Quiz #1 material (session 4 class/session 5 prep materials)

Question 1

When was the WTO formed?

Answer 1

Right after the war

Question 2

What are the two most important aspects of the WTO for this class?

Answer 2

1 = the bond rate
2 = trading without discrimination

Question 3

What are some of Canada’s FTA’s?

Answer 3

USMCA (used to be NAFTA), CETA (Comprehensive Economic & Trade Agreement), CPTPP (Comprehensive and Progressive Trans-Pacific Partnership),

Question 4

What does USMCA stand for?

Answer 4

United States - Mexico - Canada Agreement

Question 5

What does CETA stand for?

Answer 5

Comprehensive and Economic Trade Agreement

Question 6

What does CPTPP stand for?

Answer 6

Comprehensive and Progressive Trans Pacific Partnership

Question 7

For a given product, imports to Canada form which of the following countries are most likely to be subjected to the same tariff rate as imports to Canada and China?

Answer 7

Argentina - this is because we do not have a free trade agreement with them

Question 8

In order for a car to be exported from one North American country to another tariff-free, what percentage of the car parts must be sourced within North America (under USMCA)?

Answer 8

75%

Question 9

In order for a car to be exported from one North American country to another tariff-free, What percentage of the car parts must be made by workers who earn at at least $16 an hour (under USMCA)?

Answer 9

40-45%

Question 10

What’s the USA rate charged on imported cars who are not part of a free trade agreement?

Answer 10

2.5%

Question 11

The Toyota assembly plant in Cambridge imports many car parts from a Toyota plant in Czech Republic. In what situation can the Canadian plant exports theses Toyota cars tariff-free to the US?

Answer 11

25%

Question 12

What countries are major automobile manufactuerers

Answer 12

Germany, UK, Czech Republic, Slovakia, Hungary, Belgium

Question 13

Who are the major investors in UK’s automobile sector?

Answer 13

Japan, India ,Germany

Question 14

Why was Brexit such a big worry for the automobile industry?

Answer 14

Tariffs would make cars more expensive to import and export, supply chain costs would increase through order all the parts required (which are imported)

Question 15

What percentage of cars does Britain export that it makes?

Answer 15

80%

Question 16

What happened in 1989 with regard to the eastern European automobile industry?

Answer 16

the fall of the Berlin wall

Question 17

What led to the bounce back of the eastern European countries?

Answer 17

The automobile industry took off

Question 18

What event led to the prosperity of the countries who had their automobile industry excel?

Answer 18

The countries had to join the EU

Question 19

What is the WTO?

Answer 19

The WTO is the only global international organization dealing with the rules of trade between nations

Question 20

How many members does the WTO have?

Answer 20

164

Question 21

What are the WTO’s central missions?

Answer 21

1) to make international trade free

2) to make international trade more predictable

Question 22

How does the WTO make trade freer?

Answer 22

1) Binding & Negotiation

2) Trading Without Discrimination

Question 23

What does Binding & Negotiation mean?

Answer 23

Imposes maximum tariff rates (i.e. bond rates) permissible for each member nation - when a country joins, it must enter negotiations with all the existing members regarding maximum tariff rates

Question 24

Once a country agrees to a rate, can it impose a higher rate?

Answer 24

No

Question 25

What is the "Simple Average Bond Rate"?

Answer 25

Is the average of all bond rates within a country

Question 26

What type of country enjoys higher bond rates?

Answer 26

Less developed countries - this is to protect their domestic industries from competition

Question 27

If a country lowers their tariffs for another country, must they lower them for all?

Answer 27

Yes

Question 28

What does Trading Without Discrimination mean?

Answer 28

Every member of the WTO must treat every other member equally and as a most-favoured-nation (MFN)

Question 29

What is an exception to the free trade rule?

Answer 29

Set up a free trade area in which lower tariff rates apply to goods traded within this area (they must be involved in free trade)

Question 30

What are the 3 common unfair trade practices?

Answer 30

Dumping, Subsidies, and Export Surge

Question 31

What is dumping?

Answer 31

A company exports a product at a price lower than the price it normally charges in its own home market

Question 32

What 2 options does the importing country have in a dumping situation?

Answer 32

1) launch a case against the country of that exporter (use the WTO dispute settlement system) 2) importing country take actions using its own rules (under WTO restrictions)

Question 33

What is an anti-dumping duty?

Answer 33

Charging extra import duty on the particular product from the particular exporting company in order to bring its price closer to the "normal value"

Question 34

What is subsidy unfair practices?

Answer 34

A country provides a subsidy available only to a company, industry, group of companies, or group of industries

Question 35

What are countervailing duties?

Answer 35

Charging extra import duty to offset the subsidies on subsidized imports

Question 36

What is an export surge?

Answer 36

Is when a nation faces a sudden import surge that might threaten the survival of a domestic industry

Question 37

What are some "safeguards" against import surge?

Answer 37

- Restrict imports of a product temporarily if its domestic industry is injured or threatened with injury caused by an import surge - Include a "sunset" clause - Offer something in return to the exporting parties

Question 38

What are the two WTO dispute settlement procedures?

Answer 38

1) Use the TWO dispute settlement procedure | 2) Use the coutry's own resources under WTO rules