Deck 2: Trade

Question 1

What is fast-track authority and why was it important for the U.S. government and former President Barack Obama to have had this privilege?

Answer 1

The fast-track authority for brokering trade agreements was the authority given to former President Obama to negotiate international agreements that Congress can approve or deny. Fast track authority is instrumental in passing trade agreements that will create economic growth and investments.

Question 2

What are the expected impacts of providing President Obama with fast-track authority on the negotiation of the TPP?

Answer 2

The TPP is expected to lower tariffs and create new regulations for diverse sectors such as agriculture, banking, and the pharmaceutical industry. While some labor unions are concerned that the Trans-Pacific Partnership (TPP) could send more jobs to low-wage countries such as Vietnam and Malaysia, the Obama administration says the deal will level the playing field for U.S. workers and raise standards abroad. With fast-track authority, Obama will also be afforded greater flexibility to pursue further trade agreements.

Question 3

Why do you think that Democrats have recently been opposed to signing another free trade agreement? Do you think that trade politics are necessary to save jobs for the American people?

Answer 3

Democrats have been concerned about the impact that trade agreements will have on U.S. workers. As Democratic Leader Nancy Pelosi notes, "Any trade agreement must be judged by whether it will create good-paying jobs, whether it will increase the paychecks of American families, and whether it recognizes the fundamental connection between commerce and climate." Democrats are wary of a repeat of NAFTA, the free trade agreement with Canada and Mexico that concluded in 1994, which many economists argue caused a U.S. Trade deficit resulting in the loss of manufacturing jobs.
Yes, trade politics are necessary to save jobs for the American people, as businesses looking to gain a competitive advantage will be looking to outsource labor forces to other countries where wages are lower and regulations are not as standardized or strict as in the United States.

Question 4

What is comparative advantage and why is it important in trade?

Question 5

Do you think that the U.S., not China, should produce the Olympic uniforms for the U.S. Olympic athletes? If so, please explain your rationale.

Question 6

What is the general perception about the dominance of "Made in China" products among the American people? Is there any myth about it?

Question 7

What was the ruling of the WTO regarding the trade dispute between Boeing and Airbus?

Question 8

How was the form of subsidies received by Airbus different from that received by Boeing? Who do you think has more substantially subsidized the manufacturing of new airplanes and why?

Question 9

Why do think that the EU and the U.S. government have been supporting the production of commercial airplanes?

Question 10

How does U.S. foreign policy influence its trade policy in East Asia, particularly in the context of U.S.-China relations?

Question 11

What is China's response to the U.S. suggestion of linking China's foreign policy to its trade policy?

Question 12

How is the U.S. approach to trade expansion different from the Chinese approach?

Question 13

What was the trade facilitation deal signed at the Bali WTO meeting in 2013? What is the significance of the implementation of this deal?

Question 14

Why did India veto the final agreement on this deal?

Question 15

What is the likely impact of the failure of the trade facilitation deal on the agreement of the WTO's Doha Round negotiation?

Question 16

What are the major trends in global trade? Are there any particular phenomena to which we need to pay close attention?

Question 17

How is comparative advantage theory different from absolute advantage theory? Why do some economists believe that comparative advantage theory may no longer hold in this global economy?

Question 18

What are the key elements of new trade theory? Are you convinced that new trade theory is more powerful than old trade theory in explaining the current developments in international trade?

Question 19

Discuss the key political and economic arguments that justify the government protectionism. Identify and explain one most recent case for each of these arguments.

Question 20

What are key remaining issues that the Doha Round needs to deal with to reach an agreement? Do you think that regional free trade agreements such as TPP will continue to increase in the future? If so, please explain your reasoning.

Question 21

Which of the following has come about as a result of the growth of services in international trade?

A) Reduced shipping costs
B) More accessible workers' rights
C) The same testing regimes for pharmaceuticals
D) All of the above

Question 22

Which of the following best describes absolute advantage theory?

A) One country gains at the expense of the other country
B) Any country can find a product that it can produce more efficiently
C) A country should produce based on factors it has in abundant supply
D) A country can produce multiple products more efficiently than other countries

Question 23

Mercantilism is based on the premise that trade is a _________ sum game in which only those exporting countries benefit from it while importing countries do not gain anything.

A) Zero
B) Positive
C) Win-win
D) Negative

Question 24

Which of the following is not among neoclassical (old) trade theories?

A) Absolute advantage
B) Comparative advantage
C) Factor endowment theory
D) Economies of scale

Question 25

Which of the following best describes comparative advantage?

A) One country gains at the expense of the other country
B) Any country can find a product that it can produce more efficiently
C) A country should produce based on factors it has in abundant supply
D) A country can produce multiple products more efficiently than other countries

Question 26

If multiple countries are capable of producing an identical product in terms of quality and function, the price of exports will drop. This phenomenon is known as:

A) Economies of scale
B) Immiserating effect
C) Strategic trade policy
D) Opportunity cost

Question 27

Which of the following most accurately describes the maturity stage of the International Product Life Cycle?

A) The product is introduced to other developed countries
B) A new product will replace the existing product as it gets old
C) Developing countries can produce the same product the developed country invented
D) A product is invented and introduced in a developed country

Question 28

Which of the following is not a key source of the United States' trade deficit?

A) Low savings rate in the private sector
B) Large spending in the government sector
C) China's large trade surplus
D) None of the above

Question 29

Which of the following best describes first-mover advantage?

A) A firm can enjoy benefits like efficient cost structures
B) A firm can enjoy large profits and a monopoly status
C) A firm can exploit economies of scale with no competitors
D) All of the above

Question 30

Which of these is not a political argument for government protectionism of free trade?

A) Saving jobs and industries
B) Protecting consumer health
C) Supporting foreign policy
D) Strategic trade policy

Question 31

An example of government protectionism of free trade for national security is:

A) Prohibiting the trade of products that contain confidential information
B) Banning the importation of hormone-treated beef
C) Trade sanctions against a country for their totalitarian government practices
D) All of the above

Question 32

Which of the following is a pitfall for using infant industry arguments for government protectionism of free trade?

A) It is not always easy to accurately predict the industry that is most likely to succeed in the future
B) Finding the right timing to remove the protection is difficult
C) All of the above
D) None of the above

Question 33

Which of these trade models explains why a certain country continues to sustain a competitve advantage in a particular industry?

A) Porter's Five Forces
B) Diamond Model
C) Comparative Advantage
D) New Trade Theory

Question 34

Which of the following is not a factor in the trade model described above?

A) Domestic rivalry
B) Demand conditions
C) National security
D) Firm strategy

Question 35

An example of a supporting industry that would help a firm gain a competitive advantage in the auto industry is:

A) Computer
B) Steel
C) Rubber
D) All of the above

Question 36

The Japanese inventing miniature consumer electronic appliances to accommodate small living spaces is an example of a country's response to:

A) Demand conditions
B) Factor conditions
C) Supporting Industry
D) Comparative advantage

Question 37

Which of the following was created after World War II to promote free trade and sponsored multiple rounds of multilateral trade negotiations?

A) World Trade Organization
B) General Agreement on Tariffs and Trade
C) Most Favored Nation
D) All of the above

Question 38

Which of the following was not a key achievement in the Uruguay Round of multilateral trade negotiations?

A) Creation of the WTO
B) Adequate protection of intellectual property rights
C) Reducing trade barriers in financial services
D) Reduction of agricultural subsidies

Question 39

Which of the following is not a negative impact of Regional Free Trade Agreements (RFTA)??

A) Incentives for other nations to join the RFTA or negotiate their own agreements
B) RFTA members would lose interest in multilateral free trade agreements
C) RFTA members would discriminate against non-members
D) None of the above

Question 40

Which of the following is still an issue that remains between developing and developed nations in the Doha Round?

A) Agricultural subsidies
B) Anti-dumping issues
C) Intellectual property rights
D) All of the above

Question 41

What are the recent trends in global trade?

Question 42

Explain the misconception of the U.S. trade deficit in relation to China's trade surplus.

Question 43

What are government arguments for intervening in free trade?

Question 44

What is the purpose of Porter's Diamond model? Describe the four elements of the model.

Question 45

Explain the key issues still remaining in the conclusion of the Doha Round.