Ch 8 #1-3,5,6

Ch 8 #1-3,5,6 - Ch 8 #1-3, 5, 6 1. Key Provisions of the...

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Ch 8 #1-3, 5, 6 1. Key Provisions of the GATT a. If the US applies a tariff to a product imported from one country, the GATT requires that the same level of tariffs, for steel in this example, be applied to all other countries in the GATT according to the “most favored nation (MFN)” principle. Tariffs applied to your most favored nation, in terms of trade, must be applied to all other nations in the GATT. b. Article 24 is an exception to the MFN principle because it exempts free trade and customs unions from the MFN principle. It’s an exception to MFN because under free trade, there are no tariffs between the countries in the partnership. For example, the US has 0 tariffs for Mexico and Canada under NAFTA but violates the MFN principle by imposing a tariff greater than 0 on nations outside of NAFTA. c. One exception to the article 9 to not maintain quotas has been through the MultiFibre Arrangement (MFA) of 1974. It allowed industrial countries to restrict importation of textiles from developing countries through the use of quotas. The reason behind the restriction is because of developing countries ability to produce at a much lower cost than domestic producers. If they were allowed to conduct free trade, the domestic textiles and
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Ch 8 #1-3,5,6 - Ch 8 #1-3, 5, 6 1. Key Provisions of the...

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