International Business and Trade Laws Practice Flashcards

Practice flashcards covering trade theories, legal systems, and customs terminology based on lecture notes.

What are Customs Laws?

A body of laws that regulates the movement of goods across national borders by overseeing importation and exportation, ensuring compliance with government requirements, collecting duties, and preventing unlawful trade activities.

Who introduced the Comparative Advantage Theory and in what year?

David Ricardo in $1817$.

What is the core principle of the Comparative Advantage Theory?

Countries maximize efficiency and mutual gains when they specialize in producing goods they can make at the lowest opportunity cost and trade for the rest.

Define Corporate Social Responsibility (CSR).

A business approach that encourages organizations to create positive social and environmental impacts while pursuing profit, demonstrating accountability to customers, employees, communities, and other stakeholders.

What is Foreign Direct Investment (FDI)?

A form of international investment where an investor establishes or acquires a business in another country with the objective of exercising substantial influence or control over its operations.

How does a Civil Law legal system function?

It is founded on comprehensive written statutes and legal codes where judges resolve disputes primarily by applying codified laws rather than relying on previous court rulings.

What is a Tariff-Rate Quota (TRQ)?

A trade mechanism that permits a specified volume of imported goods to enter at a reduced tariff, while any quantity exceeding the limit is charged a significantly higher tariff.

Who is Geert Hofstede?

A Dutch researcher who developed the Cultural Dimensions Theory, providing a framework for understanding how cultural values shape workplace behavior and international business practices.

What is a Specific Tariff?

A customs duty imposed as a fixed monetary charge on each unit of an imported product, regardless of its selling price or market value.

Define the process of Economic Integration.

A process in which countries strengthen their economic relationships by reducing trade barriers, coordinating policies, and allowing freer movement of goods, services, capital, and sometimes labor.

What do Legal and Trade Laws encompass in cross-border trade?

The collection of domestic laws and international agreements that establish the legal framework governing cross-border trade, foreign investments, commercial transactions, and business relationships.

Who developed the New Trade Theory and in which decade?

Paul Krugman and Kevin Lancaster in the $1980s$.

According to New Trade Theory, what drives international trade besides resources?

Economies of scale, innovation, and the advantages gained by entering markets early.

What is included in Import and Export Laws?

Regulations that establish legal requirements for shipping products across borders, including customs procedures, permits, documentation, and licensing.

How is Communication defined in the context of international business?

The continuous process of exchanging information, ideas, and feedback that enables organizations from different countries to build trust and achieve shared objectives.

What characterizes a Bilateral Agreement?

A formal treaty entered into by two nations to define terms of cooperation, trade, or investment, providing reciprocal rights and obligations.

Define the term Embargo.

An official government action that restricts or completely prohibits commercial transactions with a particular country to achieve political, economic, or security objectives.

Who proposed the Absolute Advantage Theory?

Adam Smith.

What is the central idea of the Absolute Advantage Theory?

Nations should specialize in producing goods they can manufacture more efficiently than other countries, leading to increased productivity and trade benefits.

What is the goal of Consumer Protection Law?

To safeguard consumers by ensuring fair business practices, product safety, truthful advertising, and protection against deceptive or fraudulent activities.

Define a Global Supply Chain.

An interconnected international system involving suppliers, manufacturers, logistics providers, distributors, and retailers working together to move products to consumers worldwide.

What does the Power Distance Index (PDI) measure?

The degree to which members of a society accept unequal distribution of authority, influence, and decision-making power.

What is Theocratic Law?

A legal system in which religious teachings and sacred scriptures serve as the primary source of legislation and government authority.

What are Intellectual Property Rights (IPR)?

Legal rights granted to creators for exclusive control over inventions, artistic works, trademarks, patents, and confidential business information.

Who introduced the Product Life Cycle Theory and when?

Raymond Vernon in $1966$.

What are the four stages of a product's development according to the Product Life Cycle Theory?

Introduction, growth, maturity, and standardization.

What is a Quota?

A government-imposed numerical restriction that limits the amount of a product allowed to enter or leave a country during a specified period.

Define Labor Law.

A branch of law governing employment relationships by establishing standards for wages, working conditions, employee rights, and employer responsibilities.

What are Values and Attitudes?

Personal beliefs, principles, and perspectives that influence how individuals evaluate situations and behave in social and professional environments.

What is the role of Business Ethics?

The application of moral principles in business activities, guiding organizations to act with honesty, fairness, integrity, and social responsibility.

Define National Relationships.

The diplomatic, political, economic, and social interactions among countries that influence international cooperation and trade partnerships.

What are International Business Contracts?

Legally enforceable agreements between parties from different countries defining rights, obligations, payments, delivery terms, and dispute resolution methods.

What is Mercantilism?

An economic doctrine that views national wealth as dependent on accumulating precious metals by encouraging exports and discouraging imports.

Define a Multilateral Agreement.

A formal agreement involving three or more countries that establishes common rules for international trade, investment, or economic cooperation.

What is a Sales Quota?

A measurable sales target assigned within a designated period to evaluate performance and encourage productivity.

What is the Competitive Advantage Theory?

A concept explaining that businesses achieve superior performance through unique strengths, innovation, or cost efficiencies that competitors cannot easily replicate.

Define an Export Quota.

A government policy setting the maximum quantity of certain goods permitted for export to protect domestic supply or regulate trade.

How does a Common Law system differ from Civil Law?

It evolved through judicial decisions and legal precedents, allowing courts to interpret laws based on previously decided cases alongside statutes.

What is Cross-Cultural Management?

The practice of leading people from diverse backgrounds by recognizing differences in beliefs and communication styles to improve organizational performance.

What are International Trade Agreements?

Legally binding arrangements between two or more countries to establish common rules for commercial exchange and reduce trade restrictions.

Define Ad Valorem Tariff.

A customs charge determined by a fixed percentage of an imported product's declared value.

What is Foreign Portfolio Investment (FPI)?

An international investment where financial securities are purchased in foreign companies without participating in their management.

What is the definition of Social Structure in a business environment?

The organized pattern of relationships, institutions, and social groups within a society that influences people's behavior and purchasing decisions.

Define Dispute Resolution.

The process of settling international business disagreements through negotiation, mediation, arbitration, or court proceedings.

What is a Tariff?

A financial levy imposed by a government on imported merchandise to regulate trade, protect domestic industries, or provide revenue.

Define Culture.

The collection of shared traditions, customs, beliefs, values, and languages that shape how members of a society interact.

What are Non-Tariff Barriers (NTBs)?

Government measures such as licensing rules, product standards, and health regulations that influence trade without directly imposing import taxes.

What is a Compound Tariff?

A customs duty that combines a fixed amount for each unit of a product with an additional percentage based on its value.

What is Protocol?

A formal set of accepted procedures, rules, and professional conduct observed during official meetings and diplomatic engagements.

What does the Heckscher–Ohlin Theory propose?

Countries gain trade advantages by exporting products that intensively use resources they possess in abundance while importing goods that require resources they lack.