Question 1

The Uruguay Round of Multilateral Trade Negotiations accomplished all EXCEPT which of the following?

Accepted Answer

C

Question 2

Under U.S.commercial policy, which clause permits the modification of a trade liberalization agreement on a temporary basis if serious injury occurs to domestic producers as a result of the agreement?

Accepted Answer

The escape clause, also known as the safeguard clause, allows for the temporary modification of a trade liberalization agreement if serious injury occurs to domestic producers as a result of the agreement. This clause provides a safety net for domestic industries that may be negatively impacted by increased competition as a result of free trade agreements.

Question 3

Under U.S.commercial policy, the escape clause results in

Accepted Answer

The escape clause, also known as the safeguard clause, is a provision in US commercial policy that allows temporary quotas to be granted to domestic firms that are injured by import competition. It is designed to protect domestic producers who may be negatively impacted by increased imports. Tariffs, tax advantages, and duties are other types of trade policy measures that are used to promote or restrict trade, but they are not specifically related to the escape clause.

Question 4

The U.S."trade-remedy laws" could establish all of the following EXCEPT

Accepted Answer

The global market for tin does not involve any hostile nations, and therefore economic sanctions would not be applicable in this context. The other three measures are possible forms of trade-remedy laws that the U.S. could establish to protect domestic firms from unfair foreign competition.

Question 5

The General Agreement on Tariffs and Trade and its successor, the World Trade Organization, have resulted in

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), have been established to promote international trade and remove trade barriers among member countries through multilateral negotiations. Therefore, the reduction of trade barriers is the main objective of these agreements. Option A and B are not correct as these agreements have not resulted in the termination of export subsidies or import tariffs specifically applied to manufactured goods. Option C is not correct as these agreements discourage beggar-thy-neighbor policies, which are trade policies that benefit one country at the expense of another.

Question 6

Countervailing duties are intended to neutralize any unfair advantage that foreign exporters might gain over domestic producers because of foreign

Accepted Answer

Countervailing duties are specifically designed to counteract the effect of subsidies given to foreign exporters by their respective governments.

Question 7

______________ attempt to produce a fair and free-trading environment in which there exists a level playing field.

Accepted Answer

Trade-remedy laws are designed to ensure fair competition, and create a level playing field for producers in the global market. These laws provide for penalties and tariffs against unfair trade practices such as dumping or subsidies.

Question 8

A trade policy designed to alleviate some domestic economic problem by exporting it to foreign countries is known as a (an)

Accepted Answer

A trade policy designed to alleviate some domestic economic problem by exporting it to foreign countries is known as a beggar-thy-neighbor policy. This policy seeks to gain a short-term advantage by harming other countries' economies through measures such as protectionism and currency devaluation. It is often criticized for causing a race to the bottom, where countries engage in retaliatory measures and ultimately harm global economic growth.

Question 9

Which policy reflects the notion that if society enjoys gains that are due to increased efficiency stemming from trade liberalization, some sort of compensation should be provided to those who are temporarily hurt by import competition?

Accepted Answer

Trade adjustment assistance reflects the notion that if society enjoys gains that are due to increased efficiency stemming from trade liberalization, some sort of compensation should be provided to those who are temporarily hurt by import competition. Countervailing duties are tariffs that are specifically imposed to counteract the effects of subsidies given to foreign producers, while domestic subsidies are government payments to domestic producers in order to promote their production. The most-favored-nation standard refers to the principle that countries should not discriminate against each other in terms of trade.

Question 10

For the United States, which organization makes loans to foreign buyers of U.S.manufactured goods?

Accepted Answer

The Export-Import Bank (Ex-Im Bank) is a U.S. government agency that provides loans to foreign buyers of U.S. manufactured goods in order to promote the export of American goods and services.

Question 11

Adjustment assistance is sometimes used to assist

Accepted Answer

Adjustment assistance is a program that provides support and retraining to workers who have been displaced by imports. It is not used for workers displaced by exports or for foreign firms injured by quotas or tariffs.

Question 12

Under the original provisions of the Reciprocal Trade Agreements Act, the president of the United States was authorized to cut tariffs up to

Accepted Answer

Under the original provisions of the Reciprocal Trade Agreements Act, the president of the United States was authorized to cut tariffs by up to 50 percent.

Question 13

As a way of helping American firms trade in the world market, U.S.trade law provides antitrust exemptions for horizontal combinations of American firms engaged solely in export trade.Such firms are permitted to form

Accepted Answer

U.S. trade law allows antitrust exemptions for American firms engaged solely in export trade to form export trade associations. This allows for collaboration amongst firms in the same industry to promote their products and increase sales in the global market. Domestic international sales corporations, export-import banks, and commodity sales corporations are not relevant to this provision.

Question 14

The World Trade Organization was established by the ____ of multilateral trade negotiations.

Accepted Answer

The Uruguay Round established the World Trade Organization (WTO) in 1995. It was the eighth round of multilateral trade negotiations conducted under the General Agreement on Tariffs and Trade (GATT). The Kennedy Round (1964-67) and Tokyo Round (1973-79) were also rounds of GATT negotiations but did not result in the establishment of the WTO. There was no Clinton Round.

Question 15

Throughout the post-World War II era, the importance of tariffs as a trade barrier has

Accepted Answer

The implementation of multilateral trade agreements and the globalization of trade have led to decreased importance of tariffs as a trade barrier. Tariffs are now generally considered to be a less effective protectionist policy than other measures such as subsidies or non-tariff barriers.

Question 16

The principle of normal trade relations (most-favored-nation) treatment was established with the passage of the

Accepted Answer

The principle of normal trade relations (most-favored-nation) treatment was established with the passage of the Reciprocal Trade Agreements Act of 1934. The Fordney-McCumber Act of 1922 and the Smoot-Hawley Act of 1930 were protectionist measures that raised tariff rates, while the Trade Act of 1974 aimed to promote free trade and adjust U.S. trade policy to changing global conditions.

Question 17

Trade theory suggests that the United States would gain from a subsidy provided by Japan to its calculator producers if the gains to American consumers of calculators more than offset the losses to American calculator producers.This occurs as long as the United States

Accepted Answer

Trade theory suggests that a country would benefit from a subsidy provided by another country if the gains to domestic consumers from cheaper imports exceed the losses to domestic producers. This is true for a country that is a net importer of the subsidized product. Therefore, in this case, the United States would benefit from the subsidy provided by Japan if the United States is a net importer of calculators.

Question 18

The Export-Import Bank of the United States encourages American firms to sell overseas by providing direct loans and loan guarantees to foreign purchasers of American goods.To American firms, this represents a

Accepted Answer

The Export-Import Bank of the United States provides loans and loan guarantees to foreign purchasers of American goods, which is a form of export subsidy.

Question 19

The high point of U.S.protection culminated with the passage of the

Accepted Answer

The passage of the Smoot-Hawley Act in 1930 saw the highest point of U.S. protectionism, as it increased tariffs on imported goods and triggered retaliation from trading partners, worsening the Great Depression. The other options mentioned (B, C, and D) are not related to the high point of U.S. protectionism, as they either promoted free trade or addressed domestic economic issues.

Question 20

The Smoot-Hawley Tariff Act of 1930 has generally been associated with

Accepted Answer

The Smoot-Hawley Tariff Act of 1930 was one of the major causes of intensifying the worldwide depression by raising tariffs on over 20,000 imported goods and triggering retaliation from other countries against American exports. It did not lead to falling tariffs, increases in the volume of trade, or efforts to liberalize nontariff trade barriers.

Quiz 6: Trade Regulations and Industrial Policies