Non-Tariff Barriers Quiz
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Questions and Answers

What are the three most frequently used types of non-tariff barriers (NTBs) referred to as temporary trade barriers?

  • Antidumping, countervailing duties, safeguards (correct)
  • Ad-valorem duties, specific duties, tariff-rate quotas
  • Dumping, subsidies, tariffs
  • Quotas, tariffs, price undertakings

    • Who established antidumping (AD) and countervailing duties (CVD) and for what purpose?

  • Developing nations to reduce imports
  • Developed nations to punish dumping due to predatory pricing and counteract subsidies (correct)
  • Developed nations to increase trade barriers
  • Developing nations to combat unfair trade practices

    • Which of the following is NOT a form of temporary trade barriers (TTBs)?

  • Quotas
  • Tariff-rate quotas
  • Subsidies (correct)
  • Specific duties

    • What is the primary purpose of safeguards (SGs) as mentioned in the text?

    <p>To limit imports due to surge in imports that injure the domestic industry</p> Signup and view all the answers

    Which type of trade barriers are supposed to be temporary according to the text?

    <p>TTBs</p> Signup and view all the answers

    How are antidumping (AD) and countervailing duties (CVD) applied in terms of scope?

    <p>Bilaterally for specific exporting countries</p> Signup and view all the answers

    Which of the following is NOT a goal of antidumping (AD) as mentioned in the text?

    <p>To promote fair competition in international trade</p> Signup and view all the answers

    What is the purpose of price undertakings in the context of temporary trade barriers?

    <p>'Price undertakings' involve firms charging different prices in different markets</p> Signup and view all the answers

    What is the main purpose of antidumping duties according to the text?

    <p>To protect domestic industries from unfair competition due to dumping</p> Signup and view all the answers

    How is the dumping margin calculated in the context of international trade?

    <p>By comparing the export prices with prices in foreign markets</p> Signup and view all the answers

    In the case presented in the text, which entity was responsible for determining dumping and causing injury to the domestic industry?

    <p>European Commission</p> Signup and view all the answers

    What was one major consequence of the dumping practices by Chinese exporters on the EU domestic industry?

    <p>Increased job losses and bankruptcies in the EU</p> Signup and view all the answers

    Which entity benefits the most as a result of antidumping duties in the EU?

    <p>Domestic producers</p> Signup and view all the answers

    What role did the European Bicycle Manufacturers Association play in the EU antidumping case against Chinese imports?

    <p>Petition for antidumping duties on Chinese imports</p> Signup and view all the answers

    What was the range of antidumping duties imposed by the EU on Chinese imports?

    <p>21.8-83.6%</p> Signup and view all the answers

    What is one reason why investigating authorities use surrogate countries to determine dumping margins?

    <p>To compensate for unavailable pricing data from specific countries</p> Signup and view all the answers

    In an international trade context, why might firms charge lower prices in export markets according to the text?

    <p>To maximize profits in a competitive export market</p> Signup and view all the answers

    What is a key factor that can lead a country's investigating authority to impose antidumping duties based on the text?

    <p>Import prices lower than fair value resulting in injury to domestic industry</p> Signup and view all the answers

    What is the main benefit of Safeguards (SGs) over Anti-Dumping (AD) measures?

    <p>SGs aim to protect domestic industries without needing to prove unfair trade</p> Signup and view all the answers

    In what scenario can a monopolistic competition firm engage in dumping?

    <p>When it faces higher marginal costs in the domestic market</p> Signup and view all the answers

    Why is there a tendency for governments to impose higher tariff rates on final goods relative to inputs?

    <p>To protect domestic industries that produce final goods</p> Signup and view all the answers

    How do Temporary Trade Barriers (TTBs) differ from Anti-Dumping (AD) duties?

    <p>TTBs do not require proving unfair trade practices, unlike AD duties</p> Signup and view all the answers

    What could be a reason for an EU shoemaker facing higher import penetration rates if the EU imposes Anti-Dumping (AD) duties on leather?

    <p>Decrease in the European Retail Price (ERP)</p> Signup and view all the answers

    What is the primary challenge associated with revoking Temporary Trade Barriers (TTBs) once they are imposed?

    <p>Political economy channels making revocation extremely difficult</p> Signup and view all the answers

    What is the key difference between Safeguards (SGs) and Anti-Dumping (AD) measures?

    <p>SGs focus on protecting domestic industries without proving unfair trade practices</p> Signup and view all the answers

    Why might a discriminating monopolist engage in dumping?

    <p>To maximize profits by charging different prices in different markets</p> Signup and view all the answers

    What is the primary goal of Temporary Trade Barriers (TTBs)?

    <p>To provide temporary protection for domestic industries from import surges</p> Signup and view all the answers

    Why do governments often impose higher tariff rates on final goods compared to inputs?

    <p>To protect domestic industries that produce final goods</p> Signup and view all the answers

    Study Notes

    Temporary Trade Barriers (TTBs)

    • The three most frequently used types of temporary trade barriers are:

      • Antidumping (AD)
      • Countervailing duties (CVD)
      • Safeguards (SGs)

    • The General Agreement on Tariffs and Trade (GATT), now the World Trade Organization (WTO), established AD and CVD to address unfair trade practices.

    • AD is intended to counteract dumping, which occurs when exporters sell goods in a foreign market at a price lower than their domestic price, causing injury to the domestic industry.

    • CVD is intended to counteract unfair subsidies provided by exporting governments to their exporters.

    • Not a form of temporary trade barriers: Tariff rate quotas are not considered temporary trade barriers.

    • Safeguards (SGs) primary purpose: To protect domestic industries from surges in imports that threaten to cause serious injury.

    • According to the text, temporary trade barriers are meant to be temporary measures, in principle.

    Antidumping (AD) and Countervailing Duties (CVD)

    • AD and CVD scope: They are applied to specific industries and products.

    • AD Goals:

      • To counter unfair trade practices and protect domestic industries.
      • Not a goal of AD: To reduce the overall competitiveness of the industry

    • Price undertakings: In certain situations, exporters may agree to raise their export prices to a level that eliminates the dumping margin, preventing the need for antidumping duties.

    • Purpose of antidumping duties: To offset the price advantage enjoyed by dumped imports and ensure fair competition for domestic producers.

    • Dumping margin calculation: The dumping margin is calculated as the difference between the exporters' domestic price and their export price.

    European Union (EU) Antidumping Case Against Chinese Bicycle Imports

    • The EU was responsible for determining that Chinese exporters were dumping bicycles in the EU market and causing injury to the EU domestic industry.

    • One major consequence of the dumping was a significant drop in EU bicycle manufacturers' production and sales, as Chinese exporters benefited from lower prices.

    • The entity that benefits the most from AD duties in the EU is the domestic industry being protected.

    • The European Bicycle Manufacturers Association (EBMA) played a crucial role in the case by providing evidence to support their claims.

    • Anti-dumping duties range: The EU imposed duties ranging from 8.5% to 28% on Chinese bicycle imports.

    Surrogate Countries and Dumping Margins

    • Investigating authorities use surrogate countries to determine dumping margins when there is no reliable information available for the exporter's home market.

    • Firms may charge lower prices in export markets due to:

      • Lower demand in the foreign market
      • Excess capacity in the home market

    • A critical factor for a country's investigating authority to impose antidumping duties is evidence of harm to the domestic industry.

    • The main benefit of Safeguards (SGs) over Anti-Dumping (AD) measures: SGs focus on protecting domestic industries against temporary increases in imports, while AD addresses dumping practices that result in unfair competition.

    Monopolist Dumping and Government Trade Policies

    • A monopolist firm can engage in dumping if it operates in both a competitive and non-competitive market.

    • Governments tend to impose higher tariffs on final goods due to:

      • Protection for domestic industries
      • Revenue generation

    TTBs vs. AD Duties

    • Temporary Trade Barriers differ from Anti-Dumping duties in their scope: They are applied to prevent significant harm to domestic industries resulting from temporary surges in imports, while AD addresses unfair pricing practices by foreign exporters.

    • Reason for higher import penetration rates for EU shoemakers after AD duties on leather: The antidumping duties on leather, a key input in shoemaking, could lead to higher prices for the import of leather, making it more difficult for EU shoemakers to compete.

    • The main challenge associated with revoking TTBs is proving that the circumstances that justified their imposition no longer exist.

    • The key difference between SGs and AD measures: SGs address surge in imports while AD addresses dumping practices.

    • Reason for a discriminating monopolist to engage in dumping: In order to increase their profits by taking advantage of different price elasticities in the domestic and foreign markets.

    • The primary goal of Temporary Trade Barriers (TTBs): To mitigate injury to domestic producers caused by sudden increases in imports or unfair trade practices from exports.

    • Reason for governments to impose higher tariff rates on final goods compared to inputs:

      • To protect domestic industries: The tariff rates on final goods could protect domestic manufacturers.
      • To generate revenue: Tariffs on final goods might be more effective in generating revenue compared to tariffs on inputs.

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    Description

    Test your knowledge on non-tariff barriers (NTBs) such as antidumping duties (AD), countervailing duties (CVD), and safeguards (SG) used in international trade. Learn about the specific rules set by the WTO for temporary trade barriers (TTBs) and the various forms that TTBs can take.

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