MGT 3030 Chapter 7 Smartbook

in __ Britain withdrew from the European Union following __

2016; Brexit

the WTO reports that approximately __ of all antidumping actions reported involve the basic metals, chemicals, plastics, and electrical equipment industries

70%

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

GATT

in the mid 1800s, __ was the first nation to officially follow free trade

Great Britain

many western countries imposed trade sanctions against __ during the 1980s and 1990s to encourage the country to improve human rights policies by dropping its apartheid policies

South Africa

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

administrative trade policy

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

antidumping duties

what are four main instruments of trade policy

antidumping duties, tariffs, local content requirements, import quotas

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

dumping

the argument for strategic trade policy suggest a __ justification for government intervention in trade

economic

if a country places a 20 percent tax on dairy products exported to other nations in order to limit exports and have sufficient supplies of dairy products for the home country, it is using an

export tariff

which function did the creators of the WTO hope it would perform

facilitate future trade deals

true or false: Krugman advocates that it is logical to expect the US government to ignore special interest politics when forming policy

false

GATT was put into place under the leadership of the US government as a way to

foster free trade

__ trade is the economic policy of not discriminating against exports to or imports from foreign countries

free

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

free trade

the US has placed a limit on the amount of tuna in airtight containers that can be imported into this country. this is an example of an

import quota

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

infant industry

country A wants to lower trade barriers with its neighbor, country B. while both countries support free trade, they are both reluctant to lower their barriers because they are not sure the other country will reciprocate. what obstacle is preventing the advancement of free trade between these countries

lack of trust

a __ states that some percentage of a good must be produced domestically

local content requirement

in order to win a contract in Mexico, QVB auto manufacturing must make 65 percent of the component parts of their vehicles in Mexico. this is an example of

local content requirement

the basic metals, chemicals, plastics, and machinery and electrical equipment industries account for the __ of antidumping actions

majority

a government would impose administrative trade policies in order to

make it difficult for imports to enter a country

reciprocal trade agreements between two or more partners are called __ trade agreements

multilateral

the stalled doha round has caused many nations to use __ to foster trade

multilateral trade agreements

today, many nations are __ new trade policies associated with the WTO

opposed to

a foreign nation is concerned that all jobs in the computer manufacturing industry will be lost to another country. the government decides to step in and prevent this from happening and implements tariffs on certain imports. the leader is praised for this action and reminds voters of this during the next election. in this situation, government invention is based on a __ argument

political

higher tariff rates on agricultural products come from a desire to

protect domestic agriculture from foreign competition

by threatening __ trade sanctions, one country can convince another country to open its markets

punitive

an import __ is a type of trade restriction that sets a physical limit on the quantity of a product that can be imported into the country in a set period of time

quota

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

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

the TRIPS agreement is based on the notion that inadequate protection of intellectual property __ the incentive for innovation

reduces

protecting intellectual property, through patents, trademarks, and copyrights, fosters innovation and can lead to what two results

rising living standards, economic growth

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

service

GATT negotiations continue to deal with additional issues such as

services, intellectual property, agricultural subsidies

if a country assesses a fixed charge of $5 per unit of rice that's imported, it is using a __ tariff

specific

a tax on imports that is designated as a fixed monetary amount per unit of import is called a

specific tariff

a __ is a payment by the government to a domestic producer to help lower production costs so they are better able to compete with foreign imports

subsidy

the nationwide company, nightingale health systems, received a tax break from the government when it was faltering and ready to declare bankruptcy. this subsidy helped the company with production costs and allowed it to have a stronger presence in the competitive health industry. this tax break is a type of

subsidy

a tax on goods coming into or leaving a country is called a

tariff

__ 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 of duty during the quota period

tariff rate quotas

taxes placed on imports to protect domestic producers from foreign competition and to produce revenue for the government are called

tariffs

what occurs when a company practices dumping

the firm is unloading excess production in a foreign market

what is a bound tariff rate

the highest tariff rate that can be charged

what's the main reason a country would use export tariffs

to ensure sufficient supply of a good within the country

Krugman argues that if each country seeks to follow a strategic trade policy to protect its interest, this may lead to a

trade war

country A subsidizes oil development and country B is losing any competitive advantage because of it. Krugman would agree that country B hopes to minimize subsidies to prevent a

trade war

true or false: following Brexit, Great Britain withdrew from the European Union in 2016

true

unilateral lowering of trade barriers has not occurred mostly due to lack of __ among governments

trust

Paul Krugman would agree that while strategic trade policy seems appealing in theory, in reality, strategic trade policy is

unworkable

what are the four issues currently at the forefront of the WTO agenda

high tariffs on nonagricultural goods and services, antidumping policies, protectionism in agriculture, lack of intellectual property protection

the european union's support for the common agricultural policy illustrates why strategic trade policy is problematic. in this instance, the government was influenced by __ to the detriment of consumers

interest groups

when governments intervene in foreign trade, they often claim they are protecting __ from unfair foreign competition

jobs

how has US policy affected the WTO's enforcement mechanism

the US refused to appoint new members to the appellate board and as a result, the WTO could no longer issue binding rulings

true or false: the US has imposed trade sanctions on other countries as a way to protect and promote human rights in those nations

true

true or false: to limit imports over the quota, tariff rate quotas are common in agriculture

true

tariff rates on __ products are generally much higher than tariffs on manufactured products or services

agricultural

which three industries are frequently targeted by antidumping actions

basic metals, chemicals, plastics

what are two reasons countries should remain focused on opening markets

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

the trump administration imposed tariffs in an attempt to reduce the annual trade deficit with china. how did china respond to these measures

china quickly implemented their own tariffs on US agricultural imports which created hardship for many US farmers

Krugman pointed out that strategic trade policies can provoke retaliation. a case in point is the 2022 inflation reduction act which has prompted the EU, South Korea, and china to create their own state support of

electric vehicle production

what is considered the simplest instrument of trade policy

tariffs

during the 1980s and 1990s, the world trading system was strained by the persistent trade deficit in the world's largest economy, which was

the US

what are three reasons that caused the global trading system erected under GATT to be strained during the 1980s and early 1990s

the persistent trade deficit in the US, countries found ways to get around GATT regulations, the economic success of Japan

in order to preserve protectionism, many countries are looking to which of these loopholes associated with antidumping

the vague definition of dumping

which economist was a key figure in the early free trade movement in great britain

Ricardo