Globalisation, Trade and Free Trade Agreements

An export is a good or service supplied by a resident of one economy to a buyer in another economy.

An import is a good or service acquired from another economy.

A goods trade deficit occurs when the value of merchandise imports exceeds the value of merchandise exports over a period.

A tariff is a tax or duty imposed on imported or, in some cases, exported goods.

Protectionism refers to policies that shield domestic producers from foreign competition, for example through tariffs or quotas.

A quota sets a quantitative limit on the amount of a good that may be imported or exported.

An FTA reduces or removes specified trade barriers between participating economies, subject to the agreement‘s terms.

Rules of origin determine whether a product qualifies as originating in a participating country and can receive preferential treatment.

The WTO provides a framework for trade rules and negotiations among member economies and a process for trade disputes.

Comparative advantage exists when a producer can make a good or service at a lower opportunity cost than another producer.

Foreign exchange refers to currencies and currency claims used in international payments and transactions.

The balance of payments records economic transactions between residents of an economy and the rest of the world over a period.

Exports and imports of goods and services are recorded in the current account.

A remittance is a transfer of money, often by a worker living abroad to people or institutions in another country.

It refers to a country‘s firms contributing stages, inputs or services to production networks spanning multiple countries.

A weaker currency can make domestic goods cheaper for foreign buyers in foreign-currency terms, though the actual effect depends on prices and contracts.

A non-tariff barrier is a trade restriction other than a tariff, such as certain quotas, licensing requirements or technical measures.

Trade liberalisation reduces barriers to cross-border trade, for example by lowering tariffs or easing restrictions.

Excessive protectionism can reduce competition, raise prices and weaken incentives to improve productivity.

Export promotion seeks to improve firms‘ ability to sell goods and services in foreign markets.