CBA 396 - ch. 7

Subsidy

A _______provided by the government helps domestic producers to compete against foreign imports Add Valorem tariff specific tariff import quota subsidy

A tariff rate Quota

A common hybrid of a quota and a tariff is known as an import tariffs quota a voluntary export restraint an ad valorem tariff a tariff rate quota

Dumping

A company that sells its product in a foreign market below the cost of production may be accused of pandering profiteering carnivorous behavior dumping

Extend GATT rules to cover trade in services

A key goal of the 1986 Uruguay round was to extend GATT to cover trading commodities extend GATT rules to cover trade in services increase agricultural subsidy loosen the GATT's monitoring and enforcement mechanisms

Further reduce barriers to cross border trade and investment

A key issue in the "millennium round" of the WTO was to Increase barriers to cross border trade in agricultural products Extend GATT to cover trade in commodities Further reduce barriers to cross border trade and investment Extend GATT ruled to cover trade in services

The extra profit producers make when supply is artificially limited by an import quota

A quota rent A quota on trade imposed by the exporting country Levied as a fixed charge for each unit of a good imported Levied as a product to on of the value of the imported good The extra profit producers make when supply is artificially limited by an import quota

World trade organization

According to the 1986 Uruguay round the _____ was to be created to implement the GATT agreement World trade organization International Monetary Fund United Nations World bank

World trade organization

According to the 1986 Uruguay round the ________what is to be created to implement the GATT agreement world trade organization international monetary fund United Nations world bank

Comparative advantage

According to the infant industry argument many developing countries have a potential ________ in manufacturing but new manufacturing industries cannot initially compete with establish industries in developed countries absolute advantage comparative advantage opportunity cost competitive advantage

Bureaucratic rules designed to make it difficult for imports to enter a country

Administrative trade policies are Requirements that some specific fraction of a good be produced domestically Quotas on trade imposed by the exporting country Bureaucratic rules designed to make it difficult for imports to enter a country Designed to punish foreign firms that engage in dumping

Telecommunications and financial services

After the Uruguay round of GATT negotiations extended global trading rules to cover trade in services the first two industries targeted for reform by the WTO were textiles and technology telecommunications and financial services automotive and aerospace agriculture and consulting services

Import quota

An _________ is a direct restriction on the quantity of sound good that may be imported into a country import tariff import quota import subsidiary ad valorem tariff

Countervailing duties

Anti dumping duties are often called Export duties Positive duties retroactive duties Countervailing duties

A competitive advantage

Business firms that lobby their governments to engage in protectionism may miss the opportunity to build ______ a globally dispersed production system An absolute advantage A competitive advantage A strategic trade advantage A comparative advantage

Subsidies

By lowering production costs _______help domestic producers compete against foreign imports subsidies duties quotas tariffs

Smoky hawley act

Economic problems during the great depression were compounded in the 1930s when the US Congress passed the ________aimed at avoiding rising unemployment by protecting domestic industries diverting consumer demand away from foreign products Smoot Hawley act anti-dumping act Helms-Burton act D Amato act

Boosts national income at the expense of other countries

Economist Paul Krugman suggests that strategic trade policy aimed at establishing domestic firms in a dominant position in a global industry is a beggar thy neighbor policy that Provides enhanced protect for intellectual property of those firms Boosts national income at the expense of other countries Reduces domestic agricultural profits Depleted national income to the benefits of other countries

Hurt the citizens of both countries

Economist Paul kurgan has suggested that trade policy designed to retaliate against another country's trade policy would Benefit the multinational firms of both countries Benefit the citizens of both countries Hurt the multinational firms of both countries Hurt the citizens of both countries

They fear more damaging punitive tariffs or import quotas might follow if they do not

Foreign producers typically agree to voluntary export restrictions because their manufacturing capacity is limited they can divert their exports to other countries and charge more for their products they fear far more damaging punitive tariffs or important quotas might follow if they do not they are required to buy the world trade organization

To confirm to local content regulations a firm may have to locate more production activities in a given market than it would otherwise

Identify the true statement about trade barriers they lower the cost of exporting products to a country they may put a firm at a competitive advantage to indigenous competitors they may help a firm to serve a country from locations outside of that country to conform to local content regulations a firm may have to locate more production activities in a given market than it would otherwise

Reduce the overall efficiency of the world economy

Import tariffs reduce the price of foreign goods create efficient utilization of resources reduce the overall efficiency of the world economy are generally proconsumer and anti-producer

Dumping

In 1997 to South Korean manufactures of semiconductors LG; and Hyundai electronics were accused of selling dynamic random access memory chips (DRAMs) in the US market at below the cost of production it was a ledge that the firm we're trying to unload their excess production in the United States this is an example of an ad Valerem tariff a subsidy dumping an import quota

Protect domestic producers by limiting foreign competition

Local content regulations Protect domestic producers by limiting foreign competition Lower the prices of imported components Tend to benefit consumers and not producers Encourage outsourcing of production units

Globally dispersed production systems

Many firms of all national origins increasingly depend on _____ for their competitive advantage Globally dispersed production systems specific tariffs infant industries subsidies

Globally dispersed production systems

Many firms of all national origins increasingly depend on ______ for their competitive advantage Globally dispersed production systems Specific tariffs Infant industries Subsidies

Continued high tariff rates on goods and services in many nations

One issue at the forefront of the current agenda of the WTO is the Decrease in antidumping policies Low level of protectionism in agriculture Strong protection for intellectual property rights in many nations Continues high tariff rates on goods and services in many nations

Continued high tariff rates on goods and services in many nations

One issue at the forefront of the current agenda of the world trade organization is the decrease in anti-dumping policies low level of protectionism in agriculture strong protection for intellectual property rights in many nations continued high tariff rates on goods and services in many nations

Levied as a fixed charge for each unit of a good imported

Specific tariffs are levied as a proportion of the value of the imported goods government payment to domestic producers in the form of manufacturing or production requirements of goods levied as a fixed charge for each unit of a good imported

Capture first mover advantages

Strategic trade policy suggest that in industries where the existence of substantial scale economies implies that the world will probably support only a few firms countries may predominate in the export a certain product simply because they had firms that were able to influence the assignment of tariffs influence the assignment of quotas capture first mover advantages capitalize on late mover advantage is

Capture first mover advantages

Strategic trade policy suggests that in industries where the existence of substantial scale economies implies that the world will profitably support only a few firms, countries may predominate in the export of certain products simply because they had firms that were able to Influence the assignments of tariffs Influence the assignment of quotas Capture first mover advantages Capitalize on late mover advantages

Comply with the rules within 10 years in the case of the poorest countries

TRIPS regulations oblige WTO members to Grant and enforce patents lasting at least 100 years grant and enforce copyrights lasting 100 years comply with rules within five years in the case of the rich countries comply with the rules within 10 years of the poorest countries

Limit imports over quota

Tariff rate quotas are common in agriculture where their goal is to reduce the use of synthetic fertilizers limit imports over quota increase agricultural imports increase foreign competition

Consumers

Tariffs do not benefit consumers domestic producers governments domestic firms

Administrative trade policies

The Netherlands exports tulip bulbs to almost every country in the world except Japan this was because in Japan customs inspectors insisted on checking every toilet bowl by cutting it vertically down the middle this is an example of which of the following trade barriers export restraint administrative trade policies local content requirement ad valorem

Avoiding rising unemployment

The Smoot- Hawley act was aimed at Diverting consumer demand toward foreign products Promoting unrestricted free trade Limited global warming Avoiding rising unemployment

Established regulations on patents and copyrights

The TRIPS regulations established at the 1995 Uruguay round establish regulations on patents and copyrights set a new level of agriculture subsidies organized OECD countries to eliminate tariffs on textiles establish new tariff levels on technology

Lower prices to consumers and make it fairer for developing nations

The WTO argues that removing tariff barriers and subsidies in the agricultural sector could protect domestic agriculture in developed nations lower the overall level of agricultural trade restrict global economic growth lower prices to consumers and make it fairer for developing nations

Extending free trade agreements to services

The WTO' SGATS has taken the lead in providing enhanced protection for intellectual property extending free trade agreements to services reducing agricultural subsidies Enforcing GATT rules

Quota rent

The extra profit that producers make when supplies artificially limited by an import quota is referred to as a Quota rent specific tariff tariff rate quote subsidy

Firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital market

The infant argument is criticized because it relies on an assumption that New manufacturing industries in developing nations can initially compete with established industries in developed countries Selling goods in a foreign market at below their fair market value is legally and ethically justified The domestic industry in a developing nation lacks the capacity to meet demand Firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital market

False

True or false GATT has not recognized the infant industry argument as a legitimate reason for protectionism

False

True or false Tariff barriers lower the cost of exporting products to a country

False

True or false Tariffs are generally proconsumer an anti-producer

True

True or false anti-dumping policies are designed to punish foreign firms that are engaged in dumping

True

True or false antidumping actions are concentrated in certain sectors of the economy such as basic metal industries, chemicals , plastics and machinery and electrical equipment

False

True or false during the 1980s and early 1990s the world trading system directed by the GATT gained momentum as protectionist demands generally decreased across the world

True

True or false governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them

False

True or false one of the successful outcomes of the Doha round negotiations has been in many nations have proceeded with bilateral free trade agreements

false

True or false tariffs are generally proconsumer an anti-producer

False

True or false tariffs on industrial goods remain higher than tariffs on services

False

True or false the world trade organization does not have the power to impose trade sanctions

True

True or false the world trade organization was created as part of the Uruguay round

False

True or false trade wars benefit countries with interventionist governments

True

True or faults protecting industries deemed important for national security consumer protection and retaliating against unfair foreign competition or economic arguments for government intervention

Impose anti-dumping duties on

WTO rules allow countries to __________foreign goods that are being sold cheaper then at home or below their cost of production with domestic producers can show that they are being harmed Impose anti-dumping duties on subsidize lower the import quota on place countervailing duties on

Free trade

What term refers to a situation in which a government does not attempt to restrict what is citizens can buy or sell to another country tariffs import quotas free trade subsidies

To protect the jobs of Europe's farmers

What was the purpose of the establishment of the common agricultural policy (CAP) by the European Union? To increase imports and raise prices to protect the jobs of Europe's farmers to increase the import of grapes for the wine industry to make farmers in Europe more productive

Other countries reacted by raising their own tariff barriers

What was the result of the smoot Hawley act? Other countries reacted by raising their own tariff barriers other countries reacted by lowering their trade barriers US exports increase the United States began to get out of the Great Depression

To protect jobs and industries

Which of the following is a political reason for government to intervene in markets? To help citizens obtain jobs in foreign markets to aid their countries businesses in foreign markets to subsidize a multinational companies to protect jobs and industries

Many countries found ways to get around GATT regulations

Which of the following is a reason for the pressure for greater protectionism that occurred during the 1980s and early 1990s? The US Congress directed an enormous wall of tariff barriers Japanese economic failure strained the world trading system the persistent trade surplus in United States strain the world trading system many countries found ways to get around GATT regulations

Government subsidies must be paid for typically by taxing individuals and corporations

Which of the following observations about subsidies is true? Government subsidies must be paid for typically by taxing individuals and corporations Subsidies are used to reduce exports from a sector often for political reasons All subsidies are successful at increasing the international competitiveness of domestic producers Subsidies help foreign producers gain a competitive advantage over domestic producers

Export tariffs are used to raise revenue for the government

Which of the following observations about tariffs is true tariffs are generally anti-producer and pro consumer export tariffs are used to raise revenue for the government export tariffs are far more common than import tariffs import tariffs increase the overall efficiency of the world economy

It benefits domestic producers by limiting import competition

Which of the following statements concerning a voluntary export restraint is true It benefits domestic producers by limiting import competition In most cases it benefits consumers It lowers the domestic price of an imported food It is a variant of the ad valorem tariff

Specific tariffs

_____ are levied as a proportion of the value of the imported good

Bound tariff rates

_____ are the highest rate that can be charged, which is often but not always the rate that is charged Ad valorem tariff rates Tariff rents Specific tariff rates Bound tariff rates

Voluntary export restraint

______ is a quota on trade imposed by the exporting country typically at the request of the importing countries government voluntary export restraint specific tariff quota trade reconciliation ad valorem tariff

Ad Valerem tariffs

_______ Are levied as a proportion of the value of the imported good specific tariffs import quotas ad valorem tariffs tariff rate quotas

Free trade

________ and agriculture could jumpstart economic growth among the worlds poor nations and alleviate global poverty quota rent free trade strategic trade policy subsidies

A local content requirement is

___________ a requirement that some specific fraction of a good be produced domestically administrative trade policies are the buy American act is a local contact requirement is bureaucratic rules are