Eastern Oregon University Administrative Trade Barriers Questions Ch 7 #4 on page 209 1st pictureCh 8 #4 on page 235 2nd pictureCh 9 #1 on page 267 3rd picture 3. Given the arguments relating to the new trade
theory and strategic trade policy, what kind of
trade policy should business be pressuring
government to adopt?
4. You are an employee of a U.S.firm that produces
personal computers in Thailand and then
exports them to the United States and other
countries for sale. The personal computers were
originally produced in Thailand to take
advantage of relatively low labor costs and a
skilled workforce. Other possible locations
considered at the time were Malaysia and Hong
Kong. The U.S. government decides to impose
punitive 100 percent ad valorem tariffs on
imports of computers from Thailand to punish
the country for administrative trade barriers
that restrict U.S. exports to Thailand. How
should your firm respond? What does this tell
you about the use of targeted trade barriers?
5. Reread the Management Focus Protecting U.S.
Magnesium.” Who gains most from the
antidumping duties levied by the United States
on imports of magnesium from China and
Russia? Who are the losers? Are these duties in
the best national interests of the United States?
percent of gross fixed capital for
Ireland but only 4.1 percent in Japan (gross fixed
capital formation refers to investments in fixed
assets such as factories, warehouses, and retail
stores). What do you think explains this
difference in FDI inflows into the two countries?
2. Compare and contrast these explanations of FDI:
internalization theory and Knickerbocker’s
theory of FDI. Which theory do you think offers
the best explanation of the historical pattern of
3. What are the strengths of the eclectic theory of
FDI? Can you see any shortcomings? How does
the eclectic theory influence management
4. Read the Management Focus “Burberry Shifts Its
Entry Strategy in Japan” and then answer the
a. Why did Burberry initially choose a licensing
strategy to expand its presence in Japan?
b. What limitations of licensing
became apparent over time? Should Burberry
have expected these drawbacks to arise?
c. Was terminating the Japanese licensing
agreement and opening wholly owned stores
11. The free movement of goods across borders, the
harmonization of product standards, and the
simplification of tax regimes make it possible for
firms based in a free trade area to realize
potentially enormous cost economies by
centralizing production in those locations within
the area where the mix of factor costs and skills
12. The lowering of barriers to trade and investment
among countries within a trade group will
probably be followed by increased price
Critical Thinking and Discussion
1. NAFTA produced significant net benefits for the
Canadian, Mexican, and U.S. economies. Discuss.
2. What are the economic and political arguments
for regional economic integration? Given these
arguments, why don’t we see more substantial
examples of integration in the world economy?
3. What in general was the effect of the creation of
a single market and a single currency within the
EU on competition within the EU? Why?
4. Do you think it is correct for the European
Commission to restrict mergers between
American companies that do business in Europe?
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