Test 1- chapter 3

Question 0

Types of barriers- Tariffs

Answer 0

• Penalize countries that are not politically align with the importing country
• Generate revenues

Question 1

Arguments of protectionism

Answer 1

-Protection of markets with excess productive capacity
-Employment protection and protection of markets with excess labor
-Infant industry argument
-Natural resources conservation and environmental protection
Consumer Protection
-National defense

Question 2

Types of barriers- non tariff barriers

Answer 2

• Measures, other than traditional tariffs that are used to distort international trade flows:
• Raise prices of both imports and import competing goods
• Favor domestic over foreign supply sources by causing importers to change higher prices and to restrict import volumes

Question 3

Types of barriers- Quotas

Answer 3

• Specify unit limit or value of a product that may be implied during a specified period
• administered either on a global first come, first served basis or on a bilateral basis to restrict shipments from a specific supply source

Question 4

Other types of barries

Answer 4

• Licenses
• Price controls
• Standards
• Boycott, embargoes and sanction

Question 5

WTO functions

Answer 5

• Ensures free flow of trade
• Provides assistance to developing and transition economies
• Offers help for export promotion
• Promotes regional trade agreements and economic cooperation
• Reviews members’ trade policies and engages in routine notification of new trade measures

Question 6

Bilateral agreements

Answer 6

Limited to two countries BTA provision

Question 7

Multilateral forums and agreemnts

Answer 7

• general agreements between multiple countries

- typically, they are industry specific

Question 8

Free trade agreements

Answer 8

• Countries reduce or eliminate trade barries on all goods and services traded between them
• NAFTA
• FTAA- ambitious plan to creat a market of 800 million and an annal production of 11 trillion dollars in the current deecade

Question 9

Common Market

Answer 9

Eliminate all tariff and non tariff barriers to trade, adopt common external tariffs, and allow for free movement of capital and labor within the common market. Requires a significant degree of harmony and cooperation on fiscal, monetary and employment policies

Question 10

Monetary union

Answer 10

Involves:
-a common monetary policy
-the creation of a unified central bank
-The use of a single currency
Sacrifice of national sovereignty to bureaucratic control

Question 11

Political Union

Answer 11

• common governing and legislative bodies, and enforcement powers
• ex European Union
• Less protectionism: higher economic growth
• Lower cost of doing business

-Cultural differences persist
-increased price competition within blocks
-across trading block rivalry can increase barriers
Improvement of competitiveness of many local firm within the blocks

Question 12

NAFTA

Answer 12

General:

• Tariffs reduced across all sectors by 99% over 10 years
• FDI unrestricted (x-oil and railways in mexico, culture in canada, airlines-communication US)
• No free movement of labor
• Cross border flow of services unrestricted
• Application of environmental standards
• Two commissions have the right to impose penalties when issues of health/safety, child labor, min wages violated

Question 13

Case for and against NAFTA

Answer 13

For:

• jobs and investment for mexico
• lower cost of living and export potential in US/Canada
• US/canadian firms more competitive

Against:
-Job exodus

Question 14

Euro Land

Answer 14

Euro book notes and coins have been in circulation since January 1 2002 and are now a part of daily life for the 315 million europeans living in the euro area