Week 7

Question 1

What are tariffs

Answer 1

Oldest form of trade policy and it is a tax that the government impose on imported/exported goods

Question 2

What are the two categories of tariffs?

Answer 2

1. Specified tarries
2. Ad valorem

Question 3

What are specified tariffs?

Answer 3

Levied as a fixed charge for each unit

Question 4

What is ad valorem?

Answer 4

Levied as a proportion of the value of the imported good

Question 5

What are the components that government pays to the domestic producer?

Answer 5

1. Cash Grants
2. Low interest loans
3. Tax breaks
4. Government equity participation in the company

Question 6

Where do subsidy revenues generated from?

Answer 6

Taxes

Question 7

What do subsidies encourage?

Answer 7

Over production, inefficiency and reduced trade

Question 8

What are the different types of quota?

Answer 8

Import quotas and voluntary export restraint

Question 9

What are import quotas?

Answer 9

Restriction on the quantity of some good imported into a country

Question 10

What are voluntary export restraint?

Answer 10

Quotas on trade imposed by exporting country, typically at the request of the importing country

Question 11

What are local content?

Answer 11

Requires a fraction of a good to be produced domestically, there’s a percent of component parts and value of good

Question 12

Who uses the local content initially?

Answer 12

Developing countries but developed countries are starting to implement

Question 13

Who benefits from the local content?

Answer 13

Producers

Question 14

What are administrative policies?

Answer 14

These bureaucratic rules that make it difficult for imports to enter a country

Question 15

What did the Japanese impose?

Answer 15

Impose strict administrative policies

Question 16

What are antidumping policies?

Answer 16

When you sell a goods in a foreign market below production goods and below market value

Question 17

Why was antidumping policies created?

Answer 17

Because of unloading excess production and predatory behavior

Question 18

What remedies are there?

Answer 18

Seeks imposition of tariffs

Question 19

What are the political arguments of intervention?

Answer 19

1. Protect jobs and industries
2. National security
3. Relatliation (Punitive sanctions)
4. Furthering foreign policy objectives
5. Protect human rights
6. Protect consumer rights

Question 20

What are examples of the economic arguments for intervention?

Answer 20

Infant industry

Question 21

Who made the oldest economic argument for intervention?

Answer 21

Alexander Hamilton

Question 22

How does strategic trade policies play in economic intervention?

Answer 22

subsidies protect firms in new emerging industries with substantial scale economies bc governments benefit if they support domestic firms to overcome barriers to enter created by existing foreign firms

Question 23

What is GATT and when was it established?\

Answer 23

GATT is a multilateral agreement established in 1948 under the US leadership and its objective is to liberalize trade by eliminating tariffs, subsidies and import quotas. They used round of talks to reduce trade barriers

Question 24

What did Uruguay Round GATT 1986-93 negotiate?

Answer 24

They negotiated Mutual tariff reduction and to dispute resolutions if complaints are were received

Question 25

Why was there a greater protectionism for the greater protectionism

Answer 25

Because of Japan’s increase of power due to the economic machine which closed Japanese markets, US trade benefits and GATT circumvented by many countries

Question 26

Why was the WTO created?

Answer 26

Created during the Uruaguay Round of GATT to police and enforce GATT rules

Question 27

What did the WTO have an impact on?

Answer 27

Agriculture subsidies, intellectual property (TRIPS), monitoring and enforcement

Question 28

What were the achievements of WTO?

Answer 28

1. Telecommunications 90% of worlds telecommunication revenues and pledged to open their market to fair competition
2. Financial Services 95% of financial services market

Question 29

What happened in WTO in Seattle?

Answer 29

1. Millennium round was aimed at further reduction of trade barriers in agriculture and services
2. Meeting was disrupted by human rights groups, trade unions, environmentalists, anti globalization groups and no agreement was reached

Question 30

What did the Doha Agenda do for the WTO?

Answer 30

Cut tariffs on industrial goods and services, phasing out subsidies, reduce antidumping laws, WTO regulation on intellectual property should not prevent members from protecting public health. (TRIPS agreement)