Question 1

Among the codes of conduct addressed at the Tokyo Round of multilateral trade negotiations were customs valuation, product standards, subsidies and countervailing duties, government procurement policies, and import licensing procedures.

Accepted Answer

The figure and the statement do not provide any contradicting information, indicating that the given statement is true.

Question 2

An antidumping duty levied on imports of foreign-produced steel leads to an increase in consumer surplus in the home country.

Accepted Answer

The statement is about the Japanese market for jetliners, but the information given is about steel imports. Therefore, there is not enough information to determine whether the statement is true or false.

Question 3

According to the escape clause, temporary trade restrictions may be imposed in industries where domestic producers are substantially being harmed by surging imports.

Accepted Answer

The statement accurately reflects the escape clause provision.

Question 4

According to the fast-track provision of U.S.trade law, once the president has completed trade negotiations, their outcome is subject to a vote (without amendment) in Congress within 90 legislative days of submission.

Accepted Answer

This statement accurately describes the fast-track provision of U.S. trade law, also known as Trade Promotion Authority (TPA). Once negotiations are completed and the president submits the agreement to Congress, it is subject to a straight up-or-down vote within 90 legislative days, and cannot be amended.

Question 5

The Uruguay Round of trade negotiations resulted in the General Agreement on Tariffs and Trade being succeeded by the World Trade Organization.

Accepted Answer

This statement is true. The World Trade Organization (WTO) was established in 1995 to replace the General Agreement on Tariffs and Trade (GATT) as the international organization that oversees and regulates global trade. The Uruguay Round of trade negotiations, which took place from 1986 to 1994, resulted in the creation of the WTO.

Question 6

The main focus of the Uruguay Round of multilateral trade negotiations was on tariff barriers rather than nontariff trade barriers.

Accepted Answer

The Uruguay Round of multilateral trade negotiations, which took place from 1986 to 1994, focused significantly on both tariff and non-tariff barriers, aiming to extend the trading system into several new areas, including services and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles.

Question 7

Although the Uruguay Round of multilateral trade negotiations succeeded in reducing nontariff trade barriers, it could NOT achieve reductions in tariff trade barriers.

Accepted Answer

The statement is incorrect. The Uruguay Round of multilateral trade negotiations did succeed in reducing tariff trade barriers.

Question 8

The fast-track provision of U.S.trade law has the effect of speeding up the timetable during which the president negotiates trade agreements with foreign governments.

Accepted Answer

The statement accurately describes the fast-track provision of U.S. trade law.

Question 9

Under the government procurement policy of the World Trade Organization, federal-state-local governments are prevented from discriminating in favor of the products of domestic suppliers on contracts valued at $1 million and more.

Accepted Answer

The World Trade Organization's Agreement on Government Procurement (GPA) aims to ensure open, fair, and transparent conditions of competition in government procurement. However, it applies only to the countries that have agreed to be parties to the GPA and does not universally prevent all federal, state, or local governments from favoring domestic products, nor does it specify a $1 million threshold for such conditions.

Question 10

According to the General Agreement on Tariffs and Trade and its successor, the World Trade Organization, only bilateral trade negotiations can take place between a country and its trading partners.

Accepted Answer

The statement is false. Multilateral trade negotiations can also take place under the rules of the General Agreement on Tariffs and Trade and the World Trade Organization.

Question 11

According to the normal-trade-relations (most-favored-nation (MFN)) principle, if the United States extends MFN treatment to China and then grants a low tariff on imports of shirts from South Korea, the United States is obligated to provide the identical low tariff on imports of shirts from China.

Accepted Answer

According to the normal-trade-relations (most-favored-nation (MFN)) principle, MFN treatment must be extended to all member countries and any tariff concessions granted to one member country must be extended to all other member countries on equal terms. Therefore, if the United States grants a low tariff on imports of shirts from South Korea, it must also extend the same low tariff to imports of shirts from China if both countries are members of the World Trade Organization and receive MFN treatment.

Question 12

The purpose of "countervailing duties," as levied by the domestic government, is to neutralize import tariffs imposed by foreign governments.

Accepted Answer

Countervailing duties are imposed to offset subsidies provided by foreign governments to their exporters, not to neutralize import tariffs.

Question 13

The U.S.trade-remedy laws attempt to redress hardships for U.S.firms resulting from actions and policies of foreign firms and governments.

Accepted Answer

The statement accurately describes the purpose of the U.S. trade-remedy laws.

Question 14

According to U.S.trade law, the escape clause provides relief to U.S.firms that experience unfair foreign competition.

Accepted Answer

The escape clause, also known as Section 201 of the Trade Act of 1974, allows domestic industries to seek temporary relief from imports that cause or threaten to cause serious injury, regardless of whether the competition is considered "fair" or "unfair."

Question 15

U.S.tariffs on imports from countries issued normal-trade-relations (most-favored-nation) status are often three or four times as high as those on comparable imports from nations NOT receiving that status.

Accepted Answer

Normal-trade-relations (most-favored-nation) status means a country will receive the lowest tariff rate available from the United States, not higher rates compared to those not receiving that status.

Question 16

The only members of the General Agreement on Tariffs and Trade and its successor, the World Trade Organization, are developing countries rather than developed countries.

Accepted Answer

Both developing and developed countries are members of the General Agreement on Tariffs and Trade and its successor, the World Trade Organization.

Question 17

Unlike the Tokyo Round of multilateral trade negotiations, the Uruguay Round addressed the issues of intellectual property protection, trade barriers in services, and agricultural subsidies.

Accepted Answer

The statement is correct. The Tokyo Round did not address these issues, but they were addressed in the Uruguay Round.

Question 18

Economic theory suggests that if France is a net importer of automobiles, whose production is subsidized by the Korean government, the overall welfare of France decreases because of the Korean subsidy.

Accepted Answer

Economic theory suggests that if Korea subsidizes its automobile production, it lowers the production cost, which can lead to lower prices for French consumers. This can increase consumer surplus in France, potentially increasing overall welfare despite France being a net importer. The subsidy effectively transfers some of the Korean taxpayers' money to French consumers.

Question 19

Members of the General Agreement on Tariffs and Trade and its successor, the World Trade Organization, agree to the principle of nondiscrimination in trade and the reduction of trade barriers by multilateral negotiations.

Accepted Answer

The statement accurately describes the principles and agreements of both GATT and WTO regarding trade.

Question 20

Under the provisions of the World Trade Organization, Canada would have the right to impose countervailing duties on imports of South Korean steel when the South Korean government provides export subsidies to its steelmakers.

Accepted Answer

The World Trade Organization allows countries to impose countervailing duties (anti-subsidy duties) on imports when the exporting country is providing export subsidies to its producers. Therefore, Canada would have the right to impose countervailing duties on imports of South Korean steel if the South Korean government provides export subsidies to its steelmakers.

Quiz 6: Trade Regulations and Industrial Policies