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Export terms
Acceptance
- This term has several related meanings: (1) A time draft (or bill of exchange)
that the drawee has accepted and is unconditionally obligated to pay at
maturity. The draft must be presented first for acceptance - the drawee becomes
the "acceptor" - then for payment. The word "accepted" and the date and place of
payment must be written on the face of the draft. (2) The drawee's act in
receiving a draft and thus entering into the obligation to pay its value at
maturity. (3) Broadly speaking, any agreement to purchase goods under specified
terms. An agreement to purchase goods at a stated price and under stated terms.
Ad valorem - According to value. See Duty.
Advance against documents - A loan made on the security of the documents
covering the shipment.
Advising bank - A bank, operating in the exporter's country, that handles
letters of credit for a foreign bank by notifying the export firm that the
credit has been opened in its favor. The advising bank fully informs the
exporter of the conditions of the letter of credit without necessarily bearing
responsibility for payment.
Advisory capacity - A term indicating that a shipper's agent or
representative is not empowered to make definitive decisions or adjustments
without approval of the group or individual represented. Compare Without
reserve.
Agent - See Foreign sales agent.
Air waybill - A bill of lading that covers both domestic and
international flights transporting goods to a specified destination. This is a
nonnegotiable instrument of air transport that serves as a receipt for the
shipper, indicating that the carrier has accepted the goods listed and obligates
itself to carry the consignment to the airport of destination according to
specified conditions. Compare Inland bill of lading, Ocean bill of lading, and
Through bill of lading.
Alongside - The side of a ship. Goods to be delivered "alongside" are to
be placed on the dock or barge within reach of the transport ship's tackle so
that they can be loaded aboard the ship.
Antidiversion clause - See Destination control statement.
Arbitrage - The process of buying foreign exchange, stocks, bonds, and
other commodities in one market and immediately selling them in another market
at higher prices.
Asian dollars - U.S. Dollars deposited in Asia and the Pacific Basin.
Compare Eurodollars.
ATA Carnet - See Carnet.
Balance of trade - The difference between a country's total imports and
exports. If exports exceed imports, a favorable balance of trade exists; if not,
a trade deficit is said to exist.
Barter - Trade in which merchandise is exchanged directly for other
merchandise without use of money. Barter is an important means of trade with
countries using currency that is not readily convertible.
Beneficiary - The person in whose favor a letter of credit is issued or a
draft is drawn.
Bill of exchange - See Draft.
Bill of lading - A document that establishes the terms of a contract
between a shipper and a transportation company under which freight is to be
moved between specified points for a specified charge. Usually prepared by the
shipper on forms issued by the carrier, it serves as a document of title, a
contract of carriage, and a receipt for goods. Also see Air waybill, Inland bill
of lading, Ocean bill of lading, and Through bill of lading.
Bonded warehouse - A warehouse authorized by customs authorities for
storage of goods on which payment of duties is deferred until the goods are
removed.
Booking - An arrangement with a steamship company for the acceptance and
carriage of freight.
Buying agent - See Purchasing agent.
Carnet - 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.
Cash against documents (CAD) - Payment for goods in which a commission
house or other intermediary transfers title documents to the buyer upon payment
in cash.
Cash in advance (CIA) - Payment for goods in which the price is paid in
full before shipment is made. This method is usually used only for small
purchases or when the goods are built to order.
Cash with order (CWO) - Payment for goods in which the buyer pays when
ordering and in which the transaction is binding on both parties.
Certificate of inspection - A document certifying that merchandise (such
as perishable goods) was in good condition immediately prior to its shipment.
Certificate of manufacture - A statement (often notarized) in which a
producer of goods certifies that manufacture has been completed and that the
goods are now at the disposal of the buyer.
Certificate of origin - A document, required by certain foreign countries
for tariff purposes, certifying the country of origin of specified goods.
CFR - Cost and freight. A pricing term indicating that the cost of the
goods and freight charges are included in the quoted price; the buyer arranges
for and pays insurance.
Charter party - A written contract, usually on a special form, between
the owner of a vessel and a "charterer" who rents use of the vessel or a part of
its freight space. The contract generally includes the freight rates and the
ports involved in the transportation.
CIF - Cost, insurance, freight. A pricing term indicating that the cost
of the goods, insurance, and freight are included in the quoted price.
Clean bill of lading - A receipt for goods issued by a carrier that
indicates that the goods were received in "apparent good order and condition,"
without damages or other irregularities. Compare Foul bill of lading.
Clean draft - A draft to which no documents have been attached.
Collection papers - All documents (commercial invoices, bills of lading,
etc.) submitted to a buyer for the purpose of receiving payment for a shipment.
Commercial attache - The commerce expert on the diplomatic staff of his
or her country's embassy or large consulate.
Commercial invoice - An itemized list of goods shipped, usually included
among an exporter's collection papers.
Commission agent - See Purchasing agent.
Common carrier - An individual, partnership, or corporation that
transports persons or goods for compensation.
Confirmed letter of credit - A letter of credit, issued by a foreign
bank, the validity of which has been confirmed by a domestic bank. An exporter
whose payment terms are a confirmed letter of credit is assured of payment by
the domestic bank even if the foreign buyer or the foreign bank defaults. See
Letter of credit.
Consignment - Delivery of merchandise from an exporter (the consignor) to
an agent (the consignee) under agreement that the agent sell the merchandise for
the account of the exporter. The consignor retains title to the goods until the
consignee has sold them. The consignee sells the goods for commission and remits
the net proceeds to the consignor.
Consular declaration - A formal statement, made to the consul of a
foreign country, describing goods to be shipped.
Consular invoice - A document, required by some foreign countries,
describing a shipment of goods and showing information such as the consignor,
consignee, and value of the shipment. Certified by a consular official of the
foreign country, it is used by the country's customs officials to verify the
value, quantity, and nature of the shipment.
Convertible currency - A currency that can be bought and sold for other
currencies at will.
Correspondent bank - A bank that, in its own country, handles the
business of a foreign bank.
Countertrade - The sale of goods or services that are paid for in whole
or in part by the transfer of goods or services from a foreign country.
Countervailing duty - A duty imposed to counter unfairly subsidized
products.
CPT (carriage paid to) and CIP (carriage and insurance paid to) - Pricing
terms indicating that carriage, or carriage and insurance, are paid to the named
place of destination. They apply in place of CFR and CIF, respectively, for
shipment by modes other than water.
Credit risk insurance - Insurance designed to cover risks of nonpayment
for delivered goods. Compare Marine insurance.
Customhouse broker - An individual or firm licensed to enter and clear
goods through customs.
Customs - The authorities designated to collect duties levied by a
country on imports and exports. The term also applies to the procedures involved
in such collection.
Date draft - A draft that matures in a specified number of days after the
date it is issued, without regard to the date of acceptance. See Draft, Sight
draft, and Time draft.
Deferred payment credit - Type of letter of credit providing for payment
some time after presentation of shipping documents by exporter.
Demand draft - See Sight draft.
Devaluation - The official lowering of the value of one country's
currency in terms of one or more foreign currencies. For example, if the U.S.
dollar is devalued in relation to the French franc, one dollar will "buy" fewer
francs than before.
DISC - Domestic international sales corporation. Discrepancy - Letter of
credit - When documents presented do not conform to the letter of credit it is
referred to as a discrepancy.
Dispatch - An amount paid by a vessel's operator to a charterer if
loading or unloading is completed in less time than stipulated in the charter
party.
Distributor - A foreign agent who sells for a supplier directly and
maintains an inventory of the supplier's products.
Dock receipt - A receipt issued by an ocean carrier to acknowledge
receipt of a shipment at the carrier's dock or warehouse facilities. Also see
Warehouse receipt.
Documentary draft - A draft to which documents are attached.
Documents against acceptance (D/A) - Instructions given by a shipper to a
bank indicating that documents transferring title to goods should be delivered
to the buyer (or drawee) only upon the buyer's acceptance of the attached draft.
Draft (or Bill of exchange) - An unconditional order in writing from one
person (the drawer) to another (the drawee), directing the drawee to pay a
specified amount to a named drawer at a fixed or determinable future date. See
Date draft, Sight draft, Time draft.
Drawback - Articles manufactured or produced in the United States with
the use of imported components or raw materials and later exported are entitled
to a refund of up to 99 percent of the duty charged on the imported components.
The refund of duty is known as a drawback.
Drawee - The individual or firm on whom a draft is drawn and who owes the
stated amount. Compare Drawer. Also see Draft.
Drawer - The individual or firm that issues or signs a draft and thus
stands to receive payment of the stated amount from the drawee. Compare Drawee.
Also see Draft.
Dumping - Selling merchandise in another country at a price below the
price at which the same merchandise is sold in the home market or selling such
merchandise below the costs incurred in production and shipment.
Duty - 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 factor such as weight or quantity (specific duties), or a combination of
value and other factors (compound duties).
EMC - See Export management company.
ETC - See Export trading company.
Eurodollars - U.S. dollars placed on deposit in banks outside the United
States; usually refers to deposits in Europe.
Ex - From. When used in pricing terms such as "ex factory" or "ex dock,"
it signifies that the price quoted applies only at the point of origin (in the
two examples, at the seller's factory or a dock at the import point). In
practice, this kind of quotation indicates that the seller agrees to place the
goods at the disposal of the buyer at the specified place within a fixed period
of time.
Exchange permit - A government permit sometimes required by the
importer's government to enable the import firm to convert its own country's
currency into foreign currency with which to pay a seller in another country.
Exchange rate - The price of one currency in terms of another, that is,
the number of units of one currency that may be exchanged for one unit of
another currency.
Eximbank - Export-Import Bank of the United States.
Export broker - An individual or firm that brings together buyers and
sellers for a fee but does not take part in actual sales transactions.
Export commission house - An organization which, for a commission, acts
as a purchasing agent for a foreign buyer.
Export declaration - See Shipper's export declaration.
Export license - A government document that permits the licensee to
export designated goods to certain destinations. See General export license and
Individually validated export license.
Export management company - A private firm that serves as the export
department for several producers of goods or services, either by taking title or
by soliciting and transacting export business on behalf of its clients in return
for a commission, salary, or retainer plus commission.
Export trading company - A firm similar or identical to an export
management company.
FAS - Free alongside ship. A pricing term indicating that the quoted
price includes the cost of delivering the goods alongside a designated vessel.
FCA - "Free carrier" to named place. Replaces the former term "FOB named
inland port" to designate the seller's responsibility for the cost of loading
goods at the named shipping point. May be used for multimodal transport,
container stations, and any mode of transport, including air.
FCIA - Foreign Credit Insurance Association.
FI - Free in. A pricing term indicating that the charterer of a vessel is
responsible for the cost of loading and unloading goods from the vessel.
Floating policy - See Open policy.
FO - Free out. A pricing term indicating that the charterer of a vessel
is responsible for the cost of loading goods from the vessel.
FOB - "Free on board" at named port of export. A pricing term indicating
that the quoted price covers all expenses up to and including delivery of goods
upon an overseas vessel provided by or for the buyer.
Force majeure - The title of a standard clause in marine contracts
exempting the parties for nonfulfillment of their obligations as a result of
conditions beyond their control, such as earthquakes, floods, or war.
Foreign exchange - The currency or credit instruments of a foreign
country. Also, transactions involving purchase or sale of currencies.
Foreign freight forwarder - See Freight forwarder.
Foreign sales agent - An individual or firm that serves as the foreign
representative of a domestic supplier and seeks sales abroad for the supplier.
Foreign trade zone - See Free-trade zone.
Foul bill of lading - A receipt for goods issued by a carrier with an
indication that the goods were damaged when received. Compare Clean bill of
lading.
Free port - An area such as a port city into which merchandise may
legally be moved without payment of duties.
Free-trade zone - A port designated by the government of a country for
duty-free entry of any nonprohibited goods. Merchandise may be stored,
displayed, used for manufacturing, etc., within the zone and reexported without
duties being paid. Duties are imposed on the merchandise (or items manufactured
from the merchandise) only when the goods pass from the zone into an area of the
country subject to the customs authority.
Freight forwarder - An independent business that handles export shipments
for compensation. (A freight forwarder is among the best sources of information
and assistance on export regulations and documentation, shipping methods, and
foreign import regulations.)
GATT - General Agreement on Tariffs and Trade. A multilateral treaty
intended to help reduce trade barriers between signatory countries and to
promote trade through tariff concessions.
General export license - Any of various export licenses covering export
commodities for which Individually validated export licenses are not required.
No formal application or written authorization is needed to ship exports under a
general export license.
Gross weight - The full weight of a shipment, including goods and
packaging. Compare Tare weight.
Import license - A document required and issued by some national
governments authorizing the importation of goods into their individual
countries.
Individually validated export license - A required document issued by the
U.S. Government authorizing the export of specific commodities. This license is
for a specific transaction or time period in which the exporting is to take
place. Compare General export license.
Inland bill of lading - A bill of lading used in transporting goods
overland to the exporter's international carrier. Although a through bill of
lading can sometimes be used, it is usually necessary to prepare both an inland
bill of lading and an ocean bill of lading for export shipments. Compare Air
waybill, Ocean bill of lading, and Through bill of lading.
International freight forwarder - See Freight forwarder.
Irrevocable letter of credit - A letter of credit in which the specified
payment is guaranteed by the bank if all terms and conditions are met by the
drawee. Compare Revocable letter of credit.
Letter of credit (L/C) - A document, issued by a bank per instructions by
a buyer of goods, authorizing the seller to draw a specified sum of money under
specified terms, usually the receipt by the bank of certain documents within a
given time.
Licensing - A business arrangement in which the manufacturer of a product
(or a firm with proprietary rights over certain technology, trademarks, etc.)
grants permission to some other group or individual to manufacture that product
(or make use of that proprietary material) in return for specified royalties or
other payment.
Manifest - See Ship's manifest.
Marine insurance - Insurance that compensates the owners of goods
transported overseas in the event of loss that cannot be legally recovered from
the carrier. Also covers air shipments. Compare Credit risk insurance.
Marking (or marks) - Letters, numbers, and other symbols placed on cargo
packages to facilitate identification.
Ocean bill of lading - A bill of lading (B/L) indicating that the
exporter consigns a shipment to an international carrier for transportation to a
specified foreign market. Unlike an inland B/L, the ocean B/L also serves as a
collection document. If it is a "straight" B/L, the foreign buyer can obtain the
shipment from the carrier by simply showing proof of identity. If a "negotiable"
B/L is used, the buyer must first pay for the goods, post a bond, or meet other
conditions agreeable to the seller. Compare Air waybill, Inland bill of lading,
and Through bill of lading.
On board bill of lading - A bill of lading in which a carrier certifies
that goods have been placed on board a certain vessel.
Open account - A trade arrangement in which goods are shipped to a
foreign buyer without guarantee of payment. The obvious risk this method poses
to the supplier makes it essential that the buyer's integrity be unquestionable.
Open insurance policy - A marine insurance policy that applies to all
shipments made by an exporter over a period of time rather than to one shipment
only.
Order bill of lading - A negotiable bill of lading made out to the order
of the shipper.
Packing list - A list showing the number and kinds of items being
shipped, as well as other information needed for transportation purposes.
Parcel post receipt - The postal authorities' signed acknowledgment of
delivery to receiver of a shipment made by parcel post.
PEFCO - Private Export Funding Corporation. A corporation that lends to
foreign buyers to finance exports from the United States.
Perils of the sea - A marine insurance term used to designate heavy
weather, stranding, lightning, collision, and sea water damage.
Phytosanitary inspection certificate - A certificate, issued by the U.S.
Department of Agriculture to satisfy import regulations for foreign countries,
indicating that a U.S. shipment has been inspected and is free from harmful
pests and plant diseases.
Political risk - In export financing, the risk of loss due to such causes
as currency inconvertibility, government action preventing entry of goods,
expropriation or confiscation, and war.
Pro forma invoice - An invoice provided by a supplier prior to the
shipment of merchandise, informing the buyer of the kinds and quantities of
goods to be sent, their value, and important specifications (weight, size,
etc.).
Purchasing agent - An agent who purchases goods in his or her own country
on behalf of foreign importers such as government agencies and large private
concerns.
Quota - The quantity of goods of a specific kind that a country permits
to be imported without restriction or imposition of additional duties.
Quotation - An offer to sell goods at a stated price and under specified
conditions.
Remitting bank - The bank that sends the draft to the overseas bank for
collection.
Representative - See Foreign sales agent.
Revocable letter of credit - A letter of credit that can be canceled or
altered by the drawee (buyer) after it has been issued by the drawee's bank.
Compare Irrevocable letter of credit.
Shipper's export declaration - A form required for all shipments by the
U.S. Treasury Department and prepared by a shipper, indicating the value,
weight, destination, and other basic information about an export shipment.
Ship's manifest - An instrument in writing, signed by the captain of a
ship, that lists the individual shipments constituting the ship's cargo.
Sight draft (S/D) - A draft that is payable upon presentation to the
drawee. Compare Date draft and Time draft.
Spot exchange - The purchase or sale of foreign exchange for immediate
delivery.
Standard industrial classification (SIC) - A standard numerical code
system used to classify products and services.
Standard international trade classification (SITC) - A standard numerical
code system developed by the United Nations to classify commodities used in
international trade.
Steamship conference - A group of steamship operators that operate under
mutually agreed-upon freight rates.
Straight bill of lading - A nonnegotiable bill of lading in which the
goods are consigned directly to a named consignee.
Tare weight - The weight of a container and packing materials without the
weight of the goods it contains. Compare Gross weight.
Tenor (of a draft) - Designation of a payment as being due at sight, a
given number of days after sight, or a given number of days after date.
Through bill of lading - A single bill of lading converting both the
domestic and international carriage of an export shipment. An air waybill, for
instance, is essentially a through bill of lading used for air shipments. Ocean
shipments, on the other hand, usually require two separate documents - an inland
bill of lading for domestic carriage and an ocean bill of lading for
international carriage. Through bills of lading are insufficient for ocean
shipments. Compare Air waybill, Inland bill of lading, and Ocean bill of lading.
Time draft - A draft that matures either a certain number of days after
acceptance or a certain number of days after the date of the draft. Compare Date
draft and Sight
Tramp steamer - A ship not operating on regular routes or schedules.
Transaction statement - A document that delineates the terms and
conditions agreed upon between the importer and exporter.
Trust receipt - Release of merchandise by a bank to a buyer in which the
bank retains title to the merchandise. The buyer, who obtains the goods for
manufacturing or sales purposes, is obligated to maintain the goods (or the
proceeds from their sale) distinct from the remainder of his or her assets and
to hold them ready for repossession by the bank.
Warehouse receipt - A receipt issued by a warehouse listing goods
received for storage.
Wharfage - A charge assessed by a pier or dock owner for handling
incoming or outgoing cargo.
Without reserve - A term indicating that a shipper's agent or
representative is empowered to make definitive decisions and adjustments abroad
without approval of the group or individual represented. Compare Advisory
capacity..