Chapter 10 - The Legal Environment of International Trade

tariff

(1) domestically -- government-approved schedule of charges that may be made by a regulated business, such as a common carrier or warehouser; (2) internationally -- tax imposed by a country on goods crossing its borders, without regard to whether the purpose is to raise revenue or to discourage the traffic in the taxed goods

A 'choice-of-law' provision in an international contract set's forth whether the CISG will govern the contract.

False

A letter of credit agrees to provide the seller with needed currency exchanges when transactions with foreign buyers occur.

False

Since 1947 and the end of the World War II era, the goal of the General Agreement on Tariffs and Trade (GATT) has been to restrict world trade.

False

The "effects doctrine" requires U.S. courts to assume jurisdiction over cases when domestic commercial activities have a direct and foreseeable effect on international commerce

False

The goal of the North American Free Trade Agreement (NAFTA) is to eliminate all tariffs between the United States and Europe.

False

The jurisdictional rule of reason addresses the problems that arise when a foreign country has a significant interest in regulating conduct taking place within the United States.

False

The term dumping refers to the sale of damaged goods in a foreign market to cut the losses that would otherwise be caused by the damage.

False

The use of agency arrangements allows a U.S. firm to avoid taxation on sales made in its agent's country.

False

The use of import quotas represents the most common form of tariff barrier.

False

​A direct sale by an American firm to a customer abroad, with terms of payment commonly based on an irrevocable letter of credit, is an import sale.

False

​Licensing involves the transfer of title of goods to a distributor who bears the financial and commercial risks for the subsequent sale of the goods.

False

"Know-how" secrets and processes are considered intellectual property rights, which are legally protectable.

True

A common barrier to the free movement of goods across borders is the tariff barrier.

True

A societé anonyme is the European counterpart of a U.S. corporation.

True

Blocking laws prohibit the disclosure, copying, inspection, or removal of documents located in the enacting country in compliance with orders from foreign authorities.

True

Franchising is a form of licensing that now is very common in international business.

True

Parties to international ventures often agree to arbitrate their disputes in neutral countries.

True

TRIPS extends the Paris Convention to special protection for "well-known marks".

True

TRIPS is the WTO agreement that deals with trade rules that impact tariffs and embargoes.

True

The "Turtle Law" prohibits the importation of shrimp from countries that allow the harvesting of shrimp that could adversely affect endangered sea turtles.

True

The Foreign Corrupt Practices Act prohibits improper payments to influence foreign officials.

True

The Securities and Exchange Commission (SEC) is not limited to litigation when a securities law enforcement investigation runs into secrecy or blocking laws.

True

The United Nations Conventions on Contracts for the International Sale of Goods (CISG) sets forth uniform rules to govern international sales contracts.

True

The World Intellectual Property Organization administers the Berne Convention for international copyright protections.

True

The World Trade Organization (WTO) provides a Dispute Settlement Body (DSB) to enable member countries to resolve trade disputes rather than engage in unilateral trade sanctions or a trade war.

True

The purpose of most-favored-nation treatment is to prohibit one country's discrimination between its own products and foreign products or services.

True

Under the General Agreement on Tariffs and Trade (GATT), the principle of trade without discrimination is embodied in the most favored nation clause.

True

Under the act-of-state doctrine, the courts of one country will not sit in judgment of the acts of the government of another country conducted within its own territory.

True

United States antitrust laws have broad extraterritorial reach.

True

When an international sale is made, the parties often set forth in their contract which country's law will govern a dispute.

True

national treatment

a WTO requirement in which a country may not discriminate between its own products and foreign products or services

sovereign immunity doctrine

a doctrine that states that a foreign sovereign generally cannot be sued without its consent

choice-of-law clause

clause in an agreement that specifies which law will govern should a dispute arise

most-favored-nation

clause in treaties between countries whereby any privilege granted to one member is extends to all members of the treaty

letter of credit

commercial device used to guarantee payment to a seller, primarily in an international business transaction

secrecy laws

confidentiality laws applied to home-country banks

export sale

direct sale to customers in a foreign country

effects doctrine

doctrine stating that U.S. courts will assume jurisdiction and will apply antitrust laws to conduct outside of the United States when the activity of business firms has a direct and substantial effect on U.S. commerce; the rule as been modified to require that the effect U.S. commerce also be direct and foreseeable

sovereign compliance doctrine

doctrine that allows a defendant to raise as a an affirmative defense to an antitrust action the fact that defendant's actions were compelled by a foreign state

act-of-state doctrine

doctrine whereby every sovereign state is bound to respect the independence of every other sovereign state, and the courts of wone country will not sit in judgment of another government's acts done within its own territory

distributor

entity that takes title to goods and bears the financial and commercial risks for the subsequent sale of the goods

franchising

granting of permission to use a trademark, trade name, or copyright under specified conditions, a form of licensing

well-known mark

in international law a mark that both the Paris Convention and TRIPS recognize as deserving protection even if it is not registered in the foreign country; national law determines what "well-known" means but the WIPO offers a list suggesting that the value of the mark, the extent of its use and promotion, and its recognition in the relevant sector of the public are key factors.

blocking laws

laws that prohibit the disclosure, copying, inspection, or removal of documents located in the enacting country in compliance with orders from foreign authorities

Dispute Settlement Body (DSB)

means provided by the World Trade Organization for member nations to resolve trade dispute rather than engage in unilateral trade sanctions or a trade war

principal

person or firm who employs an agent; the person who, with respect to a surety, is primarily liable to the third person or creditor

agent

person or firm who is authorized by the principal or by operation of law to make contracts with third person on behalf of the principal

comity

principle of international and national law that the laws of all nations and states deserve the respect legitimately demanded by equal participants

jurisdictional rule of reason

rule that balances the vital interests, including laws and policies of the United States with those of a foreign country

dumping

selling goods in another country at less than fair value

Foreign Trade Antitrust Improvements Act

the act that requires that the defendant's conduct have a "direct, substantial, and reasonably foreseeable effect" on domestic commerce

licensing

transfer of technology rights to a product so that it may be produced by a different business organization in a foreign country in exchange for royalties and other payments as agreed