Question 1

Compared to other economic integration agreements, like NAFTA, one can say that the European Union has the greatest degree of integration.

Accepted Answer

The European Union has the highest level of economic integration among all regional economic integration agreements. The EU member states have a common market, a Customs Union, and a single currency, among other forms of integration. NAFTA, on the other hand, created a trilateral free trade area between the United States, Canada, and Mexico, but did not go as far as integration as the EU.

Question 2

Relying on corporate codes of conduct to establish fair labor standards in an international market is a lot like relying on human resource policies to establish fair labor standards in a domestic market.

Accepted Answer

Both corporate codes of conduct and human resource policies are internal policies created by the company for employees to follow. While these policies may outline expectations for fair labor practices, they are not legally binding and may not be enforced or followed consistently, especially in an international market where regulations and enforcement mechanisms may differ. Thus, relying solely on internal policies is not enough to guarantee fair labor standards in either domestic or international markets.

Question 3

The WTO provides a forum for negotiating and enforcing global trade agreements between participating countries.

Accepted Answer

The World Trade Organization (WTO) was established to provide a platform for negotiating and enforcing trade agreements among its member countries. Its main objective is to ensure that trade flows as smoothly, predictably and freely as possible. The WTO operates a number of dispute settlement mechanisms to ensure that members comply with their commitments under the global trade agreements. Therefore, the statement is true.

Question 4

While labor and environmental activists advocate for stronger protective regulations on trade, others argue that these are just a way to create unnecessary trade barriers and put poorer countries at a disadvantage.

Accepted Answer

Labor and environmental activists often push for stronger regulations on trade to protect workers and the environment, but some argue that these regulations create trade barriers and can disadvantage poorer countries. This debate is ongoing in the international trade community.

Question 5

While globalization has increased the exportation of unskilled jobs from the U.S. to low-wage countries, white collar jobs are rarely outsourced abroad.

Accepted Answer

This statement is false. White collar jobs, such as call center representatives, IT support, and accounting, are frequently outsourced abroad due to the availability of cheaper labor in countries like India, China, and the Philippines. This practice, known as offshoring, has become increasingly common in recent decades.

Question 6

Fair trade and free trade are basically the same concepts.

Accepted Answer

Fair trade and free trade have different meanings and concepts. Free trade promotes open markets and free competition without tariffs or barriers to trade, while fair trade promotes social and environmental sustainability, and focuses on ensuring fair prices and wages for workers in developing countries.

Question 7

International investment portfolios create cross-border flows of investment securities like stocks and bonds.

Accepted Answer

International investment portfolios involve investing in securities across different countries and thus create cross-border flows of investment securities.

Question 8

Because immigration is tightly controlled, the vast majority of immigrants to the U.S. are skilled workers.

Accepted Answer

The statement is false. While skilled workers make up a significant portion of immigrants to the U.S., there are also many immigrants who come for family reunification, diversity visas, and humanitarian reasons.

Question 9

There are few benefits of immigration to the receiving country while there are many benefits to the immigrants' home country.

Accepted Answer

Immigration can offer significant benefits to the receiving country, including economic growth through an expanded labor force, innovation, cultural diversity, and addressing demographic challenges such as an aging population. Conversely, the immigrants' home country can experience benefits such as remittances but also face challenges like brain drain.

Question 10

Developing countries are most likely to see labor standards as a way to protect U.S. jobs, rather than a good faith effort to improve the lives of working people worldwide.

Accepted Answer

Developing countries may view labor standards imposed by the United States as protectionist measures designed to limit competition from cheaper labor markets rather than as a sincere attempt to promote fair working conditions globally. This perception can create tensions in international trade negotiations and underscore the importance of framing labor standards within a broader agenda of economic development and human rights.

Question 11

The WTO is a specialized agency for the United Nations focused on the promotion of social justice and internationally-recognized human and labor rights.

Accepted Answer

While the WTO is a specialized agency, its focus is on facilitating trade negotiations and resolving trade disputes among its member countries. While the organization works to ensure that trade is conducted in a fair and non-discriminatory manner, it is not primarily concerned with issues of social justice or human and labor rights.

Question 12

Foreign direct investment can result in exploitation of labor, particularly in export processing zones.

Accepted Answer

Export processing zones often have lower labor standards and fewer worker protections, leading to potential exploitation of workers by multinational corporations investing in those zones.

Question 13

The North American Free Trade Agreement includes a common monetary and fiscal policy between member nations.

Accepted Answer

The North American Free Trade Agreement (NAFTA) does not include a common monetary and fiscal policy between member nations. It is primarily a trade agreement aimed at eliminating trade barriers and promoting economic cooperation between Canada, Mexico, and the United States. Each country maintains its own monetary and fiscal policy.

Question 14

When looking to international financial investments, investors are more likely to think long term, making international markets more stable than a national market.

Accepted Answer

International markets often involve additional risks such as currency fluctuations, political instability, and differences in regulation, which can lead to increased volatility compared to national markets. Investors may not always think long term due to these uncertainties.

Question 15

If a signatory country to the WTO wants to pass a law to establish higher product standards for a particular import, it must be able to produce scientific evidence supporting the need for these standards.

Accepted Answer

This is true. According to the WTO's Sanitary and Phytosanitary (SPS) Agreement, member countries can establish their own product standards for health and safety reasons, but they must have scientific evidence to support them. This is to prevent countries from using trade restrictions under the guise of health and safety concerns without valid scientific justification.

Question 16

U.S. trade policy has tended to focus on reducing tariffs and other barriers to trade.

Accepted Answer

This statement is true. Historically, the United States has pursued a policy of reducing tariffs and other barriers to trade as a means of promoting economic growth and expanding international trade. This approach is based on the principle of free trade, which holds that if countries are allowed to trade with each other without undue barriers, the economic benefits will accrue to both parties. In recent years, however, there has been increasing debate over the value of free trade and the impact it has on domestic industries and workers.

Question 17

Fair trade incorporates labor, environmental, public health, and other standards into trade agreements. Free trade advocates none of these.

Accepted Answer

Fair trade agreements prioritize ethical and sustainable practices, whereas free trade agreements prioritize the elimination of tariffs and barriers to trade without regard for labor or environmental concerns.

Question 18

The ILO is a specialized agency of the U.S. Department of Labor focused on social justice and human rights.

Accepted Answer

The ILO is not an agency of the U.S. Department of Labor. It is a separate and independent specialized agency of the United Nations, with its own governing structure and mandate to promote social justice and decent work for all.

Question 19

The ILO's Declaration on Fundamental Principles and Rights at Work establishes a set of core labor standards that includes the freedom to bargaining collectively at work.

Accepted Answer

The ILO's Declaration on Fundamental Principles and Rights at Work does establish a set of core labor standards that includes the freedom to bargaining collectively at work.

Question 20

For signatory countries to the WTO, quotas limiting imports are considered a trade barrier and therefore should be minimized or eliminated.

Accepted Answer

Quotas can limit imports, which goes against the principles of free trade and creates a trade barrier. Therefore, signatory countries to the WTO strive to minimize or eliminate quotas in order to promote free and fair trade.

Quiz 11: Globalization and Financialization