IB Midterm

EU

- Council of Ministers is composed of government ministers from each member. - Includes France and Germany

Andean Community

- Customs Union - A signed agreement in 1969 was based on the EU model. - Far less successful than the UE, it had all but collapsed in the 1980s. Some growth was seen after adoption of free market economic policies. Negotiations on the creation of a free trade area are proceeding at a very slow pace. - Venezuela joined at one point but has since withdrawn.

free market view

- Lower wages—Dell decides to move to Mexico to take advantage of lower labor costs and overall efficiency. - Comparative advantage—International production should be distributed among countries. - Benefits—Resource transfers from the parent country benefit the host country.

licensing drawback

A firm can quickly lose control over its technology, manufacturing, and marketing.

industrial

ASEAN has two objectives: foster free trade among member countries and achieve cooperation in __________ policies.

Uruguay Round

Among other things, negotiations that took place here reduced tariffs on industrial goods, reduced agricultural subsidies, and offered more protection for intellectual property rights.

ad valorem

As part of its effort to protect its auto makers from foreign competition, a tariff based on a proportion of the value of the product.

free trade area

Assume that France and Italy agree to remove all barriers to the trade of goods between them. However, the countries agree that each would be allowed to determine its own trade policies with regard to nonmembers. The economic integration between these countries is called a(n)

WTO

Between 1995 and 2019 more than 500 trade disputes between member countries were brought before this organization.

neither the importing country nor the exporting country complained to the GATT bureaucracy for it to take action

Bilateral voluntary export restraints, or VERs, circumvented GATT agreements, because

Tokyo Round

By the end of this in 1979, average tariff declined by nearly 92% in the United States.

positive-sum game

Economic theories for integration imply that free trade and investment create __________ for participants.

GATT

Established in 1947, its objective was to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like

sacrifice national sovereignty for the greater good.

Establishment of the euro required participating national governments to

true

Following Brexit, Great Britain withdrew from the European Union in 2016.

the companies had an unfair competitive advantage in the global industry

Following the global financial downturn in 2008-2009, some developed nations subsidized automobile makers to help them survive the economic climate. One negative consequence of this action was that

tariff rate quota system

For many years, there have been limits set on the amount of sugar that foreign producers can sell in the U.S. market. This is mandated by a

greenfield investment

Foreign direct investment can be in the form of a(n) ______, which occurs when a firm establishes a new operation in a foreign market.

Corn laws

Free trade as a government policy was first officially embraced by Great Britain by the repeal of this particular tariff.

lower, increase

Greenfield investing spurs competition by increasing the number of players in a market and this will tend to _____ prices and ______ economic welfare.

He pulled the United States out of these negotiations.

How did President Trump react to the two multilateral trade agreements, the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership, which were being pursued by the Obama administration?

economic union

If the proposed Regional Comprehensive Economic Partnership (RCEP) is achieved, it will rival the European Union (EU) when measured by the number of countries involved and their combined gross domestic product (GDP). The EU is an example of a(n)

all member countries would stand to benefit, although the benefits may not be equally distributed.

If the proposed Regional Comprehensive Economic Partnership (RCEP) is successful at removing tariffs on cross-border trade between member countries

exporting

If your household goods can be efficiently produced through economies of scale, it would be a good idea to use a(n) _______ strategy.

exporting or foreign direct investment

If your proprietary know-how of "green" processes is difficult to transfer to other firms, the most effective approach would be

host-country benefit

Increase in direct and indirect employment Transfer of new technology FDI as a substitute for imports of goods and services

licensing

Internalization theory is used to explain why a firm would prefer foreign direct investment over ______ as a strategy to enter a foreign market.

favorable

It is in the best interest of a company to seek out a country that has _ (restrictive or favorable?) policies toward FDI.

India benefits from employment effects.

JCB operates several factories in India employing more than 5,000 workers. Which best characterizes JCB's impact on India?

a greenfield investment.

JCB's joint venture in India with Escorts can best be described as

is an example of foreign direct investment.

JCB's joint venture in India with local conglomerate Escorts

false

Krugman advocates that it is logical to expect the U.S. government to ignore special-interest politics when forming policy.

infant industry argument

Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries. This demonstrates the

economic crisis in Argentina

Mercosur was temporarily suspended in 2001 because of a(n)

host-country cost

Monopolization of markets Outflow of earnings from a foreign subsidiary

resource-transfer effects

Most developing countries do not have access to the technology available in developed nations, but these developing nations need technology to create new jobs and stimulate the economy. Which aspect of inward FDI do these developing nations rely on to have access to needed technology?

loss

One cost to a host country related to FDI would be the _ (gain or loss?) of sovereignty and autonomy.

manipulating tax rules to encourage the firms to invest at home.

One example of a home-country policy for restricting outward FDI is

first-mover advantage

One focus of strategic trade policy is to help domestic companies gain a ___________________.

political

One reason a government might intervene in foreign trade is to protect consumers from a potentially dangerous product that's being imported. This would be an example of a(n) _____ argument for government intervention.

provided the impetus for the restructuring of substantial sections of European industry.

One result of the Single European Act was that it

export tariff

One way to ensure that there is sufficient supply of a good within a country is to enact a(n) __________, which discriminates against producers from exporting goods.

Mexico would be used as an assembly site and higher-paying jobs would be kept in the U.S. and Canada.

Opponents of NAFTA in Mexico were concerned that

VER

Peru restricts sugar exports by United States request.

mercantilist

President Trump has voiced his opposition to many free trade deals. Because of this, some say that he maintains a(n) __________ view on trade.

Smoot Lawley

Put in place to avoid rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products.

market imperfections approach

Robertson's Fertilizers Inc. has decided against licensing its products because it wants to have control over the manufacturing and marketing processes. The company decides to focus on FDI instead. This decision is representative of the

Local Content Requirements

Specific percent of goods must be produced domestically.

Nontariff

Subsidies and quotas are examples of _________ barriers a county might impose.

agricultural

Tariff rates on ______ products are generally much higher than tariffs on manufactured products or services.

true

Tax concessions can be used by a government to encourage foreign firms to do business in that country.

Free Trade

The United States and Kenya are exploring the possibility of a trade deal. _______ refers to a situation in which a government does not attempt to restrict what its citizens can buy from or sell to another country.

true

The United States has imposed trade sanctions on other countries as a way to protect and promote human rights in those nations.

could significantly increase the cost of a new car

The United States-Mexico-Canada Agreement (USMCA) retains much of the framework of the North American Free Trade Agreement (NAFTA) but with some changes especially in trade in automobiles. For U.S. consumers, the USMCA

antidumping duties

The WTO does allow ______ to be imposed on foreign goods sold below their cost of production when domestic producers are being hurt.

enforcement mechanisms

The WTO is more successful than GATT because the WTO has ______ that make it more effective.

location specific advantage

The ability of an individual, company, or economy to conduct an activity better than another for reasons related to location is called a(n)

offshore production

The board of directors of Green Garden Supply in Vermont voted to invest in a production facility in Mexico as a way to lower costs and free up financial resources for the company to grow in other areas. What form of FDI is this company using?

exporting

The effect of bulky or heavy products on transportation costs can make _______ an inappropriate strategy.

have common international rules for intellectual property rights

The focus of the TRIPS agreement is to

FDI is a benefit to both the source country and the host country.

The free market view would argue that

flow

The of FDI is the amount of FDI attempted over a period of time (usually one year).

profits

The radical view toward FDI argues that MNE's extract ______ from the host country and take them back to their home country.

total accumulated value of foreign-owned assets at a given time.

The stock of FDI refers to the

double

To encourage FDI, many countries have eliminated ______ taxation of foreign income.

automobiles and dairy

Two of the biggest industries affected by the United States-Mexico-Canada Agreement (USMCA) were

protect domestic producers from unfair foreign competition

Ultimately, antidumping policies are put in place to

subsidies and low interest loans

What are the two most common incentives governments offer to foreign firms to invest in their country?

To ensure sufficient supply of a good within the country

What's the main reason a country would use export tariffs?

false

When FDI occurs through greenfield investment, it will increase competition in a market and decrease economic welfare.

Ricardo

Which economist was a key figure in the early free trade movement in Great Britain?

World trade organization

Which organization was created to implement the GATT agreement?

USMCA

- An updated version of an existing trade agreement that includes new provisions for local content requirements for automakers and more open dairy trade. - The terms of the agreement will require minimum wages for auto workers in one bloc-member country to triple. - Raises threshold for automakers to qualify for zero tariffs. Under agreement, automakers must produce 75% (up from 62.5%) of a vehicle's content in North America. - A new agreement reached in 2020 to replace an existing agreement between the same countries.

trade diversion

- Canada imports computer chips from the United States (a USMCA partner), even though China exports them at a cheaper rate. - Chile imports cocoa from Mexico. It then enters the Andean Pact and changes its cocoa imports to Colombia (and Andean Pact member). - France imports solar panels from Spain (an EU partner) even though Australia offers a better price.

CAFTA

- Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic are at the core with an invitation for the United States for bilateral talks. - After an earlier attempt failed following a war between two participants, a new impetus came in 2003 when the United States signaled its intention to enter into bilateral trade negotiations with the group.

Mercosur

- In 2016 Venezuela was suspended for violating this pact's democratic principles and engaging in widespread human rights violations. - Recession troubles in 1998 led to greater downfall of this agreement. - Paraguay and Uruguay became members in March 1990, and in 2006, Venezuela joined but has yet to be fully integrated. - Trade between the four core members quadrupled between 1990 and 1998, but recession created major problems.

Radical view

- Iran—A Muslim country, which rejects Marxist theory, Iran has essentially embraced FDI. - Communist countries—Many communist countries were opposed in principle to FDI. -Socialist countries—Many of the socialist countries, particularly the ones in Africa, have embraced this view toward FDI.

pragmatic nationalism

- Tax subsidiaries—Offering tax subsidiaries to foreign multinational enterprises in the form of tax breaks or grants. - Profits—When a foreign company produces something in a host country, it creates jobs, but the profits from the host country go overseas. - Japan—When IBM and Texas Instruments set up wholly owned subsidiaries in Japan by negotiating terms that were beneficial to the Japanese economy.

ASEAN

- This group signed a free trade agreement with China that removes tariffs on 90% of traded goods. - There has been limited progress to foster free trade under this agreement.

NAFTA

- United States President Donald Trump claimed that this agreement did not benefit all members equally. He threatened to pull the United States out if more favorable terms were not reached. - Opposition to this agreement believed there would be a mass exodus of jobs from the United States and Canada into Mexico. - Agreement ratified by all three countries and went into effect January 1, 1994. - Environmental and job loss fears did not materialize.

trade creation

- United States imports cheaper textiles from Mexico because Mexico belongs to United States-Mexico-Canada Agreement (USMCA). - United States imports sugar from Canada and not Mexico even though both countries belong to USMCA.

Political Arguments for Intervention

-Certain key industries should be supported so that in case of national emergency or war the country will have access to key supplies and materials. -Certain foreign products seem attractive to consumers, but there are also significant concerns about the safety of the products over the long run -As societies get richer, citizens lobby for greater environmental protections. -A vocal and active segment of the population feels that domestic companies may shift factories to foreign locations.

Economic arguments for intervention

-Poor-quality products may be sold, which lowers profits for firms that originally developed the product. Economic arguments for intervention -Part of strategic trade policy that suggests it is a good idea to help domestic firms overcome barriers to entry created by foreign firms that have reaped first-mover advantages. -Part of strategic trade policy suggesting that a government can help raise national income if it can ensure that the firm or firms with a first-mover advantage will be domestic.

administrative trade policy

A country might create safety standards for certain products that other nations can't comply with. As a result, these nations can't be involved with exporting parts for those goods and trade does not exist. These safety standards are a form of

benefits outway the costs

A country that has the pragmatic nationalism view would agree that foreign direct investment should be allowed as long as

FDI should be allowed so long as the benefits outweigh the costs.

A country that relies on the pragmatic nationalist view would say that

balance-of-payments

A country's ___________ accounts track expenditures and receipts from other countries.

FDI Drawback

A firm bears the costs and risks of overseas operations, and operating in a new culture.

FDI benefit

A firm controls operations in different countries, can use profits from one country to support another.

licensing benefit

A firm does not have to bear development costs and risks of opening a foreign market.

outflow

A key cost of FDI for the home country is when the balance of payments is adversely affected by the initial capital required to finance the FDI. (Choose inflow or outflow.)

Greenfield investment

A low-cost, no-frills grocery store chain that began in the United States decided to open similar stores in Germany which did not have any stores like this. What type of FDI is this company using?

makes the domestic industry inefficient

A major reason why many economists remain critical of the infant industry argument is because it

specific tariff

A nation that imposes a fixed charge of $3 per barrel of oil imported into the country is relying on which instrument of trade?

the amount of trade it creates exceeds the amount it diverts.

A regional free trade agreement will benefit the world only if

the quota

A tariff rate quota provides a lower tariff rate to imports within ______

import quota

A tiny South Pacific island nation produces large quantities of honey-based products. To protect this industry, the island government mandates that only designated trading companies can import the crop, each of which is allocated the right to import a maximum number of pounds of honey each year. This is an example of a(n)

resource transfer

A(n) ______ effect has occurred when a company's FDI of capital, technology, and management resources creates a positive contribution to a host country that might not otherwise be available.

oligopoly

A(n) ______ is a market form in which a market or industry has a limited number of large firms.

olligopoly

A(n) ______ is a market form in which a market or industry has a limited number of large firms.

common market

A(n) __________ has no barriers to trade among member countries, includes a common external trade policy, and allows factors of production to move freely among members, but does not have a common currency.

tariff rate quota

A(n) __________ is in place when a lower tariff rate is applied to imports within the government quota than those over the quota.

quota rent

A(n) __________ refers to the extra profit that producers make when supply is artificially limited by an import quota.

exporting benefit

Centralized manufacturing can result in scale economies from global sales volume.

China wants to protect its firms from their more competitive US rivals

China has been accused of prohibiting U.S. companies that offer cloud computing from offering their services in China. Which argument best explains this?

home-country benefit

Demand creation for home-country export The inward flow of foreign earnings

Economic arguments for intervention

Developing countries with a comparative advantage in manufacturing should temporarily support new industries until they have grown strong enough to meet international competition.

franchising

Dipper Donuts licenses its brand name to foreign firms as long as they agree to run their restaurants on exactly the same lines as Dipper Donuts restaurants elsewhere in the world. In return, the foreign firms have to pay Dipper Donuts a percentage of their profits. This is an example of

employs a number of host country citizens

Direct effects of FDI on employment in the host country arise when a foreign MNE

licensing

Dolby Fashion House, an Italian manufacturer of evening dresses, granted U.S. company On the Runway Inc. the right to produce and sell Dolby Fashion's products in the United States. In return, On the Runway Inc. has to pay a royalty fee on every unit sold. According to this information, what form of FDI is Dolby Fashion House using?

shut U.S. companies out of RCEP markets if RCEP becomes a trade fortress.

Donald Trump's decision to pull out of negotiations for the Trans Pacific Partnership (TPP) motivated negotiators to come to terms on the Regional Comprehensive Economic Partnership (RCEP). Trump's actions could

strategic trade policy

According to __________, a government should use subsidies to support promising firms that are active in newly emerging industries.

trade creation

After the creation of a free trade area involving five nations, higher-cost external producers of rice were replaced by lower-cost external rice producers within the free trade area. This is known as

They promote more efficient use of resources

Alexander Hamilton argued that tariffs are an effective means of protecting infant industries until they are better able to compete. Which is not true of tariffs used to protect infant industries?

licensing

Allowing a foreign firm to produce and sell your product for a royalty fee is called

licensing

Although it normally involves much longer-term commitments, franchising is essentially the service industry version of

limit a firm's ability to serve a country from locations outside of that country.

An implication of trade barriers for business practice is that they...

licensing

Assume that Green Organics Ltd. based in Phoenix, Arizona has given a British-based company the right to produce and sell its products. In return for this, the British company will pay Green Organics $1 for every unit it sells. What type of investment is Green Organics using?

Tariffs are taxes levied on imports or exports

Brazil used tariffs to protect its auto industry in the 1950s.

Antidumping policies

EU imposes a special tariff on the offending foreign imports.

Subsidies

EU payments to European farmers.

home-country cost

FDI as a substitute for direct export Initial capital outflow to finance FDI Loss of economic independence

India had high tariff barriers.

For JCB, FDI in India was initially preferable to exporting because

services

GATS, a sister body of the World Trade Organization, is responsible for extending free trade agreements in what area?

service

GATT rules initially only dealt with trade in manufactured goods and commodities. With the increase in trade in the ______ sector, the Uruguay Round sought to establish agreements to cover this area.

It implemented a wall of tariffs

How did the Smoot-Hawley Act divert consumer demand away from foreign products?

It committed the European Economic Community to establish common policies in agriculture and transportation.

How did the Treaty of Rome affect trade?

These shifts encourage businesses to participate in FDI.

How has a shift toward democratic political institutions and free market economies affected FDI?

- Balance of payments are negatively affected if purpose of FDI is to develop a low-cost production location. - Balance of payments are negatively affected if FDI is a substitute for direct exports.

Identify two costs of FDI to a home country.

administrative trade

If Switzerland decides it wants to make it difficult for other countries to export cheese to Swiss businesses and creates pasteurization standards that don't exist anywhere else in the world, it would be implementing __________ policies as a way to restrict these imports.

licensing

If a firm's know-how, skills, and capabilities can be protected by contract, and if tight control over foreign operations is not vital to remain competitive, and there are reasons to believe that additional costs through transportation or tariffs would be high, the most effective approach would be

free trade area

If it is approved by legislators in member countries, the United States-Mexico-Canada Agreement (USMCA) will replace the existing North American Free Trade Agreement (NAFTA). Which level of regional economic integration best describes NAFTA?

offshore production

If the United States invests in paper towel production facilities in Mexico, it would be engaging in

foreign direct investment

If the firm is facing the threat of trade barriers such as high import tariffs or quotas and the firm has proprietary technology, the firm should consider

political union

In its current state, the European Union (EU) can best be characterized as being at which level of economic integration?

Subsidies

In order to encourage the wine production industry, the Italian government provided low-interest loans for the purchase of equipment and plants. The government also gave cash grants and made tax reductions. Which instrument of trade policy is being used by the Italian government?

Former soviet union

In the last decade, FDI inflows directed at developing nations have increased and even surpassed inflows into developed nations for the first time in 2018. Which of these developing economies was the recipient of these FDI inflows?

infant industry argument

Indonesia might have a potential comparative advantage in manufacturing textiles but is unable to compete with established textile manufacturing in Japan, at least for the near future. Indonesia could claim the

exporting, licensing

Instead of FDI, a company could choose ______, which involves producing goods at home and shipping them overseas, or ______, which is granting a foreign firm the right to produce and sell a product in return for a royalty fee.

utilizing resource assets that are tied to a particular foreign location and valuable enough to be combined with the firm's own unique assets.

Location-specific advantages for a firm are those that arise from

to provoke retaliation

Paul Krugman believed that a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to

The euro has had a volatile trading history against the U.S. dollar.

Since it was introduced in 1999, how has the euro compared to the U.S. dollar?

canada, mexico, us

The 25-year-old NAFTA agreement is set to be replaced with a new agreement, the USMCA. Which countries belong to NAFTA and, going forward, the USMCA?

decided not to be part of the european community

The European Free Trade Association initially consisted of member nations that

remove all impediments to the formation of a single market.

The Single European Act was put in place in an attempt to

establishing tariff barriers

The Smoot-Hawley Act tried to divert consumer demand away from foreign products by

greater political union

The Treaty of Maastricht and the Treaty of Lisbon were indications of __________ within the European Union (EU).

exacerbating the global glut of steel by investing in additional production.

The United States has accused China of

tariff

The United States has raised the taxes on tomatoes imported from Mexico. These taxes are an example of a(n)

trade diversion

The United States imports sugar from several nations. If the NAFTA agreement caused the United States to import sugar only from Canada, even though it cost more to do so, it would be an example of

Steel

The United States is demanding that China reduce overcapacity in which industry?

- They provided the base for many of the largest and best-capitalized businesses. - They were the most developed nations with the largest economies in the postwar period.

The United States, the United Kingdom, the Netherlands, France, Germany, and Japan together have accounted for the majority of all FDI outflows for 1998-2018 for what two reasons?

current

The _____ account tracks goods and services exports and imports in balance-of-payments accounting.

infant industry

The ______ argument for trade intervention states that developing countries need to support new industries until they are strong enough to compete globally.

direct, indirect

The ______ effects of FDI come when a multinational enterprise hires host-country citizens and ______ effects come when local suppliers hire workers as a result of the FDI.

economic

The argument for strategic trade policy suggests a(n) ______ justification for government intervention in trade.

political union

The banking union and harmonized tax rules that have been adopted by Eurozone members are indicators of which level of economic integration?

mexico

The biggest leap of economic faith came from __________ when signing the NAFTA agreement.

Domestic consumers and foreign producers lose, while the home government and home producers gain.

The infant industry argument suggests that protecting infant industries from foreign competitors will allow them time to become large enough to enjoy economies of scale. Who typically wins and who loses from a government policy to protect infant industries?

internalization theory

The management team at Pass the Ketchup Brands has decided not to license its product because of concerns that this will create opportunities for another company to have access to their secret recipe. For this reason, the company decides that FDI is their best course of action. Which economic theory does their choice represent?

infant industry

The oldest argument for government intervention in trade in which developing nations must protect their domestic industries until they are ready to compete globally is the ______ argument.

greenfield investment

The world flow of foreign direct investment between 1990 and 2017 increased 600 percent. If a company decides to establish a new operation in a foreign country, that company has engaged in

Toyota is concerned that its ability to export from Japan could be compromised by U.S. tariffs and quotas.

Toyota produces 1.2 million vehicles per year in the United States. Which best explains why Toyota has chosen to produce its vehicles in the United States rather than exporting from Japan?

invest directly in target markets.

Toyota's $25 billion investment in the U.S. market indicates that the Japanese company believes that the United States is a strategically important market. When considering future international expansion, if Toyota has valuable know-how that cannot be protected with a licensing contract and also faces high transportation costs, Toyota should

current

Tracking exports and imports of goods and services is measured by the account in balance-of-payments accounting.

exporting-drawback

Transportation costs can make it unprofitable to ship some products over a long distance.

free movement of labor because there are no restrictions on immigration or emigration.

Under a common market agreement, you would find

Ad Valorem tariff

United States imposes a 2.5% tarff on imported watches.

Specific Tariff

United States levies a $1 tariff on imported watches.

Import Quotas

United States restricts the number of imported video games.

Administrative Policies

United States stops medicine imports unapproved by FDA.

1- because of high tariff rates on imports of selected goods from developing nations into developed nations 2- because average tariffs on services remain higher than on industrial goods

What are two reasons countries should remain focused on opening markets?

-stable economy -large domestic markets

What are two reasons the United States has been an attractive target for FDI?

- raise the cost of exporting products - quotas limit the ability to serve a country from outside locales

What are two ways trade barriers hamper a firm's productive activities?

highest tariff rate that can be charged

What is a bound tariff rate?

Intervention can be dangerous and lead to retaliation efforts.

What is one drawback of government intervention in international trade?

the firm is unloading excess production in a foreign market.

What occurs when a company practices dumping?

- Supply capital, technology, and management resources - Boost a country's economic growth rate

What two positive contributions to a host country can FDI provide?

- Firms want to circumvent potential future trade barriers. - FDI has been driven by political and economic changes in developing nations.

What two reasons does the text give as to why FDI has outpaced world trade and world output?

NAFTA was designed to eliminate barriers to trade among member countries thereby creating a larger and more efficient productive base for the entire region.

What was the initial impetus for NAFTA?

encouraging outward FDI by a home country.

When a nation puts government-backed insurance programs in place to cover major types of foreign investment risk, it has the effect of

dumping

When manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production, it is called ______.

This stipulation is an example of a(n) local content requirement

When the management team reviewed its government contract on office chairs, they noticed that in order to bid on the project, at least 37 percent of the value of the office chairs had to be produced in the United States.

Multipoint Competition

When two or more enterprises encounter each other in different regional markets, national markets, or industries it creates

Furthering foreign policy objectives

Which argument for government intervention in trade best describes the rationale behind the United States' interest in negotiating a trade deal with Kenya?

greece

Which country has been granted at least three bailout efforts by the EU in an attempt to prevent a sovereign debt crisis?

The willingness of countries to give up sovereignty for the benefit of all.

Which fundamental element of a political union did the European Union (EU) lack as a result of Britain's decision to opt out of provisions such as the EU Charter of Fundamental Rights, the Schengen Agreement, and the Eurozone?

free trade area

Which level of regional economic integration best describes the new free trade agreement in North America currently referred to as USMCA?

Britain was seen as taking a "me first" approach rather than a "what's best for the whole" approach.

Which of the following best explains why some thought the European Union (EU) would be better off without Britain?

U.S. automakers will have to source more inputs within the bloc for vehicles to qualify as tariff-free.

Which of the following is most likely if the United States-Mexico-Canada Agreement (USMCA) is approved in member countries?

Great Britain refusing to adopt the common currency of the European Union, the euro

Which of these situations shows how concerns over national sovereignty can act as an impediment to regional economic integration?

The employees of Seven Sons Inc. have more money to spend and as a result, more home construction jobs are being created in the country.

Which situation represents an indirect effect of FDI on employment in a host country?

strategic behavior

Which theory of FDI flows is concerned with how FDI interacts with oligopolistic industries?

The eclectic paradigm

Which theory of foreign direct investment attempts to combine (1) the theories that focus on favoring direct investment when exporting and licensing are available and (2) theories that say certain locations are favored over others for FDI?

plastic, chemicals, basic metal

Which three industries are frequently targeted by antidumping actions?

pragmatic nationalism

Which view of FDI states that there are benefits and costs to FDI and that countries attempt to maximize the benefits and minimize the national co

free trade area

While the terms of the Regional Comprehensive Economic Partnership (RCEP) are still being negotiated, if the agreement achieves just a(n) __________ status, all barriers to the trade of goods and services among member countries will be removed.

The new agreement reduces uncertainty about trade in the region allowing firms to make strategic decisions.

Why is the announcement of the new trade agreement, referred to as USMCA by Donald Trump, so important for companies like Renault?

tariff barriers

______ constrain a firm's ability to export its products by raising the price of the exported product, which could put the firm at a competitive disadvantage with domestic firms in that country.

GATT

______ is the acronym for the multilateral agreement established in 1947 aimed at the abolition of quotas, tariffs, and subsidies in order to liberalize trade.

exporting

______ refers to shipping goods and services out of the jurisdiction of a country.

Multipoint competition

__________ arises when two or more enterprises encounter each other in different regional markets, national markets, or industries.

mercosur

__________ is a pact that originated in 1988 to establish a free trade area now including Argentina, Brazil, Paraguay, and Uruguay

Central American Common Market

__________ is a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war.

Subsidy

a trade instrument that provides cash assistance to its companies