Absolute advantage: an idea described by Adam Smith in his Inquiry into the Nature and Causes of the Wealth of Nations, and developed further by others, that countries engage in international trade to obtain goods more cheaply from abroad than they could make them themselves at home. Smith argued that international trade allows a greater specialization than would be possible in an autarkic system, thereby permitting resources to be used more efficiently. Writing about the reasons why families buy things rather than making them themselves, he said: “[w]hat is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it with some part of the produce of our own industry employed in a way in which we have some advantage.” See also autarky, comparative advantage, gains-from-trade theory, Heckscher-Ohlin theorem, self-reliance and self-sufficiency. [Smith 1991 (1776)]

Absolute standard: see minimum standard of treatment.

Absorption: countering the higher tariffs resulting from anti-dumping measures through lowering the price of the good. In other words, the producer or exporter of the good absorbs the additional cost caused by higher tariffs to preserve his place in the market. See also anti-absorption and circumvention.

Absorption principle: also known as “roll-up” principle, used in the administration of preferential rules of origin under free-trade agreements.