MGMT 346 EXAM 3 QUESTIONS WITH VERIFIED
ANSWERS 2026
federal system - Answers - the states gave the federal congress exclusive power to
manage trade among the states with foreign nations
centralizes federal regulation of commercial policy
states forbidden to enter into treaties with foreign nations
free trade area - Answers - An FTA develops when two or more countries agree to
eliminate or phase out customs duties and other barriers to trade among the
participating countries ("members")
Duty-Free shipment entitlement only applies to products originating in an FTA member
country. Accordingly, there is no need for the member countries to have common
commercial policies toward non-participating countries outside the FTA.
Example: because Japanese steel imported into Mexico cannot be reimported duty-free
into the U.S., there is no need for Mexico or the U.S. to place the same customs duties
on Japanese steel or have a common commercial policy toward Japan
The U.S. is party to many FTAs (see Table 14.1)
customs union - Answers - In a Customs Union, such as the European Union (EU),
there is free trade in all goods that come through any of the EU members, even imports
from outside the European Union
A customs union such as the EU can only function if all of its members have common
tariffs on imports from outside the union. Accordingly, the EU member countries have a
common customs tariff
Under EU operating treaty, only the EU has the power to negotiate with other non-EU
countries on behalf of all EU member countries (for example, the United States cannot
negotiate with France over tariffs; it can only negotiate with the EU as a whole)
what countries make up NAFTA - Answers - The North American Free Trade Area was
created in 1994 pursuant to the provisions of the North Atlantic Free Trade Agreement
(NAFTA) signed by President Clinton (after heated political debate)
- NAFTA Purposes and Fears Voiced by Opponents:
Spur trade and investment in North America
Improve standard of living throughout the continent
, Cause loss of manufacturing jobs in U.S.
Hurt U.S. agriculture
what is the largest free trade area in the world? - Answers - Canada, Mexico, US
Who signed NAFTA? - Answers - Bill Clinton
is NAFTA a customs union or common market? - Answers - NO
NAFTA modeled on the 1989 U.S.-Canada free trade agreement
Lowered/phases out tariffs, quotas, import licenses and other barriers
Lowered non-tariff barriers to trade and commercial travel
Liberalized trade in goods and services, and contains specific provisions protecting
intellectual property rights
Protected the interests of foreign investors from arbitrary gov't expropriation action
Continuing nontariff barrier issues
how does NATIONAL TREATMENT play a role here? - Answers - -adopted from GATT
-When goods arrive and enter from another NAFTA country, the imported goods are
treated without discrimination and no differently than domestic goods
what type of goods does NAFTA apply to? - Answers - -goods wholly produced or
obtained in North America
-goods wholly obtained does not mean purchased
-NAFTA reduced tariffs apply only to goods that originate in the United States, Mexico
or Canada
-NAFTA goods producer must be able to trace all inputs to raw materials mined, grown,
or born in North America.
overall NAFTA flow of trade - Answers - Exports to Canada in 2018: $17.8 billion
Exports to Mexico in 2018: $30.7 billion
Top California Exports to Canada and Mexico:- Computer & Electronic Products ($13.7
Billion
ANSWERS 2026
federal system - Answers - the states gave the federal congress exclusive power to
manage trade among the states with foreign nations
centralizes federal regulation of commercial policy
states forbidden to enter into treaties with foreign nations
free trade area - Answers - An FTA develops when two or more countries agree to
eliminate or phase out customs duties and other barriers to trade among the
participating countries ("members")
Duty-Free shipment entitlement only applies to products originating in an FTA member
country. Accordingly, there is no need for the member countries to have common
commercial policies toward non-participating countries outside the FTA.
Example: because Japanese steel imported into Mexico cannot be reimported duty-free
into the U.S., there is no need for Mexico or the U.S. to place the same customs duties
on Japanese steel or have a common commercial policy toward Japan
The U.S. is party to many FTAs (see Table 14.1)
customs union - Answers - In a Customs Union, such as the European Union (EU),
there is free trade in all goods that come through any of the EU members, even imports
from outside the European Union
A customs union such as the EU can only function if all of its members have common
tariffs on imports from outside the union. Accordingly, the EU member countries have a
common customs tariff
Under EU operating treaty, only the EU has the power to negotiate with other non-EU
countries on behalf of all EU member countries (for example, the United States cannot
negotiate with France over tariffs; it can only negotiate with the EU as a whole)
what countries make up NAFTA - Answers - The North American Free Trade Area was
created in 1994 pursuant to the provisions of the North Atlantic Free Trade Agreement
(NAFTA) signed by President Clinton (after heated political debate)
- NAFTA Purposes and Fears Voiced by Opponents:
Spur trade and investment in North America
Improve standard of living throughout the continent
, Cause loss of manufacturing jobs in U.S.
Hurt U.S. agriculture
what is the largest free trade area in the world? - Answers - Canada, Mexico, US
Who signed NAFTA? - Answers - Bill Clinton
is NAFTA a customs union or common market? - Answers - NO
NAFTA modeled on the 1989 U.S.-Canada free trade agreement
Lowered/phases out tariffs, quotas, import licenses and other barriers
Lowered non-tariff barriers to trade and commercial travel
Liberalized trade in goods and services, and contains specific provisions protecting
intellectual property rights
Protected the interests of foreign investors from arbitrary gov't expropriation action
Continuing nontariff barrier issues
how does NATIONAL TREATMENT play a role here? - Answers - -adopted from GATT
-When goods arrive and enter from another NAFTA country, the imported goods are
treated without discrimination and no differently than domestic goods
what type of goods does NAFTA apply to? - Answers - -goods wholly produced or
obtained in North America
-goods wholly obtained does not mean purchased
-NAFTA reduced tariffs apply only to goods that originate in the United States, Mexico
or Canada
-NAFTA goods producer must be able to trace all inputs to raw materials mined, grown,
or born in North America.
overall NAFTA flow of trade - Answers - Exports to Canada in 2018: $17.8 billion
Exports to Mexico in 2018: $30.7 billion
Top California Exports to Canada and Mexico:- Computer & Electronic Products ($13.7
Billion
