Chapter 6 Flashcards
No country in the world permits what?
Completely unregulated flow of goods and services across its border; essentially completely free trade
What is the effect of retaliation on the employment market?
It’s difficult to determine due to the likelihood of retaliation and the fact that both imports and exports create jobs
Due to changes in trade policy, policy-makers continue to struggle with the problem of what?
Income redistribution
What argument holds that governmental prevention of import competition is necessary to help certain industries evolve from high-cost to low-cost production?
The infant-industry argument for protection
Government is often argued to be beneficial if it does what? Why?
Promotes industrialization, given the positive relationship between industrial activity and certain economic objectives
Trade controls to improve economic relations with other countries include what?
Objectives of improving the balance of payments, raising prices to foreign consumers, gaining comparable access to foreign markets, preventing foreign monopoly prices, assuring that domestic consumers get low prices, and shifting revenue from foreign producers to domestic tax receipts
Considerable government interference in international trade is motivated by what?
Political, not economic, concerns, including maintaining domestic supplies of essential goods and preventing potential supplies of essential goods and preventing potential enemies form gaining goods that would help them achieve their objectives
Trade controls that directly affect price and indirectly affect quantity include what?
Tariffs, subsidies, arbitrary customs valuation methods, and special fees
Trade controls that directly affect quantity and indirectly affect price include what?
Quotas, VERs, “buy local” legislation, arbitrary standards, licensing arrangements, foreign-exchange controls, administrative delays, and reciprocal requirements
A company’s development of an international strategy will greatly determine what?
Whether it will benefit more from protectionism or from some other means for countering international competition
Changing trade agreements and the advent of new products create what?
Complexities for both companies and governments as they plan their policies
This argument presumes that the unregulated importation of lower-priced manufacturers prevents the development of a domestic industry:
Industrialization argument
Type of development when some countries have achieved rapid economic growth by promoting the development of industries with export potential
Export-led development
This argument, which holds that companies are entitled to the same foreign markets as foreign industries and companies have to theirs, is called what?
Comparable access argument
Occurs when companies sometimes export below cost or below their home-country price
Dumping
This theory states that a foreign producer will lower its prices if the importing country places a tax on its products
Optimum-tariff theory
This argument says that governments apply trade restrictions to protect essential domestic industries during peacetime so the country is not dependent on foreign supplies during the war
Essential-industry argument
This is the most common type of trade control
Tariff
This trade control is a tax levied on a good shipped internationally
Tariff
This trade control is collected by a country through which the goods pass
Transit tariffs
Tariffs collected by the exporting country
Export tariff
Tariffs collected by the importing country
Import tariff
Tariffs assessed on a per-unit basis
Specific duty
Tariffs assessed as a percentage of the item’s value
Ad valorem duty
Tariffs assessed on both a per-unit basis and as a percentage of the item’s value
Compound duty
A form of direct assistance to companies to boost competitiveness
Subsidies
The most common type of quantitative import or export restriction
Quota
Limits the quantity of a product that can be imported or exported in a given time frame
Quota
“Country A asks Country B to voluntarily reduce its company’s exports to Country A”
Voluntary export restraint
A specific type of quota that prohibits all trade
Embargo
This control requires an importer to apply to agency to secure the foreign currency to pay for the product
Foreign exchange control
These are government requirements in the importing country whereby the exporter, usually in sales to a foreign government, must provide additional economic benefits such as jobs
Offsets