Deck 8: International Trade and Labor and Environmental Standards

Question 1

Which of the following is NOT an obstacle to increased international economic integration?

A)Monopoly powers given to domestic companies of individual nations
B)High tariff rates imposed by industrialized nations
C)Health and safety standard requirements
D)Labor and environmental standard requirements

Answer 1

B

Question 2

When the evolution of new technologies is unknown,or it is unclear which country has the "best" rules for standards,the adoption of ________ is the superior option.

A)a harmonization of standards
B)separate standards
C)mutual recognition standards
D)larger country standards

Answer 2

C

Question 3

Domestic firms operating abroad may find it economically beneficial to adopt environment-friendly standards because

A)foreign nations may be upset if firms do not use the environment-friendly technology.
B)the least-cost strategy usually involves the adoption of one set of environment-friendly technology rather than multiple standards.
C)they may be forced to replace the old technology whenever the foreign country experiences positive economic development.
D)their environment-unfriendly technology may be replaced by foreign-based technology.

Answer 3

B

Question 4

All of the following are responsible for the removal of the formal trade barriers except

A)the General Agreement on Tariffs and Trade (GATT).
B)the World Trade Organization (WTO).
C)regional trade agreements such as NAFTA.
D)the World Bank and the IMF.

Question 5

Requiring a firm with international operations to follow the standards of its home country instead of those of the foreign country has all of the following advantages except

A)it takes care of the fear of a race-to-the-bottom by making it impossible for a home-based company to exploit low standards.
B)it shifts the costs of improved standards to firms and consumers in high-income countries.
C)it avoids the problems of high-income countries dictating what standards are to be used. In this situation, firms that cross national boundaries must conform to whichever standards are higher.
D)it is a comprehensive measure, since it addresses the problem of production in foreign firms as well as firms from high-standards countries that relocate abroad.

Question 6

Health and safety standards are generally similar in most countries.

Question 7

Which of the following is a true statement about obstacles to increased economic integration?

A)Countries generally agree about appropriate environmental standards.
B)Domestic policies do not affect international trade.
C)Production changes due to trade redistribute income fairly.
D)Adopting common standards gives an advantage to firms that already meet those standards.

Question 8

Greater specialization within a country

A)increases risks to the country.
B)is rarely beneficial.
C)creates winners and losers and raises issues about fairness.
D)evenly distributes benefits in the long run.

Question 9

Mutual recognition of standards refers to

A)the elimination of tariffs and quotas by trading partners.
B)common product safety, environment, labor, and fair competition standards agreed upon by trading partners.
C)the acceptance of a trading partner's standards as valid and sufficient by another trading partner.
D)separate standards held by different trading partners which other partners refuse to recognize.

Question 10

Which of the following is FALSE?

A)Most of the world's population lives in countries classified as low- or lower-middle income.
B)All labor and environmental conditions improve with income growth.
C)Percentage wise, more children work in low-income countries than in higher income countries.
D)With such large income differences internationally, it is not surprising that there are very large differences in most social, economic, and environmental indicators.

Question 11

Monopoly powers given to domestic utility companies to create economies of scale might unintentionally

A)be an obstacle to increased international trade.
B)be useful for the creation of a comparative advantage for the domestic country.
C)not be used for rent-seeking behaviors.
D)be a positive externality for the world as a whole.

Question 12

Domestic policies can have unintended effects on international trade.

Question 13

Harmonization of standards refers to

A)the elimination of tariffs and quotas by trading partners.
B)common product safety, environment, labor, and fair competition standards agreed upon by trading partners.
C)the acceptance or keeping of a trading partner's standards as valid and sufficient by another trading partner.
D)separate standards held by different trading partners which other partners refuse to recognize.

Question 14

Which of the following is true?

A)Generally, the lower the country's average income, the less administrative, scientific, and technical capacity it has to design and enforce standards.
B)National priorities do not change as income changes-countries of all income levels seem to share the same priorities and values.
C)Differences in income are always an obstacle to the harmonization of standards.
D)The adoption of a common set of rules usually narrows the market and raises prices.

Question 15

Separate standards refers to

A)the elimination of tariffs and quotas by trading partners.
B)common product safety, environment, labor, and fair competition standards agreed upon by trading partners.
C)the acceptance of a trading partner's standards as valid and sufficient by another trading partner.
D)standards held by different trading partners which other partners refuse to recognize.

Question 16

Why does a country's increased specialization due to trade raise issues of fairness?

Question 17

What are two main obstacles to increased international integration?

Question 18

Many conflicts over standards result from the differences in income between countries.

Question 19

Most regional trade and WTO agreements practice

A)the harmonization standards only.
B)separate standards only.
C)mutual recognition standards only.
D)a combination of harmonization, mutual recognition, and separate standards.

Question 20

All of the following are reasons countries may be unable to use discriminatory trade practices to enforce labor standards EXCEPT

A)countries can never impose trade barriers on other sovereign nations.
B)the WTO requires nations to treat other nations the same.
C)a single country may be unsuccessful in convincing members of its trading block to participate in imposing the sanctions.
D)retaliation or a full blown trade war might result.

Question 21

Describe the connections between rising income and environmental and social indicators.Which indicators improve and which worsen as national income rises?

Question 22

Mutual recognition is more efficient than other approaches to setting standards.

Question 23

Developing countries are usually unwilling to negotiate over labor standards because

A)the WTO always tends to rule in favor of industrialized nations.
B)they fear that industrialized nations are trying to undermine their comparative advantage-production of agriculture and textiles/apparel-and close the markets of high-income countries in these areas.
C)they fear that they may be unable to compete without some protection of their industries.
D)organized labor would not allow them to negotiate with other countries.

Question 24

The use of trade barriers to enforce standards abroad raises all of the following concerns except

A)the potential deadweight losses in consumption and production at home.
B)the potential for the use of trade barriers to erupt into a bigger trade war.
C)the difficulty of knowing whether some of the concerns are over standards or are veiled protectionism.
D)only small countries may be able to use trade barriers effectively.

Question 25

Harmonization of standards

A)can make it less costly for exporting firms to produce.
B)is easy to agree on.
C)is not possible for countries of different income levels.
D)is required under WTO rules.

Question 26

Explain how harmonization of standards might increase productive efficiency.

Question 27

Race to the bottom refers to which of the following?

A)Firms have an incentive to relocate to countries with lower standards.
B)Countries have an incentive to conform to the standards of the lowest income country.
C)Countries will compete with each other to offer incentives to firms.
D)Firms will underpay workers in low income countries.

Question 28

Lower income countries may have more difficulties in enforcing standards.

Question 29

Suppose two nations are seeking to expand their commercial relations.What options do they have in terms of addressing conflicts in standards? Describe each and what conditions might favor different approaches to setting standards.

Question 30

Imposing the same standards on high- and low-income countries can be a problem because

A)it widens the market and lowers prices.
B)there are no economies of scale for low-income countries.
C)high-income countries have few environmental problems.
D)low-income countries may have less ability to enforce standards.

Question 31

Discriminatory trade practices are allowed among sister WTO member countries,especially when it comes to

A)the use of child labor in agricultural and textile/apparel products.
B)national security and special benefits given to other members of a free trade area.
C)the protection of agriculture and textile/apparel from open trade.
D)environmental protection.

Question 32

Low labor standards are usually associated with

A)nondemocratic governments.
B)high-income countries.
C)high-wage countries.
D)low foreign investment.

Question 33

Harmonization of standards

A)is costly for high income countries.
B)can reduce firm costs.
C)is less difficult for dissimilar countries.
D)is part of the race to the bottom.

Question 34

Low-income countries are largely responsible for excess carbon dioxide emissions globally.

Question 35

Explain the three options for setting standards in trade rules.

Question 36

The race-to-the-bottom concept described in the text refers to

A)the situation in which countries with high standards are forced to lower their standards or face the loss of jobs and industry.
B)the situation in which human rights are not respected by trading countries.
C)adopting the standards of a few selected middle-income and high-income countries.
D)the use of low per-capita income as a means of comparing the well-being of individuals.

Question 37

Harmonization of standards can institutionalize a set of inferior standards.

Question 38

What environmental problem gets worse as income rises according to your text?

Question 39

As national income rises,

A)water problems are eliminated.
B)infant mortality falls.
C)emissions from fossil fuels decrease.
D)depletion of forest reserves increases at an increasing rate.

Question 40

Which of the following is true?

A)Child labor is most common in urban areas.
B)Child labor is most common in the textile industry.
C)If child labor were stopped, families would have greater economic success.
D)Agriculture is the main industry that uses child labor.

Question 41

When countries try to ban child labor,

A)most children start to attend school.
B)family poverty decreases.
C)child labor often moves to the informal economy.
D)GDP increases.

Question 42

The claim that lower environmental standards in foreign countries reduce industrial competitiveness for high standard countries is on firm theoretical ground because

A)higher environmental standards requirements raise the cost of production to a firm or industry abiding by the rules.
B)there will be a race-to-the-bottom competition on environmental standards.
C)the interests of firms that are subject to the high standards coincide with the nation's interests, one-for-one.
D)environmental standards in most countries have gotten more lax over time.

Question 43

The International Labor Organization has been around since 1919,and has a consistent record of being willing to take action against countries that violate core labor standards.

Question 44

Transborder environmental impacts can take place when one country's pollution spills over into a second country in all of the following situations except

A)when an upstream user pollutes a shared watershed.
B)when industrial production in one country creates acid rain in another country.
C)when heavy traffic between two or more countries creates semi-global warming.
D)the production of exported products degrades the local environment.

Question 45

Child labor is a common family survival strategy,especially for farmers in rural areas where it is hard to enforce rules or to reach the poor with any supporting infrastructure or social services.

Question 46

Some proponents of trade sanctions argue for changes in policy because they fear low standards will be used to capture markets and foreign investment.While theoretically possible,there is little or no support for the view that countries use low labor standards this way,because

A)countries with low labor standards generally have trouble attracting foreign investment.
B)low standards can change a country's comparative advantage.
C)it is impossible to lower labor standards.
D)countries would not have an incentive to have low standards.

Question 47

In what industrial sector are children most likely to be working?

Question 48

Define labor standards as proposed by the ILO.

Question 49

There is clear evidence of a race-to-the-bottom internationally,regarding working conditions and the environment.

Question 50

One reason why the plants of multinational corporations abroad may have better standards than domestic contractors in low-income countries is because multinational corporations tend to reduce costs by using one standard in terms of capital equipment and technology for all markets.

Question 51

Why are universal standards for minimum wages and hours worked difficult to agree on?

Question 52

Critics argue that concern about labor practices in other countries is often used to justify protectionism.Is this a reasonable criticism? Explain.

Question 53

One claim that trade barrier proponents use to enforce environmental standards is that

A)environmental standards do not reduce industrial competitiveness and do not induce race-to-the-bottom, where countries are forced to rescind their standards in order to maintain employment.
B)high standards in industrialized nations motivates some firms to "export pollution" to developing countries by relocating their dirty industries.
C)enforcing environmental standards is essential, as there are no differences between labor standards and environmental standards.
D)all environmental impacts are non-transboundary.

Question 54

While Africa has the largest numbers of working children,Asia has the highest proportion of working children,with an estimated one in four employed.

Question 55

Which region has the largest number of children working?

Question 56

Which region has the highest proportion of its children working?

Question 57

Countries that compete by offering foreign firms a reduced set of environmental compliance requirements are known as

A)transboundary members.
B)pollution havens.
C)pollutants.
D)pollution exporters.

Question 58

Using trade barriers to address labor standards does all of the following except it

A)leads to deadweight losses.
B)redistributes income.
C)works more effectively for countries that are small relative to the total market.
D)potentially makes conditions worse as production moves to the informal sector.

Question 59

Empirical studies show that countries with low standards are very successful at attracting foreign investment.

Question 60

Is the claim that environmental standards reduce industrial competitiveness valid?

A)Yes, because environmental standards raise costs to businesses.
B)No, because consumers will want to buy from firms that pollute less.
C)No, because environmental standards have little effect in high-income countries.
D)Yes, because environmental standards will cause the imposition of WTO sanctions.

Question 61

Coffee is an example of a product that has been successfully labeled and marketed based on its production method or environmental protection.

Question 62

Over time,most countries have increased environmental standards.

Question 63

The WTO explicitly stated that in making its sea turtle decision,it was NOT saying that sovereign nations could not adopt effective measures to protect endangered species.Clearly,it said,sovereign nations can and should develop effective measures,including trade measures,to protect endangered species.

Question 64

What is a pollution haven,and is there evidence that pollution havens exist?

Question 65

Why would a global carbon tax be desirable?

Question 66

Harmful carbon emissions

A)are increasingly produced by industrializing countries such as China and India.
B)are only a problem in high-income countries.
C)must be reduced by countries individually.
D)have little effect on the environment.

Question 67

"Certified shade-grown,organic coffee" is an example of requiring home standards in a foreign market instead of trade barriers.

Question 68

Which of the following is NOT a problem with finding a solution to global climate change?

A)Countries have not recognized that there is a problem with climate change.
B)Solutions must be adopted globally, not unilaterally.
C)Science can only provide probabilities of future events, not certainties.
D)It is difficult to determine an appropriate level of response to climate change problems.

Question 69

Trade measures are usually not the best way of addressing problems such as pollution and child labor because

A)it is more efficient to address these problems at the production and consumption level.
B)trade measures are not effective in reducing pollution.
C)the governments of high-income countries are not interested in sanctioning pollution and child labor.
D)the WTO prohibits most trade sanctions.

Question 70

The WTO allows trade protection to protect endangered species.

Question 71

Low standards reduce production costs and change a nation's comparative advantage.

Question 72

What does empirical research suggest about the existence of pollution havens?

Question 73

Which of the following is NOT a true statement about the WTO and the protection of endangered species?

A)The environmental movement has been critical of the WTO.
B)Under WTO rules, countries have a right to impose import barriers to protect endangered species.
C)The WTO did not allow the U.S. to protect sea turtles.
D)GATT rules prohibit discrimination based on the production process used.

Question 74

Labeling that states that a product was produced under environmentally sustainable conditions may not be an effective way to reduce pollution if

A)producers do not apply labels.
B)labeling increases costs.
C)consumers do not believe the information on the label.
D)governments require labels.

Question 75

The WTO encourages nations to take unilateral action on trade issues,including issues involving environmental protection.

Question 76

Under the Sullivan Principles,a multinational producing in different countries

A)should pay the same wages in all countries.
B)should comply with the same environmental standards that exist in the home country.
C)should lobby for better standards in all countries.
D)should produce in pollution havens.

Question 77

The best way to address differences in labor and environmental standards is through trade barriers.

Question 78

Is there one optimal environmental standard for the entire world? If not,how might using trade barriers to enforce country-specific environmental standards reduce overall well-being?

Question 79

Explain the obstacles to more widespread adoption of labeling as a method of reducing environmental and child labor problems.