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Chapter 8
Global Trade Relations
Multiple-Choice
1) The Stolper-Samuelson theory builds on
a) strategic trade theory.
b) the theory of absolute advantage.
c) the Heckscher-Ohlin theory.
d) the theory of comparative advantage.
informality was the fact that it
a) did not make decisions that were binding on members.
b) was easy for countries to become members.
c) did not have dispute settlement procedures.
d) had contracting parties.
rector general described the following principal as the
fundamental cornerstone of GATT:
a) nondiscrimination.
b) safeguards.
c) trade liberalization.
d) reciprocity.
4) The first GATT round to negotiate intellectual property issues was the
a) Tokyo Round.
b) Kennedy Round.
c) Uruguay Round.
d) Dillon Round.
5) Theories explaining the rapid increase in intra-industry trade emphasize
the fact that
a) trade produces economies of scale.
b) trade results from comparative advantage.
c) MNCs benefit from trade with their subsidiaries.
d) trade is most beneficial between states with different factor
endowments.
6) Competitive advantage
a) is virtually identical to comparative advantage.
c) stems from earlier liberal theories of trade.
d) stems from the emphasis on industrial targeting.
7) The 1934 Reciprocal Trade Agreements Act
a) enabled the United States to lower tariffs on a statutory basis.
b) linked U.S. tariff levels to international negotiations.
c) resulted in multilateral trade negotiations.
d) enabled the U.S. Congress to lower tariffs by up to 50 percent.
8) The first GATT round with extensive negotiations on NTBs was the
a) Kennedy Round.
b) Tokyo Round.
c) Uruguay Round.
d) Dillon Round
9) Diffuse reciprocity is most closely associated with
a) neomercantilism.
b) conditional MFN treatment.
c) specific reciprocity.
d) unconditional MFN treatment.
10) The WTO permits state A to impose CVDs when
a) state B has trade-distorting subsidies that produce or threaten
b) state B has trade-distorting subsidies that produce or threaten
c) foreign goods are dumped and this causes or threatens material
ucers.
d) foreign goods are dumped and this causes or threatens serious
injury to domestic producers.
11) WTO policy making most often operates according to the
a) adaptive club model.
b) multistakeholder model.
c) single undertaking model.
d) club model.
12) An example of SDT for LDCs is the
a) safeguards principle.
b) enabling clause.
c) Uruguay Round as a single undertaking.
d) Western policy of differentiation.
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13) The most important exception GATT permitted to MFN treatment was
for
a) LDCs.
b) CVDs
c) anti-dumping duties
d) regional trade agreements.
14) The theorists who are most supportive of the precautionary principle on
trade issues are
a) orthodox liberals.
b) institutional liberals.
c) the greens.
d) interventionist liberals.
15) The theorists most opposed to injecting environmental issues into trade
negotiations are
a) institutional liberals.
b) orthodox liberals.
c) interventionist liberals.
d) the greens.
True-False
1) The national treatment requirement is designed to prevent external
discrimination in trade.
2) Specific reciprocity can coexist with unconditional MFN treatment.
3) National treatment and the MFN principle are both part of the
nondiscrimination principle.
4) David Ricardo is most closely associated with the theory of comparative
advantage.
5) GATT ceased to exist when the WTO replaced it as the main global trade
organization in 1995.
6) The GATT/WTO has never had a director-general from an LDC.
7) The most important exception to the MFN principle is the special and
differential treatment in trade given to LDCs.
Fill in the Blank
1) The concept of __________________ refers to the cost of producing less
of one product in order to produce more of another product.
2) occurs when a firm sells products in an export market at a
lower price than it charges in the home market.
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3) According to the theory of , if each country specializes
in producing goods that it can produce more cheaply than other countries,
everyone will benefit from free trade.
4) The theory states that a state has a comparative
advantage in producing goods that involve intensive use of its most abundant
factor of production.
5) The WTO permits a state to impose if another state
provides trade-distorting subsidies that produce or threaten material injury to
domestic producers.
6) According to the theory of , countries A and B can both
benefit from free trade if each country specializes in producing the good it
can produce relatively more cheaply than other goods.
7) By ensuring that the exchange of concessions is balanced, reciprocity
limits free riding under the __________________.
Essay
1) What is the relationship between the GATT/WTO and civil society
groups, and how has this relationship changed over time?
2) How do neomercantilists, liberals, and historical materials differ in their
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did LDCs become more actively involved in the GATT Uruguay Round, and
what has been their position in the Doha Round?
4) In what ways are China, India, and Brazil posing a challenge to DC
dominance in the global trade regime?
5) What are the similarities and differences between GATT and the WTO?
Why do you think it is that GATT completed 8 trade negotiating rounds, and
that the WTO has been unable to complete a single round?
r
from the Uruguay Round negotiations as a Single Undertaking? Why do
you think this change occurred?
7) How has liberal trade theory evolved over time? (Discuss the theories of
absolute and comparative advantage, the Heckscher-Ohlin theory, and the
Stolper-Samuelson theory.)
8) Is the GATT/WTO MFN principle compatible with diffuse reciprocity,
specific reciprocity, and the development principle? Explain.
9) Why is the safeguard principle essential to most international trade
agreements? What are ADDs and CVDs, and what must a country
demonstrate to impose them? Why are ADDs and CVDs so controversial?
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10) How much priority has the GATT/WTO given to the environment?
What are the views of different theorists regarding the inclusion of
environmental issues in negotiations for freer trade?