Deck 14: North American Free Trade Law

Question 1

In 1994,the Extraordinary Challenge Committee found that the U.S.Department of Commerce was correct in implementing countervailing duties against Canadian lumber.

Answer 1

False

Question 2

Canada and the United States are each other's largest trading partners.

Answer 2

True

Question 3

NAFTA has had a modest positive effect on U.S.net exports,income,investment,and jobs.

Answer 3

True

Question 4

Mexico's marking and labeling requirements are very easy to comply with and help promote trade with both the U.S.and Canada.

Question 5

A free trade area is a group of two or more sovereign countries in which import duties and other trade barriers are reduced or eliminated.

Question 6

Since NAFTA was signed,Mexico has reduced its average applied tariffs on U.S.imports by slightly more than 1%.

Question 7

Production sharing is intended to create U.S.jobs by encouraging the use of U.S.-made components when assembly of a product takes place in a foreign country.

Question 8

The passage of NAFTA engendered the greatest debate in Mexico.

Question 9

Under NAFTA,a service provider still has to have an office or residence within the borders of a country in order to do business in that country.

Question 10

In Samsonite Corporation v.United States,it was found that the luggage handles were only assembled in Mexico and therefore not subject to duties.

Question 11

Two U.S.groups that have tended to oppose NAFTA are labor unions and employers' associations.

Question 12

NAFTA was built on the U.S.-Canada Free Trade Agreement.

Question 13

The NAFTA Binational Panel found that the sale of U.S.twine in Canada at unfairly low prices caused past injury to Canadian twine producers.

Question 14

Canada,Mexico,and the United States phased out,over a ten-year period,all tariffs on textile and apparel goods that met the North American rules of origin.

Question 15

NAFTA is similar to the European Union because it is a customs union.

Question 16

NAFTA raises tariffs on non-North American products in order to stimulate trade between the U.S.,Canada,and Mexico.

Question 17

A criticism raised against NAFTA is that it serves to divide the world into regional trading blocks.

Question 18

Sectoral issues are issues of concern to a particular industrial,agricultural,or service sector of the economy.

Question 19

NAFTA encourages that standards and technical regulations not be used as a nontariff barrier.

Question 20

In Mexico,all imports must be handled by a licensed Mexican customs broker.

Question 21

No other trade sector is as complex or as highly regulated as trade in textiles.

Question 22

A customs union is a free trade area with a common external tariff.

Question 23

NAFTA's national treatment principle states that differing standards for North American products must be justified.

Question 24

Harmonized tariff schedules break down product classifications into:

A) 6 digits.
B) 8 digits.
C) 10 digits.
D) 12 digits.

Question 25

NAFTA was based on:

A) The U.S.-Canada Free Trade Agreement.
B) The General Agreement on Tariffs and Trade.
C) The Generalized System of Preferences.
D) The North American Agreement on Labor Cooperation.
E) None of the above.

Question 26

The yarn-forward rule of origin means that textiles goods must be produced from yarn made in a NAFTA country.

Question 27

An argument that was used in support of NAFTA's passage in the U.S.was that:

A) U.S. shipments to Mexico faced tariffs two-and-a-half times the average U.S. rates.
B) Tougher environmental laws in Mexico would eventually be applied to all three countries.
C) Lower wages in Mexico would lead to more jobs being created in Mexico.
D) The cultures of all three countries would not be affected by NAFTA.

Question 28

A free trade area is:

A) Two countries that have a common external tariff.
B) A geographic area between two countries where there are no tariffs.
C) A group of two or more countries in which import duties and other trade barriers are reduced or eliminated.
D) A geographic area between two countries where tariffs are reduced, but not necessarily eliminated.

Question 29

Under NAFTA,a country can make citizenship a requirement for intellectual property rights protection.

Question 30

A customs union is:

A) A group of customs laws intended to reduce tariffs and stimulate trade.
B) A free trade area with a common external tariff.
C) A free trade area with no tariffs between the member nations.
D) A union of nations that promotes lower tariffs for international trade.
E) None of the above.

Question 31

NAFTA's national treatment principle states:

A) All goods claiming to be from a country must be produced in that country.
B) All products from a country must have the same amount of tariffs placed on them.
C) All imports from a NAFTA country must be treated like similar domestically produced goods.
D) All exports from a NAFTA country must meet certain quality standards.

Question 32

For most products undergoing a transformation in North America,the rule of origin is based on its tariff classification.

Question 33

NAFTA sets environmental standards for all three countries that were met in 2004.

Question 34

Tariff-rate quotas are fixed-rate tariffs on agricultural goods.

Question 35

NAFTA:

A) Lowers tariffs.
B) Liberalizes trade in goods.
C) Addresses many regional issues that are of concern to the three countries.
D) Liberalizes trade in services.
E) All of the above.

Question 36

Which of the following statements is untrue regarding trade between the U.S.,Canada,and Mexico?

A) Canada and the United States are each other's largest trading partners.
B) Mexico underwent a serious financial crisis in 1994.
C) Some key industries in Mexico are government-owned monopolies.
D) Mexico has had a traditionally open market that encourages foreign investment.
E) All of the above statements are correct.

Question 37

Which of the following statements is untrue regarding NAFTA and nontariff barriers?

A) Most nontariff barriers were to be eliminated within five years under NAFTA.
B) NAFTA prohibits new export taxes on goods under any circumstances.
C) Special rules allow each country to impose import restrictions to protect human, animal or plant life, or the environment.
D) Customer user fees were to be eliminated by 1999.

Question 38

In Samsonite v.United States,the court found that:

A) Samsonite luggage was causing serious injury to the Canadian luggage market.
B) Processing of the metal strips was a fabrication, and therefore not qualified for duty-free treatment.
C) The processing of the metal strips was a mere assembly and therefore qualified for duty-free treatment.
D) Samsonite luggage did not cause serious injury to the Mexican luggage industry.

Question 39

NAFTA eliminated all tariffs on telephones,cellular phones,and trade in communicates equipment in 2004.

Question 40

Which of the following arguments was not raised in opposition to NAFTA?

A) By creating a regional trading block, NAFTA would strengthen GATT's global trade liberalization achievements.
B) NAFTA would permit firms to take advantage of weaker environmental laws and low cost labor by locating plants in Mexico.
C) NAFTA would allow U.S. products and advertising to weaken the distinctive cultures and traditions of Canada and Mexico.
D) NAFTA would cause Mexican companies to suffer in competition against larger and better capitalized U.S. and Canadian firms.
E) None of the above.

Question 41

What are the arguments for and against granting reciprocity of professional licenses where domestic rules regarding the initial grant of those licenses differ (for example,the rules for becoming a doctor or lawyer and being admitted to the practice are different in each country)?

Question 42

Regarding environmental issues and NAFTA:

A) NAFTA sets strict environmental and ecological standards for all three countries.
B) NAFTA calls for the three countries to work together to develop common environmental standards.
C) NAFTA countries can continue to ban pesticides without informing each other.
D) NAFTA created the NAFTA Commission for Environmental Cooperation, which acts in a purely advisory role in regard to environmental issues.

Question 43

Compare and contrast the operations of and standards of review employed by a NAFTA and Binational panel.

Question 44

Appeals of a binational panel decision may be taken to:

A) The World Trade Organization.
B) The court of law in the country in which the dispute took place.
C) The Extraordinary Challenge Committee.
D) The NAFTA Fair Trade Commission.
E) None of the above.

Question 45

In what ways is the Mexican Tariff Schedule similar and different from that of the U.S.?

Question 46

Regarding the dispute over Canadian twine:

A) The Canadian International Trade Tribunal found that the twine was causing material injury to the production of like goods in Canada.
B) The binational panel affirmed the Canadian Tribunal's determination.
C) The panel found that there was insufficient evidence to determine whether the U.S. twine was causing current injury to the Canadian market.
D) The case was remanded to the tribunal.
E) All of the above.

Question 47

Which of the following statements is untrue regarding intellectual property rights as covered under NAFTA:

A) NAFTA's provisions protect the intellectual property rights of North American firms.
B) NAFTA requires that each country enforce its intellectual property rights to prevent smuggling of counterfeit items.
C) Specific provisions prohibit the use of geographic regions (e.g. Kentucky bourbon) unless the products are actually derived from that area.
D) Copyrights will be protected equally in all three countries.
E) All of the above statements are true.

Question 48

How are the IPR provisions of NAFTA similar or dissimilar to those of TRIPS? Of the U.S.?

Question 49

Compare and contrast the major rules on trade in textiles,automobiles,and agriculture.

Question 50

Which of the following statements is untrue regarding emergency safeguard actions under NAFTA?

A) Special safeguards for textiles may be applied where increased imports cause "serious damage" to the domestic industry.
B) Safeguards are available for ten years for certain agricultural products.
C) The country using them must offer the exporting country trade compensation.
D) Safeguards can take the form of both tariffs and quotas.
E) All of the above.

Question 51

Goods that may not contain any non-North American parts or materials in order to obtain NAFTA tariff rates include:

A) Minerals mined in North America.
B) Vegetables grown in North America.
C) Live animals born and raised in North America.
D) Scrap derived from production in North America.
E) All of the above.

Question 52

Regarding the U.S.-Canadian dispute over softwood lumber:

A) The extraordinary challenge committee found that the "stump charges" violated NAFTA.
B) The extraordinary challenge committee found that the "stump charges" were justified.
C) The binational panel was justified in its decision that no countervailing duty was authorized by U.S. law.
D) The binational panel was justified in its decision to recommend countervailing duties against Canada.

Question 53

The Fair Trade Commission:

A) Attempts to settle disputes that arise over NAFTA.
B) Is a law-making body that was formed by NAFTA.
C) Was created by NAFTA to help promote fair trade.
D) Will be phased out over the next ten years.

Question 54

Regarding marking and labeling rules in Mexico:

A) The cost of complying with the rules is so costly that many small companies cannot afford to sell their products in Mexico.
B) Product warranties must be clearly stated.
C) Exporters to Mexico need to seek good advice in labeling and marking products to avoid long delays in getting their goods to markets in Mexico.
D) There are specific labeling requirements for certain products.
E) All of the above are true.

Question 55

Regarding trade in services under NAFTA:

A) No NAFTA country can require a North American service provider to have a residence or office within its border.
B) The most important impact of NAFTA's financial services provisions is that they open Mexican financial service industries to investment by Canada and the United States.
C) NAFTA does not affect regulations applied to purely domestic truck or bus transportation.
D) NAFTA eliminated all tariffs on telephones, cellular phones, and trade in communications equipment in 2004.
E) All of the above are correct.

Question 56

Regarding NAFTA's investment provisions:

A) Domestically owned companies are given priority over foreign-owned firms.
B) Mexico has stricter environmental laws than the United States.
C) Firms operating in any NAFTA country can convert foreign exchange at local banks.
D) Local firms owned by investors from other NAFTA countries must fill senior management positions with local citizens.

Question 57

Regarding sectoral issues and NAFTA:

A) Mexico has long had an open automobile market, which has encouraged trade.
B) NAFTA contains specific rules of origin for determining when a textile product has originated in North America.
C) No other trade sector is as complex or highly regulated as agricultural trade.
D) NAFTA has no rules regarding government procurement.

Question 58

For most products undergoing a transformation in North America,the rule of origin will be based on:

A) Its tariff classification.
B) The source of the raw material used in the production of the product.
C) Its point of origin.
D) The product's label.

Question 59

An example of a sectoral issue is:

A) A dispute regarding the tariffs on a product.
B) An issue concerning a particular area of the economy.
C) An issue concerning the environmental effects of a product.
D) A dispute regarding quotas.

Question 60

The North American Agreement on Labor Cooperation promotes:

A) Freedom of association.
B) Restrictions on child labor.
C) Equal pay for men and women.
D) Prohibition of forced labor.
E) All of the above.

Question 61

Compare and contrast the NAFTA dispute resolution procedures with those of U.S.courts and the EU.

Question 62

Compare and contrast the structure and purpose of a free trade area and a customs union or common market.(Compare and contrast NAFTA with the EU.)

Question 63

Some have advocated extending NAFTA to other countries in the region.Weigh the competing considerations in doing so.

Question 64

Presume that the Caribbean countries have been granted NAFTA membership.Design a plan for phasing them into membership.

Question 65

Write a memo advocating for the inclusion or exclusion of certain products or areas from NAFTA (or CBERA)treatment.

Question 66

Create a regulation regarding reciprocity of professional licenses.

Question 67

Weigh the relative merits for granting the Caribbean countries NAFTA membership.

Question 68

Draft a new NAFTA clause regarding an environmental or labor protection issue (you may also wish to consider environmental measures applicable to investment).

Question 69

Write an outline describing a new,improved NAFTA dispute resolution process (you may wish to address only one aspect of the present process).

Question 70

The maquiladora industry has had both a positive and a negative social and economic impact on the people of Mexico.Assess the relative merits of legislating corporate social responsibility to the residents and towns in which they operate.