Deck 8: Global Trade Relations

Question 1

Absolute advantage refers to when

A) a state has a greater technological base than its trading partners
B) a state has greater human capital
C) a state has relatively greater advantage in the production of its exports
D) none of the above

Answer 1

D

Question 2

The Stolper-Samuelson theory builds on

A) strategic trade theory.
B) the theory of absolute advantage.
C) the Heckscher-Ohlin theory.
D) the theory of comparative advantage.

Answer 2

C

Question 3

Theories explaining the rapid increase in intra-industry trade emphasize the fact that

A) trade can occur with the same industrial goods.
B) trade results from comparative advantage.
C) MNCs benefit from trade with their subsidiaries.
D) trade is most beneficial between states with different factor endowments.

Answer 3

A

Question 4

The gravity model includes which of the following factors to explain trade (check all that apply):

A) economies of scale
B) distance from trading partner
C) size of economies
D) comparative advantage

Question 5

Competitive advantage

A) is virtually identical to comparative advantage.
B) depends on a country's endowment of natural resources.
C) stems from earlier liberal theories of trade.
D) stems from the emphasis on industrial targeting.

Question 6

The 1934 Reciprocal Trade Agreements Act

A) enabled the United States to lower tariffs on a statutory basis.
B) linked U.S. tariff levels to international negotiations.
C) resulted in multilateral trade negotiations.
D) enabled the U.S. Congress to lower tariffs by up to 50 percent.

Question 7

One indication of GATT's informality was the fact that it

A) did not make decisions that were binding on members.
B) was easy for countries to become members.
C) did not have dispute settlement procedures.
D) did not have a headquarters.

Question 8

Which of the following was a weakness of the GATT (check all that apply):

A) some trade sectors were exempt
B) the U.S. failed to ratify the agreement
C) dispute settlement
D) limited to goods

Question 9

The first GATT round with negotiations on NTBs was the

A) Kennedy Round.
B) Tokyo Round.
C) Uruguay Round.
D) Dillon Round

Question 10

Reciprocity is most closely associated with

A) nondiscrimination
B) NTBs
C) national treatment.
D) hegemony.

Question 11

Diffuse reciprocity refers to when states:

A) offer equal treatment to a number of states
B) offer equal treatment across a number of products
C) offer concessions in return for concessions immediately
D) offer concessions for concessions in the future

Question 12

Which country/region has the greatest amount of merchandise trade in the world?

A) U.S.
B) China
C) Japan
D) European Union

Question 13

Dumping occurs when a company from another state:

A) Offers deep discounts on its products
B) Sells below its home market price
C) Sells above the price it sells in another market
D) Offers incentives for retail sales

Question 14

Which two of the three functions has the WTO been able to perform?

A) Implement and monitor trade principles and rules
B) Settle disputes
C) Conduct multilateral trade negotiations with a final agreement

Question 15

The NIEO centered on a shift in prices for

A) technology goods
B) services
C) commodities
D) petrol

Question 16

The theorists who are most supportive of the precautionary principle on trade issues are

A) orthodox liberals.
B) institutional liberals.
C) the greens.
D) interventionist liberals.

Question 17

The theorists most opposed to injecting environmental issues into trade negotiations are

A) institutional liberals.
B) orthodox liberals.
C) interventionist liberals.
D) the greens.

Question 18

Opportunity cost refers to the need to invest heavily in production.

Question 19

Liberals are skeptical of the advantages of strategic trade theory.

Question 20

The national treatment requirement is designed to prevent external discrimination in trade.

Question 21

Specific reciprocity can coexist with unconditional MFN treatment.

Question 22

National treatment and the MFN principle are both part of the GATT/WTO's nondiscrimination principle.

Question 23

GATT passed on dispute rules to the WTO in 1995.

Question 24

The GATT/WTO has never had a director-general from an LDC.

Question 25

The concept of __________________ refers to the cost of producing less of one product in order to produce more of another product.

Question 26

According to the theory of______________ , countries A and B can both benefit from free trade if each country specializes in producing the good it can produce relatively more cheaply than other goods.

Question 27

___________trade refers to when states trade differentiated products that are similar in function.

Question 28

The______________ theory states that a state has a comparative advantage in producing goods that involve intensive use of its most abundant factor of production.

Question 29

______________occurs when a firm sells products in an export market at a lower price than it charges in the home market.

Question 30

____________industries are ones that require state protection until they are globally competitive.

Question 31

The WTO permits a state to impose____________________________if another state provides trade-distorting subsidies that produce or threaten material injury to domestic producers.

Question 32

Explain the Stolper-Samuelson theorem using a concrete scenario of two countries and two products (such as the U.S. and Mexico for software and textiles)

Question 33

Compare 2-3 different theories of how trade occurs against the trade between 2 actual countries. For example, comparative advantage vs. absolute advantage; Hecksher-Ohlin vs. gravity model; etc.

Question 34

Investigate the nature of the U.S. Congress's objections to the ITO in 1948. Were the concerns justified?

Question 35

Examine a dispute that has occurred at the WTO (check the WTO website for documents). What is the nature of the dispute, and what does its outcome reveal about how dispute settlement occurs? Which theoretical perspective do your findings resonate with?

Question 36

Examine the single undertaking approach and the issues revealed by the failure of the Doha Round. Is it time to try a different approach, and what would that look like?

Question 37

Why is the safeguard principle essential to most international trade agreements? What are ADDs and CVDs, and what must a country demonstrate to impose them? Why are ADDs and CVDs so controversial? Examine a real life case and analyze what it reveals about how justified such actions are.

Question 38

Is the LDCs' request for special and differential treatment justified and under what circumstances? How has it been embedded in the trade regime? What difference has it made for development?

Question 39

What is the nature of the controversy over China's admission into the WTO? Are such complaints justified? What changes, if any, do you think are required on the part of China?

Question 40

What is the relationship between the GATT/WTO and private companies and civil society? Should this relationship change, and if so, how? Or why not?

Question 41

How do neomercantilists, liberals, and historical materials differ in their views of the WTO Doha Round's problems?

Question 42

Why is there so little ability to raise labor standards via the ILO? What changes could be made to improve them? Who would support and oppose your recommendations?

Question 43

How much priority has the GATT/WTO given to the environment? What are the views of different theorists regarding the inclusion of environmental issues in negotiations for freer trade?