EXPORT GLOSSARY
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 U.S. bank. An exporter whose payment
terms are a confirmed letter of credit is assured of
payment by the U.S. 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. (See Barter.)
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.
Destination control statement -- Any of various statements
that the U.S. government requires to be displayed on
export shipments and that specify the destinations for
which export of the shipment has been authorized.
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 chapter 13). 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 (comdollar
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.
Factoring houses -- Finance companies which buy or loan
against export documents.
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.
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.
Schedule B -- Refers to Schedule B, Statistical
Classification of Domestic and Foreign Commodities
Exported from the United States. All commodities
exported from the United States must be assigned a
seven-digit Schedule B number.
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 by the U.S. government 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 draft.
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.
