Chinese Tire Maker Rejects Charge of Defects U.S. regulators ordered the recall of more than 450,000 faulty

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Chinese Tire Maker Rejects Charge of Defects U.S. regulators ordered the recall of more than 450,000 faulty tires. The Chinese producer of the tires disputed the allegations and hinted that the recall might be an effort to hamper Chinese exports to the United States.

Source: International Herald Tribune, June 26, 2007

a. What does the news clip imply about the comparative advantage of producing tires in the United States and China?

b. Could product quality be a valid argument against free trade? If it could, explain how.

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Macroeconomics

ISBN: 125367

12th Global Edition

Authors: Michael Parkin

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