What does a Surety Bond protect against in international trade?

A Surety Bond serves as a financial guarantee in international trade, specifically protecting against non-payment of duties and taxes. When a party, often an importer or exporter, obtains a Surety Bond, it essentially guarantees that the customs duties and taxes will be paid to the government. This is crucial as it assures the authorities that financial obligations will be met, which is especially important in international transactions that involve significant monetary stakes and adherence to regulatory requirements.

The use of a Surety Bond helps facilitate smoother trade operations by providing a layer of trust and security for governments and regulatory bodies. It reassures them that, should the company default on its obligations, the surety company will cover the payment, ensuring that the government does not lose out on tax revenue.

In contrast, the other options do not accurately reflect the primary purpose of a Surety Bond. While loss of goods during transport, misrepresentation of goods, and warranty claims are all important risks in international trade, they are typically addressed through other forms of insurance and legal recourse. The specific function of a Surety Bond revolves around the assurance of financial obligations related to duties and taxes, making this choice the correct one.