MGMT 346 Exam 2

Country A imposes an import tax on fungible goods such as oil, wheat, or timber that enter specifically from country B. This is likely called a:

Specific or flat tariff

What is material injury?

Substantial damage to a product

What is the dutiable status of goods?

Tariffs, restraints on imports, and other import controls are applied to goods according to the item's dutiable status

What are technical barriers to trade?

Technical regulations and standards that apply to imported foreign products, even if they also apply equally to domestic products.

Who oversees the WTO?

The Ministerial Conference which appoints the Director-General

A famous example of US law that motivated other countries to implement retaliatory tariffs which as a result hurt the US economy during the Depression was:

The Smoot-Hawley Tariff Act

What is the Japan Industrial Standards (JIS) Mark?

The symbol of an approved product in Japan that is government authorized. It means that the product is approved and indicates that the manufacturer has submitted the product for inspections

How is the President or executive branch affected by the separation of powers?

The system of checks and balances in place forces the President to have to work with Congress.

What is dumping?

The unfair trade practice of selling products in a foreign country for less than the price charged for the same or comparable goods in the producers home market

What is an absolute quota?

Those that strictly prohibit imports of an item above a predetermined limit, based either on the value or quantity of specific goods, or as a percentage of the domestic market for that item

How is the EU attempting to increase standardization?

Through the CE Mark

What is the overarching goal of GATT negotiating rounds?

To aim for trade liberalization

All of the different "Rounds" of multilateral trade negotiations had the same goal of:

Trade liberalization

A law granting favorable tariff treatment to imports for developing countries is called a:

Trade preference

______ is not a non-tariff trade barrier.

Unconditional MFN trade

What does the WTO Agreement on Subsidies and Countervailing measures do?

WTO Rules apply to specific subsidies. it classifies subsidies into prohibited and actionable subsidies

The original drafters of GATT know of the possible political consequences of tariff concessions and built into the process an ______________ as means to be relieved from its concessions.

escape clause

What do trade sanctions do in respect to Section 301?

they end an illegal foreign trade practice, not to compensate the petitioning US firm

What are the arguments against quotas?

- They distort the free market - They deprive the consumers of their choice - they cause dramatic price increases due to the lack of foreign competition - Protected domestic companies tend to become "lazy" and inefficient producers

What are the functions of the WTO?

- To facilitate cooperation between member-nations on trade issues - To administer the WTO agreements - To provide a forum for future trade negotiations - To monitor national trade policies - To assist developing countries in complying with WTO agreements by giving technical assistance - To provide a forum for the settlement of trade disputes between members

What are the Federal Agencies affecting trade?

- US Department of Commerce - US Trade Representative - US Department of the Treasury - International Trade Commission - US Court of International Trade

How many countries are a member of the WTO?

164. Two controversial admissions were China in 2001 and Russia in 2012

What is the International Organization for Standardization (ISO)?

A nongovernmental organization comprising of national standards for goods and services

What is an allocated quota?

A quota in which the total limit is "allocated" among several specific countries.

What is the relevance of exports of commercial services?

According to WTO, exports of commercial services exceeded $4.8 Trillion in 2014

How does Trade Adjustment Assistance (TAA) work?

An agency that helps workers improve their skills and get support and resources for reemployment. Petitions are filed with the Department of Labor by workers, state workforce, or union - Direct cash payments to workers - Job retraining for workers and relocation - Help for companies as well

What is tariffication?

An effort to convert all existing agricultural non-tariff barriers into bound tariffs and to reduce these tariffs over time

The Import-Export Clause of the US Constitution specifically prohibits states from taxing:

Both imports and exports

What were the three main objectives of the WTO Agreement on Agriculture?

1. Cutting domestic subsidies and other direct payments to farmers 2. Cutting programs that subsidize exports of farm products 3. Assuring greater market access for imported farm products by converting quotas and other non tariff barriers into tariffs

A free trade agreement usually refers to one with:

A "free trade area" providing favorable tariff treatment, often based on geography

What is an auctioned quota?

A country sells the quota rights through bidding

What is the American National Standards Institute (ANSI)?

An institute that maintains an "online portal" that translates the standards and regulations in China

What is the usual remedy to dumping?

Antidumping duties

What is consumption abroad?

Consumers or firms making use of a service in another country

What does GATT permit tariffs to regulate?

GATT permits tariffs to regulate imports, but not quotas or quantitative restrictions

In 1944, the allied nations met at the Breton Woods Conference and out of concern with the "post-war" economies of the nations of the world created:

International Monetary Fund and World Bank

What is Codex Alimentarius?

International standards for the protection of plants, animals, and foodstuffs

What is MFN now referred as?

Normal Trade Relations or NTR

What is the calculation of the dumping margin in determining anti dumping duties?

Normal value - Export price = Dumping margin

What are rounds?

Round of trade negotiations among the WTO members

What replaced GATT and when?

The WTO replaced GATT in 1995

What are upstream subsidies?

These are granted for raw materials

What are global quotas?

These are quotas imposed by an importing nation on a particular product regardless of its country of origin

A widget is imported into the US from South Africa. Once in the US, it is transported via rail from the entry port to Chicago. It has imposed on it then a special "Foreign Product Transportation Fee" that is not placed on transported products of domestic manufacturers. This is deemed inconsistent and invalid under:

"National treatment" principle of GATT

What must the ITC consider ind determining material damages?

- Import volume - the effect on prices for like domestic products - the impact on the domestic industry sales, profits, market share, wages, unemployment, growing inventories, and other measures of economic health

What are antidumping duties?

A government tariff imposed on imported products, which are priced far less than the original market value - they are not criminal fines and they are not "damages" that are awarded to an injured firm

What are the procurement rules?

Agreement on Government Procurement reverses general WTO rules that allow government agencies to favor domestic products

Country A wants to impose a quota on imports of cars from manufacturers in specific countries but wishes to ensure that one country and its manufacturers do not come to dominate the market on imports by using for itself too much of the entire quota allowed for that group. You should suggest that country A implement a(n):

Allocated quota

A nation's usual remedy for dumping is for the country to place ___________ on the dumped products which are in addition to any regular tariffs already imposed:

Anti dumping duties

What is a trade barrier?

Any implement to trade in services or goods

What are the Chinese Standards and technical regulations?

China is still socialist/communist and has a very bureaucratic regulatory framework. Laws are administered by China's General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ).

What is a free trade area?

Consists of two or more countries that are party to a free trade agreement that reduces or eliminates tariffs on goods, removes trade barriers, and usually addresses other common concerns affecting trade between them.

What was the issue in Dole v. Carter?

Did the agreement qualify as an executive order?

What are non-tariff trade barriers?

Direct or indirect, they are any impediment to trade other than tariffs

When are most trade concessions made?

During major negotiating rounds

What are prohibited subsidies?

Export subsidies or import substitution subsidies

What is Unconditional MFN?

If a member extends privilege to another member, then that privilege automatically is extended to all members

You are the chief official in designing US trade policy. You wish to erect non-tariff trade barriers to Greek wine entering this country. This is politically sensitive given Greece's financial condition. Which strategy is the "sneakiest" and least likely to be made a political issue by angry Greek politicians?

Hidden or extra "red tape" in the importing process that causes delays.

What does the International Trade Commission do?

Investigates unfair trade practices

When can the President grant import relief in relation to the International Trade Commission (ITC)?

If the ITC determines that an article is being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat thereof, to the domestic industry producing an article like or directly competitive with the imported article

What is the benefit of international standardization?

Makes design and building and products cheaper and trade easier

What is the equivalence aspect of TBT?

Nations agree to accept foreign standards that are functionally equivalent to their own

What did the Doha Development Round aim to do?

Negotiate agricultural subsidies

Who can bring complaints under the WTO?

Only a government can bring a complaint against another government

What is the relevance of the China Compulsory Certification (CCC) Mark?

Products need to meet CCC standards of quality and safety requirements for sale in the country.

What is the Trade Reform Act of 1974?

It gave more power to the President

What is the purpose of the WTO Agreement on Basic Telecommunications?

It includes regulation of voice and data systems, satellite systems and services, paging, and others. the agreement binds 108 countries to MFN trade and to open their telecommunications markets to foreign competitors

What is the WTO?

It is an umbrella organization that sets rules of international trade and dispute resolution

What did the Uruguay Round aim to do?

Switch from GATT to WTO

WTO members, when setting valid restrictions on trade, should make them no more onerous than necessary to achieve the goals for which they are imposed. this is called the principle of:

Least restrictive trade

WTO Agreements have extended WTO principles to a variety of services but have generally not significantly affected patchwork domestic regulations about:

Licensing of foreign professionals

What is import relief?

Measures which are imposed by a government when the motive is to temporarily suspend or restrict the importation of products in order to protect its domestic manufacturers from competition

What does Article II of GATT call for?

Member nations must cooperate in lowering tariffs

What is the dumping margin?

The difference between the normal value and the export price

What does AGOA encourage?

The law encourages US trade ad investment in sub-Saharan Africa and improves access for African products to US markets

What is the export price?

The price at which a product is sold to an unaffiliated buyer in the importing country, excluding insurance and shipping costs

What is trade liberalization?

The process of reducing tariffs, removing artificial barriers, and restrictions on trade

What is the role of product standards in Japan?

They are usually based on design characteristics

How many countries benefit from CBI?

17 countries

What is the petition procedure of Section 301?

A Section 301 action can be initiated by petition of any interested party or firm, or by the USTR. The USTR must conduct a formal investigation into the foreign trade practices and immediately begin negotiations for a solution.

In respect to least restrictive trade, what does the WTO mandate?

A balancing test: weigh protecting public against restrictions

What is commercial presence?

A foreign company setting up subsidiaries or branches to provide services in another country

What is a customs union?

A free trade area with a common external tariff

What is a common market?

A free trade area with relatively free movement or capital and services. This is one step further than a customs union in that it also removes restrictions on the free movement of money, labor, and factors of production. The European Union is a common market and monetary union that functions at a high level of economic, legal, and political integration

Your government asks for advice. It wishes to place a financial barrier on the entry of lace-up shoes being exported into the country by foreign manufacturers. It is intended to be a simple-to-enforce financial barrier. You suggest the easiest and simplest type of tariff is called a:

A global, flat tariff

What is a quota?

A limit on the number of goods that can be imported

What is a technical regulation?

A mandatory law/regulation affecting a product's characteristics, such as its performance, design, construction, chemical composition, materials, packaging, or labeling. These must be met before a product can be imported or sold in a country.

What is an ad valorem tariff?

A tariff based on a percentage of the price of that good

What is a specific or flat tariff?

A tariff based on the physical units of a good

What is a tariff?

A tax levied on goods by the country of importation. It is usually computed as a percentage of value or on the basis of physical units.

What is a product standard, also referred to as a "standard"?

A voluntary guideline for product characteristics established by a recognized private or industry organization or association. Regardless of voluntary status, a consumer may look for the seal of compliance in making a purchasing decision.

You are in charge of tariff policy for your country. You are asked to place an import restraint on products from a politically-allied nation. The restraint must be subtle and most difficult to detect and be "safe" from attack in the press. Your best suggestion is to implement:

An indirect non-tariff trade barrier by administrative regulations

Country A is in trade with countries B, C, D, E. All states have MFN status. A lowers it tariff on car engines imported from country B by 2.0%. C, D, and E do not reciprocate by lowering their barriers yet receive the same reduced tariff as B. This agreement is called:

An unconditional MFN trade agreement

What is an import trade barrier?

Any impediment, direct or indirect, to the entrance or sale of imported goods or services

What is the Argentina Safeguard Measures on Imports of Footwear concerned with?

Argentina failed to show that increased imports were the cause of serious harm to domestic footwear

What is the GATT escape clause?

Article XIX permits a country to take a temporary corrective action to safeguard its domestic industry where: - as a result o unforeseen developments, - and due to the effect of a tariff concession or obligation under a trade agreement - increased quantities of an imported product, - are causing or threaten to cause serious injury to domestic producers of like or directly competitive products

What is a tariff concession?

Assists in reducing costs for imported goods for instance. Each country's promise to reduce tariffs on imports of a given item in return for tariff concessions from other countries

What does the US Trade Representative do?

Carries out all bilateral and multilateral trade negotiations on behalf of the US

What are conformity assessments?

Certificate that encourages nations to enter into mutual recognition agreements.

Based on its economic growth in the past decade or so and global impact, the most significant admission into the WTO of a new member was in 2001 with the admission of _______:

China

The _______ vests the federal government with exclusive control over foreign commerce.

Commerce Clause

One of the main principles of GATT system was a commitment by nations to:

Conduct of regular multilateral trade negotiations

Prior to formally requesting binding dispute resolution with the WTO Dispute Resolution Body, the party complaining about a tariff violation must:

Conduct trade consultations with the offering party at the WTO

An export subsidy is a governmental financial contribution to domestic producers:

Contingent on export performance

What was the issue in Youngstown Sheet & Tube v. Sawyer?

Could President Truman rely on his inherent power as chief executive and as commander in chief of the armed forces to force the continued operation of the nation's steel mills during the Korean War in the face of a threatened labor strike?

How are subsidies and nonmarket economies dealt with?

Countervailing measures are not used if ITA is unable to identify and measure government subsidies - If countervailing duties law is not applicable, antidumping duties become the only fair trade remedy

What are beneficiary developing countries?

Countries that are eligible for preferential treatment under GSP

The court of record with original jurisdiction to hear a dispute about the trade or tariff laws of the US is:

Court of International Trade

What is the goal of dispute settlement under the WTO?

Dispute mechanisms and procedures attempt to avoid retaliation or "trade wars"

How does the WTO settle dumping cases?

Disputes are taken to the WTO Dispute Settlement Panel - Panel must accept the facts as found by the ITA/ITC

When the US Congress enacts a scheme of legislation or regulation in an area that prevails over inconsistent state regulation, the acts of Congress will prevail under the:

Doctrine of federal preemption

What is a schedule of commitments?

Documents in which specific commitments, such as tariff bindings, are listed at the WTO

What are actionable subsidies?

Domestic subsidies which give unfair competitive advantage to domestic firms - they are actionable at the WTO if: they cause injury to domestic industry, or the cause nullification and impairment of rights, or cause "serious prejudice". (presumed if subsidy exceeds 5% of value)

the selling of products in a foreign country for less than the price charged for "like" or comparable products in the exporting company's home market is called:

Dumping

Why are technical barriers critical in the EU?

EU efforts to reduce technical barriers to trade is critical because of multinational brands and consolidation of the euro

The Uruguay Round from 1986 to 1994 ushered in significant changes to international trade regulation. These changes included all of the following except:

Elimination of all non-tariff trade barriers

A basic right of the WTO is that a country must treat goods and services from all WTO members:

Equally and without discrimination

What is the Standardization Administrative of China?

Established in 2001, it coordinates the development of standards.

What are domestic subsidies?

Financial aids given by the government to individuals or enterprises in the local market. They distort markets by causing overproduction and suppressing prices while protecting the incomes of farmers.

What is presence of natural persons?

Individuals traveling from their own country to supply services in another

________________ is a nongovernmental organization which has developed over 21,000 standards for goods, services, and manufacturing and technology. Its goal is to foster international trade by creating a common language for standards and technical requirements

International Organization for Standardization

What is the CE Mark?

Internationally recognized symbol for safety and quality of many kinds of products

What does the WTO Agreement on Trade-Related Investment Measures (TRIMS) do?

It attempts to reduce restrictions on foreign investment that might restrict cross-border trade in goods and services. It also eliminates discrimination against foreign firms and their goods and services

What did the WTO Agreement on Agriculture do?

It began the process of removing government intervention in the farming sector and ending government programs that distort normal market conditions.

What is the Trade Expansion Act of 1962?

It created office of the US Trade Representative

What did the Kennedy Round aim to do?

More tariff cuts

What is the metal recognition aspect of TBT?

Nations are encouraged to enter into these agreements whereby they recognize certifications, or conformity assessments, of foreign inspection firms and labs approved in the country where the article is manufactured.

What is the harmonization aspect of TBT?

Nations attempt to bring their standards and technical regulations into harmony with internationally accepted standards.

What are the multilateral trade negotiation in respect to GATT?

Negotiations between GATT that aim to reduce tariffs and non-tariff barriers

Are WTO panel or Appellate Body decisions used as precedent for future cases?

No, they do not have the same precedential value as judicial decisions. They are not binding in future cases

How many nations have joined the WTO Agreement on Trade in Financial Services?

Over 100 nations

What is the process for dispute resolution under WTO agreements?

Parties must first engage in trade consultations at the WTO, and if that doesn't work then they may request binding dispute resolution before the WTO Dispute Settlement Body

What are agricultural export subsidies?

Payments or allowances given to farmers that encourage farmers to export agricultural products

What are indirect non-tariff trade barriers?

Perfectly neutral and nondiscriminatory, their effect is to discriminate against foreign-made products or firms.

What standard does the US use?

Performance Standards

What is the constructed value?

Price of the dumped product compared with the cost of producing the product in the exporting country plus a reasonable amount for selling, packaging, administration, and other costs and for a reasonable profit

What are tariff schedules?

Primary resource for determining tariff classifications for goods imported. They are detailed product by product listings of all tariffs for that country

The process by which a government sells or transfers government-owned industry or assets to the private sector is called:

Privatization

ISO 9000 is a standard intended to ensure:

Product quality through the product design and manufacturing process

What does the WTO Agreement on Safeguards do?

Provides details lacking in the escape clause and sets out procedural steps for countries to use it

What is the ISO 14000?

Provides guidelines for environmental management. It does not set criteria for pollution or environmental impact, rather it requires that a firm establish a management system for setting its own environmental objectives, complying with national or local environmental laws, and continuing to improve its environmental impact

What is a competitive need limitation in terms of GSP?

Quantitative limit on imports from each beneficiary country

What does Article XII of GATT permit?

Quotas can only be used in severe national balance of payment emergencies because quotas are so trade and free-market distorting

What does Article XI of GATT prohibit?

Prohibits a country from using an import license as a protectionist measure in disguise

What is zero quota?

Refers to a complete ban on the import of a product in that it permits zero quantities to be imported

What are global safeguards?

Take decisions such as restricting imports of a product temporarily to protect from an increase in imports causing or threatening to cause injury to domestic production

When nations attempt to minimize or eliminate technical barriers to trade, they use various methods to achieve this goal except:

Tariff concessions

What is the WTO trying to do and what are the complications?

The WTO is moving the global economy to more free and fair trade, but there are many countries still dealing with political instability, communism, Marxism, that find it difficult to open to free trade

What is a "less than fair value" defined as?

The export price of a product sold in the US is less than the normal value of a foreign like or similar good sold in in the exporter's home country

Who has the power to regulate international commerce?

The federal government was given this power by the drafters of the US Constitution

What are tariff bindings?

They are agreed tariff rates, think of the word bindings and the fact that countries are BOUND by these rates, it serves as a maximum

What is the role of tariff bindings?

They are capped at agreed rates and published in tariff schedules

What is the intention of National Treatment provisions in GATT?

They ensure that imported products will not be subject to discriminatory treatment under the laws of the importing nation

What is the process for a country to modify or withdraw a concession?

They must negotiate directly with the countries most affected by the modification and by agreement reduce or offset tariffs on other items equal to an equivalent amount in trade

How do countries settle disputes when deadlocked under the WTO?

They seek quasi-judicial process for resolution

A subsidy bestowed on raw materials or component parts (inputs) for use in an exported product is called a(n)

Upstream subsidy

What was the issue in Arizona v. United States?

What is Arizona permitted to do with immigration considering federal preemption?

A balance-of-payment deficit arises:

When a nation's outflow of foreign exchange exceeds its receipts in its own currency

What is a balance of payments deficit?

When a nation's outflow of foreign exchange exceeds receipts. This can be due to normal inflows and outflows of foreign currencies and is usually never a problem

Miami places a "Port Tax" on services provided by the port authorities to vessels entering the port from any destination, e.g., entry taxes, inspection charges, wharf fees, etc. Is this constitutional?

Yes, under the precedent set by Department of Revenue of the State of Washington case

What is a compound tariff rate?

ad valorem + specific rates

The US wishes to publish its tariff rate on a product. There is some need for flexibility in the US rate determination predicted, so you advise that the easiest strategy is to publish a specific "ceiling" rate and use discretion to reduce rate as appropriate. This "ceiling tariff rate" is called:

the bound rate

A means to prevent multiple taxations by a state or a multinational corporation is to offer the taxpayer a:

"Water's edge election."

What is the Equal Dignity Rule?

- An act of Congress can override an inconsistent prior treaty - A treaty will override an inconsistent prior act of Congress - Statutes and treaties are of equal dignity

What are some examples of direct non-tariff barriers?

- Embargoes - Quotas - Import licensing schemes

What are the limits on the use of safeguards?

- May not exceed 4 years - Use of quotas greatly restricted - Voluntary restraint agreements no longer permitted

What are the main principles of WTO Trade Law found in GATT?

- Multilateral trade negotiations - Transparency/predictability - Reciprocal tariff reduction and bound commitments - Nondiscrimination and unconditional MFN - National treatment - Elimination of quotas and other non-tariff barriers - Dispute resolution

What are the types of treaties?

- Self-executing - Non self-executing - Executory

What is a trade balancing requirement?

A regulation that allows companies to import products based on the export volume

What is the Reciprocal Trade Agreements Act of 1934?

Introduced Most Favored Nation status (now known as Normal Trade Relations)

What are global tariffs?

Tariffs imposed on a particular classification of goods without regard to the country of origin of the goods.

What is the US Caribbean Basin Initiative (CBI)?

The name collectively given to several laws that grant trade preferences to goods imported from the Caribbean. These are several special programs allowing duty-free imports of textiles and other products from improvised Haiti

What is the important aspect related to administering government procurement rules in the United States?

The responsibility rests with the President to revoke the waiver of "Buy America Act"

What is transparency?

the degree to which the public has knowledge of the foreign regulations and laws

What are some example of treaties under US law?

- FCN Treaties (Friendship, Commerce, and Navigation)

What does the US Court of International Trade do?

Has exclusive jurisdiction over all civil actions against the US, involving revenue from imports, tariffs, embargoes, or quantitative restriction (except for health and safety) and enforcement of customs laws

What is cross-border supply?

Services supplied from one country to another

One of the principles of the WTO is that whereby members must eliminate quotas and other non-tariff barriers and convert them into tariffs. This is called:

Tariffication

How are tariffs viewed in terms of trade restrictions?

Tariffs are generally considered to be one of the least restrictive types of trade barriers (assuming the tariff rate is reasonable and not prohibitive) because tariff rates are published and freely available, easily calculated by exporter and importer, and capable of being passed on in the price of goods.

What are trade preferences?

They provide for a formal system of exemption from the more general rules of the WTO. They are given to developing countries to help further their social and economic developments

What is the Africa Growth ad Opportunity Act (AGOA)?

This aids in the economic growth and the establishment of political freedom in 48 poor countries in the sub-Saharan Africa where the per capita annual income averages about $500 per year.

What are provisional safeguards?

This occurs when there is clear evidence that imports have increased

In determining serious injury, what does the ITC look at?

- A significant idling of productive facilities in the industry - The inability of firms to operate at a reasonable profit - Unemployment or underemployment in the industry where serious injury to a domestic industry is threatened - A decline in sales or market share - A downward trend in production, profits, wages, productivity, or employment - Growing inventories - A firm's inability to generate capital for plant and equipment modernization or for RnD - An actual increase in imports or in market share held by imports - Other factors that may account for the serious injury to the domestic industry

What is the US Escape Clause, Section 201 of the Trade Act of 1974?

- Does not follow the GATT guidelines - US law refers to safeguards as positive adjustments - article being imported in such increased quantities as to be a substantial cause of serious injury or threat thereof to domestic industry producing an article like or directly competitive with the imported article

What does the Commerce Clause deal with?

- Multiple taxation - State restrictions on both imports and exports - State income taxation of multinational corporations

What power does the President or executive branch possess?

- Power to negotiate treaties - Power to appoint ambassadors

What are some aspects of the President's powers?

- President has limited powers? - But President has broad powers during the time of war - Presidents rely on delegations of power from Congress

What does the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) do?

- WTO countries agree to abide by intellectual property conventions - Domestic and foreign intellectual property rights treated the same, and enforcement is strengthened - Members are bringing their laws into compliance with TRIPS

What are Safeguards against injury?

A precautionary measure taken by the government as an emergency remedy, usually tariffs, used to protect a domestic industry from injury resulting from increased imports of a like or competing products.

What are sanitary and phytosanitary measures?

A precautionary measure taken by the government to protect or enhance food safety and quality, and prevent disease - A country has the right to protect human, animal, and plant life but cannot be used to justify otherwise discriminatory conduct

Company A in the US sells and exports widgets to Nigeria. The US lowers its tariff on foreign-manufactured widgets from 6.0% to 4.0%. Company A will then pressure the US to demand:

A reciprocal tariff concession from Nigeria on widgets or similar imports.

What are local content requirements?

A regulation that dictates the use of a percentage of local products in manufacturing imported products

What are Most Favored Nation (MFN) Trades?

Agreement to treat products or services from that country with the lowest tariff rates that it gives to similar products imported from its other MFN trading partners - In US MFN granted by Congress - According to WTO, all members of the WTO are entitled to MFN status

What does the TBT apply to?

All products, agricultural, industrial, and consumer goods

The President is concerned with fighting terrorism by tracking and stopping the funding of terrorist groups who use the US banking system. He wants to know which agency he should speak to about this narrow issue broadly within the world of foreign trade. To which agency or group should he speak to?

Bureau of Financial Crimes Enforcement Network (FinCEN)

You are engaged with several nations as a trade representative of your country to create a free trade area agreement. As an example to argue in favor of such arrangement, you want to cite examples of success stories of such structure. What example would you NOT cite?

Caribbean Basin Initiative

What is the Trade assistance to firms?

It is administered by the US Department of Commerce and intended to help US companies become more competitive. Companies are eligible if increased imports contributed to a decline in sales and to the unemployment of a significant number of workers

What is the Smoot-Hawley Tariff Act of 1930?

It raised tariffs so high, that there was international retaliation. Some say it exacerbated the Great Depression

What is a trade-related investment measure?

Rules applied to foreign investors by the domestic regulations of a country

What was created at the Bretton Woods Conference in 1944?

The International Monetary Fund and the World Bank, also known as the International Bank for Reconstruction

How does a country qualify for benefits of AGOA?

They must try to improve their own conditions through progressive economic and social policies. The country must abide by human rights standards, eliminate abuses of child labor, not support terrorism

What is a tariff-rate quota?

This is not a quota, but instead a tariff rate that increases according to the quantity of goods imported

What is the Generalized System of Preferences (GSP)?

This program permits certain approved imports from specified developing countries to enter the US at reduced rates of duty, or duty free. This aids the development of poorer countries while decreasing costs of many imported goods for US business and consumers

A nation may impose tariffs on products that are imported from another country and then decrease tariffs on other products to "even out" overall tariffs placed on goods from that country. This is called:

Trade compensation

The Trade Reform Act of 1974 created a "fast track" process for approving trade agreements, known as the president's:

Trade promotion authority

Examples of a common market:

- Caribbean community - Common Market of the South - Andean Community of Nations - African Regional Economic Communities - Asian free trade initiatives - Middle East economic integration

What is the WTO Agreement on Technical Barriers to Trade (TBT)?

- Established as one of the Uruguay Round agreements in 1994 - Emphasizes Harmonization, equivalence, and mutual recognition - Aims at minimizing technical barriers to trade

What are the exceptions for permitting trade restrictions under Article XX of GATT?

- For the protection of public morals - For the protection of human, animal, or plant life or health - For the regulation of gold or silver - For customs enforcement - To stop infringement of patents, trademarks, and copyrights - For prevention of deceptive practices - for prohibitions on trade in products made by prison labor - Protection of national artistic, historic, or archaeological treasures

What does the US Department of Commerce do?

- Includes control of exports as well as the International Trade Administration or ITA - US Bureau of Industry and Security - US Department of Homeland Security - Border and Transportation Protection

What is the WTO Agreement on Government Procurement?

- It applies only to those countries that signed, and applies to goods and services worth 130,000 SDRs and construction contracts over 5 million - nearly 90 Agencies are excluded from the Procurement rules

What are some examples of indirect non-tariff trade barriers?

- Laws - Regulations - Rules of administrative agencies

What is the ISO 9000?

- It has become the standard for ensuring product quality through product design and manufacturing process - Certification makes selling in Europe much easier

What are the reasons for price cutting?

- Price discrimination - Purpose is to drive out competition

What are the two major regulatory approaches to product testing, inspections, and certifications?

- Prior approval: Products undergo testing and inspection in these countries - Prior certification: Products needs to be certified and approved in period approval countries before sale

What does Trade in services include?

- Professional services - Health care - Insurance - Travel - Many others

What are some reasons for regulating imports?

- Revenue - Protection of domestic industry - Retaliation against foreign trade barriers - Protection of resources

What are the four ways to provide an international service under the WTO General Agreement on Trade in Services (GATS)?

1. Services supplied from one country to another, known as cross-border supply 2. Consumers or firms making use if a service in another country, known as consumption abroad 3. A foreign company setting up subsidiaries or branches to provide services in another country, known as commercial presence 4. Individuals traveling from their own country to supply services in another, known as presence of natural persons

How is a country's eligibility for GSP determined?

It is determined by statute and administrative regulation. The requirement are: - The item must qualify for a GSP tariff preference in the US tariff schedule - It must be imported directly from an eligible country - The country must be eligible for GSP treatment for that particular item - The item must be the "growth, product, and manufacture" of the eligible country (as strictly defined in US law)

You are asked by your local Congressman what the status of the Trans Pacific Partnership (TPP) is as of June 2017. How do you respond?

It remains in effect but the US is not a member, and China has never been a member.

_______________ refers to the extent in which government regulations, product standards and technical requirements are made readily available to the domestic public, as well as foreign firms.

Transparency

What are direct non-tariff trade barriers?

Limits imports of goods or services or denies access of foreign firms to local markets. Most direct non tariff barriers are not permitted.

How does the material injury standard relate to the serious injury standard?

Material injury can be reviewed every five years. The material injury standard under the AD is less than the serious injury standard in safeguard actions

What is the purpose of the WTO Agreement on Trade in Financial Services?

To open commercial banking, securities, and insurance industries to foreign competition. The agreement is intended to promote efficiency, reduce costs, and provide consumers with a greater choice of service providers, while still permitting countries to regulate these industries for the protection of investors, depositors, and consumers

What does the WTO General Agreement on Trade in Services (1994) establish?

Establishes rules for international trade in services. - Overseen by the Council for Trade in Services - Defines four ways to provide an international service

What does Section 301 of the Trade Act of 1974 do?

It is the primary statute that permits the US Trade Rep, on direction of the POTUS, to take retaliatory trade action against other countries whose acts or trade policies toward the US are unreasonable or discriminatory, or in violation of a trade agreement

How does GATS establish criteria for earning a license for a foreign professional?

It must be an objective criteria, such as eduction, experience, or ability. Cannot discriminate on citizenship Countries may, if they choose, recognize licenses granted by other countries

What is the principle of least restrictive trade?

This states that WTO members, in setting otherwise valid restrictions on trade, shall make them no more onerous than necessary to achieve the goals for which they were imposed.

What are the President's options for adjusting imports?

these last temporarily for 4-8 yrs - 50% tariff increases - tariff-rate quotas - absolute quotas - auctioned quotas - grant trade adjustment assistance to workers or to the domestic industry

What does the North American Free Trade Agreement govern?

the free flow of services among Canada, Mexico, and the US

A state's authority to tax a business engage in foreign commerce may be determined by whether or not the imposed tax:

results in multiple taxation