temporary measures implemented in order to protect an industry while it adjusts
to increased competition by foreign suppliers. Safeguards can include tariffs or
Sanitary and Phytosanitary (SPS) Measures.
Technical barriers designed for the protection of human health or the control of
animal and plant pests and diseases. Under the Uruguay Round Agreement on the
Application of Sanitary and Phytosanitary (SPS) Measures, WTO member countries
agreed to base any SPS measures on an assessment of risks posed by the import in
question and to use scientific methods in assessing the risk.
Part of the U.S. Trade Act of 1974 (P.L. 93-618) that allows the President to
provide relief to industries hurt by competing imports. Growers or trade
associations must petition the International Trade Commission to investigate
complaints of injury caused by imports. Also known as safeguards.
A provision of the U.S. Trade Act of 1974 (P.L. 93-618) that allows the
President to take appropriate action to persuade a foreign government to remove
any act, policy, or practice that violates an international trade agreement. The
provision also applies to practices of a foreign government that are
unjustified, unreasonable, or discriminatory, and burden or restrict U.S.
Special and differential treatment.
A principle allowing developing countries to have lesser reduction commitments
than developed countries. In the Uruguay Round, disciplines applying to
developing and least-developed countries were less stringent than those applying
to developed countries.
State trading enterprises (STEs).
Government-controlled trading agencies used by countries such as Canada,
Australia, and New Zealand to receive and market domestic products in domestic
and international markets. STEs also encompass the practice of conducting trade
exclusively through a government agency.
direct or indirect benefit granted by a government for the production or
distribution (including export) of a good. Examples include any national tax
rebate on exports; financial assistance on preferential terms; financial
assistance for operating losses; assumption of costs of production, processing,
or distribution; a differential export tax or duty exemption; domestic
consumption quota; or other methods of ensuring the availability of raw
materials at artificially low prices. Subsidies are usually granted for
activities considered to be in the public interest.
tax imposed on imports by a government. A tariff may be either a fixed charge
per unit of product imported (specific tariff) or a fixed percentage of value (ad
Tariff treatment accorded to a country that is more favorable than that given to
countries outside the preferential arrangement.
The process of converting nontariff trade barriers to bound tariffs. This was
done under the Uruguay Round Agreement on Agriculture in order to improve the
transparency of existing agricultural trade barriers and facilitate their
Tariff-rate quota (TRQ).
Application of a higher tariff rate to imported goods after a certain
quantitative limit (quota) has been reached. A lower tariff rate applies to any
imports below the quota amount.
Developing countries and particularly the least-developed countries need
financial, human, and institutional assistance in order to be able to implement
several WTO agreements.
Technical Barriers to Trade (TBT).
Refers to regulations, standards (including packaging, marking, and labeling
requirements), testing and certification procedures, and other non-tariff
barriers that can create obstacles to trade. Under the Uruguay Round Agreement
on Technical Barriers to Trade (TBT Agreement), WTO members agreed to
disciplines on the use of these measures as they apply to both industrial and
The Three Sisters. The
WTO’s Sanitary and Phytosanitary Agreement identifies three standard-setting
organizations: the Food and Agriculture Organization-World Health Organization
Codex Alimentarius for
food safety; the International Office for
Epizootics (OIE) for animal health; and the International Plant Protection
Convention (IPPC) for plant health.
Regulations used by governments to restrict imports from, and exports to, other
countries. Examples include tariffs, nontariff barriers, embargoes, and import
See Balance of trade.
Trade Promotion Authority.
See Fast-track negotiating authority.
The degree to which trade policies and practices and the process by which they
are established, are published in timely fashion for use by foreign suppliers,
and are predictable.
Unfair trade practices.
Actions by a government or firms that result in competitive advantages in
international trade. Such actions include export subsidies, dumping, boycotts,
or discriminatory shipping arrangements. Under U.S. Section 301, the President
is required to take appropriate action, including retaliation, to obtain removal
of policies or actions by a foreign government that violate an international
agreement or are unjustifiable, unreasonable, or discriminatory, and burden or
restrict U.S. commerce.
U.S. Trade Representative (USTR).
Cabinet-level head of the Office of the U.S. Trade Representative, the principal
trade policy agency of the U.S. Government. The U.S. Trade Representative is
also the chief U.S. delegate and negotiator at all major trade talks and
negotiations. The USTR is part of the Executive Office of the President.
The difference between the price of a foreign product at the port and the
official price at which competitive imports can be sold. Such levies are
effectively a variable tax on imports or a variable subsidy to exports.
World Trade Organization (WTO).
Established on Jan. 1, 1995, as a result of the Uruguay Round, the WTO replaces
the General Agreement on Tariffs and Trade as the legal and institutional
foundation of the multilateral trading system of member countries. It provides
the principal contractual obligations determining how governments frame and
implement domestic trade legislation and regulations. And it is the platform on
which trade relations among countries evolve through collective debate,
negotiation, and adjudication.
A group composed of neutral representatives that may be established by the WTO
Secretariat under the dispute settlement provisions of the WTO. The WTO panel
reviews the facts of a dispute and renders findings of WTO law and recommends