COPYRIGHTED MATERIAL
LET'S PRACTICE
Name: _____________________________________________________________________________
Can HnnH’s Glucosia Sales be Saved?
1. The Glucosian government wants their nation’s companies to succeed. It’s charging foreign companies an “opportunity fee” to do business in Glucosia. The effect of this is to give a price advantage to Glucosian-made products. Glucosia is a WTO member nation. Is this so-called “opportunity fee” a barrier to trade in disguise? _____. If so, what kind? _________ 2. The Glucosian government has limited the quantity of goods that HnnH may export to their country. What kind of barrier to trade is this? _________ Yes tariff quota
3. HnnH’s ships have been denied access to the main port. Shipments must be unloaded at a small port 100 miles to the north and trucked in over the mountains to the main city, a costly process. Is this a barrier to free trade? _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 4. The Glucosian government informed HnnH that if it wants to manufacture products in their country, it may do so only with equipment made in Glucosia. Is this a barrier to free trade? Explain. _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 5. The Glucosian government is requiring HnnH to obtain a special medical products sales license to do business. However, it will not be able to obtain the license for two years. Is this a barrier to trade? _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ Yes, this appears to be a protectionist strategy (barrier to free trade), particularly if there is no other reason to divert HnnH shipments to this inconvenient port, HnnH should be treated the same as local companies. Possibly. This prevents HnnH from getting its goods into the Glucosian market, which restricts trade . HnnH must be treated the same as local companies. If this is a requirement for Glucosians too – it may be OK. Yes this appears to be a protectionist strategy. It is a local content requirement. This makes it impossible / too costly for HnnH to do business in Glucosia. PRODUCT PREVIEW
323 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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