| Absolute advantage | the benefit enjoyed by a producer who can supply a certain quantity of an item more efficiently than can other producers
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| Auto Pact | the 1965 agreement establishing free trade in autos and auto parts between Canada and the United States; formerly known as the Canada–US Automotive Products Agreement
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| Common market | a group of countries with not only a free trade area and common trade barriers with outside countries, but also free movement of labour and capital
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| Comparative advantage | the benefit enjoyed by a producer who can supply a certain item with a lower opportunity cost than can other producers
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| Customs union | a group of countries with common trade barriers with outside countries as well as a free trade area
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| European Union (EU) | an expanding common market of European countries first formed in 1956, formerly known as the European Economic Community (EEC)
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| Export subsidies | payments by a government to domestic exporters so that these exporters can reduce the prices they charge in foreign markets
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| Free Trade Agreement (FTA) | the 1988 pact between Canada and the United States to form a free trade area
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| Free trade area | an area in which trade is tariff-free, although member countries are able to impose separate trade barriers on outside countries
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| General Agreement on Tariffs and Trade (GATT) | a multilateral trade agreement that lessened the degree of trade protection among member countries, including Canada
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| Globalization | the trend of growing foreign trade and investment and the spread of international businesses and markets
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| Import quota | a set limit on the quantity of a good that can be imported in a given year
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| Infant industry | a domestic industry that is young in comparison to its foreign competitors
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| Law of comparative advantage | states that maximum output is achieved when producers specialize in what they can make at a lower opportunity cost than can other producers
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| National Policy | a Canadian policy initiated in 1879 that included high Canadian tariffs on manufactured imports in order to stimulate a domestic manufacturing sector
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| Non-tariff barriers (NTBs) | trade barriers other than tariffs that are used to restrict imports; include import quotas, voluntary export restraints, and domestic regulations
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| North American Free Trade Agreement (NAFTA) | the 1993 pact among Canada, the United States, and Mexico to form a free trade area
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| Tariff | an excise tax on imported goods
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| Terms of trade | the international price of one product in terms of another
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| Trading bloc | a relatively small number of countries involved in a trade agreement
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| Voluntary export restraints (VERs) | import quotas that are voluntarily put in place by the exporting country
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| World Trade Organization (WTO) | a multilateral trade organization that has replaced GATT
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2002 McGraw-Hill Higher Education