Ch4.3 Free Trade And Protectionism Flashcards
What is free trade
Refers to the unencumbered flow of good and services across national borders.
What is a tariff
Tariffs are a tax imposed on an imported goods or service.
It will cost more at in other country than on the one you’re on.
What is a subsidy
An opposite of a tariff; When governments make payments to domestic producers.
What is a quota
A limitation on the amount of an import allowed to enter a country.
What is an embargo
Total restriction on an import or export
What is a local content requirements
A requirement that some portions of a food be produced domestically.
Who benefits and who suffers from trade barriers?
Domestic producers and their workers are benefited while domestic consumers are hurt by it. It increases prices for the consumers
What are 4 arguments in favor of protectionist trade barriers.
National security, Infant industry, cheap foreign labor and threat of retaliation.
What is dumping
Refers to selling a product at a price below the price charged in the producing country. It is illegal and can be difficult to prove.
(GATT) General Agreement on Tariffs and trade, what is it?
GATT is an international organization that held eight rounds of negotiated agreements or treaties to reduce tariffs and other obstacles to free trade on goods.
What is the (WTO) World Trade Organization
An international organization that promotes more free trade by extending GATT rules to services, by increasing protection or intellectual property rights, by arbitrating trade disputes and by monitoring the trade policies of member countries.
What problem can ensue form free trade?
It encourages firms to shift their production to countries with low wages and lax labor standards and that the exploitation of workers in low-wage countries contributes to the gap between the rich and the poor.
What are regional free trade agreements?
They’re compacts abolishing trade barriers among member countries.
(NAFTA) North America free trade agreements is what
An ongoing agreement to move the US,Mexico and Canada closer to true free trade.
