Question 1

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.

Accepted Answer

This is true, as recognized by the World Trade Organization's Agreement on Technical Barriers to Trade. However, such measures need to be applied in a non-discriminatory and transparent manner in order to avoid trade barriers and disputes with other countries.

Question 2

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

Accepted Answer

This statement is not true as the WTO panel does have the authority to authorize trade sanctions if a country fails to comply with its rulings.

Question 3

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

Accepted Answer

This is one of the key objectives of GATT, as outlined in its founding principles.

Question 4

A tariff is:

Accepted Answer

A tariff is a tax levied on goods being brought into a country, which is also known as an import duty. Therefore, choices A and B are both correct. A ban on trade with a foreign nation, as stated in choice C, is known as an embargo, which is different from a tariff.

Question 5

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:

Accepted Answer

If a nation that belongs to WTO imposes a tariff or quota on imported products outside of the guidelines established by GATT, it may be subject to a proceeding pursuant to the WTO's Dispute Settlement Understanding. Military retaliation or a lawsuit in the World Court is not a typical response to GATT violations.

Question 6

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

Accepted Answer

According to GATT, quotas are considered acceptable devices for regulating trade only where a nation is imposing a temporary safeguard to protect its balance of payments. This means that quotas can only be used for a limited time and for a specific purpose, such as protecting a nation's economy from an influx of imports. Quotas cannot be used as a long-term solution or as a tool for engaging in a trade war without the approval of the United Nations. Therefore, option A is the best choice.

Question 7

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.

Accepted Answer

The answer of While WTO reports carry no weight as...

Question 8

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

Accepted Answer

All three areas - normal trade relations, national treatment, and elimination of quotas and quantitative restrictions - are central to the principle of nondiscrimination in the GATT. Normal trade relations ensure that all member countries are treated equally in matters of trade. National treatment requires that imported goods are treated no less favorably than domestically produced goods. Elimination of quotas and quantitative restrictions means that countries cannot discriminate against any trading partner by imposing quotas or other restrictions on their goods.

Question 9

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.

Accepted Answer

The answer of An example of the GATT/WTO dispute settlement...

Question 10

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

Accepted Answer

Tariffication involves converting non-tariff barriers to trade into tariffs to make them easier to quantify and potentially reduce.

Question 11

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

Accepted Answer

The answer of Which of the following may not be...

Question 12

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:

Accepted Answer

"Not transparent" accurately describes the situation where import regulations are not readily available or are hidden, as transparency refers to openness and availability of information.

Question 13

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

Accepted Answer

MFN (Most-Favored Nation) rates require equal treatment of all trading partners, so if the United States grants lower tariff rates to a less developed country under MFN rates, it must also grant those same rates to all other trading partners. However, the United States can offer preferential tariff rates to certain countries under Free Trade Agreements or other types of trade arrangements.

Question 14

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

Accepted Answer

The WTO Dispute Settlement Understanding does not require a complaining country to prove it has a "legal interest" in the case; it only needs to demonstrate that it has a trade concern or that its benefits under the WTO agreements are being impaired.

Question 15

Tariffs serve all of the following purposes except :

Accepted Answer

Tariffs are primarily used to regulate and control import competition, protect domestic industries, and generate revenue for the government. While they may have some impact on the flow of commerce, enhancing commerce is not their primary purpose.

Question 16

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

Accepted Answer

Tariffs can be calculated either as a percentage of the value of the goods being imported (ad valorem) or on the basis of physical units, such as weight or volume (specific). Therefore, both I and II are correct.

Question 17

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

Accepted Answer

WTO DSU reports do not carry formal precedential value as each panel and Appellate Body is free to interpret the covered agreements anew, though past reports may be considered persuasive.

Question 18

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

Accepted Answer

While GATT (General Agreement on Tariffs and Trade) does restrict the use of quotas, Article XII of the GATT allows countries to impose quantitative restrictions to protect their balance of payments situation under certain conditions. The use of quotas in this case may be subject to negotiation and approval by other GATT members.

Question 19

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

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) established rules to regulate trade in goods and services, which were later strengthened by the GATT 1994 agreement. The World Trade Organization (WTO) was created to oversee the implementation of these rules and further promote global trade.

Question 20

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

Accepted Answer

Trade in textiles and services are regulated by the GATT system, although certain agreements such as the Agreement on Textiles and Clothing may provide temporary exemptions or special treatment for some countries.

Quiz 9: The World Trade Organization: Basic Principles