Global Business ch 6

The GATT was established in _________.

1947

In November ________, representatives of the WTO met in ___________ to further reduce barriers to cross-border trade. Unfortunately, the talks ended up leading to no agreements because of the huge amount of protests.

1999, Seattle

The talks scheduled at Doha were only supposed to last for ____ years, but have already gone on for longer than that.

3

For a product to be considered "American," ____% of the materials must be produced domestically.

51

The Uruguay Round had ___ provisions.

7

There are ___ main instruments of trade policy.

7

The GATT has ____ rounds of negotiations.

8

___________ ___________ developed the infant industry argument in 1792.

Alexander Hamilton

The most frequent target of antidumping actions is ___________.

China

Definition: Act passed in 1996, similar to the Helms-Burton Act, aimed at Libya and Iran.

D'Amato Act

Because of the failure of the WTO talks in Seattle, the WTO scheduled a meeting in __________ in 2001 to set up a new agenda.

Doha

The __________ was a multilateral agreement whose objective was to liberalize trade by eliminating tariffs, subsidies, import quotas, etc.

GATT

Free trade was first officially adopted by ___________ _________ in 1846.

Great Britain

The Smoot-Hawley Act was passed in response to the tragedy of the ____________ ____________.

Great Depression

Definition: Act passed in 1996 that allowed Americans to sue foreign films that use Cuban property confiscated from them after the 1959 revolution.

Helms-Burton Act

It has been argued that ____________ is the master of administrative trade policies.

Japan

In the 1980s, pressure for greater protectionism rose against the GATT. The three reasons for this rise in pressures were: (1) The economic success of __________ strained the world trading system. (2) The world trading system was strained by the persistent ___________ __________ in the world's largest economy, the US. (3) Many countries found ways to get around GATT __________.

Japan, trade deficit, regulations

Paul ____________ argues that using the strategic trade policy to establish domestic firms in a global industry could invoke retaliatory subsidies in other countries, creating an expensive and pointless trade war.

Krugman

The first international agreement to limit global warming was the ___________ ____________, which was not signed by the US or China.

Kyoto Protocol

___________ ___________ ___________ status allows countries to export goods to the United States under favorable terms.

Most Favored Nation

Definition: Enacted in 1930 by the US Congress, this tariff erected a wall of barriers against imports into the United States.

Smoot-Hawley Act

The last round of GATT negotiations was the ___________ Round.

Uruguay

The GATT was superseded by the ____________.

WTO

The seventh provision of the Uruguay Round was that the ___________ _____________ _____________ was to be created to implement the GATT agreement.

World Trade Organization

___________ ___________ tariffs are levied as a proportion of the value of the imported good.

ad valorem

The sixth instrument of trade policy is ___________ ____________ ___________, which are bureaucratic rules designed to make it difficult for imports to enter a country.

administrative trade policies

The third provision of the Uruguay Round was that ___________ subsidies were to be substantially reduced.

agricultural

The seventh instrument of trade policy is ___________ ___________, which are policies designed to punish foreign firms that engage in dumping and thus protect domestic producers from unfair foreign competition.

antidumping policies

__________ __________ is the greenhouse gas at the center of concerns over global warming.

carbon dioxide

Subsidies help domestic producers in two ways: (1) ___________ against foreign imports, and (2) gaining ___________ markets.

competing, export

Intellectual property rights violations usually occur in ____________ ____________ and _____________.

computer software, music

Although governments and domestic producers gain from tariffs, _________ lose because they pay more for certain imports.

consumers

Antidumping duties are sometimes called _____________ duties.

countervailing

Local content requirements are used by ___________ countries to protect local jobs and industry from foreign competition.

developed

The second provision of the Uruguay Round was that average tariff rates imposed by ___________ nations on manufactured goods were to be reduced to less than 4% of value.

developed

Local content requirements have been widely used by ____________ countries to shift their manufacturing base from the simple assembly of imported products into the local manufacture of component parts.

developing

Governments usually intervene in international trade to protect ___________ producers.

domestic

The main gains from subsidies accrue to __________ producers, whose international competitiveness increases.

domestic

Definition: Selling goods in a foreign market at below their costs of production or below their "fair" market value.

dumping

Four of the main issues that the WTO is trying to solve are (1) anti-__________ policies, (2) the high level of ___________ in agriculture, (3) the lack of strong protection for ___________ property rights in many nations, and (4) the continued high ___________ rates on nonagricultural goods and services in many nations.

dumping, protectionism, intellectual, tariff

__________ arguments for government intervention in international trade are concerned with boosting the overall wealth of a nation.

economic

Advocates of strategic trade policy favor subsidies to help domestic firms achieve a dominant position in industries where ___________ _____ ___________ are important and the world market is not large enough to profitably support more than a few firms.

economies of scale

Many economists are critical of the infant industry argument because (1) protection of manufacturing from foreign competition does no good unless the protection helps make the industry ____________, and (2) the infant industry argument relies on the assumption that firms are unable to make efficient long-term investments by ___________ money.

efficient, borrowing

Dumping is viewed as a method by which firms unload __________ production in foreign markets.

excess

If India was marketing imitations of US-patented innovations can affect international trade in two ways: (1) It reduces the _________ opportunities in India for the original innovator in the US. (2) It also reduces the export opportunities in the countries where __________ sells.

export, India

True/False: Economists have found that firms move production to countries with less pollution regulation when these laws are increased in their home country.

false

True/False: If a complaint about dumping does not have merit, a government will impose an antidumping duty on the foreign imports.

false

True/False: If a domestic industry lacks the capacity to meet demand, an import quota can lower prices for the domestically produced and the imported good.

false

True/False: Subsidies are usually very successful in helping domestic producers gain international competitiveness.

false

True/False: The GATT was much more effective in handling disputes and setting enforceable rules than the WTO.

false

The strategic trade policy has two arguments: (1) It is argued that by appropriate actions, the government can help raise national income if it can ensure that domestic firms gain __________-__________ advantages. (2) It might pay a government to intervene in an industry by helping domestic firms overcome ___________ ___ ___________ created by foreign firms who have gained these advantages.

first-mover, barriers to entry

Definition: The absence of government barriers to the free flow of goods and services between countries.

free trade

Over the past 25 years, the volume of world trade has _________ every year, and barriers to international trade have been progressively __________.

grown, reduced

Import quotas are usually enforced by issuing _________ _________ to a group of individuals or firms.

import licenses

The third instrument of trade policy is ___________ ___________, which are direct restrictions on the quantity of some good that may be imported into a country.

import quotas

__________ ___________ have caused the price of sugar in the US to be 40% higher than the world price.

import quotas

The first provision of the Uruguay Round was that tariffs on ___________ goods were to be reduced by more than 1/3, and tariffs were to be scrapped on more than ____% of manufactured goods.

industrial, 40

The WTO agenda established in Doha includes cutting tariffs on ___________ goods and services, phasing out ___________ to agricultural producers, reducing barriers to __________-___________ investment, and limiting the use of ___________ laws.

industrial, subsidies, cross-border, antidumping

Definition: An argument that new industries in developing countries must be temporarily protected from international competition to help them reach a position where they can compete on world markets with the firms of developed nations.

infant industry argument

The fifth provision of the Uruguay Round was that GATT rules were to be extended to provide protection for ___________ property.

intellectual

The fifth instrument of trade policy is ___________ ___________ ___________, which are requirements that some specific fraction of a good be produced domestically.

local content requirements

2/3 of protectionist measures are various kinds of "___________" barriers designed to get around WTO rules. For example, Indonesia specified that certain kinds of goods can be imported only through five ports.

nontariff

Preserving jobs, protecting industries important for national security, and protecting consumers from dangerous products are ___________ arguments for government intervention in national trade.

political

__________ arguments for government intervention in international trade are concerned with protecting the interests of certain groups within a nation at the expense of other groups.

political

The two effects of import tariffs are (1) tariffs are pro-_________ and anti-__________, and (2) import tariffs reduce the overall __________ of the world economy.

producer, consumer, efficiency

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

quota rent

Tariffs can be placed to protect domestic producers or to produce ____________ for the government.

revenue

Export tariffs have two objectives: (1) to raise __________ for the government, and (2) to reduce exports from a sector for ___________ reasons.

revenue, political

The fourth provision of the Uruguay Round was that GATT fair trade and market access rules were to be extended to cover a wide range of ____________.

services

__________ tariffs are levied as a fixed charge for each unit of a good imported.

specific

The two types of tariffs are ___________ tariffs and ______ __________ tariffs.

specific, ad valorem

Definition: Government policy aimed at improving the competitive position of a domestic industry or domestic firm in the world market.

strategic trade policy

The second instrument of trade policy is ___________, which are government payments to a domestic producer.

subsidies

Definition: The process of applying a lower tariff rate to imports within the quota than those over the quota.

tariff rate quota

The first instrument of trade policy is ___________, which are taxes levied on imports or exports.

tariffs

The sixth provision of the Uruguay Round was that barriers on trade in __________ were to be significantly reduced over 10 years.

textiles

True/False: Agriculture is one of the largest beneficiaries of subsidies in most countries.

true

True/False: Import quotas or VERs always raise the domestic price of an imported good.

true

True/False: Many governments would like an unrestricted free trade policy, but do not get rid of trade barriers for fear that other countries will not follow suit.

true

True/False: Tariffs on agricultural products are usually much higher than those on manufactured products.

true

The point of antidumping policies is to protect domestic producers from __________ foreign competition.

unfair

The fourth instrument of trade policy is ___________ ___________ ___________, which are quotas on trade imposed by the exporting country, typically at the request of the importing country's government.

voluntary export restraints