Exam 6: Trade Regulations and Industrial Policies

Under U.S. commercial policy, which clause permits the modification of a trade liberalization agreement on a temporary basis if serious injury occurs to domestic producers as a result of the agreement?

Economic sanctions are most effective in causing the target nation to modify its behavior when the:

The average tariff rate today on dutiable imports in the United States is approximately:

It is widely recognized that the economic sanctions levied against Iraq in 1990 were a major factor causing Iraq to withdraw its military forces from Kuwait.

According to the strategic-trade-policy hypothesis, government can alter the terms of competition to favor domestic companies, thus increasing their profits at the expense of their rivals.

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable influence the South Korean (world) price. Assume the South Korean price to be $60 per calculator. Figure 6.2. Effects of an Export Subsidy -Consider Figure 6.2. With free trade, Mexican consumers purchase ____ calculators, Mexican firms produce ____ calculators, and ____ calculators are imported.

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.

Export embargoes induce greater losses in consumer surplus for the target country:

The strategic-trade-policy hypothesis assumes that domestic firms operate under increasing cost conditions as well as in perfectly competitive markets.

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

Industrial policies

Concerning industrial policy, the United States has nationalized its major industries in an attempt to promote global champions.

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.

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

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.

Assume Boeing Inc. (of the United States) and Airbus Industrie (of Europe) rival for monopoly profits in the Canadian aircraft market. Suppose the two firms face identical cost and demand conditions, as seen in Figure 6.1. Figure 6.1. Strategic Trade Policy: Boeing versus Airbus -Consider Figure 6.1. At the monopoly price as established by Boeing, Canadian consumers realize $____ of consumer surplus from the availability of aircraft.

During the post World War II era, the United States has adopted explicit industrial policies similar to those of France and Japan.

According to the strategic- trade- policy hypothesis, governmental subsidies granted to domestic producers can help them in capturing economic profits from foreign competitors.

The implicit industrial policies of the U.S. government have included:

The United States