With the approach of Canada-U.S. trade negotiations and discussions on broader multilateral trade issues, the months ahead promise a profusion of jargon, familiar and obscure. To help you pierce the fog, here is a brief, somewhat opinionated, lexicon of trade terms.

FREE-TRADE AREA. An agreement between two or more countries to remove barriers to the flow of goods and services between them. The type of Canada-U.S. trade deal under consideration.

CUSTOMS UNION. A free-trade area in which member states also agree to maintain a common tariff schedule against goods from other countries.

COMMON MARKET. Free trade in the fullest sense. No barriers to movements of goods, services, capital, or people between member states. Greater economic advantages than free-trade area, owing to superior allocation of resources.

MULTILATERAL FREE TRADE. Free trade as negotiated between scores of mutually suspicious nations, each seeking not to liberalize their own tariff regimes, but to reduce others. Takes decades to arrange, after which tariffs are pared while nontariff barriers spring up unchecked. For this reason supported by protectionists.

BILATERAL FREE TRADE. Free trade as negotiated between two countries. Requires complicated arrangements to harmonize policies, eliminate subsidies, phase-in, and so on, involving several years of bargaining. Supported by Canada and the U.S., most economists and the media, and that section of the business community which sees a buck in it.

UNILATERAL FREE TRADE. One country - for example, Canada - simply removes all barriers to trade, without waiting for other nations to reciprocate. It is then free to keep or discard whatever phase-in periods and domestic policies it wishes, without hindrance. Retains much of the advantages of bilateral or multilateral free trade, without attendant political difficulties - or delays.

TARIFFS. Regressive, discriminatory tax on imports, ranging in Canada from 2.5% on office equipment to more than 20% on some other commodities (shoe imports, for example, still carry a 23% tariff). Effect is to push up the price of imports, allowing domestic producers to raise their goods in tandem. Consumers' real income is reduced (the poor are hit relatively hardest), productivity is retarded, jobs are destroyed.

By 1987, under the terms of the last round of General Agreement on Tariffs & Trade negotiations, 80% of Canadian exports to the U.S. will be tariff-free, vs 65% of U.S. imports. This excludes goods that simply are not traded because of the inhibiting presence of the tariffs. Nor should it be forgotten that the one fifth of Caniandian exports that are subject to tariffs are in the high value-added sectors. However, growth in nontariff barriers, here and abroad, is fast making tariffs the least of our worries.

NONTARIFF BARRIERS. Quotas, ''voluntary'' export restraints, Buy-Canadian policies, subsidies on tradeable goods and other methods of raising the relative cost of imports to consumers. More difficult to monitor or control than tariffs.

GENERAL AGREEMENT ON TARIFFS & TRADE. International organization that attempts to civilize trade relations. Used by signatory nations less to remove tariffs than to make them more predictable and less discriminatory. Frowns also on NTBs. A bilateral Canada-U.S. arrangement is permitted under GATT rules, so long as it is all-encompassing. Sectoral free trade is verboten.

Reduced trade barriers have been achieved in successive GATT negotiating sessions - the Geneva round (1956), the Dillon round (1960-62), the Kennedy round (1964-67), and the Tokyo round (1974-79).

A new series of GATT negotiations begins in September, possibly in Montreal. A key item for Western countries will be to press for freer trade in services, opposed by such Third World countries as Brazil and India.

MULTI-FIBRE ARRANGEMENT. Splendid example of GATT's commitment to free trade. Agreement by which developed nations block exports of developing nations' textiles and clothing, to their mutual impoverishment. Comes up for renewal in July. Canada is a signatory.

MERCANTILISM. Centuries-old belief, still dominant in business and press circles, that the purpose of trade is to maximize a country's trade surplus. The purpose of trade is to maximize a country's productive potential; imports, by freeing domestic output for higher productive uses, contribute just as much as exports to this end.

Trade debate in Canada is largely between rival camps of mercantilists: the traditional protectionist variety, and reluctant free traders, who see removing domestic trade barriers as a necessary evil in order to gain ''access to U.S. markets.''

EXPORT SUBSIDIES. Tax money used to enable exporters to sell their wares at artificially cheap prices, by means ranging from concessional financing to promotional assistance.

Concessional financing (lending to export customers at below-market rates) has become so widespread that the Organization for Economic Co-operation & Development sets minimum financing rates, adjusted for term length and the wealth of the buyer country. Currently, OECD consensus rates range from 8.8% (two-to five-year loans to the poorest countries) to 11.2% (five-year-plus loans to relatively rich nations). Canada's Export Development Corp. will generally not go below the OECD rates in its financing, although, on some deals, terms are made more attractive by blending in aid money.

COUNTERVAILING DUTY. Tariff imposed in retaliation for foreign subsidy, often ignoring subsidies to domestic producers. Some argue it should be imposed only on difference between each country's subsidy; others say why not simply scrap the lot.

DUMPING. A ploy by which manufacturers in one country, often supported by government subsidy, try to sell goods in export markets for less than they charge at home. Some view dumping as a gift from abroad for consumers.

To ward off this evil, the Canadian Imports Tribunal levies duties on goods it determines have been dumped, and/or have injured Canadian producers.

INFANT INDUSTRY. Emotive term used in arguments for protection for new industries, which are generally given some patina of extra importance: current example is high-tech. Presumes, however, some failure of capital markets to recognize future ability of industry to cover costs - which, if true, suggests capital market intervention rather than price-fixing as the appropriate remedy.

The ''infants,'' additionally, tend to get a little long in the tooth before their industrial diapers are removed - often sliding gracefully into ''mature industry'' status, thereby qualifying for still more protection in order to modernize.

STUMPAGE. Point of contention in American lumber lobby complaints. In Canada, where the Crown is held to own forest lands, the royalty to cut wood on those lands - the stumpage fee - is comparatively nominal. In the U.S., where the forestry companies must bid for the land itself, the effective charge is much higher. American industry thus argues that Canadian foresters are ''subsidized.''

AUTO PACT. Properly, the Canada-U.S. Automotive Products Agreement (1965). Thought to be an example of free trade. It isn't. Although Canadian-made cars and auto parts enter the U.S. unhindered, American manufacturers must meet production-to-sales and Canadian content quotas to qualify for duty-free access.

That constraint has ''bitten,'' however, in only one year of the 20 since the accord was signed: local production has generally exceeded quotas. Would make precious little difference, therefore, if it were superseded by overall free trade agreement. Among several items the government has decreed are not on the bargaining table, nevertheless.

LAURIER. As in, ''remember what happened to.'' A cautionary tale for timid politicians: Sir Wilfrid lost on a platform of reciprocity in the 1911 election. It has been enough to mention his name to scuttle bilateral free trade proposals ever since.

RECIPROCITY. What bilateral free trade used to be called, before Laurier lost the election. Treaty guaranteed free flow of agricultural products from 1854 to 1866.