International Business Law Exam 4

Trade Barrier

is any obstacle to trade in goods or services.

Barrier to us doing trade somehow

Import Trade Barrier

is any impediment to the entrance of imported goods or services into the importing country.

There is a barrier to trade involving imports

Impediment

is a hindrance or obstruction in doing something.

Tariff

is a tax placed on imported goods.

Are Most Used Type of Import Trade Barrier

Tariffs

Ad Valorem Tariff

is computed on a fixed percentage of the value of the imported good.

tax of a % of VALue

Example:

We pay a 10% tax on each imported care bear

Specific Tariff

is computed on the basis of physical units.

have a specific amount of tariff/tax on specific physical characteristics

Example of Specific Tariff

Example:

• U.S has a specific tariff of $20 per one pound on Care bears

• We are buying one Care bear

• One care bear costs $100

• One care bear weighs 1 pound

• Specific tariff is $20, because we just have one pound

• Total cost of Care bear will be $100+$20=$120

Non-Tariff Import Trade Barrier

is any impediment to trade other than tariffs.

it’s a BARRIER to TRADE that is NOT a TARIFF

Direct Non-Tariff Import Trade Barrier

specifically limits imports of goods or services.

Example of Direct Non-Tariff Import Trade Barrier

Ad in newspaper says everyone can apply to a job, except women

Embargo

• is an official ban on trade with a particular country.

• We’re not sending you stuff, and you cant send us stuff

Indirect Non-Tariff Import Trade Barrier

is a barrier that seems perfectly neutral and not targeted at keeping out particular goods from a specific country.

Example of Indirect Non-Tariff Import Trade Barrier

Example:

1. US has a law that says it wont allow import of foreign beef if it has growth hormones in it

2. Ad in newspaper says everyone can apply if they are at least 6 feet tall

World Trade Organization

is the most important intergovernmental organization for world trade, and it provides the framework by which we regulate world trade.

Tariff Concession

is each country’s promise to reduce tariffs on imports of a given item in return for tariff concessions of other countries.

Agree to lower tariff rates

Example of Tariff Concessions

Example:

• Honduras and US are WTO member countries

• Honduras wants us to lower tariffs on its coffee beans

• US says it will if Honduras lowers its tariffs on our medical devices

• Both US and Honduras have done tariff concessions

Tariff Binding

is the agreed tariff rate, because the rates become bound or capped at that particular rate.

Bound Rate

the maximum tariff rate a country may charge on an item.

Max tariff rate

Example of Bound rate

Example:

• US and Canada are member countries of the WTO

• They both agree to do tariff concessions, where they will lower their tariffs

• They both agree to do tariff bindings as $1 per pound of cheese

• If they charge more than that, they have gone over the bound rate

Nondiscrimination

means every WTO member country must treat the goods of other WTO member countries equally and without discrimination.

Cant play favorites

Most-Favored-Nation Status

Status means that when one country grants this status to another country, it is agreeing to give items imported from that country the most favorable treatment that it gives to other most-favored nations.

Status of favoring a nation the most because they are in the same club as us

A WTO rule that says a country must generally give one trading partner the same trade benefits it gives other WTO members.

Example: If the U.S. lowers tariffs on products from Japan, it must generally give that same lower tariff to other WTO members too.

Most Favorable Treatment

• means the lowest tariff rates.

• Treating countries most favorably by giving them the lower tariff rates

• If reduce tariffs on a product from one country, must reduce tariffs on same products from other countries

WTO Agreements

are the agreements its member nations have agreed to abide by.

=rules countries must follow to be in WTO

Multilateral Trade Negotiation

is a specific form of a WTO Agreement, where several countries that are members of the WTO come together and agree to trade in a certain way.

Negotiation

is a discussion aimed at reaching an agreement.

Negotiating Rounds

are where member countries come together and agree on trade agreements.

Round

is a negotiating session.

=Meetings

Nullification

is to deprive something of value.

Trade Negotiation

is a process in which countries meet together with the goal of reaching a trade agreement.

WTO Dispute Settlement Body

is made up of representatives from different member countries, who will then issue a binding decision once hearing all of the evidence.

Binding Decision

is a decision that must be obeyed.

Trade War

occurs when countries retaliate against other countries by raising higher tariffs or imposing non-tariff trade barriers without the WTO’s consent.

You have to get the WTO’s consent/okay before you can raise tariffs on another country

Sanction

is a penalty for disobeying a law or rule.

Withdrawal or Suspension of a Concession

means that the countries affected by one country’s bad act will then be allowed to legally increase their tariff rates on that particular country.

Example of Withdrawal or Suspension of a Concession

The US can place really high tariffs on Canada until it starts following the WTO Agreements with us

WTO Market Access Agreements

are agreements that provide exporters of goods and services with market access to foreign countries.

Market Access

refers to the ability of a country to sell goods and services across borders.

Principle of Least Restrictive Trade

means that if a country is going to set a valid trade restriction, they should not make that restriction more burdensome than necessary to achieve the goals for which the restriction was imposed.

Is One of Most Important Legal Concepts in International Trade

Example: Instead of banning all imported food, a country requires food safety inspections to make sure the food is safe.

Trade Barrier

is any obstacle to trade in goods or services.

Technical Regulation

is a law or regulation affecting a product’s characteristics, like its performance, design, construction, or packaging that must be met before a product can be imported into a country.

Technical Barrier to Trade

is a technical regulation that applies to imported foreign goods.

WTO Agreement on Technical Barriers to Trade (TBT Agreement)

is an agreement between all member countries of the WTO that prohibits countries from using their regulations or standards to discriminate against the import of foreign goods.

Equivalence

means that WTO member countries agree to accept and recognize that the other countries’ foreign standards that are the equivalent of their own.

All WTO member countries technical regulations are equal

When one country accepts another country’s rules or standards as providing the same level of protection.

Example: The U.S. accepts another country’s food safety standards because they provide the same level of safety.

Mutual Recognition

means that WTO member countries agree to mutually recognize certifications of foreign inspection firms rather than making the import obtain certifications in each country they export to.

we will MUTUALLY RECOGNIZE and accept other countries inspections and testing

Conformity Assessments

occurs when one country recognizes the certifications of products from another country.

Trade in Services

applies to areas such as professional services along with nonprofessional services.

When countries sell services to each other instead of physical products.

Example: An American company pays an Indian company to provide customer service over the phone.

Cross-Border Supply

is when services are supplied from one country to another country.

SUPPLIED services CROSSED a BORDER not people

Example of cross border supply

Example:

• A lives in the US

• B lives in England

• On the phone, A provides legal advice to B

• A SUPPLIED a service ACROSS a BORDER

Consumption Abroad

is when there is use of a service in one country.

Example:

• A lives in the US

• B lives in England

• A travels to England and uses B’s tourism services

Commercial Presence

is when a foreign company sets up branches to provide services in another country.

a company creates a COMMERICIAL/Business PRESENCE in a foreign country by placing a brand in that country

Example:

• Company A is a US company

• Company A sets up a branch in England

Presence of Natural Persons

occurs when individuals travel from their own country to supply services in another.

A PERSON was PRESENT in a foreign country an provided their services in that foreign country

Example:

• A lives In the US

• A traves to China to teach English

WTO General Agreement on Trade in Services (GATS)

is an agreement that establishes rules for international trade in services, and states that countries may not treat foreign providers less favorably than domestic providers.

cant discriminate foreign services with other WTO member countries, all WTO member country service providers are equal

Intellectual Property Rights

are the legal rights resulting from the intellectual activity of the owner.

The WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS)

refers to government rules or regulations on intellectual property rights that have an effect on trade in goods and requires that all domestic and foreign intellectual property right owners, regardless of their citizenship, be treated the same under other member countries’ intellectual property rights laws.

A WTO agreement that protects intellectual property, such as patents, copyrights, and trademarks, between countries.

Example: A company in China cannot legally copy and sell an American company's patented invention without permission.

Section 301

allows the U.S. to take retaliatory trade action against other countries that have discriminated against the U.S; the purpose of Section 301 is to discourage foreign countries from violating their agreements with the U.S.

Import Competition

occurs when a private or domestic firm is competing with imports from a foreign firm.

Exception to WTO Discrimination

occurs under limited circumstances, and a country may use temporary safeguards to protect a domestic industry from injury caused by increased imports.

Market Disruption

occurs when increased imports of foreign goods cause decreased sales volumes, lower profits, or lower wages in a country.

The US is telling the WTO that a particular country has sent over so many products that its really hurting our economy

Exception to WTO Discrimination

occurs under limited circumstances, and a country may use temporary safeguards to protect a domestic industry from injury caused by increased imports.

Example:

The U.S. can give lower tariffs to developing countries to help their economies grow, even if other countries do not get the same deal.

Safeguards Against Injury

are emergency remedies only, usually in the form of tariffs, that are used to protect a domestic industry from injury resulting from increased imports of similar products.

Safeguard

protects something from harm or damage with an appropriate measure.

Example of safeguard

Example:

• We grown soybeans here in the US

• China starts sending us a bunch of soybeans

• Chinas soybeans are cheaper

• We loses sales in soybeans, lose profits, then lose jobs

• WTO allows us to raise tariffs on China’s soybeans

• BUT, we must also raise tariffs on all other countries sending us soybeans too

Trade compensation

is the act of lowering import tariffs on certain products coming from a foreign country for the purpose of offsetting increased tariffs imposed on other products from that country.

Example of trade compensation

Example:

• We raised tariff prices on China’s soybeans

• We now have to lower tariff prices on China’s green beans

Unfair Trade Practices

refer generally to any fraudulent, deceptive, or dishonest trade practices that is prohibited by law.

Dumping

is the selling of goods in a foreign country for less than the price charged for “like” or comparable products in the producer’s home market.

Example of Dumping

Example:

• England selling X watch for 25 pounds in England

• The US sells X watch for 20 dollars in the US

• England sells X watch for 5 dollars in the US

Monopoly

is the exclusive possession or control of the supply of or trade in a commodity or service.

Duty

is a tax levied on an imported good.

Another word for a tax charged on goods, especially imports.

Antidumping duties

are special import tariffs assessed in addition to the normal tariffs already imposed on those particular goods, for the purpose of offsetting the unfairly low price of dumped goods.

Extra taxes a country puts on imported goods sold at an unfairly low price to protect its own businesses.

Example of antidumping duties

Example: A company in China sells steel in the United States for less than its normal value, hurting American steel companies. The U.S. may charge an extra tax on that steel to help make competition fair.

Like Product

describes the particular relationship in international trade law between two goods that are produced by two different trading nations.

Products that are alike/identical, they’re just made by different countries

Example of Like product

Example:

• US makes X watch

• England makes X watch

• Both watches are the same

• The only difference is the country that makes them

U.S. International Trade Administration

ensures fair trade at home and abroad by enforcing U.S. trade laws and agreements.

A U.S. government agency that helps enforce trade laws and protect American businesses from unfair foreign competition.

Example of U.S. International Trade Administration

If a foreign company sells steel in the U.S. at unfairly low prices, the ITA investigates whether dumping is occurring and determines whether antidumping duties should apply.

Subsidy

is a financial contribution, including any form of income or price support, made by a government, that confers a benefit on a specific domestic enterprise or industry.

Money or financial help a government gives to businesses to help them lower costs and compete.

Example of Subsidy

Example: The U.S. government gives American farmers money to help them produce crops at a lower cost and compete with foreign farmers.

Price Support

is the minimum legal price a seller may charge and, if there is a surplus of goods, the government will purchase the surplus.

Government Passes a Law Saying There is a Minimum Legal Price a Seller May Charge

Surplus

is an amount of something left over when requirements have been met.

Subsidized Business

receives some form of monetary benefit from its domestic government.

Prohibited Subsidies

are not permissible and banned under all conditions.

Government financial help that is illegal under international trade rules, such as subsidies that depend on exporting goods or using domestic products instead of imports.

Export Subsidy

is a subsidy made available to domestic firms upon the export of their products.

Government money given to businesses to help them sell products to other countries.

Import Substitution Subsidy

is a government subsidy whose payment is contingent on its recipient using or purchasing domestically made goods over imported goods.

Government money given to local businesses to make products instead of importing them from other countries.

Counter Measures

are increased and punitive tariffs in an amount needed to offset the subsidies to make international trade fair again.

Actions a country takes to respond to another country's unfair trade practices.

Punitive

means punishment.