CES International Trade Regulations & Laws 3 — Questions and Answers
Question 1: Under the Foreign Corrupt Practices Act (FCPA), which of the following payments to a foreign official is generally permitted as an exception?
- Payments to secure a government contract
- Facilitating payments to expedite routine government actions (Correct answer)
- Gifts to foreign ministers to influence legislation
- Commissions paid to a foreign sales agent who bribes officials
Correct answer: Facilitating payments to expedite routine government actions
The FCPA contains a narrow exception for facilitating payments made to expedite or secure the performance of routine, non-discretionary government actions.
Question 2: Which U.S. law prohibits American companies from complying with foreign boycotts not sanctioned by the United States?
- Export Administration Act
- Anti-Boycott provisions of the EAR (Correct answer)
- Trading with the Enemy Act
- Foreign Assets Control Regulations
Correct answer: Anti-Boycott provisions of the EAR
The anti-boycott provisions under the EAR (and supported by the Tax Reform Act) prohibit U.S. persons from cooperating with unsanctioned foreign boycotts, such as the Arab League boycott of Israel.
Question 3: A 'routed export transaction' under EAR is one where:
- The exporter uses a freight forwarder in a third country
- The foreign buyer controls the export and selects the U.S. forwarder (Correct answer)
- The shipment transits through more than one foreign country
- The payment is routed through a non-U.S. bank
Correct answer: The foreign buyer controls the export and selects the U.S. forwarder
In a routed export transaction, the foreign purchaser controls the export and authorizes a U.S. agent to file the EEI, shifting certain compliance responsibilities.
Question 4: What is the primary purpose of the Wassenaar Arrangement in international trade?
- To set global tariff rates for agricultural products
- To control exports of conventional arms and dual-use goods and technologies among member states (Correct answer)
- To establish international standards for product safety certifications
- To regulate foreign direct investment in developing nations
Correct answer: To control exports of conventional arms and dual-use goods and technologies among member states
The Wassenaar Arrangement is a multilateral export control regime promoting transparency and responsibility in transfers of conventional arms and dual-use items.
Question 5: Under U.S. export law, a 'deemed export' occurs when:
- Goods are exported and then re-imported within 30 days
- Controlled technology or source code is released to a foreign national in the United States (Correct answer)
- An item is exported to a free trade zone and held without entering commerce
- A U.S. company licenses technology to a domestic subsidiary
Correct answer: Controlled technology or source code is released to a foreign national in the United States
A deemed export is the release of controlled technology or software to a foreign national inside the U.S., which is treated as an export to that person's home country.
Question 6: Which sanction program imposes the broadest restrictions, essentially prohibiting almost all U.S. trade with the targeted country?
- Targeted financial sanctions against specific individuals
- Comprehensive country-wide OFAC embargo (Correct answer)
- Anti-dumping duty orders
- Section 232 national security tariffs
Correct answer: Comprehensive country-wide OFAC embargo
A comprehensive OFAC embargo, such as those on Cuba, Iran, and North Korea, broadly prohibits virtually all trade, financial transactions, and services.
Question 7: What filing requirement applies when a U.S. exporter ships goods to Canada under USMCA?
- No EEI filing is required for most commercial shipments to Canada (Correct answer)
- A full EEI must always be filed regardless of value
- An ITAR license is automatically triggered for all Canadian shipments
- A Certificate of Origin must be filed through AES before every shipment
Correct answer: No EEI filing is required for most commercial shipments to Canada
Most commercial shipments to Canada are exempt from the EEI/AES filing requirement due to the U.S.-Canada data-sharing agreement, with certain exceptions for controlled items.
CES International Trade Regulations & Laws 3
Under the Foreign Corrupt Practices Act (FCPA), which of the following payments to a foreign official is generally permitted as an exception?