International Trade

Question 1

Tariff

Answer 1

A tax paid by importers

• specific tariff = fixed $ per good
• ad valorem tariff = proportion of the good’s value

Pro: helps local producers

Con: local consumers pay more

Question 2

Subsidy

Answer 2

Financial assistance from a government to a producer

Pros: helps producers lower production costs, allows them to compete with global producers

Cons: higher taxation/government spending, makes the global economy less efficient

Question 3

Quota

Answer 3

A restriction on the quantity of a specific good that can be imported into a country

Pro: drivesbsiness towards domestic producers
Con: raises domestic prices if domestic suppliers can’t match domestic demand

Question 4

Voluntary Export Restraint (VER)

Answer 4

a quota or tariff placed on exported goods at the request of another country’s government

Pro: helps domestic producers

Con: easy to circumnavigate by importing to another country first

Banned by the WTO in 1954

Question 5

Local Content Requirements

Answer 5

Requires that a specific proportion of the good be manufactured domestically

Ex: Buy American Act (1933)

Question 6

Dumping

Answer 6

Selling goods in a foreign market for less than their fair market value → drives out domestic competitors

Considered an unfair trading practice by the WTO

Question 7

Uruguay Round of Negotiations

Answer 7

• established the WTO
• reduced tariffs
• reduced agricultural subsidies
• reduced barriers to textile trade

Question 8

Agreement on Trade-Related Aspects of International Property Rights (TRIPS)

Answer 8

WTO Policy gives:
- 20 years for patents
- 7 years for trademarks
- Life of the author + 50 years for copyright

Question 9

WTO Information Technology Agreement (ITA)

Answer 9

Rule: zero tariffs on technology

Goal:
- add more information communication technologies (ICT) to the no-tariff list
- free data flows across countries

Question 10

ITA and Developing Counties

Answer 10

Developing countries argue that the ITA will harm them:
- new technology can wipe out manufacturing sectors
- reduced tariffs decreases R&D investment in developing countries

Question 11

Digital Trade Barriers (4)

Answer 11

• infrastructure and connectivity issues
• lack of digital payment systems
• data filtering
• digital firewalls

Question 12

Electronic World Trade Platform (eWTP)

Answer 12

Alibaba platform that gives SMEs direct access to international consumers

Goal: makes globalization work for everyone

Question 13

Types of Data Traded Across Borders (5)

Answer 13

1. Personal Data
2. Confidential Business Data
3. Public Data
4. Meta Data (AI)
5. Machine-to-Machine Communication