CustomsReference

Glossary of Trade Related Terms

The definitions included in this Glossary are drawn from a variety of sources, including glossaries prepared by the United States Department of Commerce and by the Department of Foreign Affairs (Canada).

201 - Escape Clause

Section 201 of the U.S. Trade Act of 1974 is used when increased imports are a substantial cause of serious injury. Remedies are product specific and applied to all sources.

301

Section 301 of the U.S. Trade Act is invoked when there is a violation of U.S. rights under a trade agreement, or any foreign act, policy or practice which is unjustifiable, unreasonable or discriminatory or restricts U.S. commerce. The remedy includes "All appropriate and feasible action" including retaliation in the form of suspension or withdrawal of trade agreement benefits, imposition of tariffs, fees or other import restrictions.

337 - Unfair Import Practices

Section 337 of the U.S. Tariff Act of 1930 is used when unfair methods of competition injure a U.S. industry or restraining or monopolizing U.S. trade and commerce. It is usually a patent infringement and is product specific. The remedy is exclusion from entry into the U.S., or a cease-and-desist order. 

Ad Valorem Tariff

A tariff calculated as a percentage of the value of goods cleared through customs, e.g. 15 percent ad valorem means 15 percent of the value. See also, Specific Tariff.

Andean Group

Trade association of: Bolivia, Colombia, Ecuador, Peru and Venezuela, signatories of the Cartagena Agreement.

Andean Trade Preference Act (ATPA)

U.S. Act providing preferential tariffs to Bolivia, Columbia, Ecuador Peru, and Venezuela.

Anti-dumping Code

A code of conduct negotiated under the auspices of GATT during the Kennedy and Tokyo Rounds that established both substantive and procedural standards for national anti-dumping proceedings. See also, Dumping.

Anti-dumping Duties

See Dumping.

APTA

Automotive Products Trade Act (US). Related to the Canada - US Autopact agreement.

ASEAN

Association of South East Asian Nations. Indonesia, Malaysia, Philippines, and Thailand.

Autopact

Automotive Products Trade Act (US). Related to the Canada - US Autopact agreement.

Binding

Agreement to maintain a particular tariff level against increase or change. In trade negotiations, binding a tariff is considered equivalent to a significant reduction in the level.

CAFE ACT

Energy Policy and Conservation Act of 1975. US statute defining domestic content (under NAFTA) and fuel economy requirements for motor vehicles.

CARICOM

Caribbean Common Market.

Cartagena Agreement

Trade association (Andean Group) of: Bolivia, Colombia, Ecuador, Peru and Venezuela.

CBERA

Caribbean Basin Economic Recovery Act (USA). Beneficiary countries are:

Antigua and Barbuda	Grenada	Nicaragua
Aruba	Guatemala	Panama
Bahamas	Guyana	St. Kitts and Nevis
Barbados	Haiti	Saint Lucia
Belize	Honduras	Saint Vincent and the Grenadines
Costa Rica	Jamaica	Trinidad and Tobago
Dominican Republic	Montserrat	Virgin Islands, British
El Salvador	Netherlands Antilles

Canada Chile Free Trade Agreement

Canada Chile Free Trade Agreement, signed in 1997 , between the Government of Canada, and the Government of Chile.

Canada Israel Free Trade Agreement

Canada Chile Free Trade Agreement, signed in 1997 , between the Government of Canada, and the Government of Israel.

Certificate of Origin

See Rules of Origin.

Check Digit

Suffix required (by some countries) to be added to a 10-digit HS commodity code, when filling out import documents.

CIT

US Court of International Trade a court which hears appeals from administrative and quasi-judicial trade decisions of the ITC, ITA and the U.S. Customs Service.

CITT

Canadian International Trade Tribunal, a quasi-judicial body responsible under Canadian law for hearing classification and valuation appeals, making injury determination in anti-dumping, countervailing duty, and safeguard cases and providing advice to the government on other import issues.

Common Market

See Customs Union.

Compendium of Classified Opinions

A collection of classification opinions agreed to and published by the World Customs Organization.

Compensation

Concept that withdrawal or amendment of a previously negotiated or bound concession, such as a tariff increase, change in quota level, temporary surtax, etc., requires a new and equivalent concession.

Contingency Protection

Collective term referring to Anti-dumping and Countervailing Duties and Safeguards.

Countervailing Duties

Additional duties imposed by an importing country to offset government subsidies in an exporting country, when the subsidized imports cause material injury to domestic industry in the importing country.

Customs Act

Canadian legislation which provides the basic framework for customs procedures in Canada.

Customs Classification

The particular category in a tariff nomenclature in which a product is classified for tariff purposes, or the procedure for determining the appropriate tariff category in a country's nomenclature system used for the classification, coding and description of internationally traded goods. Both Canada and the United States have acceded to the Harmonized Commodity Coding and Description System (HS).

Customs Duties

See Tariff

Customs Tariff

Canadian legislation providing the legal framework for the collection of customs duties in Canada, including rules related to drawbacks, duty remission, valuation, etc.

Customs Union

A group of nations which have eliminated trade barriers amongst themselves and have created a common external commercial policy in respect of all other countries. A customs union forms the basis for a common market which seeks to further liberalize trade.

Drawback

Import duties or taxes repaid by a government in whole or in part, when the imported goods are re-exported or used in the manufacture of exported goods.

Dumping

The sale of an imported commodity at a price lower than that at which it is sold within the exporting country or to third countries. Dumping is generally considered to be an unfair trade practice that can disrupt markets and injure producers of like products in the importing country. Article VI of GATT permits the imposition of Anti-Dumping Duties against "dumped" goods equal to the difference between their export price and their normal value in the exporting country when the importation of such goods causes or threatens material injury to domestic products.

Duty

See Tariff.

Duty Remission

Import duties or taxes repaid by a government in whole or in part, to a particular company or industry contingent upon exports, manufacture in the importing country or similar performance requirements, usually on imports of components, parts or products to complete a product line.

EC or EEC

European Economic Community, comprising Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and the United Kingdom.

EFTA

European Free Trade Area, comprising Austria, Finland, Iceland, Norway, Sweden, Switzerland and Liechtenstein.

Emergency Restrictions

See Escape Clause and Safeguards.

End-use Tariff Item

Tariff classification where the rate of duty depends upon the use to which the imported product is put, e.g., cotton sheeting for medical use is subject to a lower tariff rate than other cotton sheeting.

Escape Clause

A provision in a bilateral or multilateral trade agreement permitting a signatory nation to suspend tariff or other concessions when imports threaten serious harm to the producers of competitive domestic goods. GATT Article XIX and FTA Chapter Eleven contain such safeguard provisions to help firms adversely affected by a relatively sudden surge of imports adjust to the rising level of import competition.

Exceptions

Provisions in trade agreements that provide for rules to deal with special circumstances, such as import or export controls for security reasons. GATT Articles XX and XXI provide for the basic exceptions to the GATT; FTA Chapters Twelve and Twenty provide similar exceptions.

Explanatory Notes

The World Customs Organization has published Explanatory Notes which provide detailed descriptions of which products are covered by particular chapters, headings, and subheadings.

Export and Import Permits Act

Canadian legislation which provides the mechanism by which exports and imports can be controlled.

Export Quotas

Specific restrictions or ceilings imposed by an exporting country on the value or volume of certain exports, designed to protect domestic producers and consumers from temporary shortages of the goods affected or to bolster their prices in world markets. Some International Commodity Agreements explicitly indicate when producers should apply such restraints. Export Quotas are also often applied in Orderly Marketing Agreements and Voluntary Restraint Agreements, and to promote domestic processing of raw materials in countries that produce them.

Export Restraints

Quantitative restrictions imposed by exporting countries to limit exports to specified foreign markets, often pursuant to a formal or informal agreement concluded at the request of the importing countries.

Export Subsidies

Government payments or other financially quantifiable benefits provided to domestic producers or exporters contingent on the export of their goods or services. GATT Article XVI recognizes that subsidies in general and particularly export subsidies can distort trade and hinder the achievement of GATT objectives. An Agreement on Subsidies and Countervailing Measures was negotiated in the Tokyo Round to elaborate upon the GATT rules.

Failure Zone

Failure Zone goods cannot be incorporated into a finished good if preferential tariff treatment is being sought for the finished good.

FAS

Freely Associated States. Marshall Islands and the Federated States of Micronesia, which are eligible for special treatment under the U.S. Compact of Free Association Act of 1985.

Free Trade Area

An arrangement among two or more nations to remove substantially all tariff and non-tariff barriers to trade between them, while each maintains its own schedule of tariffs and other commercial regulations applying to trade of all other nations. GATT Article XXIV provides a framework of rules for the negotiation of free-trade areas such as the Canada-US FTA.

Free Trade Zone

An area within a country (a seaport, airport, warehouse or any designated area) regarded as being outside its customs territory. Importers may bring goods of foreign origin into such an area without paying customs duties and taxes, pending their eventual processing, transshipment or re-exportation. Free trade zones may also be known as “free ports”, “free warehouses”, and “foreign trade zones”.

FTA

Free Trade Agreement. An agreement between Canada and the US providing for the phase out of tariffs over the period 1 January 1989 to 1 January 1998. Predecessor of the NAFTA agreement.

GATT

General Agreement on Tariffs and Trade, a multilateral agreement, subscribed to by 100 countries which establishes rules for international trade. The primary objective of GATT is to liberalize world trade and place it on a secure basis, thereby contributing to global economic growth and development.

General Preferential Tariff (GPT) - Canada

A preferential tariff treatment accorded to products originating in the territory of certain developing countries.

General Rules of Interpretation (GRIs)

The six rules which must be followed in order to properly classify a good under the Harmonized System.

Generalized System of Preferences (GSP) - U.S.

A preferential tariff treatment accorded to products originating in the territory of certain developing countries.

Harmonized Commodity Description and Coding System (HS)

The HS is the internationally agreed tariff nomenclature developed by the World Customs Organization. It has been implemented by over sixty nations including the United States and Canada.

HTS

Harmonized Tariff Schedule. US version of the Harmonized Commodity Description and Coding System (HS), see above.

Import Measures

Tariff rates and all other measures by an importing country that restrict importation, or increase, decrease or relieve the duty rate applicable to a good.

Import Quota

See Quantitative Restriction

Injury

The term used by the GATT to describe the effect on domestic producers of a decline in output, lost sales, decline in market share, reduced profits and return on investment, reduced capacity utilization, etc., as a result of import competition. A distinction is often made between serious injury (required for emergency safeguard measures) and material injury (required for anti-dumping and countervailing duties).

IL

United States - Israel Free Trade Area.

International Trade Commission

See, USITC.

ITA

International Trade Administration of the US Department of Commerce, the agency responsible for anti-dumping and countervailing duty investigations under US law. If the ITA establishes the existence of dumping and subsidization in a particular case, the ITC must then determine whether or not there is injury to domestic producers.

ITC

International Trade Commission. See USITC.

Most Favored Nation Treatment (MFN)

A commitment that a country will extend to another country the lowest tariff rates it applies to any third country. All contracting parties to GATT must apply MFN treatment to one another pursuant to Article I of GATT. Exceptions to this basic rule are allowed in the formation of regional trading arrangements, provided certain criteria are met.

Multilateral Trade Negotiations (MTN)

Seven rounds of "Multilateral Trade Negotiations" (MTN) have been held under the auspices of GATT since 1947. Each round represented a discrete and lengthy series of interacting bargaining sessions among the participating contracting parties in search of mutually beneficial agreements looking toward the reduction of barriers to trade. The Uruguay Round launched in September, 1986 at Punta del Este, Uruguay, is the eighth round.

NAFTA

North American Free Trade Agreement, signed in 1994 , between the Government of Canada, the Government of the United Mexican States, and the Government of the United States of America.

National Extensions

These are two additional sets of two digits which may be added to the internationally uniform six digit HS tariff description. Countries employ the fourth pair of digits to differentiate between products classified within a particular subheading for rate of duty and the fifth pair for statistical purposes.

Non-Tariff Barriers or Measures

Government measures or policies other than tariffs that restrict or distort international trade. Examples include import quotas, discriminatory procurement practices, and measures to protect intellectual property. Such measures have become relatively more conspicuous impediments to trade as tariffs have been reduced since 1947.

Other Government Agency (OGA) Codes (U.S. Only)

Following is the list of agencies and codes that currently interface with ACS. Note: other agencies may have requirements not listed here

OGA Code	Agency and Description
AP2	Animal and Plant Health Inspection Service (APHIS) inspection required.
DT1	Department of Transportation form HS-7 may be required.
DT2	Department of Transportation form HS-7 is required.
FC3	Federal Communications form 740 may be required.
FC4	Federal Communications form 740 is required.
FD0	The Food and Drug Administration (FDA) form 701 is not required.
FD1	The Food and Drug Administration (FDA) form 701 may be required.
FD2	The Food and Drug Administration (FDA) form 701 is required.
FD3	The Food and Drug Administration (FDA) form 701 and prior notice may be required.
FD4	The Food and Drug Administration (FDA) form 701 and prior notice is required.
FS2	United States Department of Agriculture (USDA) meat inspection is required.
FW1	Fish and Wildlife Service (FWS) notification may be required.
FW2	Fish and Wildlife Service (FWS) notification is required.
TL1	Alcohol, Tobacco, and Firearms 5100.31 may be required.
TL2	Alcohol, Tobacco, and Firearms 5100.31 is required.

Quantitative Restriction (QR)

Explicit limit or quota on the amount of goods that can be imported or exported during a specified time period, usually measured by volume but sometimes by value. The quota may be applied on a "selective" basis, with varying limits set according to the country of origin, or on a quantitative global basis that only specifies the total limit and thus tends to benefit more efficient suppliers. Quotas are generally administered through a system of licensing.

Quota

See Quantitative Restriction

Retaliation

Action taken by a country to restrain imports from a country that has increased a tariff or imposed other measures that adversely affect its exports in a manner inconsistent with GATT. The GATT and the FTA, in certain circumstances, permit such actions. The value of trade affected by such retaliatory measures should approximately equal the value affected by the initial import restriction.

Round of Trade Negotiations

A cycle of multilateral trade negotiations under the auspices of GATT, culminating in simultaneous trade agreements among participating countries to reduce tariff and non-tariff barriers to trade. Seven "rounds" have been completed thus far: Geneva, 1947-48; Annecy, France, 1949; Torquay, England, 1950-51; Geneva, 1956; Geneva, 1960-62 (the Dillion Round); Geneva, 1963-67 (the Kennedy Round); and Geneva, 1973-79 (the Tokyo Round). The Uruguay Round commenced in September, 1986 and concluded in 1994.

Rules of Origin

Rules used to determine whether goods originate in a particular country for the purpose of the application of trade measures such as tariffs. For example, goods made up of components originating in various countries but which when assembled add 50% to their overall value may be considered to be goods originating in one country, whereas the addition of 25% in value would not qualify. These rules are very important to countries which are parties to a free-trade area. In the Canada-U.S. FTA, all goods require a Certificate of Origin to demonstrate to customs authorities that they qualify for FTA preferential treatment.

Safeguards

Emergency actions in the form of additional duties or import quotas applied to fairly traded imports which nevertheless cause or threaten serious injury to domestic producers.

Special Import Measures Act (SIMA) - Canada

Canadian legislation implementing rights and obligations flowing from the Tokyo Round in the area of Anti-Dumping, Countervailing Duties, and Safeguard actions. It provides for similar provisions covering anti-dumping and countervailing duty procedures, including separate investigations of the existence of dumping and subsidization and their margin by Revenue Canada and of injury by the Canadian International Trade Tribunal.

Specific Duty or Tariff

An import tax set at a fixed amount per unit or per unit of measure regardless of the value of the item imported. For comparison. See, Ad Valorem Tariff.

Statistical Extensions

A fifth set of two digits which are added to the tariff descriptors to distinguish between products for statistical purposes.

Subsidies Code

A code of conduct negotiated under the auspices of GATT during the Tokyo Round that expanded on Articles VI and XVI by establishing both substantive and procedural standards for national countervailing duty proceedings as well as establishing obligations regarding notification and dispute settlement in the area of subsidy practices.

Subsidy

An economic benefit conferred by a government to producers of goods, often to strengthen their competitive position. The subsidy may be direct (a cash grant) or indirect (low-interest export credits guaranteed by a government agency, for example).

Surcharge or Surtax

A tariff or tax on imports in addition to the existing tariff, often used as an emergency safeguard measure.

TAA

Trade Adjustment Assistance program (US).

Tariff

A duty (or tax) levied upon goods transported from one customs territory to another. The term "tariff" often refers to a comprehensive list or "schedule" of merchandise with the rate of duty to be paid to the government for importing products listed. The tariff rate is the rate at which imported goods are taxed.

Tariff Item

An HS or HTS classification for a type of good, for the purpose of specifying a tariff or other import measures for goods so defined.

Tariff Schedule

A comprehensive list of the goods which a country imports and the import duties applicable to each product. In Canada, the list is contained in Schedules I, II, III, IV, V, VI and VII to the Customs Tariff. In the United States, the list is contained in the United States Harmonized Tariff Schedule.

Tokyo Round

Seventh in a series of multilateral trade negotiations held under the auspices of GATT, launched in Tokyo in 1973 and concluded in 1979.

Trade Act of 1974

US legislation signed into law on 3 January 1975, which granted the President authority to enter the Tokyo Round and negotiate international agreements to reduce tariffs and non-tariff measures. The act also amended US law governing the escape clause, anti-dumping, and countervailing duties; expanded trade adjustment assistance; established guidelines for granting MFN status to East Block states; and granted limited trade preferences (GSP) to less developed countries.

Trade Agreements of 1979

U.S. legislation which approved and implemented the trade agreements negotiated during the Tokyo Round. It implemented U.S. obligations under the MTN agreements, amending the countervailing duty and anti-dumping laws, extending the President's authority to negotiate trade agreements, and requiring the President to reorganize executive branch trade functions.

Trade and Competitiveness Act of 1988

Omnibus trade legislation amending US trade legislation and providing the President with authority for the Uruguay Round of MTNs.

Trade and Tariff Act of 1984

An omnibus trade bill whose provisions included extension of the President's authority to grant trade preferences, authorization for negotiating a free-trade agreement with Israel, and authority to enforce export restraint agreements on steel.

Trade Expansion Act of 1962

US Legislation authorizing US participating on the Kennedy Round of trade negotiations, which also amended US escape clause procedures and established the Trade Adjustment Assistance (TAA) program.

Unfair Trade Practices

Unfair trade practice measures include retaliatory actions against a country that unfairly impedes imports. One type of unfair practice is violations of intellectual property, such as patent, trademark and copyright infringements, which are protected in the U.S. under Section 337 of the Tariff Act of 1930.

Uruguay Round

Eighth in a series of multilateral trade negotiations held under the auspices of GATT. This round was launched at Punta del Este, Uruguay in September, 1986, and concluded in the Spring of 1994.

USITC

US International Trade Commission. A fact-finding and regulatory agency whose six members make determinations of injury and recommendations for relief for industries or works seeking relief from increasing import competition. In addition, upon the request of Congress or the President, or on its own initiative, the Commission conducts comprehensive studies of specific industries and trade problems, and the probable impact on specific US industries of proposed reductions in US tariffs and non-tariff trade barriers.

USTR

United States Trade Representative. An official in the Executive Office of the President, with cabinet-level and ambassadorial rank, charged with advising the President and leading and coordinating the US government on international trade negotiations and the development of trade policy.

Valuation

The appraisal of the value of imported goods by customs officials for the purpose of determining the amount of duty payable in the importing country. The GATT Customs Valuation Code obliges signatories to use the "transaction value" of imported goods - or the price actually paid or payable for them -- as the principal basis for valuing the goods for customs purposes.

Variable Levy

A tariff subject to alterations as world market prices change, the alterations being designed to assure that the import price after payment of duty will equal a predetermined "gate" price. The variable levy of the European Community, the best known example, equals the difference between the target price for domestic agricultural producers and lowest offers for imported commodities on a C.I.F. basis. The amount of the levy is adjusted daily for changes in the world market situations in the case of grains, fortnightly for dairy products, and quarterly for pork.

Voluntary Restraint Agreement (VRA) Voluntary Export Restraints (VERs)

Informal agreements through which exporters voluntarily restrain certain exports (usually through export quotas) to avoid economic dislocation in an importing country, and to avert the possible imposition of mandatory import restrictions. Such arrangements do not normally entail "compensation" for the exporting country.