Glossary of Trade Terms

Common Market

A Customs Union with common policies on product regulation and freedom of movement of capital and labour.

Countertrade

A generic term for export transactions where the sale to the purchaser is conditional upon a reciprocal purchase or undertaking by the exporter.

Customs Union

A trading block consisting of two or more countries that have eliminated trade barriers among themselves and imposed a common tariff on all goods imported from all other countries (e.g., ASEAN).

Export subsidies

Government payments or other financially quantifiable benefits provided to domestic producers contingent on the export of their goods and services.

Free Trade Zone

A designated area where foreign companies can operate without paying duties on imported inputs.

Gross Domestic Product (GDP)

The total value of goods and services produced in a country in a year, regardless of the nationality of the producer.

Gross National Product (GNP)

The total value of goods and services produced by the nationals of a country, regardless of location (i.e., including foreign investment income).

International Organization on Standardization (ISO)

The world’s largest developer and publisher of international standards, such as the ISO 9000 series of quality management standards.

Risk assessment

A detailed study to identify the possibilities of financial loss in an export sale as a result of default by the buyer (commercial risk), political circumstances in the buyer’s market (country or political risk), or exchange rate fluctuations in foreign currency markets (currency or foreign exchange risk).

Trade agreement

A wide-ranging tax, tariff, and market entry pact, which may also include investment guarantees, that deepens interdependence among trading nations.

World Bank

The largest global development institution in the world, set up under the aegis of the United Nations to provide financing and development aid to developing and transitional economies, especially the Least Developed Countries.

World Trade Organization (WTO)

The only international body dealing with the rules of trade between nations and a forum for dispute settlement. The 152 member countries are all signatories to the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS), and Trade-Related Aspects of Intellectual Property Rights (TRIPS).