Chapter 8: Capitalizing on Global & Regional Integration

Which of the following is a difference between the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO)? a. The GATT was ineffective in reducing tariff barriers, whereas the WTO reduced tariff barriers. b. The GATT includes an effective dispute settlement mechanism, whereas the WTO does not include a dispute settlement mechanism. c. The GATT does not cover Intellectual Property (IP) protection, whereas the WTO includes IP protection. d. The GATT includes an agreement on the trade of services, whereas the WTO does not cover the trade of services.

Which of the following is a difference between the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO)? a. The GATT was ineffective in reducing tariff barriers, whereas the WTO reduced tariff barriers. b. The GATT includes an effective dispute settlement mechanism, whereas the WTO does not include a dispute settlement mechanism. c. The GATT does not cover Intellectual Property (IP) protection, whereas the WTO includes IP protection. d. The GATT includes an agreement on the trade of services, whereas the WTO does not cover the trade of services.

In 2008, Andean Community and Mercusur countries agreed to form the Union of South American Nations (USAN). a. True b. False

a. True

Mexico has arguably been NAFTA's biggest beneficiary, almost tripling per capita GDP in two decades. a. True b. False

a. True

North American Free Trade Agreement (NAFTA) is a free trade agreement (FTA) among Canada, Mexico, and the United States. a. True b. False

a. True

The 1999 Doha Round, held by the WTO in Seattle, attracted a huge public outcry including 30,000 protestors. a. True b. False

a. True

The Association of Southeast Asian Nations (ASEAN) was founded in 1967 after being inspired by the EU's success. a. True b. False

a. True

The Doha Round refers to a round of the World Trade Organization (WTO) negotiations to reduce agricultural subsidies, slash tariffs, and strengthen intellectual property protection. a. True b. False

a. True

In the aftermath of ____ the world began to unify behind global economic integration, which has the fundamental goal of promoting peace. a. WWII b. The General Agreement on Tariffs and Trade (GATT) c. WWI d. NAFTA

a. WWII

The free trade area formed by Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua-plus the Dominican Republic is called the _____. a. Central America Free Trade Agreement (CAFTA) b. Union of South American Nations (USAN) c. North American Free Trade Agreement (NAFTA) d. Closer Economic Relations (CER)

a. Central America Free Trade Agreement (CAFTA)

Which of the following was the General Agreement on Tariffs and Trade's (GATT's) successor? a. The World Trade Organization (WTO) b. The International Monetary Fund (IMF) c. The Federation of International Trade Associations (FITA) d. The Commonwealth of Independent States (CIS)

a. The World Trade Organization (WTO)

_____ was established in 1995 as the global multilateral trading system and the organization that supports it. a. The World Trade Organization (WTO) b. The European Union (EU) c. A customs union d. A monetary union

a. The World Trade Organization (WTO)

In 2013 in Bali, Indonesia, 159 members of the WTO struck deal that would cut red tape at customs posts around the world and serve as the only tangible achievement of the Doha Round. This deal was known as the: a. Trade Facilitation Agreement (TFA) b. United States-Dominican Republic-Central America Free Trade Agreement (CAFTA) c. Euro Zone Agreement d. Doha Development Agenda

a. Trade Facilitation Agreement (TFA)

Which of the following improvements resulted after the establishment of the General Agreement on Tariffs and Trade (GATT)? a. Trade growth consistently outpaced the gross domestic product (GDP) growth. b. The average tariffs in developed economies significantly increased. c. Effective dispute resolution mechanism was established. d. Trade in services and intellectual property (IP) protection was covered.

a. Trade growth consistently outpaced the gross domestic product (GDP) growth.

Global economic integration refers to efforts to reduce trade and investment barriers around the globe. a. True b. False

a. True

The North Symorian Trade Confederate (NSTC) was established to promote regional economic integration within six countries belonging to the same subcontinent. This free trade area has imposed common external policies on nonparticipants. In this case, NSTC is a _____. a. customs union b. common union c. monetary union d. political union

a. customs union

Which of the following customs unions in South America is more pro-free trade? a. Mercosur b. Andean Community c. Latin American Union d. Trans-Pacific Partnership

b. Andean Community

Which of the following is a disadvantage of global economic integration? a. Trade may be restricted by imposing protectionism. b. Critics may not be happy with the environmental impact. c. Countries can face discrimination in trade practices. d. People can be deprived of their jobs.

b. Critics may not be happy with the environmental impact.

Andean Community is relatively more protectionist and suspicious of the United States, whereas Mercosur is more pro-free trade. a. True b. False

b. False

Given the slowdown of multilateralism and the acceleration of regionalism, managers should focus their attention more at global levels than regional levels. a. True b. False

b. False

Protectionist policies promote free trade and economic gains. a. True b. False

b. False

Regional economic integration refers to efforts to reduce trade and investment barriers around the globe. a. True b. False

b. False

The Doha Round was successful because most countries delivered on their promise to reduce agricultural subsidies. a. True b. False

b. False

The European Union (EU) is now a political union. a. True b. False

b. False

The original motivations for European integration were economic in nature. a. True b. False

b. False

Which of the following will result from global economic integration? a. It will promote protectionist policies through tariffs and quotas. b. Its fundamental goal is to promote peace among countries. c. Governments will raise trade barriers due to global economic integration. d. Environment will be benefited through global economic integration.

b. Its fundamental goal is to promote peace among countries.

Which of the following was a result of the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA or CER)? a. Citizens of both countries could not reside in the other country for a long term. b. Tariffs and nontariff barriers between the countries were removed. c. Each of the countries charged exporters from the other country for dumping. d. The trade was unsuccessful due to cultural differences between the countries.

b. Tariffs and nontariff barriers between the countries were removed.

Which of the following was agreed upon and launched at the end of the Uruguay Round in 1994? a. The General Agreement on Tariffs and Trade (GATT) b. The World Trade Organization (WTO) c. The European Union (EU) d. The Multifiber Arrangement (MFA)

b. The World Trade Organization (WTO)

The North West Trading Zone (NWTZ) is a free trade area comprising eleven countries in the Moresian continent. The member countries of this free trade area use different currencies. In addition to imposing common external policies, the NWTZ permits the free movement of goods and people. In this case, the NWTZ is a _____. a. political union b. common market c. monetary union d. customs market

b. common market

The region consisting of eighteen European countries using a common currency is called the _____. a. Sterling area b. euro zone c. political union d. Andean Community

b. euro zone

Lumberne is a continent comprising 18 countries. Currently, Lumberne is a free trade area and an economic union including all 18 countries as members of free trade. Although each country is politically independent, governments of at least 12 countries are negotiating to form a common government. If Lumberne comes to be led by a single government, it would be a _____. a. monetary union b. political union c. customs union d. trade union

b. political union

Which of the following countries is a member country of Asia-Pacific Economic Cooperation (APEC)? a. India b. Brazil c. Chile d. Italy

c. Chile

Which of the following is an economic benefit of global economic integration? a. It limits investment opportunities and reduces risks. b. It allows nations to lower trade barriers for specific trade partners. c. It allows for disputes to be handled constructively. d. It builds confidence in a multilateral trading system.

c. It allows for disputes to be handled constructively.

Which of the following statements is true of global economic integration? a. It leads to war among trading countries. b. It facilitates equal distribution of benefits. c. It stimulates the economic growth of countries. d. It allows discrimination among trading countries.

c. It stimulates the economic growth of countries.

The _____, signed in 2007 and enacted in 2009, amended the Maastricht Treaty that served as a constitutional basis for the European Union (EU). a. Paris Treaty b. Treaty of Rome c. Lisbon Treaty d. Brussels Treaty

c. Lisbon Treaty

The most (in)famous loophole in merchandise trade created through the General Agreement on Tariffs and Trade (GATT) was the _____. a. Trade-Related Aspects of Intellectual Property Rights (TRIPS) b. General Agreement on Trade in Services (GATS) c. Multifiber Arrangement (MFA) d. Trade Facilitation Agreement (TFA)

c. Multifiber Arrangement (MFA)

Simon is a citizen of Belgium. He can travel to places such as France, Germany, and Greece without a passport. These states of the European Union are referred to as the _____. a. Sterling area b. Andean Community c. Schengen d. Mercosur

c. Schengen

The South East Trading Zone (SETZ) is a monetary union comprising eleven member countries. In this case, which of the following statements is true? a. The member countries will not permit the free movement of goods and people. b. The member countries will not impose common external policies on nonparticipants. c. The member countries will integrate political and economic affairs of a region. d. The member countries will adopt a common currency.

c. The member countries will integrate political and economic affairs of a region.

Praziland is one of the five countries in a free trade area (FTA). In this case, which of the following is likely to be true of the FTA? a. The members of the FTA will not engage in trade with the nonmembers. b. Each member of the FTA will maintain similar trade policies with nonmembers. c. The members of the FTA will remove trade barriers among themselves. d. The FTA will permit the free movement of goods and people from nonparticipants.

c. The members of the FTA will remove trade barriers among themselves.

_____ has been developing because Asia-Pacific Economic Cooperation (APEC) is too big and too difficult to get anything meaningful done. a. ASEAN Free Trade Area (AFTA) b. Closer Economic Relations (CER) c. Trans-Pacific Partnership (TPP) d. Association of Southeast Asian Nations (ASEAN)

c. Trans-Pacific Partnership (TPP)

In the context of the World Trade Organization's (WTO's) trade dispute settlement mechanisms, the losing country: a. experiences no loss of sovereignty. b. has to comply with the World Trade Organization's (WTO's) ruling. c. can defy the WTO ruling by doing nothing and suffer trade retaliation by the winning country. d. can block any unfavorable decision.

c. can defy the WTO ruling by doing nothing and suffer trade retaliation by the winning country.

Today's EU established a _____ when 18 EU members adopted of the euro. a. customs union b. common union c. monetary union d. political union

c. monetary union

The benefits of Association of Southeast Asian Nations (ASEAN) free trade area (AFTA) are limited because: a. the governments of ASEAN countries are politically unstable. b. of the war between the member countries. c. the member countries are developing countries. d. ASEAN's main trading partners are outside the region.

d. ASEAN's main trading partners are outside the region.

Which of the following is a disadvantage of regional economic integration? a. It is centered on preferential treatments for firms outside a region. b. It restricts free trade and investment in participating countries within a region. c. It reduces the collective political weight of a region. d. It may result in some loss of sovereignty in an economic dimension.

d. It may result in some loss of sovereignty in an economic dimension.

The Forman Free Trade Agreement (FFTA) is an economic union established to promote regional economic integration among its five member countries. In this case, which of the following is likely to be true? a. Member countries follow different external policies with nonmember countries. b. Movement of goods and people from nonmember countries is restricted. c. Member countries adopt different currencies. d. Members of the FFTA coordinate and harmonize monetary, fiscal, and taxation policies.

d. Members of the FFTA coordinate and harmonize monetary, fiscal, and taxation policies.

Which of the following agreements was signed among Canada, Mexico, and the United States? a. The General Agreement on Tariffs and Trade (GATT) b. The General Agreement on Trade in Services (GATS) c. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) d. The North American Free Trade Agreement (NAFTA)

d. The North American Free Trade Agreement (NAFTA)

In comparison with the General Agreement on Tariffs and Trade (GATT), which of the following statements is true of the World Trade Organization (WTO)? a. The World Trade Organization (WTO) led many governments to invoke non-tariff barriers which triggered trade disputes. b. The World Trade Organization (WTO) introduced the Multifiber Arrangement (MFA) which restricted free trade in textiles. c. The World Trade Organization (WTO) does not cover Intellectual Property (IP) protection. d. The World Trade Organization (WTO) includes effective trade dispute settlement mechanism.

d. The World Trade Organization (WTO) includes effective trade dispute settlement mechanism.

Which of the following is a reason that enforcement by the WTO faces controversy? a. The accusing country is also forced to change its trade practices. b. The offending country has no choice whether or not to implement a WTO order. c. Most of the WTO's trade dispute rulings resort to trade retaliation. d. The losing country experiences some loss of sovereignty.

d. The losing country experiences some loss of sovereignty.

Which of the following is a disadvantage of the General Agreement on Tariffs and Trade's (GATT's) policies? a. It increased the average trade tariffs among developed countries. b. Non-tariff barriers that were easy to verify and challenge were removed. c. It abolished the Multifiber Arrangement (MFA) designed to promote free trade in textiles. d. Trade in services and intellectual property (IP) protection was not covered.

d. Trade in services and intellectual property (IP) protection was not covered.

Which of the following was NOT an ambition set out by the Doah Round? a. defeating the terrorist agenda b. reducing agricultural subsidies in developed countries to facilitate exports from developing countries c. strengthening IP protection d. increasing tariffs

d. increasing tariffs