Quiz #1 material (session 4 class/session 5 prep materials) Flashcards
When was the WTO formed?
Right after the war
What are the two most important aspects of the WTO for this class?
1 = the bond rate 2 = trading without discrimination
What are some of Canada’s FTA’s?
USMCA (used to be NAFTA), CETA (Comprehensive Economic & Trade Agreement), CPTPP (Comprehensive and Progressive Trans-Pacific Partnership),
What does USMCA stand for?
United States - Mexico - Canada Agreement
What does CETA stand for?
Comprehensive and Economic Trade Agreement
What does CPTPP stand for?
Comprehensive and Progressive Trans Pacific Partnership
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?
Argentina - this is because we do not have a free trade agreement with them
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)?
75%
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)?
40-45%
What’s the USA rate charged on imported cars who are not part of a free trade agreement?
2.5%
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?
25%
What countries are major automobile manufactuerers
Germany, UK, Czech Republic, Slovakia, Hungary, Belgium
Who are the major investors in UK’s automobile sector?
Japan, India ,Germany
Why was Brexit such a big worry for the automobile industry?
Tariffs would make cars more expensive to import and export, supply chain costs would increase through order all the parts required (which are imported)
What percentage of cars does Britain export that it makes?
80%
What happened in 1989 with regard to the eastern European automobile industry?
the fall of the Berlin wall
What led to the bounce back of the eastern European countries?
The automobile industry took off
What event led to the prosperity of the countries who had their automobile industry excel?
The countries had to join the EU
What is the WTO?
The WTO is the only global international organization dealing with the rules of trade between nations
How many members does the WTO have?
164
What are the WTO’s central missions?
1) to make international trade free
2) to make international trade more predictable
How does the WTO make trade freer?
1) Binding & Negotiation
2) Trading Without Discrimination
What does Binding & Negotiation mean?
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
Once a country agrees to a rate, can it impose a higher rate?
No
What is the “Simple Average Bond Rate”?
Is the average of all bond rates within a country
What type of country enjoys higher bond rates?
Less developed countries - this is to protect their domestic industries from competition
If a country lowers their tariffs for another country, must they lower them for all?
Yes
What does Trading Without Discrimination mean?
Every member of the WTO must treat every other member equally and as a most-favoured-nation (MFN)
What is an exception to the free trade rule?
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)
What are the 3 common unfair trade practices?
Dumping, Subsidies, and Export Surge
What is dumping?
A company exports a product at a price lower than the price it normally charges in its own home market
What 2 options does the importing country have in a dumping situation?
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)
What is an anti-dumping duty?
Charging extra import duty on the particular product from the particular exporting company in order to bring its price closer to the “normal value”
What is subsidy unfair practices?
A country provides a subsidy available only to a company, industry, group of companies, or group of industries
What are countervailing duties?
Charging extra import duty to offset the subsidies on subsidized imports
What is an export surge?
Is when a nation faces a sudden import surge that might threaten the survival of a domestic industry
What are some “safeguards” against import surge?
- 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
What are the two WTO dispute settlement procedures?
1) Use the TWO dispute settlement procedure
2) Use the coutry’s own resources under WTO rules
