| admiralty
|
| (law/shipping) Any
civil or criminal issue having to do with maritime law. |
|
|
| ad valorem |
| Literally: according
to value. |
| (general) Any charge,
tax, or duty that is applied as a percentage of value. |
| (customs/taxation) A
tax calculated on the value of the property subject to the tax. See also duty. |
| (shipping) A freight
rate set at a certain percentage of the declared value of an article. |
| |
| advice |
| (banking) The term
"advice" connotes several types of forms used on the banking field. Generally
speaking, an advice is a form of letter that relates or acknowledges a certain activity or
result with regard to a customer's relations with a bank. Examples include credit advice,
debit advice, advice of payment and advice of execution. In commercial transactions,
information on a business transaction such as shipment of goods. |
| (banking/letters of
credit) The forwarding of a letter of credit, or an amendment to a letter of credit to the
seller, or beneficiary of the credit, by the advising bank (seller's bank). |
| See also
issuance; letter of credit; amendment. |
|
|
| advising bank |
| (banking) The bank
(also referred to as the seller's or exporter's bank) which receives a letter of credit or
amendment to a letter of credit from the issuing bank (the buyer's bank) and forwards it
to the beneficiary (seller/exporter) of the credit. See also letter of credit;
issuing bank. |
|
|
| air waybill
(airbill) |
| (shipping) A shipping
document used by the airlines for air freight. It is a contract for carriage that includes
carrier conditions of carriage including such items as limits of liability and claims
procedures. The air waybill also contains shipping instructions to airlines, a description
of the commodity and applicable transportation charges. Air waybills are used by many
truckers as through documents for coordinated air/truck service. |
| Air waybills are not
negotiable. The airline industry has adopted a standard formatted air waybill that
accommodates both domestic and international traffic. The standard document was designed
to enhance the application of modern computerized systems to air freight processing for
both the carrier and the shipper. See also bill of lading; negotiable. |
|
|
| amendment |
| (law/general) An
addition, deletion, or change in a legal document. |
| (banking/letters of
credit) A change in the terms and conditions of a letter of credit (e.g., extension of the
letter of credit's validity period, shipping deadline, etc.), usually to meet the needs of
the seller. The seller requests an amendment of the buyer who, if he agrees, instructs his
bank (the issuing bank) to issue the amendment. The issuing bank informs the seller's bank
(the advising bank) who then notifies the seller of the amendment. In the case of
irrevocable letters of credit, amendments may only be made with the agreement of all
parties to the transaction. See also letter of credit. |
| |
| antidumping duties
|
| Duties assessed
against a particular class of imports when the imports are being sold (that is dumped) at
less than fair market value in the importing country. |
|
|
| ATA Carnet |
| (customs) ATA stands
for the combined French and English words "Admission Temporair/Temporary
Admission." An ATA Carnet is an international customs document which may be used for
the temporary duty-free admission of certain goods into a country in lieu of the usual
customs documents required. The carnet serves as a guarantee against the payment of
customs duties which may become due on goods temporarily imported and not re-exported.
Quota compliance may be required on certain types of merchandise. ATA textile carnets are
subject to quota and visa requirements. |
| The ATA Convention of
1961 authorized the ATA Carnet to replace the ECS ("Echantillons
Commerciaux/Commercial Samples") Carnet that was created by a 1956 convention
sponsored by the Customs Cooperation Council. |
| ATA Carnets are issued
by National Chambers of Commerce affiliated with the Paris-based International Chamber of
Commerce (ICC). These associations guarantee the payment of duties to local customs
authorities should goods imported under cover of a foreign-issued carnet not be
re-exported. |
|
|
| beneficiary |
| (banking/letter of
credit) The individual or company in whose favor a letter of credit is opened. |
| (insurance) The person
or legal entity named to receive the proceeds or benefits of an insurance policy. |
| |
| bill of exchange
|
| (banking) An
unconditional order in writing, signed by a person (drawer) such as a buyer, and addressed
to another person (drawee), typically a bank, ordering the drawee to pay a stated sum of
money to yet another person (payee), often a seller, on demand or at a fixed or
determinable future time. |
| The most common
versions of a bill of exchange are: |
| (a) A draft,
wherein the drawer instructs the drawee to pay a certain amount to a named person, usually
in payment for the transfer of goods or services. Sight drafts are payable when
presented. Time drafts (also called usance drafts) are payable at a future fixed
(specific) date or determinable (30, 60, 90 days etc.) date. Time drafts are used as a
financing tool (as with Documents against Acceptance, D/A terms) to give the buyer time to
pay for his purchase. |
| (b) A promissory
note, wherein the issuer promises to pay a certain amount. |
|
|
| bill of lading |
| (shipping) A document
issued by a carrier to a shipper, signed by the captain, agent, or owner of a vessel,
furnishing written evidence regarding receipt of the goods (cargo), the conditions on
which transportation is made (contract of carriage), and the engagement to deliver goods
at the prescribed port of destination to the lawful holder of the bill of lading. |
| A bill of lading is,
therefore, both a receipt for merchandise and a contract to deliver it as freight. There
are a number of different types of bills of lading. |
| (a) A straight bill
of lading indicates that the shipper will deliver the goods to the consignee. The
document itself does not give title to the goods (non-negotiable). The consignee need only
identify himself to claim the goods. A straight bill of lading is often used when payment
for the goods has been made in advance. |
| (b) A shipper's
order bill of lading is a title document to the goods, issued "to the order
of" a party, usually the shipper, whose endorsement is required to effect its
negotiation. Because it is negotiable, a shipper's order bill of lading can be bought,
sold, or traded while goods are in transit and is commonly used for letter-of-credit
transactions. The buyer usually needs the original or a copy as proof of ownership to take
possession of the goods. |
| (c) An air waybill
is a form of bill of lading used for the air transport of goods and is not negotiable. See
also air waybill for a fuller explanation. |
| (d) A clean bill of
lading is a bill of lading where the carrier has noted that the merchandise has been
received in apparent good condition (no apparent damage, loss, etc.) and which does not
bear such notations as "Shipper's Load and Count," etc. |
| (e) A claused bill
of lading is a bill of lading which contains notations which specify deficient
condition(s) of the goods and/or packaging. |
| |
| bond |
| (finance) The
obligation to answer for the debt of another person. |
| (insurance/customs) A
contract between a principal and a surety (insurance company or agent) which is obtained
to insure performance of an obligation (often imposed by law or regulation). |
| Posting of a bond is
commonly required by the customs authority of a country to guarantee payment of duties or
performance of a procedural requirement. |
| |
| Bonded |
| (customs) Goods stored
under supervision of customs until the import duties are paid or the goods are exported. |
|
| carnet |
| (customs) A customs document
permitting the holder to carry or send merchandise temporarily into certain foreign
countries (for display, demonstration, or similar purposes) without paying duties or
posting bonds. See also ATA Carnet. |
|
|
| certificate of origin |
| (customs) A document attesting to
the country of origin of goods. A certificate of origin is often required by the customs
authorities of a country as part of the entry process. Such certificates are usually
obtained through an official or quasi official organization in the country of origin such
as a consular office or local chamber of commerce. A certificate of origin may be required
even though the commercial invoice contains the information. |
| Certificate of Origin Form A
A document required by the customs authority of many developed countries to prove country
of origin eligibility of merchandise under duty-free import programs such as the
Generalized System of Preferences and the Caribbean Basin Initiative. |
| |
| CIP--carriage and insurance
paid to (...named place of destination) |
| (Incoterm) "Carriage and
insurance paid to..." means that the seller has the same obligations as under CPT,
but with the addition that the seller has to procure cargo insurance against the buyer's
risk of loss of or damage to the goods during the carriage. The seller contracts for
insurance and pays the insurance premium. The buyer should note that under the CIP term
the seller is only required to obtain insurance on minimum coverage. The CIP term requires
the seller to clear the goods for export. This term may be used for any mode of transport
including multimodal transport. |
| |
| CFR--cost and freight (...named
port of destination) |
| (Incoterm) "Cost and
Freight" means that the seller must pay the costs and freight necessary to bring the
goods to the named port of destination but the risk of loss of or damage to the goods, as
well as any additional costs due to events occurring after the time the goods have been
delivered on board the vessel, is transferred from the seller to the buyer when the goods
pass the ship's rail in the port of shipment. The CFR term requires the seller to clear
the goods for export. |
| This term can only by used for sea
and inland waterway transport. When the ship's rail serves no practical purpose, such as
in the case of roll-on/roll-off or container traffic, the CPT term is more appropriate to
use. |
| |
| classification |
| (general) The categorization of
merchandise. |
| (shipping) The assignment of a
category to a specific cargo for the purpose of applying class rates, together with
governing rules and regulations. |
| (customs) The categorization of
merchandise according to the tariff schedule of a country. Classification affects the duty
status of imported merchandise. |
| See also Harmonized System.
See also valuation. |
| |
| collecting bank |
| (banking) The bank that acts as
agent for the seller and seller's bank in collecting payment or a time draft from the
buyer to be forwarded to the remitting bank (usually the seller's bank). |
| |
| commingling |
| (customs) The packing or mingling
of various articles subject to different rates of duty in such a way that the quantity or
value of each class of articles cannot readily be ascertained by customs without the
physical segregation of the shipment or the contents of any package thereof. Commingled
articles are generally subject to the highest rate of duty applicable to any part of the
commingled lot, unless the consignee or his agent segregates the articles under customs
supervision. |
| |
| compound rate of duty |
| (customs) A combination of both a
specific rate of duty and an ad valorem rate of duty. For example: 0.7 cents per pound
plus 10 percent ad valorem. See also duty; ad valorem. |
| consular invoice |
| (customs) An invoice covering a
shipment of goods certified (usually in triplicate) by the consul of the country for which
the merchandise is destined. This invoice is used by customs officials of the country of
entry to verify the value, quantity, and nature of the merchandise imported. See also
invoice. |
| |
| consular visa |
| An official endorsement by a
consul of a country, sometimes required for certification of country of origin or
compliance with export and import requirements. |
| |
| CIF--cost, insurance, freight
(...named port of destination) |
| (Incoterm) "Cost, Insurance,
Freight" means that the seller has the same obligations as under CFR but with the
addition that he has to procure marine insurance against the buyer's risk of loss of or
damage to the goods during the carriage. The seller contracts for insurance and pays the
insurance premium. |
| The buyer should note that under
the CIF term the seller is only required to obtain insurance on minimum coverage. The CIF
term requires the seller to clear the goods for export. |
| This term can only be used for sea
and inland waterway transport. When the ship's rail serves no practical purpose such as in
the case of roll-on/roll-off or container traffic, the CIP term is more appropriate to
use. |
| |
| countertrade |
| An umbrella term for several sorts
of trade in which the seller is required to accept goods or other instruments or trade, in
partial or whole payment for its products. |
| Countertrade transactions include
barter, buy-back or compensation, counterpurchase, offset requirements, swap, switch, or
triangular trade, evidence or clearing accounts. |
|
|
| countervailing duties |
| Special import duties assessed to
offset export manufacturing subsidies received by businesses in an exporting country. |
| |
| country of origin |
| The country where merchandise was
grown, mined, or manufactured. |
| |
| CPT--carriage paid to (...named
place of destination) |
| (Incoterm) "Carriage paid
to..." means that the seller pays the freight for the carriage of the goods to the
named destination. The risk of loss of or damage to the goods, as well as any additional
costs due to events occurring after the time the goods have been delivered to the carrier,
is transferred from the seller to the buyer when the goods have been delivered into the
custody of the carrier. |
| "Carrier" means any
person who, in contract of carriage, undertakes to perform or to procure the performance
of carriage, by rail, road, sea, air, inland waterway or by a combination of such modes.
If subsequent carriers are used for the carriage to the agreed destination, the risk
passes when the goods have been delivered to the first carrier. The CPT term requires the
seller to clear the goods for export. This term may be used for any mode of transport
including multimodal transport. |
| |
| custom house |
| (customs) The government office
where duties, tolls, or taxes placed on imports or exports are paid and vessels entered or
cleared. |
| |
| customs |
| (a) A government authority
designated to regulate flow of goods to/from a country and to collect duties levied by a
country on imports and exports. The term also applies to the procedures involved in such
collection. |
| (b) Taxes imposed by a government
on the import or export of items. See also duty, tariff. |
| |
| customs broker |
| (customs) An individual or firm
licensed by the customs authority of a country to act for importers in handling the
sequence of custom formalities and other details critical to the legal and speedy
exporting and importing of goods. |
|
|
| customs classification |
| (customs) The particular category
in a tariff nomenclature in which a product is classified for tariff purposes; or, the
procedure for determining the appropriate tariff category in a country's nomenclature
system used for the classification, coding and description of internationally traded goods
See also Harmonized System. |
| documents against acceptance
(D/A) |
| See also documentary
collection. |
| |
| documents against payment (D/P)
|
| See also documentary
collection. |
| |
| DAF--delivered at frontier
(...named place) |
| (Incoterm) "Delivered at
Frontier" means that the seller fulfils his obligation to deliver when the goods have
been made available, cleared for export, at the named point and place at the frontier, but
before the customs border of the adjoining country. The term "frontier" may be
used for any frontier including that of the country of export. Therefore, it is of vital
importance that the frontier in question be defined precisely by always naming the point
and place in the term. The term is primarily intended to be used when goods are to be
carried by rail or road, but it may be used for any mode of transport. |
| |
| DDP--delivered duty paid
(...named place of destination) |
| (Incoterm) "Delivered duty
paid" means that the seller fulfils his obligation to deliver when the goods have
been made available at the named place in the country of importation. The seller has to
bear the risks and costs including duties, taxes and other charges of delivering the goods
thereto, cleared for importation. While the EXW term represents the minimum obligation for
the seller, DDP represents the maximum obligation. |
| This term should not be used if
the seller is unable directly or indirectly to obtain the import licence. If the parties
wish the buyer to clear the goods for importation and to pay the duty, the term DDU
(delivered duty unpaid) should be used. |
| If the parties wish to exclude
from the seller's obligations some of the costs payable upon importation of the goods
(such as value added tax (VAT)), this should be made clear by adding words to this effect:
"Delivered duty paid, VAT unpaid (...named place or destination)." |
| This term may be used irrespective
of the mode of transport. |
| |
| DDU--delivered duty unpaid
(...named place of destination) |
| (Incoterm) "Delivered duty
unpaid" means that the seller fulfils his obligation to deliver when the goods have
been made available at the named place in the country of importation. The seller has to
bear the costs and risks involved in bringing the goods thereto (excluding duties, taxes
and other official charges payable upon importation as well as the costs and risks of
carrying out customs formalities). The buyer has to pay any additional costs and to bear
any risks caused by his failure to clear the goods for import in time. |
| If the parties wish the seller to
carry out customs formalities and bear the costs and risks resulting therefrom, this has
to be made clear by adding words to this effect. |
| If the parties wish to include in
the seller's obligations some of the costs payable upon importation of the goods (such as
value added tax (VAT)), this should be made clear by adding words to this effect:
"Delivered duty unpaid, VAT paid (...named place or destination)." This term may
be used irrespective of the mode of transport. |
| |
| DEQ--delivered ex quay (duty
paid) (...named port of destination) |
| (Incoterm) "Delivered Ex Quay
(duty paid)" means that the seller fulfils his obligation to deliver when he has made
the goods available to the buyer on the quay (wharf) at the named port of destination,
cleared for importation. The seller has to bear all risks and costs including duties,
taxes and other charges of delivering the goods thereto. |
| This term should not be used if
the seller is unable directly or indirectly to obtain the import licence. |
| If the parties wish the buyer to
clear the goods for importation and pay the duty the words "duty unpaid" should
be used instead of "duty paid." |
| If the parties wish to exclude
from the seller's obligations some of the costs payable upon importation of the goods
(such as value added tax (VAT)), this should be made clear by adding words to this effect:
"Delivered ex quay, VAT unpaid (...named port of destination)." This term can
only be used for sea or inland waterway transport. |
| |
| DES--delivered ex ship
(...named port of destination) |
| (Incoterm) "Delivered Ex
Ship" means that the seller fulfils his obligation to deliver when the goods have
been made available to the buyer on board the ship uncleared for import at the named port
of destination. The seller has to bear all the costs and risks involved in bringing the
goods to the named port of destination. This term can only be used for sea or inland
waterway transport. |
| |
| demurrage |
| (shipping) (a) The detention of a
freight car or ship by the shipper beyond time permitted (grace period) for loading or
unloading, |
| (b) The extra charges a shipper
pays for detaining a freight car or ship beyond time permitted for loading or unloading.
Used interchangeably with detention. Detention applies to equipment. Demurrage applies to
cargo. |
| |
| discrepancies |
| (banking/letters of credit) The
non-compliance of documents with the terms and conditions of a letter of credit.
Information (or missing information or missing documents/papers, etc.) in the documents
submitted under a letter of credit, which: (1) is not consistent with its terms and
conditions; (2) is inconsistent with other documents submitted; (3) does not meet the
requirements of the Uniform Customs and Practice for Documentary Credits (UCPDC), ICC
brochure no. 500, 1993 revision. |
| If the documents show
discrepancies of any kind, the issuing bank is no longer obliged to pay and, in the case
of a confirmed letter of credit, neither is the confirming bank (strict documentary
compliance). See also letter of credit. |
| |
| dock receipt |
| A document/receipt issued by an
ocean carrier when the seller/exporter is not responsible for moving the goods to their
final destination, but only to a dock in the exporting country. The document/receipt
indicates that the goods were, in fact, delivered and received at the specified dock. |
|
|
| documentary collection |
| (banking) A method of effecting
payment for goods whereby the seller/exporter ships goods to the buyer, but instructs his
bank to collect a certain sum from the buyer/importer in exchange for the transfer of
title, shipping and other documentation enabling the buyer/importer to take possession of
the goods. The two types of documentary collection are: |
| (a) Documents against Payment
(D/P) where the bank releases the documents to the buyer/importer only against a cash
payment in a prescribed currency; and |
| (b) Documents against
Acceptance (D/A) where the bank releases the documents to the buyer/importer against
acceptance of a bill of exchange (draft) guaranteeing payment at a later date. |
| In documentary collections, banks
act in a fiduciary capacity and make every effort to ensure that payment is received, but
are liable only for the correct execution of the collection instructions, and do not make
any commitment to pay the seller/exporter themselves. |
| Documentary collections are
subject to the Uniform Rules of Collections, Brochure No. 322, revised 1978, of the
International Chamber of Commerce (ICC) in Paris. |
| |
| documentation |
| (general) All or any of the
financial and commercial documents relating to a transaction. |
| Documents in an international
trade transaction may include: commercial invoice, consular invoice, customs invoice,
certificate of origin, bill of lading, inspection certificates, bills of exchange and
others. |
|
|
| draft; draft bill of exchange
|
| See also bill of exchange. |
|
|
| drawback--refund of duties |
| The refund of all or part of
customs duties, or domestic tax paid on imported merchandise which was subsequently either
manufactured into a different article or reexported. |
| |
| drawee |
| (banking) The individual or firm
on whom a draft is drawn and who owes the indicated amount. In a documentary collection,
the drawee is the buyer. See also drawer; bill of exchange. |
| |
| drawer |
| (banking) The individual or firm
that issues or signs a draft and thus stands to receive payment of the indicated amount
from the drawee. In a documentary collection, the drawer is the seller. See also
drawee; bill of exchange. |
| |
| dumping |
| (customs) The sale of a commodity
in a foreign market at less than fair value, usually considered to be a price lower than
that at which it is sold within the exporting country or to third countries. |
| |
| duty |
| (customs) A tax levied by a
government on the import, export or consumption of goods. Usually a tax imposed on imports
by the customs authority of a country. Duties are generally based on the value of the
goods (ad valorem duties), some other factors such as weight or quantity (specific
duties), or a combination of value and other factors (compound duties). |
| Duties are imposed for purposes of
protecting domestic industries from more competitive foreign-made products and generating
state revenue. Most countries employ a range of duties, allowing a large number of
products to pass duty-free while imposing greater duties as the perceived risks rise.
Although still prevalent, duties are being reduced and eliminated among certain trading
partners with the creation of international agreements, such as GATT and regional free
trade agreements. Duties are also known as "tariffs." |
| See also ad valorem;
specific rate of duty; compound rate of duty. |
|
|
| export declaration |
| A document required by the customs
authority of various countries for the export of goods. This form typically requires
complete particulars on an individual export shipment. |
| |
| export license |
| A document prepared by a
government authority, granting the right to export a specified quantity of a commodity to
a specified country. This document may be required in some countries for most or all
exports and in other countries only under special circumstances. |
|
|
| EXW--ex works (...named place)
|
| (Incoterm) "Ex works"
means that the seller fulfills his obligation to deliver when he has made the goods
available at his premises (i.e. works, factory, warehouse, etc.) to the buyer. In
particular, he is not responsible for loading the goods on the vehicle provided by the
buyer or for clearing the goods for export, unless otherwise agreed. The buyer bears all
costs and risks involved in taking the goods from the seller's premises to the desired
destination. This term thus represents the minimum obligation for the seller. This term
should not be used when the buyer cannot carry out directly or indirectly the export
formalities. In such circumstances, the FCA term should be used. |
|
|
| foreign trade zone (FTZ) |
| FTZs (or free zones, free ports,
or bonded warehouses) are special commercial and industrial areas in or near ports of
entry where foreign and domestic merchandise, including raw materials, components, and
finished goods, may be brought in without being subject to payment of customs duties.
Merchandise brought into these zones often may be stored, sold, exhibited, repacked,
assembled, sorted, graded, cleaned, or otherwise manipulated prior to reexport or entry
into the national customs territory. |
| |
| FAS--free alongside ship
(...named port of shipment) |
| (Incoterm) "Free Alongside
Ship" means that the seller fulfills his obligation to deliver when the goods have
been placed alongside the vessel on the quay or in lighters at the named port of shipment.
This means that the buyer has to bear all costs and risks of loss of or damage to the
goods from that moment. The FAS term requires the buyer to clear the goods for export. It
should not be used when the buyer cannot carry out directly or indirectly the export
formalities. |
| This term can only be used for sea
or inland waterway transport. |
|
|
| FCA--free carrier (...named
place) |
| (Incoterm) "Free
Carrier" means that the seller fulfills his obligation to deliver when he has handed
over the goods, cleared for export, into the charge of the carrier named by the buyer at
the named place or point. If no precise point is indicated by the buyer, the seller may
choose within the place or range stipulated where the carrier shall take the goods into
his charge. When, according to commercial practice, the seller's assistance is required in
making the contract with the carrier (such as in rail or air transport) the seller may act
at the buyer's risk and expense. |
| This term may be used for any mode
of transport, including multimodal transport. |
| "Carrier" means any
person who, in a contract of carriage, undertakes to perform or to procure the performance
of carriage by rail, road, sea, air, inland waterway or by a combination of such modes. If
the buyer instructs the seller to deliver the cargo to a person, e.g. a freight forwarder
who is not a "carrier," the seller is deemed to have fulfilled his obligation to
deliver the goods when they are in the custody of that person. |
| "Transport terminal"
means a railway terminal, a freight station, a container terminal or yard, a multi-purpose
cargo terminal or any similar receiving point. |
| "Container" includes any
equipment used to unitise cargo, e.g. all types of containers and/or flats, whether ISO
accepted or not, trailers, swap bodies, ro-ro equipment, igloos, and applies to all modes
of transport. |
| |
| FOB--free on board (...named
port of shipment) |
| (Incoterm) "Free On
Board" means that the seller fulfills his obligation to deliver when the goods have
passed over the ship's rail at the named port of shipment. This means that the buyer has
to bear all costs and risks of loss of or damage to the goods from that point. The FOB
term requires the seller to clear the goods for export. |
| This term can only be used for sea
or inland waterway transport. When the ship's rail serves no practical purpose, such as in
the case of roll-on/roll-off or container traffic, the FCA term is more appropriate to
use. |
| |
| foreign exchange |
| (banking/foreign exchange) Current
or liquid claims payable in foreign currency and in a foreign country (bank balances,
checks, bills of exchange). Not to be confused with foreign bank notes and coin, which are
not included in this definition. See also bank notes. |
|
|
| forward foreign exchange |
| (foreign exchange) An agreement to
purchase foreign exchange (currency) at a future date at a predetermined rate of exchange.
Forward foreign exchange contracts are often purchased by international buyers of goods
who wish to hedge against foreign exchange fluctuations between the time the contract is
negotiated and the time payment is to be made. |
| |
| freight forwarder |
| (shipping) A person engaged in the
business of assembling, collection, consolidating, shipping and distributing
less-than-carload or less-than-truckload freight. Also, a person acting as agent in the
trans-shipping of freight to or from foreign countries and the clearing of freight through
customs, including full preparation of documents, arranging for shipping, warehousing,
delivery and export clearance. |
| |
| Harmonized System (HS) |
| A multipurpose international goods
classification system designed to be used by manufacturers, transporters, exporters,
importers, customs, statisticians, and others in classifying goods moving in international
trade under a single commodity code. It divides products into more than 5,000
classifications. |
| |
| import license |
| A document, issued by a government
agency, giving authorization to import certain commodities. |
| |
| import substitution |
| A strategy which emphasizes the
replacement of imports with domestically produced goods, rather than the production of
goods for export. Governments generally implement such a policy to encourage the
development of domestic industry. |
| |
| impost |
| See also duties |
| |
| in bond |
| A procedure by which an importer
can move goods into or through a country before paying duties by posting a bond or other
security. |
| |
| Incoterms |
| A codification of international
rules for the uniform interpretation of common contract clauses in export/import
transactions. Developed and issued by the International Chamber of Commerce (ICC) in
Paris. The version which is currently valid is publication no. 460 from 1990. The thirteen
Incoterms 1990 are: |
| (1) Ex Works (EXW), |
| (2) Free Carrier (FCA), |
| (3) Free Alongside Ship (FAS), |
| (4) Free On Board (FOB), |
| (5) Cost and Freight (CFR), |
| (6) Cost, Insurance and Freight
(CIF), |
| (7) Carriage Paid To (CPT), |
| (8) Carriage and Insurance Paid To
(CIP), |
| (9) Delivered At Frontier (DAF), |
| (10) Delivered Ex Ship (DES), |
| (11) Delivered Ex Quay (DEQ), |
| (12) Delivered Duty Unpaid (DDU),
and |
| (13) Delivered Duty Paid (DDP). |
| See specific listings for each
individual Incoterm. |
|
|
| inspection certificate |
| An affidavit signed by the
seller/exporter or an independent inspection firm (as required by the buyer/importer),
confirming that merchandise meets certain specifications. |
| |
| invoice |
| A document identifying the seller
and buyer of goods or services, identifying numbers such as invoice number, date, shipping
date, mode of transport, delivery and payment terms, and a complete listing and
description of the goods or services being sold including prices, discounts and
quantities. |
| |
| issuance |
| (banking) The establishment of a
letter of credit by the issuing bank (buyer's bank) based on the buyer's application and
credit relationship with the bank. See also letter of credit; advice; amendment. |
| |
| issuing bank |
| (banking) The buyer's bank which
establishes a letter of credit at the request of the buyer, in favor of the beneficiary
(seller/exporter). Also called the buyer's bank or the opening bank See also
advising bank. |
| |
| legal kilo |
| See legal weight. |
| |
| legal weight |
| Total weight of the merchandise
and its own packaging, exclusive of any exterior containers or packing materials. |
| |
| letter of credit (L/C) |
| (banking) Formal term: Documentary
credit or documentary letter of credit. |
| A letter of credit is a document
issued by a bank stating its commitment to pay someone (supplier/exporter/seller) a stated
amount of money on behalf of a buyer (importer) so long as the seller meets very specific
terms and conditions. Letters of credit are more formally called documentary letters of
credit because the banks handling the transaction deal in documents as opposed to goods. |
| The terms and conditions listed in
the credit all involve presentation of specific documents within a stated period of time,
hence the formal name--documentary credits. |
| The documents the buyer requires
in the credit may vary, but at a minimum include an invoice and a bill of lading. Other
documents the buyer may specify are certificate of origin, consular invoice, insurance
certificate, inspection certificate and others. |
| Letters of credit are the most
common method of making international payments, because the risks of the transaction are
shared by both the buyer and the supplier. |
| Documentary letters of credit are
subject to the Uniform Customs and Practice for Documentary Credits (UCPDC), Brochure No.
500, of the International Chamber of Commerce (ICC) in Paris. |
|
|
| Basic Letters of Credit |
| There are two basic forms of a
letter of credit: the Revocable Credit and the Irrevocable Credit. There are also two
types of irrevocable credit: the Irrevocable Credit not Confirmed, and the Irrevocable
Confirmed Credit. Each type of credit has advantages and disadvantages for the buyer and
for the seller. Also note that the more the banks assume risk by guaranteeing payment, the
more they will charge for providing the service. |
| (a) Revocable credit--This
credit can be changed or canceled by the buyer without prior notice to the supplier.
Because it offers little security, revocable credits are generally unacceptable to the
seller and are rarely used. |
| (b) Irrevocable credit--The
irrevocable credit is one which the issuing bank commits itself irrevocably to honor,
provided the beneficiary complies with all stipulated conditions. This credit cannot be
changed or canceled without the consent of both the buyer and the seller. As a result,
this type of credit is the most widely used in international trade. Irrevocable credits
are more expensive because of the issuing bank's added liability in guaranteeing the
credit. There are two types of irrevocable credits: |
| : (1) The Irrevocable credit
not confirmed (Unconfirmed credit). This means that the buyer's bank which issues the
credit is the only party responsible for payment to the supplier, and the supplier's bank
is obliged to pay the supplier only after receiving payment from the buyer's bank. The
supplier's bank merely acts on behalf of the issuing bank and therefore incurs no risk. |
| : (2) The Irrevocable,
confirmed credit. In a confirmed credit, the advising bank adds its guarantee to pay
the supplier to that of the issuing bank. If the issuing bank fails to make payment, the
advising bank will pay. If a supplier is unfamiliar with the buyer's bank which issues the
letter of credit, he may insist on an irrevocable confirmed credit. These credits may be
used when trade is conducted in a high risk area where there are fears of outbreak of war
or social, political, or financial instability. Confirmed credits may also be used by the
supplier to enlist the aid of a local bank to extend financing to enable him to fill the
order. A confirmed credit costs more because the bank has added liability. |
|
|
| Special Letters of Credit |
| There are numerous special letters
of credit designed to meet specific needs of buyers, suppliers, and intermediaries.
Special letters of credit usually involve increased participation by banks, so financing
and service charges are higher than those for basic letters of credit. The following is a
brief description of some special letters of credit. |
| (a) Standby letter of credit--This
credit is primarily a payment or performance guarantee. It is used primarily in the United
States because U.S. banks are prevented by law from giving certain guarantees. Standby
credits are often called non-performing letters of credit because they are only used as a
backup payment method if the collection on a primary payment method is past due. |
| Standby letters of credit can be
used, for example, to guarantee the following types of payment and performance: repayment
of loans, fulfillment by subcontractors, securing the payment for goods delivered by third
parties. |
| The beneficiary to a standby
letter of credit can draw from it on demand, so the buyer assumes added risk. |
| (b) Revolving letter of credit--This
credit is a commitment on the part of the issuing bank to restore the credit to the
original amount after it has been used or drawn down. The number of times it can be
utilized and the period of validity is stated in the credit. The credit can be cumulative
or noncumulative. Cumulative means that unutilized sums can be added to the next
installment, whereas noncumulative means that partial amounts not utilized in time expire.
|
| (c) Deferred payment letter of
credit--In this credit the buyer takes delivery of the shipped goods by accepting the
documents and agreeing to pay the bank after a fixed period of time. This credit gives the
buyer a grace period for payment. |
| (d) Red clause letter of credit--This
is used to provide the supplier with some funds prior to shipment to finance production of
the goods. The credit may be advanced in part or in full, and the buyer's bank finances
the advance payment. The buyer, in essence, extends financing to the seller and incurs
ultimate risk for all advanced credits. |
| (e) Transferable Letter of
Credit--This credit allows the supplier to transfer all or part of the proceeds of the
letter of credit to a second beneficiary, usually the ultimate supplier of the goods. This
is a common financing tactic for middlemen and is used extensively in the Far East. |
| (f) Back-to-Back Letter of
Credit--This is a new credit opened on the basis of an already existing,
nontransferable credit. It is used by traders to make payment to the ultimate supplier. A
trader receives a letter of credit from the buyer and then opens another letter of credit
in favor of the supplier. The first letter of credit is used as collateral for the second
credit. The second credit makes price adjustments from which come the trader's profit. |
| |
| liquidation |
| (customs) Final customs review,
payment of duties, and approval of a shipment for import. |
| |
| manifest |
| (shipping) A document giving the
description of a ship's cargo or the contents of a car or truck. |
|
|
| Most Favored Nation (MFN) |
| A non-discriminatory trade policy
commitment on the part of one country to extend to another country the lowest tariff rates
it applies to any other country. |
| |
| negotiable |
| Anything that can be sold or
transferred to another for money or as payments of a debt. In international trade, usually
refers to the transferability of a title document--such as a negotiable bill of lading. |
|
|
| negotiable bill of lading |
| (shipping) Bill of lading
transferred by endorsement. There are three possibilities: (1) to XY & Co. or their
order; (2) to the order of XY & Co.; and (3) to order, without the name of the party.
In the latter case the bill remains to the order of the shipper until he endorses it. |
| These types of bills of lading are
usually endorsed on the reverse. The opposite of a negotiable bill of lading is the
straight bill of lading See also bill of lading. |
| |
| negotiation |
| (banking) (a) The action by which
a negotiable instrument is circulated (bought and sold) from one holder to another. |
| (b) In letter of credit
transactions, the examination of seller's documentation by the bank to determine if they
comply with the terms and conditions of the letter of credit. See also letter of
credit. |
|
|
| ocean bill of lading (B/L) |
| (shipping) A receipt for the cargo
and a contract for transportation between a shipper and the ocean carrier. It may also be
used as an instrument of ownership (negotiable bill of lading) which can be bought, sold,
or traded while the goods are in transit. To be used in this manner, it must be a
negotiable "Order" Bill-of-Lading. |
| (a) A clean bill of lading
is issued when the shipment is received in good order. If damaged or a shortage is noted,
a clean bill of lading will not be issued. |
| (b) An on board bill of lading
certifies that the cargo has been placed aboard the named vessel and is signed by the
master of the vessel or his representative. In letter of credit transactions, an on board
bill of lading is usually necessary for the shipper to obtain payment from the bank. When
all bills of lading are processed, a ship's manifest is prepared by the steamship line.
This summarizes all cargo aboard the vessel by port of loading and discharge. |
| (c) An inland bill of lading
(a waybill on rail or the "pro forma" bill of lading in trucking) is used to
document the transportation of the goods between the port and the point of origin or
destination. It should contain information such as marks, numbers, steamship line, and
similar information to match with a dock receipt. |
| See also bill of lading. |
| |
| packing list |
| (shipping) A document prepared by
the shipper listing the kinds and quantities of merchandise in a particular shipment. A
copy is usually sent to the consignee to assist in checking the shipment when received.
Also referred to as a bill of parcels. |
| |
| phytosanitary inspection
certificate |
| A certificate, issued by a
government authority to satisfy import regulations of a foreign country, indicating that
an export shipment has been inspected and is free from harmful pests and plant diseases. |
| |
| pro forma invoice |
| An invoice provided by a supplier
prior to a sale or shipment of merchandise, informing the buyer of the kinds and
quantities of goods to be sent, their value, and important specifications (weight, size,
and similar characteristics). A pro forma invoice is used: (1) as a preliminary invoice
together with a quotation; (2) for customs purposes in connection with shipments of
samples, advertising material, etc. |
| |
| quota(s) |
| (customs) A limitation on the
quantity of goods that may be imported into a country from all countries or from specific
countries during a set period of time. |
| (a) Absolute quotas permit
a limited number of units of specified merchandise to be entered or withdrawn for
consumption in a country during specified periods. |
| (b) Tariff-rate quotas
permit a specified quantity of merchandise to be entered or withdrawn in a country at a
reduced rate during a specified period. |
| |
| remittance |
| (banking) Funds forwarded from one
person to another as payment for bought items or services. |
| |
| remitting bank |
| (banking) In a documentary
collection, a bank which acts as an intermediary, forwarding the remitter's documents to,
and payments from the collecting bank. See also documentary collection. |
| |
| sight draft |
| (banking) A financial instrument
payable upon presentation or demand. A bill of exchange may be made payable, for example,
at sight or after sight, which means it is payable upon presentation or demand, or within
a particular period after demand is made. See also bill of exchange. |
| |
| tariff |
| (general) A comprehensive list or
"schedule" of merchandise with applicable rates to be paid or charged for each
listed article. |
| (shipping) A schedule of shipping
rates charged, together with governing rules and regulations. A tariff sets forth a
contract of carriage for the shipper, the consignee, and the carrier. Individual carriers
also publish their own tariffs covering special services. |
| (customs) A schedule of duties or
taxes assessed by a government on goods as they enter (or leave) a country. Tariffs may be
imposed to protect domestic industries from imported goods and/or to generate revenue.
Types include ad valorem, specific, variable, or compound. |
| See also duty. |
| |
| Uruguay Round |
| (GATT) The eighth round of
multilateral trade negotiations concerning the General Agreement on Tariffs and Trade
(GATT). The Uruguay Round (so named because meetings began in Punta del Este, Uruguay in
1987) concluded in December, 1993 after seven years of talks with 117 member nations. The
major goals of the Uruguay Round were to reduce barriers to trade in goods; to strengthen
the role of GATT and improve the multilateral trading system; to increase the
responsiveness of GATT to the evolving international economic environment; to encourage
cooperation in strengthening the inter-relationship between trade and other economic
policies affecting growth and development; and the establishment of a multilateral
framework of principles and rules for trade in services, including the elaboration of
possible disciplines for individual service sectors. |
| |
| validity |
| (banking) The time period for
which a letter of credit is valid. After receiving notice of a letter of credit opened in
his behalf, the seller/exporter/beneficiary must meet all the requirements of the letter
of credit within the period of validity. |
| |
| valuation |
| (general) The fixing of value to
anything. Synonymous with "appraising." |
| (customs) The appraisal of the
worth of imported goods by customs officials for the purpose of determining the amount of
duty payable in the importing country. |
| The GATT Customs Valuation Code
obligates governments that sign it to use the "transaction value" of imported
goods--or the price actually paid or payable for them--as the principal basis for valuing
the goods for customs purposes. |
| |
| value-added tax (VAT) |
| (taxation) An indirect tax on
consumption that is assessed on the increased value of goods at each discrete point in the
chain of production and distribution, from the raw material stage to final consumption.
The tax on processors or merchants is levied on the amount by which they increase the
value of items they purchase and resell. |
| |
| waybill |
| (shipping) A document prepared by
a transportation line at the point of a shipment, showing the point or origin,
destination, route, consignor, consignee, description of shipment and amount charged for
the transportation service, and forwarded with the shipment, or direct by mail, to the
agent at the transfer point or waybill destination. See also bill of lading; air
waybill; ocean bill of lading. |
| |
