International Trade Policy

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What year did the GATT transform into the WTO with 123 nations as members?

2001

1948

1995 (correct)

2010

Which agreement focused on streamlining standards and giving firms legal rights to challenge government policies?

Doha Round

TTIP (correct)

TPP

NAFTA

What was the purpose of the Doha Round of WTO negotiations that began in 2001?

Introduce reciprocity

Increase tariffs

Reduce NTBs (correct)

Expand shallow integration

Which country is blamed for imposing high tariffs during the Great Depression, leading to a motivation for establishing formal trade rules?

United States (B) Signup and view all the answers

What did the Trump administration refuse to do, concerning the WTO's Appellate Body?

Appoint new judges (A) Signup and view all the answers

Which trade agreement was described as 'NAFTA on steroids' and had signatories like Japan and Australia?

TPP (C) Signup and view all the answers

What is the main impact of Free Trade Agreements (FTAs) that do not follow the Most Favored Nation (MFN) rule according to the text?

Lead to trade diversion and inefficiencies for non-member countries (D) Signup and view all the answers

In the context of FTAs, what does 'trade diversion' refer to?

Shifting trade patterns to favor non-member countries (A) Signup and view all the answers

How does the text describe the impact of the EU-Turkey customs union on textile imports?

Increase in Turkish textile exports to the EU (B) Signup and view all the answers

What was the consequence of NAFTA on US imports of auto parts from Mexico and China?

Rise in US imports from Mexico and decline from China (C) Signup and view all the answers

What happens to tariff revenues when a country shifts from imposing tariffs to being part of a Free Trade Agreement (FTA) according to the text?

Tariff revenues decrease due to lower tariffs (D) Signup and view all the answers

Which statement accurately summarizes the impact of FTAs that do not adhere to the MFN rule on global trade?

Create inefficiencies for non-member countries through trade diversion (C) Signup and view all the answers

What is the key issue addressed in the text regarding trade agreements?

The role of terms-of-trade externalities in trade agreements (B) Signup and view all the answers

Why might governments impose tariffs even in the absence of political objectives?

To secure terms-of-trade gains for large countries (C) Signup and view all the answers

In the context of a large country imposing an import tariff, what is the effect on the welfare of the home country and the foreign country?

Welfare gain for the home country and welfare loss for the foreign country (D) Signup and view all the answers

Why are Nash tariffs considered inefficient according to the text?

They result in a prisoner's dilemma situation (A) Signup and view all the answers

What is the potential consequence of too many members and interests in the Doha Round, as per the text?

Termination of successful multilateral negotiations (C) Signup and view all the answers

What happens to the US consumer surplus in the scenario where Mexico eliminates China from the US import market for auto parts?

It increases as Mexico provides cheaper auto parts than China. (B) Signup and view all the answers

What do trade agreements enable countries to escape from, based on Bagwell and Staiger (2010)?

'Terms-of-trade-driven prisoners' dilemma' (A) Signup and view all the answers

What is the impact of NAFTA causing the Mexican export supply curve to shift dramatically?

Elimination of China from the US import market for auto parts. (A) Signup and view all the answers

How does the fear of authorized retaliation help in enforcing trade agreement rules according to the text?

By making sure that the agreement is self-enforcing through repeated-game perspective. (D) Signup and view all the answers

What is a key difference between trade creation and trade diversion according to the text?

Trade creation can result in higher consumer surplus than trade diversion. (B) Signup and view all the answers

How many disputes have been initiated within the WTO dispute settlement framework according to the text?

More than 600 disputes (D) Signup and view all the answers

Why is it mentioned that there is no 'world-jail for offenders' with respect to enforcing trade agreements?

To emphasize the lack of effective enforcement mechanisms globally. (A) Signup and view all the answers

In the context of trade agreements, which of the following is true about the most-favored nation (MFN) principle?

It requires all trading partners to have the same trade barrier. (D) Signup and view all the answers

Which element is NOT a key component in the design of GATT/WTO?

Bilateral trade agreements (B) Signup and view all the answers

Under Article XXIV of the GATT/WTO, what types of agreements are exempt from the MFN principle?

Free-trade areas and customs unions (D) Signup and view all the answers

Which scenario is consistent with achieving reciprocity in trade agreements according to GATT/WTO principles?

Both countries reducing their trade barriers by equal amounts. (B) Signup and view all the answers

Which statement accurately describes the relationship between free-trade agreements (FTAs) and customs unions (CUs)?

FTAs maintain a common external tariff while CUs eliminate tariffs within the area. (D) Signup and view all the answers

If two countries are engaged in a Terms-of-trade-driven prisoners’ dilemma where e − b − d > 0, what is the only Nash equilibrium according to the text?

Both countries have negative payoffs. (D) Signup and view all the answers

What was the purpose of the GATT signed in 1947?

To establish rules of international trade cooperatively (C) Signup and view all the answers

How did the Uruguay Round differ from the previous GATT negotiations?

It expanded the number of signatories and reduced tariffs (D) Signup and view all the answers

What was a key outcome of the Uruguay Round negotiations?

Establishment of WTO with new agreements on dispute settlement (A) Signup and view all the answers

Which core tenets continued to be crucial in the WTO other than reciprocity and MFN?

Dispute Settlement Mechanism (DSM) (B) Signup and view all the answers

What was the purpose of the Doha Round launched in 2001?

Liberalization of trade in agriculture (D) Signup and view all the answers

Why did developing countries argue against the terms of the Doha Round?

They were offered more than what they could get from developed countries (C) Signup and view all the answers

'Shallow integration' refers to what aspect of the WTO's success?

'Shallow integration' has been a general success for the WTO (D) Signup and view all the answers

'Beggar-thy-neighbor' policies were criticized because they:

Left the world as a whole worse off due to cross-border externalities (D) Signup and view all the answers

'Reciprocal reductions in tariffs (through bindings)' as mentioned in the text refer to:

'Reciprocal reductions' mean reducing tariffs collectively among signatories (D) Signup and view all the answers

'NTBs' eliminated during the Uruguay Round stands for:

'Non-Tariff Barriers' that hindered free trade (A) Signup and view all the answers

International Trade Policy - The World Trading System

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Questions and Answers

What year did the GATT transform into the WTO with 123 nations as members?

Which agreement focused on streamlining standards and giving firms legal rights to challenge government policies?

What was the purpose of the Doha Round of WTO negotiations that began in 2001?

Which country is blamed for imposing high tariffs during the Great Depression, leading to a motivation for establishing formal trade rules?

What did the Trump administration refuse to do, concerning the WTO's Appellate Body?

Which trade agreement was described as 'NAFTA on steroids' and had signatories like Japan and Australia?

What is the main impact of Free Trade Agreements (FTAs) that do not follow the Most Favored Nation (MFN) rule according to the text?

In the context of FTAs, what does 'trade diversion' refer to?

How does the text describe the impact of the EU-Turkey customs union on textile imports?

What was the consequence of NAFTA on US imports of auto parts from Mexico and China?

What happens to tariff revenues when a country shifts from imposing tariffs to being part of a Free Trade Agreement (FTA) according to the text?

Which statement accurately summarizes the impact of FTAs that do not adhere to the MFN rule on global trade?

What is the key issue addressed in the text regarding trade agreements?

Why might governments impose tariffs even in the absence of political objectives?

In the context of a large country imposing an import tariff, what is the effect on the welfare of the home country and the foreign country?

Why are Nash tariffs considered inefficient according to the text?

What is the potential consequence of too many members and interests in the Doha Round, as per the text?

What happens to the US consumer surplus in the scenario where Mexico eliminates China from the US import market for auto parts?

What do trade agreements enable countries to escape from, based on Bagwell and Staiger (2010)?

What is the impact of NAFTA causing the Mexican export supply curve to shift dramatically?

How does the fear of authorized retaliation help in enforcing trade agreement rules according to the text?

What is a key difference between trade creation and trade diversion according to the text?

How many disputes have been initiated within the WTO dispute settlement framework according to the text?

Why is it mentioned that there is no 'world-jail for offenders' with respect to enforcing trade agreements?

In the context of trade agreements, which of the following is true about the most-favored nation (MFN) principle?

Which element is NOT a key component in the design of GATT/WTO?

Under Article XXIV of the GATT/WTO, what types of agreements are exempt from the MFN principle?

Which scenario is consistent with achieving reciprocity in trade agreements according to GATT/WTO principles?

Which statement accurately describes the relationship between free-trade agreements (FTAs) and customs unions (CUs)?

If two countries are engaged in a Terms-of-trade-driven prisoners’ dilemma where e − b − d > 0, what is the only Nash equilibrium according to the text?

What was the purpose of the GATT signed in 1947?

How did the Uruguay Round differ from the previous GATT negotiations?

What was a key outcome of the Uruguay Round negotiations?

Which core tenets continued to be crucial in the WTO other than reciprocity and MFN?

What was the purpose of the Doha Round launched in 2001?

Why did developing countries argue against the terms of the Doha Round?

'Shallow integration' refers to what aspect of the WTO's success?

'Beggar-thy-neighbor' policies were criticized because they:

'Reciprocal reductions in tariffs (through bindings)' as mentioned in the text refer to:

'NTBs' eliminated during the Uruguay Round stands for:

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