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.  One of the generic methods used to establish actual duty charges on shipments, using monetary valuation as a basis for calculation rather than non-monetary standards (e.g., fixed amount per unit, ton, bushel, etc.) which are known as “specified” duties.

ADVANCE BANK

A loan made on the security of 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 Rreserve.)

AFFREIGHTMENT, CONTRACT OF

An agreement by a steamship line to provide cargo space on a vessel at a specified time and for a specified price to accommodate an exporter or importer, who then becomes liable for payment even though he is later unable to make the shipment.

AFTER DATE

A phrase indicating that payment on a draft or other negotiable instrument is due a specified number of days after presentation of the draft to the drawee or payee.

AFTER SIGHT

A phrase indicating the payment on a draft or other negotiable instrument is due a specified number of days after presentation of the draft to the drawee or payee.

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 non-negotiable 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.

ALL-RISK CLAUSE

An insurance provision that all loss or damage to goods is insured except that of inherent vice (self-caused).

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.

ANTIDUMPING DUTY

A charge levied on imported goods sold on the U.S. market to offset the difference between the sale price on the U.S. market and the exporter’s home market or between the U.S. sale price and the cost of producing the goods.  (See Dumping).

APPARENT CONSUMPTION

An estimate of domestic consumption calculated as product shipment plus imports minus exports.

APPRAISEMENT

The determination, by a proper Customs official, of the dutiable value of imported merchandise following procedures outlined in the Tariff Act of 1930, as amended.

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.

ARBITRATION CLAUSE

A clause in a sales contract outlining the method under which disputes will be settled.

ASIA PACIFIC ECONOMIC COOPERATION (APEC)

An organization established in 1989 to promote trade and investment in the Pacific Basin.  APEC now comprises eighteen economies located in and around the Pacific Ocean:  Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, South Korea, Taiwan, Thailand, and the United States.

ASIAN DOLLARS

U.S. dollars deposited in Asia and the Pacific Basin.  Compare Eurodollars.

AT SIGHT

A phrase indicating that payment on a draft or other negotiable instrument is due upon presentation or demand.

ATA CARNET

See Carnet.

AUTHORITY TO PAY

A letter used mostly in the Far Eastern trade, addressed by a bank to a seller of merchandise, notifying him that it is authorized to purchase, with or without recourse, drafts up to a stipulated amount drawn on a certain foreign buyer in cover of specified shipments of merchandise.

AUTO PACT

An agreement on automotive products between the governments of the United States and Canada that went into effect in September 1966.  The pact has resulted in a large increase in bilateral automotive trade.

AW

All-water: direct ports of call with no overland service.

Return to top of the page

BAF

Bunker adjustment factor, a fuel surcharge.

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.

BANK AFFILIATE ETC

An ETC partially or wholly owned by a banking institution as provided under the ETCA.

BANK HOLDING COMPANY

Any company which directly or directly owns or controls, with power to vote, more than five percent of voting shares of each of one or more other banks.

BANKER’S BANK

A bank that is established by mutual consent by independent and unaffiliated banks to provide a clearinghouse for financial transactions.

BARRATRY

Negligence or fraud on the part of a ship’s officers or crew resulting in injury or loss to the ship’s owners.

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.

BEGGAR-THY-NEIGHBOR POLICY

A course of action through which a country tries to reduce unemployment and increase domestic output by raising tariffs and instituting non-tariff barriers that impede imports, or by accomplishing the same objective through competitive devaluation in currency.

BENEFICIARY

The person in whose favor a letter of credit is issued or a draft is drawn.

BIG EMERGING MARKETS (BEMs)

A group of fast-growing economies that the Department of commerce has identified as major U.S. export markets in the future:  Argentina, Brazil, the Chinese Economic Area (China, Hong Kong, and Taiwan) India, Indonesia, Mexico, Poland, South Africa, South Korea, and Turkey.  In 1994, the total population of the BEMs was 2.8 billion, about half of world population.

BILATERAL TRADE AGREEMENT

A formal agreement involving commerce between two countries.  Such agreements sometimes list the quantities of specific goods that may be exchanged between participating countries within a given period.

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.

BLOCKED EXCHANGE

Exchange which cannot be freely converted into other currencies.

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.

BOOKING NUMBER

A number assigned to a contract of affreightment used as an identifying reference on bills and correspondence.

BUYING AGENT

See Purchasing agent.

Return to top of the page

C&F NAMED PORT

See CFR.

CABLE ADDRESS

A code word of less than 10 letters, registered annually with the Central Bureau of Registered Addresses, used in lieu of the entire name and address of a firm receiving or sending cablegrams in order to reduce the number of words required in a cablegram.

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.

CCCN

The customs tariff used by many countries worldwide, including most European nations but not the United States.  It is also known as the Brussels Tariff Nomenclature.

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

(...named port of destination) - An international commercial term which 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 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 CPT term is more appropriate to use.

CHAMBER OF COMMERCE

An association of business people organized to promote local business interests.

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 port involved in the transportation.

CIF - COST, INSURANCE AND FREIGHT

(...named port of destination) - An international commercial term which 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 contract 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 purposes such as in the case of roll-on/roll-off or container traffic, the CIP term is more appropriate to use.

CIP - CARRIAGE AND INSURANCE PAID TO

(...named place of destination) - An international commercial term which 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 contract for insurance and pays the insurance premium.

CLAUSED BILL LADING

One on which the common carrier has noted exceptions to having accepted a shipper’s merchandise for transportation in “apparent good order and condition.”

CLAYTON ACT

A major U.S. antitrust law passed in 1914 to supplement the Sherman Act.  The Clayton Act dealt primarily with the prohibition of price discrimination among buyers by sellers in the sale of commodities and the acquisition of the company’s stock by a competitor.

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.

COCOM

“The Coordinating Committee on Multilateral Export Controls,” a voluntary group of countries consisting of Belgium, Denmark, France, Federal Republic of Germany, Greece, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Spain, Turkey, United Kingdom, Canada and the United States.  This group administers a common set of export controls.

CODE OF CONDUCT

International instruments that indicate standards of behavior by nations, states, or multinational corporations deemed desirable by the international community.  Each of these codes is monitored by a special committee that meets under the auspices of GATT and encourages consultations and the settlement of disputes arising under the code.

COLLECTION PAPERS

All documents (commercial invoices, bills of lading, etc.) submitted to a buyer for the purpose of receiving payment for a shipment.

COMBINATION EXPORT MANAGER

A firm which acts as an export sales agent for more than one U.S. manufacturer, all of which are non-competitive with the others.  Business is transacted under the names of the manufacturers and revenue is derived from sales commissions.

COMMERCIAL ATTACHE

The commerce expert on the diplomatic staff of his or her country’s embassy or large consulate.

COMMERCIAL CODE

A published code designed to reduce the total number of words required in a cablegram.

COMMERCIAL INVOICE

An itemized list of goods shipped, usually included among an exporter’s collection papers.

COMMISSION AGENT

See Purchasing agent.

COMMODITY CREDIT CORPORATION

A government corporation controlled by the Department of Agriculture to provide financing and stability to the marketing and exporting of agricultural commodities.

COMMODITY GROUPINGS

A numerical system used by the U.S. Bureau of the Census to group imports and exports in broader categories than are provided by the Tariff Schedules.  Currently, Schedule A is used to categorize imports, Schedule E for exports,  Schedule B was replaced by Schedule E in 1978.

COMMON CARRIER

An individual, partnership, or corporation that transports persons or goods for compensation.

COMMON EXTERNAL TARIFF

A tariff rate uniformly applied by a common market or customs union, such as the European Community, to imports from countries outside the union.

COMPARATIVE ADVANTAGE

A central concept in international trade theory which holds that a country or a region should specialize in the production and export of those goods and services that it can produce relatively more efficiently than other goods and services, and import those goods and services in which it has a comparative disadvantage.

CONDITIONALLY FREE

Merchandise which is free of duty under certain conditions and provided the conditions can be satisfied.

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.

CONSIGNEE

This would be the buyer or importer.

CONSIGNEE MARKS

A symbol placed on packaged for export for identification purposes; generally consisting of a triangle, square, circle, diamond, cross, with letters and/or numbers as well as port of discharge.

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.

CONSIGNOR

This would be the seller or exporter.

CONSTANT DOLLARS

Values adjusted to a base price level, calculated by dividing current dollars by a price deflator.  Use of constant dollars eliminates the effects of price inflation and permits the comparison of output volumes over time.  Also known as “real” dollars.

CONSUL

A government official residing in a foreign country who is charged with the representation of the interests of his country and its nationals.

CONSULAR DECLARATION

A formal statement, made to the consul of a foreign country, describing goods to be shipped.  Approval must be obtained prior to shipment.

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.

CONSULATE

The jurisdiction, term of office, or official premises of a consul.

CONSUMER PRICE INDEX (CPI)

A measurement of the relative price levels of various goods and services purchased by consumers.

CONVERTIBILITY

The degree to which a particular currency may be traded for another in foreign exchange markets.  “Hard” currencies enjoy nearly universal acceptance and are thus said to have (good) convertibility.

CONVERTIBLE CURRENCY

A currency that can be bought and sold for other currencies at will.

COPYRIGHT

The writings of an author are protected against copying.  Included within the protection of copyright laws are literary, dramatic, musical, artistic, and computer software works.

CORRESPONDENT BANK

A bank that, in its own country, handles the business of a foreign bank.

COST AND INSURANCE

A pricing term indicating that these costs are included in the quoted price.

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

An additional duty imposed by the Secretary of the Treasury in order to offset export grants, bounties or subsidies paid to foreign suppliers in certain countries by the government of the country for the purpose of promoting export.

CPT - CARRIAGE PAID TO

(...named place of destination) - An international commercial term

 which 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.

CREDIT RISK INSURANCE

Insurance designed to cover risks of nonpayment for delivered goods.  Compare Maine insurance.

CURRENT DOLLARS

The actual dollar amount paid in sales transactions.

CUSTOMHOUSE BROKER

A individual or firm, licensed by the Treasury Department, engaged in entering and clearing goods through Customs.  The duties of a broker include preparing the entry blank and filing it; advising the importer on duties to be paid; advancing duties and other costs; and, arranging for delivery to his client, his trucking firm, or other carrier.

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.

CUSTOMS BONDED WAREHOUSE

A warehouse where imported goods may be stored for a total of three years without the payment of duty or taxes.

CUSTOMS COURT

The court to which importers might appeal or protest decisions made by Customs officers.

CUSTOMS VALUE

The value of U.S. imports as determined by the U.S. Customs Service.  Generally defined as the price actually paid, excluding U.S. Import duties, freight, insurance, and other charges incurred in bringing merchandise to the United States.

Return to top of the page

D/A SIGHT DRAFT

Documents against acceptance sight draft.  A method payment for goods in which documents transferring title are delivered to the buyer as soon as he signs an acceptance, stamped on a draft, guaranteeing payment of the draft.

DAF - DELIVERED AT FRONTIER

(...named place) - An international commercial term which means that the seller fulfills 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.

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.

DDP - DELIVERED DUTY PAID

(...named place of destination) - An international commercial term which means that the seller fulfills 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.  Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation.

DDU - DELIVERED DUTY UNPAID

(...named place of destination) - An international commercial term which means that the seller fulfills 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).

DEFERRED PAYMENT CREDIT

Type of letter of credit providing for payment some time after presentation of shipping documents by exporter.

DELIVERY INSTRUCTIONS