Deck 33: International Business Law

Question 1

The Republic of Garbino is a signatory to the General Agreement on Tariffs and Trade and a member of the WTO. Article III:2 of GATT states that a government must accord the same or better tax treatment to imported goods as it does to domestic products. Garbino imposed a tax on imported lumber of 13 cents per board foot while its own lumber is taxed at 5 cents per board foot. Its own lumber industry is small and very inefficient. It exports a variety of manufactured goods to Canada.

A) Since the GATT is only a body of principles, Canada cannot use it to impose countervailing duties on Garbino's exports to Canada.
B) Garbino is obligated to follow the GATT rules on the restrictions it may impose on imports, or suffer countervailing duties being imposed by Canada on Garbino's exports to Canada.
C) Since the purpose of the GATT is to help reduce barriers to international free trade, it is likely that Garbino's actions would breach the spirit of GATT.
D) Garbino is obligated to follow the GATT rules on the restrictions it may impose on imports, or suffer countervailing duties being imposed by Canada on Garbino's exports to Canada and since the GATT is only a body of principles, Canada cannot use it to impose countervailing duties on Garbino's exports to Canada.
E) Since the purpose of the GATT is to help reduce barriers to international free trade, it is likely that Garbino's actions would breach the spirit of GATT and Garbino is obligated to follow the GATT rules on the restrictions it may impose on imports, or suffer countervailing duties being imposed by Canada on Garbino's exports to Canada.

Answer 1

E

Question 2

Canada would like to increase its exports to the Eastern European country of Estavia, but there is still a great deal of political uncertainty there. Your firm makes small consumer appliances. You would like to find out if there is a market in Estavia for your goods and, if there is, how you can market your goods there most effectively. You are also worried about whether or not, in a country as politically unstable as Estavia, you can protect your own interests if you do trade there. Which of the following institutions would be of help to you? i. A customs brokerage firm.
Ii) The Export Development Corporation.
Iii) The Auto-pact.
Iv) The Department of External Affairs.
V) The Canadian International Development Agency.
Vi) The merchants' guilds.

A) All of the institutions will be of help.
B) All of the institutions except the Department of External Affairs will be of help.
C) All of the institutions except the Auto-pact will be of help.
D) The Export Development Corporation, the Auto-pact and the Canadian International Development Agency will be of help.
E) The Export Development Corporation and the Department of External Affairs will be of help.

Answer 2

E

Question 3

Which of the following is not part of the mandate of the Export Development Corporation?

A) The provision of security for the payment for goods sold under certain export transactions.
B) The organization of trade missions and support of Canadian exporters who wish to travel and attend international trade shows abroad.
C) Providing loan guarantees to enable Canadian exporters to fund the production of export-destined goods.
D) Providing insurance against the many risks associated with international business transactions.

Answer 3

B

Question 4

International business transactions significantly increase risk. What new elements are introduced in this type of transaction that result in increased risk?

A) Contractual relations with a foreign party.
B) Another legal jurisdiction.
C) International rules.
D) All responses are applicable

Question 5

Memorial Stone Carvers Ltd. makes special imports of marble from Italy. It has just found out that it may have been overpaying customs duties because the wrong rate may have been applied. Under which of the following statutes would it be able to appeal the Customs duty rate decision?

A) The Customs Act.
B) The Customs Tariff Act.
C) The General Agreement on Tariffs and Trade.
D) The Special Import Measures Act.
E) The Arbitration Act.

Question 6

Merchandise of all kinds is a profitable spin-off of its movies, but Disney has no interest or ability in operating a thousand factories to turn out these products. What is the perfect solution for Disney?

A) Manufacturing merchandise.
B) Foreign distribution agreements.
C) Licensing.
D) Contracts of sale.

Question 7

Gift Importers Ltd. has a contract with a Philippine government exporting agency for the purchase of numerous handmade artifacts. Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them, the contract contains a clause which identifies the procedure by which a third party acceptable to both would settle any disputes. In order to protect itself from an after-the-fact application of Philippine law, which, for example, would remove or alter some of the protections for Gift Importers in the contract, Gift Importers should insist on a clause by which the third party who is to resolve disputes would operate in a country other than Canada or the Philippines and under internationally recognized rules.

Question 8

Gift Importers Ltd. has a contract with a Philippine government exporting agency for the purchase of numerous handmade artifacts. Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them, the contract contains a clause which identifies the procedure by which a third party acceptable to both would settle any disputes. The two parties in this case chose a German, Holtz, as their arbitrator. The contract is silent as to the language of an arbitration. Though neither party to the dispute has German as their native tongue, it would by custom probably be the language of this arbitration.

Question 9

What Canadian legislation has the direct effect of protecting Canadian businesses and industries from the dumping of foreign good into Canada?

A) The Customs Tariff Act.
B) The Customs Act.
C) The Special Import Measures Act.
D) The Export and Import Permits Act.
E) The Hazardous Products Act.

Question 10

(p. 758.) How may an ongoing relationship for the foreign distribution of goods be structured?

A) Foreign distribution agreement.
B) Creation of a foreign branch plant or sales office.
C) Joint Venture Agreement.
D) Licensing of patents.
E) All of these ways.

Question 11

Gift Importers Ltd. has a contract with a Philippine government exporting agency for the purchase of numerous handmade artifacts. Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them, the contract contains a clause which identifies the procedure by which a third party acceptable to both would settle any disputes. The contract identifies the UNCITRAL rules as being the procedure to be used in the arbitration. Holtz may choose to follow that or to follow the relevant law of the country in which the contract was formed, that is, the country of the party accepting the contract.

Question 12

You are the world's leading manufacturer of computerized range-finding equipment, and you want to export your products to Libya and North Korea. With which of the following might you need to concern yourself? i. The Customs Act.
Ii) The Export and Import Permits Act.
Iii) A foreign distribution agreement with your foreign contact.
Iv) A force majeure clause in a distribution contract.
V) Bills of lading.
Vi) Political risk insurance.

A) i and ii.
B) i, ii, iii and v.
C) ii, iii, iv and v
D) ii, iii, iv, v and vi .
E) i, iii, iv, v and vi.

Question 13

Gift Importers Ltd. has a contract with a Philippine government exporting agency for the purchase of numerous handmade artifacts. Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them, the contract contains a clause that identifies the procedure by which a third party acceptable to both would settle any disputes. This procedure is known as commercial arbitration.

Question 14

Of the following, the most important document(s) in an international contract for the sale of goods between a raw material supplier in Nova Scotia and a factory in Spain would be

A) the commercial invoice.
B) the UNCITRAL documents.
C) the contract of affreightment.
D) the bill of lading.
E) customary documents under the Vienna Convention.

Question 15

The bill of lading in an international commercial transaction is a contract between the _________________ and the ___________________. It serves as a _____________________ and a __________________.

A) importer; carrier; sight draft; title document
B) shipper; carrier; contract of carriage; negotiable instrument
C) shipper; carrier; title document; contract of carriage
D) exporter, carrier; title document; contract of carriage
E) shipper, carrier; contract of carriage; title document

Question 16

As the result of a complaint by the Society of Canadian Slide Fastener Manufacturers, it was determined by the Deputy Minister of National Revenue for Customs and Excise that Toshima Kogyo K.K., Tokyo had exported zippers to Canada that had been produced with subsidies from the Japanese government, and which permitted Toshima to sell them at a much cheaper price than Canadian manufacturers could sell their zippers. A duty designed to offset that advantage was imposed against such goods of Toshima's, under the

A) Export and Import Permits Act.
B) Special Import Measures Act.
C) Customs Tariff Act.
D) Competition Act.
E) United Nations Commission on International Trade Law.

Question 17

What is the test to determine if goods qualify for preferential NAFTA treatment?

A) Mine and Manufacture.
B) Labelling requirements.
C) Rules-of-origin.
D) Jurisdiction of origin.

Question 18

Which country asserts the right to apply its laws outside of that country (extraterritoriality)?

A) Canada.
B) United Kingdom.
C) Russia.
D) China.
E) None of these countries routinely assert this right.

Question 19

Gift Importers Ltd. has a contract with a Philippine government exporting agency for the purchase of numerous handmade artifacts. Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them, the contract contains a clause which identifies the procedure by which a third party acceptable to both would settle any disputes. If a dispute resolution procedure is not part of the original contract, neither the Philippine government nor Gift Importers can impose it on the other at a later date.

Question 20

The risk attached to international operations lies on a spectrum from fairly low through extremely high. Where would "export operations" sit on this spectrum?

A) Fairly low risk.
B) Medium risk.
C) High risk.
D) Extremely high risk.

Question 21

Canadian Farm Machinery Ltd. entered into a contract with High Seas Transportation, which set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce Inc. Argentine has not yet paid for the tractors. This document will set out information by which customs officials will be able to set the tariff classification and the applicable rate.

Question 22

Canadian Farm Machinery Ltd. entered into a contract with High Seas Transportation, which set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce Inc. Argentine has not yet paid for the tractors. If this contract, along with any other required documents, and a sight draft are sent to Argentine Produce's bank, the bill of lading will not be released to Argentine Produce until it pays Canadian Farm Machinery, thus protecting Canadian Farm Machinery's ownership rights if Argentine does not pay.

Question 23

Canadian Farm Machinery Ltd. entered into a contract with High Seas Transportation, which set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce Inc. Argentine has not yet paid for the tractors. Canadian Farm Machinery's sale of the tractors to Argentine Produce is covered by the Sale of Goods Act.

Question 24

Canadian Farm Machinery Ltd. entered into a contract with High Seas Transportation, which set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce Inc. Argentine has not yet paid for the tractors. High Seas must deliver the tractors only to whomever Canadian Farm Machinery has identified as the consignee in the contract.

Question 25

General Mfg. & Tool Corp is a small company producing industrial machinery, including a special computer-controlled milling machine capable of producing ball-bearings that can meet the tiniest known industrial specifications. Many firms using this machine sell their output to defence contractors in the USA and Canada, but the output finds its way into a great many consumer goods as well, such as VCRs and automobiles. You are approached as a trade consultant by the president of GMT Corp., and asked to make recommendations about licensing the production of the machines in South-East Asia. Describe what steps GMT Corp. should take to determine the exportability of their licence and describe the major advantages of licensing. Further describe for GMT Corp. what should go into any good licensing agreement.

Question 26

A Canadian company is considering negotiations to create a licensing agreement with a German company for the manufacture of patented Canadian products in Germany. What items do you feel are vital for the final agreement to contain in order that it can be functional at law and in practice?

Question 27

You are exporting your Canadian-made microchips to Romania for the first time. Describe the kinds of steps you can take to protect yourself from financial loss in case something happens to the shipments. The chips will be only partially paid for at the time they are shipped.

Question 28

The Export and Import Permits Act, in part, protects Canadian business from the "dumping" of foreign goods into Canada.

Question 29

Canadian Farm Machinery Ltd. entered into a contract with High Seas Transportation, which set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce Inc. Argentine has not yet paid for the tractors. This document is called a bill of lading.

Question 30

Seacoast Fisheries & Canning, of Signal Bay, Nova Scotia entered into a contract with SEAINTORG, a Russian government-owned foreign trade organization for marine products, to process and can Russian off-shore catch. Due to the movement of fish up the Canadian coast, SEAINTORG suspends the agreement, and has its catch canned by operations in Newfoundland. What alternatives are open to SFC other than Canadian courts, and how does the process operate?

Question 31

Haglund Manufacturing Co. of Dartmouth, Nova Scotia is a maker of nautical navigation devices, and has developed some interesting new technology in the field. It is considering a business relationship with Schiffgebau Werk, in Hamburg, Germany, which has some vacant land and trained but surplus employees. When the president of Haglund last visited Hamburg, he noted that other vacant commercial properties existed as well. Identify the range of options available to Haglund for entry into the German market with its products. Compare and contrast the advantages and disadvantages of each. What would you suggest to Haglund if the company is cash-poor and risk-adverse? What if Haglund has reasonable resources and has considerable experience in international trade?

Question 32

The system that assigns internationally recognized identification numbers to essentially all traded commodities so that nations can have a common basis for the identification of goods is called Canada's Customs Tariff.

Question 33

Discuss your own interpretation of, response to and opinion about the extraterritorial application of a nation's laws.

Question 34

A Canadian company has a patented product and seeks to have it produced overseas. It desires to minimize its investment abroad and its degree of exposure to foreign legislation. In this case, the far-and-away best choice would be to opt for a licensing arrangement.

Question 35

The North American Free Trade Agreement is not a common market.