International trade Question 1




a.The USA law provides limitations to the international trade involvingdual-purpose products used by both the civilians and the military.Such goods require an exclusive license while other commodities areentirely restricted for exports. In the R.T.Foods, Inc v. the U.S., 13-1188 andthe Int`lCustom Prods., Inc. v. the U.S., 14-1644 cases,the court ruled that the defendants’ goods did not qualify asdual-purpose products. Consequently, it is imperative to verify thatthe company’s products of interest do not fall in the dual category(The Law of International Trade, n.d).

b.The USA International law prohibits the exportation of products tospecific countries. In the MidContinent Nail Corporation v. the U.S., 12-1682, andthe ReadMid Continent Nail Corporation v. the U.S., 12-1682disputes, the court ruled that household toolkits imported from Chinawere against the antidumping order. It is imperative to check thedestination and sources of goods before engaging in internationaltrade (The Law of International Trade, n.d).

c.Third, the law prohibits international trade with particularcountries. Specifically, it places the obligation on U.S. basedcompanies to identify the ultimate buyer. In the case of the USAv. Fishenko et al., Alexander Posobilov, Shavkat Abdullaev andAnastaciaDiatlova wereaccused of illegally exporting high-end technology microchips for theRussian military (Koenig, 2015). In the case, MotorolaMobility, LLC v. International Trade Commission, 2012-1535, thecourt ruled that the plaintiff satisfied the requirement by theindustry, and the mobile equipment was not subject to restrictions.


a.The relocation of business is subject to the legal provisions ofNorth American Free Trade Agreement (NAFTA).The accord guides thetransfer of business operations from the United States to Mexico. Theprimary benefit is the quick dispute resolution process, which issubject to the principle of reciprocity. However, the limited use ofroad transport is the main drawback. NAFTA places a 20-mile limit onthe travel of Mexican trucks within the United States commercial zone(Amadeo, 2016).

b.In Mexico, the company will encounter fewer legal tariffs andbarriers to international trade. The tax on globally traded productsdepends on the merchandise, its value, and origin. However, therewill be a slower rate of trade since NAFTA maintained most of theregulations on customs between the USA and Mexico (Amadeo, 2016).

c.The relocation is subject to legal protection against theintellectual property of the company. The defense against piratingwill enable the company to be innovative. However, the main drawbackis the increased the competition for factors of production. Themajority of manufacturing companies have moved there due to theattractive lower costs of capital and labor (Amadeo, 2016).


a.Bribery, or “Mordidas” and issuing tips to get things doneinvolve making moral and ethical decisions. In Mexico, most of thebribery is conceived as tipping as opposed to corruption. Therelocation decision is prone to encounter involuntary delays due toinstances where the leaders expect bribes to provide certificates orlicenses (Iwan, 2006).

b.The drug related violence will hinder the company’s access toskilled professionals. Besides, the violence will involve a moraldecision to increase the salaries of professionals as a motivationfor working in high insecurity areas (Iwan, 2006).

c.The moral decision to follow the over bureaucratic nature ofgovernance in Mexico is prone to cause delays, and at times,frustration. For example, it takes 69 days to obtain constructionpermits. Other business requirements such as sewer connections maytake up to 30 days (Iwan, 2006).


a.Domestic organizations in Mexico use the help of attorneys withexperience in technical law to comply with the USA regulations. Theexport control programs in the United States are numerous, and theirapplication procedures require high technical awareness.Consequently, most businesses use export lawyers who assist thein-house international officers in establishing the methods used toclassify products, subject to the United States and commerce controllist (Edelman, 2011).

b.The companies obtain exclusive licenses whenever they deal indual-purpose goods to avoid litigation. Besides, they conform to thelaw by dealing in products that are not entirely restricted forexports and imports (Edelman, 2011).

c.The companies conduct customers and supplier’s background checksagainst the list of countries affected by export and importrestrictions. A list of restricted countries exists on the U.S.Department of Commerce website. Besides, they also distributequestionnaires and request the buyers to declare that they are notrestricted to import and exportation of goods by the United StatesBureau of Industry and Security (Edelman, 2011).


a.Most organizations set a compliance policy, including, a statement ofthe reinforced prohibition to address the most potential conformityissues. The policy stipulates the need for employees’ vigilance indetecting and recording potential compliance violation (Edelman,2011).

b.Written down certifications are used to ensure that new employeesunderstand the compliance requirements. Moreover, they identifyfactors that could contribute the violation of existing laws. Whendesigning the contracts, the companies use an indemnificationlanguage that spells out provisions for resolution of third partytransactions (Edelman, 2011).

c.Companies establish internal forms and standard contracts, whichprovide opportunities of verifying compliance with procedures forinternational trade. Besides, they assist in identifying certainrisks such as bribery (Edelman, 2011).


Abbey,R. (2006). NAFTA case highlights importance of technical compliance.Miller&amp Chevalier.Retrieved from

Amadeo,K. (2016, March 22). History of NAFTA. Aboutmoney. Retrievedon 22 June 2016

Edelman,D. (2011, February 11). Compliance program “must haves” for doingbusiness abroad.Corporate Compliance Insights.Retrieved on 22 June 2016from&nbsp

IwanL. (2006, November 7). Corruption, bribes, mordidas, tips – Doingbusiness in Mexico.Retrievedon 14 June 2016 from

Koenig,B. (2015, October 27). 3 convicted for smuggling $30M in electronicsto Russia. Law 360 . .Retrieved on 14 June 2016 from

Thelaw of international trade: A Business overview (n.d). MichiganUniversity.Retrieved on 14 June 2016 from