Chapter 7: The World Trade Organization
MULTIPLE CHOICE
1. Which of the following is not one of the key principles incorporated into the original
GATT?
a. Most favored nation.
b. National treatment.
c. Prohibition of quotas.
d. Intellectual property rights protection.
2. The GATT was established in 1948 to:
a. Negotiate tariff reductions.
b. Establish a forum for resolving trade disputes.
c. Enforcing rules governing trade in services.
d. A and B above.
3. Which of the following is an example of most-favored nation (MFN) treatment?
a. Country A may apply a quota selectively.
b. If country A lowers its tariff on wheat exports from country B, it must offer the same
tariff to all of its trading partners that are WTO members.
c. Country A may apply a tariff selectively.
d. None of the above
4. Exceptions to MFN treatment are allowed in cases involving:
a. Preferential trade agreements.
b. Preferences granted to developing countries.
c. The imposition of voluntary export restraints (VERs).
d. A and B above.
5. Which of the following is an example of national treatment?
a. Treating all counties equally in imposing a tariff.
b. A country should treat imported goods no differently than goods produced
domestically in terms of domestic taxation.
c. Subsidies for national firms that export.
d. None of the above.
6. Which of the following had in the past been granted exceptions to the GATT general
prohibition of quotas?
a. Automobiles.
b. Textiles and clothing.
c. Agriculture.
d. B and C above.
7. Bound tariffs can be relaxed under which of the following conditions?
a. After renegotiation and upon payment of compensation.
b. Bound tariffs can never be changed.
c. Bound tariffs can be relaxed at the request of a contracting party.
d. None of the above.
8. Which of the following issues does the WTO Agreement on Agriculture not address?
a. Market access.
b. Domestic support.
c. Foreign direct investment.
d. Export subsidies.
9. Within the Agreement on Agriculture, “green box” measures include:
a. Government agriculture support policies that distort trade.
b. Government agricultural policies that are determined by the WTO not to distort trade.
c. Government support policies that might or might not distort trade.
d. None of the above.
10. Which of the following is not one of the areas brought under global trading rules by the
WTO’s Marrakesh Agreement?
a. Services.
b. Competition policy.
c. Trade-related investment measures.
d. Intellectual property.
11. Which of the following is not a category of intellectual property covered by the TRIPS?
a. Industrial designs.
b. Copyrights.
c. Trade secrets.
d. Patents.
12. Which of the following is not a part of the WTO’s Dispute Settlement Mechanism
(DSM)?
a. Ministerial Conference.
b. Panel.
c. Consultation.
d. Appellate Body.
TRUE AND FALSE
1. A specific tariff, once bound in a round of multilateral trade negotiations, may never
again be raised.
2. Dumped goods are exports sold at a price below that existing in the importing country.
3. In order for a subsidy to be considered unfair and countervailing duties against the
subsidizing country justified, the importing country must demonstrate material injury to
its domestic industry.
4. The GATT/WTO does not allow any exemptions to the principle of most-favored nation
(MFN).
5. The Ministerial Conference and General Council of the WTO must always make
decisions by consensus.
6. Tariffication is the process of reducing tariffs through successive round of multilateral
trade negotiations.
7. The WTO General Agreement of Trade in Services (GATS) identifies movement of
consumers as a means of services trade.
8. The WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS)
identifies geographical indications as a covered type of intellectual property.
9. If a country ignores the outcome of a dispute settlement process, the complaining
member has the right to impose retaliatory tariffs on imports from the other country.
SHORT ANSWER
1. Why was the GATT originally established in 1948?
2. Why does the GATT/WTO prohibit quotas?
3. What was the International Trade Organization (ITO), what was it supposed to do, and
why did it not come into existence in 1948?
4. What is “dumping” and how does the GATT/WTO allow members to deal with it?
5. How does the GATT/WTO allow contracting parties to address subsidies applied by
foreign exporters?
6. What is the difference between bound tariffs and applied tariffs?
7. How is the WTO organized and how does it conduct its business?
8. How did the WTO Agreement on Agriculture deal with quotas on agricultural goods?
9. How did the WTO Agreement on Agriculture deal with export subsidies?
10. How did the WTO Agreement on Textiles and Clothing reintegrate this sector back into
the GATT?
11. What are the ways that services can be provided via international trade?
12. What are some of the objections raised to the Agreement on Trade-Related Aspects of
Intellectual Property (TRIPS)?
13. How does the WTO dispute settlement procedure differ from the one in existence before
1994?
14. What difficulties are faced by the WTO Committee on the Environment?
15. What were some of the problems in concluding the Doha Round?