Glossary of International Trade Terms
In global trade world the term "International Trade" is referred to the exchange of goods and services between regions. In this article we have compiled an extensive list of the different terms that are widely used in the conducting of transactions in International Trade. These terms include the different ways of transportation, the different intermediaries and individuals conducting international trade, along with the necessary documents and laws that should generally be known by individuals. The terms are arranged in alphabetical order, making navigation easier for you.
Acceptance: An agreement which signifies that the buyer has agreed to purchase goods under particular terms and under stated price is known as acceptance.
Ad Valorem: Charge that is levied onto the value.
Advance against Documents: This is the term used to describe the loan that is taken out on the security and safety of the documents that are covering the shipment.
Advising Bank: This refers to a bank which is operating in the country of the exporter which handles the letters of credits (see below) for the foreign banks. The bank also notifies that the credit has been opened.
Advisory Capacity: This term indicates that the agent and the representative of the shipper cannot make any binding decision without the approval of the shipper.
Airway Bill: It is also known as the Bill of Lading, which is able to cover both domestic as well as international flights to transport goods to a particular destination.
Alongside: This is the phrase for referring to the side of the ship. The goods that are supposed to be delivered alongside can be placed on the barge or the dock can be placed within the reach of the ship’s tackle so that loading is made easier.
Alteration: This signifies the process whereby there is a change in the boundaries of a particular zone or subzone.
Alternative Inventory Control System (AICS): This signifies a previous system of inventory control, which may be manual or automated. This can be based on the records that are being maintained by an operator, zone grantee or individual zone user.
Applicant: An individual or a corporation which applies for the right to establish, operate and maintain a trade zone internationally.
Arbitrage: This refers to the process whereby foreign exchange, bonds, stocks and other commodities are brought in one mark and then sold immediately in another market at higher prices.
Asian Dollars: This refers to U.S dollars, which are in store in Pacific Basin and Asia.
Attributive Basis: This refers to the accounting of the consignment when the identification of the goods within the shipment as admitted into the zone has been lost.
Audit-Inspection Procedures: This provides a method for the Customs to decrease the supervision of zones on-site, along with the zone users to increase the flexibility of zone through the usage of supervising zones.
Balance of Trade: This refers to the balance between the country’s total imports versus total exports.
Barter Trade: This refers to the kind of trade which involves the exchange of merchandise with other merchandise without using the money.
Beneficiary: This refers to the individual or the group in whose favor a draft or a Letter of Credit is drawn.
Bill of Lading: This is a particular document which establishes a contract between the transportation company and a shipper for the moving of freight at a specific time period for a particular charge.
Bonded Warehouse: This is a warehouse which is under the authority of the Customs to help in the storing of goods until the duties that have been deferred have been paid.
Booking: This refers to the arrangement with a transport company to accept and transport the freight.
Carnet: This refers to a document given by the customs that permits the holder of the document to send or carry merchandise into a foreign country on a temporary basis without posting bonds or paying duties.
Cash Against Documents: This refers to the payment that is made in cash when the commission house gives title documents to the buyer.
Cash in Advance: This is the payment for the goods in full before any kind of shipment has even started.
Cash with Order: This refers to the payment for the goods at the time when the order is placed and which makes the transaction binding on both the seller and the buyer.
Certificate of Inspection: This document certifies whether the merchandise was in a good condition when the merchandise was being shipped.
Certificate of Manufacture: This is a statement in which the manufacturer of the good binds upon the idea that the production has been completed, and now the goods can be taken away by the buyer.
Certificate of Origin: This is a document which states as to where the specified goods originated from.
Cost and Freight: This is a term which refers to the pricing of the good that includes the cost and the freight charges included in the quoted price.
Charter Party: This signifies a written contract between the owner of the ship and the one who is buying the charter to rent the vessel or part of the freight space of the vessel.
Cost and Insurance: This refers to a pricing term whereby the quoted price includes the cost of the goods and the insurance costs.
Cost, Insurance and Freight: This refers to a pricing term whereby the quoted price includes the cost of the goods, the freight and the insurance of the goods.
Clean Bill of Lading: This serves as the receipt for the goods which is issued by the carrier indicating that the goods were received without any kind of damages or irregularities.
Clean Draft: This refers to a draft in which no documents have been attached.
Collection Papers: This refers to the documents that have been submitted to the buyer with the purpose of receiving the payment for a particular shipment.
Commercial Attache’: This is an individual who is a commerce expert on the diplomatic staff present in the embassy of the country or a consulate of a country.
Commercial Invoice: This invoice contains a list of goods which have been shipped.
Common Carrier: This refers to an individual or group that transports goods or persons for compensation.
Confirmed Letter of Credit: A Letter of Credit that has been issued by a foreign bank; the U.S bank has confirmed the validity of the letter.
Consignment: This refers to the agreement that is signed between the consignors (exporters) to the consignee (agent) which ensures that the agent will sell the merchandise that has been delivered on behalf of the exporter.
Constructive Transfer: This refers to a legal fiction which allows the entry of merchandise through the Customs in a particular zone before the goods have actually been transferred to the territory of the Cutsoms.
Consular Invoice: This refers to a document which may be required by foreign countries and that describes the shipment of the goods and showcases information such as the consignee, consignor and the value of the entire shipment.
Convertible Currency: This refers to the currency that can be exchanged in the market at will.
Corporation, Private : This refers to a corporation that has been organized with the aim of establishment, the operation and the maintenance of a foreign trade area. This would be chartered under a particular act of state, which allows the corporation to operate this specific zone.
Corporation, Public: This refers to the state division of the operation of different zones as mandated by the state.
Correspondent Bank: A domestic bank that handles the business conducted by a foreign bank is known as correspondent bank.
Countertrade: This refers to the process whereby certain goods or services are paid for in whole or in part through the transfer of certain goods or services from a particular foreign country.
Credit Risk insurance: This is an insurance which protects the seller against the risk of nonpayment for the goods that have been delivered.
Customs: These are the authorities that have been designed for the collection of duties which are imposed by a country on exports and imports.
Customs Territory: This refers to the territory within the U.S where the tariff laws of the United States apply.
Customhouse Broker: This refers to the particular individual or firm that has been authorized by customs to enter and then subsequently clear goods through the customs.
Date Draft: This refers to a draft which would mature in a particular number of days after the date of issuance without any regard to the acceptance date (mentioned above).
Deactivization: This refers to the process whereby the grantee or operator voluntary discontinues the operation of an entire zone or subzone.
Default: This refers to an omission or act which may result in a claim for taxes, charges or other damages under the law of the FTZ Operator’s Bond.
Deferred Payment Credit: This is a type of Letter of Credit which allows the importer to buy for the goods sometime after the shipment of the goods have been done by the exporter.
Destination Control Statement: This can refer to any of the different various statements which may be required by the U.S requirement. This statement needs to be displayed on the different shipments, and have the details of the destinations for which the shipment has been authorized for.
Devaluation: This refers to the process whereby the value of one currency in terms of other foreign currencies has decreased.
Discrepancy: When there are documents presented which do not match the letter of credit is known as discrepancy.
Dispatch: This refers to the amount which may be paid by the owner or the operator of the vessel to the charterer if the loading and unloading of the goods took less time than those stipulated in the charter party (as mentioned above).
Distributor: This refers to a foreign agent who direct sells for the supplier and who also has an inventory for the products of the supplier.
District Director: The director of the customs for the particular district in which the zone is present.
District Engineer: This refers to the individual who is engineer of the Department of Army of a particular district where the zone maybe located.
Doc Receipt: This refers to the receipt which has been issued by the ocean carrier to maintain the shipment has been received either at the warehouse facilities or the dock of the carrier.
Documentary Against Acceptance (D/A): This refers to a set of instructions that have been issued to a bank by the shipper indicating that the documents that transfer the title of goods to the buyer should only be delivered to the buyer when the buyer accepts the attached draft.
Draft: This refers to an unconditional order which has been given to the drawee by a drawer, which directs the drawee to pay the particular amount to the drawer at a near date in the future.
Drawback: Those goods which are produced or manufactured in the U.S using imported raw materials and then eventually exported can get a refund of up to 99% of the duty that had been previously charged on the components that were imported.
Drawee: This refers to the individual or the group for which the draft is drawn and who owes a particular stated amount.
Drawer: This refers to the individual or the group who issues and subsequently signs the draft and who has the right to receive the payment from the drawee.
Dumping: This refers to the importing and the exporting of goods and services into another country below the cost that was incurred in the production and shipment of those goods and services.
Duty: This refers to the tax that is imposed by the customs authority of a country on imports.
Eurodollars: U.S dollars which have been placed in Europe are known as Eurodollars.
Exchange Permit: This refers to a permit issued by the government which may be required by the government of the importer to ensure that the importer is able to convert the currency into foreign currency so that the importer can pay the exporter in the other country.
Exchange Rate: This refers to the value of one currency in terms of the other, which means that the number of units that can be exchanged for one currency for another.
Exhibition: This refers to the showcasing of merchandise within a particular zone to attract new buyers.
Eximbank: This refers to the Export and Import Bank within the United States.
Export Broker: The intermediary (an individual or firm) which brings the sellers and buyers together for commission but does not take part in how the sales actually take place is known as an export broker .
Export Commission House: This refers to an organization which can act as the purchasing agent for an international buyer in exchange for a specified amount of commission.
Export License: A government document which allows the individual to export particular documents to certain destinations is known as export license.
Export Management Company: This refers to a private firm that can manage the exports of a business in return for a salary, commission or retainer plus commission.
Export Trading Company: This refers to the firm which is similar to the export management company.
First In-First Out (FIFO) : This is an accounting method that keeps up with the good merchandising policy that the first stock that came in out would be disposed off first.
Force Majeure: This refers to the title which is present as a standard clause within marine contracts that exempt the parties for not fulfilling their regulations in case there are conditions that are beyond the control of the parties which include war, floods and earthquake,.
Foreign Exchange: This refers to the credit instruments or currency of an international country.
Foreign First (FOFI): This is an accounting method which states that the goods that have a foreign status would be disposed off first.
Foreign Sales Agent: This may refer to an individual or a group who can serve as the foreign representative of a supplier and can attempt to find sales in different countries for the supplier.
Free Trade Zone: This is a port that has been deemed as duty-free entry area of certain goods by a government of a country. This means that the merchandise can be displayed, stored or used for manufacturing and sold within the zone without any kind of duties being paid.
Foreign Trade Zones Act: This is a act for Foreign Trade Zone which took place in June 18, 1934.
Foreign Trade Zones Board: The board or authority which has been established to carry out the Foreign Trade Zones Act.
Foul Bull of lading: This refers to the receipt of goods which has been issued by the carrier indicating that the goods when received were damaged.
Free Alongside: This is a pricing term which states that the cost also includes the delivery of goods which is alongside a particular vessel.
Free In : This is a pricing term which indicates that the cost of loading and unloading the goods is the responsibility of the owner or charter of the vessel.
Free Port: This refers to the area which maybe a city in which no duties have to be paid for the legal movement of goods.
Freight Forwarder: This refers to any independent business which in exchange for compensation handles the shipment of exports.
GATT: This stands for General Agreement on Tariffs and Trade, which is a general treaty with the intent of the reduction of trade barriers amongst the countries that have signed the treaty for the purpose of promotion of free trade and tariff concessions.
General Export License: This refers to the export licenses that cover the export commodities which require no validated export licenses (see below).
Grantee: This refers to any group which has been privileged by the Foreign Trade Zone to establish, operate and maintain a foreign trade zone.
Gross Weight: This refers to the weighing measure that takes into account the full weight of the shipment, including the goods and the packing weight .
Import License: This is a document which is issued and may be required by some governments to allow the entry of certain import in their particular countries .
Inland Bill of Lading: This refers to Bill of Lading which is used for the transport of goods overland to the international carrier of the exporter.
Irrevocable Letter of Credit: A letter of credit which guarantees that the payment will be made to the drawee if all terms and conditions have been met by the drawee.
Letter of Credit: L/C or Letter of Credit is a document which has been issued by the bank according to the instructions of the buyer of the goods which allows the seller to get a particular sum of money under particular conditions. (Also read: Letter of Credit Benefits)
Licensing: This refers to an arrangement that takes place between the producer of a particular product and another individual or group which gives the right to other group to produce that product in exchange for certain royalties to be paid.
Manipulation: This is a process whereby the merchandise may be packed, unpacked, sorted, graded or cleaned but not manufactured.
Manufacture: This refers to the production of certain goods from using raw materials or prepared materials to transform materials into new forms.
Marine Insurance: This refers to the insurance which is able to compensate the owner of the goods in case there is any loss which cannot be covered legally by the carrier of the goods.
Marking: This refers to the process whereby cargo packages are lettered, numbered or symbolized to facilitate the process of identification.
Merchandise: This refers to the goods, chattels and wares of all the kinds except prohibited merchandise, along with production equipment, supplies and building materials that may be required for the operation of a zone.
Merchandise, Domestic: This refers to the merchandise that has been produced in the United States but which has not been exported.
Merchandise, Foreign: This refers to the merchandise that has been imported and that has not been released by the Customs Authority.
Merchandise, Fungible: This refers to merchandise that has the same kind of commercial purposes.
Merchandise, Mixed Status: This refers to foreign merchandise that has been mixed with domestic merchandise within the zone.
Merchandise/Prohibited: This refers to the import of merchandise which has been prohibited by law on different grounds, or that merchandise which has been excluded by the order of the Foreign Trade Zones Board.
Merchandise/Operations, Restricted: This refers to merchandise which has not been authorized by the custom authority unless there is a special permit or a waiver from the U.S government.
Non-privileged Foreign (NPF): This refers to either non-tax-paid domestic merchandise or foreign merchandise for which duties and taxes will be determined when they enter the zone.
On Board Bill of Lading: A bill of lading which certifies that the goods have been placed aboard a certain vessel; issued by the carrier.
Open Account: A kind of trade arrangement where goods have been shipped to a buyer without any kind of guarantee for payment.
Open Insurance Policy: This is a kind of marine insurance policy which is applicable on all shipments made by a particular exporter over a specified period of time.
Operator: This refers to a person, partnership or a corporation which operates either a zone or subzone according to the terms of the agreement with the Grantee.
Operator’s Bond: This refers to the document that has to be submitted to the Customs by zone operators to assure that they would comply with the regulations of the Custom.
Order Bill of Lading: This is a bill of lading which is made to the order of the shopper which can be negotiated.
Packing List: This refers to a proper list which showcases the quantity and the type of items that are being shipped, along with other information which may be required for the purpose of transportation.
Parcel Post Receipt: This is a document which indicates the signed acknowledgement of the postal authorities that the delivery of the goods has been done to the receiver. This is done when the shipment is made by parcel post.
Private Export Funding Corporation (PEFCO): This organization lends money to foreign buyers so that the exports from the United States can be financed.
Perils of the Sea: This is a marine insurance term which serves to accommodate different conditions, such as lightning, collision, heavy weather, seawater damage and stranding.
Phytosanitary Inspection Certificate: This is a document which is issued by the U.S Department of Agriculture indicating that the shipment from U/S has been inspected properly and therefore, is free from any plant diseases or harmful pests, and thus indicating that they satisfy the import regulations of the foreign countries.
Political Risk: This refers to the risk that occurs in export financing which may be because of causes such as confiscation, war, government preventing the entry of goods, currency inconvertibility and many other such reasons.
Privileged Foreign: This refers to either non-tax paid domestic merchandise or foreign merchandise on which the applicable duties and taxes were determined at the time the merchandise was approved.
Pro Forma Invoice: This refers to the invoice that is sent to the buyer by the supplier before the merchandise has been shipped to indicate the quantity and the kind of goods to be sent, the value of the goods and other necessary details.
Purchasing Agent: Foreign importers such as government agencies and private corporations may ask an agent in another country to purchase goods on their behalf.
Quota: This refers to the maximum amount of goods of a particular kind that can be imported into the country without imposition of any additional duties.
Quotation: This refers to the offer that is made by the seller to sell goods at a particular price under certain conditions.
Reactivation: The resumption of the use of a particular zone that had been deactivated in the past without any kind of alteration in the area boundaries or the operator .
Regional Commissioner: The regional commissioner of the area in which the zone is located.
Remitting Bank: This is the bank that sends over the draft to the foreign bank for the collection of money.
Resident Member: An individual that has been provided authority by the Secretary of the Army to handle the different matters within the zone.
Retail Trade: This refers to the selling and buying of items for individual use.
Revocable Letter of Credit: This is a kind of Letter of Credit which can be altered by the buyer even when it has been issued by the bank of the drawee.
Schedule B: It is a form of procedure which is a Statistical Classification of Domestic and Foreign Commodities that are exported from United States.
Shipper’s Export Declaration: A form that indicates the weight, value, destination and other information regarding the export shipment prepared by the shipper since it is required by the U.S Treasury Department.
Ship’s Manifest: This is a document in writing from the master of the ship that indicates the individual shipments that are present in the cargo of the ship .
Sight Draft: A draft which becomes payable once it has been presented to the drawee.
Spot Exchange: This refers to the exchange of foreign currency so that it can be delivered immediately.
Standard Industrial Classification (SIC): This refers to the standard classification that is done by the U.S Government for the classification of products and services.
Standard International Trade Classification: A form of numerical classification used by the United Nations for the classification of merchandise in international trade (Also check What is International Trade).
Steamship conference: A negotiation amongst different operators of a steamship to operate under freight rates that are mutually agreed upon is known as steamship conference.
Straight Bill of Lading : This is a bill of lading which cannot be negotiated upon and which stipulates that the goods have to be consigned directly to consignee who has been named.
Subzone: This is a zone that has been made for a special purpose which cannot be accommodated within a zone that exists already. However, it is part of the zone project and occurs for that specific purpose only.
Tare weight: This refers to the weighing measurement which takes into account the weight of the packing material and the container without the weight of the goods that the packing and container contains.
Tenor: This refers to the payment being made at sight, or at particular days after the sight or a specified number of days after the date has passed.
Through Bill of Lading: This refers to a comprehensive and single document which covers the export shipment and its carriage within both domestic and international areas.
Time Draft: This is a draft which would mature after a certain amount of days of the acceptance of the draft or after a number of days after the date of the draft has passed.
Tramp Steamer: This refers to a ship that does not work on fixed and regular schedules or routes.
Transaction Statement: This is a document that deactivates the terms and conditions that were enacted between the exporter and the importer .
Transfer: This refers to the taking of merchandise from one zone to another zone for the consumption, exportation, transportation, cartage, warehousing, vessels and equipment and lighterage.
Trust Receipt: This refers to the release of the consignment to the buyer from the bank but the bank retains the title of the merchandise.
UIN: This is an abbreviation that means Unique Identification Number, which is a form of inventory method that controls the merchandise within a zone through the use of unique letters and numbers for the identification of the merchandise that has been admitted to a particular zone.
User: This refers to the firm or the person who uses the zone for purposes such as handling, storage or processing of the consignment.
Validated Export License: This is a license which authorizes the export of particular commodities which is issued by the Government of United States.
Vessel/Aircraft Supply: This refers when certain goods or equipment is shipped to vessels or aircraft without any duties and taxes during being engaged in foreign trade as stipulated by section 309 of the Tariff Act.
Warehouse Receipt: This is a document that contains the list of goods that have been placed in the warehouse for storage.
Wharfage: This refers to a charge which has been made by the dock owner or pier for the handling of the incoming or the outgoing shipments.
Zone Lot Number (ZLN): This refers to a method of inventory control within a zone for the identification of the merchandise by lot and lot number.
Zone Project: This refers to a grantee having all the zone and the subzone sites in a single entry port.
Zone Restricted: This refers to the entry of merchandise within a zone for the purpose of only exportation or destruction.
Zone Site: This refers to the physical location of either the zone or the subzone.
Zone Status: This refers to the status of the merchandise which has entered into a particular zone which includes NPF, PF, ZR and D (see all above).
Posted by: Jason on Feb 10 2014Tags: Trade Free Trade Foreign Trade International Trade International Trade Terms Trade Definitions Trade Terms Glossary Of Trade
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