BUL CHAPTER 8

Dumping

The selling of goods in a foreign country at a price below the price charged for the same goods in the domestic market.

Distribution agreement

A contract between a seller and a distributor of the seller's products setting out the terms and conditions of the distributorship.

Normal trade relations (NTR) status

A status granted through an international treaty by which each member nation must treat other members at least as well as it treats the country that receives its most favorable treatment.

Tariffs

A tax on imported goods.

Islamic countries

A third, less prevalent, legal system is common in Islamic countries, where the law is often influenced by sharia, the religious law of Islam. Sharia is a comprehensive code of principles that governs both the public and the private lives of persons of the Islamic faith. Sharia directs many aspects of day-today life, including politics, economics, banking, business law, contract law, and social issues.

treaty

An agreement formed between two or more independent nations.

Quotas

An assigned import limit on goods.

Common Law Systems

Common Law Systems As discussed in Chapter 1, in a common law system, the courts independently develop the rules governing certain areas of law, such as torts and contracts. These common law rules apply to all areas not covered by statutory law. Although the common law doctrine of stare decisis obligates judges to follow precedential decisions in their jurisdictions, courts may modify or even overturn precedents when deemed necessary.

The international organization charged with the responsibility for eliminating trade barriers including tariffs is

THE WTO

The act of state doctrine

The act of state doctrine provides that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within the latter's own territory.

international law

The law that governs relations among nations. International customs and treaties are generally considered to be two of the most important sources of international law.

The principle of comity basically refers to legal reciprocity. One nation will defer and give effect to the executive, legislative, and judicial acts of another country, as long as the acts are consistent with the law and public policy of the accommodating nation.

The principle of comity

dumping

The selling of goods in a foreign country at a price below the price charged for the same goods in the domestic market.

Export

To sell products to buyers located in other countries.

the doctrine of sovereign immunity

When certain conditions are satisfied, the doctrine of sovereign immunity exempts foreign nations from the jurisdiction of the U.S. courts

a civil law system

a civil law system, the primary source of law is a statutory code. Courts interpret the code and apply the rules to individual cases, but courts may not depart from the code and develop their own laws. Judicial precedents are not binding, as they are in a common law system.

When a U.S. firm wishes to limit its involvement in an international market, it may establish a(n) agency relationship with a foreign firm.

agency

The provision of the U.S. Constitution that provides that "No Tax or Duty shall be laid on Articles exported from any State" is found in

article I, section 9

Microlex, Inc., a U.S. corporation, signs a sales contract with Freres, S.A., a French corporation, in which Microlex agrees to sell Freres $100,000 worth of Microlex products. This is an example of

direct exporting/direct exporting, a U.S. company signs a sales contract with a foreign purchaser that provides for the conditions of shipment and payment for the goods.

When a foreign country becomes a big market, the U.S. firm may wish to appoint a distributor located in that country.

distributor

The primary purpose of the North American Free Trade Agreement (NAFTA) is to:

eliminate tariffs among the US, Canada and Mexico

Firms investing in foreign nations run all of the following risks EXCEPT: a. new taxes imposed. b. excessive profits. c. costs that are higher than anticipated. d. profits less than anticipated. e. expropriation of the property. f. confiscation of the property.

excessive profits.

congress sets export quotas on various items, such a grain being sold abroad

export quotas

Dunkin Donuts licenses Nadia to use its trademark, trade name, and recipes to produce and sell donuts in Romania. Payment by Nadia will include a set-up fee, plus a small royalty on all revenues generated in Romania. This type of business arrangement is most likely

francise

The main reason that U.S. firms establish manufacturing plants abroad is that: a. in so doing they reduce costs. b. in so doing they increase their shipping costs. c. in so doing they better manage their marketing campaigns.

in so doing they reduce costs

A U.S. company may establish a specialized marketing organization in a foreign country by appointing a foreign agent or a foreign distributor and this is called indirect exporting.

indirect

The U.S. government decides to charge $10.25 on every Blu-ray player that is imported. This policy:

is a legally permitted tariff

A distribution agreement sets out the terms and conditions of the distributorship, such as price, currency of payment, and method of payment.

method

When a U.S. firm establishes a wholly owned subsidiary in a foreign country, the parent company usually

remains in the US

incentives and subsidies

the United States and other nations also uses incentives and subsidies to stimulate exports and thereby aid domestic business

A U.S. firm can expand into international markets through a joint venture. a. True b. False

true

Foreign companies, such as Sony and Nissan, have established U.S. plants to avoid import duties that are imposed on Japanese products entering this country.

true

restriction on technology exports

under the export administration act in 1979, the flow of technologically advanced products and technical data can be restricted