Test 1- chapter 3 Flashcards Preview

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Flashcards in Test 1- chapter 3 Deck (15)
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0
Q

Types of barriers- Tariffs

A
  • Penalize countries that are not politically align with the importing country
  • Generate revenues
1
Q

Arguments of protectionism

A

-Protection of markets with excess productive capacity
-Employment protection and protection of markets with excess labor
-Infant industry argument
-Natural resources conservation and environmental protection
Consumer Protection
-National defense

2
Q

Types of barriers- non tariff barriers

A
  • Measures, other than traditional tariffs that are used to distort international trade flows:
  • Raise prices of both imports and import competing goods
  • Favor domestic over foreign supply sources by causing importers to change higher prices and to restrict import volumes
3
Q

Types of barriers- Quotas

A
  • Specify unit limit or value of a product that may be implied during a specified period
  • administered either on a global first come, first served basis or on a bilateral basis to restrict shipments from a specific supply source
4
Q

Other types of barries

A
  • Licenses
  • Price controls
  • Standards
  • Boycott, embargoes and sanction
5
Q

WTO functions

A
  • Ensures free flow of trade
  • Provides assistance to developing and transition economies
  • Offers help for export promotion
  • Promotes regional trade agreements and economic cooperation
  • Reviews members’ trade policies and engages in routine notification of new trade measures
6
Q

Bilateral agreements

A

Limited to two countries BTA provision

7
Q

Multilateral forums and agreemnts

A
  • general agreements between multiple countries

- typically, they are industry specific

8
Q

Free trade agreements

A
  • Countries reduce or eliminate trade barries on all goods and services traded between them
  • NAFTA
  • FTAA- ambitious plan to creat a market of 800 million and an annal production of 11 trillion dollars in the current deecade
9
Q

Common Market

A

Eliminate all tariff and non tariff barriers to trade, adopt common external tariffs, and allow for free movement of capital and labor within the common market. Requires a significant degree of harmony and cooperation on fiscal, monetary and employment policies

10
Q

Monetary union

A
Involves:
-a common monetary policy
-the creation of a unified central bank
-The use of a single currency
Sacrifice of national sovereignty to bureaucratic control
11
Q

Political Union

A
  • common governing and legislative bodies, and enforcement powers
  • ex European Union
  • Less protectionism: higher economic growth
  • Lower cost of doing business

-Cultural differences persist
-increased price competition within blocks
-across trading block rivalry can increase barriers
Improvement of competitiveness of many local firm within the blocks

12
Q

NAFTA

A

General:

  • Tariffs reduced across all sectors by 99% over 10 years
  • FDI unrestricted (x-oil and railways in mexico, culture in canada, airlines-communication US)
  • No free movement of labor
  • Cross border flow of services unrestricted
  • Application of environmental standards
  • Two commissions have the right to impose penalties when issues of health/safety, child labor, min wages violated
13
Q

Case for and against NAFTA

A

For:

  • jobs and investment for mexico
  • lower cost of living and export potential in US/Canada
  • US/canadian firms more competitive

Against:
-Job exodus

14
Q

Euro Land

A

Euro book notes and coins have been in circulation since January 1 2002 and are now a part of daily life for the 315 million europeans living in the euro area