- T -

TAA Trade adjustment assistance
Takeover The acquisition by one firm of another.
Taper tantrum The panic response in international bond markets when the Fed began to reduce the level of (to "taper") its policy of quantitative easing.
Target 1. Any objective of economic policy.
2. The value of an economic variable that policy makers regard as ideal and use as the basis for setting policy. Contrasts with instrument.
3. The level of an exchange rate that guides exchange market intervention by a central bank or exchange stabilization fund.
Target zone An exchange regime in which intervention is used to keep the exchange rate between upper and lower limits, the target zone. Since pegged exchange rates also set narrow limits of intervention, "target zone" implies a wider band. Classically analyzed by Krugman (1991c).
Targeting See industrial targeting
Tariff A tax on trade, usually an import tariff but sometimes used to denote an export tax. Tariffs may be ad valorem or specific.
Tariff Act of 1930 Smoot-Hawley Tariff.
Tariff anomaly An unusual situation in which the tariff on a semi-processed good is higher than on the finished good, causing the effective rate of protection on the finished good to be lower than its tariff and even, potentially, negative. Thus the opposite of tariff escalation.
Tariff binding A commitment, under the GATT, by a country not to raise the tariff on an item above a specified level, also called the tariff binding, the bound rate, or the bound tariff.
Tariff classification See tariff heading.
Tariff Commission The name of what is today the United States International Trade Commission as of its founding in 1916, until it was renamed the USITC in 1975.
Tariff complementarity The idea that reducing a tariff on a good from one trading partner, as in an FTA, creates the incentive to reduce that tariff against other trading partners. Theoretical models of tariff setting disagree on whether this or its opposite, tariff substitutability, makes sense. Term is due to Bagwell and Staiger (1999).
Tariff deficit Despite appearances, this is not a term in international economics. It means the difference between the price (called a tariff) that a regulated utility such as an electricity producer is allowed to charge and its cost per unit.
Tariff dispersion The inequality of the tariffs levied by a country. It is generally the case that, for a given average level of a country's tariffs, greater dispersion causes greater distortion and thus reduces welfare.
Tariff equivalent The level of tariff that would be the same as a given NTB in terms of its effect, usually on the quantity of imports.
Tariff escalation In a country's tariff schedule, the tendency for tariffs to be higher on processed goods than on the raw materials from which they are produced. This causes the effective rate of protection on these goods to be higher than the nominal rate and puts LDC producers of primary products at a disadvantage.
Tariff factory A production facility established by a foreign firm through FDI in a country in spite of its higher production costs, in order to serve its market without paying a tariff. Thus the result of tariff-jumping FDI.
Tariff heading The descriptive name attached to a tariff line, indicating the product to which it applies. Same as tariff classification.
Tariff items 806 & 807 Lines 806.30 and 807.00 of the U.S. tariff schedule, which permit goods that have been sent abroad for processing or assembly to be admitted subject to duty only on the value added abroad.
Tariff jumping The establishment of a production facility within a foreign country, through FDI or licensing, in order to avoid a tariff.
Tariff line A single item in a country's tariff schedule.
Tariff peak In a tariff schedule, a single tariff or a small group of tariffs that are particularly high, often defined as greater than three times the average nominal tariff.
Tariff preference A lower (or zero) tariff on a product from one country than is applied to imports from most countries. This violation of the MFN principle is permitted in special cases, including some preferential trade arrangements and the GSP.
Tariff protection Protection provided by a tariff.
Tariff quota A tariff rate quota.
Tariff rate quota A combination of an import tariff and an import quota in which imports below a specified quantity enter at a low (or zero) tariff and imports above that quantity enter at a higher tariff. Also called a tariff quota.
Tariff redundancy See redundant tariff.
Tariff revenue See revenue.
Tariff schedule The list of all of a country's tariffs, organized by product.
Tariff Schedule of the United States, Annotated The official product nomenclature for specifying tariffs in the United States used until 1988, when it was replaced with the harmonized system.
Tariff substitutability See tariff complementarity.
Tariff surcharge Import surcharge
Tariff wall A tariff, presumably a high one, perhaps in lots of industries. The term is used to highlight the difficulty foreign sellers have in getting their products past the tariff, often in the context of the incentive therefore provided for FDI. See foreign investment argument for protection.
Tariff-and-retaliation game The game of countries setting tariffs knowing that by doing so they alter the terms of trade to their own advantage. This is one very specific form of trade war.
Tariffication Conversion of NTBs to tariffs at the level of their tariff equivalents. In the Uruguay Round, agricultural NTBs were tariffied and bound, the purpose being to replace unwieldy NTBs with tariffs that could then become the subject of negotiation.
Tariffs and retaliation The process of one country raising its tariff to secure some advantage, to which another country responds by raising its tariff, the first raises its tariff still further, etc. See retaliation and trade war. Classic treatment by Johnson (1953/54).
Tastes In economics, this is usually a synonym for preferences, in the sense of attitudes toward different goods.
Tax An amount of money required to be paid to government by persons or firms.
Tax base The amount on which a taxpayer pays taxes, as for example their taxable income in the case of an income tax, or the taxable value of their property in the case of a property tax.
Tax break Any provision of the tax code, such as a tax credit or tax deduction, that reduces the amount of tax that a firm or individual will pay, perhaps in return for behavior that the government wishes to encourage.
Tax buoyancy A measure of how rapidly the revenue from a tax rises (including due to any change in tax law) as the tax base rises. It is defined, like an elasticity, as %ΔR / %ΔB where R is the real revenue from the tax, B is the real tax base, and %Δ is percent change. It differs from tax elasticity in not holding the tax law constant.
Tax compliance The extent to which economic agents pay the taxes that their government has levied. In developing countries, a low rate of tax compliance is often a significant hindrance to economic development.
Tax concession A special provision for a firm not to pay a tax that it would otherwise owe, provided by a local, state, or national government as an inducement to invest. Competition among governments, seeking to attract investment, to some extent undermines the benefits that countries might otherwise receive from FDI.
Tax credit A provision of the tax code that specifies an amount by which a taxpayer's taxes will be reduced in return for some behavior.
Tax deduction A provision of the tax code that specifies an amount by which a taxpayer's tax base will be reduced in return for some behavior, resulting in a lowering of the amount of tax paid that depends on their tax rate.
Tax elasticity The elasticity of the real revenue from a tax with respect to the real tax base, for a given tax law.
Tax haven A location, usually a country, where either rates of taxation or levels of enforcement are low, so that high taxes in other countries can be avoided by locating there.
Tax incidence How the burden of a tax (or tariff) is distributed between buyers and sellers. A tax typically both raises the price to buyers and lowers it to sellers, by amounts that sum to the tax.
Tax inversion A change in corporate nationality (the corporation's legal domicile) in order to take advantage of the new home's lower corporate tax rate.
Tax rebate The refund of a tax that has been overpaid. Some countries rebate certain taxes that have been paid on goods that are then exported.
Tax-cum-subsidy This phrase is used to indicate a policy that may be either a tax or a subsidy, depending on which will achieve the stated objective, which is usually to alter or set a relative price. The word "cum" here is Latin for "with," which is slightly inappropriate, since in this context what is usually meant is "or."
TBT Technical barrier to trade
TEC Transatlantic Economic Council
Technical barrier to trade A technical regulation or other requirement (for testing, labeling, packaging, marketing, certification, etc.) applied to imports in a way that restricts trade.
Technical change Usually a synonym for technological progress.
Technical inefficiency See X-efficiency.
Technical progress Same as technological progress.
Technical regulation A requirement of characteristics (such as dimensions, quality, performance, or safety) that a product must meet in order to be sold on a country's market. See standards.
Technique 1. A specific method of production, using a particular combination of inputs.
2. With CRTS, a particular ratio of factors employed in production.
3. A point on an isoquant.
Technique of analysis A method used for displaying or manipulating economic models.
Technological change A change in a production function that alters the relationship between inputs and outputs. Normally it is understood to be an improvement in technology, or technological progress, and it is of interest in international economics for its implications for trade and economic welfare.
Technological difference A difference in production functions, usually for the same industry compared between two countries, such that one country has higher output for any given input than the other.
Technological progress A technological change that increases output for any given input.
Technology 1. The complete set of knowledge about how to produce in an economy at a point in time, including techniques of production that are available but not economically viable.
2. The set of production functions available to an economy.
3. Referring to industries that are experiencing, or recently have experienced, technological progress.
Technology gap 1. A time lag between the appearance of a new technology and its acquisition by a country.
2. The presence in a country of a technology that other countries do not have, so that it can produce and export a good whose cost might otherwise (if other countries had the same technology but different factor prices) be higher than abroad.
Technology gap model A model of trade that is driven by a technology gap that is of different importance for different industries, so that technologically advanced countries have comparative advantage in sectors where technology is most important. [Origin]
Technology intensive Referring to an industry in which technology is advancing rapidly, and thus where successful operation requires heavy expenditure on R&D.
Technology spillover Same as technology transfer, though usually not done intentionally by the transferor.
Technology transfer The communication or transmission of a technology from one firm or country to another. This may be accomplished in a variety of ways, ranging from deliberate licensing to reverse engineering.
Temporary admission Permission to import a good duty free for use as an input in producing for export. See drawback and export processing zone.
Temporary producer movement A mode of supplying a traded service through the temporary movement of persons employed by the supplier into the buyer's country.
Tender To offer a product for sale at a specified price, usually in response to a specific request from a potential purchaser. Government procurement, for example, that is not open to international tendering is a form of nontariff barrier.
Tequila Crisis The economic and financial crisis that began in late 1994 when the Mexican peso devalued, causing disruption in the Mexican economy that then spread through other countries of Latin America. Peso crisis.
Term deposit An amount held at a bank or other financial institution subject to a minimum time period, or term, before it can be withdrawn without penalty. Also called a time deposit.
Term structure of interest rates Yield curve
Terms of trade 1. Most commonly in economics, the relative price, on world markets, of a country's exports compared to its imports. Also called the net barter terms of trade. See improve the terms of trade.* Introduced by Marshall (1923). [Origin]
2. Any of several other related concepts: gross barter terms of trade, income terms of trade, single factoral terms of trade, double factoral terms of trade, and commodity terms of trade.
3. Outside of the economics of international trade, this expression often refers more broadly to the policies, facilities, and other arrangements that characterize the trade between one country or group of countries and another.
4. Unusually, some use not definition 1., but its reciprocal: the relative price of imports compared to exports. Thus in Backus et al. (1994): "The terms of trade, in this paper, is the relative price of imports to exports…"
Terms of trade argument Same as the optimal tariff argument, which works by restricting the quantity of trade in order to improve the terms of trade.
Terms of trade controversy Disagreement over the validity of the Prebisch-Singer Hypothesis.
Terms of trade effect The effect of a tariff on the terms of trade. By reducing the demand for imports, a tariff levied by a large country causes the prices of those imported goods to fall on the world market relative to the country's exports, improving its terms of trade.
Tertiary sector The portion of an economy producing services, in contrast to the primary sector and the secondary sector.
Textbook Heckscher-Ohlin Model The 2x2x2 model.
Textiles Cloth. The textile sector is important for trade, along with apparel, because with some exceptions (synthetics) it is a very labor intensive sector, and it is therefore a likely source of comparative advantage for developing countries. See textiles and apparel.
Textiles and apparel These largely labor intensive sectors are often the first manufactured exports of developing countries. Because of the threat to employment in developed countries, however, they have long been protected there. This has only recently changed under the WTO's ATC.
Textiles and Clothing Agreement Agreement on Textiles and Clothing
TFP Total Factor Productivity
TFTA Tripartite Free Trade Area
Thank-you note 1. Paul Krugman's suggested policy for responding to a foreign subsidy: send their embassy a thank-you note, on the grounds that one benefits from cheaper imports via the terms of trade. [Origin]
2. Krugman (2009) suggested this again as the US response if China were to sell dollars, as that it would improve US competitiveness and employment. (This is opposite of #1, presumably reflecting concern in 2009 with short-run weakness of US aggregate demand rather than longer-run effects of terms of trade.)
Theoretical proposition A property of an economic model that is derived (deduced) from its assumptions. It usually takes the form of a prediction about something that would be true if the world conformed to the model's assumptions, and perhaps also to additional assumptions specified in the proposition.
Theory of second best See second best.
Think tank An organization, usually nonprofit, that primarily engages in research and commentary.
Third best Even further from optimal than second best.
Third World Refers to all less developed countries as a group. Term was coined by Alfred Sauvy during the Cold War, when the first world was the developed capitalist countries and the second world was the communist countries, although those terms were seldom used. [Origin]
Thirlwall's Law 1. The empirical regularity observed by Thirlwall (1979) that for many countries the rate of growth of output, gY, is approximated by the rate of growth of exports, gX, divided by the country's elasticity of demand for imports, ηM: gY = gXM.
2. Equivalently, letting export growth be driven by foreign income growth, gY*, and the elasticity of (foreign) demand for exports, ηX, this equates the ratio of foreign and domestic growth rates to the ratio of the trade elasticities: gY/gY* = ηXM. The latter was dubbed by Krugman (1989) the "45-degree rule."
Tied aid Aid that is given under the condition that part or all of it must be used to purchase goods from the country providing the aid.
Tied loan Loan that is given under the condition that part or all of it must be used to purchase goods from the country providing the loan.
Tiger economy Any one of several economies that have developed extremely rapidly over a period of years. Especially the Four Tigers, but also a number of others who had growth spurts more recently.
Tight money A monetary policy that is contractionary, thus with high interest rates for borrowing. Contrasts with easy money.
Time deposit Term deposit
Time inconsistency The problem that arises when decision makers, especially policy makers, make plans for policy in the future that they know will not be preferred when the time to implement them arrives. Knowing this, others will not find the commitment to the first policy credible.
Time preference The attachment of a higher weight in utility to consumption in the present compared to consumption in the future. A common formulation of utility from a time path of consumption c(t) would be U = ∫c(t)e−ρt, where ρ>0 is the rate of time preference.
Time series variation The changes in an economic variable that occur over time for a given economic unit such as a consumer, firm, industry, or country. Often used to seek evidence of effects of macroeconomic and financial policies. Contrasts with cross sectional variation.
TIR Convention A 1949 agreement that now (2016) includes 68 countries, providing for transport of goods by road across countries, with duties levied only on reaching their destination. (TIR stands for the French "Transports Internationaux Routiers" - International Road Transport.)
TISA Trade in Services Agreement
Title VII Title VII of the Omnibus Trade and Competitiveness Act of 1988 is a US law to monitor and enforce international agreements on government procurement as they affect US exporters.
TLC Tratado de Libre Comercio (Spanish for Free Trade Agreement)
TNC Transnational corporation.
To market See pricing to market.
Tobin tax A small tax on international currency transactions, proposed by James Tobin in 1978 to discourage destabilizing short-term international capital movements. Advocates suggest a tax of 0.1-0.25% with revenue used for urgent global priorities. Others question enforceability.
Tobin's Q The ratio of a firm's market value to the replacement cost of its assets. Used as a guide to investment. Due to Tobin (1969).
Tokyo Round The 7th round of multilateral trade negotiations that took place under GATT auspices, commencing 1973 and completed in 1979. This was the first trade round to deal with NTBs, by negotiating the Tokyo Round Codes.
Tokyo Round Codes The plurilateral agreements negotiated in the Tokyo Round covering several NTBs, arising from customs valuation, standards, government procurement, etc. The WTO replaced most of these with agreements applying to all members, the only exceptions today being the agreements on civil aircraft and government procurement.
Torquay Round The third (1950-51) of the trade rounds conducted under the auspices of the GATT, initiated at the town of Torquay, U.K.
TOT Terms of trade
Total Aggregate Measurement of Support Same as aggregate measurement of support.
Total factor productivity A measure of the output of an industry or economy relative to the size of all of its primary factor inputs. The term, and its acronym TFP, often refers to the growth of this measure, as measured by the Solow residual. See also Hicks neutral technical progress.
Total product The output of a firm or industry, as distinct from average product and marginal product.
TPA Trade Promotion Authority
TPP Trans-Pacific Partnership
TPRC Trade Policy Research Centre
TPRM Trade Policy Review Mechanism
Tracing The principle, sometimes applied in rules of origin, that only the domestically-produced content of intermediate inputs can count as domestic in products that use them as inputs. Contrasts with roll-up, and requires greater effort to keep track of inputs.
Tradable 1. Capable of being traded among countries.
2. A good or service that is tradable; with tradables referring to an aggregate of such goods and services.
Trade 1. To exchange one item for another; one person or firm providing an item (good, service, asset, etc.) to another person or firm, with the latter providing a different item to the first in return, as payment.
2. To export and/or import.
3. The quantity or value of exports and/or imports.
Trade Act of 1934 Reciprocal Trade Agreements Act of 1934.
Trade Act of 1962 Trade Expansion Act of 1962.
Trade Act of 1974 Trade Reform Act of 1974
Trade Act of 1979 Trade Agreements Act of 1979
Trade Act of 1988 Omnibus Trade and Competitiveness Act of 1988.
Trade adjustment assistance A program of adjustment assistance for workers and firms in industries that have suffered from competition with imports. In the U.S., TAA began with the Trade Expansion Act of 1962, and it has been renewed and expanded since then, including as part of the NAFTA.
Trade agreement A negotiated agreement among two or more countries to limit or alter their policies with respect to trade. A common type in recent years has been agreements to form preferential trading arrangements.
Trade Agreements Act of 1979 The legislation implementing the Tokyo Round agreement in the United States.
Trade and Development Act of 2000 The first significant trade legislation passed by the U.S. Congress after the Trade Act of 1988, this renewed and extended AGOA and the CBI, and it included miscellaneous other trade measures such as requiring carousel retaliation.
Trade and investment The interactions between, and the rules and policies governing, international trade and foreign direct investment. One of the Singapore Issues.
Trade and transformation curve diagram
One of the most frequently used diagrams of trade theory, using a transformation curve together with one or more price lines and sometimes community indifference curves to illustrate production, consumption, and trade and the effects on them of tariffs and other exogenous changes.
Trade and Wages Debate The debate between and among trade economists and labor economists as to the reason for the increase in the relative wages of skilled labor, compared to unskilled labor, in the U.S. starting in the 1980s. A central issue was the importance of "trade" as a contributing cause.
Trade as an engine of growth See engine of growth.
Trade as the handmaiden of growth See handmaiden of growth.
Trade balance Balance of trade.
Trade balance ratio The ratio of value of exports to value of imports. Equals one if trade balance is zero, greater than one if a surplus, and less than one if a deficit. Has the advantage of indicating how large a surplus or deficit is compared to imports, since R=X/M and B=X-M imply R-1=B/M.
Trade balancing mechanism A policy that seeks to limit trade deficits (or increase surpluses) by using import licensing to limit total imports to the total value of exports. Introduced by Argentina in 2011.
Trade barrier An artificial disincentive to export and/or import, such as a tariff, quota, or other NTB.
Trade bias See bias of a trade regime.
Trade bloc Trading bloc.
Trade collapse See Great Trade Collapse.
Trade co-movement puzzle The positive correlation between business cycles of countries that trade a lot with each other. This is a puzzle because it cannot be explained by modern conventional theories of the real business cycle, though it seems an obvious implication of early Keynesian models of foreign repercussions.
Trade complementarity index A measure of the extent to which one of two countries, j, exports what the other, k, imports. Defined as TCjk = 100 – Σi( | mik – xij | / 2 ), where xij is the share of good i in all exports of country j and mik is the share of good i in all imports of country k.
Trade concentration index Any of several measures of the extent to which exports of a particular product or to a particular country come from only a small number of countries. May be a Herfindahl Index or another measure used for similar purposes in other areas of economic or statistical analysis.
Trade cost Any cost incurred in order to engage in international trade, including transport cost, insurance, etc.
Trade cost puzzle 1. The empirical finding, usually from gravity models, that bilateral trade declines with distance more rapidly than can be accounted for by the trade costs that are implicit in price differences across countries and locations.
2. The observation that the effect of distance, as measured by gravity models, has not declined over the last half century.
Trade creation Trade between members of a PTA that replaces what would have been production in the importing country were it not for the PTA. Associated with welfare improvement for the importing country since it reduces the cost of the imported good. Concept, and trade diversion, due to Viner (1950).
Trade credit 1. An amount that is loaned to an exporter to be repaid when the exports are paid for by the foreign importer.
2. Credit extended by an exporter to an importer, permitting them to pay at some time after they take delivery.
Trade defense measure Any of several policies that permit tariffs or other trade restrictions to prevent or correct injury to domestic industry due to imports. Most common (and WTO-permitted) forms are safeguards, anti-dumping duties , and countervailing duties.
Trade deficit Imports minus exports of goods and services. See deficit.
Trade deflection 1. Entry, into a low-tariff member of a free trade area, of imports intended for a purchaser in its higher-tariff partner. This is normally prevented by rules of origin. Term was introduced with this meaning by Shibata (1967). [Origin]
2. A change in the destination of exports in response to an increase in a trade barrier in another market, as when a rise in a tariff on an export from A to B causes the exports to be sold instead to C. Term was introduced with this meaning by Bown and Crowley (2007).
3. Internal trade deflection.
Trade dependency See dependency theory.
Trade dispute Any disagreement between nations involving their international trade or trade policies. Today, most such disputes appear as cases before the WTO dispute settlement mechanism, but prior to the WTO, some were handled by the GATT while others were dealt with bilaterally, sometimes precipitating trade wars.
Trade distortion A policy that alters the amount of trade, up or down, from what it would otherwise be. Agricultural subsidies, even if not based on quantity of exports, are trade distorting unless they are paid independently of whether and how much farmers produce.
Trade diversion Trade that occurs between members of a PTA that replaces what would have been imports from a country outside the PTA. Associated with welfare reduction for the importing country since it increases the cost of the imported good. Concept, and trade creation, due to Viner (1950).
Trade Expansion Act of 1962 The legislation authorizing US participation in the Kennedy Round, replacing the Reciprocal Trade Agreements Act of 1934. It also established Trade Adjustment Assistance.
Trade expenditure function For an economy, this is the difference between its expenditure function and its revenue function: TE(P,V,U) = E(P,U) − R(P,V). Its partial derivatives, representing quantities demanded minus supplied, are therefore net imports.
Trade facilitation One of the Singapore Issues, this refers in the Doha Declaration to "expediting the movement, release and clearance of goods, including goods in transit." This includes customs procedures and other practices that may add to the cost or time requirements of trade.
Trade finance The mechanisms by which firms that are engaged in trade cover their costs, including borrowing, forfaiting, export factoring, etc.
Trade flow The quantity or value of a country's bilateral trade with another country.
Trade imbalance A trade surplus or trade deficit.
Trade in services The provision of a service to buyers within or from one country by a firm in or from another country. As such transactions did not involve a physical product crossing borders, they were not seen as "trade" and were not covered by GATT. In the mid-1980s they were recognized as a form of trade and were incorporated into the WTO's GATS.
Trade in Services Agreement A proposed plurilateral agreement being negotiated (as of February 2016) by a group of willing countries in the WTO, liberalizing trade in services. Negotiations were initiated by Australia and the United States in 2013.
Trade in tasks International fragmentation
Trade indicator A trade indicator can be any sort of data, or even an anecdote, that suggests how the volume or composition of trade compares across time or across countries. Trade indicators are published by the World Bank and the OECD, among others.
Trade indifference curve In a diagram measuring quantities of exports and imports, a curve representing amounts of trade among which a freely trading country is indifferent, based on its community indifference curves and its transformation curve. Due to Meade (1952).
Trade integration The process of increasing a country's participation in world markets through trade, accomplished by trade liberalization.
Trade Integration Mechanism A policy introduced in 2004 by the IMF to make resources more "predictably available" to member countries meeting balance of payments problems due to multilateral trade liberalization.
Trade intensity index For a group or bloc of countries, usually in a PTA, the ratio of the bloc's share of intra-bloc trade to the bloc's share in world trade. If greater than one, this is said to suggest that the bloc displays trade diversion. Index seems to be due to Frankel (1997).
Trade liberalization Reduction of tariffs and removal or relaxation of NTBs.
Trade minister The government official, at the ministerial or cabinet level, primarily responsible for issues of international trade policy; the minister of international trade. In the U.S., that is the USTR.
Trade ministry The unit of government primarily responsible for issues of international trade policy and trade negotiations, headed by the trade minister. In the U.S., although trade policy is split across several units of government, trade negotiations are handled by the office of USTR.
Trade mission 1. An office or other facility maintained in one country by the government of another to help residents of both to engage in international trade between them.
2. A group of persons representing business and government of a country that travels to another country to promote its exports.
Trade model An economic model that explains certain causes, effects, and/or characteristics of international trade.
Trade negotiation A negotiation between pairs of governments, or among groups of governments, exchanging commitments to alter their trade policies, usually involving reductions in tariffs and sometimes nontariff barriers.
Trade openness See openness.
Trade parity pricing This refers to setting prices -- or allowing prices to be set by the market -- at levels determined by world prices. In countries such as India, where prices of certain products such as oil have been traditionally controlled by government, trade parity pricing may be a radical change for producers and consumers.
Trade pattern What goods and services a country trades, with whom, and in what direction. Explaining this is a major purpose of trade theory, especially with regards to which goods a country exports and imports. This may be done directly, as the commodity pattern of trade, or indirectly as the factor content pattern of trade.
Trade policy Any policy affecting international trade, but especially including especially tariffs and nontariff barriers.
Trade Policy Research Centre A research organization that was active in the 1970s and 1980s, but no longer seems to exist, at least in that form. At its height it involved many important international economists and influenced trade policies and trade negotiations.
Trade Policy Review Mechanism The periodic review of the trade policies and practices of the member countries of the WTO, conducted and published by the WTO. The review may, if appropriate, call for reform, but there is no immediate consequence of a determination that a member is out of compliance.
Trade preference A policy of admitting imports from one or more countries at lower (perhaps zero) tariffs than apply to otherwise comparable imports from other countries. See preferences and Preferential Trading Arrangement.
Trade Promotion Authority The name that began being used (as of 2000) for Fast Track.
Trade Reform Act of 1974 Actually signed on Jan. 3, 1975, this US law renewed and revised authority to negotiate trade agreements and also dealt with new issues including tariff preferences, unfair trade, the escape clause, and adjustment assistance, and it introduced fast track authority.
Trade regime The rules and practices prevailing in a country's international trade relationships.
Trade remedy Protection provided by any of the following: anti-dumping duties, countervailing duties, or safeguards protection.
Trade restriction Any policy that reduces the amount of exports or imports, such as a tariff, quota, or other nontariff barrier.
Trade Restrictiveness Index A theoretically consistent index of the restrictiveness of trade policy -- both tariffs and NTBs -- developed by Anderson and Neary (1996).
Trade round A set of multilateral negotiations, held under the auspices of the GATT and WTO, in which countries exchange commitments to reduce tariffs and agree to extensions of the GATT rules. Most recent were the Kennedy, Tokyo, Uruguay, and Doha Rounds.
Trade sanction Use of a trade policy as a sanction (definition 2), such as an embargo imposed against a country for violating human rights.
Trade secret A piece of information, known to a firm but not to others, about its production or business practices. Unlike a patent, which discloses information but protects it for a limited time, a trade secret can be kept indefinitely. But the protection of secrets under both national laws and TRIPs, is much weaker.
Trade sector 1. The portion of the economy that produces tradable goods, and thus exports and/or competes with imports.
2. The portion of the economy that actually engages in international trade, exporting and/or importing or providing trade services.
Trade service A service that is an input to an act of international trade. Examples include transportation to, from, or between ports; insurance; or the provision of trade credit.
Trade share This can mean a variety of things, but most commonly it refers either to imports or exports as a percentage of GDP.
Trade SIFT Systematic Integrated Framework for Trade Analysis
Trade surplus Exports minus imports of goods and services, or balance of trade. See surplus.
Trade theory The body of economic thought that seeks to explain why and how countries engage in international trade and the welfare implication of that trade, encompassing especially the Ricardian Model, the Heckscher-Ohlin Model, and the New Trade Theory.
Trade triangle In the trade and transformation curve diagram, the right triangle formed by the world price line and the production and consumption points, the sides of which represent the quantities exported and imported.
Trade war Generally, a period in which each of two countries alternate in further restricting trade from the other. More specifically, the process of tariffs and retaliation.
Trade-related aspects of intellectual property rights This was the term used for bringing intellectual property protection into the Uruguay Round of trade negotiations under the pretense that only trade-related aspects of the issue would be included. In practice, that did not constrain the coverage of the resulting TRIPs agreement.
Trade-related investment measure Any policy applied to foreign direct investment that has an impact on international trade, such as an export requirement. The Uruguay Round included negotiations on TRIMs.
Trade-weighted average tariff The average of a country's tariffs, weighted by value of imports. This is easily calculated as the ratio of total tariff revenue to total value of imports.
Trade-weighted exchange rate The weighted average of a country's bilateral exchange rates using bilateral trade -- exports plus imports -- as weights. Also called an effective exchange rate.
Traded good A good that is exported or imported or -- sometimes -- a good that could be exported or imported if it weren't for those pesky tariffs.
Traded/nontraded good price ratio One definition of real exchange rate.
Trademark A symbol and/or name representing a commercial enterprise, whose right to the exclusive use of that symbol is, along with patents and copyrights, one of the fundamental intellectual property rights that are the subject of the WTO TRIPS agreement.
Trading arrangement An agreement between two or more countries concerning the rules under which trade among them will be conducted, either in a particular industry or more broadly.
Trading bloc A group of countries that are somehow closely associated in international trade, usually in some sort of PTA.
Trading company 1. A firm that facilitates transactions between buyers and sellers, often in different countries. Trading companies may specialize in exports and/or imports, and they typically do not take ownership of goods, but rather take a commission from sellers.
2. "Trading Company" is also part of the names of many firms that may not satisfy definition 1.
Trading partner A trading partner of one country is any other country with which it trades. Sometimes restricted, not very rigorously, to countries with which it trades a lot, or countries in the same preferential trading arrangement.
Traditional economy 1. This term is used variously to describe a very poor country, a subsistence economy, a primitive agricultural economy, or a pre-industrial economy.
2. More formally, in a traditional economy, resources are allocated based on the historical roles of individuals and families, passed down across generations, and markets play little if any role.
Tragedy of the Commons The tendency of a publicly available resource to be overused, because individual users do not bear the full cost of their use, which is instead shared by everybody. This is a particular problem when a resource, such as an ocean fishery, is not in the jurisdiction of a single government. Term first used by Hardin (1968).
Tranche 1. French for "slice," in finance it usually refers to the pieces of a security that has been divided into parts for sale to different parties.
2. In the IMF, each member can draw upon or borrow amounts that are set as 25% of its IMF quota, the first called the gold tranche and each subsequent one called a credit tranche.
Trans-Atlantic Trade and Investment Partnership A proposed preferential trading arrangement between the United States and the European Union, negotiations for which began in 2013.
Trans-Pacific Partnership A preferential trading arrangement that was negotiated by the United States with 11 other countries of the Asia-Pacific region. Negotiations were completed October 5, 2015, but the agreement will not go into effect until the 12 countries have ratified it.
Trans-Pacific Strategic Economic Partnership Agreement The "P4" agreement among four countries -- Brunei Darussalam, Chile, New Zealand and Singapore -- that provides a "framework on which relationships between the Parties can be strengthened." Began in 2002 with three countries, adding Brunei in 2005.
Transaction cost 1. On the foreign exchange and other financial markets, this includes broker's fees and/or the bid/ask spread.
2. Much more broadly, this can refer to any sort of cost associated with the exchange of goods or services, including information costs, legal fees, and other costs incurred in overcoming market imperfections.
Transaction value The actual price of a product, paid or payable, used for customs valuation purposes.
Transatlantic Economic Council A political body in which the US and EU seek to cooperate to advance economic integration between the two.
Transfer paradox A transfer that makes the recipient worse off (i.e., an immiserizing transfer) and/or that makes the donor better off.
Transfer payment Payment made by the government or private sector of one country to another as a gift or aid, not as payment for any good or service nor as an obligation. Also called a unilateral transfer.
Transfer price Literally this is the price charged on goods and services traded between subsidiaries of (often) a multinational) corporation. However, the term usually connotes setting prices to minimize taxes paid, in response to differences in corporate tax rates. Contrasts with arm's length price.
Transfer problem Made famous in a debate between Keynes (1929a,b,c) and Ohlin (1929a,b), this is the question of whether a financial transfer from one country to another will cause, at an unchanged real exchange rate, an equal change in the countries' bilateral trade balance, thus effecting the transfer in real terms.
Transfer union A group of countries that unite enough to use transfer payments from government to government as a regular means to serving countries' changing needs. The EU is not a transfer union, though some have suggested that it should become one; creation of the EFSF in 2010 was a step in that direction.
Transfers Transfer payments.
Transformation curve Same as production possibility frontier. The name comes from the idea that, by devoting resources to producing one good instead of another, it is as though one good is being transformed into another.
Transhipment See transshipment.
Transit zone A particular type of free trade zone where a port is provided by a coastal country for a neighbor that is landlocked or lacks port facilities. Goods may enter and leave the zone without being subject to the coastal country's customs procedures or paying its tariffs.
Transition The process of converting from a centrally planned, non-market economy to a market economy. During that process, it is a transition economy.
Transition indicator An index of the progress that a country has made in the process of transition, produced by the EBRD.
Translog function The transcendental logarithmic production function, a flexible functional form due to Christensen et al. (1973). With output Y and inputs Xi, it takes the form ln Y = α0 + Σi αi ln Xi + 1/2 Σi Σj βij ln Xi ln Xj.
Transmission mechanism See monetary transmission mechanism.
Transnational corporation 1. Same as multinational corporation, though for some reason this term seems to be preferred by those who don't like them.
2. A corporation whose national identity is a matter of convenience only, and that will move its headquarters readily in response to incentives.
Transparency The clarity with which a regulation, policy, or institution can be understood and anticipated. Depends on openness, predictability, and comprehensibility. Lack of transparency can itself be an NTB.
Transparency International A global NGO seeking to free the world from corruption.
Transport cost The cost of transporting a good, especially in international trade.
Transportation cost Transport cost.
Transshipment 1. The transfer of a cargo from one ship or other form of transport to another.
2. The routing of a shipment through an intermediate port that is neither the origin nor the destination, especially if in a different country than both.
3. Routing through a different country, as above, in order to conceal the true country of origin or in order to exploit a preferential tariff. See trade deflection.
Travel and Tourism Competitiveness Index A measure of country competitiveness in the area of travel and tourism, produced annually by the World Economic Forum.
Treasury bill A short-term bond issued by a government, usually referring to those issued by the U.S. government. Considered to carry close to zero risk, countries other than the U.S. often hold a large portion of their international reserves in the form of U.S. treasury bills.
Treaty of Rome The 1957 agreement among six countries of Western Europe to form the European Economic Community, which went into effect January 1, 1958.
Treaty port Any of several coastal cities, mostly in Asia, made open to international trade and to residence by foreigners, as a result of pressure from foreign powers.
Trend The long-term movement of an economic variable, such as its average rate of increase or decrease over a sufficient number of years to encompass several business cycles.
TRI Trade Restrictiveness Index
Triad 1. Europe, North America, and East Asia.
2. The EU, the U.S., and Japan.
Triangle inequality Simply that the length of one side of a triangle is less that the sum of the lengths of the other two sides. Alternatively, that the shortest distance between two points is a straight line. Sometimes cited unnecessarily in treatments of transport costs in trade.
Triangular arbitrage Arbitrage among three currencies. For example (letting x/y be the currency x per unit of currency y exchange rate), if $/¥ > ($/£)(£/¥), then an arbitrager can profit by buying £ with $; buying ¥ with those £; and then selling those ¥ for $.
Triangular trade 1. A pattern of trade involving three countries, A, B, and C, in which A exports to B, B exports to C, and C exports to A. Provides a nice example of how bilateral trade can be unbalanced even while each country's overall trade balance is zero.
2. Term used specifically for the slave trade, in which ships often traversed one of several triangular routes. For example they might take slaves from Africa to the West Indies, sugar from the West Indies to New England, and rum from New England to Africa.
Triffin's dilemma A flaw in the dollar-based international monetary standard created by the IMF: To provide growing international reserves needed by other central banks with growing economies, the U.S. must run balance of payments deficits that undermine confidence in the dollar as a reserve asset. Due to testimony before Congress by Robert Triffin in 1960.
Trigger price See minimum price system.
Trigger price mechanism The system put in place for US imports of steel in 1978 to speed up investigations of dumping. If prices were to fall below the trigger price, an anti-dumping investigation would begin without a prior complaint from the industry. The system was suspended in 1980.
Trilemma 1. Any choice among three options, the combination of which is unsatisfactory or contradictory.
2. Three desirable objectives, any two of which preclude the third.
3. The impossible trinity.
Trilemma of international finance The trilemma in which any two of the following preclude the third: 1. free international capital mobility; 2. exchange rate stability; 3. monetary independence.
Trilemma of the World Economy The trilemma suggested by Rodrik (2007) in which any two of the following preclude the third: 1. deep economic integration; 2. national sovereignty; 3. democratic politics.
TRIMs Trade-Related Investment Measures
Tripartite Free Trade Area Launched June 10, 2015, this is intended to form a free trade area combining three already existing trade arrangements: SADC, EAC, and COMESA. Note that it does not include ECOWAS.
TRIPs Trade-Related Aspects of Intellectual Property Rights
TRIPs Agreement The agreement negotiated in the Uruguay Round that incorporated issues of intellectual property into the WTO. It provides a set of minimum standards for intellectual property protection to which all but the poorest member countries of the WTO must conform.
Troika Term used collectively for the three institutions -- European Commission, European Central Bank, and International Monetary Fund -- that together tried to deal with the European debt and financial crises that began with the first Greek crisis of 2010.
Trough The point in a business cycle when an economic contraction reaches its lowest level before turning up. Contrasts with peak.
TRQ Tariff rate quota
Trust An arrangement in which the stock of several companies is controlled by a single entity. When the companies compete and together constitute a significant market share, the trust has monopoly power. In most industrialized countries, such arrangements violate competition policies or anti-trust policy.
TSUS Tariff Schedule of the United States, Annotated
TSUSA Tariff Schedule of the United States, Annotated
TTIP Trans-Atlantic Trade and Investment Partnership
Tuna-dolphin case Actually a pair of cases, resulting from the U.S. ban, under the Marine Mammal Protection Act, on imports of tuna from countries that did not effectively prohibit tuna fishers from killing dolphins by catching them together with tuna in large ("purse seine") nets. Cases filed under GATT in 1991 and 1994 led to panel decisions against the U.S.
Tunnel See snake in the tunnel.
Twin deficits Refers to the government budget deficit and trade deficit of a country (in spite of the fact that, although they are related, they are far from being the same or even necessarily of the same sign).
Twin peaks A characterization of an unequal distribution of country per-capita incomes in the world, where populations are concentrated in a large group of poor countries, a small group of rich countries, and few in between. Term was introduced by Quah (1996).
Two-cone equilibrium A free-trade H-O equilibriumin which all goods cannot be produced in one country; instead there are two diversification cones. This, or multi-cone equilibrium, arises if country factor endowments differ sufficiently relative to industry factor intensities. Contrasts with one cone equilibrium.
Two-gap model A model of economic development that focuses on two constraints: the need for savings to finance investment, and the need for foreign exchange to finance imports.
Two-ness The property of simple versions of many trade models that they have two of everything: goods, factors, and countries especially. An important issue, addressed by Jones (1977) who coined the term, and by Jones and Scheinkman (1977) is the extent to which the results of these models depend on this two-ness.
Two-speed Europe A configuration of the European Union in which some of the countries integrate more fully than others. The adoption of the euro by only some of the countries that were then in the EU was the major example of a two-speed Europe. More commonly, the term now refers to changes that would involve some countries pursuing greater political integration.