Jan 31, 2017 · Quiz Lecture 9 -GATT Law and the World Trade Organization- Basic Principles Question 17 Multiple choice ( one answer ) ∙ Points : 1 When a nation that belongs to WTO imposes a tariff or quota on imported products , it is supposed to do so within the guidelines established by GATT .
Jan 31, 2017 · Nations are engaged in a trade war. A nation has first petitioned the United Nations for permission to do so. Question 17 Multiple choice (one answer) ∙ Points: 1 When a nation that belongs to WTO imposes a tariff or quota on imported products, it is supposed to do so within the guidelines established by GATT.
The Tariff vs. Quota Bottom Line. For these reasons, tariffs are generally considered to be preferable to import quotas. However, some economists believe that the best solution to the problem of tariffs and quotas is to get rid of them both. This isn't the view of most Americans or, apparently, of a majority of members of Congress, but it is ...
A nation must extend the same tariffs to all trading partners that are WTO members. Tariffs may be imposed in response to unfair trade practices such as dumping Countries should not limit the quantity of goods and services that they import Countries should declare export subsidies provided to particular firms, sectors, or industries.
Tariffs on all agricultural products are now bound. Almost all import restrictions that did not take the form of tariffs, such as quotas, have been converted to tariffs — a process known as “tariffication”. This has made markets substantially more predictable for agriculture.
These include commitments to cut and “bind” their customs duty rates on imports of goods. In some cases, tariffs are being cut to zero. There is also a significant increase in the number of “bound” tariffs — duty rates that are committed in the WTO and are difficult to raise.
For these reasons, tariffs are generally considered to be preferable to import quotas. However, some economists believe that the best solution to the problem of tariffs and quotas is to get rid of them both. This isn't the view of most Americans or, apparently, of a majority of members of Congress, but it is one held by some free-market economists.
An import quota of 5,000 might be reasonable if the demand for the product would otherwise be 6,000. Overnight, though, suppose the demand has now jumped to 60,000. With an import quota, there will be massive shortages and smuggling in cricket bats will become quite profitable. A tariff does not have these problems.
Tariffs generate revenue for the government. If the U.S. government puts a 20 percent tariffs on imported Indian cricket bats, they will collect $10 million dollars if $50 million worth of Indian cricket bats is imported in a year.
The government now has to tell some importer that their cricket bats will be let into the country and tell some other importer than he will not be. This gives the customs officials a lot of power, as they can now give access to favored corporations and deny access to those who are not favored.
This gives the customs officials a lot of power, as they can now give access to favored corporations and deny access to those who are not favored. This can cause a serious corruption problem in countries with import quotas, as the importers chosen to meet the quota are the ones who can provide the most favors to the customs officers.
Import quotas are more likely to cause smuggling. Both tariffs and import quotas will cause smuggling if they are set at unreasonable levels. If the tariff on cricket bats is set at 95 percent, then it's likely that people will try to sneak the bats into the country illegally, just as they would if the import quota is only a small fraction ...
The tariff is set at a level which causes the price of the cricket bats to rise just enough so that the demand for cricket bats falls to 5,000 per year. Although tariffs control the price of a good, they indirectly control the quantity sold of that good due to the interaction of supply and demand.