Question 1

The abbreviation EXW in relation to international trade means the seller should deliver the goods to the buyer's home.

Accepted Answer

EXW stands for "Ex Works", which means the seller is only responsible for making the goods available at their premises or chosen location. The buyer is responsible for all other expenses and risks associated with the transportation and delivery of the goods to their final destination.

Question 2

Foreign Direct Investment to a Canadian investor

Accepted Answer

Foreign Direct Investment involves the investor having an effective voice in the management of the enterprise, which is the case in choice C. Owning stock in a Canadian holding company, owning shares listed on a foreign stock exchange, or owning shares in a mutual fund focusing on foreign investments do not necessarily give the investor an active role in management, which is a key component of FDI. Choice B is also incorrect, as establishing a foreign branch or subsidiary can be a way to obtain FDI.

Question 3

Courts do not encourage forum shopping.

Accepted Answer

Courts discourage forum shopping as it leads to inconsistent judgments and undermines the integrity of the legal system.

Question 4

The government is more restrictive on foreign ownership in some business sectors than in others. Which sector would have the LEAST restrictions?

Accepted Answer

Tourism is typically a sector that has fewer restrictions on foreign ownership compared to others such as banking or book publishing which may be considered sensitive industries. Film making and fishing may also have some restrictions.

Question 5

Dumping is the process where

Accepted Answer

Dumping is when a foreign firm sells goods in Canada at prices lower than it sells these same goods in its own domestic market, which gives them an unfair advantage over Canadian producers. This can harm the domestic industry and may lead to job loss and economic damage.

Question 6

Where it is determined that a country has dumped its goods in another country, the recipient country may impose countervailing duties.

Accepted Answer

Countervailing duties are imposed to counteract subsidies provided by foreign governments, not dumping. Anti-dumping duties are used to address dumping.

Question 7

The practice whereby goods are sold for prices that are below that for which the goods are sold in the country of origin, is called most favoured nation treatment.

Accepted Answer

The practice described in the statement is actually known as "dumping". Most favoured nation treatment refers to a country being granted the same trade advantages as other countries with the same status.

Question 8

The GATT and the WTO aim to reduce customs duties.

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), both aim to reduce customs duties and other barriers to international trade.

Question 9

Before a court assumes jurisdiction over an international business dispute, the issue must have a connecting factor.

Accepted Answer

This is true. A connecting factor is a link between the dispute and the jurisdiction where the case is being heard. It can be a physical presence of the company, a contract signed within the jurisdiction, or any other factor that creates a connection between the dispute and the jurisdiction. Without a connecting factor, the court may lack the authority to hear the case.

Question 10

Anti- dumping duties may be levied when one country's goods are dumped in another country.

Accepted Answer

This statement is true. Anti-dumping duties are imposed on imported goods that are being sold at a lower price than their fair market value, in order to protect the domestic industry from unfair competition.

Question 11

An Import duties is a kinds of non- tariff barrier.

Accepted Answer

Import duties are a form of tariff barrier, as they involve taxes on imported goods, whereas non-tariff barriers include regulations and restrictions that do not involve taxes.

Question 12

Where it is determined that a country has dumped its goods in another country, the recipient country may impose trade related investment measures.

Accepted Answer

Trade-related investment measures (TRIMs) are not typically used to address dumping. Instead, anti-dumping duties or tariffs are imposed to counteract dumping practices.

Question 13

The practice whereby goods are sold for prices that are below that for which the goods are sold in the country of origin, is called subsidy.

Accepted Answer

The practice described is actually called dumping. Subsidy refers to financial assistance given by a government to a company or industry to help reduce the costs of production or encourage growth.

Question 14

Agricultural products fall within the scope of NAFTA.

Accepted Answer

Yes, agricultural products are included in NAFTA.

Question 15

The disadvantage of commercial arbitration, as a method of resolving international disputes, as compared to court litigation is

Accepted Answer

Arbitration often requires parties to resolve disputes in a neutral location, forfeiting the advantage of being in one's own "home" court, which can be a disadvantage compared to court litigation.

Question 16

NAFTA currently allows anti- dumping and countervailing duties on imported goods between Canada and the U.S. However, in the long term, NAFTA is requiring both countries to

Accepted Answer

NAFTA aims to establish common rules on subsidies and on anti-competitive practices such as dumping in the long term. This means that both Canada and the U.S. will have to work towards a uniform approach to these issues, which will make trade fairer for both countries.

Question 17

Which of the following is prohibited by the World Trade Organisation?

Accepted Answer

The World Trade Organization (WTO) prohibits import quotas, which are quantitative restrictions on the amount of a product that can be imported, as they are considered trade barriers.

Question 18

The World Trade Organisation provides two procedures for the resolution of disputes between countries. One way is to request the WTO Council to appoint a "Panel" to adjudicate the dispute; the other way is

Accepted Answer

The best choice is the consultation and, if necessary, conciliation procedure. This is because it offers a diplomatic solution to the dispute and allows the countries involved to come to a mutually agreed upon solution without the need for a formal adjudication panel. It also allows for a more flexible and timely resolution to the dispute.

Question 19

In a countertrade, the seller agrees to accept payment in the form of goods procured or produced by the buyer.

Accepted Answer

In a countertrade, the seller agrees to accept payment in the form of goods procured or produced by the buyer. This is a common practice in international trade, especially when traditional currency exchange is not possible due to government regulations or currency restrictions.

Question 20

The General Agreement on Tariffs and Trade (GATT) which came into existence in 1948, was superceded in 1995 by

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) was superseded by the World Trade Organization (WTO) in 1995. The WTO is an international organization that regulates trade between countries and provides a forum for negotiating and monitoring trade agreements. It also has a dispute resolution mechanism and helps to ensure that trade flows as smoothly, predictably, and freely as possible. The other options listed were all either outcomes or aspects of the GATT or WTO, but none of them superseded the GATT.

Quiz 33: International Business Transactions