Question

Regional trade agreements In the following table, indicate whether each statement about regional trade agreements is true or false. a. Under regional trade agreements, several countries eliminate tariffs among themselves and lower tariffs against all other countries b. Regional trade agreements are consistent with GATT's most favored nation principle. c. The countries in the European Union (EU) keep their own tariffs with the countries outside the EU.d. If China wants to sell a good to Canada, it can first export it to the United States, where the tariff is lower, and then ship it duty- free to Canada. e. Countries that enter into a free trade area agreement maintain a common schedule of tariffs with countries outside the agreement.f. Rules of origin are not needed in a customs union.

Answer 1

Answer:

A. True

B. True

C. True

D. True

E. False

F. True

Explanation:

It is true that under regional trade agreements, several countries eliminate tariffs among themselves and lower tariffs against all other countries.

It is true that regional trade agreements are consistent with GATT's most favored nation principle. GATT is an acronym for General agreement on tarrifs and trade and most favoured nation (MFN) is a status or level of treatment accorded by one state to another in international trade. The term means the country which is the recipient of this treatment must nominally receive equal trade advantages as the "most favoured nation" by the country granting such treatment (trade advantages include low tariffs or high import quotas).

It is true that the countries in the European Union (EU) keep their own tariffs with the countries outside the EU. The EU trade agreement is basically to promote trade among EU countries, not necessarily to lower tariffs for non members.

US and China have a trade agreement which lowers tarrifs and US and Canada operate a Free Trade agreement (FTA) which seeks to eliminate all tarrifs on trade between the two countries. Therefore If China wants to sell a good to Canada, it can first export it to the United States, where the tariff is lower, and then ship it duty- free to Canada.

It is false that countries who enter into a free trade area agreement maintain a common schedule of tariffs with countries outside the agreement. The agreement does not cover trade among non members.

In customs union, rules of origin are not needed. Custom unions only considers where the good is shipped from and not the originating nation.