Instructor’s Manual
CHAPTER 6
TRADE REGULATIONS AND INDUSTRIAL POLICIES
CHAPTER OVERVIEW
This chapter discusses the trade regulations of the United States. It also considers the various industrial
policies implemented by nations to enhance the competitiveness of their producers.
The chapter first examines the tariff history of the United States. Of particular importance is the Smoot–
Hawley Act of 1930 and the Reciprocal Trade Agreement Act of 1934 which set the stage for a wave of trade
liberalization. Trade liberalization was further promoted with the advent of the General Agreement on Tariffs
and Trade in 1947 and the World Trade Organization in 1995.
BRIEF ANSWERS TO STUDY QUESTIONS
1. Traditional protectionist arguments (e.g., protective argument and infant industry) have influenced
1930.
3. Under the normal-trade-relations (most-favored-nation) principle, reductions of trade restrictions
4. The World Trade Organization provides a mechanism whereby trade disputes among member
Instructor’s Manual
5. These laws attempt to redress hardships for U.S. producers resulting from policies of foreign firms and
7. Under the adjustment assistance program, workers, firms and communities who are injured by foreign
competition may obtain financial and technical assistance from the government.
8. The Tokyo Round of multilateral trade negotiations emphasized the role of nontariff trade barriers that
gained in importance during the 1960s and 1970s. Codes of conduct were agreed to concerning
9. Industrial policies of the United States have been less formal than those of Europe and Japan. The
11. Strategic trade policy refers to governmental assistance provided to support key industries that are
considered important to future domestic economic growth and provide widespread benefits to society.
12. Economic sanctions refer to trade and financial restrictions levied against a foreign country. Such
restrictions are designed to impose economic hardship on the people of the foreign nation which will
13. a. 4 tons, 8 tons, 4 tons, $800, $3200.
b-1. $200, 2 tons, 10 tons, 8 tons.