1. The GATT (General Agreement on Tariffs and Trade ) principle that members who violate GATT rules must compensate other countries by lowering tariffs or making other concessions, or be subject to retaliation.
2. The actual or potential payment by the winners from a change in trade or other policy to the losers, intended to undo the harm to the latter. Actual compensation is rare, but the potential for compensation is used as the basis for most evaluations of the gains from trade.