Arboria is floundering in the global marketplace, incurring devastating losses in market position and profits. The problem is not Arboria's products, but Arboria's trade policy. Arboria faces the prospect of continuing economic loss until Arborian business and political leaders recognize the fundamental differences between Arborian and foreign economic systems. Today the key trade issue is not free trade versus protectionism but diminishing trade versus expanding trade.

Arboria is operating with an obsolete trade policy, an artifact of the mid-1940s when Arboria and Whorfland dominated the global economy, tariffs were the principal obstacle to trade, and Arborian supremacy was uncontested in virtually all industries. In the intervening decades, economic circumstances have shifted radically. Arborian trade policy has not.

Today, Arboria's trade policy seems paralyzed by the relentless conflict between proponents of “free” and “fair” trade. The free traders argue that Arborian markets should be open, and the movement of goods and services across national borders unrestrained. The fair traders assert that access to Arborian markets should be restricted until Arborian businesses are granted equal access to foreign markets. They contend that free trade is impossible while other nations erect barriers to Arborian exports. Both are correct: fair trade requires equal access and equal access leads to free trade. But both sides base their positions on the same two outdated premises:
1. Global commerce is conducted under the terms of the General Agreement on Tariffs and Trade (GATT) and dominated by Arboria and similar economic systems abroad.
2. Multilateral negotiations are the most effective way to resolve pressing trade issues.

Both assumptions are wrong. The 40-year-old GATT now covers less than 7 percent of global commerce. World trade is no longer dominated by the free-trade economies; nearly 75 percent is conducted by economic systems operating with principles at odds with those of Arboria. Forging a multilateral trade policy consensus among so many diverse economic systems has become virtually impossible. And while multilateral talks drag on, Arboria misses opportunities for trade expansion.

1.  Which of the following best states the difference between free trade and fair trade, as explained in the passage?

A. Free trade requires no trade tariffs whatsoever, whereas fair trade assumes multilateral agreement on tariffs for goods of equal worth.
B. Free trade is based on the unrestricted movement of goods across all national boundaries, whereas fair trade is based on a nation's restriction of commerce with each nation that erects trade barriers to the first nation's exports.
C. The trade policies of countries like Arboria are based on the principles of free trade, whereas the trade policies of other types of world economies are based on fair trade.
D. Free-trade nations negotiate individual trade agreements with each of their trading partners, whereas fair-trade nations conduct multilateral trade negotiations.
E. Free trade assumes a constant level of global commerce, whereas fair trade promotes a steady expansion of international trade.



2.  It can be inferred that the author of the passage would most likely agree with which of the following statements about multilateral trade negotiations?

A. They are the most effective way to resolve trade problems.
B. They are most effective in dealing with fair-trade issues between nations.
C. They have only recently begun to make an impact on world trade.
D. Arborian reliance on multilateral trade negotiations, while appropriate in the past, is inadequate for today's global marketplace.
E. The principles of multilateral trade negotiations are incompatible with current Arborian foreign trade policy.



3.  Which of the following statements best summarizes the author's opinion of “free traders” and “fair traders”?

A. The free and the fair traders' continuing debate provides a healthy and effective forum for examining Arborian trade policy.
B. The proponents of fair trade are essentially correct, while those who advocate free trade are not.
C. The proponents of free trade are better able to deal with current economic problems than are the fair traders.
D. Neither the free nor the fair traders can come up with a workable trade policy because neither takes multilateral negotiations into account.
E. The proponents of both free and fair trade have based their positions on out-of-date premises that do not reflect current economic conditions.



4.  The author mentions all of the following as characteristic of world trade in the mid-1940s EXCEPT:

A. Arboria played a major role in the global marketplace.
B. Whorfland played a major role in the global marketplace.
C. Tariffs were the main obstacle to trade.
D. Fair-trade economies dominated international trade.
E. Arborian manufacturers were unsurpassed in most industries.



5.  In presenting the argument in the passage, the author uses all of the following EXCEPT:

A. statistical information about global commerce
B. definitions of terms concerning world trade
C. generalizations about Arboria's economic system
D. historical background of Arborian trade policy
E. an example of an economic system whose principles differ from those of Arboria



6.  The author asserts which of the following about Arboria's trade policy?

A. A dramatic revision of Arboria's trade policy will be necessary unless Arborian manufacturers improve the quality of their goods.
B. The most crucial issue facing Arborian trade policymakers is that of free trade versus protectionism.
C. Arboria's current trade policy was essentially developed during the 1940s and has changed little since that time.
D. Arboria's trade policy is widely emulated throughout the world, to the extent that most international commerce is modeled on Arboria's principles.
E. Arboria's trade policy has evolved gradually over the last eighty years, constantly readjusting itself in response to shifts in global commerce.



7.  The passage is primarily concerned with

A. illustrating the erosion of Arboria's position in the world marketplace
B. examining the differences between “free” and “fair” traders
C. advocating a reassessment of Arboria's trade policy
D. criticizing the terms of the General Agreement on Tariffs and Trade (GATT)
E. comparing the different economic circumstances of Arboria's trade partners



8.  The author implies that the main obstacle to a truly effective Arborian trade policy is the

A. weak position that Arboria currently holds in the global marketplace
B. inability of Arborian leaders to recognize that foreign economic systems are based on principles fundamentally different from their own
C. dominance of the supporters of free trade in the conflict between free-trade and fair-trade advocates
D. apparent inability of Arborian industries to produce goods that are competitive in the world market
E. protectionism that characterizes the foreign trade policies of so many of Arboria's trade partners