Dictionary of Trade Terms

This resource is dedicated to all foreign/international trade terms and

acts as a trading dictionary with the definitions for the most common

terms used in international trade.

A

AD Valorem Equivalent The duty collected under a specific tariff or a compound tariff expressed as a percentage of the value of the imported item. The specific tariff is calculated on the basis of units of volume or weight, rather than value.

AD Valorem Tariff A tariff calculated "according to value," or as a percentage of the value of goods cleared through customs; for example, 10% ad valorem means 10% percent of the value of the entered merchandise

AF Advance Freight (before shipment)

Air Freight Usually Air Freight is charged at the same rate irrespective of the class of goods. There are charged in any one of three ways: weight, volume or value and usual method of quotation is airport to airport.

Airway Bill The Airway Bill replaced the previously known air consignment note, and it fulfils virtually the same function for Air Freight as the Bill of Lading does for Sea Freight. It contains information about the consignment and, by law, is required to be made out by the consignor or his agent.

All Risks This is an insurance term and the “All Risks” insurance will normally cover against all risks of whatever nature provided that they are risks and not certainties.

ATA Carnet An ATA Carnet is issued by an authorized Chamber of Commerce to allow

temporary export and subsequent re-import of professional equipment, commercial samples and goods for exhibition or trade fairs without payment of customs duty on deposit of a bond.

AWB An individually numbered Contract of Airfreight for a single air shipment by the International Air Transport Association (I.A.T.A) rules.

B

Back Freight The freight costs involved on returning the shipment to the Sender, when the Importer refuses to accept the goods.

Bill A document giving evidence of indebtedness of one party to another, as, for example, a written order for goods that can be used as security for a loan to the supplier of the goods from a bank, or a security such as a Treasury bill.

Bill Of Exchange A writing binding the signer or signers to pay a certain sum at a future day or on demand, with or without interest, as may be stated in the document. The Bill of Exchange looks something like a cheque which is drawn on an overseas buyer, or even on a third party as designated in the export contact, for the sum agreed as settlement.

An exporter can send a Bill of Exchange for the value of goods for export through the banking system for payment by an overseas buyer on presentation.

The Bill is called a sight draft if it is made out payable at sight, ie “on demand”. If it is payable “at a fixed or determinable future time” it is called a term draft, because the buyer is receiving a period of credit, known as the tenor of the Bill. The buyer signifies and agreement to pay on the due date by writing an acceptance across the face of the Bill.

Bill Of Exchange – Ninety Days A Bill of Exchange which is payable ninety days after acceptance or ninety days after sight, whichever is marked on the face of the Bill.

Bill Of Lading (B/L) The Bill of Lading is common when goods are shipped by sea or where goods are packed in a container. The Bill of Lading serves three main purposes.

1. It acts as evidence that there is a contract between either the exporter or importer and a chipping company to transport the goods by sea.

2. It is a receipt for goods shipped and provides certain details as to their condition when placed on board.

3. It is also a document of title, which means that the company named on the B/L has the right to possess the goods. A transfer of title on the B/L will transfer the ownership. This element of the B/L is vital to the payment arrangements for the goods. Bills of Lading are made out in sets of two or three originals, any one of them gives title to the goods.

Bill of Lading – Trans-Shipment This Bill is different from a standard Bill of Lading because it names intermediate ports as well as the final port. Some times may give the name of the subsequent vessel that will carry out the next part of the journey. Blacklist Certificates Blacklist Certificates provide evidence that the goods did not originate in, nor were transported via, blacklisted countries or by blacklisted vessels.

Bond An interest-bearing certificate issued by a government or a business promising to pay the holder a specified sum on a specified date. A bond is a common means of raising capital.

Bonded Goods Imported goods stored in a bonded warehouse, usually after the owners of the goods have deposited a bond guaranteeing that the duty will be paid when and if the goods are withdrawn for domestic sale

Bonded Warehouse A secure storage area in which goods subject to excise taxes or customs duties are stored pending payment of taxes or duties.

Border Tax Adjustments The remission of indirect taxes on exported goods, including sales taxes and value-added taxes, designed to ensure that national tax systems do not impede exports, and the imposition of domestic taxes on imported goods, to ensure that they do not receive preferential treatment as compared with domestically produced goods.

Break Bulk Loose, non-containerised cargo imported in bulk, usually because of size or weight considerations (such as raw materials or oversized machinery). These shipments are often separated into individual lots and routed to different destinations and/or importers.

Bridging Credit Borrowing ahead of receiving payment for a sale, or short-term credit to a customer pending his or her receipt of funds from another source.

Buffer Stocks Commodity stockpiles managed in such a way as to moderate price fluctuations. Goods may be sold from a stockpile when prices reach or approach predetermined ceiling prices, and they may be purchased for the stockpile when prices reach or approach predetermined floor levels. Rubber and cocoa are among the commodities

considered most likely to benefit from buffer stocks, and international commodity agreements exist for both of these products.

Bulk Carrier A transporter is usually an ocean-going vessel of large, heavy cargoes. "Dry" cargoes are usually mineral ores such as phosphates or manganese.

C

Capital Goods Industrial products or other goods that are used in the creation of additional wealth, such as machine tools. Capital goods are sometimes called intermediate goods or producer goods, because they are used to produce other goods.

Cargo Sharing The reservation and division of maritime traffic between designated trading partners who agree that vessels owned or controlled by either will carry a specified percentage of the cargo moving between them.

Cartel An alliance or arrangement among industrial, commercial, or state-controlled enterprises producing the same commodity, aimed at regulating the purchase, production, or marketing of the commodity.

CWO (Cash With Order) A payment in advance. Cash With Order usually used for small orders with new buyers and may even be asked for before production begins.

COD (Cash On Delivery) Where small value goods are sent by Post Office Parcel or a courier and are released only after payment of the invoice plus COD charges.

Certificate Of Health Certificates of Health, or health Inspection may be required by an overseas buyer or by the authorities in the buyer’s country.

Certificate Of Insurance A document prepared by the exporter or the freight forwarder to provide evidence that insurance against loss or damage has been obtained for the goods to be exported. A Certificate of Insurance has no legal standing, banks will usually insist on seeing the insurance policy, which is a legal document, rather than a certificate.

Certificate Of Origin A standard document that certifies the country where the product was made. A Certificate of Origin is sometimes required by the importing country’s authorities to

prove that the goods originate from a particular country. This may be necessary to enable an importer to claim preferential import duty.

Certificate Of Shipment Used when trans-shipment takes place, although a Bill of Lading has been issued for the first part of the journey, a separate certificate of shipment is issued for the next part of the journey in a separate vessel.

Certificate Invoice It is an invoice provided by an authorized Chamber of Commerce, some nations will require commercial invoices to be legalized by the buying nation’s consulate before the goods can enter the country.

CET or CXT (Common External Tariff) A tariff rate uniformly applied by a common market or customs union, such as the European Community, to imports from countries outside the union.

CFR or C&F (Cost and Freight) An international commercial term used in international sales contracts to signify that the seller must pay the cost and freight necessary to bring goods to a port of destination, but that the risk of loss or damage passes from the seller to the buyer when the goods pass the ship's rail in the port of shipment.

CFS (Container Freight Station) Where numerous of shipments are gathered prior to shipment.

Ch Fwd (Changes Forward)

Ch Pd (Charges Paid)

CIF (Costs, Insurance and Freight) An international commercial term used in international sales contracts, meaning that the selling price includes all cost insurance and freight for any goods sold. The seller arranges and pays for all relevant expenses involved in shipping goods from their point of exportation to a given point of importation.

CIP (Carriage and Insurance Paid) An international commercial term that is used in international sales contracts to impose the same obligations on the seller as "carriage paid to" (CPT), with the exception that the seller is also responsible for contracting and paying for cargo insurance. Hence, in addition to this obligation, the seller will clear for export and pay the freight and all costs incurred for the carriage of goods to a destination named by the buyer. The risk of loss or damage passes to the buyer when the goods are delivered to the carrier.

Clean Bill Of Lading A Clean Bill of Lading is one, which has no superimposed clause or statement declaring a defect in the condition of the exported goods or the packaging, or some other aspect of the consignment.

Commercial Invoice A document prepared by the exporter or freight forwarder, and required by the importer to prove ownership and arrange for payment to the exporter. It should include basic information about the transaction such as a description of the goods, address of the shipper and seller as well as delivery and payment terms. In some cases, the commercial invoice is used to assess Customs duties.

Commercial Paper Short-term financial instruments that can be bought and sold, particularly promissory notes that call for the payment of specified amounts of money at a given time.

CMR Note A consignment note for movements by road transport.

CMR (Convention Merchandises Routiers) Individually numbered Contract of Affreightment for international road shipments.

Consul Invoice An invoice which is approved and certified by the Consulate of the Country of destination, in their office in the Country of Origin.

Cover Note A document, usually issued by an insurance broker to the exporter, showing details of the insurance effected.

CPA (Insurance Claims Payable Abroad)

CIM Individually numbered Contract of Affreightment for international dispatched by rail.

CPC (Customs Procedure Cods) Identifies the procedure by which the Customs will process the goods.

C/nee (Consignee) To whom the goods are addressed

CRN (Customs Registered Number) A unique which identifies an Exporter or Importer to Customs.

CT for EU (Community Transit) Goods moving within the EU Community.

CTC (Community Tariff Code) The unique commodity code number allocated to a specific product. If no CTC exists for your goods, then one can apply to Customs for a ruling, thereby creating a new code number.

Container A special constructed metal box for shipment of goods by sea, usually either 20 or 40 foot long.

Currency Fluctuations Changes in the value of one currency relative to another. An exporter can protect against loss caused by fluctuating currencies during the sales contract period by taking out a forward exchange contract with a bank.

The exporter, invoicing a buyer in a foreign currency for payment at an agreed future date, sells those expected receipts to a bank in advance (ie forward) of the due date of payment. The bank agrees to buy at a pre-determined forward rate of exchange which varies according to the time of future delivery, for example, one, three or six months, or longer. No money is exchanged at the time the forward contract is made, but under its terms the exporter is guaranteed a certain rate of exchange.

Customs Bond A bond that, in certain circumstances, importers must post to effect the entry of imported goods. A customs bond usually must be guaranteed by an approved surety. The bond acts as a security in order to ensure the collection of duties and taxes owed on imports and to facilitate compliance with other importation requirements.

Customs Invoice A document evidencing the value of the goods, which is then used to clear them through Customs in the country of import. In some cases, the commercial invoice may be used for this purpose

D

DAF (Delivered At Frontier) An international commercial term (Incoterm) that is used in international sales contracts to signify that the seller must clear for export, pay for the freight, and bear all costs and risks for the carriage of goods to a named destination at a frontier but before the customs border of the adjoining country

DD (Dock Dues) Payments made for passing the goods through the dock.

DDP (Delivered Duty Paid) An international commercial term that is used in international sales contracts to signify the maximum obligation (just as EXW signifies the minimum obligation) on the seller's part. The seller is responsible for all risks and costs incurred to have goods delivered to a named destination. This includes the obligation to contract and pay for freight and transportation costs, unloading fees, export and import licensing fees, and other taxes. The buyer is obligated only to assist in obtaining any import license or other official authorization necessary to import the goods.

DDU (Delivered Duty Unpaid) An international commercial term that is used in international sales contracts to

signify that the seller is responsible for all risks and costs incurred to have goods delivered to a named destination in the country of importation. This includes the obligation to contract and pay for freight and transportation costs, export licensing fees, and other taxes (unless specifically excluded in the contract). The buyer is responsible for obtaining import licensing, carrying out the customs formalities necessary for the importation of the goods, and paying any import duties on the goods.

Delivered Docks An indication that the seller is willing to deliver the goods carriage-paid to the docks in a named port. Packing would be included in the price, but dock dues and wharfage dues would be excluded. The buyer takes responsibility from the point at which the goods are delivered to the dock.

Delivery Note or Advice Note A notification to a customer of the net weight, size, dimensions etc, of a consignment from an export packer or manufacturer.

Delivery Order An order signed by the owner of goods, instructing his warehouse to deliver possessions of the goods to the bearer of the order.

Demurrage (storage costs) The charge made for detaining a ship or failing to ship the cargo within specified days. The term is also applied to the charge made for the detention of railway trucks. DES (Delivered Ex Ship) An international commercial term that is used in international sales contracts to signify that the seller must clear for export and must contract and pay for delivery of goods by sea or inland waterway transport to a named port of destination, but not for unloading. The seller assumes risks and costs up to arrival at the named destination, at which time the buyer, upon taking delivery of the goods, assumes all risks and responsibilities for the unloading and clearance of the goods

DEQ (Delivered Ex Quay) An international commercial term that is used in international sales contracts to signify that the seller is responsible for all risks and costs incurred to have the goods delivered and unloaded at a named port of destination. This includes the obligation to contract and pay for freight and transportation costs by sea or inland waterway, unloading fees, export and import licensing fees, and other taxes (unless specifically excluded in the contract). The buyer is obligated only to assist in obtaining any import license or other official authorization necessary to import the goods.

DF (Dead Freight) When the shipper is required to pay for space book, but not used.

DFZ (Duty Free Zone) see also (Free Zone) An area within a country (a seaport, airport, warehouse, or any designated area) regarded as being outside its customs territory.

Differential Export Tax A multi-tier export tax usually structured so that the tax on exports of a raw material exceeds the tax (if any) on exports of processed goods made from the raw material, thereby creating an incentive to process the raw material domestically.

Dock Receipt Used by an ocean carrier to acknowledge receipt of a shipment at the carrier's dock or warehouse facilities.

Dock Warrant A document, representing goods warehoused at the docks, given to the owner as a recognition of his title to the goods.

Documentary Bill Is used when the seller of goods to a customer abroad wishes to obtain payment or some form of security before the goods are actually delivered. The seller will draw a bill on the consignee for the value of the goods, and will attach to it the copy of the invoice, the insurance policy and the Bills of Lading.

These documents will be handed to his banker, who in turn will forward them to his own correspondent at the place where the consignee of the goods are at sea. When this is done, the bank will require a letter of hypothecation empowering it to sell the goods in the event of default by the consignor.

Documentary Letter of Credit A document issued by a bank which guarantees the payment of a customer's drafts for a specified period and up to a specified amount.

The Documentary Letter of Credit provides a more secure means of carrying out transactions in import-export trade than by documentary bills collection (see Bill of Exchange). A letter of credit when transmitted through a bank, usually in the exporter’s country, becomes the means by which the exporter obtains payment.

The necessary documents, correctly completed, are presented to a bank by an agreed date. If the terms of the credit are met an exporter can receive payment from a bank immediately.

Double-Column Tariff A tariff schedule listing two duty rates for some or all commodities. Under such arrangements, imports may be taxed at a higher or lower rate, depending upon the importing country's trade and other relationships with the exporting country. Some British Commonwealth countries maintain a double-column tariff that provides preferential tariff treatment to other members of the commonwealth. The United States and other countries also have lower tariffs for countries to which they grant most-favored-nation treatment.

Downstream Dumping also known as Input Dumping The practice of exporting an end-product containing an input that has been purchased at less than normal value

Drawback Import duties or taxes repaid by a government, in whole or in part, when the imported goods are re-exported or used in the manufacture of exported goods

Dual Pricing Selling identical products for different prices in different markets. Dual pricing often reflects export subsidy and dumping practices.

Duty Suspension A unilateral non-application of a customs duty, or its application at a reduced level, usually on a temporary basis.

E

ECI (Export Consignment Identifier) Composed of the CRN plus a commercial reference number, which could be the commercial invoice number.

Embargo In international trade, government actions limiting or prohibiting imports and/or exports of goods and/or services from or to a country. Such limitations may be applied by the embargoing country against its own nationals, such as the United States embargo against trade from Cuba, or in concert with other countries against a third country, such as the 1990 United Nations embargo against trade in any form with Iraq or the earlier UN embargo against trade with South Africa. Embargoes may also be applied just against trade in certain products regardless of origin, such as the ban on trade in ivory.

ETA (Estimated Time of Arrival)

ETD (Estimated Time of Dispatch)

Excise Tax A selective tax — sometimes called a consumption tax — on certain goods produced within or imported into a country.

Export Merchants Export Merchants buy goods direct from an exporter in their own home market for sale abroad. For the manufacturer the transaction is almost the same as selling in the home market as the export merchants are responsible for promoting the goods to overseas buyers.

ECGF (Export Credit Guarantee Facility) A scheme developed in the United Nations Conference on Trade and Development that would enable developing country exporters to refinance their export credits extended to importers in other countries under an international guarantee.

Export Credit Insurance Insurance designed to guarantee that an exporter will be paid for his/her goods after delivery. If the exporter has such insurance, responsibility for collecting payment from the company that imports the goods in another country, or the company's agent, rests with the underwriter of the export credit insurance

Export Quotas A specific restrictions or ceilings imposed by an exporting country on the value or volume of certain exports to protect domestic producers and consumers from temporary shortages of the goods affected or to bolster their prices in world markets. Some international commodity agreements explicitly indicate when producers should apply such restraints. Export quotas are also often applied in orderly marketing agreements and voluntary restraint agreements, and to promote domestic processing of raw materials in countries that produce them

Export Restraints A quantitative restrictions imposed by exporting countries to limit exports to specified foreign markets, usually pursuant to a formal or informal agreement concluded at the request of the importing countries.

EXW (Ex Works) An international commercial term that is used in international sales contracts to signify a seller's obligation to make the goods available to a buyer only at the seller's premises (that is, works, factory, warehouse, and the like). Thus, the seller is not responsible for loading, shipping, export clearance, etc. unless otherwise agreed. All costs, risks, and obligations incurred from moving the goods from the seller's premises to the buyer's destination are borne by the buyer.

F

Factor A mercantile agent entrusted with the possession of goods for the purpose of selling them for his principal. Such an agent may deal with the goods in his own name.

FAK (Freight All Kinds) Describes an airfreight rate, when no special Commodity Rate is available.

FAS (Free Alongside Ship) An international commercial term that is used in sales contracts to signify a seller's obligation to pay the costs and assume all risks for transporting goods from his or her place of business to the point of embarkation where a vessel or plane selected by the buyer will accept the goods.

FCA (Free Carrier) An international commercial term that is used in international sales contracts to signify that a seller must deliver goods sold, cleared for export, to a carrier or freight

forwarder specified by the buyer. The seller has no obligation with respect to import licensing or insurance.

FCL (Full Container Load)

FCR (Forwarder’s Certificate of Receipt)

FIATA (International Federation of Freight Forwarders Association)

Floating Insurance Policy A Floating Insurance Policy gives the regular overseas trader insurance in advance for all his shipments for some period ahead; the length of the period will depend on the shipments made from time to time under the policy and on the sum insured.

FOB (Free On Board) An international commercial term used in international sales contracts. In an FOB contract, a buyer and a seller agree on a designated FOB point. The seller assumes the cost of having goods packaged and ready for shipment from the FOB point, whether this is his/her own place of business or some intermediate point. The buyer assumes the costs and risks from the FOB point, including inland transportation costs and risks in the exporting country, as well as all subsequent transportation costs, including the costs of loading the merchandise on a vessel. If the contract stipulates "FOB vessel," the seller bears all transportation costs to the vessel named by the buyer, as well as the costs of loading the goods on that vessel. The same principle applies to the abbreviations "FOR" ("free on rail") and "FOT" ("free on truck").

Force Majeure Describes circumstances outside the immediate control of the Exporter or Importer, and generally defined as something which could not have been anticipated even with foresight.

Forward Market A market in which contracts for future deliveries of goods and securities on a specified date are entered into at fixed prices. The contracts themselves are popularly known as "futures." Many commodity exchanges — wool, cotton, and wheat, for example — have established forward markets that permit interested parties to hedge against changes in the prices of the raw materials they use or deal in.

Franco (Free) A price quoted which is free of any other charges.

Free Carrier This price is all costs to a named point of loading, to be transported by a carrier by road, rail, air or sea.

Free Circulation A piece of EU terminology describing goods free to move within the EU, if they were

produced in the EU, or on their originally arrival in the EU Import Duty, VAT and any other applicable duty has been paid.

Free Domicile This price is all costs including insurance and transport of delivery to the overseas buyer’s address.

Free List A list of goods not subject to import duties or import-licensing requirements in a particular country.

FOB (Free On Board) This price is all costs of the goods loaded on board a ship whose destination is stated in the commercial contract.

Free Trade A theoretical concept that assumes international trade unhampered by government measures such as tariffs or non-tariff barriers. The objective of trade liberalization is to achieve "freer trade" rather than "free trade," it being generally recognized among trade policy officials that some restrictions on trade are likely to remain in effect for the foreseeable future.

Free Zone An area within a country (a seaport, airport, warehouse, or any designated area) regarded as being outside its customs territory. Importers may therefore bring goods of foreign origin into such an area without paying customs duties and taxes, pending their eventual processing, transshipment, or re-exportation. Free zones were numerous and prosperous during an earlier period when tariffs were high. Some still exist in capital cities, transport junctions, and major seaports, but their number and prominence have declined as tariffs have fallen in recent years. Free zones may also be known as "free ports," "free warehouses," "free trade zones," and "foreign trade zones."

Freight Forward When goods are sent freight forward, the airline, shipping company, haulier collects the freight costs from the consignee before parting with the cargo. He will usually have a lien on the cargo for the cost of the freight.

Freight Forwarder A person hired to move shipments from a foreign location to a domestic location, or a portion of the way. Freight forwarders handle many of the formalities involved in importing such shipments. A forwarder will also advise on suitable packing for the particular journey or commodity. He can prepare the various documents required for the different countries, giving advice on those, which the exporter must by law prepare himself. Freight forwarders are often called clearing agents or act as a clearing agent when dealing in imports.

G

General Average A term applied to insurance policies, and more correctly defined as “general average loss”. This is a loss caused by, or directly consequential on, a General Average Act. A General Average Act consists in an extraordinary sacrifice or expenditure which is (a) voluntarily and reasonably made or incurred, (b) in time of imminent peril, (c) for the purpose of preserving the property imperiled in the common adventure. In practical terms, this means that if a ship, then all other shippers who have cargo on that vessel will bear the loss proportionately.

General Tariff A tariff that applies to imports from countries that do not enjoy either preferential or most-favoured-nation tariff treatment. Where the general tariff rate differs from the most-favoured-nation rate, the general tariff is usually an older and higher rate.

GCR (General Cargo Rate) As distinct from a rate applicable to a specific commodity.

Gr Wt (Gross Weight)

GSP (General System of Preferences) Under which goods from certain countries are given preferential rates of import duty.

H

HAWB House Air Way Bill, individually numbered, identifies a particular shipment within an Airfreight Consolidation movement. The Consol itself being covered by a single MAWB – Maser Air Way Bill fro identification purposes.

Hedge/ Hedging An action taken by a buyer or seller to protect his or her business or assets against a change in prices. A miller, for example, might buy a quantity of wheat to convert into flour at a given point in time and agree at the same time to sell a similar quantity of wheat that he does not own, at the same price, for delivery at a designated future point in time. If the price of wheat falls, he will lose on the flour while making a profit on the wheat he can later buy at the lower price. But if the price of wheat rises, he will make an extra profit on his flour, which he will have to sacrifice by purchasing wheat at the current high price. In either case, his production profits are protected.

HS (Harmonised System) A complete product classification system, formally known as the Harmonized Commodity Description and Coding System, that is organized in a particular framework and that employs a numbering or coding system consistent with its

organizational arrangement. At the international level, the HS comprises approximately 5,000 article descriptions that appear as headings and subheadings, arranged in 97 chapters grouped in 21 sections.

Hypothecation The pledging of property to secure a debt, without giving up possession of such property.

I

I.A.T.A. (International Air Transport Association)

ICC (International Chamber of Commerce)

Import Substitution An attempt by a country to reduce imports (and hence foreign exchange expenditures) by encouraging the development of domestic industries regardless of domestic inefficiencies.

Incoterms (International Commercial Terms) Incoterms are a uniform set of international rules, promulgated by the International Chamber of Commerce in Paris, for the interpretation of the terms most commonly used in international contracts for the sale of goods. Incoterms define the obligations of buyer and seller at every stage of an international sale of goods transaction. The Incoterms were first issued in 1953; they were last revised effective January 1, 2000.

Indent An indent is merely an order. Thus, an indent number refers to the order number.

Insurance An agreement or contract (commonly called a policy) between the insured, who pays a premium, and the insurer, who in return promises to compensate the insured if he suffers specified losses It is important to have insurance cover against loss or damage which may occur during shipment. The contract with the supplier should clearly state who is responsible for arranging the insurance at all stages from the time the merchandise leaves the supplier’s premises until the buyer takes possession of the goods. The stages to be covered include:

• Transportation of the goods to the docks or the airport • Time during which they are stored awaiting shipment or loading • Periods whilst on board the ship, aircraft or conveyance • Off-loading and storage on arrival in destination. • Transportation to the buyer’s premises.

It is advisable for an importer to buy goods on FCA, FAS or FOB terms in order that he can arrange the insurance in his own country.

Insurance, particularly marine insurance, is a complicated subject, and it is advisable to get a professional insurance broker to arrange cover for your shipment.

Insurance Certificate A document prepared by the exporter or the freight forwarder to provide evidence that insurance against loss or damage has been obtained for the goods to be exported.

Invisible Trade Items such as freight, insurance, and financial services that, are included in a country's balance-of-payments accounts (in the "current" account), even though they are not recorded as physically visible exports and imports.

Invoice, Pro Forma An invoice sent in advance of the goods, showing the exact details of the order, usually for the purpose of enabling payment documents to be raised.

IRD Inland Rail Depot, which is used for Customs Clearance.

J

Jettison Throwing cargo overboard, if it is determined that such an action may save a vessel in peril.

K

KD (Knocked Down) Merchandise that is imported complete with all parts but in an unassembled state (such as oversized machinery), usually to facilitate packing and shipping.

L

Laycan A ship chartering term which stands for laydays commencement and cancelling, it specifies the earliest date on which laytime can commence and the latest date, after which the Charterer can opt to cancel the Charter Party Agreement.

Laytime The time allowed by the shipowner to the voyage charterer to carry out the cargo

loading and/or discharging operations; Laytime may be expressed as a certain number of days or number of tons of cargo loaded/unloaded per day.

L/C (Letter of Credit) A document issued by a bank which guarantees the payment of a customer's drafts for a specified period and up to a specified amount. Irrevocable Letter of credit, it means that once the buyer’s conditions in the letter have been agreed by the exporter, they constitute a definite undertaking by the buyer’s bank and cannot be revoked without the exporter’s agreement. Revocable Letter of credit, it means that the terms of the credit can be cancelled or amended by an overseas buyer at any time without notice to the exporter.

LCL A seafreight expression which describes cargo amount to less than a full container load.

Levy, as a verb To assess or impose a tariff on imported merchandise; as a noun, the charge on imports.

Liberal When referring to trade policy, relatively free of import controls or restraints and/or exhibiting a preference for reducing existing barriers to trade, often contrasted with the protectionist preference for retaining or raising selected barriers to imports.

Liberalisation Unilateral or multilateral reductions in tariffs and other measures that restrict trade. Trade liberalization has been the objective of all rounds of the GATT trade negotiations

LIBOR (London Interbank Offered Rate) Is the rate of interest at which banks borrow funds from other banks, in marketable size, in the London interbank market.

Lien A general lien is the right, which arises by contract to retain goods until any sum due in respect of them is paid and also in respect of any sum which may be owing by the owner to the person in possession.

Lighterage It is the cost of a smaller vessel or barge for moving the goods ashore (in a case of a ship not being able to tie up to a quay).

Linear Reduction of Tariffs A reduction by a given percentage in all tariffs maintained by countries participating in a round of trade negotiations, with or without exceptions for products deemed to be "sensitive." It is sometimes called "horizontal reduction of tariffs," "across-the-board reduction of tariffs," or "equal percentage reduction of tariffs."

LLDCs or LDCs (Least Developed Countries) Some 48 of the world's poorest countries, considered by the United Nations to be the "least developed" of the less developed countries.

Loco (Within The Area Of) The word “loco” is always used in conjunction with a defined town or area. For example, “free delivery loco Sydney” would mean that goods will be delivered free within the area of Sydney, and that an additional charge would be made for any delivery outside the area.

Logistics Intermediary A person who consolidates several small shipments from various sources into a larger shipment, usually up to a full truck, car, or container load.

Logistics Provider A person who acts as an agent on behalf of the shipper

LO/LO The cost of using a crane to lift goods onto, or off a ship.

LTL (Less-Than-Load Shipments) A shipment that has not been loaded to capacity for the particular container type or shipping method.

M

Manifest A document signed by the Master of a ship specifying the ship and describing the goods loaded therein. This document must be delivered to the appropriate officer of Customs within six days after the final clearance of the ship.

Margin Of Preference The difference between the duty payable under a given system of tariff preferences and the duty that would be assessed in the absence of preferences.

Market Disruption A situation that occurs when a surge of imports of a particular product causes a precipitous decline in sales of similar domestically produced goods.

Mate’s Receipt A Mate’s Receipt provides evidence of delivery of goods to a ship. It has no legal value but it serves a useful purpose and is usually surrendered against Bills of Lading.

Medium Of Exchange Documentary instrument used in commercial transactions between buyers and

sellers to measure the value of the goods exchanged. The value of such instruments is usually expressed in terms of a national currency.

Mercantilism An economic philosophy prominent in the 16th and 17th centuries that equated the accumulation and possession of gold and other international monetary assets, such as foreign currency reserves, with national wealth. Although this point of view is generally discredited among 20th century economists and trade policy experts, some contemporary politicians still favour policies designed to create trade surpluses, such as import substitution and tariff protection for domestic industries, as essential to national economic strength.

MFN (Most Favored Nation Status) Which indicates that a specific nation will receive preferential imports duties, quotas etc.

Min Minimum, frequently used to state the minimum freight rate which applies to a small amount of cargo.

Minimum Valuation Customs valuation of certain low-cost items at a higher-than-actual value.

Mixed Credits A financing package that involves official government credit to supplement normal commercial credit, thus enabling an exporter to deliver goods to a buyer in another country on credit terms comparable to those of his competitors.

Movement Certificate A document used within the European Union (EU) which shows the origin of the goods. Similar to a Certificate of Origin.

MRA (Mutual Recognition Agreement) Agreements that generally allow conformity assessment — for example, testing, inspecting, certifying — of manufactured goods to be performed in the United States to another country's standards and regulations, and vice versa. An MRA can save manufacturers time and expense by avoiding excessive assessments. It also conserves U.S. regulatory agencies' resources. The United States maintains its current high health and safety standards and can adopt even higher standards without in any way violating an MRA.

MV (Motor Vessel)

Multilateral Aid Development assistance given by donors to recipient countries through international institutions

Mutatis Mutandis Latin phrase signifying "the necessary changes having been made"; "substituting new terms."

N

NCV (No Commercial Value) Often used in Import Customs Entries to describe samples etc. However, in reality Customs tend not to accept that an item has no value. This can be overcome by indicating a notional value, say $1.00.

Negotiation Credit A letter given by a bank advising a manufacturer or seller that the bank is authorized to accept and negotiate drafts drawn on a specified customer without liability on the part of the bank, usually for a stated amount and liable to withdrawal at any time.

Net Weight The weight of goods excluding all packaging, or cases.

NICs (Newly Industrializing Countries) A term coined by the Organization for Economic Cooperation and Development to describe those relatively advanced developing nations that have enjoyed rapid economic growth in recent years and can be described as middle-income countries. Examples include Brazil, Hong Kong, South Korea, Mexico, Singapore, and Taiwan. Newly industrializing countries are sometimes referred to as newly industrializing economies (NIEs).

NME (Non-market Economy) A national economy in which the government seeks to determine economic activity largely through a mechanism of central planning, as in the former Soviet Union, in contrast to a market economy, which depends heavily upon market forces to allocate productive resources. In a non-market economy, production targets, prices, costs, investment allocations, raw materials, labour, international trade, and most other economic aggregates are manipulated within a national economic plan drawn up by a central planning authority. Hence, the public sector makes the major decisions affecting demand and supply within the national economy

Nominal Tariff Rate The rate of duty charged on the gross value of a given product, rather than on the value of its components

Non Stat An expression used in a Custom’s Entry, when the quantity is of insufficient amount to be deemed to affect Custom’s statistics.

NTBs (Non-tariff Barriers) Government measures other than tariffs that restrict imports or that have the potential for restricting international trade, even though they may not always do so. NTBs include import monitoring systems and variable levies, as well as measures that are internationally perceived as trade restrictive, even though a trade-restricting intent or effect cannot objectively be ascribed to them. Such measures have become relatively more conspicuous impediments to trade as tariffs have been reduced during the period since World War II.

NV (Normal Value) The price at which merchandise is sold or offered for sale in the principal markets of the country from which it is exported.

NVOCC (Non Vessel Operating Carrier) Often used to describe a major sea freight Forwarder shipping large and frequent shipments to specific ports, but does not own their own ship.

O

ODA (Official Development Assistance) Economic or technical assistance extended to developing countries by the governments of developed countries and by international organizations, as contrasted with gifts, loans, and investments financed by the private sector. Official development assistance is construed by the OECD Development Committee as including only "concessional" transfers to developing countries, meaning that all or part of each ODA transaction is a grant or is loaned at rate of interest and/or on repayment terms more beneficial to the recipient than market rates and terms.

Offset Requirements Conditions imposed on certain large exporters in other countries by importing governments, usually to reduce cash outflows, such as by requiring the exporter to purchase goods or services produced in the importing country, to establish manufacturing facilities in the country, or to use locally produced components in manufacturing. Offset requirements are frequently associated with sales of military equipment.

Offshore Manufacturing The foreign manufacture of goods by a domestic firm primarily for import into its home market.

OMAs (Orderly Marketing Agreements) International compacts negotiated between two or more governments in which the trading partners agree to restrain the growth of trade in specified "sensitive"

products, usually through the imposition of export quotas. Orderly marketing agreements are intended to ensure that future trade increases will not disrupt, threaten, or impair competitive industries or their workers in importing countries.

Open Account Open Account offers the least security to an exporter. The goods and accompanying documents are sent directly to an overseas buyer who has agreed to pay within a certain period after the invoice date – usually not more than 180 days. The buyer undertakes to remit money to the exporter by an agreed method.

Open Insurance Cover, see Floating Insurance

OPR (Outward Processing Relief) A form of export Custom’s Entry, which indicates to the Customs that the goods are being temporarily exported, and that will be subsequently re-imported to the Country of Origin without the need to charge Import Duty upon their return.

P

Packaging, Labelling, and Marking Regulations The requirement or regulation, usually by an importing country, that imported goods be packaged, labelled, or marked according to particular guidelines. Although ostensibly required to protect consumers, non-standard packaging, labelling, and marking requirements frequently pose problems for exporters and may function as non-tariff barriers.

Packing List A Packing List gives details of the contents of all the packages making up the consignments and is required by Custom’s authorities if the packing information is not shown on the invoice. The Packaging List is usually attached to the invoice. Par Value The official fixed exchange rate between two currencies or between a currency and a specific weight of gold or a basket of currencies.

Parcel Post A valuable method of moving small units by air or sea.

Parcel Ticket A variation on the Bill of Lading covering small consignments of limited value. Usually such goods are shipped at the liability of the seller.

Particular Average A term used in insurance more clearly defined as a Particular Average Loss, ie a partial loss of the insured interest caused by a peril insured against and which is not a General Average Loss. The loss falls entirely on the party who has an interest in the particular goods so damaged.

Port Mark An identity of the port of destination stenciled onto packaging cases. This will often include an indicator of the total number of packing cases in a consignment e.g. 1/12.

Port Of Entry Point at which individuals and imported goods enter a country and clear its national customs.

Preferences Special advantages extended by importing countries to exports from particular trading partners, usually by admitting their goods at tariff rates below those imposed on imports from other supplying countries.

Premium A regular payment paid for an insurance policy that provides protection against a risk.

Price Elasticity Of Demand The percentage change in demand for a given product likely to result if its price changes by 1 percent. A slight lowering or raising of a tariff will have a larger effect on the volume of imports of a product with a high price elasticity of demand than on a product with a low price elasticity of demand.

Price Elasticity Of Supply The percentage change in supply for a given product likely to result if its price changes by 1 percent.

Primary Commodity A commodity in its raw or unprocessed state, such as iron ore. In contrast, pig iron is considered a semi-processed product, and a steel girder is a manufactured item.

Principal Supplier The country that is the most important source of a particular product imported by another country. In trade negotiations, a country offering to reduce its tariff or other barriers to imports of a particular item generally expects the country that is the principal supplier of that item to reduce restrictions on its imports of a product for which the first country is the principal supplier. Depending on the trade negotiations, both countries then may grant the same concessions to all other countries to which they accord most-favoured-nation treatment.

Prior Deposits A deposit required by a government of a specified sum, in domestic or foreign currency, usually corresponding to a certain percentage of the value of the imported product. Such deposits are characteristically held without interest, sometimes for many months — from the time an order is placed until after the import transaction is completed — and hence represent a real cost to the importer. The purpose of prior deposits is usually to discourage imports, particularly for balance-of-payments reasons, and they generally are recognized as non-tariff barriers that impede trade. Prior deposits must usually be made at the time an import license is granted.

Process Patent A process or method that consists of an act, operation, or step or series thereof performed upon a specified subject matter to produce a physical result.

Proforma Invoice An invoice which purports to represent what a final invoice with all attendant details will look like.

PSI (Preshipment Inspection) To ensure that the quantity and quality of goods to be traded conform to the specifications of the sales contract.

Purchasing Power The ability of consumers to acquire goods and services based on their possession of money and/or their recourse to credit. Aggregate purchasing power within a market or a national economy reflects total disposable income after taxes, and hence the level of employment

Q

QRs (Quantitative Restrictions) Explicit limits, or quotas, on the quantity of a good that can be imported or exported during a specified time period. Such limits are usually measured by physical quantity but sometimes by value. A quota may be applied on a selective basis, with varying limits set according to the country of origin or destination, or on a global basis that specifies only the total limit and thus tends to benefit more efficient suppliers. Quotas are frequently administered through a system of licensing.

Quarantine, Sanitary, And Health Laws And Regulations Government measures to protect consumer, animal, and plant health by regulating the use of dangerous preservatives and other additives in foods. The lack of internationally accepted standards makes it difficult to distinguish between legitimate health standards and protectionist measures.

Quotation A quotation represents the price and conditions at which a seller is prepared to supply goods.

R

Railway Consignment Note Railway Consignment Notes are similarly used to the Bill of Lading for transport by rail to an overseas destination.

Received For Shipment Bill of Lading Received For Shipment Bill of Lading confirms that the shipping company has the goods in custody for shipment. Exporters load their goods at their factory into a container provided by a transport operator. The container is transported by road or rail to the port for shipment. The Received For Shipment Bill of Lading is endorsed by the carrier on loading the goods abroad ship at the port.

Reciprocity The practice by which governments extend similar concessions to each other, as when one government lowers its tariffs or other barriers impeding its imports in exchange for equivalent concessions from a trading partner on barriers affecting its exports (a "balance of concessions").

Reinsurance The shifting by agreement (known in the insurance industry as a "treaty") of part of the risk (or "exposure") of the original insurer (the ceding company) to another insurer (the reinsurer). Sometimes a reinsurer will, in turn, pass on part of its risk to another reinsurer through a process known as retrocession. International reinsurance is important to developed and developing countries alike.

Request List A list submitted by a country to a trading partner at an early stage of trade negotiations identifying the concessions it seeks through the negotiations.

Reserve Currency A national currency such as the dollar or pound sterling, or international currency such as Special Drawing Rights, used by many countries to settle debit balances in their international accounts. Central banks generally hold a large portion of their monetary reserves in reserve currencies, which are sometimes called "key" currencies.

Restitutions Payments to agricultural exporters in the European Community under the Common Agricultural Policy to cover the difference between internal and world market prices.

Reverse Preferences Tariff advantages once offered by developing countries to imports from certain developed countries that granted them preferences in turn. Reverse preferences characterized trading arrangements between the European Community and some developing countries (the ACP countries) prior to the advent of the Lomé Convention.

Right Of Stoppage Transit The Right of an unpaid seller in certain circumstances to arrest the goods sold, after delivery to a carrier and before delivery to the purchaser.

RO-RO (Roll On/Roll Off) Cargo that is rolled on and off a vessel under its own power. Roll on/roll off shipping allows for quick and easy lading/unlading because the cargo does not need to be

loaded and unloaded by winch or crane but can be driven on and off a vessel using a tractor trailer, van, or flatbed truck.

Routing Orders The Party accepting responsibility for payment of the freight charges have the ultimate right to nominate the Carrier or Freight Forwarder to be used. Providing that the costs and services level involved match those allowed for in the original quotation.

S

SAD: Single Administrative Document An eight-part set, used either in whole or parts, to facilitate easy movement of goods within the EU.

Sensitive Products Domestically produced goods considered economically and politically important in a country whose competitive position would be threatened if protection against the imports of similar goods were reduced. The steel and textiles industries in many developed countries, for example, employ large numbers of workers, often in communities that cannot in the short term offer alternative employment. For these reasons, there has been strong opposition to the reduction of tariff and other trade-restricting measures affecting sensitive products.

Shipping Conference An alliance made up of a number of carriers that provide service from point to point for a defined route, which is distributed based upon market share.

Sight Draft A Bill of Exchange payable at sight, ie “on demand”

Single-Column Tariff A tariff schedule listing only one duty rate for each imported product. The United States maintained a single-column tariff schedule until 1909, when special preferences were instituted for products imported from Cuba and the Philippines.

SITC (Standard International Trade Classification) An international foreign data scheme that permits international comparisons of foreign trade data. It was developed by the United Nations in 1950 and is used solely by international organizations for reporting international trade.

SITPRO (Simplification of International Trade Procedures) A UK organisation who frequently become involved in improving documentation etc on a worldwide basis.

Standards Technical specifications that lay down characteristics of a product such as size,

quality, performance, or safety. Standards may also cover terminology, testing methods, packaging, labelling, or marking requirements.

SWIFT (Society For World-wide Interbank Financial Telecommunications) Major banks have set up a computer system for interbank transfers called the Society For World-wide Interbank Financial Telecommunications (SWIFT).

Specific Limitations On Trade Government measures that restrict imports or exports of a product during a given period to an explicitly stated volume or value, usually by requiring a license or other government authorization for each export or import transaction.

Specific Tariff A customs duty assessed as a stated monetary amount per unit of physical quantity, such as so many cents a pound, a bushel, or a yard, regardless of the value of the imported item.

Spot Market A market in which goods or securities are traded for immediate delivery. The spot price is, therefore, the price for immediate delivery.

SPS (Sanitary And Phytosanitary Measures) Any measures applied to protect human or animal life from risks arising from additives, contaminants, toxins, or disease-causing organisms in their food; to protect human life from plant- or animal-carried diseases; to protect animal or plant life from pests, diseases, or disease-causing organisms; and to prevent or limit other damage to a country from the entry, establishment, or spread of pests. These include measures taken to protect the health of fish and wild fauna, as well as of forests and wild flora.

Strategic Stockpiles Accumulated stocks of raw materials or other commodities deemed essential to national defence and maintained so that a country's actual or potential supply of the goods stocked will not fall below the quantity likely to be required for a given period of national emergency.

Supply Access Assurance that importing countries have fair and equitable access at reasonable prices to supplies of raw materials and other essential imports. Such assurance might include explicit constraints against the use of the export embargo as an instrument of foreign policy. Requests for such assurance reflect the desire of countries to have a consistent supply of important raw materials at stable prices

T

Tariff A duty (or tax) levied upon goods transported from one customs area to another either for protective or revenue purposes.

Tariff Quota Application of a reduced or zero duty rate for a specified quantity of imported goods, or for goods imported during a given period.

Tariff-Rate Quota A quota that is determined on the basis of the applicable tariff rate applied to imports. A predetermined amount of a good is allowed to enter at a reduced or zero tariff rate. After the quota has been filled, all subsequent shipments of that good during a specific period of time, such as a calendar year, are assessed a higher import tariff, usually the normal most-favoured-nation tariff.

TBT (Technical Barriers to Trade) Are the standards and regulations imposed by governments and governmental authorities to restrict trade.

Technical Regulations Regulations that lay down characteristics for products or related processes and production methods, including applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking, or labelling requirements as they apply to a product, process, or production method.

Technology Transfer The movement of modern or scientific methods of production or distribution from one enterprise, institution, or country to another, as through foreign investment, international trade, licensing of patent rights, technical assistance, or training. Technology may also be transferred by giving it away (technical journals, conferences, emigration of technical experts, technical assistance programs) or by industrial espionage.

Telegraphic Transfer Money is transferred by coded interbank telex and as long as the exporter makes it clear to the overseas buyer exactly to which bank and account the remittance should be made, the exporter should receive very speedy payment.

Tenor The period of credit given by a Bill of Exchange.

Term Draft A Bill of Exchange payable “at a fixed or determinable future time”

Terms Of Trade The ratio of prices (unit values) of a country's exports to the prices (unit values) of its

imports. Some economists have discerned a deteriorating trend in this ratio for developing countries as a whole. Other economists maintain that whereas the terms of trade may have become less favourable for certain countries during certain periods — and even for all developing countries during some periods — the same terms of trade have improved for other developing countries in the same periods and perhaps for most developing countries during other periods.

Third-Country Dumping A situation in which the exports of a product from one country are being injured or threatened with injury as a result of exports of the same product from a second country into a third country at less than fair value.

Threshold Price A minimum price. In the case of the European Community, the price for grains and other agricultural products under which EC’s Common Agricultural Policy operates. The threshold price is fixed at a level that will bring the selling price of grains up to the existing price level in the marketing region within the European Community where supplies are lowest.

Tied Loan A loan made by a government agency that requires a foreign borrower to spend the proceeds in the lender's country or to buy the lender's products.

TIR Initials for the French term “Transports International Routiers”, the name given to international road service facilities where one truck crosses many frontiers carrying goods. For example, a TIR truck could load in England and the driver could stay with it perhaps as far as the Middle East, Turkey, etc. Special Carnets are available, as distinct from ATA Carnets.

Trade Agreement A bilateral or multilateral treaty or other enforceable compact committing two or more nations to specified terms of commerce, usually involving mutually beneficial concessions.

Trade Barriers Government laws, regulations, policies, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products.

Trade Diversion A shift in the pattern of origin of a country's imports, resulting from changes in trade policies or practices, which may or may not involve change in the overall volume or composition of the imports involved.

Trade Mission Experts and/or businessmen sent by a government or by commercial interests in one country to encourage exports to the market of another country.

Trademark A mark or symbol secured by legal registration used by a manufacturer or trader to distinguish his or her goods from competing goods.

Transit Zone The area surrounding a port of entry in a coastal country that serves as a storage and distribution centre for the convenience of a neighbouring country — a land-locked country, for example — lacking adequate port facilities or access to the sea. A transit zone is administered so that goods in transit to and from the neighbouring country are not subject to the customs duties, import controls, or many of the entry and exit formalities of the host country. A transit zone is a more limited facility than either a free trade zone or free port.

Transparency Visibility and clarity of laws, regulations, and procedures. Some of the codes of conduct negotiated during the Tokyo Round sought to increase the transparency of non-tariff barriers that impede trade.

Transshipment A shipment that has been moved through, imported, transferred, or unladen in one or more intermediary countries (other than their originating country) prior to importation into the final destination country.

Tropical Products Traditionally, agricultural goods of export interest to developing countries in the tropical zones of Africa, Latin America, and East Asia, such as coffee, tea, spices, natural rubber, palm oil, bananas, and tropical hardwoods.

U

Unitisation The general approach for trying to transport goods in larger units. Pallets and containers are two means to this end.

V

VAT (Value -Added Tax) An indirect tax on consumption that is levied at each discrete point in the chain of production and distribution, from the raw material stage to final consumption. Each processor or merchant pays a tax proportional to the amount by which he or she increases the value of the goods purchased for resale after making his or her own contribution. The value-added tax is imposed throughout the European Community and EFTA countries, as well as in many other trading nations.

Variable Levy Under the European Community's Common Agricultural Policy, a duty that increases or decreases as domestic or world prices fluctuate to ensure that the price of the imported product after payment of duty will equal a predetermined "gate" price.

W

Wharfinger Receipt An Acknowledgement of the receipt of goods by the wharfinger. It has no legal value.