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Ag Econ
Chapter 20: Globalization & Protectionism
| Term/Question | Definition/Answer |
|---|---|
| Protection | when government legislates policies to reduce/block imports |
| What is another thing that protectionism does? | shields domestic producers/workers from foreign competition in 3 different ways: tariffs, Import quotas, nontariff barriers |
| Import Quotas | numerical limitations on quantity of products country can import; sugar import quota system |
| Nontariff Barriers | ways a nation can draw up rules, regulations, inspections, and paperwork to make it more costly/difficult to import products; rules requireing certain safety standards/origin regulations |
| World Trade Organization (WTO) | organization that seeks to negotiate reductions in barriers to trade/adjudicate complaints about violations of international trade policy; successor to General Agreement on Tariffs and Trade (GATT) |
| Arguments in Support of Restricting Imports | Infant Industry Argument; Anti-Dumping Argument; Environmental Protection Argument; Unsafe Consumer Products Argument; National Interest Argument |
| Infant Industry Argument | block imports for limited time, give infant industry time to mature, before competing on equal terms in global economy |
| Dumping | selling goods below cost of production; Tractor A vs. Tractor B; Not Allowed under WTO Rules |
| Anti-Dumping Laws | block imports sold below cost of production by imposing tariffs that increase price of imports to reflect cost of production |
| (I) Why would foreign firms export product at less than cost of production - presumably taking loss? | Demand and Supply market prices, not cost of production |
| (S) Why would foreign firms export product at less than cost of production - presumably taking loss? | Dumping is part of long-term strategy to drive out domestic competition, then raise prices (predatory pricing) |
| Race to the bottom | when production locates in countries with the lowest environmental (or other) standards, putting pressure on all countries to reduce environmental standards |
| National Interest Argument | argument that there are compelling national interests against depending on key imports from other nations; oil/special material/technologies = national security apps |
| General Agreement on Tariffs & Trade (GATT) | forum in which nations could come together to negotiate reduction in tariffs & other barriers to trade; precursor to WTO - WWII est. after Great Depression |
| Free Trade Agreement | economic agreement between countries to allow free trade betwix members; without tariffs/quotas |
| Common Market | economic agreement betwix countries to allow free trade in goods, services, labor, & financial capital betwix members while having common external trade policy |
| Economic Union | economic agreement betwix countries to allow free trade betwix members, a common external trade policy, & coordinated monetary/fiscal policies; |
| What are some economic unions? | European Union (EU); North American Trade Agreement (NAFTA); Asia Pacific Economic Cooporation (APEC) |
Created by:
horktera
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