Deck 3: Regional Market Characteristics and Preferential Trade Agreements

Question 1

A free trade area represents the most fully developed form of preferential trade agreement among nations.

Answer 1

False

Question 2

GATT (General Agreement on Tariffs and Trade)itself had no enforcement power, and the losing party in a dispute was entitled to ignore the ruling.

Answer 2

True

Question 3

Since GATT did not have enforcement power, and the process of dealing with disputes sometimes stretched on for years, some critics referred to it as General Agreement to Talk and Talk.

Answer 3

True

Question 4

The ultimate goal of a free trade agreement is to have standardized duties on goods that cross borders between the partners.

Question 5

El Salvador, Honduras, Guatemala, Nicaragua, Costa Rica, and Panama are all members of the Central American Integration System.

Question 6

Under Economic Union, a doctor or lawyer qualified in one country can practice in another member country.

Question 7

Economic Union stands at the top of the pyramid in the hierarchy of Preferential Trade Agreements.

Question 8

A preferential trade agreement is a mechanism that confirms special treatment on select trading partners, thereby at times discriminating against other trading partners.

Question 9

About 50% of global trade takes place among nations linked by free trade areas.

Question 10

The WTO promotes free trade on a global basis.

Question 11

It is customary for countries to notify the WTO when they enter into preferential trade agreements.

Question 12

Greece exports very little, and its economy is only one-tenth the size of Germany.

Question 13

In October 2011, the United States Congress finally ratified the long-delayed free trade areas with South Korea, Panama, and Colombia.

Question 14

In a Common Market there are no internal barriers to trade, and it allows for free movement of factors of production such as labor and capital.

Question 15

In spite of NAFTA creating a free trade area, Mexican avocado growers can only ship their fruit to the United States during the winter months, and only to states in the northeast subject to a quota of $30 million worth of avocados per year.

Question 16

The allure of the Latin American market has been its considerable size and huge resource base.

Question 17

In addition to eliminating internal barriers to trade, members of a customs union agree to the establishment of common external tariffs.

Question 18

Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA.

Question 19

A Customs Union represents the most fully developed form of preferential trade agreement among nations.

Question 20

NAFTA ensures that any product for sale in the U.S., Mexico, and Canada bearing a certificate of origin qualifies for tariff reduction.

Question 21

The six countries in the Gulf Cooperation Council (GCC)hold about 45% of the world's known oil reserves, but production is only about 18% of world oil output.

Question 22

Despite trade agreements, attempts to achieve integration in Central America have been described as uncoordinated, inefficient, and costly.There are still tariffs on imports of sugar, coffee, and alcoholic beverages.

Question 23

The objective of the EU member countries is to harmonize national laws and regulations so that goods, services, people, and eventually money can flow freely across national boundaries.

Question 24

Blessed with a location near the equator, Ecuador's cut-flower industry generates hundreds of millions of dollars in sales each year.

Question 25

Movements such as "the Arab Spring" have forced some of the regional leaders to make economic and political concessions.

Question 26

ASEAN's leaders are working to establish a fully integrated, single-market ASEAN Economic Community by 2015.

Question 27

Since 2010 there is a formal establishment of a new China/ASEAN Free Trade Agreement.

Question 28

In May 1998, eleven charter members of the eurozone were chosen, which included Greece.

Question 29

The EU is Mercosur's number one trading partner although Germany and France are opposed to such an agreement.

Question 30

Competing ideologies in South America help explain why intraregional trade is yielding more benefits.

Question 31

Markets in Central and Eastern Europe are not eager to embrace well-known global brands such as McDonald's, 3M International, and Philips Electronics.

Question 32

Repeat visits, extended socialization with distributors, and mastering the keiretsu system are all essential for being successful in Japanese markets.

Question 33

The Vatican City uses the euro although it is not a part of the European Union.

Question 34

Chile decided to become only an associate member of Mercosur since full membership would have required raising external tariffs.

Question 35

Coca-Cola had to delay launching its Powerade sports drink in Europe due to the lack of uniform food safety laws in the European Union.

Question 36

ASEAN's goal is to strengthen intra-regional trade relationships so members do not have to trade with China.

Question 37

Saudi Arabia, a major oil-producing nation, posted current-account deficits since they must import most of the goods and services.

Question 38

Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand were the original six members of the Association of Southeast Asian Nations referred to as ASEAN-6.

Question 39

CARICOM's main objective has been to achieve a deepening of economic integration by means of a Caribbean common market.

Question 40

Mercosur or the Common Market of the South resulted from a treaty signed by four countries: Argentina, Brazil, Paraguay, and Venezuela.

Question 41

There are barriers in Japan for global marketers in terms of attitudes as well as laws.Barriers include all of the following except:

A)any organization wishing to compete in Japan must be committed to providing top-quality products and services.
B)repeat visits and extended socialization with distributors.
C)goods marketed should have a semblance of western products and services.
D)marketers must master the keiretsu system of tightly knit corporate alliances.
E)trust has to be built before conducting successful business.

Question 42

The original six members of the ASEAN (Association of Southeast Asian Nations)included all of the following countries except:

A)Singapore.
B)Thailand.
C)India.
D)Philippines.
E)Brunei.

Question 43

Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA that includes all SICA members except:

A)Honduras.
B)Guatemala.
C)Nicaragua.
D)Panama.
E)Costa Rica.

Question 44

About 70% of Ecuador's flower harvest is exported to:

A)Bolivia.
B)United States.
C)Colombia.
D)Peru.
E)Venezuela.

Question 45

As a result of CFTA, the U.S.automakers participate in the Canadian auto market, thereby benefiting due to:

A)greater economies of scale.
B)decreased production costs.
C)reduced competition.
D)ease of exporting automobiles.
E)creating a continental demand.

Question 46

The form of economic cooperation that calls for countries to eliminate all internal barriers to trade among themselves even while maintaining independent trade policies vis-à-vis third countries is known as a(n)________.

A)Economic union
B)Customs union
C)Free trade area
D)Common market
E)none of the above

Question 47

The highest level in the pyramid of hierarchy of Preferential Trade Agreements consists of:

A)free trade area.
B)customs union.
C)common market.
D)European Union.
E)economic union.

Question 48

Argentina provides a good example of how a country can emerge from an economic crisis as a stronger global competitor.An example of emergency measures implemented by Argentina include:

A)Argentina reduced the duties on consumer goods.
B)Argentina devalued its currency for exports and capital transactions.
C)Argentina added tariffs on imported wines.
D)Argentina adopted the U.S.dollar as official currency.
E)Argentina added tariffs on wine produced within the country.

Question 49

NAFTA creates a free trade area in North America.However, Mexican avocado growers:

A)cannot hire illegal immigrants.
B)can only ship avocados to the U.S.in winter months.
C)have no quotas for the quantity of avocados shipped to the U.S.
D)cannot impose tariffs of their own.
E)none of the above

Question 50

The English-speaking CARICOM members in the eastern Caribbean are concerned with defending their privileged trading position with:

A)Russia.
B)China.
C)United States.
D)United Kingdom.
E)Australia.

Question 51

Which of the following ASEAN countries ranks number one in terms of two-way trade with the United States?

A)Brunei
B)Malaysia
C)Singapore
D)Thailand
E)Vietnam

Question 52

The World Trade Organization, which came into existence on January 1, 1995, is the successor of another organization with the abbreviation:

A)DSB.
B)GATT.
C)FTAA.
D)NAFTA.
E)ASEAN.

Question 53

Agricultural subsidies and quotas that developed outside the multilateral framework under GATT remained a divisive issue because:

A)affluent countries protect and subsidize farm production.
B)home-market consumers pay lower prices.
C)surplus agricultural output is sold abroad at high prices.
D)agricultural land became scarce in some countries.
E)American farmers did not participate in export.

Question 54

Greece is not the only European country that is in economic crisis.All of the following countries are facing problems in that region except:

A)Ireland.
B)Spain.
C)Italy.
D)Portugal.
E)Greece.

Question 55

Which member of the Central American Integration System has both the largest economy and the largest population?

A)El Salvador
B)Honduras
C)Guatemala
D)Nicaragua
E)Costa Rica

Question 56

Arrange the following in order from lowest to highest level of economic integration.

A)customs union→economic union→free trade area→common market
B)economic union→customs union→common market→free trade area
C)common market→free trade area→economic union→customs union
D)free trade area→customs union→common market→economic union
E)common market→economic union→customs union→free trade area

Question 57

NAFTA creates a free trade area, as opposed to a customs union or a common market, due to the fact that:

A)the agreement does not leave the door open for discretionary protectionism.
B)the governments of all three nations decided to eliminate tariffs.
C)the issue of illegal immigration from Mexico to the United States is resolved.
D)restrictions are imposed on the use of goods, services, and investments.
E)restrictions are imposed on labor movements among members.

Question 58

Which form of regional cooperation agreement, when fully implemented, entails creation of a unified central bank, the use of a single currency, and common policies on agriculture, social services and welfare?

A)Free trade area
B)Customs union
C)Common market
D)Economic union
E)Dispute settlement body

Question 59

The form of economic cooperation that calls for 1)eliminating internal barriers to trade and 2)establishing common external barriers is known as a(n)________.

A)Free trade area
B)Economic union
C)Customs union
D)Free trade area
E)Common market

Question 60

The most important preferential trading arrangements in Latin America do not include:

A)SICA.
B)the Andean Community.
C)CARICOM.
D)Mercosur.
E)BRIC.

Question 61

Management strategic options pertaining to products that are facilitated by a single European market include:

A)standardized packaging and labeling.
B)consolidated production.
C)shift from brand to benefit segmentation.
D)seeking marketing economies.
E)all of the above

Question 62

The highest GNI per capita in the South African Development Community was found in ________.

A)Botswana
B)Angola
C)Malawi
D)Seychelles
E)South Africa

Question 63

With the global economic crisis as a backdrop, the first-ever Happiness Congress was held in:

A)Sweden.
B)Austria.
C)Spain.
D)Italy.
E)Greece.

Question 64

The Gulf Cooperation Council (GCC)includes all of the following countries except:

A)Kuwait.
B)Saudi Arabia.
C)Iraq.
D)Bahrain.
E)Oman.

Question 65

The reason why Greece, Ireland, Portugal, and Spain sometimes are referred to as the eurozone's "peripheral countries" is:

A)that all have tourist attractions.
B)that they are situated in the peripheral parts of Europe.
C)that they all rank lower than their EU neighbors in terms of infrastructure.
D)that they are riding on the way of technology boom.
E)that they are all marred by sex scandals.

Question 66

The new country that joined the EU on January 01, 2011 is:

A)Slovakia.
B)Estonia.
C)Bulgaria.
D)Slovenia.
E)Cyprus.

Question 67

The Maastricht Treaty called for:

A)the creation of an Asia Free Trade Area (AFTA).
B)the creation of an economic and monetary union (EMU)in Europe.
C)Chile's acceptance into Mercosur.
D)the purchase of CDs and tapes from distributors in Europe.
E)the creation of the seven-nation European Free Trade Association (EFTA).

Question 68

In 2007, the United States and South Korea completed preliminary negotiations to establish the world's largest bilateral trade agreement which impacted all of the following except:

A)reduction of tariffs on 90% of product categories.
B)reduction of tariffs boosts exports from the United States.
C)a boon for Hyundai, Samsung, LG, and other South Korean industry leaders.
D)General motors, Ford, and Chrysler and other U.S.companies stand to benefit.
E)reduction of beef quota sold by the United States to Korea.

Question 69

The markets of Central and Eastern Europe present interesting opportunities and offer attractive locations for low-cost manufacturing due to:

A)their location being close to the sea.
B)the cultural similarities.
C)wage rates being lower than in Spain, Portugal and Greece.
D)strict laws and regulations.
E)prohibitive tariffs and export restrictions.

Question 70

In order to form a free trade area, South Africa has been in discussion with:

A)Swaziland.
B)EU.
C)Namibia.
D)Angola.
E)Japan.

Question 71

The introduction of the euro by EU resulted in multifaceted advantages which include:

A)elimination of costs associated with currency conversion.
B)fixed exchange rate worldwide.
C)elimination of paper currency and coins.
D)withdrawal of French Francs from circulation.
E)a choice for using local or European currency.

Question 72

Political and social instability in the Middle Eastern region can primarily be attributed to:

A)desert conditions and lack of agricultural land.
B)cultural differences among nations.
C)a wide gap between rich and poor nations due to oil revenues.
D)lack of water purification facilities.
E)absence of Western corporations.

Question 73

The member of the Gulf Cooperation Council (GCC)with the largest economy and population size is:

A)Bahrain.
B)Kuwait.
C)Oman.
D)Qatar.
E)Saudi Arabia.

Question 74

The non-EU member which uses the euro as its currency is:

A)Estonia.
B)Kosovo.
C)Montenegro.
D)Vatican City.
E)San Marino.

Question 75

In spite of having about 45% of the world's known oil reserves, Saudi Arabia and other Middle Eastern countries post current-account deficits, largely because:

A)of poor accounting practices.
B)of vast economic diversification.
C)they must import most of the goods and services.
D)most of the oil is exported.
E)new businesses are being developed.

Question 76

Markets of Central and Eastern Europe present interesting opportunities and challenges.Companies such as 3M International, McDonald's, Philips Electronics, and Henkel are moving into the region for all of the following reasons except:

A)the region is an important new source of growth.
B)that the first company to penetrate a country market often emerges as leader.
C)wage rates are much lower than those in Spain, Portugal, and Greece.
D)the region offers attractive locations for low-cost manufacturing.
E)core products and Western brand names need changes to meet consumer demands.

Question 77

In recent years, the economy of selected countries in ECOWAS has improved except in:

A)Ivory Coast.
B)Ghana.
C)Benin.
D)Sierra Leone.
E)Nigeria.

Question 78

Because they are in transition, the markets of Central and Eastern Europe present interesting opportunities and challenges which include:

A)new source of growth.
B)first mover advantage.
C)exporting as an entry mode.
D)lower wage rate.
E)all of the above.

Question 79

The enlargement of the EU has impacted marketing strategies in the eurozone countries by:

A)making it difficult to export food products from one country to another.
B)increasing the cost of production since the euro replaced local currency.
C)shifting products from one market to another in the event of shortages.
D)reduced tariffs and quotas for products imported from non-EU members.
E)having less flexibility in the placement of factories.

Question 80

The Middle East and North Africa are sometimes viewed as a regional entity referred to as:

A)GCC.
B)AMU.
C)MENA.
D)ACC.
E)ECOWAS.