Case 1 - Sid and Brenda are two Canadian ladies who are enjoying tremendous success in their new business - "Lavish Locks."

They have developed a hair product which keeps hair smooth in very hot weather with high humidity, such as the weather that is typical in late Ontario summers.

Their Canadian manufacturing and distributing companies and retail stores cannot keep up with the demand for their product.

Naturally, their goal is world domination, however, they have become aware that there is a group called the WTO which governs international trade, that might slow them down.

• Neither lady likes following rules. They will now have to investigate the background and the rules of the WTO.

Q1. Since Sid and Brenda need some background on the history and rules of the World Trade Organization (WTO) why is it important for them to be familiar with the philosophy and provisions of the General Agreement on Tariffs and Trade (GATT)?

Q2. Do the GATT and WTO require countries to engage in freer trade? Explain your answer.

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*Lavish Locks has some competition it seems. There is a Canadian company who is already quite successful internationally known as "Strand Sticker" who offers a similar product at a slightly cheaper price.

Another reason for the success of Strand Sticker is their knowledge of the rules governing international trade.

Q3. What are three fundamental rules developed by the GATT and incorporated into the WTO that are likely known by Strand Sticker? Explain your answer.

Q4. Strand Sticker also went full steam ahead and assumed that if it encountered a problem along the way, that the Canadian government would find a way to bail them out. a) What is a subsidy? b) Is it illegal under the WTO? c) What are member countries entitled to do if products that are subsidized, enter their domestic markets? Explain your answer.