Econ Ch. 6 Study Guide

The ____ is a round of trade negotiations between GATT members, at which the form of negotiations shifted from a product-by-product format to an across-the-board format. Cut tariffs on manufactured goods by an average of 35% to an average ad valorem level of 10.3%

Kennedy Round

____ gives the US trade representative (USTR) authority, subject to the approval of the president, and means to respond to unfair trading practices by foreign nations

*Section 301* of the Trade Act of 1947

____ is the most recent round of multilateral trade negotiations under the WTO.

Doha Round

The ____ is an independent agency of the US government established to encourage the exports of US businesses

Export-Import bank (Exim Bank)

*T/F* Economic sanctions are most successful if imposed unilaterally, by a single nation.

False

*T/F* The Smoot-Hawley Act of 1930 was the first major effort in the United States to reduce tariffs and move toward free trade.

False

*T/F* The escape clause in U.S. trade law permits key industries to escape permanently the competitive effects of reduced trade barriers.

False

*T/F* The most-favored-nation clause allows nations to preserve favored tariff treatment for historical allies.

False

(1947) ____ was crafted as an agreement among contracting parties, the member nations, to decrease trade barriers and place all nations on equal footing in trading relations; it was a set of bilateral agreements among countries around the world to reduce trade barriers

General Agreement on Tariffs and Trade (GATT)

____ is a system of rules negotiated by the US and Europe to restrict competition from developing exporting countries employing low cost labor

Multifiber arrangement (MFA)

The ____ is an Act passed in Congress in 1934 that set the stage for a wave of trade liberalization through negotiating authority and generalized reductions

Reciprocal Trade Agreements Act

The ____ is an Act that passed in 1930 under which US average tariffs were raised to 53% on protected imports

Smoot-Hawley Act

The ____ Round achieved across-the-board tariff cuts for industrial countries and eliminated tariffs entirely in some sectors. Many nations agreed to bind/cap a significant portion of their tariffs. Progress in decreasing/ eliminating nontariff barriers. Extensive effort to eliminate quotas and rely instead on tariffs.

The Uruguay Round

The ____ Round was a round of talks between GATT members from 1973-1979, in which signatory nations agreed to tariff cuts that took the across-the-board form initiated in the Kennedy Round. Significantly lowered tariffs and agreed to remove or lessen many nontariff barriers. Code of conduct were established in 6 areas: customs valuation, import licensing, government procurement, technical barrier to trade, antidumping procedures, and countervailing duties

Tokyo Round

____ is a provision that commits the US Congress to consider trade agreements without amendment; in return, the president must adhere to a specified timetable and several other procedures

Trade promotion authority (fast-track authority)

*T/F* Countervailing duties are designed to promote fair trade by offsetting the effects of foreign export subsidies.

True

*T/F* In 1791, Alexander Hamilton advocated tariffs to protect new industries, using the infant-industry argument.

True

*T/F* Strategic trade policy involves government targeting of key industries for export promotion, as MITI has done in Japan.

True

*T/F* The General Agreement on Tariffs and Trade, established in 1947, remains the primary international forum for negotiating trade agreements.

True

*T/F* The Uruguay Round of GATT trade talks focused primarily on agriculture, services, and intellectual property.

True

*T/F* The initial tariff laws in the United States, established in the late 1700s, were established primarily to raise revenue.

True

____ is the organization that embodies the main provisions of GATT, but its role was expanded to include a mechanism intended to improve GATT's process for resolving trade disputes among member nations

WTO

The escape clause is part of trade remedy law designed to: a. provide temporary relief for workers and firms disrupted by reductions in tariffs or other trade barriers b. offset the effects of unfair trade practices in other countries c. help U.S. firms escape the effects of export subsidies provided by foreign governments d. retaliate against foreign firms that dump exports at prices below cost of production

a. provide temporary relief for workers and firms disrupted by reductions in tariffs or other trade barriers

The Reciprocal Trade Agreements Act of 1934: a. restricted the ability of the President to negotiate tariff reductions b. made reductions in U.S. tariffs contingent on the willingness of trading partners to lower their tariffs c. provoked a trade war that raised tariffs dramatically d. eliminated the most-favored-nation clause in trade negotiations

b. made reductions in U.S. tariffs contingent on the willingness of trading partners to lower their tariffs

U.S. industrial policy includes all of the following except: a. export financing from the Export-Import Bank b. nationalization of key industries such as steel c. tariffs to protect industries facing growing foreign competition d. legislation to allow for export trade associations

b. nationalization of key industries such as steel

Strategic trade policy: a. is used most frequently to support firms in perfectly competitive industries b. often involves subsidies and other support for high-technology firms in concentrated industries c. is practiced by only one major industrial nation today d. is designed to provide equal treatment for all industries

b. often involves subsidies and other support for high-technology firms in concentrated industries

A countervailing duty: a. is the same as a scientific tariff b. protects firms from injury caused by foreign export subsidies c. is a retaliatory response to foreign tariffs d. is designed to generate revenue to offset a budget deficit

b. protects firms from injury caused by foreign export subsidies

The Smoot-Hawley Act of 1930 a. represented a turning point toward lower tariffs b. represented the highest tariff levels in U.S. history c. helped the United States recover from the Great Depression d. prompted other industrial nations to reduce their tariff barriers against U.S. exports

b. represented the highest tariff levels in U.S. history

Compared with the Tokyo Round, the Uruguay Round of GATT negotiations focused primarily on: a. import tariff reductions b. government procurement policies c. trade in professional services and agricultural products d. product standards relating to health and safety

c. trade in professional services and agricultural products

Economic sanctions against foreign nations are most successful: a. if one major nation imposes them unilaterally b. when used against historical enemies rather than traditional allies c. when influential groups within the target nation support the objectives of the sanction-imposing government d. when the sanctions are harsh, comprehensive, and highly publicized

c. when influential groups within the target nation support the objectives of the sanction-imposing government

A ____ is a levy imposed by importing countries to counteract foreign export subsidies; the size of the duty is limited to the amount of the export subsidy

countervailing duty

A Japanese government export subsidy would: a. be beneficial to U.S. producers of similar products b. be harmful to U.S. consumers c. create an overall welfare loss for the United States, as U.S. firms would lose more than U.S. consumers would gain d. create an overall welfare gain for the United States, as U.S. consumers would gain more than U.S. firms would lose

d. create an overall welfare gain for the United States, as U.S. consumers would gain more than U.S. firms would lose

The rationale for a scientific tariff is to: a. provide revenue for the government b. protect an infant industry against foreign competition c. improve a nation's balance of payments d. raise import prices to the extent that foreign production costs are lower than domestic costs

d. raise import prices to the extent that foreign production costs are lower than domestic costs

____ are government mandated limitations placed on customary trade or financial relations among nations

economic sanctions

The ____ allows the president to temporarily terminate or make modifications in trade concessions granted foreign nations and to temporarily levy restrictions on surging imports

escape clause

____ are the exclusive rights to use an invention, idea, product, or process for a given time awarded to the inventor (author) through registration with the government of that invention, idea, product, or process

intellectual property rights (IPRs)

The ____ is an agreement between two nations to apply tariffs to each other at rates as low as those applied to any other nation

most favored nation (MFN) clause

____ is the US government's replacement for the term most favored nation

normal trade relations

____ are relief provided by the escape clause to US firms and workers who are substantially injured from surges in imports that are fairly traded

safeguard

____ is the policy that government can assist domestic companies in capturing economic profits from foreign competitors

strategic trade policy

____ is government assistance granted to domestic workers displaced by increased imports

trade adjustment assistance

____ are laws designed to produce fair trading environments for all parties engaged in international business; these laws includes the escape clause, antidumping duties, and unfair trading practices

trade remedy laws