Notes Mar3 - When a group of countries form a preferential...

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EC340 Sec. 3 Professor Matusz 3/3/2011 U.S. Trade Policy - Constitution of the U.S. o Prohibits export taxes o Responsibility for all matters relative to foreign commerce is given to Congress - International agreements o U.S. was part of the General Agreement on Tariffs and Trade o GATT became World Trade Organization in 1995 - Unconditional Most Favored Nation Principle o Consider 3 countries that are members of WTO: A, B and C o Tariff imposed by country A on imports from country B has to be the same as tariffs imposed by country A on imports from country C o MFN is a principle of non-discrimination o Two exceptions are allowed Industrialized rich countries can discriminate in favor of poor less developed countries (generalized system of preferences)
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Unformatted text preview: When a group of countries form a preferential trade agreement (ex. NAFTA, European Union)-WTO (and GATT) prohibits certain behaviors o Members cannot subsidize exports o No need for domestic injury o Dumping when a firm exports a product to another country at a price lower than the cost of production-WTO requires 2-track procedure in response to dumping o Fact Finding o Demonstration that dumping causes injury to domestic economy o If both confirmed, U.S. levies an anti-dumping duty-Since trade shocks can cause adjustment cost the WTO allows a country to implement safeguard provisions. These are explicitly temporary policies that are designed to ease the transition from one equilibrium to another...
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This note was uploaded on 10/04/2011 for the course EC 340 taught by Professor Ballie during the Spring '10 term at Michigan State University.

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