Deck 3: The Global Trade Environment

Question 1

The WTO's neutral trade experts also serve as mediators in global trade disputes.

Answer 1

True

Question 2

In October 2011, the U.S. Congress finally ratified the long-delayed free trade areas with South Korea, Panama, and Colombia.

Answer 2

True

Question 3

A preferential trade agreement is a mechanism that confirms special treatment on select trading partners, thereby at times discriminating against other trading partners.

Answer 3

False

Question 4

Which form of regional cooperation agreement, when fully implemented, entails creation of a unified central bank, the use of a single currency, and common policies on agriculture, social services, and welfare?

A)Free trade area
B)Customs union
C)Common market
D)Economic union
E)Dispute settlement body

Question 5

A laptop manufactured in Canada and imported by Chile would not be subjected to duty. If the same laptop was manufactured in the USA and exported to Chile, it will have to pay duty. In order to avoid duty, can the manufacturer in the USA send the computer via Canada?

Question 6

The World Trade Organization, which came into existence on January 1, 1995, is the successor of another organization with the abbreviation:

A)DSB.
B)GATT.
C)FTAA.
D)NAFTA.
E)ASEAN.

Question 7

Trade ministers representing the WTO member nations meet ________ to work on improving world trade.

A)weekly
B)monthly
C)annually
D)biannually
E)fortnightly

Question 8

A Canadian-built Caterpillar grader tractor imported into Chile would not be subject to duty because:

A)Chile and Canada established an FTA.
B)tractors made in Canada are more durable.
C)tractors made in Canada do not require certification.
D)locally made tractors are more expensive in Chile.

Question 9

A Customs Union represents the most fully developed form of preferential trade agreement among nations.

Question 10

GATT (General Agreement on Tariffs and Trade)agreement had no enforcement power since the losing party in a dispute was entitled to ignore the ruling.

Question 11

A free trade area represents the most fully developed form of preferential trade agreement among nations.

Question 12

It is mandatory for countries to notify the WTO when they enter into preferential trade agreements.

Question 13

The United States and the EU have the world's largest trading relationship.

Question 14

In 2014, the EU filed a complaint that the government of Washington state violated international trade rules by:

A)charging that cotton subsidies depressed prices and disadvantaged producers in emerging markets.
B)prohibiting Internet gambling, the United States was violating global trade agreements.
C)imposing 30 percent tariffs on a range of steel imports for a period of three years.
D)imposing tariffs on a range of products imported from Brazil.
E)extending tax incentives to Boeing for in-state manufacture of the 777x jetliner.

Question 15

________ builds upon the elimination of internal tariff barriers, the establishment of common external barriers, and the free flow of factors.

A)European Union
B)Economic union
C)Customs union
D)Free trade area
E)Common market

Question 16

In addition to eliminating internal barriers to trade, members of a customs union agree to the establishment of common external tariffs.

Question 17

The form of economic cooperation that calls for 1)eliminating internal barriers to trade and 2)establishing common external barriers is known as a(n):

A)European Union.
B)Economic union.
C)Customs union.
D)Free trade area.
E)Common market.

Question 18

Why do some critics refer to GATT as the "General Agreement to Talk and Talk" and how does its successor, WTO, provide a better forum for trade agreements?

Question 19

Arrange the following in order from lowest to highest level of economic integration.

A)customs union→economic union→free trade area→common market
B)economic union→customs union→common market→free trade area
C)common market→free trade area→economic union→customs union
D)free trade area→customs union→common market→economic union
E)common market→economic union→customs union→free trade area

Question 20

The ultimate goal of a free trade agreement is to have standardized duties on goods that cross borders between the partners.

Question 21

Under Economic Union, a doctor or lawyer qualified in one country can practice in another member country.

Question 22

The five original members of the Central American Integration System did not include:

A)El Salvador.
B)Honduras.
C)Guatemala.
D)Nicaragua.
E)Venezuela.

Question 23

The Secretariat for Central American Integration is headquartered in:

A)El Salvador.
B)Honduras.
C)Guatemala City.
D)Nicaragua.
E)Costa Rica.

Question 24

One of the most exciting projects in the Central American region in 2014 was:

A)the enlargement of the Panama Canal.
B)Central America's effort to revive its common market.
C)the five original members' decision to reestablish the CACM.
D)the establishment of Guatemala as region's headquarter.
E)the Free Trade Agreement with the United States.

Question 25

There are several preferred trading arrangements in Latin America which include all of the following except:

A)SICA.
B)the Andean Community.
C)CARICOM.
D)Mercosur.
E)BRIC.

Question 26

Blackberry (formerly known as Research in Motion), the smartphone marketer, is based in:

A)Mexico.
B)Canada.
C)Brazil.
D)Argentina.
E)The Netherlands.

Question 27

Which member of the Central American Integration System has both the largest economy and the largest population?

A)El Salvador
B)Honduras
C)Guatemala
D)Nicaragua
E)Costa Rica

Question 28

________ is gaining a reputation as a manufacturing center as well as the world's number one producer of flat-screen TV sets.

A)Mexico
B)Canada
C)Brazil
D)Panama
E)Argentina

Question 29

The "Common Market of the South" in Latin America is used to describe:

A)SICA.
B)Mercosur.
C)Andean Community.
D)CARICOM.
E)FTAA.

Question 30

NAFTA creates a free trade area, as opposed to a customs union or a common market, due to the fact that:

A)the agreement does not leave the door open for discretionary protectionism.
B)the governments of all three nations decided to eliminate tariffs.
C)the issue of illegal immigration from Mexico to the United States is resolved.
D)restrictions are imposed on the use of goods, services, and investments.
E)restrictions are imposed on labor movements among members.

Question 31

Why does NAFTA create a free trade area as opposed to a customs union or a common market? Explain the difference by giving examples.

Question 32

The country that withdrew from the original members of the Andean Community is:

A)Bolivia.
B)Chile.
C)Ecuador.
D)Peru.
E)Venezuela.

Question 33

The form of economic cooperation that calls for countries to eliminate all internal barriers to trade among themselves even while maintaining independent trade policies vis-à-vis third countries is known as a(n):

A)Economic union.
B)Customs union.
C)Free trade area.
D)Common market.
E)None of the above

Question 34

Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA that includes all SICA members except:

A)Honduras.
B)Guatemala.
C)Nicaragua.
D)Panama.
E)Costa Rica.

Question 35

In a Common Market there are no internal barriers to trade, and it allows for free movement of factors of production such as labor and capital.

Question 36

Argentina provides a good example of how a country can emerge from an economic crisis as a stronger global competitor as per the following statement:

A)Argentina reduced the duties on consumer goods.
B)Argentina devalued its currency for exports and capital transactions.
C)Argentina added tariffs on imported wines.
D)Argentina adopted the U.S. dollar as official currency.
E)Argentina added tariffs on wine produced within the country.

Question 37

Some companies choose not to produce in Mexico since a lack of checkpoints means that cargo sits on trucks at bottleneck points such as Tijuana, a key hub for manufacturing.

Question 38

The allure of the Latin American market has been its:

A)lack of inflation.
B)considerable size.
C)rapid economic growth.
D)low foreign debt.
E)protectionism.

Question 39

Argentina was allowed to break from the CET and raise duties on consumer goods. This crisis had a silver lining, which is evident from all of the following points except:

A)Argentina's wine exports to the United States were worth four times more when dollar revenues were converted into pesos.
B)Argentina became known for the world's most expensive wines.
C)the currency devaluation made Argentine vineyard property cheaper for foreign buyers.
D)low prices for land, inexpensive labor, and ideal growing conditions for the Malbec grape have combined to make Argentina's wine industry a major player in world markets.
E)Argentina can make better wine locally for less money than anywhere in the world.

Question 40

Custom unions or a common market does not create a free trade area as compared to NAFTA due to:

A)no common external tariffs.
B)decreased production costs.
C)reduced competition.
D)ease of exporting commodities.
E)creation of a continental demand.

Question 41

CARICOM's main objective has been to achieve a deepening of economic integration by means of a Caribbean common market.

Question 42

Anxious to retain control of a valuable agricultural export, officials at Peru's National Commission Against Biopiracy have ramped up efforts to prevent maca seeds from being smuggled out of the country for cultivation elsewhere.

Question 43

Chile decided to become only an associate member of Mercosur and hence participates in the free trade area aspect of Mercosur as well as the customs union.

Question 44

Competing ideologies in South America help explain why intraregional trade is yielding more benefits.

Question 45

Individually and collectively, Association of Southeast Asian Nations (ASEAN)countries are active in regional and global trade.

Question 46

Despite trade agreements, attempts to achieve integration in Central America have been described as uncoordinated, inefficient, and costly. There are still tariffs on imports of sugar, coffee, and alcoholic beverages.

Question 47

The English-speaking CARICOM members in the eastern Caribbean are concerned with defending their privileged trading position with:

A)Russia.
B)China.
C)the United States.
D)the United Kingdom.
E)Australia.

Question 48

For the past 40 years Bhutan, a kingdom of 754,000 people in the Himalaya mountains, has relied on the following measure:

A)GNI.
B)GDP.
C)GNH.
D)GNP.
E)GTE.

Question 49

The five original members of the Central American Common Market (CACM)are El Salvador, Honduras, Guatemala, Panama, and Cost Rica.

Question 50

Which of the following ASEAN countries alone accounts for more than one-third of 2014 two-way trade exports with the United States?

A)Brunei
B)Malaysia
C)Singapore
D)Thailand
E)Vietnam

Question 51

Mercosur or the Common Market of the South resulted from a treaty signed by four countries: Argentina, Brazil, Paraguay, and Venezuela.

Question 52

Which one of the ASEAN members has the World's second-largest container port?

A)Singapore
B)Thailand
C)India
D)Philippines
E)Brunei

Question 53

Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA.

Question 54

Historically, most of the Latin American nations have witnessed decades of slow or no growth, crippling inflation, increasing foreign debt, protectionism, the bloated government payrolls, money laundering problems, and currency fluctuations. What measures are now being taken by countries in that region that will begin the process of economic transformations?

Question 55

Bhutan has relied on a measure besides economic growth, namely, gross national happiness (GNH). The GNH Index includes all of the following indicators except:

A)psychological well-being.
B)community vitality.
C)economic vitality.
D)environmental diversity.
E)living standards.

Question 56

When the roster of ASEAN members expanded to include Japan, Korea, and India, it was dubbed "ASEAN + 3."

Question 57

Although the ASEAN member countries are geographically close, they have historically been divided in many respects.

Question 58

There are barriers in Japan for global marketers in terms of attitudes as well as laws. Barriers include all of the following except:

A)any organization wishing to compete in Japan must be committed to providing top-quality products and services.
B)repeat visits and extended socialization with distributors.
C)goods marketed should have a semblance of western products and services.
D)marketers must master the keiretsu system of tightly knit corporate alliances.
E)trust has to be built before conducting successful business.

Question 59

Bhutan has relied on a measure besides economic growth referred to as the Gross National Happiness (GNH).

Question 60

The original six members of the ASEAN (Association of Southeast Asian Nations)included all of the following countries except:

A)Singapore.
B)Thailand.
C)India.
D)Philippines.
E)Brunei.

Question 61

The enlargement of the EU has impacted marketing strategies in the Eurozone countries by:

A)making it difficult to export food products from one country to another.
B)increasing the cost of production since the euro replaced local currency.
C)shifting products from one market to another in the event of shortages.
D)reduced tariffs and quotas for products imported from non-EU members.
E)having less flexibility in the placement of factories.

Question 62

Coca-Cola had to delay launching its Powerade sports drink in Europe due to the lack of uniform food safety laws in the European Union.

Question 63

McDonald's, Philips Electronics, 3M International and many other similar well known global corporations are operating in Central and Eastern Europe. Some countries in the region are still recovering from decades of command economies. What makes the region so attractive for global business corporations?

Question 64

European countries will definitely benefit by having an FTA with the United States. However there are some sticky points which need resolution. All of the following points need consideration except:

A)that the EU restricts the import of most genetically modified crops, which are common in the United States.
B)further reduction of tariffs which now average between 2 and 3 percent.
C)a variety of regulations that hamper cross-border investment and purchasing.
D)the US government would like easing of restrictions for purchasing European goods.
E)the name "Parmesan" applied to the "cows-milk" cheese.

Question 65

In spite of forming an economic bloc, the 10 ASEAN nations have many problems that need to be solved. List any two problems?

Question 66

The new country which joined the EU at the beginning of 2015 is:

A)Slovakia.
B)Lithuania.
C)Latvia.
D)Slovenia.
E)Cyprus.

Question 67

Because they are in transition, the markets of Central and Eastern Europe present interesting opportunities and challenges which include:

A)new sources of growth.
B)first mover advantage.
C)exporting as an entry mode.
D)lower wage rate.
E)all of the above

Question 68

The objective of the EU member countries is to harmonize national laws and regulations so that goods, services, people, and money can flow freely across national boundaries.

Question 69

Markets of Central and Eastern Europe present interesting opportunities and challenges. Companies such as 3M International, McDonald's, Philips Electronics, and Henkel are moving into the region for all of the following reasons except:

A)that region is an important new source of growth.
B)that the first company to penetrate a country market often emerges as leader.
C)wage rates are much lower than those in Spain, Portugal, and Greece.
D)that region offers attractive locations for low-cost manufacturing.
E)core products and Western brand names need changes are appropriate for business.

Question 70

The Gulf Cooperation Council (GCC)includes all of the following countries except:

A)Kuwait.
B)Saudi Arabia.
C)Iraq.
D)Bahrain.
E)Oman.

Question 71

Management strategic options pertaining to products that are facilitated by a single European market include:

A)standardized packaging and labeling.
B)consolidated production.
C)shift from brand to benefit segmentation.
D)seeking marketing economies.
E)all of the above

Question 72

According to EU regulations, Kraft parmesan cheese cannot be sold in Europe because:

A)it is expensive when compared to local products.
B)it is considered genetically modified agricultural product.
C)terms such as "Parmesan" is used on the package labels..
D)it does not contain salt and an enzyme.
E)it contains synthetic cellulose powder.

Question 73

The Maastricht Treaty called for:

A)the creation of an Asia Free Trade Area (AFTA).
B)the creation of an economic and monetary union in Europe.
C)Chile's acceptance into Mercosur.
D)the purchase of CDs and tapes from distributors in Europe.
E)the creation of the seven-nation European Free Trade Association (EFTA).

Question 74

The markets of Central and Eastern Europe present interesting opportunities and offer attractive opportunities for low-cost manufacturing due to:

A)their location being close to the sea.
B)the cultural similarities.
C)wage rates being lower than in Spain, Portugal and Greece.
D)strict laws and regulations.
E)prohibitive tariffs and export restrictions.

Question 75

The formation and enlargement of the European Union have wide everlasting impact on marketing strategies and marketing mix. Discuss this giving example from member nations.

Question 76

The introduction of the euro by EU resulted in multifaceted advantages which include:

A)elimination of costs associated with currency conversion.
B)fixed exchange rate worldwide.
C)elimination of paper currency and coins.
D)withdrawal of French Francs from circulation.
E)a choice for using local or European currency.

Question 77

What are some of the concerns if the European Union decides to sign a free trade agreement with the United States?

Question 78

Political and social instability in the Middle Eastern region can primarily be attributed to:

A)desert conditions and lack of agricultural land.
B)cultural differences among nations.
C)a wide gap between rich and poor nations due to oil revenues.
D)lack of water purification facilities.
E)the "Arab Spring."

Question 79

According to experts, mastering the Japanese market is considered to be a very difficult task. However, with the lucrative market in Japan, it is imperative to understand the intricacies in order to be successful in business. What are some of the factors that need to be considered by corporations that would like to conduct business in Japan?

Question 80

Although the ASEAN countries are geographically close, they have historically been divided in many respects. Elaborate on this statement and highlight the important economic development of member countries within ASEAN. How does Singapore represent a special case within the ASEAN nations?