53) Which of the following is true of the sovereign immunity doctrine?
A) A host government expropriates the property of a foreign corporation.
B) A host government refuses to permit a company to use the court system of the owner’s
country to sue the host government.
C) A host government insists that it must own more than 50 percent of a multinational joint
venture.
D) Courts in the host country pass a judgment against the company that cannot be contested by
courts in any other nation.
54) Which of the following statements is true of the Foreign Sovereign Immunities Act (FSIA)?
A) It protects U.S. citizens doing business in foreign nations.
B) It protects foreign companies doing business in the United States.
C) It protects joint ventures from liability for toxic accidents.
D) It protects foreign governments from U.S. judicial review of their public acts.
55) Which of the following allows a government expropriating foreign-owned private property to
claim that the jurisdiction of courts in the owner’s country do not apply to it because it is a
government rather than a private-sector entity?
A) bilateral investment treaty
B) act-of-state doctrine
C) sovereign immunity doctrine
D) joint venture
56) The ________ holds that each nation is bound to respect the independence of every other
sovereign state and that the courts of one nation will not sit in judgment on the acts of the courts
of another nation.
A) Single European Act
B) sovereign immunity doctrine
C) act-of-state doctrine
D) Maastricht Treaty
57) Which of the following is subject to export controls?
A) goods related to a licensing agreement
B) militarily sensitive goods
C) goods related to a franchising agreement
D) intellectual property
58) Which of the following is a reason why nations set up import controls?
A) to prevent the imposition of antidumping duties
B) to prevent foreign companies from destroying home industries
C) to reduce the flow of foreign currency coming into the home country
D) to prevent unfriendly nations from obtaining sensitive goods
59) In order to stimulate its local textile economy and promote the production of cotton,
something that has traditionally been imported, a country decides to charge the importing agency
a certain percentage of the value of the item being imported. By doing this, the government seeks
to make such imported products more expensive and thus unattractive. This is an example of a(n)
________.
A) export control system
B) quota
C) tariff
D) expropriation system
60) Expropriation is one of the greatest risks companies take when they engage in international
business.
61) Unilateral investment treaties (UITs) obligate the host government to extend fair and
nondiscriminatory treatment to investors from the other country.
62) In 1976, the U.S. congress enacted the Foreign Sovereign Immunities Act (FSIA), which
shields foreign governments from U.S. judicial review of their private, but not public, acts.
63) Under the sovereign immunity doctrine, a company whose property has been expropriated
cannot press its claims in its own country’s courts.
64) The expropriation doctrine holds that each sovereign nation is bound to respect the
independence of every other sovereign state and that the courts of one nation will not sit in
judgment on the acts of the courts of another nation done within that nation’s own sovereign
territory.
65) Tariffs and quotas are examples of export controls.
66) Explain how the expropriation of property is a risk for companies engaged in international
business.
67) Explain how the sovereign immunity doctrine is a risk for companies engaged in
international business.
68) Explain export and import controls.
69) Which of the following nations is not a member of the Andean Common Market?
A) Venezuela
B) Colombia
C) Peru
D) Argentina
70) Which of the following nations is not a member of the Mercado Commun del Ser Mercosul
(Mercosul)?
A) Argentina
B) Brazil
C) Paraguay
D) Ecuador
71) Which of the following nations is not an original member of the European Free Trade
Association (EFTA)?
A) Finland
B) Sweden
C) Norway
D) Scotland
72) The ________ is in the process of forming a Western European political and economic
community with a single currency and a common external tariff barrier toward nonmembers.
A) Statute of Europe
B) European Union
C) North American Free Trade Agreement
D) Association of Southeast Asian Nations
73) Which of the following statements is true of the World Trade Organization?
A) Member states have a common tariff barrier against nonmembers.
B) It is intended to create a common market.
C) All members are obligated to harmonize their trade laws or face sanctions.
D) It establishes guidelines for multinational corporations when operating in developed and
developing countries.
74) Which of the following organizations has the power to enforce the new trade accord that
evolved out of seven rounds of General Agreement on Tariffs and Trade (GATT) negotiations,
with more than 140 nations participating?
A) the European Union
B) the North American Free Trade Agreement
C) the World Trade Organization
D) the South American Common Market
75) Which of the following statements is true of the accord that will be supervised by the World
Trade Organization (WTO)?
A) It promotes the practice of requiring high local content of materials for manufactured
products, such as cars.
B) It addresses a “social dimension” through the establishment of uniform labor and Social
Security regulations.
C) It does not allow any internal tariffs among the member states.
D) It prohibits member countries from placing limits on the quantity of imports.
76) Environmentalists and consumer groups feared that the ________ would overrule U.S.
environmental laws and in other ways infringe on the sovereignty of the nation.
A) World Trade Organization
B) European Union
C) North American Free Trade Agreement
D) South American Common Market
77) One of the goals of the ________ was to create a uniform external tariff to be applied to all
nonmembers.
A) World Trade Organization
B) European Union
C) North American Free Trade Agreement
D) Organization for Economic Cooperation and Development
78) The ________ planned to create a “common market” of 400 million people and $4 trillion
worth of goods.
A) World Trade Organization
B) North American Free Trade Agreement
C) European Union
D) Mercado Commun del Ser Mercosul
79) The EU Commission consists of ________ members who represent ________.
A) 12; the EU, not national concerns
B) 12; national concerns, not the EU
C) 20; the EU, not national concerns
D) 20; national concerns, not the EU
80) Which of the following statements is true of the European Union’s Parliament?
A) It can assent to trade agreements with countries outside the European Union.
B) It performs the function of final decision maker in conflicts between European Union law and
individual member states.
C) It maintains price stability by lowering or raising interest rates.
D) It coordinates the economic policies of member states.
81) The ________ is administered by a three-member Trade Commission, which oversees a
Secretariat and arbitral panels.
A) North American Free Trade Agreement
B) World Trade Organization
C) European Union
D) Andean Common Market
82) Which of the following is the ultimate goal of the North American Free Trade Agreement
(NAFTA)?
A) creation of a “social dimension” through the establishment of uniform labor and Social
Security regulations
B) establishment of a monetary union through the creation of a single currency for all member
states
C) creation of a totally free trade zone among the three member states
D) establishment of common prices for all goods exported from member states
83) Members of the World Trade Organization can veto the findings of an arbitration panel.
84) The World Trade Organization pact makes it more risky for multinationals to have parts built
in cheap-labor countries and then brought back to the multinational’s home country for use in
making a product.
85) The goals of the World Trade Organization were to create a “customs union” that would do
away with internal tariffs among the member states and to create a uniform external tariff to be
applied to all nonmembers.
86) The Council of Ministers of the European Union (EU) consists of 20 members who represent
the EU, not national concerns.
87) The European Central Bank and the European Monetary Union perform the functions of
arbiter and final decision maker in conflicts between European Union law and individual
member states.
88) The North American Free Trade Agreement (NAFTA), ratified in 1994, sought to eliminate
barriers to the flow of goods, services, and investments among Canada, the United States, and
Mexico over a 15-year period.
89) What impact has the World Trade Organization (WTO) had on corporate investment
decision making?
90) Arbitration clauses in contracts involving international business transactions should include
all but which of the following?
A) what law will govern the arbitration
B) where and when the arbitration will take place
C) how the expenses of arbitration will be shared
D) whether a judge or jury will render a verdict in the arbitration
91) The International Chamber of Commerce offers a permanent ________ tribunal.
A) arbitration
B) mediation
C) summary jury
D) mock jury
92) ________ is a dispute resolution process whereby parties submit their disagreements to a
private individual decision maker they have agreed on or to a panel of decision makers whose
selection has been provided for in the contract the parties signed.
A) Prosecution
B) Mediation
C) Litigation
D) Arbitration
93) Which of the following statements is true of the arbitration of disputes?
A) It includes a judicial review.
B) It can come about through treaties.
C) It can be regulated though the provision of a choice-of-forum clause.
D) It is considered to be more public than litigation.
94) Which of the following is a dispute resolution process that goes through the judicial system?
A) litigation
B) arbitration
C) mediation
D) conciliation
95) Litigation can be used to resolve a dispute between parties when ________.
A) a waiver of judicial review has been stipulated
B) a less public means of resolving disputes is desirable
C) contracts do not contain arbitration clauses
D) two or more families of law need to be enforced
96) Private international business contracts include a(n) ________ clause so that the parties
know which family of law is to be applied in case of a dispute and what nation’s courts will be
used.
A) choice-of-forum
B) supremacy
C) ouster
D) foreign commerce
97) Because there is no single international court or legal system capable of resolving all
commercial disputes between private parties, a choice-of-________ clause should be negotiated
in all agreements involving major transactions.
A) forum
B) jury
C) judge
D) counsel
98) ________’s Commercial Court, established in 1895, is the most popular neutral forum for
resolving commercial litigation.
A) London
B) New York
C) Madrid
D) Munich
99) There exists a single international court and legal system capable of resolving all commercial
disputes between private parties.
100) Discuss arbitration as a method of dispute resolution.