Definitions
Tariff
A tax levied on imports (or exports)
Most common political argument for government intervention is that it is necessary for protecting what from what?
Jobs and industries from unfair foreign competition
What is by far the oldest economic argument for government intervention?
The infant industry argument
What does WTO stand for?
World Trade Organizer
A common hybrid of a quota and a tariff is known as what?
A tariff rate quota
Subsidy
A government payment to a domestic producer
Why do countries argue that it is necessary to protect certain industries?
Because they are important for national security
What is the infant industry argument?
Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with established industries in developed countries
What is the WTO?
An intergovernmental organization that regulates international trade
What is a voluntary export restraint (VER)?
A quota on trade imposed by the exporting country
Import Quota
A direct restriction on the quantity of some good that may be imported into a country
Why is the imposition of punitive tariffs risky?
Because the country may respond by raising trade barriers of its own
What is the strategic trade policy?
It describes the policy certain countries adopt in order to affect the outcome of strategic interactions between firms in an international oligopoly, an industry dominated by a small number of firms
Of the cases brought to the WTO, how many haven been resolved by informal consultations between the disputing countries?
3/4
Antidumping duties are often called what?
Countervailing duties
Specific tariffs
Levied as a fixed charge for each unit of a good imported
Many governments have long had regulations to protect consumers from what?
Unsafe products
What does the new trade theory argue?
That in industries in which the existence of substantial economies of scale implies that the world market will profitably support only a few firms, countries may predominate in the export of certain products simply because they have firms that were able to capture first-mover advantages
How many members did the WTO have by 2013?
159
How does local content regulations provide protection for a domestic producer of parts in the same way an import quota does?
By limiting foreign competition
Ad valorem tariffs
Levied as a proportion of the value of the imported good
Trade policy has been used several times to pressure or punish "____________" that do not abide by international law or norms
"rogue states"
What assumption does the infant industry argument rely on?
That firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital market
An issue that has become increasingly important to the WTO has been protecting what?
Intellectual property
In recent decades, which country's formal tariff and non tariff barriers have been among the lowest in the world?
Japan