The type of risk that includes controls on exports and imports

Subject: Business    / Management    


1. The type of risk that includes controls on exports and imports, controls on the movement of currency, restrictions on licensing and investment, and controls over physical property located in another country is:

a. Legal risk

b. Political risk.

c. Economic risk.

d. Currency risk.

2. Tariffs on imported products are imposed for which one of the following reasons?

a. Collection of revenue.

b. Protection of domestic industries.

c. To assert political objectives.

d. All of the above.

3. Two examples of nontariff barriers that refer to quantitative restrictions on importing and a total or near total ban on trade, respectively, are:

a. Partial embargoes, Embargoes.

b. Trade seizures; Limits.

c. Embargoes, Quotas.

d. Quotas, Embargoes.

4. The process of buying goods from a foreign supplier and entering them into the customs territory of a different country is:

a. Exporting.

b. International exchange.

c. Trade by design.

d. None of the above.

5. Firms that assist indirect exporters and are licensed to operate under the antitrust laws of the U.S. are:

a. Export management companies.

b. Indirect exporter merchants.

c. Export trading companies.

d. Freight forwarders.

6. International franchising allows the franchisee the right to use a(an):

a. Export management company.

b. Export trading company.

c. Copyright.

d. Indirect exporter merchant.

7. A cooperative business arrangement between two or more companies may be a:

a. Corporation.

b. Joint venture.

c. Both of the above.

d. None of the above.

8. The concept of local participation refers to:

a. A portion of the employees of the business in the host country will be nationals of the home


b. Employees of the business contribute a certain number of hours to community service.

c. A portion of the business must be owned by nationals of the host country.

d. The host country retains mineral rights.

9. An independent firm that purchases goods for resale directly from the exporter, assumes credit risks in the local market, and provides product service and support is known as:

a. A foreign sales representative.

b. A sales agent.

c. A foreign distributor.

d. A customs broker.

10. Which one of the following statements most accurately describes the traditional economic climate in developing countries?

a. They are largely communist countries.

b. They have well-developed free market mechanisms.

c. They have mixed economies with strong central planning features.

d. The economies make them practically unsuitable for Western companies to do business there.

11. In the case of In re Union Carbide Corporation Gas Plant Disaster at Bhopal, the U.S. court ruled:

a. That Union Carbide was criminally responsible for the deaths at the Indian plant.

b. That Union Carbide was liable to the plaintiffs under Indian law.

c. That Union Carbide was not responsible for the negligent acts of its subsidiary in India.

d. That the case brought in the U.S. courts should be transferred to the courts on India.

12. In Gaskin v. Stumm Handel GmbH, the District Court ruled:

a. That employment contracts must be in writing.

b. That the plaintiff was excused from performing a contract written in German because he

understood only English.

c. That the contract was unconscionable because it was written in a language foreign to the


d. That the plaintiff’s signing the contract makes the signatory conclusively bound by it.

13. Which one of the following does not generally characterize foreign distributors?

a. They are independent firms.

b. They are usually located in the country from which the goods are exported.

c. They assume the risks of warehousing the goods.

d. All of the above characterize foreign distributors.

14. Which one of the following does not accurately characterize export management companies?

a. They act as advisors and consultants.

b. They engage in foreign market research.

c. They exhibit goods at foreign trade shows.

d. They use their extensive sales contacts to market the products of other companies.

15. In Dayan v. McDonald’s Corporation, the court ruled that:

a. McDonald’s quality standards were inadequate under French law.

b. The McDonald’s franchise contract was illegal under French law.

c. McDonald’s fulfilled its responsibility to the franchisee in France under U.S. law.

d. McDonald’s fulfilled its responsibility to the franchisee in France under French law.

16. Public international law involves:

a. Relationships between public corporations in different countries.

b. Relationships between nations that are reflected in treaties, conventions, and charters.

` c. Both of the above.

d. None of the above.

17. The forum for public international law is:

a. The World Forum.

b. The International Court of Justice.

c. The League of Nations.

d. The Hague.

18. The difference between a common law country and a civil law country is:

a. Civil law is handled by the government while common law is handled by the people.

b. A common law country bases its law on statutes while a civil law country uses court cases.

c. A common law country has similar laws throughout its regions while a civil law country has

different laws in different regions.

d. A common law country relies heavily on precedent established by court decisions while a civil

law country uses a comprehensive code of law.

19. In a socialist country, the legal system:

a. Reflects the private ownership of property.

b. Is similar to the English common law system.

c. Exhibits no need for commercial law because such disputes are settled politically.

d. None of the above.

20. The Organization for Economic Cooperation and Development (OECD) has developed:

a. Codes of conduct for companies and host countries in an attempt to set ethical standards for


b. Guidelines for interest rates to be charged to multinational enterprises.

c. Codes of conduct for employee practices for multinational corporations.

d. None of the above.

21. The Paquette Habana case concerned:

a. A question of the applicable method for joining the IMF.

b. A question discerning applicable international law.

c. A question of which court has jurisdiction over an international case.

d. None of the above.

22. Foreign investment laws might include:

a. Protection against state intervention and the ability to repatriate profits.

b. Repatriation of profits and the ability to have 100% foreign ownership.

c. Governmental approval of technology transfer agreements.

d. All of the above.

23. The United States has, in part, accepted the jurisdiction of the International Court of Justice. The U.S. acceptance does not apply to:

a. Disputes the parties have entrusted to other tribunals.

b. Disputes that the United States decides are essentially domestic.

c. Disputes arising under a multilateral treaty where all parties affected are not before the court.

d. All of the above.

24. The OECD Guidelines for Multinational Enterprises encourages responsible conduct in the following areas:

a. Employment.

b. Bribery.

c. Environment.

d. Both b and c.

25. Which one of the following is not one of the reasons that international business law (IBL) has become more uniform?

a. The forces of free trade, economic integration, and the globalization of business have

accelerated the need for greater uniformity in IBL.

b. Nations have had to cooperate in their legal responses to global issues, common problems, and


c. All nations have agreed to practice and enforce codes and legislation set down by the World

Trade Organization.

d. Private industry and trade organizations have encouraged the growth of uniform IBL.

26. The UN’s Guiding Principles for Business on Human Rights Article 23 states all of the following except:

a. Businesses should comply with all applicable laws and respect internationally recognized human rights, wherever they operate.

b. Businesses should seek ways to honor the principles of internationally recognized human rights

when faced with conflicting requirements.

c. Businesses should seek to comply with the laws of their home country before considering

internationally recognized human rights.

d. All of the above are stated in Article 23.

27. Zapata, a Texas corporation, entered into a contract with Unterweser, a German corporation, to tow Zapata’s drilling rig from Louisiana to Italy. A storm arose and Zapata told Unterweser to tow the rig to Tampa, Florida. Zapata immediately filed a lawsuit in Florida against Unterweser for damages to the rig. The original contract called for “Any dispute must be heard before the London Court of Justice.” Which one of the following statements is correct?

a. Florida has jurisdiction since that is where the oil rig is now located.

b. The case should be heard in Texas or Germany because that is where the parties are located.

c. The forum selection clause is contrary to public policy and will not be enforced; either Florida,

Texas, or Germany would be an acceptable venue for this case.

d. The parties must adhere to the forum selection clause and have the case heard in London.

28. In a California lawsuit between a U.S. resident and a manufacturer based in Taiwan, what might limit the jurisdiction of the California court?

a. The Due Process Clause of the Fourteenth Amendment.

b. Sovereign immunity.

c. Comity.

d. All of the above.

29. If a U.S. company and an Austrian company end up in a dispute about a contract they entered into that contains an arbitration clause, a case brought before a U.S. court would”

a. Be heard by the U.S. court since arbitration clauses are not popular with such courts.

b. Be heard by the U.S. court if the U.S. company can show that it will be harmed by arbitration.

c. Not heard by the U.S. court because U.S. courts accept arbitration clauses in contracts as a form

of dispute resolution.

d. None of the above

30. There are several reasons that a court will not enforce an arbitration agreement. All of the following are reasons for not enforcing except:

a. No notice was given.

b. Arbitration was obtained in an incorrect venue.

c. The arbitrator’s decision violates public policy.

d. The arbitrator was biased.

31. The disadvantages of arbitration include: I. Limited Discovery

II. Limited Rights to Appeal

a. I only.

b. II only.

c. Neither I nor II

d. Both I and II

32. If one is trying to determine the correct geographical location of a court that has jurisdiction over a case, he/she is determining:

a. Jurisprudence.

b. Venue.

c. Allocation.

d. Alternative Dispute Resolution.

33. A forum selection clause is:

a. Contrary to public policy because it ousts the court of jurisdiction.

b. Is upheld as long as it is reasonable, negotiated in an arm’s length transaction, and absent a

compelling reason not to enforce it.

c. Will not be upheld in Japan or the U.S.

d. Is upheld as long as it was voluntary.

34. When determining whether personal jurisdiction offends “traditional notions of fair play and substantial justice,” the court evaluates several factors, including:

a. Burden on the defendant.

b. The plaintiff’s interest in having a convenient forum.

c. The forum’s legitimate interests in the dispute.

d. All of the above.

35. A U.S. federal court would have both personal and subject matter jurisdiction if

a. The plaintiff is from Hawaii and the defendant is from Sweden.

b. The amount in controversy is at least $75,000.

c. Both a and b are required.

d. None of the above.

36. A, a New York firm, sends a purchase order to B in Sweden. A standard clause on the purchase order states that “All disputes are to be heard in the courts of New York.” B confirms using its standard form, which states that “all disputes are to be resolved in arbitration before the ICC, Sweden.” Under the CISG:

a. A contract exists on A’s terms because B’s terms were a material alteration and do not become a

part of the contract.

b. A contract exists on B’s terms because the modification is immaterial.

c. No contract exists because B’s terms were a counteroffer.

d. A contract exists because A did not promptly object to the new terms.

37. The following sale is not excluded from the CISG:

a. The sale of industrial equipment.

b. The sale of consumer goods.

c. The sale of ships and aircraft.

d. The sale of negotiable instruments.

38. Contract negotiations in Japan are characterized by all of the following except:

a. The Japanese desire for group harmony and consensus.

b. The desire to develop a long-lasting business relationship.

c. The presence of lawyers during the negotiations to insure that their clients’ legal interests are


d. All of the above are characteristics of contract negotiations in Japan.

39. The following are all problems faced by developing countries in their business contract relationships with wealthier nations except:

a. Lack of trained professionals to assist their governments in contract negotiations.

b. Lack of natural resources to use as collateral for credit.

c. Lack of economic bargaining power in dealing with more powerful multinationals.

d. Lack of sophisticated legal mechanisms for dealing with contract disputes.

40. If a question arises over a trade usage, the CISG provides that:

a. No reference to trade usage is allowed by a court.

b. A court can look at those trade usages that the parties knew or ought to have known and are

regularly used in the industry.

c. A court can look at those trade usages to which the parties agreed to be bound.

d. Both b and c.

41. Under the CISG, a communication between the parties would be considered an offer when:

a. It is in the form of an advertisement.

b. It leaves the quantity and price terms open.

c. It is sufficiently definite and indicates the intention to be bound.

d. Both b and C.

42. The following elements are all considered to be key elements materially altering the terms of an offer when included with an acceptance under the CISG except:

a. Price.

b. Place and time of delivery.

c. Specification of the ship to be used for carriage.

d. Settlement of disputes terms.

43. A U.S. company sends a purchase order to an Italian shoe company. The Italian shoe company sends a letter confirming the purchase order. The CISG provides:

a. The acceptance by the Italian shoe company cannot be withdrawn under any circumstances.

b. The Italian company can withdraw the acceptance if the withdrawal reaches the U.S. company

before the acceptance reaches the U.S. company.

c. The acceptance by the Italian company was effective when sent.

d. None of the above is correct.

44. If a U.S. company wants to limit its implied warranties in connection with a sale of goods to a French company, the CISG provides that:

a. No limitation of implied warranties is allowed.

b. The limitation must be conspicuous and specific.

c. The limitation must be agreed to by the French company.

d. The limitation is valid no matter what the form.

45. All of the following are remedies available under CISG except:

a. Money damages.

b. Reformation of the contract.

c. Avoidance of the contract.

d. Specific performance.

46. If a U.S. buyer wants to avoid a sales contract with an Italian seller, the CISG states that the U.S. buyer:

a. Can avoid the contract only if there has been a fundamental breach by the Italian seller.

b. Cannot avoid the sales contract under any circumstances.

c. Can avoid the contract even for minor breaches by the Italian seller.

d. Can avoid the contract if done anytime within 30 days after the goods arrive.

47. In the event that a buyer received a shipment of seriously defective goods, under the CISG:

a. The buyer may accept the goods and reduce the amount paid to the seller accordingly.

b. The buyer must notify the seller of the defects within a reasonable time.

c. The seller may cure the defect up until the time for performance has expired.

d. All of the above.

48. In the U.S., the remedy of specific performance is limited to those instances where:

a. Money damages would be sufficient, but the injured party does not want them.

b. The goods are unique.

c. The buyer does not want the goods for which he contracted.

d. The seller wants to force the buyer to take the goods.

49. U.S. Wheat Sales, Inc., has a contract with Zambia to supply 1 million bushels of wheat. Before shipment, the U.S. government put an embargo on the sale of wheat to Zambia. U.S. Wheat cannot ship. In a legal action:

a. U.S. Wheat would be liable for breach of contract and have to pay damages.

b. U.S. Wheat will have to get wheat from other sources and specifically perform.

c. U.S. wheat will be excused from performance because of the doctrine of impossibility of


d. None of the above is correct.

50. Buyers and sellers entered into a contract for the sale of nuts. The usual route used the Suez Canal. Prior to shipment, a war closed the canal. Because the freight charges would be so high by another route, the seller refused to ship. The buyer had to buy nuts at a higher price elsewhere and sued the seller. At trial:

a. The seller will win based on the doctrine of frustration of purpose.

b. The buyer will win since this is just a risk of doing business.

c. The buyer will lose because problems with shipment by sea are an excuse for nonperformance.

d. None of the above.

51. Eastern Airlines contracted with Gulf Oil for a supply of jet fuel. An oil embargo resulted in a 400 percent increase in the price of oil. Gulf demanded a price increase from Eastern. Eastern sued to ensure its supply of oil at the contract price. The result in court will be:

a. Eastern wins because Gulf should have foreseen this situation.

b. Gulf wins due to commercial impracticability.

c. Eastern loses because a 400 percent increase is too much of a hardship for Gulf.

d. None of the above.

52. All of the following may be raised as reasons for nonperformance of sales contracts except:

a. Impossibility.

b. Frustration of purpose.

c. Commercial impracticability.

d. Subjective constraints.

53. If a merchant receives goods unsolicited with a note, “If I don’t hear from you, I assume you will keep these goods and pay for them.” Failure to respond to the seller is:

a. An acceptance unless a rejection is sent within three days upon receipt.

b. Not an acceptance and the goods must be returned within a reasonable time.

c. Not an acceptance and the goods do not need to be returned.

d. An acceptance because silence is acceptance in this situation.

54. According to Incoterms, the risk of loss or damage to goods under a CIF contract passes from seller to buyer when:

a. The goods cross the ship’s rail at the port of shipment.

b. The goods are unloaded at the port of destination.

c. The goods leave the seller’s place of business.

d. None of the above.

55. Because importers and exporters assume different risks, the most preferred way to conduct business and minimize these risks is:

a. Cash in advance.

b. Open account.

c. Documentary sale.

d. All of the above have equal risks.

56. The purpose of the bill of lading is to:

a. Transfer title to the goods to the freight forwarder.

b. Prevent shipping delays.

c. Transfer title to the goods to the buyer and receive payment.

d. Transfer title to the goods to the common carrier.

57. In addition to the bill of lading, other documents that may be required for shipment include which of the following:

a. Inspection certificate.

b. Commercial invoice.

c. Consular invoice.

d. All of the above.

58. The title to the goods in a documentary sale is transferred through:

a. Negotiation of the documents only.

b. Delivery of the goods only.

c. Negotiation of the documents and delivery of the goods.

d. Title to the goods is not transferred in a documentary sale.

59. The documentary collection is the process by which:

a. Buyers collect their goods at the port of entry.

b. Carriers consolidate cargo for shipment on a vessel.

c. Banks collect payment from the buyer.

d. Sellers must place their account into the hands of a debt collection agency to obtain payment

from the buyer.

60. Which one of the following group of documents is always required in a documentary collection for the sale of goods?

a. The draft, invoice, and bill of lading.

b. The invoice, bill of lading, and delivery order.

c. The certificate of origin, insurance policy, and invoice.

d. The draft, insurance policy, and invoice.

61. A good faith purchaser is one who purchases a document of title:

a. For value, in good faith, in the ordinary course of business.

b. For value, in good faith, directly from the seller.

c. In good faith and by endorsement from the seller’s bank.

d. With understanding that the seller acted in good faith when selling the goods.

62. B in known in the trade as a trader and merchant of soybeans. A entrusts a load of soybeans to B for storage in B’s warehouse. Secretly, B delivers the goods to an ocean carrier in return for a bill of lading. B then sells this document to C, who has purchased soybeans from B in the past (with no problems). C pays for the document through its bank. B absconds with the money. In this case:

a. A may demand return of the soybeans from C.

b. C has greater rights in the soybeans than A.

c. A’s only remedy is against the ocean carrier.

d. C’s bank is liable for committing a fraud against A.

63. A entrusts a shipment of eel skins to an ocean carrier and obtains a bill of lading. The carrier delivers the goods to B without asking B to produce the bill of lading. Without knowledge of what has occurred, A sells the bill of lading to C, who is a good faith purchaser. In this case:

a. C may not reclaim the goods because they have already been delivered by the carrier.

b. C has a cause of action against the carrier.

c. C has a cause of action against A.

d. None of the above is correct.

64. As decided in the case presented in the text, Biddel Brothers v. E. Clemens Horst Co., under a CIF sales contract:

a. The buyer has no right to inspect the goods before payment but is obligated to pay upon the

presentation of the proper documents.

b. The buyer has the right to inspect the goods prior to paying for them upon presentation of the

proper documents.

c. The buyer has no right to inspect the goods and no obligation to pay upon presentation of the

proper documents.

d. The buyer has the right to inspect the goods and no obligation to pay upon presentation of the

proper documents.

65. In Basse and Selve v. Bank of Australasia, the seller submitted a phony sample of ore to an inspection company to obtain a Certificate of Analysis showing high-grade ore. On the basis of the certificate, the seller paid for the documents and took delivery of the ore. The ore turned out to be worthless. The court ruled that:

a. The bank had an obligation to inspect the ore before paying for the documents on behalf of the


b. The buyer had a cause of action against the bank for fraud.

c. The bank acted properly in paying the seller even though the ore did not conform to the contract

because the certificate was regular on its face.

d. None of the above.

66. Seller in Georgia (USA) and buyer in the Netherlands enter into a contract for the sale of goods, CIF port of Amsterdam. The seller refused to ship. The buyer brings an action for damages. In the U.S., a court would probably rule that:

a. The seller was correct in not shipping until payment was received.

b. The damages should be measured by the difference between the contract price and the market

price of the goods at the port of shipment.

c. The damages should be measured by the difference between the contract price and the market

price of the goods in Amsterdam at the time the documents would have been presented to the

buyer for payment.

d. None of the above.

67. If the seller in Omaha wishes to place the goods in the hands of a trucking company named by the foreign buyer and have the risk of loss pass to the buyer at that time, the seller should quote his price:

a. FAS Omaha.

b. CIF seller’s plant.

c. FOB port of shipment.

d. FCA Omaha.

68. In order to prove the carrier’s liability under COGSA in court, the plaintiff must prove that the goods were loaded in a good condition and unloaded in a damaged condition or lost. This is usually done by:

a. Questioning the captain of the ship as to the condition of the goods.

b. Testimony from the shipper that the goods were in good condition when loaded into the


c. Producing a clean bill of lading.

d. There is a rebuttable presumption that the goods were damaged when they were unloaded, and

the carrier must prove that they were not.

69. Ocean carriers are exempted from liability for which one of the following?

a. Insufficiency of packaging.

b. Errors in the navigation or management of the ship.

c. Both of the above.

d. None of the above.

70. Unlike typical marine bills of lading, air waybills are:

a. not legally binding.

b. always electronic.

c. non-negotiable.

d. documents of title.

71. Maurice O’Meara Co. v. National Park Bank of New York involved a letter of credit for a shipment of newsprint. The bank was concerned that the shipment was not as represented in the documents. In finding in favor of the seller’s assignee, the court:

a. Emphasized the independence principle in letter of credit transactions.

b. Focused on the bank’s legal right to refuse documents that do not strictly comply with the terms

of the letter of credit.

c. Upheld the bank’s right to have an inspection to test the tensile strength of the newsprint.

d. A and C only.

72. A documentary drat issued for the purchase of goods by ABC Co. payable to XYZ Co., payable upon presentation, defines ABC Co. as the ___, XYZ Co. as the ___, and the specialized name of the documentary draft is ___.

a. Drawee, drawer, sight draft.

b. Drawer, drawee, sight draft.

c. Drawee, drawer, documents against acceptance.

d. Drawer, drawee, cash against documents.

73. A draft due at a future date or after a specified period of time that has been signed by the buyer is called: a. Sight draft.

b. Time draft.

c. Trade acceptance.

d. None of the above.

74. A letter of credit is a contract between:

a. The seller and the buyer’s bank.

b. The buyer’s bank and the seller’s bank.

c. The seller and the seller’s bank.

d. The buyer and the buyer’s bank.

75. The bank that is responsible for inspecting the documents to be sure they are in order, for payment to the seller, and for negotiating the documents to the buyer is called:

a. The issuing bank.

b. The negotiating bank.

c. The advising bank.

d. The lading bank.

76. In the event that a discrepancy is found in the documents presented under a letter of credit, the bank may require a waiver or:

a. Resubmit the draft.

b. Void the transaction.

c. Refuse delivery.

d. Refuse to pay against the documents.

77. Under the UCP, the description of the goods in the commercial invoice must correspond with the description in the letter of credit. In all other documents, the goods may be described:

a. In perfect conformance with the letter of credit.

b. In general terms not inconsistent with the description of the goods in the letter of credit.

c. In specific terms as requested by the buyer.

d. In general terms consistent with the contract for the sale of goods.

78. If a U.S. exporter is concerned about political and economic stability in the buyer’s country, the exporter should request which one of the following payment terms?

a. Cash against documents.

b. Irrevocable letter of credit.

c. Confirmed letter of credit.

d. Open account terms.

79. The buyer in the letter of credit is called the ____, and the seller is called the ____.

a. Account party, beneficiary.

b. Beneficiary, account party.

c. Exporter, importer.

d. Buyer, seller.

80. Assume that DownPillow sells pillows to a Japanese buyer and forwards documents and a draft for acceptance. Assume also that DownPillow discounts the trade acceptance at a U.S. bank, which then discounts the instrument in the credit markets. If the pillows turn out to be moldy and worthless, which one of the following statement(s) is (are) true?

a. The Japanese buyer does not have to pay because the pillows are damaged.

b. The U.S. bank must reimburse whoever bought the instrument and can bring a lawsuit for

payment against DownPillow.

c. The Japanese buyer must still honor and pay the acceptance upon presentation.

d. “a” and “b”.

81. A holder of a negotiable instrument cannot claim to be a holder in due course if (s)he:

a. Takes the instrument free from disputes between the drawer and drawee.

b. Knows the intstrument is overdue.

c. Unknowingly holds an instrument with a forged signature.

d. Gives value for the instruments.

82. In Star-Kist Foods, Inc. v. United States, Star-Kist complained that the president’s authority under the Reciprocal Trade Agreement Act of 1934 was unconstitutional. Star-Kist sought to challenge a presidentially lowered tariff on canned tuna imported from Iceland.

a. Star-Kist won because the congressional delegation of authority was vague and indefinite as to

the policies or objectives sought.

b. Star-Kist won because of the lack of a standard or “intelligible principle” upon which

presidential action could be judged.

c. Star-Kist lost because they lacked “standing” to protest the president’s action; only Congress

could object by means on a concurrent resolution.

d. Star-Kist lost because the court determined that the 1934 statute had provided a sufficiently

discernible standard to guide presidential action.

83. The president derives the power and authority to deal with foreign commerce and international trade from all of the following except:

a. Powers delegated to the president by Congress.

b. The president’s authority as commander-in-chief.

c. The president’s inherent executive power.

d. The president’s judicial power delegated by the courts.

84. Under the Constitution, a treaty is considered:

a. Non-binding and discretionary.

b. Unenforceable.

c. Law of the land.

d. None of the above.

85. In order for an executive agreement of the president concerning foreign affairs to be valid:

I. A court must find that it is based on the president’s inherent powers or

authority granted by Congress.

II. It must be based upon an express power granted by the U.S. Constitution.

a. I. only.

b. II. Only.

c. Both I and II.

d. Neither I nor II.

86. If the president is negotiating a trade agreement with Germany over reducing tariffs on telephone switching equipment and he wants to make sure there will be no problems with its passage, he can:

a. Call the Speaker of the House and President Pro Tem of the Senate to get their assurances

of passage.

b. Declare through Presidential Proclamation that it will be law.

c. Seek fast-track approval with Congress prior to the trade agreement being concluded.

d. None of the above.

87. Xerox Corp. manufactured parts for copy machines in the U.S. that were shipped to Mexico for assembly. The copiers were designed to be sold to Latin America and did not operate on U.S. electric current. After assembly, the copiers were kept in U.S. customs warehouses in Houston pending sale to Latin America. These goods were free of import duty by federal law. The city of Houston, Texas, assessed these copiers with a local property tax. Xerox sued to have this tax declared unconstitutional. The court should decide: I. That Xerox must pay all this tax because state/local governments have taxing

powers just like the federal government.

II. That Xerox must pay only one-half of the tax to avoid multiple taxation.

III. That this Houston law is preempted by federal law.

a. I only.

b. II only.

c. III only.

d. Both I and III.

88. A state’s authority to tax a business engaged in foreign commerce is determined by:

a. The negative implication doctrine.

b. The multiple taxation doctrine.

c. The Monroe Doctrine.

d. Both “a” and “b”.

89. The U.S. Trade Representative is:

a. A cabinet level position reporting directly to the president that carries on trade negotiations for

the U.S.

b. Required to administer the Bureau of Customs and Border Protection.

c. Both of the above.

d. None of the above.

90. In Dole v. Carter, the court considered Senator Robert Dole’s complaint that the president be enjoined from returning the Hungarian coronation regalia to Hungary. The court:

a. Enjoined the president from ordering the return on the crown until a formal treaty could be

ratified by Congress.

b. Determined that under existing protocols with Hungary, the crown could not be returned until

the year 2000.

c. Considered the executive agreement to be in accord with an earlier treaty between Hungary and

the U.S.

d. Considered the president’s agreement to return the crown as validly done pursuant to the

president’s inherent constitutional authority.

91. Treaties are negotiated by _____, with the advice and consent of _____.

a. The executive branch; Congress.

b. Congress; the President.

c. The executive branch; the Senate.

d. None of the above.

92. Which one of the following may not be a reliable criterion for determining whether imported and domestic goods are “like products”?

a. Consumers’ tastes and habits.

b. The product’s end uses.

c. The product’s uniform tariff classification.

d. None of the above are reliable.

93. Tariffs serve all of the following purposes except:

a. Collection of revenue.

b. Enhancement of flow of commerce.

c. Regulation of import competition.

d. Protection of the national defense.

94. Which one of the following is not true regarding WTO dispute settlement procedures?

a. A complaining party can request consultations to seek a solution.

b. Even if a solution is not reached, the WTO panel has no authority to authorize trade sanctions.

c. Other member nations with a “substantial interest” in the case may make written submissions

and oral arguments before the WTO panel.

d. An appellate body will hear appeals from a WTO panel case.

95. When a nation that belongs to the WTO imposes a tariff or quota on imported products, it is supposed to do so within guidelines established by WTO/GATT. If it does not do so within the guidelines:

a. The offending nation may immediately suffer trade war treatment from other WTO members.

b. The offending nation may be subject to a proceeding pursuant to the WTO’s Dispute

Settlement Understanding.

c. The offending nation may be sued in the World Court for breaching the guideline contract.

c. None of the above.

96. According to WTO/GATT, quotas are considered acceptable devices for regulating trade only where:

a. A nation is imposing a temporary safeguard to protect its balance of payments.

b. They are enacted into law by a nation’s legislative body.

c. Nations are engaged in trade war.

d. A nation has first petitioned the United Nations for permission to do so.

97. All of the following are basic principles of WTO/GATT except:

a. Commitment to normal trade relations.

b. Elimination of import quotas.

c. Non-reciprocal tariff increase.

d. Non-discrimination against imported goods.

98. Countries A, B, and C belong to the WTO. Countries X and Y do not. A has a 7% tariff on televisions from B. C, X, and Y also export televisions to A. Under the unconditional most-favored-nation trade of WTO/GATT:

a. Countries C, X, and Y are entitled to a 7% tariff on televisions.

b. Countries X and Y are entitled to a 7% tariff on televisions, but C is not.

c. Country C must petition A under WTO/GATT to get a 7% tariff on televisions.

d. Country C gets an automatic 7% tariff rate on televisions, but X and Y do not.

99. Countries A and B both produce coffee. Both countries belong to WTO/GATT. Country A imports coffee from B. Once B’s coffee enters A’s stream of commerce, under the national treatment provisions of WTO/GATT:

a. Country A cannot subject B’s coffee to higher internal taxes or charges than are imposed on A’s

domestic coffee.

b. Country A may charge higher internal taxes and charges on B’s coffee than it does on domestic


c. Country A cannot subject B’s coffee to any internal taxes or charges, even though it does so to

domestic coffee, because B’s coffee was already subjected to a tariff upon importation.

d. None of the above is correct.

100. Which one of the following is not an example of a commonly use trade barrier?

a. A convention on imported children’s toys.

b. A tariff on imported oil.

c. A tax on imported clothing.

d. A national industrial standard that drives up the cost of imported televisions.

101. Which one of the following statements regarding the 1994 Agreement on Technical Barriers to Trade is false?

a. All technical regulations shall be applied on a nondiscriminatory basis, without regard to the

national origin of the product.

b. Disputes between countries may be referred to the WTO for negotiation and settlement.

c. Whenever possible, product requirements should be based on the design and descriptive

characteristics of a product rather than its performance.

d. Proposed standards must be published and made available to foreign countries.

102. Regarding Thailand’s importation of cigarettes:

a. It was found that cigarettes made in the U.S. could not meet Thailand’s standards.

b. Thailand’s licensing system for cigarettes was not justified.

c. Thailand’s licensing system for cigarettes was needed to protect domestic industries.

d. The U.S. was not allowing Thailand to import enough U.S. cigarettes to meet demand.

103. Which one of the following statements regarding the 1994 Agreement on Import Licensing Procedures is false?

a. Applications should not be refused because of minor errors in paperwork.

b. The WTO Import Licensing Committee must be notified if any new products will become

subject to licensing requirements.

c. Where licenses are used to administer quotas, the amount of the quota already used must be

published for all importers to see.

d. All of the above are correct.

104. The WTO Agreement on Government Procurement (1994):

a. Requires fair, open, and nondiscriminatory procurement practices.

b. Sets up uniform procurement procedures to protect suppliers from different countries.

c. Applies only to those countries who have signed it.

d. All of the above.

105. Which one of the following is not an instance in which the U.S. Trade Representative may take retaliatory action against a foreign country?

a. The foreign country’s policies violate the legal right of the U.S. and restrict U.S. commerce.

b. The foreign government permits forced labor.

c. The foreign government’s policies are unreasonable or discriminatory and burden or restrict

U.S. trade or foreign investment.

d. None of the above is discretionary, rather, retaliation by the U.S. Trade Representative is

mandatory in all three instances.

106. In the U.S., technical regulations and product standards can be set by:

a. The Department of Agriculture.

b. The Consumer Product Safety Commission.

c. The Department of Transportation.

d. All of the above.

107. Which one of the following statements regarding technical barriers to trade is false?

a. Despite decades of work by the European Union, thousands of new national standards have


b. Japan and the U.S. have had a long history of disputes over Japanese technical barriers to


c. Most standard setting in the European Union takes place through one committee.

d. Japanese technical regulations and standards are transparent.

108. Section 301 refers to:

a. A law that permits the U.S. to retaliate unilaterally against other countries that violate GATT.

b. A law that permits the U.S. to retaliate unilaterally against countries that are unfair in

restricting the import of U.S. goods or services.

c. Both “a” and “b”.

d. None of the above.

109. Aeroflop, a U.S. firm, wants to sell several million dollars worth of airplanes to a government-owned airline in a European country famous for cheese. In order to get the contract, Aeroflop agrees to pay a 5% kickback to another U.S. company if that company agrees to buy all of its cheese from a seller in that European country.

a. Aeroflop’s sale to the government-owned airline is allowed under the Agreement on

Government Procurement.

b. Aeroflop’s sale is prohibited because the Agreement on Government Procurement prohibits


c. Aeroflop’s sale is allowable because the European nation is treating Aeroflop no less favorably

than its nationals.

d. The WTO dispute resolution panel must authorize both contracts prior to the sale.

110. In EU Measures Concerning Meat and Meat Products, the WTO Dispute Resolution Panel decided:

a. The EC’s regulation permitting zero residue violates the SPS agreement because internationally

accepted standards permit residue.

b. Where no internationally accepted standards exist, the EC ban on that hormone was not allowed

because it was not based on a risk assessment using scientifically accepted principals.

c. The decision of the Dispute Resolution body was overturned by the WTO Appellate Body in

January of 1998.

d. Both “a” and “b”.

111. Antidumping and countervailing duty cases may be appealed to the U.S. Court of International Trade in all of the following situations except:

a. From a decision by the International Trade Association (ITA) to suspend an investigation.

b. From a decision by the ITA to conduct an investigation.

c. From a final decision by the ITA.

d. None of the above.

112. Section 201 of the Trade Act of 1974 provides authority for the president to do what, if barriers to U.S. trade are not lifted?

a. Petition Congress to intervene in the situation.

b. Threaten military action if the barriers are not lifted.

c. Use retaliation in the form of duties or quotas.

d. Pay the U.S. company a subsidy.

113. The “escape clause” of the GATT agreement derives its name from the fact that:

a. It allows a country to escape from having trade disputes settled by GATT guidelines.

b. It permits a country to escape from its previously negotiated tariff obligations.

c. It permits a country to be relieved of having to make its balance of payments obligations for a

short period of time.

d. None of the above.

114. The requirements for import relief under U.S. law include all of the following except:

a. Increased import.

b. Imports are the substantial cause of serious injury or threaten injury.

c. Domestic industry produces a product that is like or directly competitive with the import.

d. Circumstances causing this situation