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1. The United States suffers trade deficits every year. a. True

b. False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

A-Head: Trade Regulation: The Big Picture

KEYWORDS:

Bloom's: Comprehension

2. The United States is the world's largest exporter of agricultural products. a. True

b. False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Export Controls

KEYWORDS:

Bloom's: Comprehension

3. Tariffs are generally higher in developing countries than in developed countries. a. True

b. False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Import Controls

KEYWORDS:

Bloom's: Comprehension

4. Generally, consumers are not adversely affected by tariffs since tariffs affect wholesale prices, not retail prices. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS: United States- NC- AICPA: BE-Critical Thinking TOPICS:

B-Head: hnport Controls

KEYWORDS:

Bloom's: Comprehension

5. Ad valorem duty is based on the fair market value of the imported good as of the date it reaches the United States, not the price actually paid for the good when sold for export to the United States. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: hnport Controls

KEYWORDS:

Bloom's: Comprehension

6. Although the United States government officially signed the GATT treaty, the United States Congress has refused to ratify the agreement. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States - NC- AICPA: FN-Research

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Comprehension

7. The European Union is one ofthe world's most powerful regional associations with 42 member nations as of2011. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States - NC- AICPA: FN-Research

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Knowledge

8. A contract involving the sale of goods from a Texas seller to a French wholesaler must always use the United Nations Convention on Contracts for the International Sale of Goods (CISG). a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Sales Agreements

KEYWORDS:

Bloom's: Application

9. If the United States sets a limit on the number of cars that can be imported, this action is a form of tariff. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Import Controls

KEYWORDS:

Bloom's: Application

10. It is not a violation of United States law for a domestic company to pay money to a foreign governmental official in order to obtain a contract with the foreign government if this type of "commission" is commonly paid in that foreign country. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Analysis

11. International comity holds that the courts of one nation lack the jurisdiction to hear suits against foreign governments. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Knowledge

12. The two principal actions prohibited by the Foreign Corrupt Practices Act include making bribes and making grease payments. a. True

b. False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Comprehension

13. For manufactured goods, the United States and European Union impose an average tariff of major trading partners around the world impose tariffs of percent for identical items.

percent, and

a. 10; 5

b. less than 4; 10 to 30

c. 25; 39 to 70 d. 10 to 30; less than 4

ANSWER:

b

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

LEARNING OBJECTIVES: BLLE.BEAT.07.BUSPROG: Analytic- BUSPROG: Analytic NATIONAL STANDARDS:

United States- AICPA: FN-Research

TOPICS:

B-Head: hnport Controls

KEYWORDS:

Bloom's: Comprehension

14. Axle Corporation imports goods into the United States. Who is required to pay the duty on the imported goods? a. The importer, Axle Corporation. b. The World Trade Organization. c. Each party pays one-half the duty. d. The exporter ofthe goods.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: hnport Controls

KEYWORDS:

Bloom's: Comprehension

15. The United States and Argentina have signed the Convention on Contracts for the International Sale of Goods (CISG). Oxtron, Inc., a U.S. company, and Leer, an Argentinean company, have entered into a contract under which Oxtron is to ship medical devices to Leer. The contract does not include a choice oflaw provision. The contract will be governed by: a. the CISG. b. the UCC. c. the domestic contract law of Argentina. d. the domestic contract law of the United States.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Sales Agreements

KEYWORDS:

Bloom's: Comprehension

16. The United States and Singapore have signed the Convention on Contracts for the International Sale of Goods (CISG). Notren, Inc., a U.S. company, and SWT, a Singapore company, have entered into a contract under which SWT is to ship party supplies to Notren. One of the terms of the contract states, "The validity and performance of this contract will be governed by the Uniform Commercial Code (UCC) of the state of New York, not the Convention of the International Sale of Goods (CISG)." The contract will be governed by the: a. CISG. b. Uniform Commercial Code ofNew York. c. common law. d. World Trade Law.

ANSWER:

b

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Sales Agreements

KEYWORDS:

Bloom's: Application

17. InMarubeni America Corp. v. United States, the federal appellate court ruled that the Nissan Pathfinder was, for tariff classification purposes a motor vehicle for the transport of passengers. The classification of goods is significant because: a. the tariffs will vary depending on the classification. b. the fair value will vary depending on the classification. c. the subsidy will vary depending on the classification. d. the dumping duty will vary depending on the classification.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Import Controls

KEYWORDS:

Bloom's: Analysis

18. If a foreign company "dumps" goods on the United States market: a. the goods will be considered illegal goods and not be allowed to be sold in the United States. b. the United States will issue trade sanctions against the country that allowed the dumping. c. a "dumping duty" will be imposed on the dumped goods if the Commerce Department determines the goods are being sold at less than fair value and that this harms an American industry. d. All of these are correct.

ANSWER:

c

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Import Controls

KEYWORDS:

Bloom's: Analysis

19. Notren, Inc., a U.S. company, and SWT, a Singapore company, entered into a contract under which SWT is to ship party supplies to Notren. One of the terms of the contract states, "Any disputes that arise under this contract will be resolved in the courts of Singapore." This contract term is a: a. letter of credit. b. choice oflanguage clause. c. choice offorum clause. d. draft clause.

ANSWER:

c

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Sales Agreements

KEYWORDS:

Bloom's: Application

20. What is a major argument against the GATT Treaty? a. The United States will have to compete against countries with unlimited pools of exploited labor. b. The United States will lose millions of jobs involving low-end employment and these types of workers are least capable offmding other employment. c. Both a and bare major arguments against GATT. d. Neither a nor b is a major argument against GATT.

ANSWER:

c

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Comprehension

21. The European Union has adopted a currency known as the: a. Yuri. b. Common Union. c. Yen. d. Euro.

ANSWER:

d

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Knowledge

22. Zebra Toy Company, located in Chicago, sells $500,000 worth of toys to a London, England, wholesaler. This contract could be governed by: a. Illinois's Uniform Commercial Code. b. English law. c. the CISG. d. All of these are correct.

ANSWER:

d

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Application

23. The primary goal of the North American Free Trade Agreement (NAFTA) is to: a. allow Canada, the United States, and Mexico to compete as a common economic entity against other countries in the world. b. allow for the free and unrestricted movement of people from one country to another to improve the labor market of all three counties. c. eliminate almost all trade barriers between the three nations. d. All of these are correct.

ANSWER:

c

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Comprehension

24. What is a major difference between a United States lawsuit versus a French lawsuit? a. In a French civil lawsuit, there is usually no right to a jury trial. b. The French legal system does not engage in extensive discovery procedures commonly used in the United States. c. In a French lawsuit, the rules of evidence are more flexible. d. All of these are correct.

ANSWER:

d

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

LEARNING OBJECTIVES: BLLE.BEAT.07.BUSPROG: Analytic- BUSPROG: Analytic NATIONAL STANDARDS:

United States- AICPA: FN-Research

TOPICS:

B-Head: International Sales Agreements

KEYWORDS:

Bloom's: Comprehension

25. Hardhat Machine Company sold goods to Irish Eyes Company ofNorthern Ireland. Big Bank issued a letter of credit on behalf oflrish Eyes and the letter was given to Hardhat. The "account party" is: a. Irish Eyes. b. Hardhat Machine Company. c. BigBank. d. None of these.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Sales Agreements

KEYWORDS:

Bloom's: Analysis

26. Hardhat Machine Company sold goods to Irish Eyes Company ofNorthern Ireland. Big Bank issued a letter of credit on behalf of Irish Eyes and the letter was given to Hardhat. The documents required by the letter of credit are presented to the bank for payment while the goods are still in transit. Is Hardhat entitled to be paid? a. No, payment is not due until the goods are delivered. b. No, payment is not due until 30 days after delivery. c. No, payment is not due until the buyer has had a reasonable time to inspect the goods. d. Yes, the letter of credit is a promise by the bank to pay when certain documents are presented.

ANSWER:

d

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States - DISC: Personal, corporate, legal - DISC: Personal, corporate, legal, ethical responsibilities

STATE STANDARDS:

United States - NC - AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Sales Agreements

KEYWORDS:

Bloom's: Analysis

27. When considering both imports and exports, the country trading the most goods with the United States is: a. Canada. b. China. c. Japan. d. Mexico.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

A-Head: Trade Regulation: The Big Picture

KEYWORDS:

Bloom's: Knowledge

28. Zebra Toy Company invests a large sum of money in retail stores located in a foreign country. Zebra intends to bring its foreign earnings back home to the United States. This practice is known as: a. repatriation of profits. b. inflow profit streaming. c. expropriation. d. comity.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Application

29. The Australian government has opened a for-profit tourist information center in New York City. If a dispute arises over the lease of the storefront, may the landlord sue the Australian government in the United States courts? a. Yes, because the Australian government was engaged in a commercial activity. b. No, because of the Foreign Sovereign Immunities Act which forbids U.S. courts from hearing any cases involving foreign governments. c. It depends. The Australian government can only be sued if it signed a written waiver giving up its immunity. d. It depends. The Australian government can only be sued if it is a signatory on the CISG.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Application

30. MagNet, a small United States computer company, started doing business in a foreign country. The foreign country later decided to take over all computer industry, including MagNet's operation. The foreign country paid MagNet adequate compensation in United States dollars. The foreign country's action is called: a. comity. b. repatriation. c. expropriation. d. inflow profit streaming.

ANSWER:

c

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Application

31. Kjell is the vice president of international sales for Oxtren, Inc, a U.S. company. To secure a multimillion dollar contract for his company, Kjell paid a Mongolian governmental officer $10,000. Kjell: a. has violated the Foreign Corrupt Practices Act. b. has not violated the Foreign Corrupt Practice Act because the payment was a grease payment. c. has not violated the Foreign Corrupt Practices Act because the government official was from Mongolia, not the United States. d. has not done anything illegal because Congress has not ratified the Convention of Combatting Bribery of Foreign Public Officials in International Transactions.

ANSWER:

a

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Application

32. The Marcel Company is opening an office in Mexico. The cost to obtain electrical service is $500, but the clerk suggests that service could be started faster if an additional $50 is paid, which the clerk will keep. If the Marcel official pays the additional $50: a. he will have violated the Foreign Corrupt Practices Act. b. he will not have violated the Foreign Corrupt Practices Act because this would be considered a "grease" or facilitating payment, which is legal. c. he will be guilty of violating the Foreign Corrupt Practices Act only if the payment was illegal under the written law of Mexico. d. he will be guilty of violating both the Foreign Corrupt Practices Act and the Convention of Combatting Bribery of Foreign Public Officials in International Business Transactions.

ANSWER:

b

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Application

33. Archer Co. has decided it wants to expand into international business, but it is concerned about expropriation of its property or losses caused by political unrest. Archer is considering purchasing insurance through the Overseas Private Investment Corporation (OPIC). OPIC: a. provides insurance, but the cost is relatively high.

b. provides insurance, but the list of countries in which it is willing to provide such protection is fairly short. c. provides insurance, and the cost is relatively low. d. insures against expropriation, but not against losses stemming from political violence.

ANSWER:

c

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Application

34. The United States has agreed to which of the following? a. GATT.

b. NAFTA. c. CISG. d. All of these.

ANSWER:

d

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States - NC- AICPA: FN-Research

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Knowledge

35. The purpose of the Export Administration Act of 1985 is: a. to set national quotas on exported goods. b. to limit the export of certain items which may pose a security risk. c. to document all new exports to facilitate tracking. d. All of these.

ANSWER:

b

POINTS:

1

DIFFICULTY:

Difficulty: Easy

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States - NC- AICPA: FN-Research

TOPICS:

B-Head: Export Controls

KEYWORDS:

Bloom's: Comprehension

36. Explain what the General Agreement on Tariffs and Trade (GATT) is and give pro and con arguments concerning this agreement.

ANSWER:

GATT refers to the General Agreement on Tariffs and Trade. The United States and 125 other countries formally signed GATT in 1994. The general purpose of GATT is to eliminate trade barriers between signatory countries and to bolster commerce.

Proponents of GATT claim that the United States will be a primary beneficiary since this country has traditionally assessed lower tariffs than other countries. Accordingly, the U.S. will be able to compete on a more level footing with foreign competitors.

The result will be a great increase in world trade and greater income for this country.

Opponents of GATT argue that this country will lose millions of jobs since laborintensive goods will be made via exploited labor in foreign countries. Given the low cost of production, American companies will not be able to compete. Additionally, opponents claim that domestic job losses will be in low-end employment, so those put out of work are the ones least able to fmd alternative employment.

POINTS:

1

DIFFICULTY:

Difficulty: Challenging

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Evaluation

37. Explain the origin and purpose of the World Trade Organization.

ANSWER:

The WTO was established by GATT. It has the authority to resolve trade disputes between signatory countries. The WTO addresses primarily tariff violations or nontariffbarriers. This international "court" may order compliance from any nation violating GATT and may penalize countries by imposing trade sanctions.

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: Treaties

KEYWORDS:

Bloom's: Analysis

38. Yount, Inc. is interested in expanding its business to include exporting its products to several other countries. Discuss two federal statutes that should be considered before making the decision to export.

ANSWER:

All nations limit what may be exported. In the United States, the Export Administration Act of 1985 attempts to balance the need for free trade with requirements of national security. This statute permits the federal government to restrict exports if they endanger national security, harm foreign policy goals, or drain scarce resources. The Secretary of Commerce makes a Controlled Commodities List, and no one may export a commodity on the list without a license. A second statute that limits exports is the Arms Export Control Act. This statute permits the president to create a second list of controlled goods, all related to military weaponry.

Again, no one may export any listed item without a license.

POINTS:

1

DIFFICULTY:

Difficulty: Challenging

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: FN-Decision Making

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Analysis

39. MagNet is a U.S. company based in Utah. It is negotiating to sell $4 million worth of computer goods to a French company, Legran. MagNet's attorney suggests that payment be by a letter of credit. What is a letter of credit and why does MagNet's attorney recommend payment by letter of credit?

ANSWER:

A letter of credit is a commercial device used to grant greater assurance of payment in international transactions. The purpose for obtaining a letter of credit is to assure payment for the goods. Legran is the "account party" and MagNet is the "beneficiary" of the letter. Legran will instruct its bank to issue a letter of credit to MagNet. The letter of credit is a promise by the Legran's bank to pay MagNet upon receipt of certain documents. IfLegran's bank forwards the letter of credit to MagNet's bank, MagNet's bank can confirm the letter of credit, thus providing MagNet with even greater assurance of payment.

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Analysis

40. Identify the tenn for and discuss the legality of a government's taking of property owned by foreign investors.

Discuss what action a company might take if it wants to do business abroad but is concerned about losing its property to a foreign government.

ANSWER:

A government's taking of property owned by foreign investors is called "expropriation."This practice is common and is legal if there is adequate compensation. The U.S. government acknowledges that expropriation of American interests is legal if the host government pays the owners promptly and fully in dollars.

If the compensation is long delayed, inadequate, or made in a local currency that is hard to exchange, the taking is considered to be confiscation. The courts of almost all nations agree that confiscation is illegal. A company wanting to do business abroad but concerned about expropriation can purchase insurance. The Overseas Private Investment Corporation (OPIC) insures U.S. investors against overseas losses resulting from political violence or expropriation. The OPIC insurance is available to investors at relatively low rates and covers investments in almost any country.

POINTS:

1

DIFFICULTY:

Difficulty: Moderate

NATIONAL STANDARDS: United States- BUSPROG: Analytic STATE STANDARDS:

United States- NC- AICPA: BE-Critical Thinking

TOPICS:

B-Head: International Trade Issues

KEYWORDS:

Bloom's: Analysis