Deck 3: International Trade: Institutional Barriers and Facilitators

Question 1

Boycotts, embargoes and sanctions are the most severe barriers to trade that are imposed usually to punish a company or a national government.

Answer 1

True
Boycotts, embargoes and sanctions are examples of nontariff trade barriers. They are the most severe barriers to trade and are imposed usually to punish a company or a national government.

Question 2

The "national defense" argument is not a legitimate argument for protectionism.

Answer 2

False
The "national defense" argument is regarded as justified in international trade forums and is widely accepted as a reasonable argument for protectionism. For example, the U.S. government would protect the U.S. aerospace industry. We would not want to become dependent upon other nations for the production of our military jets.

Question 3

Governments use currency flow restrictions primarily to get around WTO tariff policies.

Answer 3

False
Governments use currency flow restrictions primarily to influence the stability of the national currency.

Question 4

Paratariff measures are not a means for controlling prices.

Question 5

Excessive standards could and often do help local and international industry alike.

Question 6

Voluntary import expansions are not voluntary at all.

Question 7

Local content requirements can often be met by manipulating and/or assembling the product on the territory of the exporting country.

Question 8

Voluntary export quotas are no longer used since they were banned by the International Monetary Fund.

Question 9

The natural resources conservation argument for protectionism is not considered to be valid in international trade organization forums, especially in light of worldwide shortages of raw materials.

Question 10

Because of high levels of underemployment, Eastern European countries are lobbying against granting import licenses while actively supporting foreign direct investment.

Question 11

An orderly market arrangement is a protectionist measure for establishing quotas in the textile and apparel industries.

Question 12

Arguments invoking employment protection are used to ensure that competing multinationals do not import products manufactured elsewhere that might drive local manufacturers out of business and create local unemployment.

Question 13

Tariffs are any type of tax imposed on goods entering a particular country.

Question 14

In general, tariffs that are assessed by the United States are relatively high, over ten percent.

Question 15

Because of the General Agreement on Tariffs and Trade (GATT), governments have created new nontariff barriers.

Question 16

Nonautomatic import licenses are issued on a discretionary basis and are used to restrict imports of a given product.

Question 17

Quotas specify a minimum quantity or a value of a product that must be imported during a specified period.

Question 18

Nontariff barriers lower prices of both imports and import-competing goods.

Question 19

Paratariff measures decrease the costs of imports.

Question 20

Embargoes and sanctions are imposed by a company against a foreign country.

Question 21

The International Monetary Fund (IMF) has been criticized for imposing unduly rapid or overly detailed structural adjustment programs.

Question 22

In China, export processing zones can only be established within existing economic and technological development zones.

Question 23

In China, there are currently 25 export-processing zones (EPZs).

Question 24

Products that are manipulated in a foreign trade zone may be labeled as manufactured in the FTZ host country.

Question 25

China has 25 free trade zones and 15 export processing zones.

Question 26

Membership in the World Bank requires membership in the International Monetary Fund.

Question 27

The free trade zones in China attracted $60 billion in investments, employ 2 million people, and contribute a fourth to the nation's exports.

Question 28

The International Monetary Fund plays the role of lender of last resort.

Question 29

The Asian Development Bank, headquartered in Abidjan, Ivory Coast, has a primary goal of poverty reduction.

Question 30

The current focus of the World Bank is in the area of industrial and infrastructure development.

Question 31

Russia is a member of the G8.

Question 32

The World Trade Organization (WTO) was created in 1989 to help Eastern Europe in its process of transition to a market economy.

Question 33

The International Monetary Fund's voting policy is "one country, one vote."

Question 34

A higher black market exchange rate, compared to the market exchange rate, can signal a likely appreciation of the local currency.

Question 35

The Food and Agriculture Organization (FAO), headquartered in Rome, Italy, is a United Nations Organization.

Question 36

New international firms can no longer enter a country when the country implements a blocked-currency strategy.

Question 37

Because foreign trade zones have easy access, they are less secure causing an increased insurance cost for companies using them.

Question 38

A foreign trade zone is a tax-free area in a particular country that is not considered part of the respective country in terms of import regulations and restrictions.

Question 39

Special economic zones are customs-privileged facilities that typically exist in countries with low-cost labor.

Question 40

The premise for the comparative advantage argument is that companies benefit from specialization in an industry in which they have comparative advantage and from trading with one another.

Question 41

Granting of the Permanent-Normal-Trade-Relations (PNTR) Status is seldom linked to U.S. foreign policy.

Question 42

Which protection mechanism has been used since 1969 to protect the U.S. steel industry?

A)Voluntary import expansion
B)Voluntary export restraints
C)Price controls
D)Nonautomatic import licenses

Question 43

The Multifiber Arrangement is an example of

A)a nonautomatic import license.
B)a voluntary import expansion.
C)a price control.
D)an orderly market arrangement.

Question 44

Markets with excess productive capacity:

A)frequently use protectionistic measures to keep the factories running.
B)commonly seek foreign direct investment.
C)encourage imports of competing products to stimulate demand.
D)decrease marketing expenditures.

Question 45

Which of the following is an example of a voluntary import expansion?

A)McDonald's using its Moscow franchise profits to purchase vodka from Russia.
B)Japan importing U.S. semiconductors.
C)The U.S. limiting Japanese steel imports.
D)Wal-Mart raising its prices in the European Union so local consumers won't discriminate in favor of U.S. firms.

Question 46

Which of the following is not an argument for protectionism?

A)The market has excess productive capacity.
B)The industry is an "infant" industry.
C)Natural resources need to be conserved.
D)Foreign trade zones exist in the market.

Question 47

Vietnam received the Permanent-Normal-Trade-Relations (PNTR) Status, which means it will be subject to the same customs and tariffs as other PNTR countries.

Question 48

Which of the following is frequently used to get around local content requirements.

A)Voluntary import expansion
B)Voluntary export restraints
C)Paratariff measures
D)Foreign trade zones

Question 49

The African Growth and Opportunity Act (AGOA) allows countries in sub-Saharan Africa to use third-country fabrics and export them duty-free to the United States.

Question 50

Countervailing duty actions

A)give a rebate to the exporter.
B)impose punitive damages on importers.
C)are used in Communist countries that oppose Capitalism.
D)impose duties to offset dumping.

Question 51

The African Growth and Opportunity Act (AGOA) focuses on sub-Saharan Africa. AGOA was signed into law in 2001, and it offers incentives for African countries to open their economies and build free markets.

Question 52

Wal-Mart and other discounters and category specialists in the European Union are constantly scrutinized and often pressured by local authorities to raise prices. This is an example of

A)price controls
B)countervailing duty actions
C)a tariff
D)differential exchange rates

Question 53

Tariffs are imposed to

A)discourage imports of particular goods.
B)penalize countries that are not politically aligned with the importing country.
C)generate revenues for the importing country.
D)All of the above are reasons for tariffs.

Question 54

The most severe nontariff barriers to trade include:

A)Embargoes
B)Quotas
C)Currency Controls
D)Suing the manufacturer

Question 55

Standards as barriers to trade are frequently used as barriers to:

A)imports
B)barter
C)exports
D)all of the above

Question 56

With regard to price controls, the term dumping refers to:

A)undermining competition
B)selling products below fair value
C)discarding of excess inventory
D)all of the above

Question 57

Nonautomatic import licenses are used to:

A)allow imports of a given product
B)restrict imports of a given product
C)tax imports
D)none of the above

Question 58

Some countries restrict imports claiming the "national defense" argument. Which product is the most likely to be restricted under such an argument?

A)Luxury automobiles
B)Satellite dishes
C)Athletic shoes
D)Rice

Question 59

Which of the of the following is not an example of a nontariff barrier?

A)A tax on imported automobiles
B)A voluntary import expansion
C)A voluntary export restraint
D)A sugar quota

Question 60

Which of the following is an example of a price control?

A)increasing the prices of imports to match minimum prices of domestic imports
B)antidumping and countervailing duty actions designed to counter unfair competition
C)paratariff measures
D)all of the above are examples of price controls

Question 61

Differential Exchange Rates:

A)can be used to promote imports of desirable and necessary goods
B)can be used to discourage imports of less desirable and necessary goods
C)are favorable to the international firm importing products into this market
D)all of the above

Question 62

Approximately how may countries are a member of the World Trade Organization?

A)50
B)100
C)150
D)180

Question 63

The General Agreement on Trade in Services (GATS) initially covered which industry?

A)Retailing
B)Franchising
C)Banking
D)Manufacturing

Question 64

Which country is currently experiencing an arms embargo imposed by the United Nations Security Council as a punishment for its support of Sierra Leone's Revolutionary United Front?

A)Libya
B)Liberia
C)Egypt
D)South Africa

Question 65

Which of the following is not a member of the G8?

A)Canada
B)France
C)Italy
D)China

Question 66

Which strategy is most likely to be used by a firm trying to bypass a blocked currency?

A)Voluntary import expansion
B)Voluntary export restraints
C)Countertrade agreement
D)Use of a foreign trade zone

Question 67

Which of the following statements about foreign trade zones is inaccurate?

A)A foreign trade zone can be as small as a building.
B)Merchandise in the FTZ is outside the jurisdiction of the host country customs services.
C)Foreign trade zones are usually located near ports of entry.
D)All of the above statements are accurate.

Question 68

Which of the following countries is most likely to require a foreign exchange permit?

A)The United States
B)Germany
C)China
D)Each of the above is equally likely.

Question 69

Embargoes and sanctions are imposed by a ____ against (a) ____:

A)company; another company
B)country; company
C)company; country
D)country; another country

Question 70

A foreign trade zone

A)always increases the prices for goods sold in the importing country.
B)raises the insurance expense for a company.
C)may promote a favorable country-of-origin effect.
D)typically creates entry barriers for foreign firms.

Question 71

One arguments for free trade suggests that opening up the home market increases ____ , thus lowering prices for local consumers.

A)tourism
B)competition
C)substitutes
D)inflation

Question 72

In the United States, which entity regulates foreign trade zones?

A)The Export-Import Bank
B)The Federal Trade Commission
C)The Food and Drug Administration
D)The Department of Commerce

Question 73

The International Monetary Fund and the World Bank were created as a result of the

A)Bretton Woods Agreement
B)Paris Accords
C)Asian economic meltdown
D)World War I Reconstruction

Question 74

Which of the following has been hailed as a success for the G8?

A)Challenging China on its human rights record
B)Helping Eastern Europe in its process of transition to a market economy
C)Improving Japan's economy
D)Helping Europe to produce jobs and faster growth

Question 75

A(n) ____ is usually initiated as the result of an action group calling for a ban on consumption of all goods associated with a particular company and/or country.

A)boycott
B)sanction
C)embargo
D)voluntary export restraint

Question 76

Which of the following United Nations Organizations often provides turn-key factories to countries in need?

A)The United Nations Industrial Development Organization
B)The United Nations Conference on Trade and Development
C)The Food and Agriculture Organization
D)The Regional Economic Commission for Africa

Question 77

Which of the following is not a form of currency control used by governments?

A)Embargoes
B)Blocked currency
C)Differential exchange rates
D)Foreign exchange permits

Question 78

Which of the following is not a development bank?

A)The Inter-American Development Bank
B)The European Bank for Reconstruction and Development
C)The Australian Development Bank
D)The African Development Bank

Question 79

Which of the following is not protected under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)?

A)Trademarks
B)Patents
C)Copyrights
D)Each of the above is protected.

Question 80

Which bank is the largest international bank that sponsors economic development projects?

A)The African Development Bank
B)The Asian Development Bank
C)The European Bank for Reconstruction and Development
D)The World Bank