40 Questions
What year did the GATT transform into the WTO with 123 nations as members?
1995
Which agreement focused on streamlining standards and giving firms legal rights to challenge government policies?
TTIP
What was the purpose of the Doha Round of WTO negotiations that began in 2001?
Reduce NTBs
Which country is blamed for imposing high tariffs during the Great Depression, leading to a motivation for establishing formal trade rules?
United States
What did the Trump administration refuse to do, concerning the WTO's Appellate Body?
Appoint new judges
Which trade agreement was described as 'NAFTA on steroids' and had signatories like Japan and Australia?
TPP
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
In the context of FTAs, what does 'trade diversion' refer to?
Shifting trade patterns to favor non-member countries
How does the text describe the impact of the EU-Turkey customs union on textile imports?
Increase in Turkish textile exports to the EU
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
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
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
What is the key issue addressed in the text regarding trade agreements?
The role of terms-of-trade externalities in trade agreements
Why might governments impose tariffs even in the absence of political objectives?
To secure terms-of-trade gains for large countries
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
Why are Nash tariffs considered inefficient according to the text?
They result in a prisoner's dilemma situation
What is the potential consequence of too many members and interests in the Doha Round, as per the text?
Termination of successful multilateral negotiations
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.
What do trade agreements enable countries to escape from, based on Bagwell and Staiger (2010)?
'Terms-of-trade-driven prisoners' dilemma'
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.
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.
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.
How many disputes have been initiated within the WTO dispute settlement framework according to the text?
More than 600 disputes
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.
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.
Which element is NOT a key component in the design of GATT/WTO?
Bilateral trade agreements
Under Article XXIV of the GATT/WTO, what types of agreements are exempt from the MFN principle?
Free-trade areas and customs unions
Which scenario is consistent with achieving reciprocity in trade agreements according to GATT/WTO principles?
Both countries reducing their trade barriers by equal amounts.
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.
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.
What was the purpose of the GATT signed in 1947?
To establish rules of international trade cooperatively
How did the Uruguay Round differ from the previous GATT negotiations?
It expanded the number of signatories and reduced tariffs
What was a key outcome of the Uruguay Round negotiations?
Establishment of WTO with new agreements on dispute settlement
Which core tenets continued to be crucial in the WTO other than reciprocity and MFN?
Dispute Settlement Mechanism (DSM)
What was the purpose of the Doha Round launched in 2001?
Liberalization of trade in agriculture
Why did developing countries argue against the terms of the Doha Round?
They were offered more than what they could get from developed countries
'Shallow integration' refers to what aspect of the WTO's success?
'Shallow integration' has been a general success for the WTO
'Beggar-thy-neighbor' policies were criticized because they:
Left the world as a whole worse off due to cross-border externalities
'Reciprocal reductions in tariffs (through bindings)' as mentioned in the text refer to:
'Reciprocal reductions' mean reducing tariffs collectively among signatories
'NTBs' eliminated during the Uruguay Round stands for:
'Non-Tariff Barriers' that hindered free trade
Explore the key concepts and history of the World Trading System, from the establishment of GATT to the formation of WTO. Learn about the purpose of these multilateral agreements in regulating international trade and promoting market access.
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