Question 1

Countries A and B both produce coffee. Both countries belong to GATT. Country A imports coffee from B. Once B's coffee enters A's stream of commerce, under the national treatment provisions of GATT:
A) country A cannot subject B's coffee to higher internal taxes or charges than its domestic coffee.
B) country A may now charge higher internal taxes or charges on B's coffee in order to discourage coffee drinking since the goods have already passed the border.
C) country A cannot subject B's coffee to any internal taxes or charges, even if it does so to domestic coffee.
D) none of the above is correct.

Accepted Answer

According to the national treatment provisions of GATT, once B's coffee enters A's stream of commerce, country A cannot subject it to higher internal taxes or charges than its domestic coffee. This is to ensure that imported goods are treated equally to domestic goods in order to prevent discrimination against foreign products.

Question 2

In what ways are GATT and the WTO similar? Different?

Accepted Answer

The answer of In what ways are GATT and the...

Question 3

In the decision involving tariffs on Latin American bananas, the panel:
A) recommended the tariffs be brought in line with the EEC's obligations under GATT.
B) said the Latin American countries were authorized to impose sanctions on the EEC.
C) found the EEC's tariffs to be within GATT guidelines.
D) dismissed the case after the EEC agreed to adopt tariffs that were more in line with its GATT obligations.

Accepted Answer

The panel recommended that the tariffs be adjusted to comply with the European Economic Community's (EEC) obligations under the General Agreement on Tariffs and Trade (GATT), indicating that the existing tariffs were not in line with those obligations.

Question 4

The concept that runs throughout the GATT requires that the products of all nations be treated equally and without discrimination by importing nations. This is the principal behind:
A) nullification and impairment.
B) most-favored-nation trade.
C) ad valorem tariffs.
D) nontariff trade barriers.

Accepted Answer

The principle of most-favored-nation trade requires that all products of all nations be treated equally and without discrimination by importing nations. This means that a country cannot give preferential treatment to one trading partner over another.

Question 5

Within the structure of the World Trade Organization, the three important groups under the Ministerial Conference are:
A) the General Council, the Secretariat, and the Trade Policy Review Body.
B) the Committee on Budget, the General Council, and Trade Policy Review Body.
C) the Dispute Settlement Body, the General Council, and the International Court of Justice.
D) the Dispute Settlement Body, the General Council, and the Trade Policy Review Body.

Accepted Answer

The three important groups under the Ministerial Conference within the structure of the World Trade Organization are the Dispute Settlement Body, the General Council, and the Trade Policy Review Body. These groups are responsible for handling trade disputes, conducting regular trade policy reviews, and overseeing the overall functioning of the WTO.

Question 6

The term used to describe some action taken by a GATT member country in violation of the GATT agreement is:
A) null and void.
B) unfair and inequitable.
C) persona non grata.
D) nullification and impairment.

Accepted Answer

Nullification and impairment are the terms used to describe any action taken by a GATT member country that violates the GATT agreement. This could be anything that impairs the benefits that another member country should receive under the GATT agreement. When a member country takes such an action, the affected country can seek redress through the dispute settlement mechanism of the GATT/WTO.

Question 7

What are the similarities and differences between the GATT and WTO dispute resolution procedures?

Accepted Answer

The answer of What are the similarities and differences between...

Question 8

Virtually all nations provide import protection for domestic agricultural interests:
I. And the GATT Agreement specifically prohibits such protection with no exceptions.
II. And this problem exists because nations try to provide market stability and protection for farmers.
A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.

Accepted Answer

While virtually all nations do provide import protection for domestic agricultural interests, the GATT Agreement does not specifically prohibit such protection with no exceptions. In fact, the General Agreement on Tariffs and Trade (GATT) includes provisions that allow countries to protect domestic agricultural industries through measures such as import quotas and tariffs. The problem of import protection for domestic agriculture exists because nations try to provide market stability and protection for farmers, as stated in option II.

Question 9

Which of the following is an example of an ad valorem tariff?
A) A 15% tariff on the value of a shipment of t-shirts
B) A $10 tariff on each barrel of petroleum
C) A 20% discount on the value of peaches delivered in October, November, or December
D) None of the above

Accepted Answer

An ad valorem tariff is a tax on the value of a product, usually a percentage of the price. Choice A states a 15% tariff on the value of a shipment of t-shirts, making it the only example listed that fits the definition of an ad valorem tariff. Choice B is a specific amount per unit and not a percentage of the value. Choice C is a discount, not a tariff. Therefore, the correct answer is A.

Question 10

The WTO is overseen by the Ministerial Conference, which is made up of:
A) the presidents, prime ministers, and royalty from all WTO member nations.
B) high-ranking representatives from all WTO member nations.
C) high-ranking representatives from a select group of wealthy WTO member nations.
D) five representatives from each of the WTO member nations.

Accepted Answer

The Ministerial Conference is made up of high-ranking representatives from all WTO member nations.

Question 11

All of the following are basic principles of GATT except :
A) commitment to normal trade relations.
B) elimination of import quotas.
C) non-reciprocal tariff increases.
D) non-discrimination against imported goods.

Accepted Answer

GATT is committed to promoting free trade through the elimination of trade barriers, such as import quotas and non-discrimination against imported goods. However, reciprocal tariff increases may be allowed in certain circumstances. Therefore, non-reciprocal tariff increases are not a basic principle of GATT.

Question 12

_________ quotas are imposed on a particular product regardless of origin, while ________ quotas spread the total limit across several specific countries.
A) Absolute; qualified
B) Global; specified
C) Absolute; allocated
D) Global; allocated

Accepted Answer

Global quotas are imposed on a particular product regardless of origin, while allocated quotas spread the total limit across several specific countries.

Question 13

Which of the following is NOT an example of a commonly used trade barrier?
A) A convention on imported children's toys
B) A tariff on imported oil
C) A tax on imported clothing
D) A national industrial standard that drives up the cost of imported televisions

Accepted Answer

A convention on imported children's toys is not a commonly used trade barrier. It is not a specific policy or measure that restricts trade, but rather a general agreement or understanding between countries. Tariffs, taxes, and national standards, on the other hand, are all examples of commonly used trade barriers.

Question 14

Compare and contrast direct and indirect nontariff barriers.

Accepted Answer

The answer of Compare and contrast direct and indirect nontariff...

Question 15

Countries A, B, and C belong to GATT. Countries X and Y do not. A has a 7% tariff on televisions from B. C, X, and Y also export televisions. Under unconditional most-favored-nation trade of GATT:
A) countries C, X, and Y are entitled to a 7% tariff on televisions.
B) countries X and Y are entitled to a 7% tariff on televisions.
C) country C must petition A under GATT to get a 7% tariff on televisions.
D) country C gets an automatic 7% tariff rate on televisions.

Accepted Answer

The principle of the Most-Favored-Nation (MFN) under GATT (General Agreement on Tariffs and Trade) ensures that any trade advantage, like a lower tariff rate, given by one member country to another must be extended to all other member countries. Since countries A, B, and C are members of GATT, country C automatically gets the same 7% tariff rate on televisions that country A has given to country B. Countries X and Y, not being members of GATT, do not automatically benefit from this arrangement.

Question 16

Many countries grant preferential tariff treatment to select countries to help those countries' economic development. For example, the United States grants preferential tariff treatment to:
A) Haiti and many sub-Saharan African nations.
B) the EU.
C) China.
D) all Asian nations.

Accepted Answer

The United States grants preferential tariff treatment to Haiti and many sub-Saharan African nations through the African Growth and Opportunity Act (AGOA) in order to promote economic development in those countries.

Question 17

Describe the benefits and detriments of enacting a quota?

Accepted Answer

The answer of Describe the benefits and detriments of enacting...

Question 18

Under the WTO's dispute-settlement procedures, who can bring a complaint for nullification and impairment?
A) A corporation
B) A group of corporations within an industry
C) A government
D) All of the above

Accepted Answer

Only governments can bring a complaint for nullification and impairment under the WTO's dispute-settlement procedures.

Question 19

When a nation's import regulations or procedures lack ________, foreign firms cannot easily gain entrance to its markets.
A) incentives
B) transparency
C) documentation
D) none of the above

Accepted Answer

Transparency refers to the openness and availability of information regarding a nation's import regulations and procedures. When these are not transparent, foreign firms may find it difficult to understand and navigate the requirements for entry into the market. As a result, they may be discouraged from attempting to do business in the country.

Question 20

Which of the following is an example of a specific or flat tariff?
A) A 15% tariff on the value of a shipment of t-shirts
B) A $10 tariff on each barrel of petroleum
C) A 20% discount on the value of peaches delivered in October, November, or December
D) None of the above

Accepted Answer

A specific or flat tariff is a fixed amount of tax applied per unit of goods imported or exported. Option B is an example of a specific tariff as it applies a flat fee of $10 on each barrel of petroleum. Option A is an example of an ad-valorem tariff as it applies a percentage of the value of the goods imported. Option C is an example of a seasonal discount, not a tariff.

Quiz 9: The World Trade Organization: Basic Principles

Countries A and B both produce coffee. Both countries belong to GATT. Country A imports coffee from B. Once B's coffee enters A's stream of commerce, under the national treatment provisions of GATT:

In what ways are GATT and the WTO similar? Different?

In the decision involving tariffs on Latin American bananas, the panel:

The concept that runs throughout the GATT requires that the products of all nations be treated equally and without discrimination by importing nations. This is the principal behind:

Within the structure of the World Trade Organization, the three important groups under the Ministerial Conference are:

The term used to describe some action taken by a GATT member country in violation of the GATT agreement is:

What are the similarities and differences between the GATT and WTO dispute resolution procedures?

Virtually all nations provide import protection for domestic agricultural interests: I. And the GATT Agreement specifically prohibits such protection with no exceptions. II. And this problem exists because nations try to provide market stability and protection for farmers.

Which of the following is an example of an ad valorem tariff?

The WTO is overseen by the Ministerial Conference, which is made up of:

All of the following are basic principles of GATT except :

_ quotas are imposed on a particular product regardless of origin, while quotas spread the total limit across several specific countries.

Which of the following is NOT an example of a commonly used trade barrier?

Compare and contrast direct and indirect nontariff barriers.

Countries A, B, and C belong to GATT. Countries X and Y do not. A has a 7% tariff on televisions from B. C, X, and Y also export televisions. Under unconditional most-favored-nation trade of GATT:

Many countries grant preferential tariff treatment to select countries to help those countries' economic development. For example, the United States grants preferential tariff treatment to:

Describe the benefits and detriments of enacting a quota?

Under the WTO's dispute-settlement procedures, who can bring a complaint for nullification and impairment?

When a nation's import regulations or procedures lack ________, foreign firms cannot easily gain entrance to its markets.

Which of the following is an example of a specific or flat tariff?