Key Terms

anti-dumping laws: laws that block imports sold below the cost of production and impose tariffs that would increase the price of these imports to reflect their cost of production

common market: economic agreement between countries to allow free trade in goods, services, labor, and financial capital between members while having a common external trade policy

disruptive market change: innovative new product or production technology which disrupts the status quo in a market, leading the innovators to earn more income and profits and the other firms to lose income and profits, unless they can come up with their own innovations

dumping: selling internationally traded goods below their cost of production

economic union: economic agreement between countries to allow free trade between members, a common external trade policy, and coordinated monetary and fiscal policies

free trade agreement: economic agreement between countries to allow free trade between members

General Agreement on Tariffs and Trade (GATT): forum in which nations could come together to negotiate reductions in tariffs and other barriers to trade; the precursor to the World Trade Organization

import quotas: numerical limits on the quantity of products that a country can import

national interest argument: the argument that there are compelling national interests against depending on key imports from other nations

nontariff barriers: ways a nation can draw up rules, regulations, inspections, and paperwork to make it more costly or difficult to import products

protectionism: government policies to reduce or block imports

race to the bottom: when production locates in countries with the lowest environmental (or other) standards, putting pressure on all countries to reduce their environmental standards

World Trade Organization (WTO): organization that seeks to negotiate reductions in barriers to trade and to adjudicate complaints about violations of international trade policy; successor to the General Agreement on Tariffs and Trade (GATT)

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