International Business Law A Transactional Approach 2nd Edition By Larry A. – Test Bank

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International Business Law A Transactional Approach 2nd Edition By Larry A. – Test Bank

CHAPTER TWO

THE ETHICS OF INTERNATIONAL BUSINESS

 

TRUE/FALSE

 

  1. Domestic, but not multinational, businesses must confront ethical issues.

ANS: False

 

  1. The theory of cultural relativism holds that it is possible to determine cross-cultural standards of right and wrong.

ANS: False

 

  1. A ‘rights and duties’ approach to ethics bases the morality of an action on its net benefit to society.

ANS: False

 

  1. In its simplest formulation, utilitarianism holds that the rightness of an action can be determined by whether it produces more good than bad.

ANS: True

 

  1. Stakeholders are all parties either directly or indirectly affected by the decision of a business firm.

ANS: True

 

  1. The open discrimination against blacks sanctioned under South African law was known as Apartheid.

ANSWER. True

 

  1. The Union Carbide Bhopal disaster occurred in Pakistan.

ANS: False

 

  1. In Kantian ethics, absolute moral duties are know as categorical imperatives.

ANS: True

 

  1. In the ethics of care, a business is considered to have a special obligation to its workers and community.

ANS: True

 

  1. The school of thought known as the myth of the amoral businessperson argues that ethical business practices are inconsistent with long-term profitability.

ANS: False

 

  1. The idea that corporations have social and environmental responsibilities beyond profit making is asserted in the Caux Round Table’s Principles for International Business.

ANS: True

 

  1. All corporations are legally and ethically obligated to apply host country standards to practices occurring within that host country.

ANS: False

 

  1. American anti-trust laws do not apply to the activities of U.S. corporations operating in foreign countries.

ANS: False

 

  1. Transparency International is a U.S. governmental agency dedicated to eliminating corruption.

ANS: False

 

  1. Most countries have national laws that outlaw the payment of bribes to government officials.

ANS: True

 

  1. Under the Foreign Corrupt Practices Act (FCPA), American companies are not liable for bribes made by its foreign agents.

ANS: False

 

  1. In order to be liable for illegal payments by its agent to foreign officials, a firm must have actual knowledge that bribery has occurred.

ANS: False

 

  1. A corporation may bring a civil suit against one of its competitors for violation of the Foreign Corrupt Practices Act (FCPA).

ANS: False

 

  1. Minor payments to clerical employees of a foreign government or agency are not considered bribes under the 1988 Amendments to the Foreign Corrupt Practices Act (FCPA).

ANS: True

 

  1. The 1988 Amendments to the Foreign Corrupt Practices Act (FCPA) limited the definition of ‘foreign officials’ to employees of foreign governments and their agencies.

ANS: False

 

  1. A company can violate the Foreign Corrupt Practices Act (FCPA) without committing any acts of bribery.

ANS: True

 

  1. Under the U.S. Federal Sentencing Guidelines, a corporate or organizational entity cannot be held liable for criminal acts committed by its employees.

ANS: False

 

  1. The Federal Sentencing Guidelines provide that a company that enacts an ethics or compliance program may receive more lenient treatment for statutory violations than one that does not.

ANS: True

 

  1. ISO 9000 is a set of international, voluntary environmental management standards.

ANS: False

 

  1. The development of international standards can reduce barriers to trade by harmonizing national standards and ensuring minimum levels of quality, labor, and environmental standards are being met.

ANS: True

 

  1. The World Trade Organization (WTO) has set stringent labor standards that must be met in order for countries to gain free trade benefits.

ANS: False

 

  1. Comparative advertising in more strictly regulated in the European Union than in the United States.

ANS: True

 

MULTIPLE CHOICE

 

  1. The assessment of ethical issues in international transactions are influenced by:
  1. Culture
  2. Religion
  3. Economics
  4. All of the above

ANS: D

 

  1. The theory that holds because each country or culture has different belief systems, then there is no transnational way to determine whether an action is right or wrong is:
  1. Utilitarianism
  2. Ethical relativism
  3. Consequentialism
  4. Distributive justice

ANS: B

 

  1. The teleological or consequentialist approach to ethics is:
  1. Utilitarianism
  2. Rights and duties
  3. Virtue ethics
  4. Ethics of care

ANS: A

 

  1. A Utilitarian analysis that attempts to monetize an ethical decision by placing a dollar value on the outcome is:
  1. Benefit-cost analysis
  2. Stakeholder analysis
  3. Dominant consideration analysis
  4. None of the above

ANS: A

 

  1. When a firm faces a situation in which a certain standard or practice is considered ethical in the host country, but unethical in the home country, it is known as:
  1. Conflict of relative development
  2. Conflict of core values
  3. Conflict of cultural tradition
  4. Conflict of rights vs. duties

ANS: C

 

 

  1. Immanuel Kant is associated which with of the following approach to ethics:
  1. Virtue ethics
  2. Rights and duties
  3. Utilitarianism
  4. Ethics of care

ANS: B

 

  1. The employment at will doctrine provides that:
  1. Employees may organize labor unions
  2. Employers owe no duty of continued employment to workers
  3. Employers must enter into collective bargaining before dismissing workers
  4. None of the above

ANS: B

 

  1. Motorola’s corporate code of conduct represents a _______ approach to ethical conduct in international business:
  1. Utilitarian
  2. Virtue-based
  3. Rights-based
  4. All of the above

ANS: D

 

  1. The idea that the only social responsibility of business is to increase profits is most closely associated with:
  1. Milton Friedman
  2. Adam Smith
  3. John Kenneth Galbraith
  4. Francis Fukuyama

ANS: A

 

  1. The western concept of the dignity of all humans and the Japanese concept of society working together for the common good are embodied in the principles of which of the following organizations:
  1. Transparency International
  2. U.N. Global Impact Program
  3. Caux Round Table
  4. Amnesty International

ANS: C

 

  1. The legal concept whereby home country laws are applied to the foreign activities of a corporation is known as:
  1. Grant-back provisions
  2. Voluntary restraint laws
  3. Escape clauses
  4. Extraterritoriality

ANS: D

 

  1. The elimination of foreign bribery and corruption have been addressed by:
  1. Foreign Corrupt Practices Act (FCPA)
  2. Transparency International
  3. Organization for Economic Cooperation and Development (OECD)
  4. A & B only
  5. All of the above

ANS: E

 

  1. The Foreign Corrupt Practices Act (FCPA) prohibits U.S. firms from paying bribes to:
  1. Foreign government officials
  2. Foreign agents
  3. Foreign competitors
  4. A & B only
  5. All of the above

ANS: A

 

  1. Exceptions to the Foreign Corrupt Practices Act (FCPA) include payments that are:
  1. For routine governmental action
  2. Lawful under the written laws of the foreign government
  3. For a reasonable and bona fide expenditure
  4. A & C only
  5. All of the above

ANS: E

 

 

 

  1. Under the Foreign Corrupt Practices Act (FCPA), individuals may face imprisonment for up to:
  1. Three years
  2. Five years
  3. Ten years
  4. Fifteen years
  5. None of the above

ANS: B

 

  1. In Lamb v. Phillip Morris, Inc., the court held that:
  1. No private right of action is available under the FCPA.
  2. Direct evidence of actual intent to bribe is not required under the FCPA.
  3. Third party bribery under the FCPA includes the use of agents.
  4. All of the above
  5. None of the above

ANS: A

 

  1. A company can mitigate its penalties for violating the law under the Federal Sentencing Guidelines by:
  1. Self-reporting the crime
  2. Cooperating with government investigation
  3. Having an existing compliance program
  4. A & B only
  5. All of the above

ANS: E

 

  1. The base level of fines to be assessed under the Federal Sentencing Guidelines are based upon:
  1. The seriousness of the offense
  2. The culpability of the organization
  3. The size of the organization
  4. A & B only
  5. All of the above

ANS: D

 

  1. All regulated products in the European Union require a/an:
  1. EU Ecolabel
  2. ISO certification
  3. CE mark
  4.  All of the above
  5. None of the above

ANS: C

 

 

 

 

  1. A pro-labor device that requires companies to provide information and seek consultation with its workers on plant and workforce relocations is:
  1. Evergreen statue
  2. Works council
  3. Labor clause
  4. None of the above

ANS: B

 

  1. The 1997 EU Directive on Comparative Advertising:
  1. Prohibited all forms of comparative advertising.
  2. Prohibited comparative advertising in Italy, Belgium, and Luxembourg, but allowed it in all other EU countries.
  3. Required advertisers to demonstrate promptly the accuracy of comparative claims.
  4. Allowed comparative advertising based on subjective factors.
  5. None of the above

ANS: C

 

  1. If a private party requests an Attorney General Opinion, the Foreign Corrupt Practices Act (FCPA) requires the Justice Department to issue an opinion:
  1. Within 30 days after receiving the request
  2. Within 60 days after receiving the request
  3. Within 90 days after receiving the request
  4. Within 6 months

ANS: A

 

  1. The Foreign Corrupt Practices Act (FCPA) prohibition against offering bribes to foreign officials applies to:
  1. U.S. corporations
  2. U.S. citizens
  3. Foreign subsidiaries of U.S. companies
  4. A & B only
  5. All of the above

ANS: D

 

  1. The standard that provides a common framework for quality environmental management is:
  1. ISO 9000
  2. SA 8000
  3. ILO 1919
  4. ISO 14000

ANS: D

 

 

 

 

 

  1. The Marketing Supervision Network is a multi-national effort to resolve:
  1. International labor disputes
  2. International advertising disputes
  3. International environmental disputes
  4. International trade disputes

ANS: B

 

 

 

ESSAY QUESTIONS

  1. Compare and contrast the salient features of the four schools of ethical thought discussed in the text, especially as they apply to issues in international business ethics.

ANS: Answers will vary.

  1. Discuss Milton Friedman’s position that the only social responsibility of business is to increase profits. Do you agree or disagree with this position?  Provide support for your answer.

ANS: Answers will vary.

  1. Describe the bribery provisions of the Foreign Corrupt Practices Act.  Who can be held liable under the Act? Discuss under what circumstances a payment made to a foreign official would not be considered bribery.

ANS: Answers will vary.

  1. Discuss how the U.S. Federal Sentencing Guidelines “reward organizations for establishing a legal and ethical compliance program.”

ANS: Answers will vary.

  1. Why might the adoption of international standards for goods and services be important?  What role is ISO playing in this process?

ANS: Answers will vary.

CHAPTER SIX

NATIONAL IMPORT AND EXPORT REGULATION

 

TRUE/FALSE

 

  1. The generalized system of preferences is a framework under which developed countries give preferential tariff treatment to manufactured goods imported from developing countries.

ANS: True

 

  1. Manufacturing is not permitted on goods brought into a bonded warehouse under any circumstances.

ANS: False

 

  1. Under the Harmonized Tariff Schedule all countries charge the same duty rate for the importation of the same products.

ANS: False

 

  1. The HTS utilized in the United States is taken from an international classification scheme administered by the World Customs Organization (WCO).

ANS: True

 

  1. The general rule-making authority in customs classification and assessment of duties in the U.S. is vested in the International Trade Commission (ITC).

ANS: False

 

  1. The primary rule of interpretation in determining the appropriate HTS classification number is the essential character rule.

ANS: False

 

  1. The foreign affairs doctrine states that it is the exclusive domain of the federal government to enact laws regulating international trade.

ANS: True

 

  1. Ad Valorem duties are based on the weight or quantity of the good being imported.

ANS: False

 

  1. In order to obtain the duty exemption for off-shore assembly found in Section 9802, exported items must be ready for assembly without further fabrication.

ANS: True

 

  1. Foreign Trade Zones allow U.S. manufacturers to export goods without being subject to duties.

ANS: False

 

  1. An importer concerned about a classification issue can get an advanced ruling from the Commissioner of Customs before importing the good.

ANS: True

 

  1. Without exception, all goods imported into the U.S. must have a country of origin marking on them.

ANS: False

 

  1. Liquidation of goods by the Customs Service refers to the seizure of goods excluded from importation into the U.S.

ANS: False

 

  1. Anyone importing unmarked items into the U.S. is subject to civil penalties including an additional 10% ad valorem duty.

ANS: True

 

15.Because country of origin determinations may vary under different statutes, it is possible for the same good to be considered from Country A for purposes of marking and from Country B for purposes of assessing a duty.

ANS: True

 

  1. When using the deductive value method of determining dutiable value, an importer may deduct foreign inland freight costs, but only if they are separately invoiced.

ANS: True

 

  1. In the U.S., the least preferred method of valuation for determining the dutiable value of a good is the computed value method.

ANS: True

 

  1. U.S. firms that import materials or components that they process or assemble for re-export may obtain refunds of all duties paid on the imported merchandise, less 5 percent to cover customs costs.

ANS: False

 

  1. The Agreement on Customs Valuation makes the deductive value of a good the internationally preferred means of calculating dutiable value.

ANS: False

 

  1. U.S. law makes substantial transformation the primary test for determining a goods country of origin.

ANS: True

 

  1. The primary consequence of the Customs Modernization Act is an increase in the amount of goods being imported into U.S.

ANS: False

 

  1. The Origin Agreement of GATT has led to an international harmonization in marking requirements for imported goods.

ANS: False

 

  1. Generally, the value-added method of determining country of origin benefits less- developed countries because of their low cost labor and materials.

ANS: False

 

  1. NAFTA regulations define a good as being made in a NAFTA country if at least 55% of the labor and component parts of that good were supplied in a NAFTA country.

ANS: True

 

  1. The legal responsibility for classifying and valuing imported goods falls to the custom broker.

ANS: False

 

  1. Country specific standards requirements may act as technical barriers to trade.

ANS: True

 

  1. An eco-label is a voluntary mark awarded by NAFTA countries to producers who can show that their products are significantly less harmful to the environment than similar products.

ANS: False

 

  1. The European Union’s CE marking on a product indicates that the product has been manufactured in the European Community.

ANS: False

 

  1. The General Agreement on Trade in Services has increased the international harmonization in health and safety standards.

ANS: False

 

  1. All U.S. companies are required to obtain a general license before starting export activities.

ANS: False

 

 

 

MULTIPLE CHOICE

 

  1. All of the following are basic types of laws that regulate the importation of goods except:
  1. Marking requirements
  2. Duty assessment
  3. Country of origin
  4. Standards requirements

ANS: C

 

  1. All of the following are fundamental factors used by countries to determine the customs duties to be paid for importing goods except:
  1. Country of origin
  2. Classification
  3. Valuation
  4. Markings

ANS: D

 

  1. The uniform classification system adopted by most countries to classify goods in international trade is:
  1. Harmonized commodity description
  2. Harmonized tariff schedule
  3. Harmonized coding system
  4. Harmonized classification schedule

ANS: B

 

  1. Foreign goods placed into which of the following are exempt from duties until officially entered into a country’s stream of commerce:
  1. Free trade zone
  2. Bonded warehouse
  3. Free port
  4. A & B only
  5. All of the above

ANS: E

 

  1. A binding ruling by the Customs Service refers to:
  1. An advanced determination of a goods dutiable status
  2. Imposition of penalties for non-payment of duties
  3. Imposition of penalties for incorrect tariff classification of imported goods
  4. None of the above

ANS: A

 

  1. Duties assessed on the value of a good are known as:
  1. Ad Valorem duties
  2. Specific duties
  3. Compound duties
  4. Transformation duties

ANS: A

 

  1. When an importer’s goods do not fit into a neat category within the Harmonized tariff schedule, she should first consult the:
  1. General Rules of Interpretation
  2. International Trade Commission
  3. World Customs Organization
  4. World Trade Organization

ANS: A

 

  1. Section 9802 of the HTS provides for:
  1. Establishment of free trade zones
  2. Partial duty exemption for technological products
  3. Partial Exemption from tariff duties for items temporarily exported for assembly and then returned to the United States
  4. The establishment of the Court of International Trade

ANS: C

 

  1. The court that has jurisdiction over any civil matters against the U.S. arising out of Federal laws governing import transactions is the:
  2. Court of Appeals for the Federal Circuit
  3. Supreme Court
  4. S. District Court
  5. International Court of Justice
  6. Court of International Trade

ANS: E

 

  1. In U.S. v. Haggar Apparel Company, the Supreme Court held that:
  2. Section 9802 of the HTS is unconstitutional
  3. If the Customs Service makes a reasonable interpretation and implementation of an ambiguous statutory provision, it must be given judicial deference
  4. Customs regulations are not entitled to judicial deference because the Court of International Trade is charged to “‘reach the correct decision'” in determining the proper classification of goods
  5. The Court of International Trade is not required to apply the legal framework from Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc

ANS: B

 

  1. The customs valuation of imported goods is based upon those goods:
  2. Transformed value
  3. Transaction value
  4. Assisted value
  5. Substantial value

ANS: B

 

  1. The country of origin of an imported good is determined by:
  2. Where a good was grown, mined, produced or manufactured
  3. Whether there has been a substantial transformation of the good in another country
  4. I only
  5. II only
  6. Both I & II
  7. Neither I nor II

ANS: C

 

  1. Country of origin provides the customs service with information that determines all of the following except:
  2. Qualification for trade preferences under a free trade agreement
  3. Application of antidumping duties
  4. Application of quota restrictions
  5. Rate of duty on an import
  6. Tariff classification

ANS: E

 

  1. Deductive value is one method of determining the dutiable value of goods in which an importer is allowed to deduct certain costs including all of the following except:
  2. International freight
  3. Duties
  4. Certain commissions
  5. Packing costs

ANS: D

 

  1. A form of tax relief in which a lawfully collected customs duty is refunded or remitted wholly or in part because of the particular use made of the commodity on which the duty was collected is known as:
  2. Drawback
  3. Setback
  4. Use relief
  5. Rollback

ANS: A

 

  1. The European Union primarily uses which of the following tests to determine a products country of origin status:
  2. Substantial transformation test
  3. Specified processes test
  4. Roll-up test
  5. Value added test

ANS: D

 

  1. The Customs Modernization Act changed customs law by:
  2. Shifting the legal responsibility of classifying goods from the Customs Service to customs brokers
  3. Requiring the importer to implement a proper record keeping system
  4. Implementing a new Automated Export System
  5. B & C only
  6. All of the above

ANS: D

 

 

  1. The Basel Convention restricts trade in:
  2. Hazardous waste
  3. Nuclear arms
  4. Supercomputers
  5. Agricultural products

ANS: A

 

  1. A validated license for export will be needed when:
  2. The country of import is on the Country Groups list
  3. The product to be exported is on the Commodity Control list
  4. I only
  5. II only
  6. Both I & II
  7. Neither I nor II

ANS: C

 

  1. The __________ alerts foreign buyers of goods and documents that diversion contrary to U.S. law is prohibited
  2. Validated license
  3. Destination Control Statement
  4. Shipper’s Export Declaration
  5. Bill of lading

ANS: B

 

 

 

ESSAY QUESTIONS

  1. What are the three fundamental factors used by countries to determine the customs duties to be paid for importing goods? How are these three variables applied in U.S. import law for assessing tariffs?

ANS: Answers will vary.

  1. How do the General Rules of Interpretation provide guidance to an importer and the Customs Service when there is more than one possible tariff selection?

ANS: Answers will vary.

  1. Describe the four alternative methods available to importers for customs valuation purposes.

ANS: Answers will vary.

  1. What legal responsibilities does the Customs Modernization Act place upon the importer of goods?  How has the implementation of the Act allowed for goods to be imported more quickly?

ANS: Answers will vary.

  1. Describe and explain the various licenses and documents that the U.S. government requires exporters to obtain before shipping goods to a foreign country.

ANS: Answers will vary.

 

 

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