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CAT RC Practice Set-21

Many United States companies have, unfortunately, made the search for legal protection from import competition into a major line of work. Since 1980 the United States International Trade Commission has received about 280 complaints alleging damage from imports that benefit from subsidies by foreign governments. Another 340 charge that foreign companies “dumped” their products in the United States at “less than fair value.” Even when no unfair practices are alleged, the simple claim that an industry has been injured by imports is sufficient grounds to seek relief.

Contrary to the general impression, this quest for import relief has hurt more companies than it has helped. As corporations begin to function globally, they develop an intricate web of marketing, production, and research relationships. The complexity of these relationships makes it unlikely that a system of import relief laws will meet the strategic needs of all the units under the same parent company.

Internationalization increases the danger that foreign companies will use import relief laws against the very companies the laws were designed to protect. Suppose a United States-owned company establishes an overseas plant to manufacture a product while its competitor makes the same product in the United States. If the competitor can prove injury from the imports—and that the United States company received a subsidy from a foreign government to build its plant abroad—the United States company’s products will be uncompetitive in the United States, since they would be subject to duties.

Perhaps the most brazen case occurred when the ITC investigated allegations that Canadian companies were injuring the United States salt industry by dumping rock salt , used to de-ice roads. The bizarre aspect of the complaint was that a foreign conglomerate with United States operations was crying for help against a United States company with foreign operations. The “United States” company claiming injury was a subsidiary of a Dutch conglomerate, while the “Canadian” companies included a subsidiary of a Chicago firm that was the second-largest domestic producer of rock salt.

Question: The passage is chiefly concerned with

  1. arguing against the increased internationalization of United States corporations
  2. warning that the application of laws affecting trade frequently has unintended consequences
  3. demonstrating that foreign-based firms receive more subsidies from their governments than United States firms receive from the United States government
  4. advocating the use of trade restrictions for “dumped” products but not for other imports
  5. recommending a uniform method for handling claims of unfair trade practices
Option: 2

Question: It can be inferred from the passage that the minimal basis for a complaint to the International Trade Commission is which of the following?

  1. A foreign competitor has received a subsidy from a foreign government.
  2. A foreign competitor has substantially increased the volume of products shipped to the United States.
  3. A foreign competitor is selling products in the United States at less than fair market value.
  4. The company requesting import relief has been injured by the sale of imports in the United States.
  5. The company requesting import relief has been barred from exporting products to the country of its foreign competitor.
Option: 4

Question: The last paragraph performs which of the following functions in the passage?

  1. It summarizes the discussion thus far and suggests additional areas of research.
  2. It presents a recommendation based on the evidence presented earlier.
  3. It discusses an exceptional case in which the results expected by the author of the passage were not obtained.
  4. It introduces an additional area of concern not mentioned earlier.
  5. It cites a specific case that illustrates a problem presented more generally in the previous paragraph.
Option: 5

Question: The passage warns of which of the following dangers?

  1. Companies in the United States may receive no protection from imports unless they actively seek protection from import competition.
  2. Companies that seek legal protection from import competition may incur legal costs that far exceed any possible gain.
  3. Companies that are United States-owned but operate internationally may not be eligible for protection from import competition under the laws of the countries in which their plants operate.
  4. Companies that are not United States-owned may seek legal protection from import competition under United States import relief laws.
  5. Companies in the United States that import raw materials may have to pay duties on those materials.
Option: 4

Question: The passage suggests that which of the following is most likely to be true of United States trade laws?

  1. They will eliminate the practice of “dumping” products in the United States.
  2. They will enable manufacturers in the United States to compete more profitably outside the United States.
  3. They will affect United States trade with Canada more negatively than trade with other nations.
  4. Those that help one unit within a parent company will not necessarily help other units in the company.
  5. Those that are applied to international companies will accomplish their intended result.
Option: 4

Question: It can be inferred from the passage that the author believes which of the following about the complaint mentioned in the last paragraph?

  1. The ITC acted unfairly toward the complainant in its investigation.
  2. The complaint violated the intent of import relief laws.
  3. The response of the ITC to the complaint provided suitable relief from unfair trade practices to the complainant.
  4. The ITC did not have access to appropriate information concerning the case.
  5. Each of the companies involved in the complaint acted in its own best interest.
Option: 2

Question: According to the passage, companies have the general impression that International Trade Commission import relief practices have()

  1. caused unpredictable fluctuations in volumes of imports and exports
  2. achieved their desired effect only under unusual circumstances
  3. actually helped companies that have requested import relief
  4. been opposed by the business community
  5. had less impact on international companies than the business community expected
Option: 3

Question: According to the passage, the International Trade Commission is involved in which of the following?

  1. Investigating allegations of unfair import competition
  2. Granting subsidies to companies in the United States that have been injured by import competition
  3. Recommending legislation to ensure fair
  4. Identifying international corporations that wish to build plants in the United States
  5. Assisting corporations in the United States that wish to compete globally
Option: 1

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