Question 1

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

Accepted Answer

The World Trade Organization (WTO) was established by the Uruguay Round of multilateral trade negotiations in 1995. The Kennedy Round and the Tokyo Round were earlier rounds of trade negotiations that took place in the 1960s and 1970s, respectively. The Clinton Round is not a recognized round of trade negotiations.

Question 2

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 subsidies granted by another country can result in a net gain for the home country if it is a net importer of the subsidized product. In this case, if the subsidy provided by Japan to its calculator producers lowers the price of calculators for American consumers, and the gains to these consumers exceed any losses incurred by American calculator producers, then the U.S. would benefit from the subsidy. As the U.S. is a net importer of calculators, choice A is the correct answer.

Question 3

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

Accepted Answer

The Smoot-Hawley Act of 1930 raised U.S. tariffs on over 20,000 imported goods, leading to retaliatory tariffs from other countries and worsening the Great Depression. It is considered the high point of U.S. protectionism.

Question 4

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 up to 50 percent. This was done in order to encourage international trade and promote economic growth. While the president did not have the authority to eliminate tariffs completely, a 50 percent reduction was a significant enough cut to have an impact on trade.

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 resulted in reductions in trade barriers via multilateral negotiations. The GATT and WTO have facilitated negotiations between member countries with the goal of reducing tariffs and other trade barriers. This has helped to increase international trade and investment, benefiting participating countries' economies. The GATT and WTO have also encouraged greater adherence to international trade rules and norms, promoting fair trade practices and reducing unwarranted beggar-thy-neighbor policies.

Question 6

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 providing direct loans and loan guarantees to foreign purchasers of American goods is an example of an export subsidy. This is because it encourages American firms to export their goods by providing financial assistance to foreign buyers, effectively lowering the cost of the goods and making them more competitive in foreign markets.

Question 7

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. This act authorized the President to negotiate reciprocal trade agreements with other countries that would reduce tariffs and barriers to trade in order to promote economic growth and stability. As part of these agreements, the principle of most-favored-nation treatment was established, which required that each country would extend to the other countries the same level of trade advantages and concessions that it extends to its most-favored trading partners.

Question 8

Adjustment assistance is sometimes used to assist:

Accepted Answer

Adjustment assistance is typically used to retrain workers who have lost their jobs due to increasing imports, which often come from foreign countries with lower labor costs. The goal is to help these workers acquire new skills and find employment in other industries, ultimately reducing their reliance on government benefits. Retraining workers displaced by exports or assisting foreign firms injured by our trade policies would not fall under the purview of adjustment assistance.

Question 9

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 clause that 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 is called an escape clause. This clause allows the government to temporarily increase tariffs or take other measures to protect domestic industries from being harmed by imports. The adjustment assistance clause provides support to workers who are adversely affected by trade, the most-favored-nation clause requires equal treatment for countries, and the reciprocal-trade clause refers to agreements where countries negotiate trade terms to gain access to each other's markets.

Question 10

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

Accepted Answer

Trade-remedy laws aim to address unfair trade practices such as dumping and subsidies that create an uneven playing field. They are designed to protect domestic industries from being harmed by unfair competition and to promote free and fair trade. Industrial policies, strategic trade policies, and economic sanctions may also aim to promote fair trade, but they are not primarily focused on creating a level playing field in trade.

Question 11

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

Accepted Answer

The Smoot-Hawley Tariff Act of 1930 was a protectionist measure that raised tariffs on imported goods to extremely high levels, affecting both American businesses and foreign nations. This led to retaliatory tariffs from other countries, hurting American exports and intensifying the worldwide depression.

Question 12

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 imposed by domestic governments to offset the negative effects of foreign subsidies that give an unfair advantage to foreign producers in the domestic market. Tariffs are the taxes imposed on imported goods, quotas are limits on the quantity of imported goods, and buy-national policies require governmental and/or public entities to only buy domestically produced goods.

Question 13

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) provides loans to foreign buyers of U.S. manufactured goods to support U.S. export sales.

Question 14

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

Accepted Answer

The importance of tariffs as a trade barrier has decreased due to the widespread adoption of free trade policies and the proliferation of international trade agreements that have reduced tariffs and other trade barriers. Countries have increasingly relied on non-tariff barriers such as quotas, subsidies, and technical regulations to protect domestic industries and regulate trade.

Question 15

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

Accepted Answer

A beggar-thy-neighbor policy is an approach in which a country tries to solve its economic problems by implementing trade barriers or other negative measures that hurt foreign competitors or trading partners. This can include tariffs, quotas, or subsidies that create an unfair advantage for domestic producers. By limiting imports and increasing exports, a beggar-thy-neighbor policy can temporarily boost the domestic economy but at the expense of other countries.

Question 16

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

Accepted Answer

The escape clause, also known as the Safeguard clause, allows firms in the U.S. to request temporary import relief in the form of quotas or tariffs if they can prove that they are being injured by imports of similar products. This is done to protect domestic industries from unfair competition and give them time to adjust and become more competitive.

Question 17

The Uruguay Round of Multilateral Trade Negotiations accomplished all of the following except:

Accepted Answer

The answer of The Uruguay Round of Multilateral Trade Negotiations...

Question 18

Which policy reflects the notion that if society enjoys gains 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 due to increased efficiency stemming from trade liberalization, some sort of compensation should be provided to those who are temporarily hurt by import competition. This policy was introduced to assist workers who have lost their jobs due to imports or outsourcing. It provides them with financial assistance, training, and job search aid. Countervailing duties target perceived unfair trade practices such as subsidies provided by foreign governments. Domestic subsidies provide support to domestic producers, while the most-favored-nation standard ensures that each WTO member is treated equally in international trade.

Question 19

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

Accepted Answer

Economic sanctions against hostile nations are not established under the trade-remedy laws, but rather under foreign policy and national security laws. The other three options are examples of trade-remedy laws in the U.S.

Question 20

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

Antitrust exemptions for horizontal combinations of American firms engaged solely in export trade permit the formation of export trade associations. This allows these firms to work together to increase their competitiveness in the global market without violating antitrust laws. Option B) Domestic international sales corporations, C) Export-import banks, and D) Commodity sales corporations are not relevant to this particular aspect of U.S. trade law.

Quiz 6: Trade Regulations and Industrial Policies