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Q:
Laws governing transactions of individuals and companies that cross international borders are:
A. none of B, C, D, or E.
B. private international law.
C. product liability law.
D. public international law.
E. customary law.
Q:
The existence of the rule of law in a foreign market suggests that:
A. lawyers will be necessary in any substantive business transaction.
B. personal relationships will be less effective than in a country governed outside the rule-of-law system.
C. none of A, B, D, or E.
D. legal rulings will be the basis of any dispute resolution.
E. foreign investors can assume that their interests will be protected.
Q:
Anyone studying legal forces affecting international business soon realizes that:
A. there is a remarkable level of coordination among legal systems in the developed nations.
B. most laws are predictable, and that, although there is variance, what constitutes illegal behavior is commonly shared.
C. the variety of these forces complicates the task of understanding the laws.
D. thanks to the World Court, officials in most legal systems are open to collaborating with their international colleagues.
E. none of the above.
Q:
U.S. accounting practice is guided by the Securities and Exchange Commission (SEC) and the International Accounting Standards Board (IASB), and it follows standards known as generally accepted accounting principles (GAAP).
Q:
The United Kingdom Bribery Act includes penalties for corporate failure to prevent bribery, but only if the act of bribery occurred in the United Kingdom.
Q:
Discussion of bribery and transparency has generally not come into despite the Foreign Corrupt Practices Act (FCPA), the OECD convention, and the UN initiative.
Q:
The Foreign Corrupt Practices Act (FCPA) clearly stipulates terminology and behavior that is illegal on the part of U.S. businesses and of foreign businesses operating in the United States
Q:
Many U.S. laws affect activities of international firms, and their impacts have been coordinated.
Q:
If you are a Westerner and become victim of a miscellaneous law in a foreign country, all you have to do is call your embassy and you'll be released to your government.
Q:
In the United States, punitive damage rulings have no measureable effect on medicine.
Q:
Contingency-fee cases are limited to the United States.
Q:
Product liability is an area of torts in which the U.S. courts can make large awards, unlike in other countries.
Q:
The United States avoids trade barriers on imports in support of free trade principles.
Q:
Tariffs are categorized as financial and political forces, but they are usually not seen as legal forces.
Q:
Microsoft is an example of how a company can avoid multiple antitrust laws in multiple jurisdictions, thanks to equalization agreements.
Q:
The EU does not apply its competition policy beyond the EU.
Q:
The United States at times applies antitrust law extraterritorially.
Q:
Japanese cultural values suggest that in Japan, antitrust law against cartels would be strictly enforced.
Q:
In the antitrust area, the United States is concerned with the impact of the business deal on the consumer, whereas the EU focus is on the competitive structure of the marketplace, so it pays attention to rivals.
Q:
Under U.S. law, price fixing is illegal per se, while in other countries, damage or harm has to be done; this is the case in the EU.
Q:
The ISO (International Organization for Standardization) is the only international standardizing organization.
Q:
Global standardization of trade-related law is progressing slowly.
Q:
Global trademark protection follows the Office of Harmonization in the Internal Market approach.
Q:
There is one main organization that offers IP protection, the UN.
Q:
Many smaller and developing nations want to reduce patent protection from the current 15 to 20 years down to 5 years or even 30 months.
Q:
The World Intellectual Property Organization is a UN agency that administers 24 intellectual property treaties.
Q:
The European Patent Organization makes filing for a patent in all 27 EU member-states more difficult than it was previously.
Q:
Trademarks can include a shape, a color, or a sound.
Q:
FALSE
Q:
Incoterms are established by the UN Commission on International Trade.
Q:
Arbitration is less popular than legal proceedings, largely because arbitration is more expensive.
Q:
Although arbitration procedures may be confidential, enabling a company to avoid unwelcome publicity accompanying an open court case, arbitration is generally slower than law courts.
Q:
Arbitration provides foreign businesses a forum other than the U.S. court system to address disputes that involve U.S. sellers or buyers.
Q:
The UN Convention on the International Sale of Goods (CISG) has established legal rules and outlined the rights and obligations of the buyer and seller.
Q:
No worldwide court has the power to enforce its decrees.
Q:
By UN regulation, contracts cannot contain choice-of-law and choice-of-forum clauses.
Q:
Where litigation should occur has to do with the location of the problem and is usually clear to both the defendant and the plaintiff.
Q:
A choice-of-law clause specifies where a dispute will be settled.
Q:
Discovery refers to the process of finding out facts that indicate a law has been violated, and it leads to the filing of a legal case, or litigation.
Q:
The U.S. enforcement of Equal Employment Opportunity Commission (EEOC) law in U.S. companies operating abroad is an example of extraterritoriality.
Q:
Tax law is exempt from extraterritoriality.
Q:
The United States avoids extraterritorial application of its laws.
FALSE
Just the opposite is true, which can make for some interesting issues. During a conflict with Iran, the United States froze all Iranian assets in U.S. banks, including their foreign branches. Iranians in London using U.S. banks could not access their funds, and British loans to Iranians defaulted.
Q:
Customary international law draws on practices that have been followed often for centuries.
Q:
The source of international law is mostly the tendency of powerful nations to apply their laws extraterritorially.
Q:
The source of international law is frequently the United Nations.
Q:
Public international law refers to legal relations between governments and publicly held companies.
Q:
The degree to which a country's legal system is based on the rule of law makes no difference; it is personal relationships that matter in foreign environments.
Q:
According to the World Health Organization, about one-quarter of all drugs sold through "questionable" Internet pharmacies are estimated to be counterfeit.
Q:
Discuss the terrorist threat of kidnapping and how it impacts international business.
Q:
Discuss barriers to trade, using examples to illustrate your points.
Barriers to trade may be divided into tariff barriers and nontariff barriers. Tariff barriers are import duties whose primary purpose is to raise the selling price of the import in the importing country's market. This reduces competition for domestic producers. Countries may also use tariffs to raise revenue on both imports and exports. Tariffs may vary depending on local content and also relative to the good's selling price in the importing market. Nuisance tariffs are tariffs imposed for their administrative hassle rather than to affect market price.
Q:
What is dumping, and why is it found to be problematic?
Q:
The owners of private companies sometimes complain that government-owned companies have unfair advantages. Discuss some of these complaints.
Q:
Define and discuss country risk assessment, using examples to illustrate your points.
Country risk assessment (CRA) is an evaluation of the risk of losing an investment in a particular country. It may be conducted by a bank or business and is increasingly political in nature.
The risks themselves may be economic or financial and include the balance-of-payments position, inflation levels, labor conditions, productivity levels, and militancy in unions. Government instability that would lead to currency convertibility restrictions, tariffs and quota changes, and tax rate and labor permit changes are also assessed. Reliability and impartiality of the legal system and the risk of terrorism may be assessed as well. CRA is affected by the nature of the business. Is it a hotel or a mining company? Also important is the length of time an investment would need to yield a satisfactory return. CRA is often conducted piecemeal by various company departments, and, increasingly, outside firms are involved in CRA. Examples of these points will vary.
Q:
Cote d'Ivoire uses child labor, often imported and kidnapped, in the cultivation and harvesting of:
A. marijuana.
B. palm oil.
C. cocoa bean.
D. poppy.
E. none of the above.
Q:
Barriers to trade:
A. are a political issue but affect the cost of imports only marginally.
B. cost consumers billions of dollars per year.
C. save jobs in unprotected industries at $231,289 per job per year.
D. none of the above.
E. two of A, B, and C.
Q:
Standards are a way to establish nontariff barriers, and examples are:
A. all of B, C, and D.
B. Japan's refusal to import light mayonnaise.
C. Canada's categorization of orange juice with added calcium as a drug and subject to special requirements.
D. the prohibition of imported drugs at the consumer level in the United States.
E. two of B, C, and D.
Q:
Customs procedures in many countries often:
A. are transparent and fair.
B. discriminate against imports and favor exports.
C. are online and impersonal.
D. two of the above.
E. all of A, B, and C.
Q:
The most common form of direct government participation in trade is:
A. the subsidy.
B. shipping on national vessels.
C. import duties.
D. a combination of the above.
E. none of the above.
Q:
Nonquantitative nontariff barriers:
A. are seen by many to be the most significant nontariff barrier.
B. often involve government participation in trade, especially in customs and other administrative procedures.
C. often involve standards.
D. all of the above.
E. two of A, B, and C.
Q:
The oldest orderly marketing arrangement, which was disbanded through the WTO, is the:
A. Multi-Fiber Agreement (MFA).
B. Jamaica Agreement.
C. Textile Co-operation Treaty (CTC).
D. Japanese truck export quota.
E. Paris Convention.
Q:
Unlike quotas, voluntary export restraints (VERs) are imposed by the:
A. importing country's government.
B. exporting country's government.
C. either the importing or exporting country's government; what matters is that they are voluntary.
D. the importing company.
E. none of the above.
Q:
The United States allocates quotas to 40 countries for specific tonnages of:
A. sugar.
B. roast beef.
C. malt beer.
D. soybeans
E. two of the above.
Q:
Transshipping is used to:
A. reduce shipping costs, like consolidation.
B. avoid import administration.
C. evade allocated quotas.
D. all of the above.
E. two of A, B, and C.
Q:
Quotas are a quantitative barrier that sets:
A. limits, established by the importer.
B. goals, established by the exporter.
C. precise quantities of imports or exports, based on price.
D. expectations on domestic and foreign sales.
E. two of the above.
Q:
A nontariff barrier is illustrated by:
A. the French requirement in 1982 that all Japanese VCRs be inspected in Poitieres, far from the port and lacking speedy highway connection to the port.
B. the widespread Japanese belief that American rice can cause cancer.
C. the European attitude toward genetically modified crops.
D. all of the above.
E. two of A, B, and C.
Q:
Nuisance tariffs:
A. annoy the importers with red tape and administrative paperwork.
B. are a historical anomaly.
C. are found in developed nations more than in developing nations.
D. have no point other than to indicate that tariff regulations change quickly.
E. two of the above.
Q:
Import duties can be set to encourage:
A. increased imports based on sales volumes.
B. local input.
C. price-fixing.
D. imports from other suppliers.
E. all of the above.
Q:
Official prices ensure that:
A. imported goods will be sold at minimum prices, to avoid dumping.
B. a black market will be healthy and available for imported goods.
C. low-priced invoices to avoid tariffs will not be successful.
D. two of the above.
E. none of A, B, and C.
Q:
In the United States, the Smoot-Hawley Tariff Act:
A. outlawed tariffs for U.S. imports.
B. led to the Wall Street crash of 1929.
C. established some of the highest tariffs the United States has known.
D. two of the above.
E. all of A, B, and C.
Q:
The primary motivation of tariffs is to:
A. raise government revenue at the cost of importers.
B. raise the price of imports, to protect domestic goods.
C. punish countries over political issues.
D. encourage foreign consumption.
E. none of the above.
Q:
Subsidies are problematic because they:
A. are administered as a form of political patronage.
B. aid export businesses or protect domestic businesses from imports.
C. encourage nationalization.
D. violate UN agreements.
E. two of the above.
Q:
New types of dumping include:
A. cultural, social, financial services, and tax dumping.
B. truck, financial services, and black-market dumping.
C. gray-market, subsidiary, and transfer-pricing dumping.
D. two of the above.
E. all of A, B, and C.
Q:
Cultural dumping is found in:
A. Japan's past refusal to import American skis because Japanese snow is different, so the skis should meet different standards.
B. Saudi Arabia's refusal to import Playboy magazine.
C. The small town of Orleans, Massachusetts, decision to prohibit franchised stores from operating in the town.
D. two of the above.
E. all of A, B, and C.
Q:
Country risks are increasingly political in nature.
Q:
Financial dumping is:
A. sending excess financial resources to other nations.
B. a government's decision to subsidize low interest rates for purchases of its exports.
C. allowing a bank to have a low level of capital to total assets.
D. all of the above.
E. two of A, B, and C.
Q:
The practice of country risk assessment is an exercise in xenophobic and ethnocentric thinking.
Q:
An example of environmental dumping can be found in the:
A. maquiladora plants of Mexico, located near the U.S. border and operating at lower environmental standards than would be required in the United States.
B. nuclear waste shipments to developing nations.
C. garbage shipments from New Jersey to developing nations.
D. all of the above.
E. two of A, B, and C.
Q:
Country risk assessment is a measure of the threat of nationalization.
Q:
Social dumping occurs when an exporting country:
A. imposes an export tax on domestic businesses that export, to compensate for the opportunity cost to the domestic market.
B. creates unfair competition based on lower costs, which undermines social support systems to the worker.
C. target-markets to specific vulnerable groups in the importing country.
D. exports goods that are not sellable in the domestic environment due to hazards and safety issues.
E. two of the above.
Q:
Country risk assessment is an evaluation that assesses a country's political situation and policies to determine how much risk exists of a change in that country's government.