Deck 9: The World Trade Organization: Basic Principles

Question 1

Nontariff barriers are the least obstructive obstacles to importation as compared to tariffs.

Answer 1

False

Question 2

The General Agreement on Tariffs and Trade is today the most important instrument for regulating international trade.

Answer 2

True

Question 3

Under GATT, charges may be imposed upon the movement of imported goods, such as port fees and inspection fees.

Answer 3

True

Question 4

Although the 1947 GATT was never ratified by the U.S. Congress, the United Nations assembly voted that GATT would be imposed on all of the nation members.

Question 5

Each nation has the power to regulate imports into the country and the primary mode of control is to regulate import competition.

Question 6

When a nation's import regulations or procedures are transparent, it is difficult for foreign firms to gain entrance to its markets.

Question 7

Normal trade relations provides that a nation cannot negotiate a preferential trade agreement with another nation.

Question 8

In a tariff concession, one country promises not to levy a tariff on a given product at a level higher than agreed upon.

Question 9

A "free trade" nation has no barriers to trade.

Question 10

Quotas serve to increase the amount of imports of a product.

Question 11

Under normal trade relations, when a nation extends some privilege or right to one of its trading partners, that privilege automatically becomes applicable to all other trading partners.

Question 12

The 1947 GATT provided a regulations for the registration of patents and copyrights and stiff penalties for the misuse of intellectual property.

Question 13

An embargo is a country's economic policy response to a trading partner's obstacles to imports.

Question 14

When import regulations are readily available to importers and exporters, they are considered to be transparent.

Question 15

In the dispute regarding the European Union's importation of Latin American bananas, the dispute panel found no disparity in tariffs on the European Union's part.

Question 16

The Uruguay round of tariff negotiations was the first major multilateral trade negotiating session since World War II.

Question 17

An embargo only applies to imports from Cuba, Sudan, North Korea, and Egypt.

Question 18

Under the "national treatment" provisions of GATT, imported products may be regulated and taxed differently than domestic goods after they pass the border and enter a nation's stream of commerce.

Question 19

Tariff concessions under GATT are recorded in tariff schedules, which are detailed product-by-product listings of all tariff obligations for that nation.

Question 20

China's manipulation of the yuan to remain undervalued compared to the U.S. Dollar is a price mechanism to enhance the value to Chinese goods.

Question 21

Each nation has the right to impose import schemes and customs procedures as a means to protect its citizen's public health, safety, and morals.

Question 22

Which of the following is not true regarding WTO dispute settlement procedures?

A) A complaining party can request consultations to seek a solution.
B) Even if a solution is not reached, the panel has no authority to authorize trade sanctions.
C) Other member nations with a "substantial interest" in the case may make written submissions and oral arguments before the panel.
D) An appellate body of three people will hear appeals from a panel case.
E) All of the above are untrue.

Question 23

One of the primary objectives of GATT is the elimination of all quotas and quantitative restraints.

Question 24

A tariff is:

A) an import duty.
B) a tax levied on goods being brought into a country.
C) a ban on trade with a foreign nation.
D) both A and B.

Question 25

When a nation that belongs to WTO imposes a tariff or quota on imported products, it is supposed to do so within the guidelines established by GATT. If it does not do so within GATT's guidelines:

A) the offending nation may suffer military retaliation by the other GATT members.
B) the offending nation may be subject to a proceeding pursuant to the WTO's Dispute Settlement Understanding.
C) the offending nation may end up in the World Court being sued for breach of its GATT contract.
D) none of the above.

Question 26

According to GATT, quotas are considered acceptable devises for regulating trade only where:

A) a nation is imposing a temporary safeguard to protect its balance of payments.
B) they are enacted into law by a nation's legislative body.
C) nations are engaged in a trade war.
D) a nation has first petitioned the United Nations for permission to do so.

Question 27

While WTO reports carry no weight as precedent, subsequent panels often consider them, and they can create legitimate expectations as to the interpretation of the treaty by WTO members.

Question 28

In which of the following areas is the principle of nondiscrimination being central to the GATT evident?

A) Normal trade relations
B) National treatment
C) Elimination of quotas and quantitative restrictions
D) All of the above

Question 29

An example of the GATT/WTO dispute settlement mechanism, Apple can file a complaint against Niger's government non-tariff barrier to limit the importation of iPads to the WTO's Dispute Settlement Body.

Question 30

Tariffication is the process in which quotes, licensing schemes, and other nontariff barriers to trade are "converted" to tariffs.

Question 31

Which of the following may not be a reliable criterion for determining whether import and domestic goods are "like products"?

A) Consumers' tastes and habits
B) The product's end uses
C) The product's uniform tariff classification
D) All of the above

Question 32

The phrase to describe when a foreign government's import regulations are not made readily available to the public or are hidden or disguised in bureaucratic rules or practices is:

A) not transparent.
B) unfair trade practices.
C) bureaucratic procrastination.
D) limited access.

Question 33

Under the MFN rates the United States can grant lower tariff rates to a less developed country in order to stimulate economic growth?

Question 34

In order to convene a WTO panel, the complaining country must prove it has a "legal interest" in the case.

Question 35

Tariffs serve all of the following purposes except :

A) collection of revenue.
B) enhancement of flow of commerce.
C) regulation of import competition.
D) protection of the national defense.

Question 36

Tariffs are computed:
I. As a percentage of value ( ad valorem ).
II. On the basis of physical units (specific).

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

Question 37

WTO DSU reports carry precedential value for future panels by providing definitive interpretations of GATT provisions.

Question 38

Due to GATT's prohibition of quotas, a nation may not impose quotas to safeguard its external financial position and its balance of payments.

Question 39

The GATT 1994 established rules for regulating trade in goods and services and creation of the WTO.

Question 40

For the most part, trade in textiles and services are not regulated by the GATT system.

Question 41

Countries A and B both produce coffee. Both countries belong to GATT. Country A imports coffee from B. Once B's coffee enters A's stream of commerce, under the national treatment provisions of GATT:

A) country A cannot subject B's coffee to higher internal taxes or charges than its domestic coffee.
B) country A may now charge higher internal taxes or charges on B's coffee in order to discourage coffee drinking since the goods have already passed the border.
C) country A cannot subject B's coffee to any internal taxes or charges, even if it does so to domestic coffee.
D) none of the above is correct.

Question 42

In what ways are GATT and the WTO similar? Different?

Question 43

In the decision involving tariffs on Latin American bananas, the panel:

A) recommended the tariffs be brought in line with the EEC's obligations under GATT.
B) said the Latin American countries were authorized to impose sanctions on the EEC.
C) found the EEC's tariffs to be within GATT guidelines.
D) dismissed the case after the EEC agreed to adopt tariffs that were more in line with its GATT obligations.

Question 44

The concept that runs throughout the GATT requires that the products of all nations be treated equally and without discrimination by importing nations. This is the principal behind:

A) nullification and impairment.
B) most-favored-nation trade.
C) ad valorem tariffs.
D) nontariff trade barriers.

Question 45

Within the structure of the World Trade Organization, the three important groups under the Ministerial Conference are:

A) the General Council, the Secretariat, and the Trade Policy Review Body.
B) the Committee on Budget, the General Council, and Trade Policy Review Body.
C) the Dispute Settlement Body, the General Council, and the International Court of Justice.
D) the Dispute Settlement Body, the General Council, and the Trade Policy Review Body.

Question 46

The term used to describe some action taken by a GATT member country in violation of the GATT agreement is:

A) null and void.
B) unfair and inequitable.
C) persona non grata.
D) nullification and impairment.

Question 47

What are the similarities and differences between the GATT and WTO dispute resolution procedures?

Question 48

Virtually all nations provide import protection for domestic agricultural interests:
I. And the GATT Agreement specifically prohibits such protection with no exceptions.
II. And this problem exists because nations try to provide market stability and protection for farmers.

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

Question 49

Which of the following is an example of an ad valorem tariff?

A) A 15% tariff on the value of a shipment of t-shirts
B) A $10 tariff on each barrel of petroleum
C) A 20% discount on the value of peaches delivered in October, November, or December
D) None of the above

Question 50

The WTO is overseen by the Ministerial Conference, which is made up of:

A) the presidents, prime ministers, and royalty from all WTO member nations.
B) high-ranking representatives from all WTO member nations.
C) high-ranking representatives from a select group of wealthy WTO member nations.
D) five representatives from each of the WTO member nations.

Question 51

All of the following are basic principles of GATT except :

A) commitment to normal trade relations.
B) elimination of import quotas.
C) non-reciprocal tariff increases.
D) non-discrimination against imported goods.

Question 52

_________ quotas are imposed on a particular product regardless of origin, while ________ quotas spread the total limit across several specific countries.

A) Absolute; qualified
B) Global; specified
C) Absolute; allocated
D) Global; allocated

Question 53

Which of the following is NOT an example of a commonly used trade barrier?

A) A convention on imported children's toys
B) A tariff on imported oil
C) A tax on imported clothing
D) A national industrial standard that drives up the cost of imported televisions

Question 54

Compare and contrast direct and indirect nontariff barriers.

Question 55

Countries A, B, and C belong to GATT. Countries X and Y do not. A has a 7% tariff on televisions from B. C, X, and Y also export televisions. Under unconditional most-favored-nation trade of GATT:

A) countries C, X, and Y are entitled to a 7% tariff on televisions.
B) countries X and Y are entitled to a 7% tariff on televisions.
C) country C must petition A under GATT to get a 7% tariff on televisions.
D) country C gets an automatic 7% tariff rate on televisions.

Question 56

Many countries grant preferential tariff treatment to select countries to help those countries' economic development. For example, the United States grants preferential tariff treatment to:

A) Haiti and many sub-Saharan African nations.
B) the EU.
C) China.
D) all Asian nations.

Question 57

Describe the benefits and detriments of enacting a quota?

Question 58

Under the WTO's dispute-settlement procedures, who can bring a complaint for nullification and impairment?

A) A corporation
B) A group of corporations within an industry
C) A government
D) All of the above

Question 59

When a nation's import regulations or procedures lack ________, foreign firms cannot easily gain entrance to its markets.

A) incentives
B) transparency
C) documentation
D) none of the above

Question 60

Which of the following is an example of a specific or flat tariff?

A) A 15% tariff on the value of a shipment of t-shirts
B) A $10 tariff on each barrel of petroleum
C) A 20% discount on the value of peaches delivered in October, November, or December
D) None of the above

Question 61

Draft a document advocating for the elimination of normal trade relations status against countries involved in human rights abuses.

Question 62

Compare and contrast unconditional and conditional MFN trade.

Question 63

Assess the relative value of a reported U.S. appellate (or trial) decision and a WTO panel report in a trade dispute.

Question 64

Explain the similarities and differences between "like products" and "directly competitive products."

Question 65

Guador, a small country in South America, is a member of the WTO. American fruit producers recently succeeded in persuading several members of Congress to introduce a bill to remedy Guador's alleged unfair trade practices in the citrus fruit industry. The bill provides for a unilateral threefold increase in the tariff solely applicable to citrus fruits originating in Guador. Furthermore, the bill imposes periodic testing procedures upon Guadorian citrus fruits from which American producers are exempt. Finally, the bill caps imports of Guadorian citrus fruits into the United States at $20 million in value annually. If enacted, would the bill violate American obligations pursuant to the GATT? Why or why not?

Question 66

Draft a document advocating the unilateral elimination of normal trade relations status for countries that do not abide by their WTO commitments.