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global business > Chapter 7 > Flashcards

Chapter 7 Flashcards

1
Q

uniting principle of GAAT and WTO

A

GATT and the WTO both want to make international trade fair and easier for everyone. Their main idea is to help trade happen better by having fewer barriers

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2
Q

differences between GAAT and WTO

A
  1. GAAT stands for general agreement on tariffs and trade; WTO stands for world trade organization
  2. GAAT started in 1947; WTO began in 1955, replacing GAAT
  3. GAAT primarily focused on reducing tariffs and addressing trade issues among member countries; WTO did similar things on a bigger scale, covering not only trade in goods but also services, ideas, and investments
  4. GAAT follows the “trade without discrimination” principle. This rule made sure that all countries in GATT were treated the same way. It stopped special trade deals between certain countries, making sure that any good terms given to one country had to be given to everyone. This way, trade was fair for everyone involved; WOT follows a rule called “most favored nation” which specifically deals with extending trade benefits equally among nations
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3
Q

different levels of integration

A
  1. free trade area
  2. customs union
  3. common market
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4
Q

what is a free trade area?

A

involves countries removing or greatly lowering tariffs and trade barriers among themselves while maintaining their own trade rules with countries outside the agreement

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5
Q

what is a customs union?

A

Group of countries applying common external tariffs.

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6
Q

what is common market

A

Area allowing free movement of goods, services, capital, and people

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7
Q

static effect of reducing or removing bariers

A

Immediate changes due to a new trade agreement, involve resources moving from less effective companies to better ones because trade barriers are gone

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8
Q

the dynamic effect of reducing or removing bariers

A

Long-term impacts of economic integration, when the market grows and companies can expand and produce more, benefiting from operating on a larger scale.

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9
Q

conditions where static effect may occur

A
  1. trade creation
  2. trade diversion
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10
Q

what is trade creation

A

when production moves to more effective companies due to advantages in making things

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11
Q

what is trade diversion

A

takes place when trade moves within group of countries instead of outside them

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12
Q

what are economies of scale

A

When trade barriers decrease and markets expand, companies can produce more at a lower cost per item

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13
Q

what is global integration

A

It involves countries worldwide cooperating to facilitate global trade

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14
Q

example of global integration

A

WTO

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15
Q

what is regional integration

A

Cooperation between countries within a specific geographic region.

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16
Q

example of regional integration

A

the european union

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17
Q

what is bilateral integration?

A

when two countries form a closer economic relationship through mutual agreements

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18
Q

example of bilateral integration

A

United States-Mexico-Canada Agreement (USMCA)

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19
Q

define globalization

A

The process of increased interconnectedness among countries

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20
Q

define GAAT

A

An agreement aiming to reduce trade barriers among nations.

21
Q

define WTO

A

An organization dealing with global trade rules and dispute resolution

22
Q

Define economic integration

A

The process of reducing trade barriers between countries

23
Q

define levels of integration

A

Different stages in economic cooperation among countries

24
Q

define multilateral agreements

A

Trade agreements involving multiple countries

25
Q

define Intellectual Property

A

Ownership of unique creations or ideas

26
Q

define foreign direct investment

A

Investment made by a company in another country

27
Q

define the balance of trade

A

The difference between exports and imports

28
Q

define current account

A

Record of trade balance, income from investments, and financial transfers

29
Q

define free trade

A

Trade without tariffs or other barriers

30
Q

define economic union

A

Unions coordinating economic policies among member nations

31
Q

define trade bloc

A

A group of countries encouraging trade among themselves

32
Q

define trade surplus

A

Exports exceed imports

33
Q

define trade deficit

A

Imports exceed exports

34
Q

example of tariffs

A

India imposing taxes on imported electronic goods to protect its local electronics industry

35
Q

example of quota

A

Japan limiting the quantity of rice imports to protect its domestic rice farmers

36
Q

example of globalization

A

Apple Inc. designs its products in the United States but manufactures them in China for global distribution.

37
Q

example of disagreement that WTO resolved

A

There was a disagreement between the U.S. and China about electronic payments. The U.S. thought China was being unfair to foreign companies.

38
Q

what are the types of integrations?

A
  1. regional
  2. bilaterall
  3. global
39
Q

example of trade free area

A

The North American Free Trade Agreement (NAFTA) eliminated tariffs between the United States, Canada, and Mexico.

40
Q

example of custom union

A

The European Union (EU) removed internal tariffs and imposed a common external tariff on goods entering any EU member state from outside the union.

41
Q

example of common market

A

The EU, which not only removed internal tariffs but also enabled the free movement of labor and capital among its member nations

42
Q

Define GAAT

A

An agreement aiming to reduce trade barriers among nations.

43
Q

define WTO

A

An organization dealing with global trade rules and dispute resolution.

44
Q

example of GAAT

A

Countries like the United States, Canada, and many European nations sign agreements to reduce tariffs on various goods.

45
Q

example of economic integration

A

ASEAN (Association of Southeast Asian Nations) countries reducing trade barriers to boost trade and investment

46
Q

example of level of integration

A

The European Union progressed from a free trade area to a common market and then an economic union.

47
Q

example of foreign direct investment

A

Toyota building a manufacturing plant in the United Kingdom

48
Q

example of balance of trade

A

China exports more goods to the United States than it imports from the USA.

global business (4 decks)

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