International Business Chapter 7

The economic success of _____ put a strain on the world trading system in the 1980s and promoted protectionism measures

Japan

True/False: To limit imports over quota, tariff rate quotas would be used for agricultural products to limit the amount entering a country

True

What organization now arbitrates trade disputes and monitors trade policies of member countries

WTO

Governments implement ______ trade policies that are designed to make it difficult for imports to enter a country

administrative

What industry tends to benefits the most from subsidies in most countries?

agriculture

Sometimes governments pay subsidies to help companies survive challenging economic climates. In effect, these companies receive...

an unfair competitive advantage

Sergei believes that a Japanese-based company is selling digital cameras well-below market costs in the US and thereby gaining all of the business. He plans to report this to the Commerce Department who can examine that case based on US ______ policies

antidumping

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

argicultural

The purpose of the Smoot-Hawley Act, passed by the US Congress in 1930, was to

avoid rising unemployment

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

dumping

Protecting intellectual property, such as patents, trademarks, and copyrights, can lead to which two consequences

economic growth and rising living standards

The WTO is more successful than GATT because the WTO has _______ mechanisms that make it more effective

enforcement

What were two results of the Smoot-Hawley Act

every industry encountered tariff barriers and US exports declined

Goods that are taxed as they ship out of a country have an ______ tariff

export

Quota rent provides producers with

extra profit

True/False: Countervailing duties are placed on foreign firms to encourage them to sell products below their "fair" market value

false

The strategic trade policy may look good in theory, but in practice it may be unworkable. As a result, the case for _____ trade may come to the forefront

free

When the government does not use quotas, taxes, or other means to restrict what its citizens can buy from or sell to another country, it is called _____ trade

free

What are the two components of strategic trade policy

governments should intervene to assist firms in overcoming barriers to entry created by foreign firms due to first-mover advantages and governments should subsidize promising domestic firms in emerging industries

What are two ways a government use intervention in trade as a foreign policy instrument

grant preferential trading terms to countries it wants to build relations with and pressure/punish "rogue states"

What are three main instruments of trade policy

import quotas, subsidies, and voluntary export restaints

A tariff is a tax levied on

imports or exports

With regard to strategic trade policy, what are two actions governments take in response to pressure from business firms

increased protectionism and push for more open markets and freer trade

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

infant industry

Patents, trademarks, and copyrights are designed to protect ________ property

intellectual

Krugman argues that strategic trade policy should not be embraced bc many times governments are influences by politically important _________ to intervene in the economy

interest groups

What are two drawbacks of government intervention in free trade

it protects inefficient industries and it invites retaliation and trade wars

In order to win a Mexican contract, QVB Autos Manufacturing must make 65% of the component parts of their autos in Mexico. This is an example of a ___________

local content requirement

Governments occasionally protect certain industries, like defense-related industries, for _______ reasons

national security

Which three industries are more likely to be targeted by antidumping actions

plastics, chemicals, and basic metal

Based on the economic analysis of tariffs, it can be said that they are which two of the following

pro-producer and anti-consumer

What is considered the most common political argument for government intervention in foreign trade

protecting jobs and industries

Import quotas are based on the ______ of a good

quantity

When supply of a product is artificially limited by an import quota, a producer receives extra profit that is known as _______

quota rent

When supply of a product is artificially limited by an import quota, a producer receives extra profit that is known as....

quota rent

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

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

Which one of the following is NOT included in the Doha agenda

raising tariffs on industrial services

The Uruguay Round started in 1986 and eventually provided for which three of these provisions

reducing agricultural subsidies, reducing tariffs on industrial goods, and reducing tariffs on manufactured goods

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

ricardo

Member nations hoped that the WTO would be a facilitator of future trade deals especially in the area of

services

Many Western counties imposed trade sanctions against _____ during the 1980s and 1990s to encourage the country to improve human rights policies

south africa

A tax on imports that is levied as a fixed charge per unit of an imported good is called a _______ tariff

specific

An advocate of the strategic trade policy would agree that a government should use ________ to help promising businesses that are active in emerging industries

subsidies

Reducing many of the tariffs that are still in existence will lead to...

substantial gains in global trade

_______ 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

tariff barriers

________ permit a specific quantity of imported goods to enter the country under a reduced rate while those exceeding the quantity are charged at a higher rate

tariff rate quotas

Taxes placed on imports to protect domestic producers from foreign competition and to product revenue for the government are _______

tariffs

The main objective of GATT was to liberalize _____ restrictions

trade

The trade sanctions on Iraq that were imposed in 1991 after the Gulf War are an example of _____

using trade policy to punish rogue states

Ad valorem tariffs are based on the ______ of a product

value

A self-imposed trade restriction on the quantity of a good that the exporting country is allowed to export to another country is called ________

voluntary export restraint

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

bc of higher tariff rates on imports of selected goods from developing nations into developed nations and bc average tariffs on services remains higher than on industrial goods

The _____ Round started in 2001 and continues today to deal with the issues of agriculture, protectionism, protection of intellectual property, and other priorities of the WTO

Doha

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

compete globally

Which groups are negatively impacted when an import tariff is enacted

consumers and foreign producers

Countries can use __________ duties on an offending import to offset dumping

countervailing

In its first two decades, the WTO has been successful based on what two reasons

countries involved in formal procedures for trade disputes have adopted WTO recommendations and member countries have faith in the WTO's dispute resolution procedures

What were the first two industries targeted by the WTO as part of its effort to include regulations governing foreign direct investment

global telecommunications, financial servies