1. Protectionism, GATT, and world trade The Smoot-Hawley Act, signed into law in 1930, increased U.S. tariffs to an unprecedented level of 53%, causing a sharp decline in U.S. exports. In 1934, however, changes in the U.S. trade policy enabled U.S. manufacturers to resume business with their foreign distributors. Which of the following is the most likely reason for the increase in U.S. exports after these changes? O Congress was given the authority to approve bilateral trade agreements. O The scientific tariff was introduced, which allowed the president to increase tariff levels if foreign production costs were below those of the United States. @ The president received the authority to negotiate bilateral tariff-reduction agreements with foreign governments. The signing of the General Agreement on Tariffs and Trade (GATT) in 1947 resulted in the adoption of several new trade policies. In the following table, indicate if each of the policies listed was a result of GATT. Then, complete the last column by identifying the means by which each GATT policy was implemented. Policy GATT Policy Implementation Promotion of lower trade barriers Yes W v Promotion of trade transparency Yes W v Promotion of discriminatory taxes No v In the 1970s, multilateral negotiations called the _Tokyo Round "W resulted in W and caused an increase W in U.S. exports. Clear and public trade rules Introduction of countervailing duties Not a GATT policy Settling trade disputes lower tariffs and fewer quotas on manufactured goods lower subsidies to manufacturers more quotas on manufactured goods The World Trade Organization (WTOQO) was built on the basis of the General Agreement on Tariffs and Trade (GATT) and, thus, inherited many of its features. Still, the WTO proved to be a very distinct institution. Indicate whether each property in the following table is a unique property of the WTO compared to GATT. Unique Property of WTO Property Yes No Acts as a government Limits participation to a few nations Enforces dispute settlements Oversees tariff cuts and reduction of nontariff measures Olo0|]0|0|0 O] 0|0|0O Enforces binding commitments In which of the following cases can the United States raise tariffs on imports from another member of the WTO? O When the United States forms a customs union with that country O In response to unfair trade practices by that country O If all members of the WTO are notified O If the United States believes that the existing tariffs are too low Indicate whether each scenario in the following table represents a retaliatory tariff, a safeqguard, or an environmental issue. Retaliatory Environmental Scenario Tariff Safeguard Issue The United States bans imports of furs from countries using leg-hold traps for catching _ O O O animals. A small country, like Ecuador, applies a higher tariff to imports from a large country that o o o has been conducting unfair trade practices. The United States imposes higher tariffs on the import of prepared mushrooms for four o o o years to give domestic producers time to adjust to import competition. Which of the following arguments can be used to correctly defend the WTO's position on retaliatory tariffs? Check all that apply. [ Retaliatory tariffs are allowed to offset export prices that are below the average total cost of production. (J Accusing foreign firms of dumping is less costly than producing goods compstitively. (J A countervailing duty protects import-competing producers. Indicate whether each outcome in the following table is or is not an objective of economic sanctions. Outcome Objective Not an Objective Protection of human rights O O Protection of the domestic economy O O Export promotion O O O O Promote imperfect competition In 1990, Western countries imposed economic sanctions on Iraq with the goal of terminating Iraq's military takeover of Kuwait. Prior to the sanctions, oil and equipment were exported internationally by Irag. The following graph shows Irag's production possibilities frontier (PPF) before the sanctions were imposed. Drag the PPF curve on the following graph to show the effects of the imposed economic sanctions on Iraq's production possibilities frontier. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. 200 O 180 PPF 160 140 120 OIL (Barrels) 100 80 60 40 20 PPF 0 0 20 40 60 80 100 120 140 160 180 200 EQUIPMENTWhich of the following would impact the effectiveness of economic sanctions? Check all that apply. (J The extent of political opposition in the target nation (J The extent of imperfect competition () cultural factors in the target nation