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Unformatted text preview: INTB 3350 Exam 2 Review Summer 2011 Chapter 6 o Key Terms Free Trade The absence of barriers to the free flow of goods and services between countries Tariff A tax levied by governments on imports or exports Specific tariff Levied as a fixed charge for each unit of good imported Ad valorem tariff Levied as a proportion of the value of the imported good Subsidy Government financial assistance to a domestic producer Import quota A direct restriction on the quantity of some good that can be imported into a country Tariff rate quota The process of applying a lower tariff rate to imports within the import quota than those over the quota Voluntary export restraint (VER) A quota on trade imposed by the exporting country, typically at the request of the importing countrys government Quota rent The extra profit producers make when supply is artificially limited by an import quota Local content requirement A requirement that some specific fraction of a good be produced domestically Administrative trade policies Rules adopted by governments that can be used to restrict imports or boost exports Dumping Selling goods in a foreign market for less than their cost of production or bellow their fair market value Antidumping policies Rules designed to punish foreign firms that engage in dumping and thus protect domestic producers from unfair foreign competition Countervailing duties Antidumping duties Helms-Burton Act Passed in 1996, this law allows Americans to use foreign firms that use Cuban property confiscated from them during Cubas 1959 revolution DAmato Act Passed in 1996, this law allows Americans to sue foreign firms that use property in Libya or Iran confiscated from Americans Infant industry argument Proposed by Alexander Hamilton in 1792, this oldest economic argument for government intervention states that developing countries have a comparative advantage in manufacturing Strategic trade policy Government policy aimed at either helping the countrys domestic firms retain first-mover gains or helping domestic firms find entry into a market; applied when world market will profitably support only a few firms and certain countries may predominate in the export of certain products simply because they had first-mover firms Smoot Hawley Act 1 [Type text] [Type text] [Type text] Passed in 1930, this U.S. law erected a wall of tariff barriers against imports o Sections Instruments of Trade Policy o Trade policy uses seven main instruments Tariffs Subsidies...
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This note was uploaded on 09/28/2011 for the course INTB 3350 taught by Professor Prudan during the Summer '08 term at University of Houston.
- Summer '08