ad valorem tariff  a tax on imports evaluated as a percentage of the value of the import.
antidumping duty  a tariff imposed on a country as a penalty for dumping goods.
customs union  a free trade area with a common external tariff.
free trade area (FTA)  an area that has no trade barriers between the countries in the area.
infant industry argument  the view that a new industry may be helped by protectionist policies.
most-favored nation (MFN)  the principle by which all countries involved in multilateral negotiations receive the same tariff rates as the country with the lowest negotiated tariff rates.
multilateral negotiation  simultaneous tariff reductions on the part of many countries.
nontariff barrier  any government action other than a tariff that reduces imports, such as a quota or a standard.
revenue tariff  an import tax whose main purpose is to provide revenue to the government.
Smoot-Hawley tariff  a set of tariffs imposed in 1930 that raised the average tariff level to 59 percent by 1932.
specific tariff  a tax on imports that is proportional to the number of units or items imported.
trade creation  the increase in trade due to a decrease in trade barriers.
trade diversion  the shifting of trade away from the low-cost producer toward a higher-cost producer because of a reduction in trade barriers with the country of the higher-cost producer.
trade war  a conflict among nations over trade policies caused by imposition of protectionist policies on the part of one country and subsequent retaliatory actions by other countries.
Uruguay Round  the most recent round of multilateral negotiations, completed in 1993.
voluntary restraint agreement (VRA)  a country’s self-imposed government restriction on exports to a particular country.
World Trade Organization (WTO)  an international organization that can mediate trade disputes.