Law Chapter 10: The Legal Environment of International Trade
When a U.S. trademark holder licenses a foreign business use of its trademark overseas and a third party imports these goods into the United States to compete against the U.S. manufacturer's goods, the foreign-made goods are called _____ goods:
"Gray market"
A direct sale to customers in a foreign country is a(n):
Export sale
When a foreign government takes over an American business that is being conducted in the foreign country, this is called:
Expropriation
The main purpose of the International Monetary Fund is to:
Facilitate the expansion and balanced growth of international trade.
A country can borrow money from other IMF members or from the IMF by means of specific distribution rights (SDRs) sufficient to permit that country to maintain the stability of its currency's relationship to other world currencies.
False
A direct sale to customers abroad by an American firm, with terms of payment commonly based on an irrevocable letter of credit, is an import sale.
False
A letter of credit agrees to provide the seller with needed currency exchanges when transactions with foreign buyers occur.
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
Since 1947 and the end of the World War II era, the goal of the GATT has been to restrict world trade.
False
The U.S. dollar is considered the international currency.
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 their 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
Which of the following does not describe the European Union (EU)?:
It is administered solely by the heads of state of the member countries.
Which of the following statements is true regarding the World Trade Organization (WTO)?:
It provides a dispute settlement body to promote the resolution of trade disputes.
The transfer of technology rights in a product to allow another firm in a foreign country to produce a product in return for royalties or other specified payments is called:
Licensing
Which of the following allows a domestic firm to maintain the greatest control over its foreign operations?:
Wholly-owned subsidiaries
What is the maximum fine that can be imposed against a company for violation of The Foreign Corrupt Practices Act?:
$1,000,000
Companies with concerns over the possibility of expropriation could lessen the harm or the likelihood of this occurring by:
- Fully investigating a host government's stability - Establishing treaty commitments. - Obtaining insurance.
The GATT:
- Is a multilateral treaty - Is subscribed to by the United States - Has as its goal the liberalization of world trade
In antidumping cases:
- The International Trade Administration determines whether foreign goods are being sold in the United States at less than fair value (LTFV). - The International Trade Commission determines if there is an injury to a U.S. industry as a result of such sales. - Remedial action will be taken only if findings of both LTFV sales and injury are present.
Three defenses are commonly raised to the extraterritorial application of U.S. antitrust laws. They are:
Act-of-state, sovereign compliance, and sovereign immunity doctrines.
Which of the following is not a nontariff barrier?:
An import or export duty or tax placed on goods as they move in or out of a country.
Legal restrictions of U.S. firms doing business abroad in regard to payments made to foreign officials for obtaining business are set forth in the:
Foreign Corrupt Practices act
Which country is NOT a part of the North American Free Trade Agreement (NAFTA)?:
Greenland
The International Monetary Fund (IMF) was formed to shorten the duration and lessen the disequilibrium in the international balance of payments of its members.
True
Which is a correct statement about arbitration of contractual disputes regarding international trade?:
Parties frequently arbitrate in neutral countries.
Which of the following actions is not prohibited by The Foreign Corrupt Practices Act?:
Payments to low-level officials for expediting the performance of routine government services.
The provisions of the United Nations Convention on Contracts for the International Sale of Goods have been strongly influenced by:
The Uniform Commercial Code
The Alexo Corporation has been charged in a United States court with violation of American antitrust laws in its foreign dealings. The firm has raised the defense that its actions were compelled by the government of its host country. Alexo based its defense on the__________ doctrine:
Sovereign compliance
Under which of the following doctrines is it held that a foreign sovereign cannot be sued unless it engages in illegal commercial conduct?:
Sovereign immunity.
U.S. courts will assume jurisdiction and apply antitrust laws to conduct business outside the United States if the activities of the business firms outside the United States have a direct, substantial, and foreseeable impact on U.S. commerce. This is based on what principle?:
The "effects" doctrine
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
As a result of pressure from the United Nations Conference on Trade and Development (UNCTAD), the General Agreement on Tariffs and Trade (GATT) allowed the grant of special preferences to developing countries as an exception to the GATT's basic rule of trade without discrimination.
True
Blocking laws prohibit the disclosure, copying, inspection, or removal of documents located in the territory of the enacting country in compliance with orders from foreign authorities.
True
Contracts for the International Sale of Goods (CISG) sets forth uniform rules to govern international sales contracts.
True
Franchising is a form of licensing that now is very common in international business.
True
Law is the result of the desire of the lawmaker to achieve certain goals.
True
Parties to international ventures often agree to arbitrate their disputes in neutral countries.
True
The Foreign Corrupt Practices Act prohibits improper payments to influence foreign officials.
True
The International Bank for Reconstruction and Development, also known as the World Bank, facilitates the lending of money by capital surplus countries to countries needing economic help and wanting foreign investments.
True
The Overseas Private Investment Corporation (OPIC) offers asset protection insurance against risk of loss to plant and equipment, as well as loss of deposits in overseas bank accounts, to companies that qualify on the basis of the involvement of a "substantial U.S. interest."
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 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 goal of the North American Free Trade Agreement (NAFTA) is to eliminate all tariffs between Mexico, Canada, and the United States.
True
The interests of the less-developed nations of the world are represented by the UNCTAD
True
Under 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 can protect United States exports.
True
When an international sale is made, the parties often set forth in their contract which country's laws will govern a dispute.
True
NAFTA seeks to eliminate tariffs among which countries?:
United States, Canada, and Mexico
Which of the following is true regarding export regulations?:
Valid reasons for controlling the export of goods include national security, foreign policy, or short supply.