Deck 11: Regulating Import Competition and Unfair Trade

Question 1

Global quotas are quantitative import restrictions on a particular product regardless of its country of origin.

Answer 1

True

Question 2

The United States International Trade Commission investigated the Harley-Davidson complaint. It found that imports of competitive motorcycles were damaging the domestic industry, however the argument for protection was baseless.

Answer 2

False

Question 3

The WTO frequently impose regulatory methods to control imports into their markets.

Answer 3

False

Question 4

In the Bulk Aspirin from China case, the ITA decided to treat the private exporters the same as the government-owned exporters.

Question 5

A provisional measure is a tariff imposed by a country in order to ensure that dumping does not take place.

Question 6

The GATT Agreement on Safeguards permits a member state to increase tariffs on an imported product in order to allow a domestic manufacturer to successfully introduce a competitive product in the domestic market.

Question 7

The GATT escape clause allows member nations to take drastic permanent measures to protect a domestic industry and thereby preserve jobs.

Question 8

Dumping does not occur when there is no market for the product in the home country.

Question 9

In the Pesquera Mares Australes v. United States case, the court found that the Chilean salmon exporter had not violated U.S. antidumping laws.

Question 10

The International Trade Commission is the U.S. agency that investigates and after reviewing all the evidence makes the final determination whether or not import relief will be granted to a domestic firm.

Question 11

If the International Trade Commission reaches an affirmative decision in an escape clause action, workers, firms, and communities may be eligible for federal adjustment assistance.

Question 12

If domestic workers are damaged by foreign competition, they may be entitled to two (2) years of state unemployment benefits and federal trade adjustment assistance.

Question 13

To obtain import relief under U.S. law, the domestic industry must prove that the foreign producer or government has undertaken an illegal or unfair action in its export policy.

Question 14

The President of the United States can by executive order provide import relief in the form of temporary tariff increases or quotas without having to consulting any other organization.

Question 15

Dumping is the unfair trade practice of selling products in one country for less than the price charged for comparable goods in the producer's home market.

Question 16

Dumping does not require that the product be sold in the home country for less than the cost to produce it.

Question 17

The GATT Agreement has an escape clause whereby member nations may levy increased duties on imported products where there are unforeseen circumstances that cause or threaten serious injury to domestic producers.

Question 18

Quotas are not permitted under GATT or under U.S. law as a method of protecting domestic industries, unless a trade compensation is provided as a form of compensation.

Question 19

An upstream subsidy is granted by a government to a company that is based in another country, but has substantial business operations in the home country.

Question 20

Under U.S. law, a petition for import relief may be filed with the International Trade Commission by any firm, trade association, union, or group of workers.

Question 21

Under U.S. law, the foreign market value for antidumping duty determination is calculated as either home market sales price, sales of like products in third countries, or "normal value at the retail level."

Question 22

The GATT Agreement authorizes countervailing duties to offset the effect of subsidies on imports that cause or threaten material injury to a domestic industry.

Question 23

When a petition for import relief is filed with the International Trade Commission, the ITC conducts an investigation and must consider all the following factors except :

A) idling of productive facilities in the industry.
B) unemployment in the industry.
C) ability of industry to shift to production of other products.
D) increase in imports.

Question 24

Quotas are often favored over tariffs as import restrictions because:
I. They are more flexible tools for regulating imports.
II. It is easier for government policy makers to assess the potential impact of a quota.

A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.

Question 25

The U.S. countervailing duty statute requires that the International Trade Commission determine the fair market price of the imported product in the country of origin.

Question 26

The U.S. law that protects against "fairly traded" imported products is:

A) countervailing duty.
B) antidumping statute.
C) escape clause.
D) import relief.

Question 27

Under the law of the European Union, a country may only bring an antidumping action against a non-EU member country.

Question 28

The "escape clause" of the GATT agreement derives its name from the fact that:

A) it allows a country to escape from having trade disputes settled by GATT guidelines.
B) it permits a country to escape from its previously negotiated tariff obligations.
C) it permits a country to be relieved of having to make its balance of payments obligations for a short period of time.
D) none of the above.

Question 29

Antidumping and countervailing duty cases may be appealed to the U.S. Court of International Trade in all of the following situations except :

A) a decision by the International Trade Association not to conduct an investigation.
B) from a decision by the ITA to conduct an investigation.
C) from a final decision by the International Trade Association (ITA).
D) from a decision by the ITA to suspend an investigation.

Question 30

The U.S. law dealing with import relief is:

A) Art. 8, Sec. 1, U.S. Constitution.
B) Sec. 333, U.S. Import Relief Act.
C) Sec. 201, Trade Act of 1974.
D) GATT, Art. XIX.

Question 31

To be eligible for adjustment assistance due to import competition, the Secretary of Labor must certify all of the following except :

A) significant number of workers lost jobs.
B) ssales/production of the firm has decreased.
C) increases in imports of articles like or directly competitive with those made by petitioner contributed importantly to the loss of jobs.
D) the workers/jobs lost because of the increase in imports cannot be relocated to other industries.

Question 32

The antidumping duty imposed under U.S. law is based on the amount by which the foreign market value exceeds the cost of production by at least 10%.

Question 33

The "material injury" requirement under the U.S. unfair import statutes requires a finding of less harm than does the "serious injury" requirement in the U.S. escape clause.

Question 34

A subsidy is some advantage or favor granted by a government to its firms upon the manufacture, production, or export of a product, and such actions are beneficial to the international economy.

Question 35

The requirements for import relief under U.S. law include all of the following except :

A) increased imports.
B) imports are substantial cause of serious injury or threaten injury.
C) domestic industry produces a product that is like or directly competitive with the import.
D) circumstances causing this situation were unforeseen.

Question 36

If a country is not a member of GATT, under U.S. law a countervailing duty can be imposed without regard to whether a U.S. firm is injured or not.

Question 37

Dumping has become a fairly persistent problem in international trade and is often practiced by firms wishing to sell their excess production capacity at bargain prices to cover fixed costs.

Question 38

Section 201 of the Trade Act of 1974 provides authority for the president to do what, if barriers to U.S. trade are not lifted?

A) Petition Congress to intervene in the situation
B) Threaten military action if the barriers are not lifted
C) Use retaliation in the form of duties or quotas
D) Pay the U.S. company a subsidy

Question 39

Subsidies including domestic subsidies are regulated under the GATT Agreement.

Question 40

All subsidies are even those that are beneficial to domestic, economic, and social objectives are considered damaging to the international economy.

Question 41

If country A gives favorable tax treatment to XYZ, Inc. a corporation in country A, because XYZ, Inc. exports a large number of widgets, this tax break is referred to as a(n):

A) consortium.
B) export subsidy.
C) export rebate.
D) tariff supports.

Question 42

An actionable subsidy is one that:

A) causes material injury to the domestic producers of a like product in the complaining country.
B) violates a trade agreement.
C) causes "serious prejudice" to the interests of the complaining country.
D) all of the above.

Question 43

Assess the various legal "tools" available to the president to gain freer access to foreign markets for U.S. products.

Question 44

Consider the differential domestic and foreign political ramifications of the following U.S. trade laws: Section 201 escape clause, the antidumping statute, and the countervailing duty statute.

Question 45

What are the similarities and differences between unfair trade and fair, but economically damaging trade?

Question 46

Under U.S. law, antidumping duties can be imposed where:
I. It is determined that a class of foreign merchandise is being, or likely to be, sold in the U.S. at less than fair value, and a domestic industry is injured as a result.
II. A domestic industry needs protection to update its technology to compete with the dumped product.

A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.

Question 47

A subsidy exists where the government has conferred a benefit to a domestic firm or industry, except:

A) lower tax rate.
B) guarantee low interest loans.
C) buying goods from domestic firms at higher market prices.
D) grants to research universities.

Question 48

Available forms of import relief include:

A) absolute quotas.
B) auctioned quotas.
C) tariff increases (up to 50 percent).
D) domestic subsidies.
E) a, b, and c.

Question 49

There are two types of import protection regulations in the U.S.:
I. Laws that provide relief to protect developing U.S. domestic companies.
II. Laws that allow non-market economy nations a financial break.

A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.

Question 50

In non-market economy countries, the determination of foreign market value is usually based on:

A) the use of "constructed value."
B) home market sales.
C) third country sales.
D) both A and C.

Question 51

Describe the ways in which U.S. trade legislation is and is not based upon GATT legal principles. Give several examples.

Question 52

The GATT escape clause:

A) allows a country to take temporary corrective action to protect a domestic industry.
B) allows members who no longer wish to be a part of the WTO to quit.
C) allows a country to impose tariffs on countries that are engaging in dumping.
D) allows a country to disaffirm any previous tariffs they have imposed on another GATT member.

Question 53

In response to the petition for relief filed by Harley-Davidson Motor Company:

A) a ban on imported motorcycles above 700 cubic cent. was implemented.
B) the commission recommended that declining incremental duties on imported motorcycles be imposed for five years.
C) Honda agreed to stop the export of its larger motorcycles for five years.
D) the president threatened severe trade sanctions on Japan if they did not stop their dumping of motorcycles on the American market.

Question 54

U.S. countervailing duty statutes:
I. Countervail all export subsidies.
II.Countervail all domestic subsidies.

A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.

Question 55

Subsidies in non-market economy countries are difficult to determine because:

A) their countries are secretive and do not allow economic information to escape.
B) foreign trade is limited and there are no comparative situations.
C) these countries have few subsidies and the ones they have are very small.
D) foreign trade decisions are made by the state trading organization and exports benefit from many economic advantages designed to meet an overall plan.

Question 56

In determining whether increased imports are a substantial cause of serious injury, the ITC does not consider:

A) unemployment or underemployment in the industry.
B) growing inventories.
C) overall economic trends.
D) an actual increase in imports or in market share held by imports.
E) all of the above are considerations.

Question 57

Which of the following factors is used to determine whether dumped imports have caused material injury to an industry?

A) The volume of the dumped imports
B) The effect of the imports on prices of like products in the domestic market
C) The impact on domestic industry
D) All of the above

Question 58

In determining if a sale is less than fair value, the International Trade Administration:

A) determines if the dumped product is being sold below its cost of production.
B) determines the fixed and variable overhead costs of the dumped product to see what profit the dumping company should expect.
C) compares the foreign market value of the imported product with the U.S. price.
D) none of the above.

Question 59

Which of the following might be considered a sign of market disruption within domestic firms due to increased imports of foreign goods?

A) Decreased sales volume
B) Price suppression
C) Lower wages
D) All of the above

Question 60

Which of the following does not characterize a difference between U.S. and EU antidumping laws?

A) The duration of an antidumping duty has no time limit under U.S. law, but EU law imposes a five-year maximum duration.
B) Under U.S. law, the duty equals the dumping margin, whereas under EU law, it may vary based on the injury.
C) Under U.S. law, a duty is imposed retrospectively, while under EU law, it may be imposed prospectively.
D) All of the above.
E) None of the above.

Question 61

The USTR has requested your advice on whether the following are legal pursuant to the GATT. Please explain each of your answers. Scenario Tax credits extended by the government of India to Indian companies in order to assist in the reduction of greenhouse gases emitted during the manufacturing process.

Question 62

Identify and evaluate the importance of the several factors taken into account in an ITC proceeding to impose import restrictions.

Question 63

The President of the United States is concerned about the declining number of American companies engaged in the manufacture of computer chips. In order to reinvigorate U.S. computer chip manufacturers, the President has proposed that the United States unilaterally impose an absolute ban upon the importation of computer chips from Japan for an indefinite period of time to be determined in his complete discretion. The President has asked you whether his proposal is legal pursuant to the GATT. What is your response? Please explain the basis for your conclusions.

Question 64

Weigh the strengths and weaknesses of all possible actions a country can take to protect its market against unfair trade.

Question 65

The USTR has requested your advice on whether the following are legal pursuant to the GATT. Please explain each of your answers. Scenario Loan guarantees by the French government to French filmmakers who utilize French equipment in the making of their movies.

Question 66

The USTR has requested your advice on whether the following are legal pursuant to the GATT. Please explain each of your answers. Scenario An across-the-board reduction by the United States in the corporate tax rate.

Question 67

The USTR has requested your advice on whether the following are legal pursuant to the GATT. Please explain each of your answers. Scenario Reduced rate loans offered by U.S. banks to U.S. businesses willing to relocate their operations to economically depressed inner cities.

Question 68

Consider the relative merits of including debt expenses in the calculation of the fair market value of an imported product. Consider this both in terms of the business exporting the good and the business importing the good.

Question 69

Draft a statute or treaty defining a non-market or state-controlled economy OR identifying which factors should be considered in making such a determination and how they should be applied.

Question 70

Draft a statue defining a domestic industry. Draft statutes from the perspective of Westernized, developed nations and from developing nations.

Question 71

The USTR has requested your advice on whether the following are legal pursuant to the GATT. Please explain each of your answers. Scenario Tax credits extended by the Japanese government to Japanese computer chip manufacturers on the basis of the volume of their chip sales in the United States.