MACROECONOMICS IN THE GLOBAL ENVIRONMENT INTERNATIONAL ECONOMICS The World Trade
ID: 1152387 • Letter: M
Question
MACROECONOMICS IN THE GLOBAL ENVIRONMENT
INTERNATIONAL ECONOMICS
The World Trade Organisation (WTO) is founded on the principles of national treatment and non-discrimination
(a) Explain briefly what is meant by national treatment and non-discrimination.
(b) Tariffs, a tax on the value of imports, and quotas, typically a restriction on the quantity of imports, are popular tools for restricting trade and protecting domestic industries. Why is a tariff generally preferable to a quota? (Hint: a microeconomic supply and demand diagram may help.)
INTERNATIONAL ECONOMICS The World Trade Organisation (WTO) is founded on the principles of national treatment and non-discrimination (a) Explain briefly what is meant by national treatment and non-discrimination (b) Tariffs, a tax on the value of imports, and quotas, typically a restriction on the quantity of imports, are popular tools for restricting trade and protecting domestic industries. Why is a tariff generally preferable to a quota? (Hint: a microeconomic supply and demand diagram may help.)Explanation / Answer
a) National treatment is a basic principle of GATT/WTO that prohibits discrimination between imported and domestically produced goods with respect to internal taxation or other government regulation
b) Tariffs are preferred over Quotas because of following reasons:
1. Tariffs generate revenue.
2. Quotas might promote corruption.
3. Quotas might encourage smuggling.
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