August-TIF Ch08

Chapter 8: Services and Labor
True or False Questions
1. The Framework Agreement for GATS lays out the scope and definition of GATS.
Answer: True
Diff: 1
Topic: General Agreement on Trade in Services
Skill: Legal Concepts
2. The Framework Agreement for GATS does not define what a service sector is.
Answer: True
Diff: 2
3. The GATS covers trade-related aspects of intellectual property rights.
Answer: False
Diff: 1
4. The GATS does not allow exceptions to the MFN treatment rule.
Answer: False
Diff: 1
5. The GATS provides a provision for a departure from the principle of national treatment
to ensure that direct taxes may be effectively collected on services.
Answer: True
Diff: 1
6. GATS members can list limitations on the number of natural persons that may be
employed in a particular service sector in Schedule of Specific Commitments.
Answer: True
Diff: 2
7. The operation of GATS is overseen by WTOs Council for Trade in Services.
Answer: True
Diff: 1
8. Dispute settlements related to GATS are governed by the Fact-Finding and

Conciliation Commission on Freedom of Association.
Answer: False
Diff: 2
9. An Italian woman opening a restaurant in England is exercising her right of

establishment under the EC Treaty.
Answer: True
Diff: 2
Topic: Regional Intergovernmental Regulations on Trade in Services
Skill: Factual Application
10. The EUs freedom of movement for workers is an absolute right for all citizens in the
EU.
Answer: False
Diff: 2
11. The NAFTA provides MFN provisions for trade in services sectors.
Answer: True
Diff: 2
12. The International Labor Office functions as the secretariat for the International Labor
Organization.
Answer: True
Diff: 1
Topic: International Labor Law
13. Recommendations are issued by the ILO when there is no consensus on the subject at
hand.
Answer: True
Diff: 1
14. The special list compiled by the Conference Committee of the ILO consists of the list
of those member states that have entered into free trade agreements with some other
states.
Answer: False
Diff: 1
15. The Administrative Tribunal of the ILO does not have the power to order an IGO to
undertake an action it has not begun on its own.
Answer: True
Diff: 2
16. The Universal Declaration of Human Rights protects laborers from being compelled
to join an association.
Answer: True
Diff: 1
17. The Universal Declaration of Human Rights is a leading treaty among several nations,
which deals with labor issues.
Answer: False
Diff: 2
18. Regulation 1612/68 limits the right of a worker to take up and pursue employment
within any of the EU states.
Answer: False
Diff: 2
Topic: Regional Intergovernmental Regulations on Labor
19. The International Labor Organization is responsible for enforcing the European
Convention on Human Rights of 1950.
Answer: False
Diff: 1
20. Only the Council of Europe has the power to sanction transnational labor unions in
Europe.
Answer: False
Diff: 1
21. The Universal Declaration of Human Rights proclaims that every individual has the
right to own a passport.
Answer: False
Diff: 1
Topic: Movement of Workers
22. Apart from a Presidentially granted exception, the only means by which an American
can lawfully leave the country or return to it is with a passport.
Answer: True
Diff: 1
23. In the United States, the H-1B visas are allocated to highly skilled professionals,
engineers, and software experts to work with U.S. companies.
Answer: True
Diff: 1
24. Student visas do not come under the Visa Waiver Program in the United States.
Answer: True
Diff: 1
25. All states limit the number of permanent visas that they grant to immigrants.
Answer: True
Diff: 1
Multiple Choice Questions
26. The ________ came into effect on January 1, 1995, as one of the three main
multilateral annexes to the Agreement Establishing the World Trade Organization.
A. General Agreement on Trade in Services (GATS)

B. Central European Free Trade Agreement
C. Trade and Investment Framework Agreement (TIFA)
D. Alpine Convention
Answer: A
Diff: 1
27. Which of the following components of the GATS agreement deal(s) with issues
unique to particular economic sectors, such as financial services and
telecommunications?
A. the Framework Agreement

B. the sectoral annexes
C. the Schedules of Specific Commitments
D. the appendices
Answer: B
Diff: 2
28. Which of the following is present in the GATS Framework Agreement?
A. the terms, limitations, and conditions that can be placed on market access
B. the sectoral annexes that deal with issues unique to particular economic sectors
C. the list of service sectors that members are willing to open to the markets
D. the general obligations and disciplines to be followed by member states
Answer: D
Diff: 2
29. The Framework Agreement covers all trade in services in any sector except those
________.
A. delivered in businesses involving international trade

B. supplied in the exercise of governmental functions
C. rendered in any bank related transactions
D. provided by private businesses within a country
Answer: B
Diff: 2
30. Which of the following is governed by GATS?
A. trade-related aspects of intellectual property rights

B. trade in goods
C. temporary services rendered by laborers
D. laws governing the permanent employment of natural persons
Answer: C
Diff: 3
31. The ________ is a GATS requirement that its member states accord immediately and
unconditionally to services and service suppliers of other members treatment that is no
less beneficial than that it accords to like services and service suppliers of any other state.
A. foreseeability standard
B. ultra vires rule
C. transparency provision
D. most-favored-nation treatment
Answer: D
Diff: 1
32. The ________ in GATS requires member states to publish, prior to their entry into
force, all of their national measures and international agreements that affect their
obligations under GATS.
A. ultra vires rule

B. foreseeability standard
C. most-favored-nation treatment
D. transparency provision
Answer: D
Diff: 1
33. GATS requires its member states to ensure that their domestic regulations affecting
trade in services are administered in a reasonable, objective, and impartial manner and as
soon as the ________ adopts harmonizing guidelines in these areas, it will require them
to bring their practices into compliance with those guidelines.
A. Council for Trade-Related Aspects of Intellectual Property Rights

B. Trade Negotiations Committee
C. Council on Trade in Services
D. Council for Trade in Goods
Answer: C
Diff: 1
34. Under which of the following conditions, a member nation can apply restrictions on
international transfers and payments for current transactions even though they are
typically forbidden by GATS?
A. The member nation is in transition to a market economy.

B. The member nation wants to grant monopoly rights to a service supplier.
C. The member nation wishes to not adopt the guidelines of the Council on Trade in
Services.
D. The member nation has been granted MFN status by another country.
Answer: A
Diff: 3
35. The Framework Agreement has a provision that authorizes an exception to the MFN
treatment rule when the difference in treatment is the result of ________.
A. a member granting monopoly status to a service supplier

B. an agreement for the avoidance of double taxation
C. adopting the guidelines specified by the Council on Trade in Services
D. a member retaining restrictive laws governing services
Answer: B
Diff: 2
36. Which of the following terms refers to a GATS requirement that a WTO member state
accord to services and service suppliers of other member states treatment no less
favorable than that listed in its GATS Schedule of Specific Commitments?
A. nolo contendere rule

B. ultra vires rule
C. market access
D. national treatment
Answer: C
Diff: 1
37. Which of the following terms refers to a GATS requirement that a WTO member state
accord to services and service suppliers of other member states treatment no less
favorable than what the member grants its own like services and service suppliers?
A. nolo contendere rule

B. market access
C. national treatment
D. foreseeability standard
Answer: C
Diff: 1
38. The operation of GATS is overseen by the ________ made up of representatives of all
WTO member states.
A. World Bank
B. International Monetary Fund
C. Trade Negotiations Committee
D. Council for Trade in Services
Answer: D
Diff: 1
39. Which of the following is true of the Council for Trade in Services?
A. It is meant to function within the framework of the WTO.

B. It is an independent body with no direct affiliation with any other international trade
organizations.
C. It develops the sectoral annexes that deal with issues unique to particular economic
sectors.
D. It lays out general obligations and disciplines of member states of IMF.
Answer: A
Diff: 3
40. The Treaty Establishing the European Community and the ________ of 2010 are the
principal sources of law in the EU, pertaining to business between and among its member
states.
A. Multilateral Agreement on Investment

B. Lisbon Treaty
C. Trade and Investment Framework Agreement
D. Free Trade Agreement
Answer: B
Diff: 1
41. Under the EC Treaty, the right of member state nationals and firms to settle
permanently and carry on a business throughout the EU is known as the ________.
A. foreseeability standard
B. freedom to provide services
C. right to participation
D. right of establishment
Answer: D
Diff: 1
42. Which of the following is true of labor restrictions that can be placed on newly joined
members under the EU?
A. that all restrictions have to be lifted after the first five years from joining
B. that the restrictions can be extended for two more years after the first five years of
joining
C. that the restrictions can only be added on the first two years after joining
D. that the freedom of movement of workers is an absolute right for all Europeans upon
joining the EU
Answer: B
Diff: 3
43. The North American Free Trade Agreement (NAFTA) differs from the GATS in that
NAFTA ________.
A. does not impose the national treatment requirement on its members

B. does not provide the right to have the international standard of care doctrine applied to
expropriations
C. does not deal with services but rather by sectors
D. does not have provisions for annexes
Answer: C
Diff: 2
44. GATS differs from NAFTA in that GATS _______.
A. specifically defines four basic modes of supply

B. does not allow its members to make their sector list restrictive
C. does not grant non-members the right to be free from performance requirements
D. does not deal with services generally, but rather by sectors.
Answer: A
Diff: 2
45. Which of the following is true of NAFTA members right to change the limitations on
their sectoral list?
A. They cannot make it more restrictive than it is.

B. They cannot make additional changes once it has been ratified.
C. They can only make it more restrictive than it is.
D. They can make it either more or less restrictive than it is.
Answer: A
Diff: 2
46. The ________ is a specialized agency of the United Nations responsible for
promoting international efforts to improve working conditions, living standards, and the
equitable treatment of workers worldwide.
A. International Labor Organization

B. International Centre for Trade Union Rights
C. Fair Labor Association
D. International Labor Rights Fund
Answer: A
Diff: 1
47. The legislative body of the ILO, made up of representatives from government, labor,
and management from each member state is referred to as the ________.
A. General Assembly
B. General Conference
C. Security Council
D. Secretariat
Answer: B
Diff: 1
48. Which of the following is a similarity between the Governing Body and the General
Conference of the ILO?
A. Both of them function as the secretariat of the ILO.

B. Both of them have the power to adopt recommendations.
C. Both of them have the power to approve conventions.
D. Both of them consist of a tripartite representation of government, labor, and employer.
Answer: D
Diff: 2
49. Which of the following is true of the Governing Body of the ILO?
A. It functions as the legislative body of the ILO.

B. It functions as the judicial body of the ILO.
C. It functions as the executive body of the ILO.
D. It functions as the secretariat of the ILO.
Answer: C
Diff: 2
50. Which of the following are sponsored by the ILO when there is substantial agreement
in the international community about a particular labor practice?
A. supplementations
B. justifications
C. recommendations
D. conventions
Answer: D
Diff: 1
51. Which of the following are issued by the ILO to solve those problems that have no
consensus or when the subject matter is too complex?
A. supplementations
B. justifications
C. recommendations
D. conventions
Answer: C
Diff: 1
52. Which of the following is true of the Committee of Experts on the Application of
Conventions and Recommendations?
A. It consists of individuals who are not biased toward any groups or governments.
B. Its members are appointed by the General Conference of the ILO.
C. Its members are drawn from government representatives of each member state.
D. It reviews the recommendations made by the Conference Committee on the
Application of Conventions and Recommendations at the General Conference.
Answer: A
Diff: 3
53. Which of the following is the main function of the ILO Conference Committee on the
Application of Conventions and Recommendations?
A. to create summaries of the information contained in the member states reports

B. to make a list of member states that have defaulted on their obligations to the ILO
C. to analyze submissions of cases involving unratified treaties
D. to evaluate the extent to which the parties have complied with their obligations
Answer: B
Diff: 2
54. The ILOs Convention Concerning Freedom of Association ________.
A. grants governments the right to prohibit workers from joining certain unions
B. grants workers the right to form trade unions free from governmental interference
C. protects workers from antiunion discrimination
D. protects unions from employer domination
Answer: B
Diff: 2
55. Together with the UN Economic and Social Council (ECOSOC), the Governing Body
established in 1950 a nine-member Fact-Finding and Conciliation Commission to
________.
A. analyze submissions of cases involving unratified treaties

B. create summaries of the information contained in the member states reports
C. consider complaints involving violations of the two freedom of association
conventions
D. make a list of member states that have defaulted on their obligations to the ILO
Answer: C
Diff: 2
56. In 1968, the Council of Ministers enacted ________ to implement the EC Treaty
Provisions on the free movement of workers.
A. Directive 68/360
B. Regulation 161/68
C. the Convention Concerning Freedom of Association
D. the Convention Concerning the Application of the Principles of the Right to Organize
and to Bargain Collectively
Answer: A
Diff: 1
57. The Treaty Establishing the European Community (EC Treaty) is meant to promote
________.
A. the private individuals liability for violations of international law

B. the use of the most-favored-nation (MFN) treatment within the EU member states
C. the use of Special Drawing Rights within the EU member states
D. the comprehensive economic integration of EU member states
Answer: D
Diff: 2
58. ________ of the EC Treaty grants the EU Council the power to adopt such measures
in the field of social security as are necessary to provide freedom of movement for
workers.
A. Article 42
B. Article 39
C. Article 39(2)
D. Article 40
Answer: A
Diff: 1
59. Which of the following workers rights overlaps between the European Convention
on Human Rights and the European Social Charter?
A. Every worker has the opportunity to earn his living in an occupation freely entered
upon.
B. Every worker has the right to benefit from social welfare services.
C. Every worker has the right to join trade unions for the protection of his interest.
D. All workers and their dependents have the right to social security.
Answer: C
Diff: 2
60. A person who is ________ is most likely to seek a permanent visa from the host
nation.
A. studying as an exchange student

B. officially representing another country
C. visiting a country as a tourist
D. applying for nationalization
Answer: D
Diff: 1
61. Visas are different from passports in that visas _______.
A. cannot be obtained after entering the host nation

B. are limited by time
C. are issued by the host nation
D. cannot be used to acquire nationalization
Answer: C
Diff: 2
62. Which of the following is true of the Visa Waiver Program?
A. It allows tourists to stay in a host nation for a limited time without a visa.
B. It allows tourists to stay indefinitely without a visa in a host nation.
C. It allows tourists to travel without passports.
D. It is a form of approval given to immigrant that has been nationalized.
Answer: A
Diff: 2
63. Which of the following categories can claim priority while applying for a permanent
visa as established by the U.S. Immigration and Nationality Act?
A. aliens who have dual citizenships

B. aliens who dont have family members of American citizens
C. aliens with special skills
D. aliens who have entered the United States using the Visa Waiver Program
Answer: C
Diff: 1
64. Which of the following cases would specifically fall under the special cases category
when being prioritized for permanent visa application in the United States?
A. an alien who is a citizen of one of the NAFTA countries

B. an alien who has entered the United States using the Visa Waiver Program
C. an alien who is doing business in the United States
D. an alien who is seeking political asylum in the United States
Answer: D
Diff: 2
65. Which of the following is a type of regulation against hiring foreign workers?
A. most-preferred-nation treatment
B. ultra vires rule
C. percentile legislation
D. nolo contendere
Answer: C
Diff: 1
Essay Questions
66. What are the basic parameters of GATS laid out in the Framework Agreement?
Answer: The Framework Agreement lays out the basic parameters of GATS in six parts.
These parts deal with (1) the scope and definition of GATS, (2) general obligations and
disciplines of member states, (3) obligations and disciplines concerning specific
commitments of member states, (4) a schedule for progressively liberalizing the worlds
trade in services, (5) the institutional structure for implementing GATS, and (6)
miscellaneous provisions (including definitions of key terms).
Diff: 2
67. How is trade in service defined under the GATS?
Answer: The Framework Agreement defines trade in services. It does so in terms of

modes of supply. Four modes are described: (1) the cross-border supply of services that
do not require the physical movement of either the supplier or the consumer (such as
telecommunications), (2) the supply of services that require the consumer to go to the
supplier (such as tourism), (3) services supplied by a service supplier from one member
state by means of a commercial presence in another members territory (such as banking),
and (4) services supplied in the territory of a member state by a service supplier from
another member state by means of the temporary presence of natural persons of another
member state (such as construction or consulting work).
Diff: 2
68. Describe the significance of the Schedule of Specific Commitments. List the
categories that a member can apply on sectors mentioned in its Schedule of Specific
Commitments?
Answer: GATS is designed to open up specific service sectors of the WTO member
states markets to international access on a sector-by-sector and a state-by-state basis.
Following negotiations, or on its own initiative, a member is to submit a Schedule of
Specific Commitments for annexation to GATS that lists the sectors (or subsectors) it is
opening to market access. The member may also list limitations that apply to these
sectors, and it must do so as to six categories of limitations if it wants those six to apply.
The categories of limitations that the member must either list or not apply are limitations
on (1) the number of service suppliers allowed, (2) the total value of transactions or
assets, (3) the total quantity of service output or the number of service operations, (4) the
number of natural persons that may be employed in a particular service sector, (5) the
type of legal entity or joint venture arrangement that a service supplier may use in
supplying a service, and (6) the participation of foreign capital in terms of a maximum
percentage limit on foreign shareholding or the total value of individual or aggregate
foreign investment.
Diff: 3
69. Discuss the similarities between the provisions for trade-in-services in the GATS and
NAFTA?
Answer: The trade-in-services provisions in NAFTA are very similar to those found in
GATS. As is the case with GATS, each of the NAFTA countries (Canada, Mexico, and the
United States) has to observe the basic rules of transparency, MFN treatment, and
national treatment. In addition, each NAFTA country is required to accord the better of
national or MFN treatment to services and service suppliers of the other two countries.
Also, as in GATS, service providers establishing a commercial presence in NAFTA
countries, including providers from non-NAFTA states, are granted several important
rights, including the right to be free from performance requirements, the right to make
inward and outward transfers, the right to have the international standard of care doctrine
applied to expropriations, and the right to have investorstate disputes resolved by
binding international arbitration.
Diff: 2
70. Describe the International Labor Offices institutional structure.
Answer: The ILOs institutional structure is made up of a General Conference that acts as
a legislative body, approving conventions and adopting recommendations; a Governing
Body that serves as the executive; and an International Labor Office headed by a
Director-General that functions as the organizations secretariat. The membership of the
General Conference comprises representatives from government, labor, and management.
Each national delegation includes four representatives: two from government, one from
labor, and one from employers. The same tripartite representation also exists in the
Governing Body, which is composed of 56 members, half of whom are appointed by
governments, a quarter by workers groups, and a quarter by employers organizations. Of
the 28 seats reserved for government representatives, 10 are further reserved for delegates
from the worlds principal industrial powers.
Diff: 2
71. Describe the significance of the international labor standards established by the ILO.
Answer: To pursue its goal of improving the lot of all working people, the ILO attempts
to establish rules or standards that have international effect. Three reasons are given for
why these standards need to have international effect. The first, and most practical one, is
that individual states are not inclined to enact domestic labor laws because this would put
them at a competitive disadvantage in the world market by increasing local labor costs.
The adoption of an internationally effective agreement would, accordingly, keep
multinational companies from practicing what is sometimes called social dumping.
Second, the establishment of fair and equitable labor standards helps promote world
peace. Third, the establishment of uniform labor standards is a matter of both justice and
humanity. Each of these justifications for international standards has become even
stronger as globalization has increased.
Diff: 2
72. Explain the procedure for settling disputes between ILO members.
Answer: If an ILO member state violates the ILO Constitution, an ILO convention that it
has ratified, or the ILO Convention on the Freedom of Association (whether it is a party
to it or not), there are several dispute-resolution procedures that can be invoked to reach a
settlement. These include (1) the investigation of complaints of noncompliance with
ratified conventions by commissions of inquiry, (2) the investigation of abuses by the
Fact-Finding and Conciliation Commission on Freedom of Association, and (3)
interpretations of the ILO Constitution and ILO conventions by the International Labor
Office.
Diff: 2
73. Briefly explain the how the Treaty Establishing the European Community influences
employment laws in Europe.
Answer: The Treaty Establishing the European Community (EC Treaty), which is meant
to promote the comprehensive economic integration of EU member states, provides that
freedom of movement for workers shall be secured within the EU. Article 39 of the EC
Treaty allows workers, no matter what their occupations, to accept offers of employment
and to remain in any member state to carry out that employment. Article 40 authorizes the
EU Council to remove and harmonize administrative procedures that obstruct the free
movement of workers and to set up the machinery necessary to match job hunters in one
state with job offers in another. Article 42 grants the EU Council the power to adopt
such measures in the field of social security as are necessary to provide freedom of
movement for workers.
Diff: 2
74. Describe the significance of the transnational labor organizations in the EU.
Answer: Several transnational labor organizations have been set up as coordinating
bodies by municipal labor unions. They are designed to encourage cooperative action, to
support national organizations, and to advocate the rights of workers before regional
IGOs. Two reasonably successful examples are the International Secretariat of the World
Auto Council and the European Confederation of Trade Unions. In addition to
exchanging information about labor conditions and advocating labor issues, transnational
labor organizations have been actively involved in collecting and disbursing solidarity
funds to support national labor actions.
Diff: 2
75. What are visas? How many types of visas are allowed with respect to duration?
Answer: Visas are a host states counterpart of the passport. They grant permission for an
alien to enter a country. As with passports, issuance is discretionary with the host state,
and both the length of time that an alien may stay in a country and the activities the alien
may carry on while there can be limited. With respect to their duration, visas are
classified as either temporary or permanent. An alien who receives a temporary visa is
expected to leave the country after a stated time period. An alien who receives a
permanent visa is allowed to stay indefinitely, and often an alien who seeks a permanent
visa is expecting to apply for nationalization.
Diff: 2

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Chapter 8: Services and Labor

True or False Questions

3. The GATS covers trade-related aspects of intellectual property rights.

7. The operation of GATS is overseen by WTOs Council for Trade in Services.

8. Dispute settlements related to GATS are governed by the Fact-Finding and

9. An Italian woman opening a restaurant in England is exercising her right of

Multiple Choice Questions

A. General Agreement on Trade in Services (GATS)

A. the Framework Agreement

A. delivered in businesses involving international trade

30. Which of the following is governed by GATS?

A. trade-related aspects of intellectual property rights

A. ultra vires rule

A. Council for Trade-Related Aspects of Intellectual Property Rights

A. The member nation is in transition to a market economy.

A. a member granting monopoly status to a service supplier

A. nolo contendere rule

A. nolo contendere rule

A. It is meant to function within the framework of the WTO.

A. Multilateral Agreement on Investment

A. does not impose the national treatment requirement on its members

44. GATS differs from NAFTA in that GATS _______.

A. specifically defines four basic modes of supply

A. They cannot make it more restrictive than it is.

A. International Labor Organization

A. Both of them function as the secretariat of the ILO.

A. It functions as the legislative body of the ILO.

A. to create summaries of the information contained in the member states reports

54. The ILOs Convention Concerning Freedom of Association ________.

A. analyze submissions of cases involving unratified treaties

A. the private individuals liability for violations of international law

A. studying as an exchange student

61. Visas are different from passports in that visas _______.

A. cannot be obtained after entering the host nation

62. Which of the following is true of the Visa Waiver Program?

A. aliens who have dual citizenships

A. an alien who is a citizen of one of the NAFTA countries

67. How is trade in service defined under the GATS?

Answer: The Framework Agreement defines trade in services. It does so in terms of

70. Describe the International Labor Offices institutional structure.

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