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Chapter 20: Q. 49 (page 491)

Why do you think that the GATT rounds and, more recently, WTO negotiations have become longer and more difficult to resolve?

Short Answer

Expert verified

The GATT rounds and WTO negotiations have become longer and more difficult to resolve because like other goods negotiations also have diminishing marginal returns. If a set of policies have been executed, then it is difficult to resolve the remaining concerns.

Step by step solution

01

Step 1. Meaning of GATT and WTO.

General Agreement on Tariffs and Trade (GATT) is an agreement on international trade and World Trade Organization or WTO is an inter-governmental organization. Both GATT and WTO aim to facilitate international trade.

02

Step 2. Reason for the difficulty to resolve.

The GATT rounds and WTO negotiations have become longer and more difficult to resolve because like other goods negotiations also have diminishing marginal returns. If a set of policies have been executed, then it is difficult to resolve the remaining concerns.

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Most popular questions from this chapter

The country of Pepper land exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table.

Price\(Qd
Qs
60230180
70200200
80170220
90150240
100140250

Table 20.6 Pepper land

Price\)Qd
Qs
60430
310
70420330
80410360
90400400
100390440

Table 20.7 Land of Submarines

a. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell?

b. What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell?

c. Sketch two supply and demand diagrams, one for each country, in the situation before trade.

d. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade.

e. If the Land of Submarines imposes an antidumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country.

f. Does your general answer change if the Land of Submarines imposes an import quota of 70?

Why might a tax on domestic consumption of resources critical for national security be a more efficient approach than barriers to imports?

Economists sometimes say that protectionism is the “second-best” choice for dealing with any particular problem. What they mean is that there is often a policy choice that is more direct or effective for dealing with the problem—a choice that would still allow the benefits of trade to occur. Explain why protectionism is a “second-best” choice for:

a. helping workers as a group

b. helping industries stay strong

c. protecting the environment

d. advancing national defense

Why would countries promote protectionist laws, while also negotiate for freer trade internationally?

If trade barriers hurt the average worker in an economy (due to lower wages), why does the government create trade barriers?
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