6) Which of the following is true?
A) Child labor is most common in urban areas.
B) Child labor is most common in the textile industry.
C) If child labor were stopped, families would have greater economic success.
D) Agriculture is the main industry that uses child labor.
7) When countries try to ban child labor,
A) most children start to attend school.
B) family poverty decreases.
C) child labor often moves to the informal economy.
D) GDP increases.
8) Using trade barriers to address labor standards does all of the following EXCEPT it
A) leads to deadweight losses.
B) redistributes income.
C) works more effectively for countries that are small relative to the total market.
D) potentially makes conditions worse as production moves to the informal sector.
9) The International Labor Organization has been around since 1919, and has a consistent record
of being willing to take action against countries that violate core labor standards.
10) There is clear evidence of a race-to-the-bottom internationally, regarding working conditions
and the environment.
11) Empirical studies show that countries with low standards are very successful at attracting
foreign investment.
12) While Africa has the largest numbers of working children, Asia has the highest proportion of
working children, with an estimated one in four employed.
13) Child labor is a common family survival strategy, especially for farmers in rural areas where
it is hard to enforce rules or to reach the poor with any supporting infrastructure or social
services.
14) One reason why the plants of multinational corporations abroad may have better standards
than domestic contractors in low-income countries is because multinational corporations tend to
reduce costs by using one standard in terms of capital equipment and technology for all markets.
15) Which region has the largest number of children working?
16) Which region has the highest proportion of its children working?
17) In what industrial sector are children most likely to be working?
18) Define labor standards as proposed by the ILO.
19) Why are universal standards for minimum wages and hours worked difficult to agree on?
20) Critics argue that concern about labor practices in other countries is often used to justify
protectionism. Is this a reasonable criticism? Explain.
8.4 Trade and the Environment
1) Some proponents of trade sanctions argue for changes in policy because they fear low
standards will be used to capture markets and foreign investment. While theoretically possible,
there is little or no support for the view that countries use low labor standards this way, because
A) countries with low labor standards generally have trouble attracting foreign investment.
B) low standards can change a country’s comparative advantage.
C) it is impossible to lower labor standards.
D) countries would not have an incentive to have low standards.
2) One claim that trade barrier proponents use to enforce environmental standards is that
A) environmental standards do not reduce industrial competitiveness and do not induce race-to–
the-bottom, where countries are forced to rescind their standards in order to maintain
employment.
B) high standards in industrialized nations motivates some firms to “export pollution” to
developing countries by relocating their dirty industries.
C) enforcing environmental standards is essential, as there are no differences between labor
standards and environmental standards.
D) all environmental impacts are non-transboundary.
3) The claim that lower environmental standards in foreign countries reduce industrial
competitiveness for high standard countries is on firm theoretical ground because
A) higher environmental standards requirements raise the cost of production to a firm or industry
abiding by the rules.
B) there will be a race-to-the-bottom competition on environmental standards.
C) the interests of firms that are subject to the high standards coincide with the nation’s interests,
one-for-one.
D) environmental standards in most countries have gotten more lax over time.
4) Countries that compete by offering foreign firms a reduced set of environmental compliance
requirements are known as
A) transboundary members.
B) pollution havens.
C) pollutants.
D) pollution exporters.
5) Transborder environmental impacts can take place when one country’s pollution spills over
into a second country in all of the following situations EXCEPT
A) when an upstream user pollutes a shared watershed.
B) when industrial production in one country creates acid rain in another country.
C) when heavy traffic between two or more countries creates semi-global warming.
D) the production of exported products degrades the local environment.
6) Is the claim that environmental standards reduce industrial competitiveness valid?
A) Yes, because environmental standards raise costs to businesses.
B) No, because consumers will want to buy from firms that pollute less.
C) No, because environmental standards have little effect in high-income countries.
D) Yes, because environmental standards will cause the imposition of WTO sanctions.
7) Which of the following is NOT a true statement about the WTO and the protection of
endangered species?
A) The environmental movement has been critical of the WTO.
B) Under WTO rules, countries have a right to impose import barriers to protect endangered
species.
C) The WTO did not allow the U.S. to protect sea turtles.
D) GATT rules prohibit discrimination based on the production process used.
8) The WTO explicitly stated that in making its sea turtle decision, it was NOT saying that
sovereign nations could not adopt effective measures to protect endangered species. Clearly, it
said, sovereign nations can and should develop effective measures, including trade measures, to
protect endangered species.
9) The WTO encourages nations to take unilateral action on trade issues, including issues
involving environmental protection.
10) Low standards reduce production costs and change a nation’s comparative advantage.
11) Over time, most countries have increased environmental standards.
12) The WTO allows trade protection to protect endangered species.
13) What does empirical research suggest about the existence of pollution havens?
14) Is there one optimal environmental standard for the entire world? If not, how might using
trade barriers to enforce country-specific environmental standards reduce overall well-being?
15) What is a pollution haven, and is there evidence that pollution havens exist?
8.5 Alternatives to Trade Measures
1) Trade measures are usually not the best way of addressing problems such as pollution and
child labor because
A) it is more efficient to address these problems at the production and consumption level.
B) trade measures are not effective in reducing pollution.
C) the governments of high-income countries are not interested in sanctioning pollution and
child labor.
D) the WTO prohibits most trade sanctions.
2) Labeling that states that a product was produced under environmentally sustainable conditions
may not be an effective way to reduce pollution if
A) producers do not apply labels.
B) labeling increases costs.
C) consumers do not believe the information on the label.
D) governments require labels.
3) Under the Sullivan Principles, a multinational producing in different countries
A) should pay the same wages in all countries.
B) should comply with the same environmental standards that exist in the home country.
C) should lobby for better standards in all countries.
D) should produce in pollution havens.
4) Which of the following is NOT a problem with finding a solution to global climate change?
A) Countries have not recognized that there is a problem with climate change.
B) Solutions must be adopted globally, not unilaterally.
C) Science can only provide probabilities of future events, not certainties.
D) It is difficult to determine an appropriate level of response to climate change problems.
5) Harmful carbon emissions
A) are increasingly produced by industrializing countries such as China and India.
B) are only a problem in high-income countries.
C) must be reduced by countries individually.
D) have little effect on the environment.
6) The best way to address differences in labor and environmental standards is through trade
barriers.
7) Coffee is an example of a product that has been successfully labeled and marketed based on
its production method or environmental protection.
8) “Certified shade-grown, organic coffee” is an example of requiring home standards in a
foreign market instead of trade barriers.
9) Why would a global carbon tax be desirable?
10) Explain the obstacles to more widespread adoption of labeling as a method of reducing
environmental and child labor problems.