International BLAW Part Three (chapters 8-15)

A basic right of WTO membership is that a country must treat goods and services from all WTO members:

Equally and without discrimination.

Large exporting firms typically wish to minimize legal risks of violating export control regulations and all export laws in general. A best strategy for doing this is:

Establishment of an export management and compliance program.

All shipments of goods between the US, Canada and Mexico must contain a written "promise" that the goods originated in North America in order to qualify for preferential treatment under NAFTA. This "promise" is called:

A certificate of origin.

A compound tariff rate is:

A combined rate with ad valorem rate plus with a specific rate.

When nations attempt to minimize or eliminate technical barriers to trade, they use various methods to achieve this goal except _______.

Tariff concessions

When two or more countries agree to eliminate or to phase out customs duties and other barriers to trade among member countries this is called a:

Free Trade Area.

The true beginning of the concept that led years later to the current European Union (EU) was in 1957 with the signing of the:

Treaty of Rome

Export Administration Regulations (EAR) promulgated under original authority of Export administration Act of 1979 are administered by:

US Department of Commerce and US Department of Treasury

The original drafters of GATT know of the possible political and consequences of tariff concessions and built into the process an _____________ as means to be relieved from its concessions.

Escape clause

A free trade agreement usually refers to one with:

A "free trade area" providing favorable tariff treatment, often based on geography.

The US government has the exclusive power to regulate trade among states and with foreign nations. This power is derived from:

Commerce Clause of US Constitution

In a normal import transaction, the final computation and assessment of the applicable duty on entered goods by Customs is called:

Liquidation.

States wishing to become EU members must meet certain criteria and then attempt by negotiations to enter into an accession treaty with defined membership powers. One nation has been an applicant in membership negotiations since 1987, and that state is:

Turkey

WTO agreement have extended WTO principles to a variety of services but have generally not significantly affected "patchwork" domestic regulations about:

Licensing of foreign professionals

Dutiable status of a good is determined by each of the following except:

Chemical components used in making the item

One of the main areas of scrutiny and review by the government for license applications to export controlled items or technology is for applicants to specify in detail in the application

The person or entity receiving the item or "end user."

A law granting favorable tariff treatment to imports for developing countries is called a:

Trade preference

If goods are produced or assembled in more than one country, the country of origin must be determined to determine preferential tariff treatment under NAFTA. This determination is typically made by application of:

The "substantial transformation test."

In 1944, the allied nations met at the Breton Woods Conference and out of concern with the "post-war" economies of the nations of the world created:

International Monetary Fund and World Bank.

A states' authority to tax a business engage in foreign commerce may be determined by whether or not the imposed tax:

Results in multiple taxation

One of the main principles of the GATT system was a commitment by nations to:

Conduct of regular multilateral trade negotiations.

_____ is not a non-tariff trade barrier.

Unconditional MFN trade

EAR applies to commercial and "dual use" items defined to be:

Commercial item that has potential for military, terrorist or "proliferation" uses.

Brazilian companies export shoes made there to the Mexico and a 4.0% tariff is applied by Mexico. (The US imposes an 8.0% tariff on those same shoes if imported.) A Mexican company then immediately re-exports those shoes to the US and claims they are entitled to a preferential NAFTA tariff rate of 0.0%. The US will claim the applicable tariff rate is:

8.0%

All of the different "Rounds" of multilateral trade negotiations had the same goal of:

Trade liberalization

All products have a type of "economic nationality" for tariff purposes called:

Country of origin.

A means to prevent multiple taxations by a state or a multinational corporation is to offer the taxpayer a:

"Water's edge election"

Company A wishes to import microwaves it manufactures into the US. The transaction value of each microwave is $100. The payable duty is a compound tariff rate. The specific rate is $2.00. The ad valorem tariff is 7.00%. What will be the liquidation amount paid on each microwave?

$9.00

The European Union (EU) consists of _____ state members.

28

A refund of duties already paid by an importer when the original goods are re-exported or destroyed within a stated time period is called a:

Drawback.

The selling of products in a foreign country for less than the price charged for 'like" or comparable products in the exporting company's home market is called:

Dumping and Conformity assessments

The process by which a government sells or transfers a government-owned industry or assets to the private sector is called:

Privatization

The Import-Export Clause of the US Constitution specifically prohibits states from taxing:

Both imports and exports

The President is concerned with fighting terrorism by tracking and stopping funding of terrorist groups who use the US banking system. He wants to know which agency he should speak to about this narrow issue broadly within the world of foreign trade. To which agency or group should he speak to?

Bureau of Financial Crimes Enforcement Network (FinCEN).

Personal and commercial shipments valued at $2,500 or less may be cleared though Customs:

By an informal entry process with duties payable immediately.

The formal attempted resolution of disputes arising from interpretation of NAFTA is conducted by:

NAFTA Fair Trade Commission.

The largest trading partner of the US in 2015 in the two-way trade of goods and services was:

Canada

The EU insures minimum prices for agricultural products and imposes tariff barriers on non-member agricultural products through establishment of its:

Common Agricultural Policy (CAP).

The primary EU institution promoting monetary policy and the stability of prices and payment systems is the:

European Central Bank located in Frankfurt, Germany.

A Portuguese seller enters into a contract to sell "large eggs" to a Spanish grocery buyer. There is some confusion about the definition of "large eggs" as used in the sales contract compared to EU law which affects the duty computation of "large eggs." Which law will be the "dominant" one and provide the controlling interpretation of "large eggs?"

European Union law as defined by its Court of Justice.

Sweaters are made in Mexico. The Mexican manufacturer then imports South African-manufactured buttons into Mexico and sews them into the product for the first time after which they are then exported across the border to a US buyer. Under NAFTA rules, this sweater will be eligible for NAFTA preferential rates if the South African buttons represent at most _______ of the total cost of the sweater.

7%

An organized refusal of one or more nations to trade with a certain nation or nations, backed by economic sanctions is called:

A boycott

You lose your job as car manufacturing company employee in Detroit. If you can meet certain criteria, you can successfully file a petition and seek additional compensation beyond state unemployment compensation, or a subsidy if you have a lower-paying job. This is:

A federal program called trade adjustment assistance (TAA) administered by US Secretary of Labor.

The Court of Justice of the European Union:

Functions as the final decision-maker on questions/interpretations of EU law.

The Maastricht Treaty in 1991 advanced the concept of advanced economic integration with the EU and also for the first time the principle of:

EU "citizenship" to promote the movement of labor across borders.

The Uruguay Round from 1986 to 1994 ushered in significant changes to international trade regulation. These changes included all of the following except:

Elimination of all non-tariff trade barriers.

Member states of the EU selecting the Euro as their national currency are referred to as members of the:

Eurozone

Laws and regulations restricting the sale and licensing of goods and technology exported from the US are generally referred to as:

Export controls

_____ are typically the most effective form of sanctions

Multilateral sanctions resulting from passage of resolution by UN Security Council

Colombia in South America has many widgets imported into it by foreign manufacturers of the product. Colombia wishes to react to this flood of widgets unexpectedly from Country B, Country C and Mexico. It wishes to protect its own manufacturers and adopts a "safeguard" of a higher tariff which applies only to non-NAFTA countries. This is because Colombia wishes to stay on "good terms" with these key countries. Is this a valid safeguard if all non-NAFTA nations treated fairly?

No

Countries A, B, C and D enter into a customs union for free trade (i.e., 0.0 % tariff) for goods crossing the border within the group. Widgets from Country E are imported into Country A and a 6.0% ad valorem tariff rate is applied on each imported widget. When A exports the widgets into B, C, or D, those nations will apply a tariff rate of:

No tariff (0.0%)

An export subsidy is a governmental financial contribution to domestic producers:

Contingent on export performance.

Country A wants to impose a quota on imports of cars from foreign manufacturers in specific countries but wishes to ensure that one country and its manufacturers do not come to dominate the market on imports by using for itself too much of the entire quota allowed for that group. You should suggest that Country A implement a(n):

Allocated quota

Coal is used to make steel. France heavily subsidizes its coal industry. The use of coal sold to steel companies there and exported later as part of steel ingots allows those steel exporters to sell "below market" their product. This is an example where a ______ may be implemented by the importing nation against French steel.

tariff

ISO 9000 is a standard intended to ensure:

Product quality through the product design and manufacturing process.

The process of spreading manufacturing and assembly operations across international borders is called:

Production sharing.

Company A wishes to institute an export management and compliance program. You are asked to implement such a program for the first time at the company. A key part of such program and an area deserving special emphasis is:

Requiring record-keeping for all exports and a mandate for retaining such records for five years. This includes broadly all "records" such as license applications, supporting documents, etc.

You head a large, agricultural US company growing many products. A consultant is retained to identify potentially profitable export opportunities. He will likely advise you that exporting _______ into ______ has often provoked much resistance. Domestic product self-sufficiency and cultural pride are factors there making this a challenging difficult export opportunity to achieve success. The blanks are in order:

Rice ... Japan

Saudi Arabia refuses to do business with Israel or companies located there. You are a French citizen owning a cable manufacturing firm in Paris that does much business with the Israeli government. What advice do you give the president of the French company if he also wants to do business in Saudi Arabia?

Saudi Arabia may have placed his company on a "blacklist" since it has sold goods to Israel in the past.

A famous example of US law that motivated other counties to implement retaliatory tariffs which as a result hurt the US economy during the Depression was:

Smoot-Hawley Tariff Act.

Country A imposes an import tax on fungible goods such as oil, wheat, or timber that enter specially from country B. This is likely called a:

Specific or flat tariff

Your government asks for advice. It wishes to place a financial barrier on the entry of lace-up shoes being exported into the country by foreign manufacturers. It is intended to be a simple-to-enforce financial barrier. You suggest the easiest and simplest type tariff called a:

A global, flat tariff

Company A in the US sells and exports widgets to Nigeria. The US lowers its tariff on foreign-manufactured widgets from 6.0% to 4.0%. Company A will then pressure the US to demand:

A reciprocal tariff concession from Nigeria on widgets or similar imports.

A US company has its assets seized in Mexico for failure to obtain a business permit. The US company is outraged and wants to know if NAFTA allows this. You advise that NAFTA protects alien investors from expropriation by:

Allowing expropriation only if made for a public purpose and investor is later paid fair compensation.

You wish to export certain high-tech consumer products to South Korea. You are unsure of Korean technical standards for the products and have no access to a local, reliable Korean-English translator. You need a good English translation. What is a good place for you to check into obtaining one?

American National Standards Institute

The tariff schedule of virtually all nations is based on:

Harmonized Commodity Description and Coding System developed by the World Customs Organization.

Legal responses by governments that make it unlawful for its citizens or companies to participate in a boycott are called:

Antiboycott laws

As used in this chapter, an attempt by exporters to unlawfully or deceptively evade import restrictions or duties is called:

Circumvention

A nation's usual remedy for dumping is for the country to place ______ on the dumped products which are in addition to any regular tariffs already imposed:

Antidumping duties

Company A in Canada exports engines into the US. A US entity Company B acquiring them, pays all duties, and keeps them in stock for 6 months. Company B then cancels an anticipated product line of items for which the engines were acquired. The engine are cleaned, lubricated and then re-exported to Brazil. Company B can then:

Apply to Customs for a same-condition drawback.

Company A in US is asked by "Francois de Nationale" in Marseilles to sell it 1,000 gallons of arsenic, a poison. The price offered is above the market price. Without asking any questions, Company A obtains the required license and exports this item. The BIS seizes the goods in transport and says that there is on the Company since the end user is a terrorist organization front. What is BIS' basis of this alleged liability? Is it valid? What are best defenses by Company A?

BIS will assert Company A staff did no due diligence investigation of end user and displayed "conscious avoidance" by not seeking to ascertain truth. Payment of above market price was a "red flag."

You are engaged with several nations as a trade representative of your country to create a free trade area agreement. As an example to argue in favor of such arrangement, you would cite any of the below as a success story of such structure except:

Caribbean Basin Initiative

Based on its economic growth in the past decade or so and global impact, the most significant admission into the WTO of a new member was in 2001 with the admission of ____________.

China

China has a large agency ensuring quality of goods entering that country. Any exporter must appreciate that goods exported to China cannot enter the country unless they have the:

China Compulsory Certification Mark

All NAFTA countries impose a 1.5% tariff on shoes manufactured within their free trade area. Tariffs on Italian shoes exported into US must be at a 7.5% tariff. Reggios Shoes in Rome makes shoes and ships them to Mexico at a 1.0% tariff rate. They are "slightly altered" in Mexico by adding a few changes to the heel and then exported into US at lower tariff rate as "Mexican shoes." This is a common-occurring example of:

Circumvention

Countries must rely on internationally accepted standards or recommendations for the protection of plants, animals and foodstuffs. The most notable standards are:

Codex Alimentarius Commission standards.

The _____ vests the federal government with exclusive control over foreign commerce.

Commerce Clause

Prior to formally requesting binding dispute resolution with the WTO Dispute Resolution Body, the party complaining about a tariff violation must:

Conduct trade consultations with the offending party at the WTO

Company A in the US believes a Canadian competitor is engaging in "dumping" of certain car parts by sending them into the US for sale at "less than fair value" prices. How does Company A can formally raise this issue and seek relief:

File petitions for an investigation with the US International Trade Administration and/or International Trade Commission as appropriate.

Legally defined sites (e.g., warehouses, manufacturing facilities) that are licensed by government and legally "outside" the customs enforcement territory of the country they are in are called:

Foreign Trade Zones.

Company A in Greece imports stoves from Brazil and pays the mandated tariff. Company A then exports the stoves to a buyer in France and no tariff is paid for that import, it enters France duty free. Of the "Four Freedoms" specified in the Treaty of Rome, this is an example of the Freed of Movement of:

Goods

You are the chief official in designing US trade policy. You wish to erect non-tariff trade barriers to Greek wine entering this country. This is politically sensitive given Greece's financial condition. Which strategy is the "sneakiest" and least likely to be made a political issue by angry Greek politicians?

Hidden or extra "red tape" in the importing process that causes delays.

Your business is in Country A. You wish your company to manufacture products for export into a very "pro-environmental" Country B. In order to be a successful exporter, you likely need to establish corporate compliance with your own local, state and federal environmental laws. This will enable you to obtain a "certification" of compliance with:

ISO 14000

ABC Company in Burlingame, California wishes to export from the US a sophisticated ground positioning system (GPS) for use in all motorized vehicles, e.g., cars. ABC has already licensed this to General Motors and Ford. You are outraged when the US government (Commerce Department) insists the GPS system can only be exported under a valid license from BIS. How do you advise them if you are their attorney?

If this item is already viewed as a "dual use" product and listed on the Commerce Control List, it will be very difficult to export legally.

There are multiple institutions within the EU with various roles. The "heads of state" of the EU members comprise membership of the "highest ranking" section of the complex EU administrative structure with jurisdiction over a wide range of issues. This administrative group is called:

The European Council.

The US wishes to publish its tariff rate on a product. There is some need for flexibility in the US rate determination predicted, so you advise that the easiest strategy is to publish a specific "ceiling" rate and use discretion to reduce rate as appropriate. This "ceiling tariff rate" is called:

The bound rate

The US Buy American Act requires federal agencies to purchase goods of US origin in a preference to foreign-sourced goods. Exceptions to the Act which allow the purchase of foreign goods do not include:

The foreign manufacturer is in a NATO member country.

The policy reasons to support the control and licensing of certain exports include all of the following excerpt:

To promote price stability and affordability of certain products.

A nation may impose tariffs on products that are imported from another country and then decrease tariffs on other products to "even out" overall tariffs placed on goods from that country. This is called:

Trade compensation

The Trade Reform Act of 1974 created a "fast track" process for approving trade agreements, known as the president's:

Trade promotion authority

______________ refers to the extent in which government regulations, product standards and technical requirement are made readily available to the domestic public, as well as foreign firms.

Transparency

Miami places a "Port tax" on services provided by the port authorities to vessels entering the port from any destination, e.g., entry taxes, inspection charges, wharf fees, etc. Is this constitutional?

Yes, under the precedent of Department of Revenue of the State of Washington case.

The court of record with original jurisdiction to hear a dispute about the trade or tariff laws of the US is:

Court of International Trade

AT&T and other US companies benefitted in 2004 immensely when NAFTA eliminated all tariffs on:

Telephones, cellular phones, and trade in telecommunications equipment.

Country A has a flood of market disruption from "too many" imported foreign cars. Labor organizations and politicians will argue these disruptions include each of the following except:

Countervailing duties

The WTO Agreement on Government Procurement (AGP) enacted in 1994 has been applied to:

Upgrade and liberalize procurement practices in large-scale government procurements.

A subsidy bestowed on raw materials or component parts (inputs) for use in an exported product is called a(n):

Upstream subsidy

A balance-of-payment deficit arises:

When nation's outflow of foreign exchange exceeds it receipts in its own currency.

In a ______, there is free trade in all goods that comes into the group through any of the members, even for original, tariffed imports from outside the group which are then re-exported.

Customs union

United States and Canadian banks and other companies offering financial services wish to open offices in Mexico to obtain customers there. Does NAFTA restrict this?

No, NAFTA has allowed financial service companies to locate in Mexico, acquire 100% of local institutions (including insurance companies) and mandates nondiscriminatory treatment.

A widget is imported into the US from South Africa. Once in the US, it is transported via rail from the entry port to Chicago. It has imposed on it then a special "Foreign Product Transportation Fee" that is not placed on transported products of domestic manufacturers. This is deemed inconsistent and invalid under:

"National treatment" principle of GATT.

Company A in the US makes widgets and exports them to Cambodia under a trade agreement. A local widget maker in Cambodia comes into political power and the country raises it tariff on widgets above the bound rate. Company A is furious. Its quickest remedy is likely:

Complain to the US Trade Representative by filing a "Section 301 Petition" and assert that this is matter for mandatory retaliation.

US companies have a special concern with violation of their intellectual property rights. Given your company's special concerns with protecting its IP rights, before you enter a foreign company (Country A) with the intent to trade a product made by your company, you should see if:

Country A on the USTR's watch list or priority watch list.

You are a trade representative for the US at a negotiation for reducing trade barriers on agricultural products imported from Country A. You wish to stop A's government from being too involved in its agricultural sector by helping out domestic farmers. This means you must place on the negotiating table the topic of:

Country A's domestic subsidies for farmers.

There are special rules for Country A determining antidumping duties if an exporting nation (Country B) is identified as one of the "non-market economy countries." These are called NMEs. Calculation of antidumping duties for products from these countries is difficult because of difficulty in determining:

Normal value of the good in Country A

Company A wishes to import kitchen microwaves into the US. The applicable tariff rate is 12.0%. If Company A engages in a deliberate strategy to import all component parts into the US (assembling them in US) and pay only 4.0% tariff to evade incremental 8.0% in costs, their act is called:

Tariff engineering.

The process of modifying a product prior to importation with the intent of obtaining a lower duty rate at entry is called:

Tariff engineering.

The "country of origin" for tariff classification determination is the last country in which all "inputs" (raw materials, component parts) into the finished article underwent a required change in tariff classification. This is called the:

Tariff-Shift Rule.

One of the principles of the WTO is that whereby members must eliminate quoatas and other non-tariff barriers and convert them into tariffs. This is called:

Tariffication

NAFTA mandates that written notice with a comment-period opportunity be given to all members if a nation wishes to change the:

Technical regulations and standards for a product imported into the notifying country.

The only EU institution whose members are elected by private, individual European citizens is called the:

The European Parliament.

Ross Perot was an independent candidate for President in 1990s who opposed the US entering into the North American Free Trade Agreement (NAFTA.) His famous comment that after entering into NAFTA there would be as a result a "giant sucking sound" referred to:

US jobs leaving the US for lower wages in Mexico would create a "giant sucking sound."

Company A in Germany has a new product, a "security suitcase" that makes a bell or siren noise if a person other than its owner attempts to break into it. Usually the company exhibits its new products at a Frankfurt trade show. It wishes to make a more forceful entry into the US market by displaying its new product in the US to US buyer-distributors but at a minimal cost. What "tariff avoidance" strategy may they use to get product into the US legally for possible sales?

Use of foreign trade zone, e.g., New York, Boston, etc

You are in charge of tariff policy for your country. You are asked to place an import restraint on products from a politically-allied nation. The restraint must be subtle and most difficult to detect and be "safe" from attack in the press. Your best suggestion is to implement:

Use of indirect non-tariff barriers by administrative regulations which are facially neutral but which impact imports by ally negatively as applied

President Trump has issued a "Buy America" Executive Order encouraging the purchase of American products. Company A has imported into the US certain foreign-made components for a kitchen stove having a value of only 30% of its price but otherwise uses only US-manufactured parts and advertises it as "Made in U.S.A." Will Customs allow this mark as a "US product" to assist US buyers in complying with intent of president's policy?

No, the US Federal Trade Commission regulates use of this mark.

Company A in the US is opening a factory in Italy to manufacture its products, e.g., radio transmitters. These products made by Company A for special use are generally controlled by EAR when being exported. It wishes to send over to Italy certain quality assurance software programs and testing equipment for use in its Italian facility to assist in the manufacturing process. Must it obtain an export license form BIS if EAR-covered?

No, these are "tools of the trade" and can be temporarily exported without a license so long as remain under control of Company A and secured.

Manufacturers in Country A export widgets to Country B. Domestic manufacturers allege dumping and ask for duties to be imposed. Calculation of the "dumping margin" is critical in determining antidumping duties. This may be stated to be:

Normal value - export price = dumping margin

Bell Helicopters located in Fort Worth, Texas owns much proprietary technology about the software needed to operate military helicopters safely. The export of this technology abroad is controlled by various US laws and regulations, and cannot be exported to China. A Chinese national in the US on a spousal visa works at Bell's facility in Euless, Texas. Are there any export restrictions on his access to that technology?

Yes, because he is a national of a state to whom exporting of the technology is prohibited.

_______ is a nongovernmental organization which has developed over 21,000 standards for goods, services, manufacturing and technology. Its goal is to foster international trade by creating a "common language" for standards and technical requirements.

International Organization for Standardization

In export control regulation, the unlawful transfer, transshipment, rerouting or re-exporting of controlled items or technology is called:

Diversion

A Spanish buyer imports computers from China and pays the appropriate tariff. It then sells the computers to a Portuguese buyer and the goods enter Portugal without tariff. The Portuguese owner then exports the computers to a distributor in Italy and again the computers cross a national a border with no tariff. In this respect, the EU is similar to a:

Customs union

When the US Congress enacts a scheme of legislation or regulation in an area that prevails over inconsistent state regulation, the acts of Congress will prevail under the:

Doctrine of federal preemption

A telephone has component parts from China, Thailand, South Africa and Taiwan. It is assembled in Mexico and has a % of its value assigned as "Mexican" such that it qualifies for preferential tariff rate under NAFTA. In this analysis, the rule for determining tariff applicability is:

Domestic or Regional Value Content Rule.

You are asked by your local Congressman what the status of the Trans Pacific Partnership Agreement (TPP) is as of June 2017. How do you respond?

It remains in effect but the US is not a member, and China has never been member.

WTO members, when setting valid restrictions on trade, should make them no more onerous than necessary to achieve the goals for which they are imposed. This is called the principle of:

Least restrictive trade

Jules is a French citizen. He is a prominent company executive and decides to run for any available elected position in the EU administrative structure because he believes the EU is "too powerful" and has too many officials and "Brussels bureaucrats" making decisions affecting French industry. He must qualify under French election law and then run for a position as a:

Member of the European Parliament.

Sana is a Syrian refugee who has lived in Germany for 5 years. He acquired German nationality under German law. His 22-year old daughter Dema (still a Syrian national) arrives in Germany and lives with him briefly. Dema receives a job offer as an au pair in London and wishes to travel there. Under EU principles, can her entry into the UK be restricted or limited in any way?

No, she is a close family member of an EU member state national.

Scottish separatists living in Glasgow in 2017 create the "Republic of Scotland" and declare themselves a separate state. They assert a right to become a member state of the EU and are greatly concerned at the "Brexit" vote in the UK and what happens after the UK leaves the EU. They believe EU membership is critical. Can the Republic of Scotland become an EU member automatically by virtue of having been a part of UK before?

No, the Maastricht Treaty deems only recognized "states" can apply for and be granted membership. Until such universal recognition occurs, at best the Republic of Scotland is a candidate for future membership. Their situation is similar to Kosovo (see Table 15.2).