1. Most countries welcome imports. 
a. True
*b. False

2. The Harmonized System of classification is used to classify both exports and imports. 
*a. True
b. False

3. Since the World Trade Organization has pressured importing countries to reduce tariffs, importing countries have done away with non-tariff barriers. 
a. True
*b. False

4. Countries efforts to make imports adhere to national standards are not considered to be trade barriers. 
a. True
*b. False

5. Pre-shipment inspections are inspections performed by independent companies at the point of departure of goods destined to be exported. 
*a. True
b. False

6. In most countries, only certified Customs brokers or Customs agents are allowed to file the paperwork necessary to clear Customs. 
*a. True
b. False

7. A substantial tax break to companies that use imported parts as components of products they eventually export is called a duty drawback. 
*a. True
b. False

8. A medical device is not legal in country A, but is legal in country B. Despite being restricted from country A, the product is allowed to go through the foreign trade zone of country A on its way to country B. 
a. True
*b. False

9. For textile goods imported in the United States, the country of origin is the country in which the last change in Harmonized System classification occurred. 
*a. True
b. False

10. An importing country usually manages its imports under a tariff system that is called an N-column tariff system. 
*a. True
b. False

11. Customs offices sometimes can use a countervailing duty to tax products that the exporting government is found to have subsidized. 
*a. True
b. False

12. The concept of a value-added tax is simple and easy to administer. 
a. True
*b. False

13. National standards on imports are always thinly-disguised non-tariff barriers to trade. 
a. True
*b. False

14. Sometimes the made in [country] marking on the product is different from the country of origin for Customs duty purposes. 
a. True
*b. False

16. In the United States, the Customs Service will refund 75 percent of the duty paid by an importer for, among other things, merchandise that is rejected by the importer as non-conforming to the original purchase order. 
a. True
*b. False

16. Goods in a foreign trade zone can be warehoused until they are sent to their final destination, either in the host country or to a foreign destination. If the goods are sold in the host country, they are only dutiable at the time of that transaction. If they are sold abroad, they are dutiable both to the country where they are sold and to the host country of the foreign trade zone. 
a. True
*b. False

17. The last four digits of the numbers in the Harmonized System of classification are country-specific. 
*a. True
b. False

18. The Brussels Definition of Value has been replaced by what is called arbitrary value. 
a. True
*b. False

19. The deductive method of valuation is when Customs determines at what price identical or similar goods are sold within 90 days of importation in the importing country, and determines an entry value based upon normal mark-ups in the distribution channel. 
*a. True
b. False

20. The determinations by Customs officials of product values are sometimes arbitrary. 
*a. True
b. False

21. The United States requests the sewing tickets for some garments, an internal work document of the garment factory, as well as the time cards of the employees working there in an attempt to determine the country of origin of textile products. This can be an example of a non-tariff barrier. 
*a. True
b. False

22. Pre-shipment inspections are used when the importer is purchasing on a cash-in-advance or on a letter of credit basis. 
*a. True
b. False

23. Because of the complexity and time-consuming nature of filling out Customs entries, many countries demand that importers delegate the task of interacting with Customs to a freight forwarder, a representative of the importer that has acquired the knowledge and experience required to deal effectively and efficiently with Customs. 
a. True
*b. False

24. In order for an importer to be found compliant under the concept of informed compliance, it must demonstrate that it has exercised reasonable care in the filing of its Customs entries. 
*a. True
b. False

1. Most duty is collected ad valorem which means
~ Ad valorem means the duty is based on the value of the import. It has nothing to do with adding value, but, if anything, it may add to the price of the product. 
@ Ad valorem means the duty is based on the value of the import. It has nothing to do with adding value, but, if anything, it may add to the price of the product. 
*a. it is based on the value of the import. 
b. it is based on the value that is added in each process of manufacturer/improvement. 
c. the duty adds value to the product. 
d. the duty reduces the price of the product. 
e. it is based on the cost of the carriage contract. 

2. Tariffs can be calculated
~ All of these are forms of tariff calculation. 
@ All of these are forms of tariff calculation. 
a. ad valorem. 
b. as a fixed amount per unit imported. 
c. in a mixed system of a fixed amount per unit imported plus a percentage of the value of the goods imported. 
d. based on weight. 
*e. on any type of data, including value, unit count, and weight. 

3. A value-added tax is eventually only paid by
~ Eventually all value-added taxation is reflected in the price paid by consumers. 
@ Eventually all value-added taxation is reflected in the price paid by consumers. 
a. producers. 
b. importers. 
*c. consumers. 
d. manufacturers. 
e. customs brokers. 

4. A two-tiered tariff rate on a specific category of products in which the tariff that is low until a quota is reached and then it goes much higher is called a(n)
~ A tariff-rate quota places a two-tiered tariff rate on a specific category of products, while the other quotas do not exist. 
@ A tariff-rate quota places a two-tiered tariff rate on a specific category of products, while the other quotas do not exist. 
a. indirect quota. 
*b. tariff-rate quota. 
c. limited quota. 
d. designated quota. 
e. stepped tariff. 

5. Generally speaking, countries with scarce foreign currency resources will attempt to limit the granting of import licenses to companies that have generated export revenues and
~ The concepts of companies that have been nationalized and multi-national companies are not relevant. Import licenses are usually granted according to a number of criteria, including the availability of foreign currency and domestic substitutes. 
@ The concepts of companies that have been nationalized and multi-national companies are not relevant. Import licenses are usually granted according to a number of criteria, including the availability of foreign currency and domestic substitutes. 
a. companies that have been nationalized. 
*b. companies purchasing goods for which no close domestic substitute is available. 
c. multi-national companies. 
d. companies that pay high income taxes. 
e. companies that have acquired foreign patents. 

6. If an importer has a good reputation regarding its following of Customs regulations, the likelihood that one of its shipments is going to be inspected is minimal, therefore minimizing delays at entry and allowing the importer to organize its supply chain more predictably. This is an application of the concept of
~ The correct answer is informed compliance. 
@ The correct answer is informed compliance. 
a. bonding. 
b. stare decisis. 
c. Electronic Data Interchange. 
d. customs expediting. 
*e. informed compliance. 

7. Required documentation for entry into essentially all countries includes
~ A form designated for entry, a Certificate of Origin, and a commercial invoice are usually required to enter all countries. A bill of lading may not be required, and EDI documentation and a value-added tax certificate may not apply. A packing list may not be required, a health certificate may not apply, and corporate identification may be included in other required documentation. 
@ A form designated for entry, a Certificate of Origin, and a commercial invoice are usually required to enter all countries. A bill of lading may not be required, and EDI documentation and a value-added tax certificate may not apply. A packing list may not be required, a health certificate may not apply, and corporate identification may be included in other required documentation. 
*a. a form designated for entry, a Certificate of Origin, and a commercial invoice. 
b. a bill of lading, EDI documentation, and a value-added tax certificate. 
c. a packing list, health certification, and corporate identification. 
d. a form designated for entry, a pre-shipment inspection, and payment of duty. 
e. a form designated for entry, a bill of lading, and a VAT certificate. 

8. Duty is usually based upon
~ Tariff is the amount of duty, border traffic taxes are not always relevant, and non-tariff barriers have nothing to do with duty. While value-added taxation can be part of a duty, absolute quota is a blanket import restriction and has nothing to do with duty, and patriotism campaigns are a non-tariff barrier. Pre-shipment inspections are not required by all countries, and Customs bondsif they are usedare based on duty. Duty is usually based upon product classification, valuation, and origin. From these elements, Custom calculates the tariff. 
@ Tariff is the amount of duty, border traffic taxes are not always relevant, and non-tariff barriers have nothing to do with duty. While value-added taxation can be part of a duty, absolute quota is a blanket import restriction and has nothing to do with duty, and patriotism campaigns are a non-tariff barrier. Pre-shipment inspections are not required by all countries, and Customs bondsif they are usedare based on duty. Duty is usually based upon product classification, valuation, and origin. From these elements, Custom calculates the tariff. 
a. tariff, border traffic taxes, and non-tariff barriers. 
b. value-added taxation, absolute quota, and patriotism campaigns. 
c. pre-shipment inspections and Customs bonds. 
*d. product classification, valuation, and origin. 
e. weight and value of the products. 

9. In the Harmonized System of classification, an incomplete or unfinished product is classified 
~ In the Harmonized System of classification, an incomplete or unfinished product is classified as the product it will be when finished. 
@ In the Harmonized System of classification, an incomplete or unfinished product is classified as the product it will be when finished. 
a. in several classifications, depending upon the raw materials of the product. 
b. in several classifications, depending upon the classifications of the sub-assemblies of the product. 
c. in the classification of the closest similar product. 
d. under a special classification designated unfinished product. 
*e. as the product it will become when finished. 

10. For countries in the World Trade Organization, the valuation of goods for import purposes is based upon
~ Value added is not relevant, and invoice value is what includes the packaging costs and transportation costs in the exporting country. For member countries of the WTO, the valuation of the goods is based on the transaction value of the sale. 
@ Value added is not relevant, and invoice value is what includes the packaging costs and transportation costs in the exporting country. For member countries of the WTO, the valuation of the goods is based on the transaction value of the sale. 
a. value added. 
b. the invoice value minus packaging costs and transportation costs in the exporting country. 
*c. the transaction value of the sale. 
d. the retail value of the goods once imported. 
e. the cost of the materials used to make the product(s). 

11. Argentina, after being chastised by the World Trade Organization for having increased its duty rate on footwear, reduced them, and immediately reimposed them through a _____ tax designed to protect its footwear industry against foreign competition. 
~ Safeguard tax is what Argentinas footwear debacle is an example of in the text. 
@ Safeguard tax is what Argentinas footwear debacle is an example of in the text. 
a. punitive
b. border traffic
c. temporary protection
*d. safeguard
e. footwear

12. A tariff-rate quota
~ All of these characteristics apply to a tariff-rate quota. 
@ All of these characteristics apply to a tariff-rate quota. 
a. places a two-tiered tariff rate on a specific category of products. 
b. keeps the tariff low until the quota is reached. 
c. raises the tariff after the quota is reached. 
d. is a non-tariff barrier
*e. all of the answers in this set of responses apply to a tariff-rate quote

13. Non-tariff barriers may appear in the form of
~ All of these methods are ways to discourage imports. 
@ All of these methods are ways to discourage imports. 
a. requiring a special sticker to be applied to an imported product. 
b. slowing down Customs clearance processes. 
c. multiplying the number of documents required for importing products. 
d. Making documentation requests that are very difficult to fulfill (sewing tickets). 
*e. all of the answers in this set of responses are examples of non-tariff barriers. 

14. Countries may require pre-shipment inspections because
~ Pre-shipment inspections do not normally increase the tariff valuation of the product nor do they simplify the Customs process. Most PSIs are required by countries as part of their import process, and there are several reasons for this, including: the country wants an expert opinion on the classification and the value of the products about to enter its territory. 
@ Pre-shipment inspections do not normally increase the tariff valuation of the product nor do they simplify the Customs process. Most PSIs are required by countries as part of their import process, and there are several reasons for this, including: the country wants an expert opinion on the classification and the value of the products about to enter its territory. 
*a. the country wants an expert opinion on the classification and the value of the products about to enter its territory. 
b. it increases the tariff valuation of the product. 
c. it simplifies the Customs process. 
d. it reduces the amount paid by the importing country in fees. 
e. it allows the country of origin to be clearly determined. 

15. In most countries, the general process of clearing Customs begins with
~ Liquidation occurs after the entry is satisfactorily reviewed, the product is not cleared until after the duty is paid or there is evidence it will be paid, and a protest may follow, but it is after liquidation. The Customs process starts in most countries when an importer files an entryi. e. , notifies the Customs authorities that it will import a particular product. 
@ Liquidation occurs after the entry is satisfactorily reviewed, the product is not cleared until after the duty is paid or there is evidence it will be paid, and a protest may follow, but it is after liquidation. The Customs process starts in most countries when an importer files an entryi. e. , notifies the Customs authorities that it will import a particular product. 
a. a declaration of  liquidation. 
*b. the filing of an entry. 
c. a declaration that the goods are cleared. 
d. a review of grounds for a protest. 
e. an inspection of the goods by customs. 

16. Customs brokers are usually compensated on
~ Customs brokers are usually compensated on a fee basis. 
@ Customs brokers are usually compensated on a fee basis. 
a. a percentage of the tariff. 
b. a percentage of the added value of the goods. 
c. a schedule set by the United Nations. 
d. a schedule set by the World Trade Organization. 
*e. a fee per transaction. 

17. A time-sensitive shipment like an express package can be expedited through Customs by 
~ When a shipment is express or time-sensitive, Customs authorities allow importers to post a surety bond, which is a guarantee that the Customs will be paid, which allows goods to be entered before the duty is paid. 
@ When a shipment is express or time-sensitive, Customs authorities allow importers to post a surety bond, which is a guarantee that the Customs will be paid, which allows goods to be entered before the duty is paid. 
a. a liquidation statement. 
b. a protest. 
*c. a surety bond. 
d. a Certificate of Origin. 
e. a certificate of exception. 

18. In order for an importer to come under the scope of informed compliance, it must show that it
~ It does not matter if the importer pays duties in advanced, and the importer must demonstrate that it has hired a Customs specialist. In order to be compliant, the importer must show that it exercised reasonable car in the filing of its Customs entriesby following a standard of behavior. 
@ It does not matter if the importer pays duties in advanced, and the importer must demonstrate that it has hired a Customs specialist. In order to be compliant, the importer must show that it exercised reasonable car in the filing of its Customs entriesby following a standard of behavior. 
*a. has exercised reasonable care in the filing of its Customs entries. 
b. pays duties up to three months in advance. 
c. has not hired a Customs specialist. 
d. has paid its income taxes on time for the past three years. 
e. has attended five three-day training programs. 

19. Documentation designed to indicate what country a product initially came from is contained in the
~ A Certificate of Origin ascertains the country of origin and is a required document for entry. 
@ A Certificate of Origin ascertains the country of origin and is a required document for entry. 
a. commercial invoice. 
*b. Certificate of Origin. 
c. surety bond. 
d. entry form. 
e. certificate of free sale. 

20. An assist 
~ An assist is legal, and while it may change the value of the product, it does not affect the invoice value. An assist (an item that the importer provide to the exporter in order to produce the goods) can affect the valuation of the goods. 
@ An assist is legal, and while it may change the value of the product, it does not affect the invoice value. An assist (an item that the importer provide to the exporter in order to produce the goods) can affect the valuation of the goods. 
*a. is an item the importer provided to the exporter to produce the good (such as a mold or die used in manufacturing the product). 
b. is illegal. 
c. changes the invoice value of the imported goods. 
d. is an attempt by the importer to subsidize the exporter. 
e. is a payment made by the exporter to the importer, so that it pays less in duty. 


Type: F
1. The tax an importer must pay in order to be allowed to let goods into the country is called ____________________. 
a. duty

Type: F
2. According to the Harmonized System of classification, each product in international trade can have a code that uses up to ____________________ digits. 
a. Ten
b. ten
c. 10

Type: F
3. The country of origin of a product is the country in which it acquired its most substantial ____________________. 
a. transformation
b. change
c. value added

Type: F
4. When the invoices value is much below what Customs has historically accepted and when a much higher valuation is reached with one of the alternative valuation methods, Customs can determine that the exporter is ____________________ the goods in the importing country. 
a. dumping

Type: F
5. A quota that places a yearly limit on the number of items entering a country under a specific HS number is called a(n) ____________________ quota. 
a. absolute

Type: F
6. A quota that applies to all imports under an HS heading, regardless of country of origin, is called a(n) ____________________ quota. 
a. aggregate

Type: F
7. A representative of the importer that has acquired the knowledge and experience required to deal effectively and efficiently with Customs is called a(n) ____________________. 
a. customs broker

Type: F
8. A ____________________ is a guarantee that the importer or their representative will pay the duty due. 
a. surety bond

Type: F
9. In order for a product to be labeled as made in the USA, its minimal United States content must be ____________________ percent of the products value. 
a. 98
b. almost 100
c. nearly 100

Type: F
10. A country grants or sells a right to export a set quantity of a specific good to an exporting firm. This authorization is called a ____________________. 
a. visa

Type: F
11. Customs determines tariffs based upon the type of goods imported, which is determined according to a number of rules of ____________________ that essentially have been standardized worldwide. 
a. classification