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?

  • 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?

<p>United States (B)</p> Signup and view all the answers

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

<p>Appoint new judges (A)</p> Signup and view all the answers

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

<p>TPP (C)</p> 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?

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

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

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

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

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

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

<p>Rise in US imports from Mexico and decline from China (C)</p> 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?

<p>Tariff revenues decrease due to lower tariffs (D)</p> 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?

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

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

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

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

<p>To secure terms-of-trade gains for large countries (C)</p> 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?

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

Why are Nash tariffs considered inefficient according to the text?

<p>They result in a prisoner's dilemma situation (A)</p> 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?

<p>Termination of successful multilateral negotiations (C)</p> 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?

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

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

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

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

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

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

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

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

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

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

<p>More than 600 disputes (D)</p> Signup and view all the answers

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

<p>To emphasize the lack of effective enforcement mechanisms globally. (A)</p> 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?

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

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

<p>Bilateral trade agreements (B)</p> Signup and view all the answers

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

<p>Free-trade areas and customs unions (D)</p> Signup and view all the answers

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

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

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

<p>FTAs maintain a common external tariff while CUs eliminate tariffs within the area. (D)</p> 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?

<p>Both countries have negative payoffs. (D)</p> Signup and view all the answers

What was the purpose of the GATT signed in 1947?

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

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

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

What was a key outcome of the Uruguay Round negotiations?

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

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

<p>Dispute Settlement Mechanism (DSM) (B)</p> Signup and view all the answers

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

<p>Liberalization of trade in agriculture (D)</p> Signup and view all the answers

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

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

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

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

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

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

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

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

'NTBs' eliminated during the Uruguay Round stands for:

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

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