Deck 8: International Trade and Labor and Environmental Standards

Question 1

The use of trade barriers to enforce standards abroad raises all of the following concerns except

A)the potential deadweight losses in consumption and production at home.
B)the lack of agreement over specific content of standards.
C)the potential for the use of trade barriers to erupt into a bigger trade war.
D)the difficulty of knowing whether some of the concerns are over standards or veiled protectionism.
E)only small countries may be able to use trade barriers effectively.

Answer 1

E

Question 2

Mutual recognition of standards refers to

A)the elimination of tariffs and quotas by trading partners.
B)common product safety,environment,labor,and fair competition standards agreed upon by trading partners.
C)the acceptance or keeping of a trading partner's standards as valid and sufficient by another trading partner.
D)separate standards held by different trading partners which other partners refuse to recognize.

Answer 2

C

Question 3

Domestic firms operating abroad may find it economically beneficial to adopt environment-friendly standards because

A)foreign nations may be upset if firms do not use the environment-friendly technology.
B)the least-cost strategy usually involves the adoption of one set of environment-friendly technology rather than multiple standards.
C)they may be forced to replace the old technology whenever the foreign country experiences positive economic development.
D)their environment-unfriendly technology may be replaced by foreign-based technology.
E)Only C and D are correct.

Answer 3

B

Question 4

Suppose two nations are seeking to expand their commercial relations.What options do they have in terms of addressing conflicts in standards? Describe each and what conditions might favor different approaches to setting standards.

Question 5

Which of the following is TRUE?

A)Generally,the lower the country's average income,the less administrative,scientific,and technical capacity it has to design and enforce standards.
B)National priorities do not change as income changes-countries of all income levels seem to share the same priorities and values.
C)Differences in income are always an obstacle to the harmonization of standards.
D)The adoption of a common set of rules usually narrows the market and raises prices.

Question 6

What are two main obstacles to increased international integration?

Question 7

Monopoly powers given to domestic utility companies to create economies-of-scale might unintentionally

A)be an obstacle to increased international trade.
B)be useful for the creation of a comparative advantage for the domestic country.
C)not be used for rent-seeking behaviors.
D)be a positive externality for the world as a whole.
E)None of the above.

Question 8

Requiring a firm with international operations to follow the standards of its home country instead of those of the foreign country has all of the following advantages except

A)it takes care of the fear of a race-to-the-bottom by making it impossible for a home-based company to exploit low standards.
B)it shifts the costs of improved standards to firms and consumers in high-income countries.
C)it removes the threat of domestic firms relocating abroad for low standards and ensures that any relocation that takes place is due to foreign comparative advantage.
D)it avoids the problems of high-income countries dictating what standards are to be used.In this situation,firms that cross national boundaries must conform to whichever standards are higher.
E)it is a comprehensive measure,since it addresses the problem of production in foreign firms as well as firms from high-standards countries that relocate abroad.

Question 9

Describe the connections between rising income and environmental and social indicators.Which indicators improve and which worsen as national income rises?

Question 10

What environmental problem gets worse as income rises according to your text?

Question 11

Which of the following is FALSE?

A)Most of the world's population lives in countries classified as low- or lower-middle income.
B)All labor and environmental conditions improve with income growth.
C)Percentage wise,more children work in low-income countries than in higher income countries.
D)With such large income differences internationally,it is not surprising that there are very large differences in most social,economic,and environmental indicators.

Question 12

Harmonization of standards refers to

A)the elimination of tariffs and quotas by trading partners.
B)common product safety,environment,labor,and fair competition standards agreed upon by trading partners.
C)the acceptance or keeping of a trading partner's standards as valid and sufficient by another trading partner.
D)separate standards held by different trading partners which other partners refuse to recognize.
E)All of the above.

Question 13

Low-income countries are largely responsible for excess carbon dioxide emissions globally.

Question 14

When the evolution of new technologies is unknown,or it is unclear which country has the "best" rules for standards,the adoption of ________ is the superior option.

A)a harmonization of standards
B)separate standards
C)mutual recognition standards
D)larger country standards
E)All of the above.

Question 15

Separate standards refers to

A)the elimination of tariffs and quotas by trading partners.
B)common product safety,environment,labor,and fair competition standards agreed upon by trading partners.
C)the acceptance or keeping of a trading partner's standards as valid and sufficient by another trading partner.
D)separate standards held by different trading partners which other partners refuse to recognize.

Question 16

All of the following are responsible for the removal of the formal trade barriers except

A)the sustained efforts of the trading partners themselves.
B)the General Agreement on Tariffs and Trade (GATT).
C)the World Trade Organization (WTO).
D)regional trade agreements such as NAFTA.
E)the World Bank and the IMF.

Question 17

Most regional trade and WTO agreements practice

A)the harmonization standards only.
B)separate standards only.
C)mutual recognition standards only.
D)a combination of harmonization,mutual recognition,and separate standards.
E)only the standards set out by the WTO.

Question 18

Which of the following is NOT an obstacle to increased international economic integration?

A)Monopoly powers given to domestic companies of individual nations
B)High tariff rates imposed by industrialized nations
C)Health and safety standard requirements
D)Labor and environmental standard requirements
E)Income disparities among and within trading partners

Question 19

The race-to-the-bottom concept described in the text refers to

A)the situation in which countries with high standards are forced to lower their standards or face the loss of jobs and industry.
B)the situation in which human rights are not respected by trading countries.
C)adopting the standards of a few selected middle-income and high-income countries.
D)the use of low per-capita income as a means of comparing the well-being of individuals.
E)None of the above.

Question 20

All of the following are reasons countries may be unable to use discriminatory trade practices to enforce labor standards EXCEPT

A)in order to be effective a coalition of countries must join together to impose them.
B)countries can never impose trade barriers on other sovereign nations.
C)the WTO requires nations to treat other nations the same.
D)a single country may be unsuccessful in convincing members of its trading block to participate in imposing the sanctions.
E)retaliation or a full blown trade war might result.

Question 21

Which region has the highest proportion of its children working?

Question 22

Child labor is a common family survival strategy,especially for farmers in rural areas where it is hard to enforce rules or to reach the poor with any supporting infrastructure or social services.

Question 23

Empirical studies show that countries with low standards are very successful at attracting foreign investment.

Question 24

When countries try to ban child labor,

A)most children start to attend school.
B)family poverty decreases.
C)child labor often goes underground,with children working in the informal economy,family enterprises and remote areas.
D)GDP increases.

Question 25

In what industrial sector are children most likely to be working?

Question 26

One reason why the plants of multinational corporations abroad may have better standards than domestic contractors in low-income countries is because multinational corporations tend to reduce costs by using one standard in terms of capital equipment and technology for all markets.

Question 27

Which of the following is TRUE?

A)Child labor is most common in urban areas.
B)Child labor is most common in the textile industry.
C)Child labor is most common in production aimed at export markets.
D)If child labor were stopped,families would have greater economic success.
E)Agriculture is the main industry using child labor.

Question 28

Transborder environmental impacts can take place when one country's pollution spills over into a second country in all of the following situations except

A)when an upstream user pollutes a shared watershed.
B)when industrial production in one country creates acid rain in another country.
C)when heavy traffic between two or more countries creates semi-global warming.
D)the production of exported products degrades the local environment.
E)ozone depletion caused by many countries' pollution spills or emissions.

Question 29

Which region has the most children (total number)working?

Question 30

The claim that lower environmental standards in foreign countries reduce industrial competitiveness for high standard countries is on firm theoretical ground because

A)higher environmental standards requirements raise the cost of production to a firm or industry abiding by the rules.
B)there will be a race-to-the-bottom competition on environmental standards.
C)the interests of firms that are subject to the high standards coincide with the nation's interests,one-for-one.
D)environmental standards in most countries have gotten more lax over time.

Question 31

The International Labor Organization has been around since 1919,and has a consistent record of being willing to take action against countries that violate core labor standards.

Question 32

One claim that trade barrier proponents use to enforce environmental standards is that

A)environmental standards do not reduce industrial competitiveness and do not induce race-to-the-bottom,where countries are forced to rescind their standards in order to maintain employment.
B)high standards in industrialized nations motivates some firms to "export pollution" to developing countries by relocating their dirty industries.
C)enforcing environmental standards is essential,as there are no differences between labor standards and environmental standards.
D)all environmental impacts are non-transboundary.
E)None of the above.

Question 33

Low labor standards are usually associated with

A)nondemocratic governments.
B)high-income countries.
C)high-wage countries.
D)low foreign investment.

Question 34

Countries that compete by offering foreign firms a reduced set of environmental compliance requirements are known as

A)transboundary members.
B)pollution havens.
C)pollutants.
D)pollution exporters.
E)pollution guards.

Question 35

Discriminatory trade practices are allowed among sister WTO member countries,especially when it comes to

A)the use of child labor in agricultural and textile/apparel products.
B)national security and special benefits given to other members of a free trade area.
C)the protection of agriculture and textile/apparel from open trade.
D)Both A and B are correct.
E)Both B and C are correct.

Question 36

There is clear evidence of a race-to-the-bottom internationally,regarding working conditions and the environment.

Question 37

While Africa has the largest numbers of working children,Asia has the highest proportion of working children,with an estimated one in four employed.

Question 38

Developing countries are usually unwilling to negotiate over labor standards because

A)the WTO always tends to rule in favor of industrialized nations.
B)they fear that industrialized nations are trying to undermine their comparative advantage-production of agriculture and textiles/apparel-and close the markets of high-income countries in these areas.
C)they fear that they may be unable to compete without some protection of their industries.
D)they don't have a comparative advantage in any good at all.
E)organized labor would not allow them to negotiate with other countries.

Question 39

Using trade barriers to address labor standards does all of the following except it

A)leads to deadweight losses.
B)redistributes income.
C)works more effectively for countries that are small relative to the total market.
D)potentially makes conditions worse as production moves to the informal sector.

Question 40

Some proponents of trade sanctions argue for changes in policy because they fear low standards will be used to capture markets and foreign investment.While theoretically possible,there is little or no support for the view that countries use low labor standards this way,because

A)countries with low labor standards generally have trouble attracting foreign investment.
B)low standards can reduce costs,but they cannot change a country's comparative advantage.
C)it is impossible to lower labor standards.
D)Both A and B are correct.
E)A,B,and C are all correct.

Question 41

Coffee is an example of a product that has been successfully labeled and marketed based on its production method or environmental protection.

Question 42

The best way to address differences in labor and environmental standards is through trade barriers.

Question 43

The WTO encourages nations to take unilateral action on trade issues,including issues involving environmental protection.

Question 44

"Certified shade-grown,organic coffee" is an example of requiring home standards in a foreign market instead of trade barriers.

Question 45

Low standards reduce production costs and change a nation's comparative advantage.

Question 46

What does empirical research suggest about the existence of pollution havens?

Question 47

Is there one optimal environmental standard for the entire world? If not,how might using trade barriers to enforce country-specific environmental standards reduce overall well being?

Question 48

The WTO explicitly stated that in making its sea turtle decision,it was NOT saying that sovereign nations could not adopt effective measures to protect endangered species.Clearly,it said,sovereign nations can and should develop effective measures,including trade measures,to protect endangered species.