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________ is(are) at odds with free trade, the unrestricted flow of products, services, and capital across national borders.
Which of the following situations is an example of country risk?
Alpha Corp., a rice manufacturer based in Pakistan, suffered losses when the U.S. Department of Commerce decided to impose tariffs on the import of paddy rice to avoid competition for the domestic industry.
________ are checkpoints at the ports of entry in each country where government officials inspect imported products and levy tariffs.
What type of tariff is assessed as a percentage of the value of the imported product?
Financing or other resources that a government grants to a firm or group of firms, to ensure their survival or success is referred to as a ________.
A quantitative restriction on specific imports from a specific country for a set period of time is referred to as ________.
Which of the following is an example of nontariff trade barrier?
The U.S. Department of Commerce announced that white sugar imports will be limited to 7,500 million tons
Protectionist policies may also lead to ________.
Governments impose offensive barriers to ________.
pursue strategic or public policy objectives such as increasing employment
Governments impose defensive barriers to ________.
promote national security,
Imposing trade restrictions such as tariffs or quotas ________.
reduces the availability of products sold in the home market
Which of the following is TRUE with regard to protectionism?
It can trigger retaliation from foreign governments, which reduces sales prospects for exports.
Which of the following statements is TRUE about protection of an infant industry?
Governments can impose temporary trade barriers on foreign imports to ensure that young firms gain a large share of the domestic market.
________ refers to a tax imposed on imported products, effectively increasing the cost of acquisition for the customer.
Governments impose export controls for the purpose of ________.
preventing the export of certain products to certain countries
Which of the following is an example of an offensive rationale for government intervention?
The government of Rhodia requires foreign companies to enter its huge markets through joint ventures with local firms.
The Chinese government's policy of requiring foreign firms to enter the Chinese market via joint ventures is intended to ________.
create jobs for Chinese workers
Offensive rationales for government intervention fall into two categories: national strategic priorities and increasing employment.
A nontariff trade barrier is a government policy, regulation, or procedure that impedes trade through means other than explicit tariffs.
Protectionism refers to national economic policies designed to restrict free trade and protect domestic industries from foreign competition.
Governments impose defensive barriers to pursue strategic or public policy objectives, such as increasing employment or generating tax revenues.
Governments often impose trade barriers to restrict imports of products to protect infant industries,
Countries with many high-tech or high value-adding industries, such as information technology, pharmaceuticals, car manufacturing, or financial services, create better jobs and higher tax revenue.
The United Nations estimated that trade barriers alone cost developing countries ________ in lost trading opportunities with developed countries every year.
more than $500 billion
Typically, administrative and bureaucratic procedures ________.
hinder the activities of importers
________ refers to the requirement that firms include a minimum percentage of locally sourced inputs in the production of given products or services.
Local content requirements
In Cadmia, foreign-owned automobile manufacturing companies must be managed by a Cadmian national and most board members must be Cadmian citizens. This exemplifies ________.
FDI and ownership restrictions
Products are classified under about 8,000 different unique codes in the ________ schedule, a standardized system used worldwide.
harmonized (code) tariff
A flat fee or fixed amount per unit imposed by a government on an imported product is called a(n) ________.
Under the ________, Canada, Mexico, and the United States have eliminated nearly all tariffs on product imports from each other.
________ represent a major driver of market globalization.
Continued reductions in trade restrictions
Nontariff trade barriers have increased in popularity partly because they ________.
are easier to conceal from the WTO
An import license refers to a ________.
formal permission to import
A(n) ________ is a tax that is assessed as a percentage of the value of the imported product.
ad valorem tariff
Restrictions on the outflow of hard currency from a country or on the inflow of foreign currencies is called ________.
Governments sometimes retaliate against subsidies by imposing ________, tariffs on products imported into a country to offset subsidies given to producers or exporters in the exporting country.
Which of the following may allow a manufacturer to practice dumping?
________ are used when governments impose limits, under which firms agree to limit exports of certain products.
Voluntary export restraints
Governments support domestic industries by ________.
adopting procurement policies that restrict purchases to home-country suppliers
A import tariff aims to protect domestic industries from foreign competition.
A countervailing duty is a tariff on products imported into a country to offset subsidies given to producers or exporters in the exporting country.
FDI and ownership restrictions increase the competitive advantage of foreigners while diminishing that of the local firms.
Currency controls can help conserve especially valuable currency or reduce the risk of capital flight.
Subsidies may allow a manufacturer to practice dumping—that is, to charge an unusually low price for exported products.
Dumping violates WTO rules because it amounts to unfair competition.
What is the primary ethical concern regarding the import of products from poor countries?
Higher tariffs hurt poor nations more than developed nations.
In 1930 the United States passed the Smoot-Hawley Tariff Act, which ________.
raised U.S. tariffs to near-record highs of more than 50 percent
Which of the following Asian countries had launched an ambitious program of industrialization and export-led development that contributed to its rise from poverty in the 1940s to one of the world's wealthiest countries by the 1980s?
Which of the following statements is TRUE of NAFTA?
It eliminated all tariffs and nontariff trade barriers on goods originating from within North America.
The imposition of trade barriers by governments is a major factor in the growth of developing nations and global commerce.
Subsidies can help counterbalance harmful consequences that disproportionately affect the poor.
Export-led development refers to government policies that impose high tariffs and quotas on imports from the developed world.
Countries as diverse as Chile, Hungary, Turkey, and South Korea have liberalized their previously protected markets, lowering trade barriers and subjecting themselves to greater competition from abroad.
The General Agreement on Tariffs and Trade (GATT) and now the World Trade Organization (WTO) was organized to reduce trade barriers, because high tariffs inhibited free trade and economic growth.
The global recession and financial crisis that began in 2008 arose largely from inadequate regulation and insufficient enforcement of current regulations in the banking and finance sectors.
Which of the following entry strategies do most firms use in the absence of high tariffs?
Which of the following is a method used by some manufacturers to avoid paying high tariffs?
assemble products in the target market
Firms use foreign trade zones to ________.
assemble foreign dutiable materials and components into finished products, which are then re-exported
A ________ is an area within a country that receives imported goods for assembly or other processing and subsequent re-export.
foreign trade zone
Which of the following would be most important for NAC managers to consider while taking a decision in favor of building a facility in Mexico or India?
What entry strategies are available in both countries that would allow NAC to minimize import barriers?
Given the high trade barriers in Mexico, the management of NAC is most likely to consider ________ to be an inappropriate entry strategy.
Which of the following must NAC ensure in order to reduce exposure to trade barriers?
accurate product classification
Tariffs and most nontariff trade barriers impact importers by making products more expensive.
If high tariffs are present, managers may consider other strategies, such as FDI, licensing, and joint ventures that allow the firm to operate directly in the target market, avoiding import barriers.
Tariffs are taxes that will increase the price to consumers.
Maquiladoras refer to export-assembly plants in northern Mexico along the U.S. border that produce components and typically finished products destined for the United States on a tariff-free basis.
One approach for reducing exposure to trade barriers is to have exported products classified in the appropriate harmonized product code.
Obtaining economic development incentives from host- or home-country governments increases the cost of trade and investment barriers.
A formal arrangement between two or more countries to reduce or eliminate tariffs is known as a ________.
free trade agreement
Which of the following terms refers to two or more geographically connected nations in pursuit of free trade relations?
Members of ________ allow free trade between members and agree to adopt common tariffs and non-tariff barriers that are applied to imports from nonmember countries.
The ________ is the simplest and most common level of regional integration.
free trade area
Which of the following exemplifies local content requirements?
At least 40 percent of the value of all computers assembled in Titania must be from parts or other inputs produced in Titania.
NAFTA is an example of which of the following levels of regional integration?
free trade area
Which of the following is an example of a customs union?
The ________ is the level of regional integration that remains an ideal and is yet to be achieved.
NAFTA is a treaty entered into by Canada, Mexico, and the United States
TRUE - usmca
MERCOSUR, an economic bloc in Latin America, is an example of an economic union.
The level of integration of a customs union is greater than that of a free trade area.
Which of the following economic blocs includes Switzerland as a member country?
Which of the following is responsible for determining the admission of new member countries to the EU?
the Council of the European Union
Members of ________ benefited the most from the maquiladora program.
Which of the following has occurred as a result of NAFTA?
Mexico's per-capita income has risen substantially.
Harmonization of standards is one of the steps taken by the EU to become an economic union.
Nations pursuing regional integration seek to ________.
A) increase the scale of the marketplace for firms inside the economic bloc
B) help firms increase the scale of operations and enhanced productivity
C) attract direct investment from outside the bloc
Which of the following is the most likely reason for the establishment of the European Community?
combine forces against the powerful former Soviet Union
Regional integration greatly increases the scale of the marketplace for firms inside the economic bloc.
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