Dictionary of International Trade

DICTIONARY OF INTERNATIONAL TRADE
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ISBN: 978-84-92570-79-9
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OLEGARIO LLAMAZARES
Editor
DICTIONARY OF
INTERNATIONAL TRADE
Key deinitions of 2000
trade terms and acronyms
INDEX
INTRODUCTION .................................................................................................. 5
INTERNATIONAL TRADE TERMS FROM A TO Z ............................................ 6
INTERNATIONAL TRADE TERMS BY CATEGORIES ................................... 195
Banking ......................................................................................................... 196

Contracts & Law .......................................................................................... 198
Customs ......................................................................................................... 200
Logistics ......................................................................................................... 201
Documentation ........................................................................................... 205
Insurance ....................................................................................................... 206
Economics ..................................................................................................... 207
Marketing ..................................................................................................... 208
ABBREVIATIONS AND ACRONYMS USED

IN INTERNATIONAL TRADE ...................................................................... 210
5
INTRODUCTION
International trade is a diferent type of activity from domestic trade, and a more
complicated one, given that the buyer and seller are in diferent countries, and they
therefore face a series of barriers which have to be overcome. Over the years, a special-
ized language has been developed for international trade, with its own terms which
deine all the activities and instruments which are needed to perform international
transactions.
he International Trade Dictionary is a point of reference for all people and compa-
nies which specialise in the international purchase and sale of goods: exporters and
importers, transportation and transit companies, commercial agents, brokers, lawyers,
consultants, business associations, chambers of commerce, and teachers and students
of international trade courses.
he Dictionary contains 2000 key terms for international trade. It provides a full
and precise deinition of each term, and explains the context in which they are used.
To aid in the understanding of these terms, links are provided to other related terms
and to websites where further information can be found. he terms are classiied into
eight categories which encompass the full breadth of international trade activities:
banking, contracts and Law, customs and taxes, logistics, documentation, economics
and marketing. he Dictionary also contains an annex with the most common 300
acronyms and abbreviations to be found in international trade documents.
We are conident that this publication will help to shed light on the specialized lan-
guage of international trade, and that as a communication tool it will prove to be
very useful for exporters, importers and all export services companies to successfully
carry out their international transactions.
Olegario Llamazares
Editor
www.globalnegotiator.com
INTERNATIONAL
TRADE TERMS
FROM
A TO Z
Key definitions of 2000 trade terms and acronyms 7
Abandonment. he refusal of merchandise by the designated consignee.
About. A letter of credit term meaning plus or minus 10% of whatever immediately
follows. he terms approximately and circa are synonymous.
Abrogation. he cancellation of the part of a contract that has not yet been per-
formed. For example, if parties agree to several deliveries of goods, but after the irst
delivery, war is declared in the buyer´s country and no further goods can be delivered,
the buyer must pay the irst delivery, but the contract is abrogated for the remaining
ones. See force majeure clause; war risk.
Absolute advantage. In the theory of international trade an absolute advantage occurs

when a country or company is more eicient (using fewer resources) at producing the
same good or service than another country or company. his theory was irst suggested
by British economist Adam Smith in the 18th century. See comparative advantage.
Acceptance. he act of formally acknowledging a debt by signing a inancial instru-

ment called a draft. When done by a non-bank party, a trade acceptance is created.
When done by a bank, a banker´s acceptance is created. See bank acceptance.
A
Acceptance date. he date on which a draft was signed. For drafts drawn at “X days
from sight”, the acceptance dates begins the time period toward maturity.
Acceptance letter of credit. A letter of credit, which requires, amongst the documents
stipulated, provision of a term bill of exchange. he bill is then generally accepted by
the bank on which it is drawn or discount. he practical result is that the beneiciary
is paid promptly at a discount.
Accepting bank. In a letter of credit, this is the inancial institution that executes a
banker´s acceptance.
Accessions. Goods that are aixed to and become part if other goods. Examples
includes semiconductors that are inserted into computers, parts that are added onto
vehicles, or dials that are used in watches.
Accessorial charges. In shipping, charges made for additional, special or supple-

mental services, normally over and above the line haul services. Common accesso-
rial charges include: congestion surcharges, currency adjustment factors (CAF) and
terminal handling charges (THC). Also called surcharge.
Accord and satisfaction. A discharge of a contract or cause of action pursuant to

which the parties agree (the accord) to alter their obligations and to perform new
obligations (the satisfaction). For example, a seller who cannot obtain red fabric to
8 Dictionary of International Trade
meet the contract speciications may enter into an accord and satisfaction to provide
the buyer with blue fabric for a slightly lower price.
Acknowledgement. 1. Conirmation of receipt of a purchase order. 2. Conirmation

sent by a bank conirming receipt of a collection.
ACP Countries. African, Caribbean and Paciic countries is a group of countries

with preferential trading relations with the EU under the former Lomé Treaty now
called the Cotonou Agreement. his agreement is aimed at the reduction and eventual
eradication of poverty while contributing to sustainable development to permit the
gradual integration of ACP countries into the world economy.
Act of God. he operation of uncontrollable natural forces. his expression is used

in force majeure contract clauses that excuses a party who breaches the contract when
performance is prevented by the occurrence of certain events. See force majeure
clause.
Ad valorem duty. Latin expression that means according to the value. Import duties
or taxes expressed as a percentage of value. For example, the import duty for a product
classiied under Harmonized System 220421 is 4.5 per cent of the customs valuation.
Its acronym is A.V. or Ad Val. See tarif.
A Adhesion contract. Contract with standard, often printed terms of sale of goods
or services ofered to consumers who usually cannot negotiate any of the terms and
cannot acquire the product unless they agree to the terms.
Advance payment. Paying or part-paying a supplier before goods or services are

delivered. Advance payments may be used to negotiate a reduced price or to cover
initial supply costs.
Advance payment guarantee. A guarantee that advance payments will be returned

if the party that received such payments does not perform its part of the contract.
Advice of shipment. A notice sent to a local or foreign buyer advising that shipment
has gone forward and containing details of packing, routing, etc. A copy of the invoice
is often enclosed and, if desired, a copy of the bill of lading.
Advised letter of credit L/C. A letter of credit whose terms and conditions have been
conirmed by a bank. See letter of credit.
Advising bank. he bank that notiies the exporter of the opening of a letter of credit
in his or her favour. he advising bank, usually located in the exporter´s country, fully
informs the exporter of the conditions of the letter of credit without itself making a
payment commitment. See letter of credit.
Advisory capacity. A term indicating that an agent or representative is not empow-

ered to make deinite decisions or adjustments without approval of the principal

represented. his is the opposite of without reserve.
Aidavit. A statement sworn under oath before an authorized oicial.
Ailiate company. A Company that is less than 50% owned by a parent company;
the parents acts as minority shareholders. More loosely, this term is sometimes used
to refer to companies that are related to each other in some way. In recent years, the
concept of the ailiated company has also come to be applied to businesses that are
ailiated with the same industry, and choose to forge an ongoing business relation-
ship and sharing of resources to the mutual beneit of both entities. See subsidiary.
Afreightment. A contract between a shipper and a carrier, setting forth their respec-
tive transportation obligations. Its is a synonym for charter.
Aloat. Refers to a shipment of cargo that is currently onboard a vessel between ports,
as opposed to on land.
After date. In banking, a notation used on inancial instruments (such as drafts or bill
of exchange) to ix the maturity date as ixed number of days past the date if drawing
of the draft. For example, if a draft stipulates “30 days after date”, it means that the
draft is due (payable) 30 days after the date it was drawn. his has the efect of ixing
the date of maturity of the draft, independent of the date of acceptance of the draft.
A
See acceptance date; after sight; bill of exchange; drawee.
After-sale service. A collective term for attention to a transaction that normally

takes place after the sale (and often after delivery) is accomplished. Typical after sale
service functions include: installation, training, warranty-related repair and replace-
ment part support. After-sale service is an extremely important consideration because
of the normally greater distances between sellers and buyers in international trade.
Some international contracts as distribution contracts include a clause of after-sales
services and maintenance: he Distributor undertakes to carry out with its own staf
and means, and assume the costs of, and adequate after-sales and maintenance service for
all Products sold within the Territory. he Supplier shall provide the Distributor with the
spare parts and other means required to service the warranty conditions of the Products.
See maintenance. International Distribution Contract.
After sight. In banking, a notation on a draft that indicates that the payment is due
a ixed number of days after the draft has been presented to the drawee. For example,
“60 days after sight” means that the drawee has 30 days from the date of presentation
of the draft to make payment. See acceptance date; after date; bill of exchange;
drawee.
Agenda. he list of topics to be covered during a negotiation session. An agenda

may be arranged in either ascending or descending order of importance. he side
that exerts the greatest control of the agenda will be the most efective in attaining
their goals. Negotiation session strategy will be based on the agreed upon agenda.
See negotiations.
Agent. An independent person or legal entity, which acts on behalf of another (“Prin-
cipal”). In international transactions, this term normally refers to a sales representative
who prospects on behalf of a foreign principal, earning a commission on sales eventu-
ally concluded between the principal and the ultimate client. his is distinguished
from sales through employees and subsidiaries - that are not independent - or through
distributor´s buying and reselling in his or her own name. Sales Agents should also be
distinguished from buying agents, as their respective rights and obligations are quite
diferent. In international trade, relationships between agents and their clients (prin-
cipals) are regulated through a Model of International Commercial Agent Contract.
See brokerage; distributor, sales representative.
Agio. he extra amount over and above the market price which is paid in counter
trade transactions and results from the particular costs of countertrade.
Air freight. A service providing for the air transport of goods. he volume of air
freight has been increased dramatically due to: decreasing shipping time: greater
inventory control for just in-time manufacturing and stocking, generally superior
condition of goods upon arrival, and, for certain commodities, lower prices.
A Air freight consolidator. A company that obtains a low freight-of-all-kinds freight
rate from air carrier in return for volume, and consolidates small shipments, often to
ill air freight containers. Such companies often perform forwarding tasks and issue
their own “house” air waybills to each shipper, backed up by “master” air waybills
issued by the undercarrier for the consolidated shipment. See consolidation.
Air freight forwarder. A freight forwarder for shipments by air. In many respects, air
freight forwarder perform the same functions as air freight consolidators, except that
smaller forwarders may co-load with others rather that actually perform their own
consolidations. To the airlines, the air freight forwarder is a shipper. An air freight
forwarder is ordinarily classed as an indirect air carrier; however, many air freight for-
warders operate their own aircraft. See freight forwarder. Air Forwarder Association.
Air waybill (AWB). Transport document issued by a carrier for air transportation. If
issued by the actual carrier, it is a master air waybill. If issued by an air freight con-
solidator or forwarder it is a house air waybill. he document is issued in three origi-
nals and is not negotiable so it cannot be issued to the order; it is always nominative
and non-endorsable. Since it is not negotiable, and it does not evidence title to the
goods, in order to maintain some control of goods not paid for by cash in advance,
sellers often consign air shipments to their sales agents, or freight forwarders’ agents
in the buyer’s country. he standard form was designed to enhance the application
of computerized systems to air freight processing for both the carrier and the shipper.
Model of Air Waybill.
Aircraft pallet. A platform or pallet (in air freight usually from 3/4” to 2” thick)
upon which a unitized shipment tests or on which goods are assembled and secured
before being loaded as a unit onto aircraft. Most carriers ofer container discounts for
palletized loads. See pallet.
Airport-to-airport. he main carriage transportation movement from departure air-

port on the seller´s side to the arrival airport on the buyer´s side.
ALADI. he Latin American Integration Association is an international and regional

scope organization created in Latin America in 1980. Currently, it has 13 member
countries, and any of the Latin American states may apply for accession. Website.
All risks (AR). he broadest type of standard marine insurance coverage generally
available and ofered by the London Institute of Underwriters “A” Clauses. he name
is misleading, as “all risks” does not include coverage for the perils of war risk, strike,
riot and civil commotion. hese additional coverages are available for most markets,
usually at modest additional premiums in the market. Since there is no worldwide
standard nomenclature for all risks coverage, traders should determine exactly what
is/is not covered, and arrange for any additional coverage they deem necessary.
Allowance. An amount paid or credited by a seller as a refund or reimbursement

due to any one of a number of causes including: faulty packaging, shipment of good
which do not meet buyer´s speciications, a late shipment, etc.
A
Alongside. A phrase referring to the side of a vessel: goods to be delivered “alongside”
are to be placed on the dock or lighter within reach of the transport ship´s tackle so
that they can be loaded aboard the vessel.
Alternative Dispute Resolution (ADR). A general term for a variety of dispute

resolution mechanism that may be used as alternatives to traditional litigation before
governmental courts or tribunals. his term includes such techniques as conciliation,
mediation and negotiation. Some experts also consider arbitration as an alternative
dispute resolution mechanism.
Amendment. 1. In law, an addition, deletion, or change in a legal document. 2. In a

letter of credit, a change in terms and conditions of the letter (e.g., extension of the
letter of credit´s validity period, shipment deadline, etc.) usually to meet the needs of
the seller. he seller requests an amendment of the buyer, who, if he agrees, instructs
his bank (the issuing bank) to issue the amendment. he issuing bank informs the
seller´s bank (the advising bank) who then notiies the seller of the amendment. In
the case of irrevocable letters, amendments may only be made with the agreement of
all parties to the transaction. See letter of credit.
American Foreign Trade Deinitions. A set of sales terms published in 1941 that
have become obsolete in favour of the current version of the ICC International Cham-
ber of Commerce Incoterms. Buyers and sellers of US shall use the current Incoterms
version and clearly indicate this Practical Guide to Incoterms.
American option. A foreign exchange type of contract containing a provision to the

efect that it can be exercised at any time between the date of writing and the expira-
tion date. See currency option; European option.
American pallet. A type of pallet used in North America. he most commonly used
is the GMA (Grocery Manufacturers Association) pallet that has deck boards of 40
inches and stringers of 48 inches. Its dimensions are 1016 mm by 1219 mm. his is
equal to a pallet 40 inches wide and 48 inches long.
Andean Community. Community of four Latin America countries (Bolivia, Colom-

bia, Ecuador and Peru), that decided voluntarily to join together for the purpose of
achieving more rapid, better balanced and more autonomous development through
Andean, South American and Latin American integration. Website.
Annex. A document attached to a contract or agreement. For example, a document

entitled Exhibit A listing product speciications attached to a supply contract. Also
called exhibit or schedule.
Antidumping. Laws enacted to remedy dumping, which is deined as the sale of

A goods to a foreign market at less that fair value. Antidumping duty is an additional
tax to normal import duty that is assessed on an imported good to raise its cost price
value. See dumping.
Antitrust. A term used for government regulations designed to prevent one or a lim-
ited number of parties acting in collusion to restrain trade in a manner detrimental
of the public interest.
APEC. he Asia-Paciic Economic Cooperation is a forum of 21 Paciic Rim countries

(including United States, Canada, Mexico, Japan and Australia) that seeks to promote
free trade and economic cooperation throughout the Asia-Paciic region. Website.
APHIS. he Animal and Plant Health Inspection Service is a U.S. government agency
which has the responsibility of inspecting and certifying animals, plants and related
products for import to or export from the United States. Website.
Apparent damage. his statement in a bill of lading or other transport document is

the opposite to “apparent good order an condition”.
Apparent good order and condition. A stated or implied agreement from a carrier,
a carrier´s agent, or other bailee that the referenced goods were free of obvious dam-
age or shortage at time they were handed over transportation. he resulting transport
document or warehouse receipt will be “clean”, that is, not bearing a “foul” notation.
All transport documents without expressed foul notations are considered to be clean.
his statement is the opposite to apparent damage.
Applicant. he party applying for the issuance of a letter of credit. It is also called
the account party.
Application. In a letter of credit, instructions from the applicant to the issuing bank
to open it.
Application to qualify. An application by a supplier to be included in an agency’s

pre-qualiied suppliers list. A supplier must prove it has the capability and capacity to
deliver speciic types of goods, services, or works to be included in the list
Appraisement. Determination of the dutiable value of imported merchandise by a

customs oicial who follows procedures outlined in their country´s tarif.
Appreciation. In foreign exchange, an increase in the value of the currency of one

nation in relation to currencies of other nations.
Arbitrage. he simultaneous buying and selling of the same commodity or foreign

exchange in two or more markets in order to take advantage of price diferentials.
See hedging.
Arbitration. A process of dispute resolution in which a neutral third party (arbitror)

renders a decision after a hearing in which both parties have an opportunity to be
heard. Arbitration may be voluntary or contractually required. he advantages of
A
arbitration - as opposed to litigation - are neutrality, conidentiality, reduced costs,
faster procedures and the arbitrator´s expertise. Internationally, the main arbitration
body is the ICC International Chamber of Commerce. Other arbitration institutions
include the London Court of International Arbitration, the International Center
of Dispute Resolutions (ICDR) and the China International and Economic Trade
Arbitration Commission (CIETAC).
Arbitration clause. A contract clause included in may international contracts, stating

for example: Both parties, by mutual consent, resolve to refer any dispute to he Rules
of Conciliation and Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with said Rules. he place of arbitration shall
be ........... [city and country] and the proceedings shall be carried out in the …………
language. See arbitration; ICC International Chamber of Commerce.
Arrival notice (AN). Communication from a carrier to the intended receiver that an
international shipment is or will soon be available at its destination.
Article of extraordinary value (AEV). Commodities identiied as high value items,

requiring special care in shipping.
As freighted. An explanatory note to a freight surcharge explaining that it is to be

calculated in the same manner as the freight charge itself. Bunker adjustment factors
are usually calculated on an “as freighted” basis. By contrast, currency adjustment
factors are based on the total amount of freight payable, rather than on the number
of revenue tons.
As is. A contract term by which the buyer of goods takes them in the condition they
are in without any warranties or guarantees for better or for worse.
ASEAN. he Association of Southeast Asian nations is a political and economic orga-

nization of the countries located in Southeast Asia, which id formed by ten countries:
Indonesia, Malaysia, the Philippines, Singapore, hailand, Brunei, Cambodia, Laos,
Myanmar and Vietnam. Its aims include accelerating economic growth and social
progress. Website.
Assembly operations. An assembly operation is a variation of the subsidiary. A foreign

production plan might be set up simply to assemble components manufactured in the
domestic market or elsewhere. he exporting company may try to retain key compo-
nent manufacture in the domestic plant, allowing development, production skill and
investment to be concentrated, while maintaining the beneit from economies of scale.
Some parts of the products may be produced in various countries (multisourcing) in
order to gain each country´s comparative advantage. Capital-intensive parts may be
produced in advanced countries, and labour-intensive assemblies may be produced in
less developed countries (LDCs), where labour is abundant and labour costs are low.
A When a product becomes mature and faces intense price competition, it may be neces-
sary to shift all of the labour-intense operations to LDCs. his is the principle behind
the international product life cycle (IPLC). See outsourcing; ofshoring; subsidiary.
Assignee. A party to whom all or part of the procedures of a letter of credit have been
formally pledged, usually through a bank.
Assignment. 1. In law, the transfer of rights, title, interests and beneits of a contract
or inancial instrument to a third party. 2. In letters of credit, the beneiciary of the
letter of credit is entitled to assign his/her claims to any of the proceeds that he/
she may be entitled to, or portions thereof, to a third party. Usually the beneiciary
informs the issuing or advising bank that his/her claims or particle claims under the
letter of credit were assigned and asks the bank to advise the assignee (third party) that
it has acknowledged the assignment. he validity of the assignment is not dependent
on bank approval. In contrast, the transfer requires the agreement of the nominated
bank. An assignment is possible regardless of whether the letter of credit is transfer-
able. See letter of credit.
Assignor. A letter of credit beneiciary who formally pledges all or part of the L/C
procedures to one or more third parties, usually by executing an assignment of pro-
ceeds document at a bank.
Assist. A customs term for types of help rendered to a seller by a buyer, such as pro-
duction tooling, design work, etc. Under certain circumstances, in some countries,
the dutiable value of imported goods must be increased by the value of assists.
At sight (AS). Term indicating that whatever action it pertains to must be undertaken
immediately. his term is commonly used on drafts accompanying bank collections to
indicate that they are immediately payable (as soon as the drawees see them). However,
in practice, payments are often deferred until the arrival of the goods covered by such
collections, since the buyers have no need for accompanying documents until then.
A draft drawn at sight are also frequently required by letters of credit.
At X days date. Term used in drafts to indicate that they are payable at some future
time after they are presented.
ATA Carnet. An ATA (Admission Temporary Admission) Carnet is an international

customs document that allows the temporary importation of commercial samples,
professional equipment, or goods going to a trade fair or exhibition in countries that
are part of the ATA Carnet system. he system covers over 70 nations and territories
in Europe, North America, South America, Asia, Africa and Oceania. Without this
document you would have to go through each individual country’s customs proce-
dures for the temporary admission of goods. An ATA Carnet is valid for one year and
allows for movement of the goods shown on the Carnet as many times as required
during that period to any of the destinations applied for. he national organizations
ailiated to ATA guarantee the payment of duties to local customs authorities, should
the goods not ultimately be re-exported. Applications for an ATA Carnet shall be done
in exporter´s local Chamber of Commerce. Model of ATA Carnet. A
ATR Declaration. Exporters of the European Union with customers in Turkey require
on ATR1 declaration instead of an EUR 1 movement certiicate. An ATR1 form is
almost identical to an EUR1 form, and works in much the same way. See EUR 1
Movement Certiicate.
Attachment. Legal process for seizing property before a judgment to secure the pay-
ment of damages if awarded. A party who sues for damages for breach of contract
may request, for example, that the court issue an order freezing all transfers of speciic
property owned by the breaching party pending resolution of dispute.
Attorney-in-fact. A person authorized to transact business generally or to perform a

designated task of a non-legal nature on behalf of another individual or legal entity. An
attorney-in-fact is type of agent. In many countries, his authority must be conferred
by a written power of attorney. If, for example, a company buys goods from a for-
eign irm, and agrees to place suicient funds for the purchase in an escrow account,
the buyer may authorize an attorney-in-fact in that foreign country to disburse the
escrow funds on receiving veriication from the buyer that the goods are satisfactory.
A business enterprise may also authorize an attorney-in-fact to testify to facts on the
company´s behalf in arbitration or legal proceedings held in a foreign country. See
agent; escrow account; power of attorney.
Authentication. he act of certifying that a written document is genuine, credible,

and reliable. An authentication is performed by an authorized person who attests that
the document is in proper legal form and is executed by a person identiied as having
authority to do so. In many countries, persons authorized to authenticate documents
include consulates oicials, notaries, and judicial oicers.
Automated clearing house (ACH). An electronic clearing system in which payments

orders are exchanged among inancial institutions, primarily by magnetic media or
telecommunication networks, and handled by a data-processing centre.
Availability. In letters of credit, refers to the availability of documents in exchange

for payment of the amount stated in the letter of credit. Availability alternatives are:
• By sight payment: payment on receipt of the documents by the issuing bank
or the bank nominated in the letter of credit.
• By deferred payment: payment after a period speciied in the letter of credit,
often calculated as a number of days after the date of presentation of the docu-
ments or after the shipment date.
• By acceptance: acceptance of a draft (to be presented together with other docu-
ments) by the issuing bank or by the bank nominated in the letter of credit,
and the payment thereof at maturity.
• By negotiation: meaning the giving of value by the nominate bank to the
A beneiciary for the documents presented subject to receipt of cover from the
issuing bank.
See letter of credit; negotiation.
Aval. A guarantee notice that a third party (other than the drawee) places on a draft.
his is used when a buyer´s credit is in itself not suicient to justify a sale, and a more
creditworthy party is willing to guarantee the deal. Some national laws require that
avaled drafts be protested if unpaid when due, in order to give guarantors notice that
their contingent liabilities may be called.
Average. Insurance term for a loss or damage incident that is less than total:
• A particular average is an insurance loss that afects speciic interests only.
• A general average is an insurance loss that afects all cargo interests on board
the vessel as well as the ship herself.
See general average; particular average.
Avoidance of contract. he legal cancellation of a contract because an event occurs

that makes performance of the contract terms impossible or inequitable and that
releases the parties from their obligations. See force majeure clause.
B
Back haul. To haul a shipment back over part of a route which it has traveled.
Back letter. 1. A complement to a contract laying down rights and/or obligations that
for whatever reasons the contracting parties cannot state in the original contract. 2. A
letter of indemnity provided by a shipper to a carrier, inducing the carrier to provide
a clean transport document under circumstances where this would not otherwise be
done.
Back order. hat portion of an order that cannot be delivered at a scheduled time,
but will be delivered at a later date when available. Also, to restock requested out-of-
stock items.
Back to back letter of credit. A new letter of credit opened in favour of another
beneiciary on the basis of an already existing one, not a transferable letter of credit.
his type of letter of credit is used for trade intermediaries to open a second credit
in favour of a supplier.
Backhauling. he process of a transportation vehicle returning from the original

destination point to the point of origin. he backhaul can be with a full, partial, or
empty load. An empty backhaul is called deadheading B
Bad faith. In law, the intent to mislead or deceive. It does not include misleading by
an honest, inadvertent or uncalled-for misstatement.
BAF. he Bunker Adjustment Factor is an additional charge added to the base rate
ocean freight cost relecting the cost of fuel (called bunkers)to be used for the voyage.
his charge is separated from the base rate freight cost because fuel costs are more
frequently subject to luctuations.
Bailee. A party having temporary custody of the property of another, such as a carrier
or a warehouse.
Bailment. A delivery of goods or personal property by one person (the bailer) to

another (the bailee) on an express or implied contract and for a particular purpose
related to the goods while in possession of the bailee, who has a duty to redeliver them
to the bailer or otherwise dispose of them in accordance with the bailer´s instructions
once a purpose has been accomplished. A bailment arises, for example, when a seller
delivers goods to a shipping company with instructions to transport them to a buyer
at a certain destination. Common carriers, for example, are special bailees, because
the law imposes extra duties of due care with regard to the property and persons
transported than are required of private carriers. See carrier.
Balance of payments. A statistical summary of international transactions. hese

transactions are deined as the transfer of ownership of something that has economic
value in monetary terms from residents of one country to residents of another. he

transfer may include goods (tangibles), services (intangibles), income on investment
and inancial claims on, and liability to, the rest of the world, including changes in a
country´s reserve assets held by the central monetary authorities. Many governments
and central banks break down the Balance of Payment to its component subtotals,
such as balance of trade, balance of services, balance on investment income, balance
on transfers or balance of capital (long and short terms).
Balance of trade. he diference between a country´s total merchandise exports and

imports for a speciic time period. If exports exceeds imports, a country is said to have
a favourable balance of trade (trade superavit); if not, the trade balance is unfavourable
(trade deicit). his concept is perhaps more useful when applied to trade between
two countries, rather than one country and the rest of the world.
Bale. A shaped packing unit tied or bound under tension.
Bank acceptance. A draft accepted by a bank usually for the purpose of inancing
the sale of goods to or by the bank´s customer. he bill may be drawn for example,
by an exporter on the importer´s bank and be sold on the open market at a discount.
See bill of exchange. Depending on the bank´s creditworthiness, the acceptance
becomes a inancial instrument that can be discounted for immediate payment. See
B bill of exchange.
Bank draft. A payment order from a bank, similar to a cashier´s cheque. A bank draft
is considered cash and cannot be returned unpaid.
Bank guarantee. A contract between a bank (as guarantor) and a beneiciary, in

which a bank commits itself to pay a certain amount of money under certain speciied
conditions. A demand bank guarantee is one in which the bank agrees to pay against
the simple written demand of the beneiciary.
Bareboat charter. he lease (charter) of an entire vessel under an agreement whereby

the lessor only provides the bare vessel; that is, operation of the vessel is not included
in the lease, and the charterer must arrange to hire a ship´s master and crew itself.
Barrel (Bbl.) A unit of liquid measure consisting of 158,937 liters or 42 US gallons.

his is usually used for oil.
Barter. A form of countertrade involving the direct exchange of goods and/or services
for other goods and/or services, without the use of money and without the involve-
ment of a third party. Barter is an important means of trade with countries using
unconvertible currencies.
Basel Convention. A multilateral environmental agreement dealing with hazardous

waste.
BATNA. An acronym for Best Alternative To a Negotiated Agreement. A technique

used to negotiate a better contract or agreement mainly in international business
negotiations. here are seven basic steps to developing a BATNA:
• List what you will do if you fail to reach an agreement.

• Convert the most promising options into practical choices.
• Select the single best option (that becomes your BATNA).
• Compare your BATNA to all proposals.
• If an ofer is better than your BATNA, consider improving or accepting it.
• If an ofer is worse than your BATNA, consider rejecting it.
• If the other party will not improve their ofer, consider exercising your BATNA.
One of the determinants of your power in a negotiation is the attractiveness of your

BATNA as compared to the proposals made during the discussions. International
Business Negotiations.
Base port. Major ports that ship lines call on with their large (usually transoceanic)
vessels. Cargo bound for ports within the base port hinterland is transshipped on
feeder vessels. See feeder vessel; hub system.
B
Bearer. A person who possesses a bearer document and who is entitled to payment of
funds or transfer of title to property on presentation of the document to the payee or
transferor. For example, a buyer who presents bearer documents of title (such as a bill
of lading) to a shipper that transported the goods is entitled to receive the payment. A
seller who presents to a bank a negotiable instrument, such as a check, that is payable
to the bearer is entitled to payment of the funds. See bearer document; endorsement.
Bearer document. A negotiable document such as a pawn ticket, a duly-endorsed

cheque, or one payable to the order cash, or a negotiable warehouse receipt, whereby
the holder is considered to be the owner of the goods that the bearer document rep-
resents. he most commonly bearer document in foreign trade is a duly endorsed
negotiable marine (ocean) bill of lading. Ownership to the shipped goods is conveyed
from one party to another by endorsing and passing the B/L, and this document
must be surrendered to the carrier by the inal owner in exchange for the goods. See
bearer; endorsement.
Beneiciary. 1. In letter of credit context, generally the exporter-seller; the one on

whose behalf the letter of credit is opened by the applicant (the importer-buyer) the
party to whom the L/C is opened, generally the exporter-seller. 2. In a guarantee/
bond context, the one who will receive payment under bond should the speciied
documents or contingencies be produced. 3. In payments systems, a party to whom
funds are allocated through the crediting of an account.
Berne Convention. A treaty, administered by the World International Property Or-

ganization (WIPO), for the protection of the rights of authors in their literary and
artistic works.
Berth. he place at a wharf where vessels can be loaded and/or unloaded.
Best and inal ofer (BFO). he most favourable terms that the supplier is willing
to ofer the buyer.
Bid bond. A bond or guaranty, which has been issued as security for one party´s bid.
If that party, known as the principal, wins the biding process and then fails to take
up the resulting contract, the beneiciary may obtain payment under the bond guar-
antee. Bid bonds are usually worded to cancel automatically if the principal is not a
successful bidder, or if successful, takes up the contract. See guaranty; performance
bond; surety.
Biding. A provision in a trade agreement that no tarif rate higher that one speciied
in the agreement will be imposed during the life of the agreement.
Bilateral trade agreement. A formal agreement involving commerce between two

countries. Such agreements sometimes list the quantities of speciic goods that may
B be exchanged between participating countries within a given period.
Bill of adventure. A written certiicate used in goods that are shipped under the name
of a merchant, shipmaster, or shipowner. It certiies that the property and risk in the
goods belong to a person other than the shipper and that the shipper is accountable
to that other person for only the proceeds.
Bill of exchange. An unconditional order in writing, signed by a creditor (drawer)

such as a buyer, and addressed to another person (drawee), typically a bank, ordering
the drawee to pay a stated sum of money to yet another person (payee), often a seller,
on demand or at a ixed or determinable future time. he most common version of
bills of exchange are:
• A draft, wherein the drawer instructs the drawee to pay a certain amount to a
named person, usually in payment for the transfer of goods or services. Sight
drafts are payable when presented, and time drafts are payable at future ixe
date or determinable (30, 60, 90 days, etc.).
• A promissory note, wherein the issuer promises to pay a certain amount.
Bill of Lading B/L. A transport document issued or signed by a carrier evidencing

a contract of carriage acknowledging receipt of cargo. his term is normally reserved
for carriage by vessel (marine or ocean bill of lading) or multimodal transport. All
B/Ls must indicate the date of issue, name of shipper and place of shipment, lace of
delivery, description of goods, whether the freight charges are prepaid or collect, and
the carrier´s signature. A bill of lading is, therefore, both a receipt for merchandise
and a contract to deliver it as freight. here are a number of diferent types of bill
of lading:
• B/L on board: Conirms the shipment of the goods in the ship, incorporating
the text document “on board”. his type of bill of lading is the most common
form of issue.
• B/L received for shipment: means that the goods have been received for trans-
portation by the indicated date, but it has not been shipped. Usually used in the
multimodal transport deliveries, conirming the date on which the container
has reached the end of the irst carrier.
• B/L nominative: Issued on behalf of a person or a company, which may collect
the goods prior identiication and presentation of at least one original of B/L.
• B/L to the order: in this type of bill of lading the owner of the goods is the
possessor of the original documents that can convey the property to another
by endorsement, making nominative or simply endorsing the document as
“bearer”. his is the bill of lading most used with letters of credits where the
bank is listed as the consignee of the goods, and endorse the documentation
to his client, who is the importer.
• B/L to the bearer: is issued without identifying the owner of the goods that
will be the one that holds the original documentation.
• B/L house: is a document issued by the freight forwarder and non-negotiable.
B
Not acceptable in banking operations. It is only in shipments where either the
exporter or the importer assumes full management of the international sale.
• B/L express: issued by the freight forwarder, allows delivery of the goods at
destination with simple photocopies, i.e. the original document is not required
for any procedure. It is useful in cases of full trust between seller and buyer as
well as rapid transit maritime operations.
• Clean B/L: is a bill of lading where the carrier has noted that the goods have
been received in apparent good condition (no apparent damage, loss, etc.).
• Dirty B/L: a bill of lading with a notation to the efect that the goods have
been partially/wholly lost or damaged.
• Direct B/L: a bill of lading for direct transport between loading and discharging
ports.
• Stale B/L: a bill of lading which is presented late (for letter of credit purposes,
a B/L must be presented within a certain number of days the shipment.
In the bills of lading it is common to ind a variety of concepts abbreviated by acro-

nyms that refer to information on weights, costs, charges, services, etc., which may
be requested by the buyer or inserted by the shipping company as identiication of
the shipping characteristics. Also called marine bill of lading and ocean bill of lading.
Model of Bill of Lading B/L.
Bill-to party. In shipping, refers to the party designated on a bill of lading as the
one responsible for payment of the freight charges; this can be the shipper,. freight
forwarder, consignee, or another person. he bill-to party pays the charges associ-
ated with transportation of the shipment along with any taxes, fees, and duties that
may be incurred. If there are concerns about issues like customs duties, this party
is responsible for resolving them ahead of time by iling the correct declarations or
contacting customs oicials to ind out about the details. his party can also be liable
for expenses associated with redelivery, returns, and other situations that may arise if
a package cannot be delivered as addressed. See shipping instructions.
Binder. A document certifying temporary insurance coverage. A binder is issued by

an insurance company or its agent pending the issuance of an insurance policy.
Blank endorsement. he signature or endorsement of a person or irm on any ne-

gotiable instrument (such as a check, draft or bill of lading), usually on the reverse
of the document, without designating another person to whom the endorsement is
made. he document therefore becomes bearer paper. In shipping, for example, the
holder of a blank endorsed bill of lading can take possession of the merchandise. See
bearer document; endorsement.
Blockade. he act of preventing commercial exchange with a country port, usually

B for political reason or during wartime, by physically preventing carriers from entering
a speciic port or nation. See embargo.
Boilerplate clauses. Clauses that usually appear at the end of a contract. Sometimes
they are referred to as the “miscellaneous” clauses. Such term refers to the relatively
standardised clauses in contracts, which are often agreed with little or no negotiation
and found towards the end of an agreement. While perhaps not as commercially sensi-
tive as other terms in a contract and consequently often overlooked, they nevertheless
perform a valuable and useful purpose in a contract. Most boilerplate clauses clarify
the relationship between the contracting parties. Generally, subject to statutory re-
strictions and illegality. By including boilerplate clauses, the parties to a contract can
better deine the relationship between themselves, which provides certainty if terms in
the contract are ever disputed. Examples of boilerplate clauses are: entire agreement,
no representation, or third party rights.
Bolero. Bolero is an internet site for processing trade-related electronic documents.

Website.
Bonded warehouse. A warehouse authorized by customs authorities for storage of

goods on which payment of duties is deferred until the goods are removed for do-
mestic consumption. In the goods are re-exported, no duty has to be paid at all. See
foreign trade zone.
Border protection. Any measure which acts to restrain imports at point of entry.
Border tax adjustment (BTA). A tax to which domestically produced goods and
imports are subject but from which exports are exempt. Border tax adjustments are
intended to encourage exports while nor making imports excessively competitive
against domestic goods. his may be seen as a barrier to trade.
Bordereau. 1. A method of reporting shipments to an insurance company under an

open insurance policy. 2. An insurance form similar to a declaration, which provides for
insurance coverage of multiple shipments within a prescribed reporting period, usually
a month he bordereau is generally not used is cases where evidence of insurance must
be supplied to a customer, to banks or other third parties in order to permit collection
of claims abroad. his calls for insurance certiicate. he bordereau, therefore, is mainly
used for import shipments, nor export shipments. Sea insurance certiicate; open policy.
Born global. Born global is a type of company that from the beginning of its activities
pursues a vision of becoming global and globalizes rapidly without any preceding long
term domestic or internationalization period. Two types of born global can be distin-
guished: export/import start up and global start up, whereby the latter, contrary to
the former, involves many activities coordinated across many countries. Usually born
global companies are small companies, technology oriented companies that operates
in international markets from the earliest days of their establishment.
Bottom line. 1. he last line in a inancial statement indicating the proit of a com-
pany. 2. In a contract, the line upon which a party signs.
B
Boycott. A refusal to deal commercially or otherwise with a person, irm, or country.
Bracketed. In oicial drafts and documents, square brackets indicate text that has
not been agreed and is still under discussion.
Break clause. A clause that allows the buyer to end a contract without any penalties.
Breakbulk. To unload and distribute a portion or all the contents of a consolidated

shipment for delivery or reconsigment.
Breakbulk cargo. Non-containerized cargo that may be grouped or consolidated for

shipment, and then is later broken down, subdivided, or distributed at a further des-
tination point. It may also be cargo that is too large to it into containers. Breakbulk
cargo is often unitized on pallets or packed in boxes.
Bribery. Giving or promising money or other valuable consideration toward the end
of corrupting a person´s behaviour. While the term implies illegality, each society
has its own rules about what constitutes the acceptability of such payments. Moral
consideration aside, bribery is an entrenched part of international business and trade.
Bridgeport. A port where cargo is received by the ocean carrier and stufed into con-
tainers but then moved to another coastal port to be waded on a vessel.
Broken stowage. he loss of space caused by irregularity in the shape of packages.
Broker. An individual or irm that acts as an intermediary, often between a buyer

and seller, usually for a commission. Related to international trade services there are
three speciic kind of brokers:
• Commercial or merchandise broker: an individual or irm that works with buy-
ers and sellers by negotiating between them in buying and selling services on a
commission basis to manufacturers as a sales representative for their products.
Such a broker has no control or possession of the product that is sent directly
to the buyer; he or she merely acts as a middleperson in all transaction. It is a
commercial igure quite usual in industries such as food (meat, cereals, wine)
or shipbuilding.
• Customs broker: an individual or irm licensee authorized to enter and clear
goods through Customs for another individual or irm. See customs broker.
• Insurance broker: an individual or irm that acts as an intermediary between
an insurance company and the insured. Se insurance broker.
In international sales, brokers charge a commission as percentage of the sales efec-

tively made by the seller, through a Intermediary Contract for Trade Operations. Also
called agent, intermediary or middleman.
B
Brokerage. 1. In shipping, a commission paid to a freight forwarder by a carrier
for placing cargo, or a commission or fee paid to a shipbroker for arranging a vessel
charter. 2. In insurance, a commission paid by an insurer to an agent placing cover-
age with it.
Brokerage agreement. A type or contract, whereby a person or company acts as a

sales agent on behalf of the exporting company (principal), introducing its products
to potential buyers in the external market, in exchange for a commission based on the
value of the business deals arranged and paid to the principal. As with the distributor,
this relationship does not imply a formal interdependence between the principal and
the agent intermediary, unless the laws of the country of destination state otherwise.
he mechanism of commission agent or intermediary is therefore very useful to com-
panies that are launching their export operations. his type of contract is ideal for
small companies with little or no experience in international trade, as it allows them
to access international markets without having to make large investments. Everything
is left in the hands of the agent. his type of contract is usually called Commission
Sales Agreement. See agent; sales representative.
Brussels Tarif Nomenclature (BTN). A once widely used international tarif clas-
siication system that preceded the Customs Cooperation Council Nomenclature
(CCCN) and Harmonized System Nomenclature (HS). See Harmonized System;
H 6-digit.
BS Bunker Adjustment Factor. An additional charge added to the base rate ocean
freight cost relecting the cost of fuel (called bunkers) to be used for the voyage.
his charge is separated from the base rate freight cost because fuel costs are more
frequently subject to luctuations. Also called BAF.
Bufer stocks. Commodity stockpiles managed in such a way as to moderate price

luctuations. Goods may be sold from a stockpile when prices reach or approach pre-
determined ceiling prices, and they may be purchased for the stockpile when prices
reach or approach a predetermined loor level.
Build-Operate-Transfer (BOT). he construction and the operation of a manu-

facturing or services facility in a foreign country for a set period of time after it is
handed over to a local government authority for a nominal fee. BOT is usually used
as a means of inancing large or complicated infrastructure projects in developing
economies unable to inance the project themselves. See Turnkey.
Bulk cargo. Cargo that consist entirely of one commodity and is usually shipped
without packaging. Examples of bulk cargo are grain, coal, and oil.
Bulk carrier. A vessel speciically designed to transport bulk cargo. here are two types
of bulk carriers: those designed to transport dry bulk cargo such as grain or coal, and
those designed to transport liquid bulk cargo such as oil. B
Bulk freight. Freight not in packages or containers. For example, grain or timber.
Bureau International des Expositions (BIE). he International Exhibitions Bureau,

was established by the Paris Convention of 1928. BIE is an international organiza-
tion that regulates the conduct and scheduling of international expositions of a non-
commercial nature in which foreign nations are oicially invited to participate. See
trade fair; TSNN. Website.
Business cooperation contract (BCC). An agreement by two companies to work

together for mutual beneit, but without a long-term binding contract. Either side
may cease the BCC at will.
Business culture. Culture is a key component in business and has an impact on the
strategic direction of business. Culture inluences management decisions and all busi-
ness functions from accounting to production. International managers doing business
in a foreign country need to have some knowledge of the rules and behaviors that are
considered acceptable in social and professional relationships. he culture and tradi-
tions of each country make people behave diferently and if international managers
do not know how to adapt to business culture diferences, they can cause rejection
in the other party and even jeopardize the success of the negotiations. Two kind of
business culture can be distinguished:
• Low context cultures: in which the partners clearly say what they mean: the
language is direct and clear and there is no ambiguity - as North Americans

say: Tell it like it is.
• High context cultures: in which attitudes and circumstances are more impor-
tant than what is actually said.
Examples of low-context cultures are Western countries like the US, Australia, and the
Netherlands, while the best example of high context cultures are Asian countries like
Japan or China. See cross-culture business; Business Culture Guides by Countries.
Buy-back (compensation). A form of countertrade whereby exporter of heavy equip-

ment, technology or even entire manufacturing facilities agree to purchase a certain
percentage of the output of the new facility once it is in production. Also called
compensation trade. See countertrade.
Buying agent. An agent who purchases goods on behalf of foreign buyers. he buy-
ing agent represents and buy a speciic kind of products within a speciic territory,
which can be a country or multiple countries. he responsibilities of the Buying Agent
may include, among others, the following: identifying manufacturers and suppliers
of products within the described territory; negotiating prices; terms of delivery and
payment; managing the international transport of documents which comply with
B export and import procedures; assisting and serving as a translator of the Principal´s
representatives when visiting the country to negotiate purchase contracts or to check
on the manufacturing of products. Also called purchasing agent. Model of Interna-
tional Buying Agent Contract.
C
Cabotage. Government restrictions reserving domestic transportation (between
points within the country) to domestically registered carrier´s. Many countries have
cabotage laws that require domestic owned vessels to perform domestic interport
water transportation service.
Call option. A contract which entitles one party (exporter or importer), at his option,
to buy a speciic amount of currency to another party (usually a bank), at a price ixed
in the contract, within a speciied time limit. See American option; currency option;
European option; put option.
Calvo doctrine. A legal principle that jurisdiction in international investment dis-

putes lies with the country in which the investment is located; thus, a foreign investor
has no recourse beyond the host country´s local courts.
Capacity to contract. A person´s competency, as deined by law, to make a contract.

Capacity to contract is typically determined by whether a person has attained majority
age and is mentally capable of understanding the contract terms.
Capital account. he long and short capital imports and exports of a country in the
balance of payment. C
Captain´s protest. A document prepared by the captain of a vessel on arrival at port,
showing unusual conditions encountered during voyage. Generally, a captain´s protest
is prepared to relieve the shipowner of any liability for any loss to cargo, thus requiring
cargo owners to look to insurance companies for reimbursement.
Car seal. Metal strip and lead fastener used for locking freight car or truck doors.
Seals are numbered for record purposes.
Cargo. Merchandise hauled by transportation lines.
Cargo agent. An agent appointed by an airline or shipping line to solicit and process
international air and ocean freight for shipment. Cargo agents are paid commissions
by the airline or the shipping line.
Cargo insurance. Insurance placed on goods during transportation.
Cargo insurance certiicate. A document indicating the type and amount of insur-
ance coverage in force on a particular shipment. Used to assure the consignee that
insurance is provided to cover loss of or damage to the cargo while in transit. In some
cases a shipper may issue a document that certiied that a shipment has been insured
under a given open policy, and that the certiicate represents and takes the place of
such open policy, the provisions of which are controlling. Because of the objections
that an instrument of this kind did not constitute a “policy” within the requirement
of letters of credit, it has become the practice to use a special marine policy. A special
marine policy makes no diference to an open policy and stands on its own feet as an
obligation of the underwriting company. Also called insurance certiicate and special
cargo policy. See bordereau; open policy; special marine policy. Model of Cargo
Insurance Certiicate.
Cargo manifest. A list of a ship´s cargo but without a listing of charges.
CARICOM. he Caribbean Community Market (CARICOM) is an organization

of 15 Caribbean nations established in 1973 whose main purposes are to promote
economic integration and cooperation among its members, to ensure that the beneits
of integration are equitably shared, and to coordinate foreign policy. Its major activi-
ties involve coordinating economic policies and development planning; devising and
instituting special projects for the less-developed countries within its jurisdiction;
operating as a regional single market for many of its members (CARICOM Single
Market); and handling regional trade disputes. he secretariat headquarters is based
in Georgetown, Guyana. Website.
Carriage contract. An agreement between a carrier and another party for transporta-
tion. he other party will normally be the seller (or seller´s agent) with freight prepaid
shipments, or the buyer (or buyer´s agent) for freight collect shipments. Contract of
C carriage are normally expressed by transportation document that the carrier signs or
issues (air waybill, truck bill of lading, marine bill of lading, sea waybill, multimodal
transport document, etc.). Since carriers will normally take instructions from the party
with which they contract carriage, carrier selection can be an important consideration
for sellers and buyers alike.
Carrier. An individual or legal entity that is the business of transporting passengers

or goods for hire. Shipping lines, airlines, trucking companies and railroad compa-
nies are all carriers. he carrier may be an actual carrier (called an undercarrier) or a
“non-equipment-operating” carrier such a non-vessel operating common carrier or
airfreight consolidator.
Carrier liability limit. he maximum amount of money for which a carrier is legally
liable for loss or damage to cargo. his is surprisingly low. For example, under the
Warsaw Convention it is 17 euros per kilo for airfreight shipments.
Cartage. Transport of goods by truck to or from a main carrier (i.e. vessel or aircraft)
or bonded warehouse or free trade zone within the local port or airport commercial
zone, usually under the supervision of customs authorities.
Cartel. An organization of independent producers formed to regulate the produc-

tion, pricing or marketing practices of its members in order to limit competition and
maximize their market power.
Cartment. Customs form permitting in bond cargo to be moved from one location
to another under customs control, within the same customs district. Usually in motor
carrier´s possession while draying cargo.
Cash against documents (CAD). Payment terms used in bank collections that require
the drawee to pay before receiving certain documents. Typically, the drawer will send
these documents to the drawee´s bank with instructions that it secure payment before
releasing them. Also called payment at sight.
Cash in advance (CAI). Payment term in which the exporter receives payment before
shipment of the goods. his minimizes the exporter´s risk and inancial costs, since
there is no collection risk and no interest cost or receivables. However, importers rarely
agree to these terms, since it ties up their capital and the goods may not be received.
Consequently, such terms are not widely used. hey are most likely either when the
exporter lacks conidence in the importer´s ability to pay (often the case in initial
export transactions) or where economic and political instability in the importing
country may result in diiculties to obtain payment. See payment terms.
Cash on delivery (COD). A payment term under which payment for the shipped
goods is to be made to the carrier at time of delivery. his practice is not recommended
in foreign trade because of difering methods of operation employed by carriers in dif-
ferent countries and because the carrier nor the consignee may have access to foreign
exchange. Documents against payment (DAP) or cash against documents (CAD) are
often preferred alternatives as they use the banking system, which is better equipped
C
to process documents and convert currencies.
Cash with order (CWO). A payment term whereby the buyer remits the money at
the time the order is placed. Under this term, the buyer is actually extending credit
to the seller. Also called payment in advance.
Casualty. An adverse chance event, such as the disappearance of, or damage, to goods
in transit.
Caveat emptor. Expression that means “let the buyer beware”. he buyer accepts the
goods “as is” and the risk they may be defective or unsuitable. he buyer purchases
at their own risk.
CCC Mark. he China Compulsory Certiicate Mark, commonly known as a CCC

Mark, is a compulsory safety mark for many products imported, sold or used in the
chinese market. he CCC mark is required for both Chinese manufactured and for-
eign imported merchandise. he CCC mark is administered by the China Quality
Certiication Center. he CCC Mark is required for products such as electric tools,
motor vehicles and Safety parts, agricultural machinery or medical devices. he cer-
tiication process usually takes between 4–8 months. See CE Mark.
CE Mark. he CE Mark Conformité Européene signiies that a product meets speciic

European Union conformity assessment regulations. he mark does not endorse the
quality or durability of a product, only that it satisies mandatory technical require-

ments. he CE Mark is required for sale of products that become subject to European
Union directives issued by the Comité Européen de Normalisation (CEN) or the
Comité Européen de Normalisation Electrotechnique (CENELEC). See CCC Mark.
CEO. he Chief Executive Oicer (CEO) is the highest-ranking manager in a cor-

poration. He or she is in charge of growth, inancial operations, and goal setting for
an organization. his individual also acts as the face of the company for many public
relations opportunities. his job demands that he or she take responsibility for the
ups and downs of a business. he primary duty of the executive oicer is to steer the
direction of the company. his means approving and sometimes creating various
policies that encourage growth. Approving the operating budget and being intimately
familiar with all inancial aspects of the company is also important for this job. he
executive oicer also looks toward the future and helps create organizational goals and
objectives for the company. As well as CEO another acronyms as used in corporate
world such as CFO (Chief Financial Oicer) or COO (Chief Operating Oicer).
Certiicate of analysis. A document attesting that speciic goods have undergone

speciied testing with speciied results. In international trade, is usually the result
of an agreement between the seller and the buyer, or a requirement of one of their
governments. he certiicate of analysis is mostly used for food products, wines and
C spirits, chemicals and pharmaceuticals. Sometimes, as in the case exports of wine,
there are countries that require it at the import customs. his certiicate can be is-
sued by a certiication authority (appointed by the exporter or importer) or at the
exporter’s own laboratories, when a relationship of trust has already been established
between the parties. he analysis can be performed in the factory or warehouse of the
exporter, or on the place where the product is loaded for international transportation.
Usually the analysis is done on samples representing a certain percentage of the total
of the goods sold. When used as a required document under a letter of credit terms
and conditions, the details and identity of the party providing the analysis should be
mentioned. If this is not done, banks will accept any documents appearing on its face
to b a certiicate of analysis issued by any party other than the beneiciary. Model of
Certiicate of Analysis.
Certiicate of authority. Certiication from an institution (called a certiication au-

thority) trusted to provide certiication for parties (called certiication services provid-
ers) who record the identities of public key holders.
Certiicate of conformity. Some countries (specially Eastern countries, such as Rus-

sia, Belarus, Kazakhstan or Moldova and Romania) require a certiicate of conformity.
he certiicate of conformity conirms that the goods comply with standards issued
by the importing country. Features of a certiicate of conformity are:
• he certiicate has to be obtained before shipment.
• Many countries appoint an exclusive organization worldwide to issue certii-
cates of conformity.
• hese organizations frequently verify consignments before issuing a certiicate

of conformity.
• Goods arriving at a frontier without a certiicate of conformity are likely to be
impounded or coniscated.
Exporters should remember that the certiication companies charge for this service,
and should allow for these costs when preparing quotations.
Certiicate of free sale. Government certiication that products such as food, drugs,
medicine or cosmetics are approved for unrestricted sale in the country in which they
originate, or from which they are exported.
Certiicate of health. Some countries require a health or sanitary certiicate when

animals, animal products, ish, plants, and food products are skilled. hese certiicates
conirm that the goods are free from disease or pests (insects), and that products have
been prepared in such a way that they reach prescribed standards. Normally, these
certiicates are issued by the Department of Agriculture. Also called sanitary certiicate.
Certiicate of inspection. A document certifying that merchandise (such as perishable

goods) was in good condition at the time of inspection, usually immediately prior to
shipment. Pre-shipment inspection is requirement for importation of goods into many
developing countries. When used as a required document under letter of credit terms, C
the details and identity of the party providing the inspection should be mentioned. If
this not done, banks will accept any document appearing on its face to be an inspec-
tion certiicate issued by any party other than the beneiciary. Companies specializing
in the inspection of goods at ports such as the Swiss SGS or the French Bureau Veritas
have oices in the main exporting countries. here are also companies that specialize
in inspections in certain countries such as Asia Inspection in China and other Asian
countries. See pre-shipment inspection. Model of Certiicate of Inspection.
Certiicate of manufacture. A document in which a producer certiies that the manu-

facturing has been completed and that the referenced goods are now at the disposal
of the buyer.
Certiicate of Origin. A document attesting to the country of origin of the goods.

A certiicate of origin is often required by customs authorities of a country as part
of the entry process. Such certiicates are usually through an oicial organization in
the country of origin such as the local chamber of commerce or a consular oice.
he goods description must coincide with that provided in the commercial invoice
and in the packing list (number, goods description, name of the consignor and of
the consignee, trademarks, etc). If the certiicate of origin is not shown, the import
customs may, if it deems it necessary, accept the dispatching of goods. In this case,
the corresponding tarif would be applied to third countries (non preferential ori-
gin), without any tarif discount. Although the World Customs Organization and
the World Trade Organization) have tried to create a single set of origin criteria in
worldwide use, none exists at this time. Some countries and free-trade zones (such as
NAFTA) require that origin be certiied in terms of special criteria such as tarif shift
or percentage value. Traders are well advise to assure that any applicable origin rules
are understood and any required documentation is obtainable before concluding sales
contracts. Model of Certiicate of Origin.
Certiication of Origin Form A. his certiicate is a type of Certiicate of Origin that

allows imports from the countries included in the GSP (General System of Prefer-
ences) - developing countries - to qualify for the elimination or reduction of tarifs as
this system gives preferential treatment. his Certiicate is a document designed and
adopted at the multilateral level by UNCTAD (United Nations Conference on Trade
and Development), used for the developing countries whose objective is certify the
origin status of the products exported to industrialized countries, to received preferen-
tial treatment in the GSP. he Certiicate of Origin Form A is presented in the import
customs but must issued within a maximum period of ten months from its issuance
by a competent institution (chamber of commerce, consular oice) in the country of
origin, i.e the country from which the product is manufactured and exported. In the
import customs clearance is not necessary to present the Certiicate of Origin, because
the Certiicate of Origin Form A, acts as both, declaring the preferential origin of the
product. Model of Certiicate of Origin Form A.
C Certiicate of radioactivity. Some countries require, especially for food products, a

certiicate proving that they do not contain radioactive substances, before accepting
the import and selling of such products in its territory. his presentation certiies that
the products subject to the export or import are excluded from radioactivity. his
certiicate is issued by companies like SGS.
Certiicate of weight. A document attesting that a particular shipment is of a certain

weight.
Certiied invoice. Some countries require certiied invoices, particularly when goods
are being shipped against a letter of credit. hese are invoices that are certiied by a
Chamber of Commerce before goods are dispatched. Exporters present the invoice
to a Chamber of Commerce, which then stamps the document. he exporter lodges
authorized signatures with local chambers who verify the signature before stamping
the document.
CFR Cost and Freight. In Incoterms CFR the seller must pay the costs and freight
necessary to bring the goods to named port of destination but the risk of loss and
damage to the goods, as well as any additional costs due to events occurring after the
goods have been delivered from seller to the buyer when goods are on board in the
port of shipment. he CFR term requires the seller to clear the goods for export. his
term can only be used for sea and inland waterway transport. See Incoterms for a list
of the eleven Incoterms rules. Practical Guide to Incoterms.
CFS Container Freight Station. A facility where freight shipments are consolidated
or de-consolidated and staged between transport legs. A CFS is typically located in

proximity to an ocean, port, or airport, where cargo containers are transported to
and from. he term CFS at loading port means the location designated by carriers
for the receiving of cargo to be loaded into containers by the carrier. At discharge or
destination ports, the term CFS means the bonded location designated by carriers
for devanning of containerized cargo.
CFS/CFS. he term CFS/CFS refers to cargo delivered at origin in less-than-container

load quantities to a CFS Container freight Station to be loaded into containers and
to be unloaded from the container at destination CFS.
CFS Charge. he charge assessed for services performed at the origin or destination
for loading or unloading of cargo into/from containers at a CFS Container Freight
Station.
CFS Receiving Services. he service performed at the loading port in receiving and
packing cargo into containers from CFS Container Freight Station to CY Container
Yard.
Chaebols. Korean industrial conglomerates characterized by strong family control,

authoritarian management and centralized decision-making. he chaebol structure
can encompass a single large company or several groups of companies. Each chaebol
is owned, controlled or managed by the same family dynasty, generally that of the
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group’s founder. Samsung, Hyundai and LG Group are among the biggest and most
prominent chaebols.
Chargé dáfaires. A subordinate diplomat who takes charge in the absence of the
ambassador.
Chargeable Weight. Rate for airfreight goods where dimensional weight factor ex-
ceeds the actual weight of the cargo.
Charges collect. he total transportation charges which may include pickup and/
or delivery charges which are entered on the bill of lading to be collected from the
consignee. Equivalent terms are freight collected and charges forward.
Charter party. A contract under which a charterer agrees to hire the use of a ship
from a shipowner. he charterer in some cases will be empowered to issue his or her
own bills of lading, known as charter party bill of lading, subject to the conditions of
the original charter party contract. he charter party itself is not a bill of lading, but
a contract between the shipowner and the charterer.
Charter party bill of lading. A bill of lading issued by a charter party. Charter party
bills of lading are not acceptable by banks under letters of credit unless they are spe-
ciically authorized in the credit. See bill of lading.
Checker. A carrier-designated person who is responsible for examining cargo being

handed over shipment, for signs of damage or loss. Also called wharinger. See ap-
parent damage; apparent good order and condition.
Chock. A piece of wood or other material placed at the side of cargo to prevent roll-
ing or moving sideways.
CIETAC. he China International and Economic Trade Arbitration Commission is

a major arbitration institution in China. CIETAC headquarters are in Beijing, and
also has sub-commissions in Shenzhen, Shanghai and Tianjin. Website.
CIF Cost, Insurance and Freight. In this Incoterms, the seller has the same obliga-
tions as under CFR but with the addition hat he has to procure marine insurance
against the buyer´s risk or loss or damage to the goods during the carriage. he seller
contracts for insurance and pays the insurance premium. he buyer should note that
under the CIF term the seller is only required to obtain insurance on minimum cov-
erage. he CIF term requires the seller to clear the goods for export. his term can
only be used for sea and inland waterway transport. See Incoterms for a list of the
eleven Incoterms. Practical Guide to Incoterms.
CIM Transport document. An internationally standardized freight document issued

C in rail transport. CIM stands for “Convention Internationale concernant le transport
des Marchandises par chemin de fer”. he agreement has been in force since 1965,
and constitutes the legal basis for the conclusion of freight contracts in international
rail goods transport using one freight document.
CIP Carriage and Insurance Paid to. In Incoterms CIP, the seller has the same
obligations as under CPT (Carriage Paid to) terms, but with the addition that the
seller has to procure cargo insurance against the buyer´s risk of loss, or damage the
goods during the carriage. he seller contracts for insurance and pays the insurance
premium. he buyer should note that under the CIP term the seller is only required
to obtain insurance on minimum coverage. he CIP term requires the seller to clear
the goods for export. his term may be used for any mode of transport including
multimodal transport. See Incoterms for a list of the eleven Incoterms. Practical
Guide to Incoterms.
Circumvention. Getting around commitments in the World Trade Organization

(WTO) such as commitments to limit agricultural export subsidies. Includes: avoiding
quotas and other restrictions by altering the country of origin of a product; measures
taken by exporters to evade anti-dumping or countervailing duties.
CISG. he United Nations Convention on Contract for the International Sale of

Goods. known as Vienna Convention, is a 1980 international treaty signed by most
leading trading nations that amounts to a virtual commercial code for international
sale of goods transactions, but exclude contracts for services. See Vienna Conven-
tion. Website.
CITES. he Convention on International Trade in Endangered Species of Wild Fauna

and Flora, is an international agreement between governments. Its aim is to ensure
that international trade in specimens of wild animals and plants does not threaten
their survival. Because the trade in wild animals and plants crosses borders between
countries, the efort to regulate it requires international cooperation to safeguard
certain species from over-exploitation. CITES was conceived in the spirit of such
cooperation. Today, it accords varying degrees of protection to more than 35.000
species of animals and plants, whether they are traded as live specimens, fur coats or
dried herbs. For many years CITES has been among the conservation agreements
with the largest membership, with now 180 countries. Website.
Civil Law. A body of law created by statutes and other enactments of legislatures
and by rules and regulations adopted to give efect to those statutes and enactments.
See Common Law.
Claimant. A party presenting a demand for compensation, such as against a carrier

or insurer.
Claused bill of lading. A bill of lading that contains notations or remarks as to defects
in the goods or packaging. Also called foul or dirty bill of lading. See bill of lading.
Clean bill of exchange. A bill of exchange having no other documents, such as bill
of lading aixed to it.
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Clean bill of lading. A bill of lading indicating that goods were received in apparent
good order and condition. A clean bill is one in which contains no notations of defect,
damage or loss. and is signed by the carrier or its authorized representative. Neverthe-
less, a clean bill of lading does not have any positive airmation or mention to the
efect. If a bill of lading does contain a notation of damage or missing merchandise,
the bill of lading is call claused, foul, or dirty. See bill of lading.
Clean collection. 1. A letter of instructions to a presenting bank accompanied by a

draft and often invoices, but not accompanied by any document restricting possession
or ownership of the relevant goods. his is the opposite ofo documentary collection.
2. A letter of instructions accompanied by a cheque drawn on a bank located outside
the clearing range of the payee´s country´s banking system.
Clean draft. A draft to which no documentation has been attached.
Clean loat. A system in which exchange rates are determined by market forces rather
than by government intervention or restrictions. See dirty loat; loating exchange rate.
Clean letter of credit. A letter of credit against which the beneiciary of the credit
may draw a bill of exchange without presentation of documents. See letter of credit.
Clean on board bill of lading. A document evidencing cargo laden aboard a vessel
with no exceptions as to cargo condition or quantity. See bill of lading.
Clean receipt. A receipt containing no damage or shortage notations.
Clean report of indings. A document issued by a pre-shipment inspection agency

engaged by importer´s country, indicating that the relative shipment conforms to the
criteria established by the government. Typically, pre-shipments inspections cover
price veriication and physical inspection of the goods to determine that they conform
in quantity, quality, and kind to importation approval. See certiicate of inspection;
pre-shipment inspection.
Clean transport document. A receipt for goods without any adverse notation in-
dicating damage or shortage, issued by a carrier. Goods covered by clean transport
documents are said to be received in apparent good order and condition. Transport
document bearing adverse notations are called variously claused, unclean or foul, and
are the opposite of clean transport documents. here is no reason to show the word
clean on the face of a transport document, as all transport documents without adverse
notations are considered clean. See FCR Forwarder´s certiicate r eceipt.
Clearance. he complementation of customs entry formalities resulting in the release

of goods from customs custody to the importer.
C CMR Transport document. his document, also know as CMR consignment note,
constitutes a proof of the contract of carriage by road, determines the scope and
responsibility for the operation performed and identiies the parties involved and
the goods being transported. Its use implies adherence to the CMR (“Contrat de
Transport International de Marchandises par Route”) that governs this document.
his document includes the instructions that the exporter or the importer gives to the
carrier, so it necessarily has to accompany the goods in road shipments. he issue of
this document should be made by the carrier (the driver of the truck) with all the nec-
essary information to formalize the collection of the goods; however, it will normally
be the exporter (sender), who completes the document on the arrival of the truck to
his store, always in case of full loads; in case of groupage this document is normally
handled by the forwarding agent because there is an internal transport to collect the
goods grouped with other goods from diferent exporters to send them jointly to the
inal destination in a foreign country. Model of CMR Transport Document.
Co-branding. A form of cooperation between two or more brands with signiicant

customer recognition, in which all the participants´ brand names are retained. he
products are often complimentary, in the way that one product can be used or con-
sumed jointly with the other. he motive for co-branding is the expectation of syner-
gies that create value for participants, above the value they would expect to generate
on their own.
COFACE country risk. Country risk classiication provided by the French company
COFACE (Compagnie Française d’Assurance pour le Commerce Extérieur), world
leader in export insurance that is very useful to know the country risk and the busi-
ness climate in 160 countries. It ofers a classiication of 7 levels of risk from very low
to very high (A1, A2, A3, A4, B, C, D). From level A2 is advisable to take precau-
tions and cover the risk, and levels C and D discourage investment operations. he
160 country evaluations are based on macroeconomic, inancial and political data
regularly updated and are made freely available through COFACE website. It also
provides relevant macroeconomic information and a Strengths/Weaknesses Analysis
of the economy of each country. See country risk. Website.
Collateral. An interest in property given by a debtor to a creditor in order for the

creditor to secure payment of the debt. For example, an applicant for a letter of credit
might pledge the goods for which the credit is opened as security to the issuing bank.
Collect charges. In shipping, the transportation practice under which the receiver
of the goods pays charges.
Collecting bank. Any bank, other than the remitting bank, that is involved in process-
ing a collection. In collection terminology the remitting bank is the bank to which the
drawer has entrusted the handling of a collection, usually the drawer´s bank of account.
Collection. A set of documents including a letter or completed form indicating the

drawer´s instructions (called a collection letter), and often accompanied by a draft
or drafts, invoices, packing lists, and other documents as agreed by the drawer and
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drawee. Collections accompanied by documents restricting possession or ownership
are called documentary, while those without such documents are called clean. Many
collections are covered by the current Uniform Rules of Collections (URC) published
by the International Chamber of Commerce. Since de URC is not a law, it must be
speciied in order to apply. However, it is in such common use that reference to it is
often printed on the collection letterforms commonly used by banks.
Collection fee. he charges banks impose for handling collections.
Collection letter. A letter or form that conveys the drawer´s instructions to the pre-
senting bank. While there are many variations, collection letters identify the drawer,
drawee, and any case-of-need party; typically contain a series of boxes that apply to
various instructional points. here are two kinds of collection letters: those originating
from the drawer´s bank and those originating from the drawers or its agent, called
direct collection letters. Either way, the presenting bank receives the collection letter,
endeavours to follow its instructions, and reports to the drawer´s bank. Also called
collection instructions.
Collusion. A secret agreement or cooperation between two or more parties to cheat

or deceive others by illegal, fraudulent, or deceitful means.
Combined Nomenclature (CN). he Combined Nomenclature (CN) is a method

used for the European Union for designating goods and merchandise which was es-
tablished to meet, at one and the same time, the requirements both of the Common
Customs Tarif and of the external trade statistics of the Community. he CN is also
used in intra-Community trade statistics. he CN is comprised of the Harmonized
System (HS) nomenclature with further Community subdivisions. he Harmonized
System is run by the World Customs Organisation (WCO). his systematic list of
commodities forms the basis for international trade negotiations, and is applied by
most trading nations. he CN also include preliminary provisions, additional section
or chapter notes and footnotes relating to CN subdivisions. Each CN subdivision has
an eight digit code number, the CN code, followed by a description. See Harmonized
System; H 6-digit. Website.
Combined transport. Consignment sent by means of various modes of transport,

such as by rail and by ocean.
Combined transport document (CTD). A transport document indicating more

than one mode of transportation. For example:
• A received for shipment (marine B/L) indicating that pre-carriage from an
inland originating point as well as main carriage transport were handled by
main carrier.
• An air waybill showing than pre-carriage from the shipment originating point
C as well as main carriage were handled by the main carrier.
Comfort letter. A letter from an independent auditor included in a preliminary pro-

spectus stating that, while a full audit has not been undertaken, the auditor has done
revised the documents suiciently to assure that inancial statement information in the
preliminary prospectus is correctly prepared to the best of the auditors´s knowledge.
he auditors in efect states that, had a full audit been done, they are comfortable that
the audited inancial statements would not be materially diferent to the best of the
inancial statement information in the preliminary prospectus is correctly prepared
of f the auditor´s knowledge.
Commercial agency. A relationship between one individual or legal entity (the agent)
who represents, acts on behalf of, and binds another individual or legal entity (the
principal) in accordance with the principal´s request or instructions. In some coun-
tries, the role of commercial agencies is more narrowly deined as a relationship created
only by a written contract or power of attorney, entered into by a principal and a
person who is designated to act for the principal within the limits of the written con-
tract or the attributions of the power of attorney. In international trade, relationships
between agents and their clients (principals) are regulated through a Model of Inter-
national Commercial Agency Contract. See agent; distributor; sales representative.
Commercial counsellor. he commercial expert on the diplomatic staf of a country´s

embassy or large consulate. Also called commercial attaché.
Commercial counterfeiting. he production or marketing of goods with the intent

of defrauding the purchase by falsely conveying directly or indirectly, that the goods
are produced by a known or reputable manufacturer.
Commercial in conidence. A classiication that identiies information that, if dis-

closed, may result in damage to a party’s commercial interests, intellectual property or
trade secrets. You must not disclose any information marked ‘Commercial in Coni-
dence’ without permission from the party who supplied it. his type of information
is protected through Conidentiality Agreements.
Commercial invoice. he document recording a transaction between the seller and

the buyer. Commercial invoices are normally prepared by sellers, and should include
the following information:
• Date, names, and commercial addresses of the seller and the buyer.
• Precise denomination and quantity of goods.
• Unit and total price of the goods in the agreed currency.
• Means and conditions of payment.
• Delivery terms of the goods (it refers to Incoterms published by the Interna-
tional Chamber of Commerce). Nowadays the version in force is that of the
year 2010. Apart from the above mentioned data, which are demanded in the
regulation in force, this document must also include: C
• Seller´s and buyer´s identiication for VAT purposes (in intra-communitarian
operations).
• Order reference number.
• Origin of the goods.
• Tarif code of the goods
• Means of transport.
• A signature by an authorized person at the seller´s company, if required by the
buyer´s government.
he commercial invoice on itself does not grant any ownership of the goods, unless it
has an attached document proving the importer’s payment for the total amount. he
number of copies of the invoice (both original and copies) required for the delivery
of the goods, must be agreed with the importer. Usually, invoices are issued with the
original and two copies. Although normally the legislation in diferent countries does
not limit the number of originals, it is not advisable to make more than those strictly
necessary in order to accomplish with the customs needs required by the buyer. It is
advisable that the importer conirms with the exporter all data that the invoice must
provide before its issuing, as well as the particularities it must include in order to
accomplish with the regulation of the destination country. See proforma invoice.
Model of International Commercial Invoice.
Commercial presence. In international marketing forms of entry strategies, having

an oice, branch, or subsidiary in a foreign country.
Commercial risk. he possibility of non-payment caused by such buyer-related prob-

lems as insolvency or bankruptcy, as opposed to problems encountered by the buyer´s
country. See country risk.
Commercial sensitive information. Information that, if disclosed, could prejudice

a supplier’s commercial interests e.g. trade secrets, proit margins or new ideas. his
type of information is protected through Conidentiality Agreements.
Commercial treaty. An agreement between two or more countries setting forth con-
ditions under which business between or among the countries may be transacted. It
may outline tarif privileges, terms on which property may be owned, the manner in
which claims may be settled, etc. See multilateral agreement.
Commercial value. he actual price at which a product is sold either to unrelated

parties or to related parties at arm´s length. his is the opposite of no commercial
value, a statement that should be shown on invoices covering shipments of samples
that are being furnished without charge and are not intended for resale. See no com-
mercial value.
C Commission. Compensation given by a principal to a party (usually an agent, inter-
mediary, or sales representative) representing it. Sales commission, a percentage of the
selling price (usually without including transportations costs), is the most commonly
way to pay sales services in foreign trade. Principals using commission for its agents or
representatives, normally increase their selling prices to provide for such commission
payments. Sales commission agreements often provide that the commissions are not
paid until such time as the buyer has paid the principal, thereby assuring that the agent
or representative will assist with necessary collection efort. See agent; intermediary;
sales representative. Model of International Sales Commission Agreement.
Commission agent. An international agent who is paid a percentage of the sales he

or she generates. he Agent ofers products to potential clients in an assigned terri-
tory (usually a country), strictly in accordance with the sale conditions indicated to
it by the Principal. here is no employment relationship between the Agent and the
Principal, and their relationship is purely a commercial one. In this regard, on the
end of this agreement, the Agent shall not be entitled to receive any compensation.
In international trade the relationships between the commercial agent and his clients
are governed by the Model of International Sales Commission Agreement.
Commission sales agreement. A type or contract, whereby a person or company acts

as a sales agent on behalf of the exporting company (principal), introducing its prod-
ucts to potential buyers in the external market, in exchange for a commission based
on the value of the business deals arranged and paid to the principal. he mechanism
of commission agent or intermediary is therefore very useful to companies that are
launching their export operations. his type of contract is ideal for small companies
with little or no experience in international trade, as it allows them to access inter-
national markets without having to make large investments. Everything is left in the
hands of the agent. See distributor; sales representative. Model of International
Sales Commission Agreement.
Commissioning. he process used to test equipment to verify that it functions ac-

cording to its speciications.
Common carrier. In some jurisdictions, a legal term referring to carriers who ofer
transport services to the general consumer or business public. In contrast, for example,
to carriers who may work as employees, sub-contractors or agents of the manufacturer
or shipper.
Commodity. Broadly speaking, any article exchanged in trade, but commonly used
to refer to raw materials and bulk-produced agricultural products such as cereals,
cofee or tea.
Common external tarif. A uniform tarif rate adopted by a customs union or com-
mon market such as the European Community to imports from countries outside
the union. For example, the European Common Market is based on the principle of
a free internal trade area with a common external tarif (Tarif Exterieur Commun, in
French) applied to products imported from non-member countries. Free trade areas
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do not necessarily have common external tarifs.
Common Law. he body of law derived from usages, customs, and judicial decisions,
as distinguished from statutes. See Civil Law.
Common market. A common market (as opposed to a free trade area) has a common
external tarif and may allow for labour mobility and common economic policies
among the participating nations. he common market has the same features as a cus-
toms union, but, in addition, factors of production (labour, capital and technology)
are mobile among members. Restrictions on immigration and cross-border investment
are abolished. See economic integration.
Comparative advantage. A central concept in international trade which holds that a

country or region should specialize in the production and export of those goods and
services that it can produce relatively more eiciently that others goods or services,
and import those goods and services in which it has a comparative disadvantage. his
theory was irst propounded by the British economist David Ricardo in 1817 as a basis
for increasing the economic welfare of a population through international trade. he
comparative advantage theory normally favours specialized production in a country
based on intensive utilization of those factors of production in which the country
is relatively well endowed (such as raw materials, fertile land or skilled labour). See
absolute advantage.
Compatible cargo. A term used for cargo that may safely travel together.
Compact palletization. System developed to store homogeneous products, with great

quantity of pallets per reference. It permits the top use of the available space both for
i surface and height. his type of installation is constituted by a set of shelves that
form interior aisles of load, with rails of support for the pallets.
Compensatory trade. A form of countertrade where any combination of goods and

services are bartered. See countertrade.
Compensation deal. A type of countertrade that involves the exports of goods in one
direction. he payment of the goods is split into two parts:
• Part payment in cash by the importer.
• For the rest of the payment the original exporter makes an obligation to pur-
chase some of the buyer´s goods.
he products of the compensation deal can be used in the exporter´s internal produc-
tion or they may be sold on in the wider market. See countertrade.
Competitive intelligence. Competitive intelligence is the gathering of publicly-avail-

C able information about an enterprise’s competitors and the use of that information
to gain a business advantage. he goals of competitive intelligence include discerning
potential business risks and opportunities and enabling faster reaction to competitors.
Compulsory licensing. For patents, when the authorities license companies or in-
dividuals other than the patent owner to use the rights of the patent - to make, use,
sell or import a product under patent (i.e. a patented product or a product made by
a patented process) - without the permission of the patent owner. Allowed under the
WTO’s TRIPS (intellectual property) Agreement provided certain procedures and
conditions are fulilled. See patent.
Compound duty. A combination of both a speciic rate of duty and an ad valorem

rate of duty. For example 0.5 cents per unit plus 8 per cent ad valorem. Whereas
speciic duties are based on factors such as weight or quantity, ad valorem duties are
based on the value of the goods. See customs duty.
Comtrade. Database of the United Nations with exports and imports statistics by
countries and tarif codes. he search route to be used for obtaining the trade statistics
is: data availability - by reporter -choose the country and year in the irst column -
check box “I have read Readme First” - Continue - in quick ilter select the tarif code
(4 to 6 igures)- search - select option HS 2002 - apply. Comtrade.
Concealed damage. In shipping damage to the contents of a package which is in

good order externally. See inherent vice.
Conidential information. A classiication that identiies sensitive information that,

if disclosed, could damage the person or organization it relates to. In a business rela-
tionship, conidential information is protected through Conidentiality Agreements.
Conidentiality agreement. A type of contract used to protect sensitive technical

or commercial information from disclosure to others. Such agreement is often used
when a company or individual has a secret process or a new product that it wants
another company to evaluate as a precursor to a comprehensive manufacturing license
agreement or technology transfer agreement; or, perhaps one Party wants to evaluate
another’s existing commercial product for a new and diferent application. Coniden-
tiality agreements perform mainly three functions: (a) protect sensitive technical or
commercial information from disclosure to others; (b) prevent the forfeiture of valu-
able patent rights; (c) deine exactly what information can and cannot be disclosed.
his last function is usually accomplished by speciically classifying the nondisclosure
information as conidential or proprietary. he deinition of this term is, of course,
subject to negotiation. As one would imagine, the company or individual disclos-
ing the conidential information (the discloser) would like the deinition to be as
all-inclusive as possible; on the other hand, the company receiving the conidential
information (the recipient) would like to see as narrowly focused a deinition as pos-
sible. here are many models of conidentiality agreements: each company tends to
treat its own conidentiality agreement with great pride and possessiveness, which
causes delays, discussions, negotiations and higher transaction costs. Also called non-
disclosure agreement. Model of Conidentiality Agreement.
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Conirmed letter of credit. A letter of credit that contains a guarantee on the part of
both the issuing and de advising banks of payment to the seller so long as the seller´s
documentation is in order and the terms of the letter of credit are met. Conirmation
is only added to irrevocable letters of credit, usually available with the advising bank.
If conirmation of the letter of credit is desired, the applicant must state this expressly
in his/her letter of credit application. he conirming bank assumes the credit risk of
the issuing bank as well as the political and transfer risks of the purchaser´s country.
Without conirmation of the letter of credit, the advising bank will forward the letter
of credit to the beneiciary without taking on its own commitment. See letter of credit.
Conirming. A inancial service in which an independent company conirms an ex-

port order in the seller´s country and makes payment for the goods in the currency
of that country. Among the items eligible for conirmation are not only the goods but
also inland, air, and ocean transportation costs; forwarding fees; customs brokerage
fees; and duties. Conirming permits the entire export transaction from plant to end
user to be fully coordinated and paid for.
Conirming bank. In a letter of credit transaction, the bank that assumes responsi-
bility to the seller (usually the exporter) for payment from the issuing bank (buyer´s
bank) so long as the terms and conditions of the letter of credit have been met by the
seller/exporter. See letter of credit.
Conirming house. A trading company that represents the interests of foreign buyers.
Conirming houses typically negotiate purchases on behalf of their overseas principals,
place their domestic orders in the suppliersćountries, arrange for export handling
and transportation to the buyer, and locally pay the suppliers.
Conlict of laws. Diferences between the laws of diferent countries or other jurisdic-
tions that become signiicant in determining which law will apply when individuals
o legal entities have acquired rights, included obligations, sufered damages, or made
contracts in two or more jurisdictions. he rules that courts apply to resolve conlicts
of laws vary among countries. In addition, diferent rules apply depending on the
subject matter of a controversy - that is, whether a controversy involves property or
personal rights. See governing law clause.
Congestion surcharge. An additional charge added to the base rate ocean freight cost,
relecting the additional expenses that the ship lines incur when calling at congested
ports.
Consignee. In export transactions, the intended receiver of a cargo shipment. he

named person or legal entity having the right to claim the merchandise from the
carrier at destination, and is generally recognized as the legal owner for customs
purposes. In international representation or distributorship relations, the consignee
C is the holder and re-seller of merchandise who receives payment in the form of com-
mission or a discount as and when sales are made but does not have to purchase the
goods in advance.
Consignee marks. A symbol placed on packages for export, generally consisting of a

square, triangle, diamond, circle, cross, etc., with design letters and/or numbers for
the purpose of identiication.
Consignment. Shipment of one or more pieces of property, accepted by a carrier for

one shipper at one time, receipt for in one lot, and moving on one bill of lading. he
exporter retains title of goods until the importer sells them. his payment term should
be ofered only to trustworthy importers with an excellent credit rating in countries
where political and economic risk is very low. Consignments tend to be mainly used
by companies trading with their own subsidiaries.
Consignment contract. A contract by which a seller (consignor) delivers goods to an

individual or entity (consignee) that will sell them. For goods sold, the consignee will
remit the price to the consignor less a commission. Goods not sold may be returned
to the consignor.
Consignor. he person or irm that ships goods, or gives goods to another (consignee)
for care. See consignee; consignment contract.
Consolidated container. A shipping container containing cargo from a number of

shippers at a centrally located point of origin by a freight consolidator, and transport-
ing them as a single shipment to a destination point. Consolidation of cargo often

results in reduced shipping rates.
Consolidated shipment. A method of shipping whereby an agent (freight forwarder

or consolidator) combines individual consignments from various shippers into one
shipment made to a destination agent, for the beneit of preferential rates. he con-
solidation is then de-consolidated by the destination agent into its original component
consignments and made available to consignees. Consolidation provides shippers
access to better rates than would be otherwise attainable. Also called groupage.
Consolidation. Combining cargo from more than one shipper and/or to more than
one consignee for shipment together, usually in a single shipping container. On ar-
rival, the container is unloaded, and each individual shipment may be claimed by its
appropriate consignee. he same scenario applies when a single shipper or consignee
consolidates small shipments for its own use, or arranges that this be done by a
third-party logistics provider. Firms providing consolidation services often act as car-
riers, providing their own house transport documents that are supported by a master
transport document issued by the undercarrier for the entire consolidated shipment.
Also called groupage.
Consolidator. A company that provides consolidation services. Freight forwarders

perform the functions of a consolidator. See consolidation. C
Consular declaration. A formal statement, made in the country of export by the con-
sul of an importing country, describing goods to be shipped to the importing country.
Consular documentation. Documents and forms that have been presented to a

consulate, usually of the buyer´s country and usually in the country from which a
shipment originates. While each country requiring consulate documentations estab-
lishes its own fee schedule and procedures, commercial invoices, certiicates or origin
and/or copies of transport documents are commonly used. Typically, importers in
countries with such regulations are required to present the consularized documents
to their authorities in order to clear customs. It is important to carefully prepare
documents for consularization, since corrections are often both time consuming and
expensive. Further, consulates are normally closed on their national holidays as well
as holidays of their host country. Also called visaed or legalized documentation. See
letter of correction.
Consular invoice. An invoice covering a shipment of goods certiied by the consul

of the country for which the merchandise is destined. he invoice is used by customs
oicials of the country to verify the value, quantity, and nature of the merchandise
imported to determine the import duty. In addition, the export price may be exam-
ined in the light of the current market price in the exporter´s country to ensure that
dumping is not taking place. See commercial invoice.
Consular visa. Any one of several oicial endorsements by a consul of a country. A

consular visa can be issued for travel, consular invoices, certiicates of origin, shipping
documents and other legal documents.
Container. A single, non-disposable structure to be illed with smaller objects to

facilitate transportation. Containers are used extensively in waterborne, air and rail
transport, and come in a variety of container speciications for vessel transport include:
• 20 foot and 40 foot dry freight,
• 20 foot and 40 foot open top,
• 20 foot and 40 foot refrigerated,
• 40 foot high cube refrigerated,
• 20 foot and 40 foot lat rack,
• 40 foot and 45 foot high cube, and
• 20 foot tank container.
Actual vessel container internal and external dimensions vary from manufacturer to
manufacturer and from carrier to carrier. Airfreight containers, often called igloos,
are available in a variety of shapes and sizes. Rail containers are available for such
specialized cargos as coil. Since all carriers do not always provide the full range of
C containers, it is important to check the availability when planning fora containerized
shipment.
Container freight station (CFS). 1. At ports of shipment, designated areas for deliv-
ery of less-than-container load cargo for container loading. 2. At arrival ports, secure
locations for container unloading and cargo delivery.
Container handling charge. It refers to over cost for handling of containers at the
terminals.
Container manifest. Document showing contents and loading sequence of a con-

tainer.
Container number. An up to seven-digit number (six plus a check digit) used to

identify the size and type of container; usually preceded by a four-letter alpha (letter)
code preix designating container ownership.
Container rental surcharge. An additional fee for the use of a carrier´s container,
usually charged only for destinations with little outward cargo volume or high risk of
loss or damage to the container.
Container terminal. An area designated for the stowage of cargoes in container. Usu-
ally accessible by truck, railroad and marine transportation. In this area, containers
are picked up dropped of, maintained, and housed.
Container vessel. An ocean going vessel designed speciically to easily handle the
loading, stowage and of-loading of ocean freight containers. Containers may be
stowed either below deck or on deck.
Container yard (CY). Carrier-designated location at port areas for receiving, storing
and delivering loaded containers, as well as for empty container pickup.
Containerizable cargo. Cargo that will it into a container and result in an economi-
cal shipment.
Contingency insurance. Insurance coverage taken out by a party to an international

transaction to insure against insurance coverage taken by the counterparty. he con-
tingent insurer pays its beneiciary and attempts to collect from primary insurer. For
example, a pre-paying buyer purchasing on an Incoterms requiring the seller to insure,
such as CIP or CIF, may purchase contingency insurance from his or her local insurer.
Should there be a covered loss, the buyer´s insurer would advance payment to the
buyer, and assume the buyer´s rights against the seller´s insurer. Conversely, sellers can
purchase contingency insurance from their insurers for export when buyers arrange the
primary insurance cover. Should a buyer not pay because of failure of his or her insurer
to honour a claim for a covered loss, the seller would claim on the contingency insur-
ance. he contingency insurer would advance payment to the seller, and would bear
the loss should the buyer´s insurer never pay. Contingency insurance does not replace
primary insurance. It works only when the counterparty provides primary cover and
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the primary carrier fails to pay a covered loss.
Contract guarantee. An agreement by a third party to be responsible for the perfor-

mance of a contracting party. here are three major types of contract guarantee: tender
bonds, performance guarantees, and repayment guarantees. See Uniform Rules for
Contract Guarantees; Uniform Rules for Demand Guarantees.
Contract manufacturing. Contract manufacturing in international markets is used

in situations when one company arranges for another company in a diferent coun-
try to manufacture its products; this is also known as international subcontracting
or international outsourcing. he company provides the manufacturer with all the
speciications, and, if applicable, also with the materials required for the produc-
tion process. his type of contract sets out the requirements, which the manufac-
turer must meet concerning the quality of the products, certiication, quantities,
conditions and dates of delivery, etc. It also establishes guidelines for the inspec-
tion and testing of the products set forth by the company which contracts out the
manufacture, or by its own clients. Furthermore, it also outlines modiications to
orders, as well as guarantees and compensation in case of breach of contract. Since
the process is essentially outsourcing production in foreign markets to a partner
that privately brands the end product, there are a number of diferent companies
and industries that can make use of this type of contract. Model of International
Contract Manufacturing.
Contracting parties. 1. Parties that have entered a contract with each other. 2. Coun-
tries that are members of the World Trade Organization (WTO) and therefore have
accepted the speciied obligations and privileges.
Contractual joint venture. Agreement in which two parties come together for a
particular business project and sign a contract outlining the terms under which they
will work together. he parties do not set up a separate legal entity for the project but
work together in partnership, sharing the proits or losses of the venture on the terms
set out in the joint venture contract. he contractual joint venture is a diferent legal
arrangement from the incorporated or equity joint venture in which two or more
parties set up a separate legal entity to act as the vehicle for carrying out the project.
Participants in a contractual joint venture normally would set out the objectives of the
joint venture in the agreement. hey also would agree on the contributions in cash
or in kind made by each of the parties to the contract, with details about the valua-
tion of the contributions. he functions of the parties within the project, including
their technical contributions and commercial commitments, would be deined in the
contract. Arrangements would be made for the parties to meet to discuss progress on
the project and to appoint a management committee. See joint venture; equity joint
venture. Model of International Joint Venture Contract.
Convertibility. Ease of exchanging one currency for that of another nation or for
C gold.
Convertible currency. A currency of a nation that may be exchanged for that of

another nation without restrictions. Countries with convertible currencies typically
have sizable exchange reserves so that their currencies are generally considered to low
risk. Also called hard currency.
Copyright. A set of exclusive rights granted to the author or creator of an original

work, including the right to copy, distribute, and adapt the work. In international
business copyrights are transmitted and sold through license agreements.
Correspondent bank. A bank that performs certain operations on behalf of another

bank, usually in a diferent country. Correspondent banks hold deposits with each
other, and accept and collect items on a reciprocal basis. It is through networks of
correspondent banks that trade banks are able to service and support international
business transactions.
Counterfeit. Unauthorized representation of a registered trademark carried on goods

identical or similar to goods for which the trademark is registered, with a view to
deceiving the purchaser into believing that he/she is buying the original goods.
Counterofer. A reply to an ofer that adds to, limits, or modiies materially the terms
of the ofer. A seller, for example, who accepts a buyer´s ofer, but informs the buyer
that the goods will be of a diferent colour has made a counterofer. See ofer.
Counterparty. he opposite party to a transaction. Sellers are the counterparties of

buyers and vice versa.
Counterpurchase. An arrangement whereby exporters agree to purchase a quantity

of goods from a country in exchange for the country´s purchase of the exporter´s
product. he goods being sold by each party are typically unrelated but may be of
equivalent value. his is one if the most common forms of countertrade.
Countertrade. All foreign trade transactions resulting from exporter´s commitments

to take products from the importers or from their respective countries in full or part
payment for their exports. Countertrade is typical of trade with developing countries,
which often sufer from a lack of foreign exchange and/or credit facilities. Counter-
trade transactions include barter, buy-back or compensation, counterpurchase, ofset
requirement and swap. See respective terms.
Countervailing duties. Special customs duties imposed o imports to ofset the ben-
eits of subsidies to producers or exporters in the exporting country. Article VI of the
General Agreement on Tarif and Trade (GATT) - now World Trade Organization
(WTO) - permits the use of such duties if the importing country can prove that
the subsidy would cause injury to domestic industry. Also known as countervailing
measures.
Country of departure. he nation from which a ship or shipment has or is scheduled

C
to depart.
Country of destination. he nation in which exported goods are to be used or con-

sumed, as known to the shipper at the time of export.
Country of origin. he nation in which referenced goods were grown, manufactured

or produced, or for some customs valuation criteria, substantially transformed. See
customs valuation.
Country risk. he possibility of non-payment caused by such buyer-country related

problems as political instability, war, arbitrary government action and exchange in-
convertibility, as opposed to problems that could be encountered by the buyer such
as insolvency or bankruptcy. A country-risk country classiication is ofered by CO-
FACE (Compagnie Française dÁsssurance pour le Commerce Exterieur). Also called
political or economic risk.
Courtage. French term for brokerage or brokerage fee.
Cover note. Document issued by insurance company or insurance brokers instead of

insurance policies or insurance certiicates, which serves as proof of usual insurance
notiications and represents cover approval. Cover note may be accepted under let-
ters of credit only when they are expressly permitted. Also called broker´s cover note.
CPT Carriage Paid to. In Incoterms CPT the delivery of goods occurs when the
seller makes them available to the carrier that he has hired to perform international
transport, although the seller also manages and assumes the costs of international
transport to the place of destination. herefore, the point where the risk of transport
is transferred (when the goods are delivered to the carrier in the seller´s country) is
diferent from the point till the seller bears the costs of transport. In the event that
there are several successive carriers, such as multimodal transport or truck-air or
truck-ship, the transport risk passes from the seller to the buyer when the goods are
delivered to the irst carrier in the chain. In CPT, unlike Incoterm CIP, the seller
has no obligation to hire insurance transport to cover the goods from the place of
delivery to destination. In this Incoterm, the seller has to complete the formalities
and bear the costs of customs clearance for export, not the import clearance that
corresponds to the buyer. See Incoterms for a list of the eleven Incoterms. Practical
Guide to Incoterms.
Credit risk insurance. Insurance designed to cover risks of nonpayment for delivered
goods.
Cross-culture business. Cross culture is a vital issue in international business, as the

success of international trade depends upon the smooth interaction of employees from
diferent cultures and regions. Some of the considerations in cross-cultural business
C include concerns about the diferences that are caused by culture, beliefs, law, and
language. We can distinguished mainly three kinds of business culture efects:
• Business roles: the fact that the diferences in cultures usually have a direct
efect on the manner in which business afairs are carried out by the members
of such a community. For example, cultures that do not allow women to have
certain rights will also relect this bias in the business aspect of their dealings,
something that businessmen and women from other less repressive cultures
would have to understand in order for them to communicate efectively. Since
culture is not something that can be changed merely through the operation of
a foreign company, the management and staf of such a company would have
to look for common grounds on which they and the business partners from
those diferent cultures can meet.
• Business law: Another consideration in cross-cultural business is the manner in
which the law of the foreign culture afect the manner in which they conduct
their business. his is very important because miscommunication may occur
due to the assumption by one party to a business communication that the law
in his or her country is also the same in the country of the foreign business
partner. One way to avoid this miscommunication is through a conscious ef-
fort by a business to study the law and customs in a country before it ventures
into that country.
• Language: It is also a concern in cross-cultural business that language barriers
must be surmounted in order for business communication to occur. Some
businesses achieve this by hiring interpreters or using translation services as a
medium for channelling to the other party, and for them to decipher what the
other party is trying to say.
Also called intercultural business. See business culture. Business Culture Guides by
Countries.
Crossed check. A check that bears on its face two parallel transverse lines and that
cannot be `presented for cash A bank that accepts the check may pay the proceeds only
to another bank, which will credit the money to the account of the payee of the check.
Cultural diferences. Despite the globalization of markets cultural diversity clearly

continues. Cultural diferences often pose major diiculties in international nego-
tiations and marketing management. he cultural diferences relect diferences in
personal values and in the assumption people make about how business is organized.
Every culture has its opposing values. See business culture; cross-culture business.
Business Culture Guides by Countries.
Currency. he circulating media of exchange in a country. Includes money and such

inancial instruments as checks.
Currency adjustment factor (CAD). An additional charge added to the base-rate

ocean freight costs, which is raised or lowered to relect changes in the exchange rate
of currency in which the freight costs are billed. his charge is separate from the base
C
rate because exchange rates luctuate more often than freights costs do. Also called
Currency adjustment charge (CAC).
Currency future. A contract for the future delivery of a commodity, currency, or

security on a speciic date. In contrast to forward contracts, future contracts are for
standard quantities and for standard periods and are primarily traded on an exchange.
Forward transactions enable importers and exporters who will have to make, or will
receive, payment in a foreign currency at a future time to protect themselves against
the risk of luctuations in the spot rate.
Currency option. he contractually agreed right to buy (call option) or to sell (put
option) a speciic amount of foreign currency at a predetermined price on a speciic
date (European option) or up to a future date (American option).
Current account. he part of a country´s balance of payments that records current

(as opposed to capital) transactions, including visible trade (income and expenditures
for services), proits earned from foreign operations, interests and transfer payments.
See balance of payments.
Current balance. he value of all exports (goods plus services) less all imports of a
country over a speciic period of time, equal to the sum of the trade (visible) and
invisible balances plus net receipts of interests, proits and dividends from abroad.
See balance of payments.
Customs. A government authority designated to regulate low of goods to/from a

country and to collect duties levied by a country on imports and exports. he term
also applies to the procedures involved in such activities.
Customs area. A geographic area, usually identical to one or several contiguous na-
tional political jurisdictions, applying a particular tarif schedule on goods entering
or leaving the area. See customs union.
Customs bonded warehouse. A government warehouse where goods remain until

duty has been collected from the importer.
Customs broker. Licensed agent or broker (licensing may not be required in all
countries) whose function is to handle the process of clearing goods through customs
for importers.
Customs classiication. he particular category in tarif nomenclature in which a

products is classiied for duty purposes. Almost all major trading nations classiied
imported goods according to the Harmonized System.
Customs clearance. he act of complying with the import regulations of an import-

ing country. Generally governments require some sort of import declaration. Depend-
C ing on the country and the product, additional supporting documentation such as
origin certiicates, consulate documentation and product relates health and safety
certiicates may also be required. Payment or agreement to pay any applicable import
duty and taxes often accompanies customs clearance. Also called import clearance.
Customs duty. Tax levied by the government on goods crossing the customs border,
usually a tax imposed on imports. Duties, or tarifs, are either based on the value of
the goods (ad valorem duties), some other factors such as weight or quantity (speciic
duties) or a combination of value and other factors (combined duties).
Customs entry. An import declaration made for the purpose of obtaining customs
clearance by the importer or a customs broker authorized to represent the importer.
Depending on the country and the product, additional supporting documentation
such as origin certiicates, consular documentation and product related health and
safety certiication may also be required.
Customs invoice. A invoice made out on a special form prescribed by the customs
authorities of the importing country. Used only in a few countries, usually former
British territories (Canada). It serves as a seller´s commercial invoice.
Customs union. An association between two or more countries to eliminate tarifs

and other import restrictions on each other´s goods and establish a common tarif
on the goods from all other countries. As in the free trade area, goods and services are
freely traded among members. In addition, however, the customs union establishes a
common trade policy with respect to non-members. Typically this takes the form of
a common external tarif, whereby imports from non-member are subject to the same
tarif when sold to any member country. See economic integration.
Customs valuation. he amount of money required to be shown on the customs

entry according to the importing country´s regulations. Since many products are as-
sessed duty on ad valorem basis, the correct customs value is necessary to determine
the correct duty obligation. Countries have diferent methods to determined customs
valuation; for instance, some countries do not include the cost of transportation from
the exporting country, while others (the majority) do. Some countries increased the
value by the cost of so-called assists rendered by the importer to the foreign producer.
Many countries have comparative formulas for testing customs values, such as the
value of similar goods and/or estimates of the production costs, transportation costs
and manufacturer/exporter proit. Accurate customs valuation is also important to
determine whether the pricing of imported goods violates the importing country´s
anti-dumping regulations.
Cut-of time. he latest time cargo may be delivered to a terminal for loading to a
scheduled train or ship.
C
D
DAF Delivered at Frontier. An obsolete Incoterms that was discontinued in Inco-
terms 2010 edition. his Incoterms has been replaced by DAT. See Incoterms; DAT
Delivered at Terminal. Practical Guide to Incoterms.
Damages. A monetary amount claimed and awarded to a person for loss or injury to
the person or the person´s property. Various types of damages may sought depending
on the circumstances of the injury or loss, including:
• Actual: compensation for amounts in fact incurred.
• Expectation: compensation for amounts that a person could have reasonably
anticipated receiving from a transaction had it not failed.
• Incidental: expenses reasonably incurred by mitigating, or otherwise in associa-
tion with losses.
• Liquidated: an amount ixed by contract as reasonable compensation in the
event a party defaults.
See liquidated damages.
D Dangerous goods. Articles or substances which are capable of posing a signiicant

risk to health, safety, o property when transported by air and which are classiied ac-
cording to the most current edition of the International Civil Aviation Organization
(ICAO) Technical Instructions for the Safe Transport of Dangerous Goods by Air,
and the International Air Transport Association (IATA) Dangerous Goods Regula-
tions. Dangerous goods may be transported domestically and internationally by air.
Dangerous Goods Declaration. Shippers of dangerous goods are required to de-

clare them to carriers per the International Air Transport Association (IATA) and
the International Maritime Organization (IMO) and any applicable additional local
regulations.
DAP Delivered at Place. In Incoterms DAP the seller delivers the goods, without
unloading, at the place of destination in the buyer’s country. he transport risk is
transferred from buyer to seller in the same place where the goods are delivered.
he place of delivery may be the buyer’s premises or a place nearby, other than a trans-
port terminal, in the country of destination. If delivery occurs at a transport terminal
or transport infrastructure (port, airport, etc.) in the country of destination, Incoterms
DAT should be used. In this Incoterms the seller has to complete the formalities and
bear the costs of customs clearance of export, not the import clearance that corre-
sponds to the buyer. In the event that the seller also clear goods for import Incoterm
DDP should be used. his is a very useful Incoterms for sales between countries of
the same economic area (e.g. European Union) in which the seller wants to deliver
the goods at buyer´s premises but is not necessary to clear goods for import as there
are no customs. his Incoterms may be used irrespective of the mode of transport.
See Incoterms for a list of the eleven Incoterms. Practical Guide to Incoterms.
DAT Delivered at Terminal. In Incoterms DAT the seller delivers the goods un-
loaded at a port terminal or another place of destination in the buyer´s country. he
terminal concept is quite broad and includes both terminals of transportation (land,
air, sea) and logistics infrastructure (ports, airports, railway stations) or similar facili-
ties as docks, warehouses and free zones. Due to the diferent places of delivery that
allows this Incoterm is important to clearly mention the speciic point that seller and
buyer have chosen for delivery so the contract for international transport made by
the seller conforms to that choice. When the seller carries the goods from the delivery
terminal to another point in the buyer’s country such as buyer´s premises (factory or
warehouse) Incoterm DAT should not be used. he Incoterms suitable for that situ-
ation are DAP or DDP. In Incoterms DAT, the seller has to complete the formalities
and bear the costs of customs clearance for export, not the import clearance that
corresponds to the buyer. See Incoterms for a list of the eleven Incoterms. Practical
Guide to Incoterms.
Date draft. A draft that matures for a speciied number of days after issuance, without
regard to the date of acceptance.
DDC Delivered destination charges. hat expression refers to various miscellaneous

charges in the port of destination; also is used to refer to dispatch money at discharge.
D
DDP Delivered Duty Paid. In Incoterms DDP the seller fulils his obligation to
deliver when the goods have been available at the named place in the country of
importation. he seller has to bear the risks and costs including duties, taxes and
other charges of delivering the goods thereto, cleared for importation. While EXW
Ex Works term represents the minimum obligation for the seller, DDP represents the
maximum obligation. his term should not be used if the seller is unable to directly or
indirectly to obtain import licence. If the parties wish the buyer to clear the goods for
importation and to pay the duty, the term DAP (delivered at place) should be used.
If the parties wish to exclude from the seller´s obligations some of the costs payable
upon importation of the goods (such VAT- Value Added Tax), this would be made
clear by adding words to this efect: Delivered Duty Paid, VAT unpaid. his Incoterms
may be used irrespective of the mode of transport. See Incoterms for a list of the
eleven Incoterms. Practical Guide to Incoterms.
DDU Delivered Duty Unpaid. An obsolete Incoterms that was discontinued in In-
coterms 2010 edition. his Incoterms has been replaced by DAP Deliverer at Place.
See Incoterms. Practical Guide to Incoterms.
Dead freight. Compensation for cargo agreed to be shipped but unshipped (usually
because it was unavailable for loading). In liner terms dead freight can also mean com-
pensation due to a ship line because the shipper failed to meet a pre-agreed quantity
commitment under a service contract.
Deadweight. he maximum carrying capacity of a ship, expressed in tons, of cargo,

stores, provisions and bunker fuel. Deadweight is used interchangeably with dead-
weight tonnage and deadweight carrying capacity. A vessel´s capacity for cargo is less
than its total deadweight tonnage.
Deadweight cargo. Cargo of such weight and volume that a long ton (2.240 pound)
is stowed in an area of less than 70 cubic feet.
Dealer. An individual or irm who acts as a principal in the sale of merchandise.
Declared value for carriage. he value of goods declared to the carrier by the shipper
for the purposes of determining charges, or of establishing the limit of the carrier´s
liability for loss, damage or delay. See valuation charges.
Deck cargo. Goods shipped on the deck of a ship rather than in its holds. Since deck
cargo is more exposed to the elements, traders may wish to stipulate that goods not
be carried on deck, except in such cases as transport of hazardous materials, in which
case carriage on deck may be mandatory.
Deadline. he time or date by which something must be done.
D Deal breaker. A term or condition in a proposed transaction upon which negotiators

for both sides cannot gain agreement and that can cause the transaction to fail. Deal
breakers may relate to price, payment, terms, quality issues, etc.
Deconsolidation point. Place where loose or other non-containerized cargo is un-

grouped for delivery.
Default. In international trade, default is failure to meet the legal obligations (or
conditions) of a loan. A national sovereign default is the failure or refusal of a govern-
ment to repay its national debt. Default can be of two types:
• Debt services default: occurs when the borrower has not made a scheduled
payment of interest or principal.
• Technical default occurs when an airmative or a negative covenant is violated.
Sovereign borrowers such as nations generally are not subject to bankruptcy courts in
their own jurisdiction, and thus may be able to default without legal consequences.
Deferred payment letter of credit. A letter of credit that is not payable at sight but
at a future time.
Del credere. 1. As relates to international commercial agency relationships, a del

credere agent is one who guarantees the ability to pay prospective clients he or she
has brought to the principal; in exchange, the del credere agent is usually accorded a
higher percentage commission that is a regular agent. 2. As relates to risk in general,
del credere risk is the risk that a party will be unable to meet its inancial obligations.
Delay clause. An insurance policy clause that excludes claims for loss of market and
for loss, damage or deterioration arising from delay. his exclusion appears in almost
every marine cargo insurance policy. Insurance underwriters are exceedingly reluctant
to assume any liability for loss of market, which is generally considered a “trade loss”
and uninsurable. A market loss, furthermore, is an indirect or consequential damage.
It is not a “physical loss or damage”. See special marine policy.
Delivery. Transferring property of goods from one party to another as from the seller
to buyer, shipper to carrier, or carrier to consignee.
Delivery instructions. Speciic delivery instructions for the freight forwarder or car-
rier stating exactly where the goods are to be delivered, the deadline, and the name,
address, phone and mail of the person to contact if delivery problems are encountered.
See delivery order.
Delivery lead time. he time from the receipt of a customer order to the delivery
of the product.
Delivery note. he delivery note is a document that certiies the delivery of goods to
the buyer, who must sign it to make it clear that the goods have been delivered in ac-
cordance with the conditions established. he use of this document is not mandatory,
D
although in international trade is very common especially when the exporter deliv-
ers the goods in the seller’s country and he needs a document proving delivery. his
document must be issued in a simple format that contains the following information:
• Data identifying the seller and buyer.
• Reference to the invoice.
• Number and description of the products.
• Date of issue of the document and date of delivery of the goods.
• Name, signature and stamp of the purchaser, accepting delivery of the goods
in good condition.
his document has a dual function for the exporter: as a justiication of the removal
of the products from its warehouse and as a proof of delivery to the importer so in
that sense it is important that the carrier gets a copy signed by the importer. To the
importer, this document serves to verify that the goods received match those listed
on the purchase order or sale contract. For the carrier this document is the proof of
delivery of goods. Model of Delivery Note.
Delivery order (D/O). A document from the consignee, shipper, or owner of freight,
ordering a terminal operator, carrier or warehouseman to deliver freight to another
party. Delivery order should be clearly distinguished from bill of lading: the delivery
order is not a negotiable document, nor does it evidence receipt of goods, nor does
contain the provisions of the transport contract under which the goods are shipped.
Demand guarantee. A guarantee issued by a bank, under which the beneiciary is

only required to make a demand in order to receive payment. In contrast to the con-
ditional guarantee - which require the beneiciary to provide proof of the principal´s
default - a demand guarantee only requires that the beneiciary make a simple de-
mand, and therefore the latter guarantee is relatively risky in terms of exposure to un
unjustiied demand on the part of the beneiciary. Some protection against such an
unfair demand can be obtained by making the guarantee subject to the ICC Uniform
Rules for Demand Guarantees (URDG, ICC Publication 758).
Demurrage. he extra charges paid to a shipowner or carrier when a speciied period

for loading/unloading is exceeded. he demurrage may, depending on the context,
be paid by the charterer or shipper. Also known as detention. See detention charges.
Depreciation. In foreign exchange, the decline in value of one currency in relation

to another currency.
DEQ Delivered ex Quay. An obsolete Incoterms that was discontinued in Incoterms

2010 edition. his Incoterms has been replaced by DAT Delivered at Terminal. See
Incoterms. Practical Guide to Incoterms.
D DES Delivered ex Ship. An obsolete Incoterms that was discontinued in Incoterms
2010 edition. his Incoterms has been replaced by DAT Delivered at Terminal. See
Incoterms. Practical Guide to Incoterms.
Destination delivery charge. A charge, based on the container size, which is applied
in many tarifs to cargo. his charge is considered accessorial and is added to the base
of ocean freight. his charge covers crane lifts of the vessel, drayage of the container
within the terminal and gate fees at the terminal operation.
Destuing. he unloading of cargo from a container. Also called devanning and

stripping.
Detention charges. Charges assessed by a carrier against the consignor or consignee

as compensation for holding a carrier driver and/or trailer beyond a certain stated
period of “free time”. See demurrage.
Devaluation. he reduction of a currency´s value in relation to other currencies. he

exchange values of freely traded currencies are determined by market action. However,
governments that interfere with market action can manipulate the value of their cur-
rency by iat. Devaluation tends to reduce domestic demand for imports in a country
by rising prices in terms of the devalued currency and to raise foreign demand for the
country´s exports by reducing their prices in terms of foreign currencies. Devaluation
can therefore help to correct a balance of payments deicit and sometimes provide a
short-term basis for economic adjustment of a national economy.
Devanning. he unloading of cargo from a container. Also called destuing and

stripping.
Developed countries. A term used to distinguish the more industrialized nations, in-
cluding most OCDE member countries, from developing or less-developed countries.
he developing countries generally lack a high degree of industrialization, infrastruc-

ture and other capital investment, sophisticated technology, widespread literacy and
advanced living standard among their populations as a whole.
Deviation clause. An insurance term meaning that coverage will apply even if the
vessel or voyage or interested parties unintentionally stated incorrectly or if actual
transportation deviated from the intended routing, or was interrupted through no
fault of the assured.
Devil´s advocate. An individual who is given the role of the opposition in discus-
sions preparing for negotiations. Devil´s advocacy derives from taking the side of evil
during a theological debate. See negotiations.
Dimensional weight. An airfreight term used to describe the results of computing the
chargeable weight from the cubic measurement of a shipment. Also called dim weight.
Direct foreign investment. Investment that is made to acquire a lasting interest in D

a enterprise operating in an economy other than of the investor. In most countries,
direct investment is deined for statistical purposes as the ownership or control, di-
rectly or indirectly, by one person or company of, at least, 10 percent of the capital.
Direct tax. A tax that is levied on wealth or income. See excise tax; indirect tax;
sales tax.
Dirty loat. A system in which exchange rates are partially determined by government
intervention or restrictions to limit appreciation or depreciation of the country´s cur-
rency. See clean loat and loating exchange rate.
Discharge. he unloading of passengers or cargo from a vessel, vehicle or aircraft.
Discount. 1. A deduction from an amount due to given consideration of such cir-

cumstances as prompt or early payment or an order of unusually large quantity. 2.
Selling a receivable or accepted draft at a price below face amount for net present
value. 3. In foreign exchange, refers to a situation where a currency can be bought
more cheaply at a future date than for immediate delivery.
Discrepancies. In the context of letters of credit, discrepancies arises when docu-

ments presented under a letter of credit do not conform to the terms of the credit;
generally an error, contradiction or omission related to the documents constitutes the
discrepancy. he bank will refuse to pay against documents unless the applicant (the
buyer) agrees to amend the credit or otherwise waive objections to payment under
credit. Neither is the conirming bank obliged to pay. See letter of credit; UCPDC
Uniform Customs and Practice for Documentary Credits.
Discrimination. In international trade, inequality of treatment accorded to imports

from diferent countries, such as preferential tarif rates for imports from particular
countries or trade restrictions targeted against particular countries.
Dispatch money. An incentive payment ofered by a shipowner or a charterer in

exchange for completing loading or unloading in less time than is speciied in the
charter party contract. his time is often calculated as a number of lay days (laytime).
See Charter party; demurrage; laytime.
Distortion. When prices and production are higher or lower than levels that would
usually exist in a competitive market.
Distributive bargain. A negotiation based on an attempt to divide up an amount of

resources, resulting in a win-lose situation. When choosing this strategy, one takes on
an adversarial or competitive view. he focus is on achieving immediate goals, with
little or no regard for building future relationships. Little time or energy is needed
in resolving conlicts using a win-lose strategy, because few if any creative solutions
D are considered. his negotiation strategy is typical of competitive negotiators who
belong to such emerging countries as China, Russia or Arab countries. Also known
as win-lose strategy.
Distributor. An independent person or legal entity that sell goods locally on behalf
of a principal. Distributors can be distinguished from agents as distributors buy the
goods in their own name, then re-sell them at prices which they have some liberty
to set. Distributorship is frequently based on a contract that grants the distributor
exclusivity for a speciic territory. Some of the main clauses of this type of contracts
are: products and territory, exclusivity, non-competition, prices, delivery and payment
conditions, promotional activities, services etc. In international markets, relationships
between distributors and its providers are governed through an International Distribu-
tion Contract. See agent; sales representative.
Dock. A place where cargo is loaded/unloaded. Often used as synonym for wharf or
pier. A loading dock is the part of a shipping facility where trucks are loaded.
Dock receipt. A receipt issued by a warehouse supervisor or port oicer certifying

that goods have been received by the shipping company. he dock receipt is used
to transfer accountability when an export item is moved by the domestic carrier to
the port of embarkation and left with the international carrier for movement to its
destination. Dock receipts are normally prepared by forwarders or shippers.
Documentary collection. A method of payment under which the shipping docu-

ments relating to a particular cargo are released to the importer on payment (docu-
ments against payment D/) or acceptance (documents against acceptance D/A) of a

documentary draft drawn on him by the exporter. Under collections, the exporter
presents a draft together with shipping documents to a bank (the remitting bank)
in his country, which then forwards the documents and draft to the collecting bank
in the buyer´s country. he documents enabling the buyer to take possession of the
goods will only be released by the collecting bank when the buyer either pay or ac-
cepts the draft.
Documentary credit. Documentary credit means the same thing than “letter of
credit”. Traders and bankers in some parts of the world (US, Asia) tend to use the term
“letter of credit” or the abbreviation “L/C”, while some bankers (in Europe) prefer to
use “documentary credit” or “D/C”. Documentary credits facilitate international pay-
ments by providing security for both the exporter and the importer. he seller receives
an advance assurance of payment upon presentation of documents conforming to the
terms and conditions of the letter of credit, and the buyer is assured that the bank will
not pay unless the seller has actually submitted documents strictly complying with
the documentary credit. A typical procedure of a documentary credit is as follows:
• Contract. he process begins when the exporter and importer agree on a sales
contract. Typically, it is the exporter that insists on payment by letter of credit
because it does not want to take a credit risk, and cannot get suicient informa-
tion about the creditworthiness of the buyer to grant another form of payment.
• Application. he importer then initiates the documentary credit mechanism
D
by going to its bank and requesting it to open the credit.
• Issuance. Subject to internal credit approval, the importer´s bank issues the
credit (and is hence called the “issuing bank”), under which it agrees to pay
according to the importer´s instructions. he credit is sent to the exporter or
to the a bank in the exporter´s country (depending of the type of credit).
• Conirmation (optional). Commonly, under the sales contract and/or doc-
umentary credit application, the exporter´s bank (or another bank in the
exporter´s country) will be requested to conirm the documentary credit,
thereby committing itself to pay under the terms of the credit. Exporters may
insist on conirmed credits when they want to have a trusted local payment.
• Notiication. he exporter (beneiciary) is notiied of the availability of the
credit.
• Shipment and presentation of the documents. If the exporter agrees with the
terms of the credit, it then proceeds to ship the goods. After shipment, the
exporter goes to the bank nominated in the credit to efect payment an presents
the documents that the importer has asked for. he exporter usually also pres-
ents a bill of exchange or draft, a document representing the bank´s payment
obligation.
• Examination of documents/discrepancy/waiver. he bank examines the docu-
ments carefully to ensure that they comply with the terms of the credit. If the
documents do not comply, the bank cites a documentary “discrepancy”, notiies

the exporter and refuses to pay the credit. he exporter may then either correct
the documents or obtain a waiver of the discrepancy from the importer.
International documentary credit practice is governed by a set of rules produced by

ICC, the latest version of which is know as UCO 6000 Uniform Customs and Practice
for Documentary Credits. See letter of credit. Model of Letter of Credit.
Documentary instructions. he formal list and description of documents (primar-

ily shipping documents) a buyer requires of the seller, especially in a documentary
letter of credit.
Documents against acceptance (D/A). Collection terms of payment that require the
drawee to accept a draft or drafts drawn for future maturity at the presenting bank
prior to receiving the accompanying documents. Typically, such collections include a
document that restricts possession or ownership, thereby forcing the drawee to accept
he draft in order to obtain the relevant goods. he presenting bank then conveys the
acceptance at maturity date(s) to the drawer through its bank, and presents the draft
for payment when due. here are two kinds of time drafts: those payable at a prede-
termined time from the day shown on the face of the draft (date drafts), and those
payable at a predetermined time from the date(s) the draft was accepted (time-sight
D drafts). As the date shown on drafts normally corresponds to the date of the transport
document, date drafts extend time from shipment. Time-sight drafts, however, are
normally accepted once the goods have arrived and thereby extend time from arrival.
he net diference, therefore, is which part inances the goods during transit time.
he question of protest should be addressed when considering these payment terms.
Documents against payment (D/P). Collection terms of payment that require the
drawee to pay a draft prior to receiving the accompanying documents. Typically, such
collections include a document that restricts possession or ownership, thereby forc-
ing the drawee to honour the draft in order to obtain the relevant goods. While it is
possible to protest for non-payment of sight drafts, the beneit is questionable, as the
drawee will not have received the contract goods.
Doing Business Project. he Doing Business Project provides objective measures

of business regulations and their enforcement across 189 economies. his report,
launched in 2002, looks at domestic small and medium-size companies and measures
the regulations applying to them through their life cycle. By gathering and analysing
comprehensive quantitative data to compare business regulation environments across
economies and over time, Doing Business Project encourages countries to compete
towards more eicient regulation; ofers measurable benchmarks for reform; and
serves as a resource for academics, journalists, private sector researchers and others
interested in the business climate of each country.
Doing business Project evaluates 10 topics related to business regulations:

• Starting a business
• Dealing with construction permits.
• Getting electricity.
• Registering property.
• Getting credit.
• Protecting investors.
• Paying taxes.
• Trading Across borders.
• Enforcing contracts.
• Resolving insolvency.
he Doing Business Project is published annually by the World Bank Group. Website.
Domicile. 1. A place of permanent residence. 2. In banking, the place where a draft

or acceptance is made payable. See bill of exchange.
Door-to-airport. A contract carriage whereby a single carrier undertakes transporta-

tion responsibility from the point where the shipment originates (usually the seller´s
door) to a designated airport on the buyer´s side. Unless the seller is physically located
D
at an airport, door-to-airport transportation includes pre-carriage and main carriage,
but does not include on-carriage.
Door-to-door. A transport service covering carriage from seller´s premises to the

buyer´s premises. his term refers to a freight in a carriage contract between a carrier
and a shipper and thus is distinct from the issue of the Incoterms chosen in the con-
tract of sale (an agreement between seller and buyer). Depending on the circumstances
of the transaction, it could be possible to quote prices on either EXW, FCA, CPT,
CIP, DP or DDP Incoterms in conjunction with so-called house-to-house transport
services. Attention should be given to the inclusion of loading (unloading charges in
the house-to-house rate, especially in comparison with the responsibility under the
respective Incoterms for loading or unloading). he shipper should make sure that
the transport service corresponds to the contractual obligations under Incoterms. It is
sometimes said that door-to-door services imply that loading and unloading are not
included in the freight charge. Door-to-door is sometimes used as synonymously with
house-to-house, but it is claimed by some that here is a distinction between the two,
namely that house-to-house only refers to rental rates for containers from container
yard to container yard. See house-to-house.
Door-to-port. A contract carriage whereby a single carrier undertakes transportation

responsibility from the point where the shipment originates (usually the seller´s door)
to a designated port on the buyer´s side. Unless the seller is physically located at a
port, door-to-port transportation includes pre-carriage and main carriage, but does
not include on-carriage.
Double column tarif. A tarif schedule listing two duty rates for some or all com-
modities. Under such arrangements imports may be taxed at a higher or lower rate,
depending on the importing country´s trade relationship with the exporting country.
Downstream dumping. A situation where producers sell at below cost to another

producer in the same country, who further processes and exports the products to
another country. See dumping.
Draft. An unconditional order in writing, signed by a person (drawer) such as a buyer,

and addressed to other person (drawee), typically a bank, ordering the drawee to pay a
stated sum of money to yet another person (payee), often a seller. A draft, also called
a bill of exchange, may be payable to a named person or his order (order draft), or to
bearer (bearer draft). he most common versions of a draft are sight draft, which is
payable on presentation or demand, and the time draft, which is payable at a future
ixed (speciic) or determinable (30, 60, 90 days, etc.) date. Should the beneiciary
under a time draft require the money before the bill matures, he may discount his
claim for immediate payment with his bank. Also called bill of exchange.
D Drayage. Charge made for local hauling by dray or truck. Also called cartage.
Drawback. he refund by a government, in whole or part, of customs duties as-

sessed on imported goods that are subsequently exported. Drawback may also often
be claimed for duty paid on the imported material content of domestically produced
goods that are exported. Drawback regulations and procedures vary among countries.
Drawee. he individual or irm on whom a draft is drawn. he drawee is instructed

by the drawer to pay a speciied sum of money to, or to the order of the payee, or to
the bearer. In a documentary collection, the drawee is generally the buyer. See bill of
exchange; draft; documentary collection; drawer.
Drawer. he individual or irm that issues or signs a draft instructing the drawee
to pay a speciied sum of money to, or to the order of, a named person (payee), or
to bearer. In the case of a draft to one´s order, the drawer is also the payee. Like the
endorser(s), the drawer is secondarily liable on the draft. In a documentary collection,
the drawer is the seller. See draft; documentary collection.
Drawing. A term used to describe the payment of a letter of credit based on a presen-
tation of documents that comply with the terms and conditions of the letter of credit.
Drum. A cylindrical shipping container.
Dry port. A dry port is a port situated near sea. If the importer or exporter is far
away from a sea port, it will be an inconvenience to co-ordinate and handle the goods
properly. So governments of certain countries allow CFS (container freight station) to

handle export and import formalities under customs supervision. he cargo will be
moved by rail or road from the sea port to CFS. he exporter can complete customs
formalities in CFS and ship the goods without moving cargo to sea port. Likewise,
importer can take delivery of cargo near his place after completing procedures at dry
port. If the buyer insist for on board bill of lading, as a proof of export, the buyer
waits to get the shipment reached at sea port and once cargo loaded in to vessel, the
on board bill of lading is obtained from shipping line. If the buyer needs only a proof
of shipment, the exporter can obtain Received for shipment B/L from the carrier who
is a multi model transporter. A multimodal transporter is a carrier who carries goods
in two or more modes of transport like road, rail, air, or sea. See transit zone.
D/S Days after sight. Payment term often used in conjunction with bank drafts and
documentary credit.
Due diligence. Investigative research to independently establish the background of

a potential partner. Matters investigated typically include inancial statements, legal
status and any key matters that afect the viability of the partner to follow through on
a particular transaction. Openness and access to records are not standardized globally,
and a result of the ability to conduct such research may be greatly restricted by legal
structure of individual economies and company policy.
Dumping. he practice of selling a product in a foreign market at an unfairly low

D
price (a price that is lower than the cost in the home market, or which is lower than
the cost of production) in order to gain a competitive advantage over other suppliers.
Dumping is considered an unfair trade practice under GATT and World Trade Orga-
nization agreements. It is regulated by national government through the imposition
of anti-dumping duties, in some cases calculated to equal the diference between the
product´s price in the importing and the exporting country.
DUNS number. An international numbering system provided by the American com-

pany Duns & Bradstreet for identifying companies.
Duopoly. A market controlled by two suppliers.
Duty. In customs, a tax levied by government on the import, export or consumption

of goods. Usually a tax imposed on imports by the customs authority of a country.
Duties are generally based on the value of the goods (ad valorem duties), some other
factors such as weight or quantity (speciic duties) or a combination of value and other
factors (compound duties).
Duty paid. A price that includes the cost of import clearance. See DDP Incoterms.
E-auction. An online reverse auction that takes place in real time. It gives suppliers
the opportunity to bid against each other to improve their ofers.
E & OE Errors and omissions excepted. When appended to a signature on a ship-

ping document, indicates a disclaimer of responsibility for spelling, typographical or
clerical errors.
Eco-label. A voluntary mark awarded by the European Union to producers who can
show that their product is signiicantly less harmful to the environment than similar
products.
Economic integration. Economic integration has been one of the main economic
developments afecting international trade in the last years. Countries have wanted
to engage in economic cooperation to use their respective resources more efectively
and to provide large markets for member-countries of the resulting integrated areas.
here are mainly four levels of economic integration:
• Free trade area: is the least restrictive and loosest form of economic integra-
tion among nations. In a free trade area all barriers to trade among members
E countries are removed. Each member country maintains its own trade barriers
vis-à-vis con-member countries.
• Customs union: is one step further in the economic integration process. As
in the free trade area, goods and services are freely traded among members. In
addition, however, the customs union establishes a common trade policy with
respect to non-members. Typically this takes the form of a common external
tarif, whereby imports from non-member are subject to the same tarif when
sold to any member country.
• Common market. he common market has the same features as a customs
union, but, in addition, factors of production (labour, capital and technology)
are mobile among members. Restrictions on immigration and cross-border
investment are abolished.
• Economic union: it is the last step in an economic integration process. In
addition to free movement of goods, services and production factors, it also
requires integration of economic policies, both monetary and iscal. Under an
economic union members harmonize monetary policies, taxation and govern-
ment spending. In addition, a common currency is used by members and this
could involve a system of ixed exchange rates.
Economic union. An economic union is the last step in an economic integration

process. he previous ones are: free trade area, customs union and common market.
In addition to free movement of goods, services and production factors, it also requires
integration of economic policies, both monetary and iscal. Under an economic union
members harmonized monetary policies, taxation and government spending. In addi-

tion, a common currency is used by members and this could involve a system of ixed
exchange rates. Clearly the formation of a economic union requires the surrender of
a large measure of national sovereignty to a supranational body. Such a union is the
previous and last step to political uniication. See economic integration.
EDI. he Electronic Data Interchange is a computer-to-computer transmission of

business messages (such as purchase orders, invoices, booking instructions, etc.) using
standard, industry accepted message formats.
EDIFACT. he Electronic Data for Administration, Commerce and Transportation

is an international sytanx used in the interchange of electronic data.
EFTA. he European Free Trade Association is an intergovernmental organization

set up for the promotion of free trade and economic integration to the beneit of its
four Member States: Iceland, Liechtenstein, Norway and Switzerland.
Embargo. A prohibition upon export or imports, either with respect to speciic prod-
ucts or speciic countries. Historically, embargoes have been ordered most frequently
in time of war, but they may also be applied for political, economic or sanitary rea-
sons. Embargoes, imposed against an individual country by the United Nations - or
a group of nations - in an efort to inluence its conduct or its policies are sometimes
called “sanctions”.
E
E-marketplace. An online market place where buyers and seller can do business
electronically.
Enabling clause. he decision on Diferential and More Favourable treatment, Reci-

procity and Fuller Participation of Developing Countries made at the GATT Tokyo
Round, permits developed counties to extend preferences to developing countries
without violating the most-favoured-nation treatment agreements.
End date. he date a contract ends.
Endorsement. he act of a person who is holder of a negotiable instrument in signing

his or her name on the back of that instrument, thereby transferring title or owner-
ship. An endorsement may be made if favour of another individual or legal entity,
resulting in a transfer of the property to that other individual o legal entity. here are
several types of endorsements:
• Endorsement in blank is the writing of only the endorser´s name on the nego-
tiable instrument without designating another person to whom the endorse-
ment is made, and with the implied understanding that the instrument is
payable to the bearer.
• Collection endorsement is one that restricts payment of the endorsed instru-
ment to purposes of deposit or collection.
• Conditional endorsement is one that limits time at which the instrument can
be paid or further transferred or that requires the occurrence of an event before
the instrument is payable.
• Restrictive endorsement is one that directs a speciic payment of the instru-
ment, such as for deposit or collection only, and that precludes any other
transfer of it.
Endorsee. he party in whose favour a document and/or the rights contained therein
in transferred by signature of the endorser.
Endorser. he party executing transfer of a document and/or the rights contained

therein by aixing his or her signature.
Entrepot. An intermediary storage facility where goods are kept temporarily for
distribution within a country or for re-export.
Equity joint venture (EJV). A type of joint venture in which two or more parties
set up a separate legal company to act as the vehicle for carrying out the project.
his new company would usually be located in the same country as one of the two
partner companies, with the purpose of mutually establishing an activity with its
own objectives: marketing and distribution, research, manufacturing, etc. he joint
E venture contract establishes all the agreements needed to start up and manage the
Joint Venture. See joint venture; contractual joint venture. Model of International
Joint Venture Contract.
Equivalence. In sanitary-phytosanitary measures (SPS): governments recognizing

other countries’ measures as acceptable even if they are diferent from their own, so
long as an equivalent level of protection is provided.
Escrow account. A temporary pass through account held by a third party during the
process of a transaction between two parties. his is a temporary account as it oper-
ates until the completion of a transaction process, which is implemented after all the
conditions between the buyer and the seller are settled. his term is mainly used in
the United States.
European Economic Interest Grouping (EEIG). Type of legal structure that allows
companies to found a legally independent cooperation entity with the aim of facilitat-
ing, streamlining and developing their economic activities. he partnership must be
related to the economic activity of its member companies and must play a supporting
role (e.g. joint accounting or prospecting). he EEIG is iscally transparent: it is not
deemed to have legal personality for income tax purposes, so that its results are only
taxable as proits or beneits derived by its members.
ETA Estimated time of arrival. he anticipated date or time that a carrier will arrive
at destination.
ETD Estimated time of departure. he anticipated date or time that a carrier will
leave the port or airport of loading.
eUCP. The Uniform Customs and Practice for Documentary Credits (Supple-
ment for Electronic Presentation) is a supplement to the International Chamber of
Commerce´s Uniform Customs and Practice for Documentary Credits (UCP 600)
to accommodate presentation of documents and records alone or in combination
with paper documents.
EUR 1 Movement Certiicate. Goods transport certiicate and proof of preference

for export in countries and regions associated with the European Union through
free trade agreements, association of preferential agreements, as long as the goods
concerned are included in the tarifs preferences.
EUR-Lex. Portal that ofers most European Union legal texts. EUR-Lex goal is bring-
ing together the whole body of EU texts for online consultation in a streamlined
environment. EUR-Lex.
Eurobox. A plastic stackable container with closed grips. his normalization turns
out to be essential for the coordination and adaptation among diferent manufactur-
ers, for which the eurobox boxes are available in standardized sizes and all of them
are stacked among each other and on pallets. heir smooth interior and without rib-
bings, as well as their size, facilitate the loading and the management of these boxes.
E
Manufactured in polypropylene, they resists impacts, humidity, oils and a great variety
of chemical products.
Europages. Europages is the main business directory for inding, selecting and con-
tacting companies in all European countries. It has near 3 million companies reg-
istered. he search can be done by product, country (or region). See Globaltrade;
Kompass. Website.
EURO-pallet. A type of wooden pallet measured in millimeters that has the dimen-
sions 800 mm by 1,200 mm by 144 mm. his is equal to a pallet 31.50 inches wide
and 47.24 inches long. his pallet, which is commonly used in European countries,
also come in a few variations. he EURO 2 measures 1,200 mm wide by 1,000 mm
long. A EURO 3 pallet lips those dimensions. Its width is 1,000 mm while its length
is 1,200 mm. here are three varieties of EURO 3 pallets. heir measurements are
800 mm by 600 mm, 600 mm by 400 mm and 400 mm by 300 mm.
European option. A foreign exchange type of contract containing a provision to the

efect that it can only be exercised on the expiry or maturity date. See currency op-
tion and American option.
Eurostat. Eurostat is the Statistical Oice of the European Union. Its task is to provide
the European Union with statistics at the European level. By harmonising statistics
through a single methodology, the statistics are made comparable for products and
services in the European Union. he registration works for all Eurostat products and
services. his means that by registering, individuals and companies can activate the
alert function and access the enhanced functionalities of the databases. Website.
Evergreen letter of credit. A letter of credit that automatically renews itself beyond
its stated expiration.
Ex ante, ex post. Before and after a commercial measure is applied to protect the
internal market.
Ex Cellar. A non standard trade term used in the trade of wines and liquors. It must
be replaced by EXW Ex Works. Practical Guide to Incoterms.
Ex Factory. A non standard trade term that must be replaced by EXW Ex Works.
Practical Guide to Incoterms.
Exchange control. A government policy of regulating access to foreign currency.

Typically, countries resort to exchange control because of chronic shortages of foreign
currency, particularly the so-called hard (freely convertible) currency. he are several
ways governments implement exchange control. Import licensing limits the kind and
quantity of products that may be legally imported. A second and often concurrent
E practice is to restrict foreign currency transactions to the government central bank
or selected banks under government supervision. When such measures are imposed,
importers must apply for prior authorization from the government to obtain the
foreign currency required to bring in designated amounts and types of goods. Since
such measures have the efect of restricting imports, they are considered non-tarif
barriers to trade.
Exchange rate. he price of one currency expressed in terms of another, i.e., the
number of units of one currency that may be exchanged for one unit of another cur-
rency. here are mainly two systems of exchange rates:
• Free exchange rates: the actual exchange rate is determined by supply and
demand on the foreign exchange market.
• Fixed exchange rates: the exchange rate is tied to a reference (e.g., gold, USD,
etc.).
Inluences on exchange rates include diferences between countries; investor expecta-

tions about the future changes in a currency´s value; investor views on the overall
quantity of assets in circulation; arbitrage; and central bank exchange rate support.
See loating exchange rate; Oanda.
Exchange risk. he possibility of receiving less or paying more money because a

receivable or a payable is denominated in a foreign currency. Countries with short-
ages of convertible currencies reserves often resort to exchange control. Under these
conditions, delays in payments often occur even after buyers have paid, while the
central bank allocates the corresponding foreign exchange. See Oanda.
Excise tax. A selective tax, sometimes called consumption tax, on certain goods pro-
duced within or imported into a country. An example is a tax on the import of crude
oil, or a tax on certain luxury goods.
Exclusive distribution. his is a type of distribution in which only one distributor

is authorized to sell a speciic product within a particular territory. he legality of an
exclusive distribution agreement can vary depending on the speciics of the case. In
some instances, such agreements are entirely legal, while in others, rivals may create
legal challenges. If a irm can show that an exclusive distribution agreement harms
competition in some way, it may be able to argue that the agreement is not legal. his
type of distribution agreement is usually seen with high end and luxury products.
he structure of an exclusive distribution contract favors both the manufacturer and
the distributor or retailer. From the point of view of people moving the product to
consumers, having an exclusive contract means that consumers must come to them
if they want the product. Model of International Distribution Contract.
Exculpatory clause. A contract clause by which a party is released from liability for
wrongful acts committed by the other party. A seller may agree to release a buyer, for
example, from liability for all or speciied defects in the design, packaging or manu-
facture of a product. E
Execution. 1. he signing of a document, such as a contract. 2. A legal process for
enforcing a judgment for damages, usually by seizure and sale of the debtor´s personal
property. For example, if a court awards damages in a breach of contract action and
the reaching party fails to remit them, the party awarded damages may request the
court to order seizure and sale of breaching party´s inventory to satisfy the award.
Exhibit. A document attached to a contract or agreement. For example, a document

entitled Exhibit A listing product speciications attached to a supply contract. Also
called annex or schedule.
Expatriate. An expatriate is someone who has chosen to live and work in a country
other than the one in which he or she legally resides. Most often, an expatriate is a
citizen of a Western nation who has chosen to live in a non-Western country, such as
one in South America, Asia, or Africa. Expatriates are often known simply as expats,
and they often form their own communities in their new host countries. In areas
popular with expatriates, such as parts of Africa and South-East Asia, there are often
services such as hotels and cafes that cater speciically to the needs of the local expa-
triate community. In addition to salary, companies give their expatriate employees
beneits such as relocation assistance, housing allowance company car, school fees,
medical insurance, etc. Relationships between companies (mainly multinationals cor-
porations) an their expatriate employees are governed through a Model of Expatriate
Contract of Employment.
Expatriate contract. Changes in the world economy have made most of the jobs for
executives and managers focus on the so-called emerging countries (China, India,
Brazil, South Africa). hus in the Western world there is a large number of highly
qualiied professionals who are looking for work outside their home countries. Due
to this new situation, many opportunities arise to negotiate expatriate contracts of
employment. Main aspects that should be negotiate in an expatriate contract are:
• Salary.
• Cost of living.
• Housing and accommodation.
• Healthcare.
• Schooling and education.
• Car.
• Flights home and vacation.
Also called expat contract. Model of Expatriate Contract of Employment.
Expiration date. In a letter of credit transaction, the inal date the seller (beneiciary
of the credit) may present documents and draw a draft under the terms of the letter
E of credit. Also called expiry date. See letter of credit.
Expiry date. In foreign exchange options business, the last day on which an option
can be exercised.
Export. To ship an item away from a country for sale to another country.
Export broker. An individual or irm that brings together buyers and sellers for a fee
but does not take part in actual sales transactions.
Export business plan. he purpose of an export business plan is to prepare compa-

nies, specially middle and small to enter the international market place or to better
organize their existing international business activity. his type of plan serves as step-
by-step guide to lead the company through the process of exporting products and
services to international markets. Some of the goals of an export business plan are:
• Assessment of export potential and capabilities.
• Identify target markets.
• Choose the best market entry strategy.
• Selection of most suitable marketing actions.
• Better management of international business operations.
• Evaluate the inancial resources, sales goals and proits.
his trade tool will help exporters to set their goals, efectively allocate their resources
and determine which countries ofer the most potential for their products as well as
how to reach the clients and how to make competitive ofers. Export Business Plan
Template and Example.
Export clearance. he act of complying with the export regulations of an exporting

country.
Export contract. he export contract is used for the international sale of certain prod-
ucts (industrial supplies, raw materials, manufactured goods), which are projected for
resale, where the buyer is a trader, importer, distributor or wholesaler that will sell the
products to another company or merchant. hough it is common practice to export
products based a proforma invoice or quotation received from exporters, it is a safe
practice to use written and legal export contracts. Some of the essential elements of
an export contract are:
• Products, standards and speciications.
• Quantity. Units of measure in both igures and words.
• Total value. he total contract value in words and igures, and in a speciic
currency.
• Terms of delivery. Delivery terms, based on the Incoterms. E
• Terms of payment. Amount, mode and currency.
• Documentary requirements. Documents needed for international trade trans-
actions.
• Delay in delivery. Damages due to the importer from the exporter in the event
of late delivery owing to reasons other that force majeure.
• Insurance. A contract should provide for the insurance of goods against loss,
damage or destruction during transportation.
• Force majeure. Provisions in the contract deining circumstances that would
relieve partners of their liability for non-performance of the contract.
• Applicable law. he law of the country that is to govern the contract.
• Arbitration. Arbitration clause to facilitate amicable and quick settlement of
disputes or diferences that may arise between the parties.
See International sale contract. Model of Export Contract.
Export credit insurance. Special insurance coverage for exporters to protect against
non payment by the importer (coverage may extend to certain other risks, depending
on the policy). Export credit insurance is available from private insurance underwrit-
ers, such as the German company Atradius, the French COFACE as well as from
government agencies, such as US Eximbank.
Export declaration. A government document declaring designated goods to be

shipped out of the country. his document should be completed by the exporter and
iled with the country government.
Export duty. A tax imposed on exports of some nations. See duty; tarif.
Export entry modes. In establishing export channels a company has to decide which
functions will be the responsibility of external agents and which will be handled by
the company itself. While export channels may take diferent forms, three major types
may be identiied: indirect, direct and cooperative export marketing group:
• Indirect export: this is when the manufacturing company does not take direct
care of the exporting activities. Instead another domestic company, such as an
export agent or trading company, perform these activities, often without the
manufacturing irm´s involvement in the foreign sales of its products.
• Direct export: his usually occurs when the producing irm takes care of ex-
porting activities and is in direct contract with the clients in the foreign target
market. he irm is typically involved in handling documentation, physical
delivery and pricing policies, with the products being sold to inal clients.
• Cooperative export. his involves collaborative agreements with other irms
(export marketing groups) concerning the performance of exporting functions.
E
Export license. A government document granting the licensee the right to export a
speciic quantity of a commodity to a speciied country. his license may be required
in a few countries (mainly developing countries) for most of all exports and in other
countries only under special circumstances.
Export incentives. Assistance provided by governments to enable or assist their sup-

pliers in securing foreign markets. Incentives take may forms. Some, such as assisting
exporters in locating foreign importers through a country´s foreign service post or
providing government-sponsored credit insurance, do not distort markets. Others
such as direct subsidies promote unfair competition and violate World Trade Organi-
zation rules. A third class of incentives -reduced taxation of export-related proits - are
highly controversial and government programmes are referred to the World Trade
Organization for rulings on a regular basis.
Export management company (EMC). Independent private company that acts like
an export department for several non-competing manufacturers and suppliers. Export
management companies can be quite varied.; they can be either local or foreign-
owned, and operate on either a commission (as an agent), a fee basis (as a consultant)
or taking possession of the goods for direct export. he EMC also has the ability to
appoint sales representative in importing countries, promote goods and services of its
clients, arrange transportation, provide warranties and after-sales-service, and extend
import credit. he Export Management Companies can act as:
• An external export sales department, which represents the product of its clients
along with various other non-competitive manufacturers. he relationship with

its clients is established through an International Sales Representative Contract.
• An agent for those exporters that are domestic. he EMC establishes the mar-
keting presence in foreign markets soliciting orders from foreign customers in
the name of the manufacturer. Invoicing is done of the name of the manu-
facturer and the EMC helps the manufacturer with all details of the export
transaction. he EMC may suggest the export price, but the principal has the
inal say on even whether to accept the order. he relationship with its clients
is established through a International Commercial Agency Contract.
• A consulting company with a broad experience and knowledge in the ield of
exports. Export management consultants typically do not hold title to exported
goods, making money instead from commissions paid on each export. he
relationship with its clients is established through a International Consulting
Contract.
• An exclusive distributor on a buy-sell basis. he EMC buys manufacturers at a
set price and resells to foreign customers at a price established by the EMC. In
this case, the EMC is responsible for invoicing and bears the risk on nonpay-
ment. It is very important to note, that the EMC is acting as a distributor, the
manufacturer may have no control over the export price and not even know
the foreign clients are. he relationship with its clients is established through
a International Distribution Contract. E
Export management companies are similar to trading companies, but have some
important diferences because trading companies:
• Specialize mainly in international purchasing and selling on behalf of foreign
clients, while an ETC has no loyalty to a particular manufacturer. hey are
seeking the best terms for their clients.
• Usually buy products in big orders and pay cash to suppliers.
• Identify what foreign buyers want to spend their money on and then searches
domestic sources willing to export, in comparison with Export Management
Companies, which attracts buyers.
See agent; distributor; international consultant; trading company.
Export manager. An export manager serves as intermediary between foreign buyers

and domestic sellers. Unlike trading companies who buy the products before selling
directly to foreign buyers, export managers ind buyers internationally for a domestic
manufacturer that employ them. A export manager plans and coordinates the inter-
national shipment of goods. During the course of the day, he/she may negotiate with
a variety of people, such as shippers, agents and vendors, and are expected to have
excellent customer service skills in dealing with customers. Export managers are also
often responsible for personnel management, which often includes the hiring, training
and supervision of the international department staf. In their accounting function,
export managers may keep track of invoices and prepare reports to expedite the billing
process. hey may also have to ensure that shipments are in compliance with the laws
and regulations governing the export industry. hey have also to negotiate Export
Contracts. While there are no speciic requirements for entry into this profession,
most employers (mainly new exporters) require that candidates have at least a high
school education, and many prefer an university degree mainly in marketing or busi-
ness administration. However, experience in the industry may often substitute for the
lack of a degree. Extensive knowledge of languages (Spanish, French, German and
Chinese) is also appreciated. See agent; distributor; export management company
(EMC); trading company.
Export marks. Words or symbols placed on the outside of a export packed goods
to indicate the shipment´s destination. Typical marks for vessel shipments include
the buyer´s name or symbol destination port, gross weight and dimensions, while
marks for air or ground shipments usually include the buyer´s full address. In all cases
marks should include the sequential number of the particular shipping piece (box,
drum, package, etc.) followed by a slash and the total number of shipping pieces.
For example a box market 1/7 would indicate that it is the irst piece of a shipment
total seven boxes.
Export packing. he preparation of goods for international shipping. he degree

E of export packing required greatly depends on the kind of product, the mode of
transportation, and the facilities at the shipment and destination port or airport.
Shipments made by vessel typically require extensive packing and moisture protec-
tion because of longer transit time, exposure to the humid environment, and the fact
that they are usually handled and re-handled more than with other transport modes.
Although containerization may reduce the need for crating, it does not remove the
need for robust packing and careful container loading. Shipments made by air may
require a lesser degree of export packing than vessel shipments because the transit
times are shorter and air cargo itself tends to be of a lighter weight. However, changes
in temperature and altitude may cause condensation, so efective moisture protection
is often required. Ground-only shipments made among countries connected by irst
class infrastructure may often be treated as domestic shipments, unless long distances
or multi-modal transport (truck-rail-truck) is involved. Shippers of fragile products or
those receiving frequent complaints of in-transit damage should consider consulting a
surveyor for speciic packing recommendations. To prevent introduction of non-native
pests, some countries (for example, Australia) prohibit the importation of non-treated
coniferous wood packing materials (pallets) from certain originating countries.
Export-performance measure. Requirement that a certain quantity of production

must be exported.
Export quota. A speciic restriction on the value or volume of exports of a speciied

good imposed by government of the exporting country. his restraint may be intended
to protect domestic producers from temporary shortages of certain materials, or as
means to moderate world prices of speciied commodities. Commodity agreements
sometimes contain explicit provisions to indicate when export quotas should go into
efect among producers. Export quotas are also used in connection with orderly mar-
keting and voluntary restraint agreements. See import quota.
Export processing zones (EPZ). Industrial parks designated by governments to pro-

vide tax and other incentives to export irms.
Export quota. A speciic restriction on the value or volume of exports of a speciied

good imposed by government of the exporting country. his restraint may be intended
to protect domestic producers from temporary shortages of certain materials, or as
means to moderate words prices of speciied commodities. Commodity agreements
sometimes contain explicit provisions to indicate when export quotas should go into
efect among producers. Export quotas are also used in connection with orderly mar-
keting and voluntary restraint agreements. See import quota.
Export subsidies. Government payments, economic inducements or their inancially

quantiiable beneits provided to domestic producers or exporters contingent on the
export of their goods or services.
Expression of interest (EOI). A summary from a potential supplier that shows they
are interested in and capable of delivering particular goods or services. Asking for
EOIs is usually the irst stage of a multi-step tender process E
EXW Ex Works. In Incoterms EXW the seller fulils his obligation to deliver when he
has made the goods available at his premises (i.e. works, factory, warehouse, et.) to the
buyer. In particular, he is not responsible for loading the goods on the vehicle provided
by the buyer or for clearing the goods for export, unless otherwise agreed. he buyer
bears all costs and risks involved in taking the goods from the seller´s premises to the
desired destination. his term thus represents the minimum obligation for the seller
and should not be used when the buyer cannot carry out directly or indirectly the
export formalities. In such circumstances the FCA Free Carrier term should be used.
his term may be used for any mode of transport including multimodal transport.
See Incoterms for a list of the eleven Incoterms. Practical Guide to Incoterms.
Facilitation payment. A payment or consideration given to a government oicial

or employee in order to get them to do what they should have done anyway. Unlike
a bribe, the facilitation payment seeks no special consideration and is usually legal.
See bribery.
Factoring. In the context of international trade, the inancial service consisting of

the granting of cash in advance against accounts receivable from foreign customers.
More generally, a range of inancing and risk management services ofered by special-
ized companies, called factors, to exporters/sellers, particularly those who deal with
a stream of low-value, short-term foreign accounts receivable. he exporter transfers
title to its foreign account receivable to a factoring house in exchange for cash at a
discount from the face value. Other basic services ofered by actors are: export credit
risk assessment, collection of overdue foreign accounts and administration of ac-
counting ledgers.
FAK Freight of all kinds. Freight rate applicable to all types of goods and therefore
is not restricted to a particular commodity. FAK freight rates are quoted primarily by
undercarriers to consolidators (NVOCCs and air freight consolidators) who ill ship-
ping containers with diferent kinds of cargoes received either from diferent shippers
F or for diferent consignees or both. While the consolidator may charge its clients on a
commodity-speciic basis, it pays the undercarrier a predetermined FAK rate.
FAS Free Alongside. In Incoterms FAS the seller delivers the goods placing them
alongside the ship named by the buyer at the agreed port of shipment. he export
clearance is done by the seller. his Incoterm is only used for certain commodities
and materials that are not packed and cannot be individualized, such as grain, timber,
minerals, steel products, etc.; delivery is done in those ports that have specialized
terminals for this type of products. If the goods are carried in containers, Incoterms
FCA should be used when containers are delivered at port terminals but not alongside
ships. he export clearance must be done by the seller. Usually, it is necessary to clear
the goods before placing them alongside the ship. When using FAS, the buyer is re-
sponsible for loading the goods on the ship. For this reason, the buyer must know very
well the practices in the port of shipment because in the case of problems arise there.
his term can only be used for sea and inland waterway transport. See Incoterms for
a list of the eleven Incoterms. Practical Guide to Incoterms.
Fast track. In United States, fast track procedures for approval of trade agreement
were included by the U.S. Congress in trade legislations in 1974, in 1979, and again
in the 19888 Trade Act. Fast track provides two guarantees essential to the successful
negotiation or trade agreements: a vote on implementing legislation within a ixed
period of time and a vote, yes or no, with no amendments to that legislation. See
Trade Act.
FBL FIATA Bill of Lading. he FIATA Bill of Lading serves as a shipping contract
and a proof that the goods have been carried with the use of more than one mode of
transportation. It also determines the responsibility of the freight forwarder. When
issued “to order”, it is a title of the property of the goods so it can be negotiated.
Unlike other transport documents, the FBL does not identify any type of transport
as the principal, so the responsibility falls on the forwarding agent which acts as a
carrier from the collection till the delivery of the goods, including the involvement
of any third party. he forwarder agent identiied as Multimodal Transport Opera-
tor (MTO), shall be authorized by FIATA for doing multimodal transportation. In
maritime transport this document is only used for Full Containers Load (FCL), so
that its use does not allow for groupage or bulking. his document is used only in
international transactions in which the goods are carried in two or more modes of
transportation (multimodal). Also called Forwarder´s Bill of Lading and Multimodal
Bill of Lading. Model of FBL FIATA Bill of Lading.
FCA Free Carrier. In Incoterms FCA the seller fulils his obligation to deliver when
he has handed over the goods, cleared for export, into the charge of the carrier named
by the buyer at the named place or point. If no precise point is indicated by the buyer,
the seller may choose within the place or range stipulated where the carrier shall
take the goods into his charge. When, according to commercial practice, the seller´s
assistance is required in making the contract with the carrier (such as in rail or air
transport) the seller may act at buyer´s risk and expense. When the goods are trans-
ported in containers and the place of delivery is the port of shipment, Incoterms rules
E
advised to use FCA instead of FOB, because the containers are delivered regularly in
the port’s container terminal and not loaded onto the ship. FCA is one of the most
used Incoterms in international trade and will probably replace EXW for the major-
ity of sales where the seller delivers the goods in its own country and does not want
to manage international logistics. his term may be used for any mode of transport
including multimodal transport. See Incoterms for a list of the eleven Incoterms.
FCL Full Container Load. A shipment of suicient volume or weight to justify the
exclusive use if a shipping container.
FCR Forwarder´s certiicate receipt. A receipt for shipped goods tendered by a

carrier (such as a dock receipt, or marine, air or ground transport document) that
indicates the shortage or damage to one or more of the shipping pieces. When cargo
is irst picked up for shipment, or is handed of from one carrier to another, it is in-
spected by receiving carrier for obvious shortage or damage. Any such problems are
noted on the carrier´s receipt, thereby exonerating it from causing problems. his
creates a paper trial that can be followed backwards to determine where the damage
or shortage took place and thereby assign responsibility on the carrier that caused it.
Clean transport documents are those that bear no damage or shortage notations, and
are opposite of foul transport documents.
Feeder vessel. A ship that transports cargo from a major port (often called base port)
to a smaller ports within a given range. his is akin to the hub and spoke system used
in air transport.
Fees. he amount clients pay to consultants or other service providers for the time
spent delivering services. Fees may be ixed price or calculated on an hourly or daily
basis. International Consulting Contract.
FEU Forty-foot equivalent unit. A practice in marine commerce expressing cargo

quantity in terms of forty-foot container loads. One FEU equals two TEUs (Twenty-
foot equivalent units).
FHEX. A term meaning that Fridays and Holidays are Excluded in calculating the
laytime for vessel chartering.
FHINC. A term meaning that Fridays and Holidays are Included in calculating the
FIATA. he International Federation of Freight Forwarders Association is a non-gov-

ernmental organization founded in 1926 representing the freight forwarding industry
worldwide. FIATA has three main divisions, called institutes, covering air freight,
customs facilitation and multimodal transport. Each has its own advisory body and
F working groups. In addition it has created the following documents to establish a
uniform worldwide standard for freight forwarders:
• FIATA FBL Negotiable Multimodal Bill of Lading.
• FIATA FWB Non negotiable Multimodal Transport Waybill.
• FIATA FCR Forwarders Certiicate of Receipt.
• FIATA FCT Forwarders Certiicate of Transport.
• FIATA FWR Warehouse Receipt.
• FIATA SDT Shipper´s Declaration for the Transport of Dangerous goods.
• FIATA SIC Shippers Intermodal Weight Certiicate.
• FIATA FFI Forwarding Instructions.
FIFO First in, irst out. Inventory management and/or accounting procedure where-
by the earliest arriving goods of their kind (irst in) are shipped prior to those that
have arrived more recently.
FILO First in, last out. Inventory management and/or accounting procedure where-
by the earliest arriving goods of their kind (irst in) are shipped after those that have
arrived more recently (last out).
FIO Free in and out. A transport or freight term which indicating that loading/
discharging costs are not included in the freight. In the charter party context means
that loading/discharging are not the shipowner´s responsibility. he charterer is re-

sponsible for loading/discharging. May be used with addition of stowed (FIOS) and/
or trimmed (FIOST).
FIOST Free in, out, stowed and trimmed. And elaboration of the FIO chartering
terms whereby the vessel owner is not responsible for the costs of loading, unloading,
stowage, trimming. his is the opposite of gross terms.
Fixing. In foreign exchange, establishing of the oicial exchange rate of a domestic

currency against other negotiable currencies.
Flag carrier. A vessel registered under the lag of a particular country. Some counties
support their merchant marine industry by limiting certain types of cargo to vessel
registered in their nationality such as government-inanced purchases of foreign aid.
See preferential cargo.
Flag of convenience. A ship registered under the lag of a country (like Cyprus or
Liberia) that ofers a minimal degree of control in the areas of taxes, crew and safety
requirements.
Flagship store. In retail business the designation of lagship is given to a retailer’s

primary location, a store in a prominent location, a chain’s largest store, the store that
holds or sells the highest volume of merchandise, a retailer’s most well-known loca-
F
tion, a chain’s irst retail outlet, a store location with decor or merchandise mix that
is distinctly diferent from the rest of the chain, or the store location in a chain which
carries the most high-priced merchandise catering to the most upscale customers.
Floating currency. One whose value in terms of foreign currency is not kept stable
(on the basis of the par value or a ixed relationship to some other currency) but in-
stead is allowed, without a multiplicity of exchange rates, to be determined (entirely
or to some degree) by market forces. Even where a currency is loating, the authorities
may inluence its movements by oicial intervention. If such intervention is absent
or minor, the expression “clean loat” is sometimes used.
Floating exchange rate. A rate of exchange that is determined by market forces. See
clean loat and dirty loat.
Flotsam. Floating debris or wreckage of a ship or a ship´s cargo. Also called jetsam.
FOB Airport. A no longer valid Incoterms. It has been replaced by FCA. It was with-
drawn from use as valid Incoterms because it was felt that the term was the source of
much potential disagreement, especially as regards to allocation of customs clearance
and export handling charges. Practical Guide to Incoterms.
FOB Free on Board. FOB is the oldest Incoterms and together with CIF the most
widely used with sea transport. he seller delivers the goods by placing them on board
the ship named by the buyer in the port of shipment. he terminal costs and export
clearance are borne by the seller. his Incoterm should be used preferably with bulk,
heavy loads and general cargo. Also, in the case of complex goods (e.g. machinery)
whose loading on board the ship may involve some risk so it is better that the seller
assumes this risk till the loading has been completed and the goods delivered. When
the goods are transported in containers and the place of delivery is the port of ship-
ment, Incoterms rules advise to use FCA instead of FOB, because the containers are
delivered regularly in the port’s container terminal and not loaded on board the ship.
his term may only be used for sea and inland waterway transport. See Incoterms for
a list of the eleven Incoterms. Practical Guide to Incoterms.
FOR Free on Rail. A no longer valid Incoterms, but still used for some traders when
goods are delivered in railway station in the seller´s country. he suitable term from
Incoterms rules is FCA Free Carrier. See Incoterms. Practical Guide to Incoterms.
Force majeure clause. A contract clause that excuses who breaches the contract
when performance is prevented by the occurrence of certain events such as natural
disasters (earthquakes, loods), war or labor strike, that is beyond the party´s reason-
able control.
F If a force majeure clause is not expressly included in a contract, a legal action may
brought on the basis that such a clause should be implied under the doctrine or com-
mercial frustration or commercial impracticability. A typical force majeure clause is
as follows: Force majeure means war, emergency, accident, ire, earthquake, lood, storm,
industrial strike or other impediment which the afected party proves was beyond its control
and that it could not reasonably be expected to have taken the impediment into account
at the time of the conclusion of this contract or to have avoided or overcome it or its con-
sequences. If the performance by either party of any of its obligations under this contract
is prevented or delayed by force majeure for a continuous period in excess of three [specify
any other igure] months, the other party shall be entitled to terminate this contract by
giving written notice to the Party afected by the force majeure.
Foreign Direct Investment (FDI). Capital lows from non-residents in a country to

the economies of other countries in order to participate and control the management
of enterprises in the country in which the investments take place. To be considered
IDE, usually, each capital movement require two conditions: Cross-shareholding
company in which it invests at least 10% of the capital and that the foreign investor
has at least one representative in the board of directors of the company. UNCTAD
publishes annually the World Investment Report in which FDI lows between coun-
tries are analyzed.
Fork lift. A machine used to pick up and move goods loaded on pallets or skids.
Foul bill of lading. A receipt for goods issued by a carrier with an indication that the
goods were damaged or short in quantity when received. See bill of lading.
Foul transport document. A receipt for shipped hoods tendered by a carrier (such as
a dock receipt), or marine, air or ground transport document) that indicates shortage
or damage to one or more of the shipping pieces. When cargo is irst picked up for
shipment, or is handed of from one carrier to another, it is inspected by the receiving
carrier for obvious shortage or damage. Any such problems are noted on the carrier´s
receipt, thereby exonerating it from causing the problem. his creates a paper trail
that can be followed backwards to determine where the damage or shortage took
place and thereby assign responsibility on the carrier that caused it. Clean transport
documents are those that bear no damage or shortage notations, and are the opposite
of foul transport documents.
Four-way pallet. A pallet designated so that the forks of a fork lift truck can be in-
serted from all four sides.
Free of particular average (FAP). A type of marine cargo insurance providing mini-
mal coverage. It corresponds to the Institute of London Underwriters “C” clauses.
Free of particular average covers:
• Total or partial loss from stranding, sinking, burning or collision.
• Total loss from errors in vessel management, boiler bursting, defects in hull or
machinery and explosion,
his coverage is usually inadequate for shipments of goods of more than nominal val-
F
ue. Nevertheless, both the current versions of Incoterms and ICC´s Uniform Customs
and Practice for Documentary Credit (UCP 600) accept minimum-cover insurance as
the seller´s compliance with its obligation to insure in the absence of any agreement
to the contrary. See London Institute of Underwriters Clauses.
Free trade. System in which goods, capital, and labor low freely between nations,
without barriers which could hinder the trade process. Many nations have free trade
agreements, like NAFTA (North America Free Trade Agreement, between Canada,
United States and Mexico) and several international organizations promote free trade
between their members. A number of barriers to trade are struck down in a free trade
agreement. Taxes, tarifs, and import quotas are all eliminated, as are subsidies, tax
breaks, and other forms of support to domestic producers. Restrictions on the low of
currency are also lifted, as are regulations which could be considered a barrier to free
trade. In conclusion, free trade enables foreign companies to trade just as eiciently,
easily, and efectively as domestic producers. See economic integration.
Foreign currency. he currency of any foreign country which is authorized medium

of circulation and the basis for record keeping in that country. Foreign currency is
traded by banks either by the actual handling of currency or checks, or by establishing
balances in foreign currency with banks in those countries.
Foreign currency account. An account maintained in a foreign bank in the currency

of the country in which the bank is located. When such accounts are kept, they usu-
ally represent that portion of the carrying bank´s foreign currency account that is in
excess of its contractual requirements.
Foreign exchange. Current or liquid claims payable in foreign currency and in a

foreign country (bank balances, checks, bills of exchange). Not to be confused with
foreign bank notes and coin, which are not included in this deinition.
Forfaiting. he purchase by the forfaiter of an exporter´s accounts receivable which

are based on negotiable instruments such as bills of exchange and promisory notes. In
contrast to factoring, forfaiting involves a series of independent, medium-to-longer-
term obligations of higher value. Since the forfaiter purchases the bills o a non-
recourse basis, he assumes both commercial and political risk. Forfaiting difers from
export factoring in the following three ways:
• Factors usually want access to all or a large percentage of an exporter´s business,
while forfaiters will work on a transaction-by-transaction basis.
• Forfaiters usually work with medium and long term receivables, while fac-
tors work with short term receivables. Since payment terms usually relect the
types of products involved, forfaiters usually work with sales of capital goods
(machinery), commodities and large projects, while factors work mostly with
sales of consumer goods.
F • Most factors do not have strong capabilities with developing countries where
legal and inancial frameworks are inadequate and credit information is rarely
available through ailiate factor. However, most forfaiters are willing to work
with sales to such countries because they usually required bank or sovereign
guarantees.
Forklift trucks. A motorized truck equipped with two hydraulically powered forks
that can lift, move and position skidded or palletized cargo.
Forward rate. he price of a foreign currency that is bought or sold for delivery and
payment at a ixed future time, usually 30, 60 or 90 days. Forward transactions en-
able importers and exporters who will have to make, or will receive, payment in a
foreign currency at a future time to protect themselves against the risk of luctuations
in the spot rate.
FOT Free on track. A no longer valid Incoterms, but still used by some traders. he
term may create confusion as to whether it applies to motor vehicle or to rail ship-
ments. he suitable terms for Incoterms rules is FCA Free Carrier. See Incoterms.
Forward exchange contract. A contract for the delivery of a speciied amount of a

named currency at a speciied future date in return for a speciied amount of another
named currency. Forward exchange contracts enable importers and exporters who
will make and receive payments in a foreign currency at a future time to protect
themselves from luctuations in the rate of exchange. In contrast to currency future,

forward exchange contracts are for variable amounts and time periods and are trans-
acted through banks and exchange houses.
Forward exchange option. A contractually agreed right to buy (put) or to sell (call)
a speciic amount of one currency for a speciied amount of another predetermined
future date (European option) or up to a predetermined future date (American op-
tion). Like forward exchange contracts, forward exchange options enable importers
and exporters who will make or receive payments in a foreign currency at a future
time, to protect themselves from luctuations in a rate o exchange. However, unlike
foreign exchange contracts, the option holder is not obligated to perform the exchange
transaction if doing so is not his or her advantage.
Forwarder. A person or company that arranges transportation, usually on behalf of

the party contracting for main carriage. Many forwarders provide additional services,
such as assistance with country speciic documentary requirements, insurance, storage,
and even customs clearance. Some forwarders also act as carriers (air freight consolida-
tors or NVOOCs). Typically, forwarders obtain brokerage commission income from
the carriers they select. his minimizes the fees that they charge to clients, and makes
using forwarders cost-competitive. Some countries require that forwarders obtain
a license, al least to be eligible for brokerage income. Also called freight forwarder.
Free of capture and seizure. A provision in standard commercial insurance coverage

F
that exclude loss due to war and warlike acts. his peril can be mitigated by war risk
coverage, which is usually available at an additional premium cost.
Free of particular average (FPA). A type of marine cargo insurance providing mini-
mum cover in the US market. London Institute of Underwriters “C” Clauses, ofer
virtually the same coverage in other markets. Free of particular average covers:
• Total or partial loss from stranding, sinking, burning or collision.
• Total loss from errors in vessel management, boiler bursting, defects in hull or
machinery and explosion.
his coverage is usually inadequate for shipments of goods of more than nominal
value. Nevertheless, Incoterms rules accept minimum-cover insurance in the absence
of any agreement to the contrary. herefore, the seller and the buyer should carefully
deine the coverage that they want, and should clearly agree that the responsible party
provide it. FPA is the opposite of all risks and London Institute of Underwriters “A”
Clauses, which provide maximum cover, especially when augmented to include war,
strike, riot and civil commotion perils.
Free trade. System in which goods, capital, and labour low freely between nations,
without barriers that could hinder the trade process. Many nations have free trade
agreements, like NAFTA (North America Free Trade Agreement, between Canada,
United States and Mexico) and several international organizations promote free trade
between their members. A number of barriers to trade are struck down in a free trade
agreement. Taxes, tarifs, and import quotas are all eliminated, as are subsidies, tax
breaks, and other forms of support to domestic producers. Restrictions on the low
of currency are also lifted, as are regulations that could be considered a barrier to free
trade. In conclusion, free trade enables foreign companies to trade just as eiciently,
easily, and efectively as domestic producers. See economic integration.
Free trade agreement (FTA). An arrangement that establishes unimpeded exchange

and low of goods and services between trading partners, regardless of national borders
of member countries. FTAs do not address labour mobility across borders, common
currencies, uniform standards and other common policies such as taxes. Member
countries apply their own individual tarif rates to countries outside the free trade area.
Free trade area. A group of countries that agree to eliminate tarifs and other import
restrictions on each other´s goods, while each participating country applies its own
independent schedule of tarifs to imports from countries that are not members.
An example of free trade area is NAFTA (North American Free Trade associations)
between Canada, United States and Mexico.
Free trade zone. Special commercial and industrial area in or near ports of entry
where foreign and domestic merchandise may be brought in without being subject to
F payment of customs duties. Merchandise including raw materials, components and
inished goods, may be stored, sold, exhibited, repacked, assembled, sorted, graded,
cleaned or otherwise manipulated prior to re-export or entry into the national customs
authority. 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. Foreign trade zones are also called foreign free zones, free
ports or bonded warehouses.
Freely negotiable. A letter of credit that can be presented with conforming docu-
ments at any bank.
Freight. 1. All merchandise, goods, products or commodities shipped by air, railroad,

or water, other than baggage, express mail or regular mail. 2. Transportation charges.
Freight collect. A shipping arrangement whereby the carrier collects its freight charges
from the consignee rather than from the shipper. his usually happens when the con-
tract of carriage is between the carrier and the consignee. Also called freight payable
at destination (FPAD).
Freight forwarder. A person engaged in the business of assembling, collection, con-

solidating, shipping and distributing less-than-carload or less-than-truckload freight.
Also, a person acting as agent in the trans-shipping of freight to or from foreign
countries and clearing of freight through countries, including full preparation of
documents, arranging for shipping, warehousing, delivery and export clearance.
Freight prepayable. Terminology designed by carriers to provide transportation docu-

mentation indicating the freight charges are for the account of the shipper, while no
stating that payment has actually been received. his situation usually arises with
letters of credit requiring freight-prepaid transport documents. Freight prepayable,
freight to be prepaid, or similar terms does not satisfy such a requirement unless spe-
ciically permitted by the individual letter of credit. Also called freight to be prepaid.
Freight prepaid. A shipping arrangement whereby the carrier is paid its freight charg-
es by the shipper rather than by the consignee. his usually happens when the contract
of carriage is between the shipper and the carrier. See freight prepayable.
Freight rebate. A refund of a portion of previously paid transportation charges, usu-

ally in return for the shipper´s tendering a certain volume of freight to the carrier.
his practice is illegal in some countries, such as US. his can have the unintended
consequence of making legitimate claims against carriers diicult, since they must be
fully documented to prove that they are not actually rebates in disguise.
Future contract. A contract for the future of delivery of a commodity, currency or

security on a speciic date. Currency future contracts are for standard quantities over
standard periods of time are primarily traded on exchanges (and in this way difer from
forward exchange contracts). Future contracts are oicially traded on an exchange
market such as Chicago Board of Trade (CBOT), London International Financial and
Futures Exchange (LIFFE) or New York Mercantile Exchange (NYMEX).
F
Gateway. 1. In customs, the port where customs clearance takes place. 2. In ship-
ping, a point at which freight moving from one territory to another is interchanged
between transportation lines.
GATS. he General Agreement on Trade Services is a World Trade Organization

agreement that is the irst multilateral agreement provide legally enforceable rules
covering all international trade services and investment in the service sector. Attached
to the framework agreement are annexes dealing with rules for speciic sectors (move-
ment of natural persons, air transport, inancial services, telecommunications, etc.).
he agreement also provides for exceptions to the principles of national treatment
and most-favoured nation treatment. See GATT General Agreement on Tarifs and
Trade. Website.
GATT. he General Agreement on Tarifs and Trade is a multilateral trade agreement

aimed at expanding international trade and the organization that oversees the agree-
ment. he purpose of GATT organization, based in Geneva, is to provide a forum
for discussion of world trade issues that allows for the disciplined resolution of trade
disputes, based on the founding principles of the GATT which include nondiscrimi-
nation, transparency, an the most-favoured-nation (MFV) treatment. International
G negotiations known as Rounds are conducted to lower tarifs and other barriers to
trade, and a consultative mechanism that may be invoked by governments seeking to
protect their trade interests. he fundamental principles of the GATT are:
• Trade without discrimination. he irst principal embodied in the famous
most-favoured-nation clause is that trade must be conducted on the basis of
non discrimination. No country is to give special trading advantages to another
or to discriminate against it; all are on an equal basis and all share the beneits
of any moves towards lower trader barriers.
• Protection through tarifs. Ensures that if protection to a domestic industry is
given, it should be extended through the customs tarif and not through other
commercial measures.
• Promotion fair competition. Concerns over dumping and subsidies are ad-
dressed by the Anti-Dumping Code which provides rules under which govern-
ments may respond to dumping in their domestic market by overseas com-
petitors, and rules for the application of countervailing duties which can be
imposed to negate the efects of export subsidies.
• Quantitative restrictions on imports. A basic clause of GATT is a general pro-
hibition of quantitative restrictions (import quotas). he main exception to the
general rules against these restrictions allows their use in balance of payments
diiculties.
• Possible emergency actions. Waiver procedures allow a country to seek release
from particular GATT obligations, when its economic or trade circumstances
so warrant. he safeguards rule permit members under carefully deined cir-

cumstances to impose import restrictions or suspended tarif concessions on
products that are being imported in such increased quantities and under such
conditions that they cause serious injury to competing domestic producers.
• Regional trading arrangements. Regional trading groupings, as an exception
to the general most-favoured-nations treatment are permitted in the form of
a custom union or free trade area.
• Settling trade disputes. Consultation, conciliation, and dispute settlement are
fundamental aspects of GATT´s work. Countries can petition GATT for a fair
settlement of cases in which they feel the rights under the General Agreement
are being withheld or compromise by other members.
See most-favoured-nation; safeguards. Website.
Gauger. An individual or company that measures, gauges or otherwise inspected by

approved commercial gauger for classiication-veriication purposes. See surveyor.
General average (GA). A voluntary sacriice or extraordinary expense incurred dur-

ing waterborne transit to protect all interests from an impending peril. he main
principle behind general average is that when sacriice is made to save the interests
of all parties involved in transportation, the party who makes the sacriice must be
compensated by all parties who stand to beneit from the sacriice or expenditure.
G
For instance, when cargo is jettisoned to save a vessel from sinking, all parties whose
cargo was not thrown overboard must contribute to reimburse those parties whose
cargo was. Carriers will require some form of security (promissory note) or insurance
company guarantee bond prior to releasing cargo, in order to enforce each party´s
contribution. While this can be a burden for owners of uninsured cargo, insurance
companies provide such guarantees for cargoes they insure.
General average contribution. he amount each party involved in a general average

must contribute.
General cargo rate. he rate a carrier charges for the shipment of cargo that does not
have a special class rate or commodity rate.
General cargo vessels. A vessel designed to handle breakbulk cargo such as bags,
cartons, cases, crates and drums, either individually or in unitized or palletized loads.
See breakbulk vessel.
General conditions of international sale. It is a document that details the general

conditions that a seller (exporter) ofers to a buyer (importer) for the supplying of
goods or for rendering a service. It is usually used for repetitive sales or for sales with a
medium or small amount of money. his document must include the most important
aspects of the international sale, such as: a description of goods, price and payment
conditions, delivery conditions (Incoterms), etc. It can also include some other spe-
ciic conditions, typical of contracts, like retention of title of property, delivery and
risk transfer or the applicable law. he general conditions are usually attached to the
commercial ofer or can also be provided in the purchase order overleaf. See terms
and conditions. Model of General Conditions of International Sale.
General partnership. A partnership in which all of the partners have joint and several
liability for the partnerships obligations. See joint and several liability.
General order. A place of storage for imported goods that have not been promptly
customs-cleared. he length of the goods may await clearance varies from country to
country and port to port. General order storage can be extremely expensive, which is
why timely carrier arrival notice is so important.
General tarif. A tarif that applies to imports from other countries that do no not en-
joy preferential or most-favoured-nation tarif treatment. Where the general tarif dif-
fers from the most favoured-nation rate, the general tarif is usually older and higher.
Generalized System of Preferences (GSP). A framework under which developed

countries give preferential tarif treatment to goods imported from certain developing
countries. GSP is one element of a coordinated efort by industrial trading nations
to bring developing countries more fully into international trading system. More
G than thirty countries now maintain GSP programmes. See enabling clause. Website.
Global Competitiveness Report. his annually published report by the World Eco-
nomic Forum assesses the competitiveness of 144 economies, providing insight into
the drivers of their productivity and prosperity.
Global quota. In customs, a quota of the total imports of a product from all countries.
Global strategy. Global strategy as deined in international marketing as a type of

strategy guide to globalization. As opposed to a multidomestic strategy a global strat-
egy may be appropriate in industries where irms are faced with strong pressures for
cost reduction, but with weak pressures for local responsiveness. herefore, it allows
these irms to sell a standardized product worldwide. However, ixed costs (capital
equipment) are substantial. Nevertheless, these irms are able to take advantage of
scale economies (cost advantages that an enterprise obtains due to expansion) and
learning curve efects, because they are able to mass produce a standard product that
can be exported (providing that demand is greater than the costs involved). A global
strategy should address the following questions:
• What must be (versus what is) the extent of market presence in the world’s
major markets?
• How to build the necessary global presence?
• What must be (versus what are) the optimal locations around the world for
the various value chain activities?
• How to turn a global presence into global competitive advantage?
Global strategies require irms to tightly coordinate their product and pricing strate-
gies across international markets and locations; therefore, irms that pursue a global
strategy are typically highly centralized. See multidomestic strategy.
Global Trade Alert. Website that ofers information about international trade barriers
or state measures that are likely to afect international trade. It identiies the trading
partners and the efects on imports coming from diferent countries. Website.
Globalization. he process of integration and interaction among governments of

diferent nations (through free trade agreements), companies (through investment in
other countries, creating ailiate companies) and people (with the same consumer
trends, thanks mainly to information on Internet). his process has efects on the en-
vironment, political systems, economic development as well as prosperity and welfare
in societies around the world.
Globaltrade. Online business directory of export services providers and market analy-
sis. It is a private website, sponsored by diferent agencies of foreign trade promotion.
Ofers two very useful resources:
• Business Directory: more than 100.000 trade services providers classiied by
country and specialty: agents and distributors, trading companies, transporta- G
tion and logistics, lawyers, etc.
• Market Analysis: more than 30.000 documents on market research, industry
news, tips for doing business, etc.
See Europages; Kompass. Website.
GmbH Gesellschaft mit beschränker Haftung. In German speaking countries (Aus-

tria, Germany, Switzerland) a designation for a private limited liability corporation
with limited liability to shareholders.
Go-between. An intermediary employee by foreign irms for the purpose of gaining

contacts, language ability, or knowledge of local business practices. A go-between
can be efectively used by either side in a negotiation to help smooth over a variety of
social, political, and business issues.
Gold reserves. Gold retained by a nation´s central bank, forming the backing of
currency that the nation has issued.
Gold standard. A monetary agreement whereby all national currencies are backed
100% by gold and the gold is utilized for payment of foreign activity.
Governing law clause. In a transaction with no foreign element involved it will not
usually be necessary to specify the system of law which is to govern the transaction
or the courts which are to have jurisdiction in the event of a dispute. However, where
there are international aspects to the transaction, it is sensible to set out in the contract
both the governing law and jurisdiction – i.e. which country’s laws govern the terms
of the contract and in which country’s courts will any dispute be inally decided. A
typical governing law and jurisdiction clause is as follows: his Agreement shall be gov-
erned by the laws of [insert country] and the parties submit to the [exclusive/non-exclusive]
jurisdiction of the courts of [insert country] in respect of any dispute or diference between
them arising out of this Agreement.
Government procurement. A System through which oicial governments agencies

purchase goods and services. Government procurement policies and practices may
constitute non tarif barriers to trade if they discriminate in favour of domestic sup-
pliers when competitive imported goods are cheaper or of better quality. he GATT
Government Procurement Code sought to reduce, if not eliminate, these barriers by
improving transparency and equity in national procurement policies, and by ensuring
efective recourse to dispute settlement procedures. See international procurement.
Grey market. A situation that consists of unauthorized traders buying and selling a
company´s product in diferent countries. Companies confronted with a grey situation
can react in many ways. hey may decide to ignore the problem, take legal action or
modify elements of their marketing mix. he option chosen is strongly inluenced by
G the nature of the situation and its expected duration. See parallel imports.
Grid. In foreign exchange, ixed margin within which exchange rates are not allowed
to luctuate.
G-7 Group of Seven. Group comprising the major industrialized nations in economic
terms, which in view if the global importance of the member states have made in their
objective to coordinate their respective domestic economic policies. Member states
are the USA, Japan, Germany, France, United Kingdom, Italy and Canada.
G-77 Group of Seventy Seven. A grouping of developing countries founded in 1964.

his numerical designation persists, although membership has increased to more
than 130 countries. he G-77 functions as a caucus for the developing countries on
economic matters in many forums including the United Nations.
Gross sales. he total amount received or receivable for goods sold, before any allow-
ances for returned goods or sales discounts.
Gross terms. Chartering terms whereby the vessel owner is responsible for the costs
of loading, stowing, trimming and unloading. Many voyage charters are handled on
this basis. Also called gross charter.
Gross tonnage. he capacity of a vessel (no cargo) expressed in vessel tons. It is deter-
mined by dividing by 100 the contents, in cubic feet, of the vessel closed-in spaces. (A
vessel ton is 100 cubic feet). he register of a vessel states both gross and net tonnage.
Gross weight. he total scale weight of a shipment, including the goods and their
packing.
Groupage. Combining cargo from more than one shipper and/or to more than one
consignee for shipment together, usually in a single shipping container. On arrival,
the container is unloaded, and each individual shipment may be claimed by its ap-
propriate consignee. Also called consolidation.
Guaranteed freight. Freight charges that are not prepaid but are payable whether the
cargo is delivered or not, provided that failure to deliver resulted from causes beyond
the carrier´s control.
Guarantor. An individual or legal entity that makes a guaranty, by which the guaran-
tor agrees to be held liable for another´s debt or performance.
Guaranty. A contract by which one person (the guarantor) agrees to pay another´s
debt or to perform another´s obligation only if that other individual or legal entity
fail to pay or perform. A guaranty is usually a separate contract from the principal
agreement, and therefore the guarantor is secondarily liable to the third person. See
guarantor.
Guanxi. he network of personal contacts that is the most important trait of Chinese
executives. One may refer to this as their “social capital” as it is used for professional
G
advancement. his network consists of family, college or university acquaintances,
co-workers, etc. Guanxi functions as the basis to the principle of reciprocity, some-
thing the Chinese refer to as hui bao. When a person does another person a favor,
it is expected that the favor be returned. It does not have to be immediately, but at
some point in that personal relationship, the favor must be returned. It is almost as
if Chinese executives maintain an accounting record of the favors they have done,
and received, from every member of their personal contact network. China Business
Cultura & Etiquette Guide.
Hague Rules. he International Convention for the Uniication of Certain Rules

relating to Bill of Lading is a set of rules that are an internationally agreed standard
conditions that apply to marine carriage contracts. he Hamburg Rules are often
incorporated as a paramount clause in marine contracts of carriage.
Halal certiicate. he Halal certiicate is a document that guarantees that products

and services aimed at the Muslim population meet the requirements of Islamic law
and therefore are suitable for consumption in both Muslim-majority countries and
in Western countries where there are signiicant population group who practice Islam
(France, Germany, United Kingdom, Spain). Halal certiication is a process which
ensures the features and quality of the products according to the rules established by
the Islamic Council that allow the use of the mark Halal. It is mainly applied to meat
products and other food products such as milk, canned food and additives. Specii-
cally, for meat products Halal certiies that the animals were slaughtered in a single cut,
thoroughly bled, and their meat have not been in contact with animals slaughtered
otherwise and, especially, with pork. Products that are Halal certiied are often marked
with a Halal symbol, or simply the letter M (as the letter K is used to identify kosher
products for Jewish population). See Kosher certiicate. Model of Halal Certiicate.
H Hamburg Rules. Formally title he United Nations Convention on the Carriage of
Goods by Sea 1978, the Hamburg rules are internationally standard conditions that
apply to marine carriage contracts, an are considered more equitable to cargo interest
(as opposed to shipowners) than the Hague Rule. hese or Hague Rules, are often
incorporated as a paramount clause in marine contract of carriage.
Harbor fees. Charges assessed to users for the use of a harbor, used generally for
maintenance of the harbor.
Hard money (currency). Currency of a nation having stability in the country and
abroad. Refers to currency that is accepted internationally and freely convertible.
Harmonized System (HS). A method of classifying goods in international trade

developed by the World Customs Organization. he core system contains 96 chap-
ters and classiies at six-digit lever, with the irst two numbers indicating appropri-
ate chapter, the second two numbers indicating the appropriate heading within the
chapter and the third two numbers indicating the appropriate sub-heading within
the heading. It is organized into 99 chapters arranged in 22 sections with sections
generally covering an industry (e.g. Section XI, textiles and Textiles Articles) and the
chapters covering the various materials and products of the industry (e.g. Chapter
50, Silk). Many countries place additional digits after the six-digit HS number to
achieve greater classiication precision. For example, the United States uses ten-digit
numbers for export and import classiication, of which the irst six are harmonized.
See HS 6-digit. Harmonized System Classiication.
Hatch. In shipping, the opening in the deck of a vessel which gives access to cargo
hold.
Haulage. he local transport goods. Also the charges made for hauling freight on
carts, drays or trucks. Also called cartage or drayage.
Hazardous materials (HAZMAT). Any substance or material that has been deter-
mined to be capable of posing an unreasonable risk to health, safety and commerce,
and has been designated by a competent organization like the International Maritime
Organization (IMO) or the International Air Transport Association (IATA). here
are many types of hazard classes, based on a risk or risks that particular substances
or materials may pose in transportation. Further, some materials may be considered
hazardous for one mode of transport but not for others. Hazardous materials may
be transported domestically, but they may be classiied as Dangerous Goods when
transported internationally.
Heavy lift. Cargo that exceeds the weight capacity or is too large to be loaded by car-
rying breakbulk vessel´s gear ( traditionally around 5000 kilos). While containerized
cargo is not subjected to heavy lift charges, it may be assessed excess weight charges.
Hedging. Purchasing a future contract for delivery of a commodity or currency to

reduce the risk or adverse price changes occurring from the present to the time the per-
formance the is due. Hedging consists of counterbalancing a present sale o purchase
H
by a purchase or sale of a similar commodity or currency, usually for delivery at some
future date. he desired result is that a proit or loss on a current sale or purchase be
ofset by the loss or proit on the future purchase or sale. See arbitrage.
Hidden costs. Expenses that are not normally included in the purchase price for a
piece of equipment or machine e.g. maintenance, supplies, training, support and
upgrades.
High context cultures. In this type of cultures managers and executives use and in-
terpret more of the elements surrounding the message to develop their understanding
of the message. In high context cultures the social status and knowledge of the person
and the social setting add extra information, and will be perceived by the message
receiver. Examples of high context cultures are countries such as China, Brazil or
Saudi Arabia. See business culture; low context cultures. Business Culture Guides
by Countries.
High cube. A vessel shipping container with interior and exterior height dimensions
greater than standard container nominal dimensions of 7 feet 6 inch and 8 feet. Many
high cube containers have a 9 foot 6 inch exterior height dimension.
Hinterland logistics. he hinterland is the land or district behind a coast or the

shoreline of a river. Speciically in logistics, the word is applied to the inland region
lying behind a port, claimed by the state that owns the coast. he area from which
products are delivered to a port for shipping elsewhere is that port’s hinterland. he
term is also used to refer to the area around a city or town.
Hold. he space below deck in a vessel used to carry cargo.
Holder in due course. An individual or legal entity (holder) who possesses a nego-
tiable instrument, document of title, and who took possession for value, in good faith,
and without notice of other individual´s or legal entity´s claim or defense against. A
holder in due course is generally protected from the claims of third parties against the
item transferred, and thus the only recourse of a third party is against the person that
transferred the title, instrument or other item to the holder in due course.
Holding company. Holding companies are corporations that are created for the sole
purpose of obtaining and managing a controlling interest in other companies. here
are several reasons why a holding company may be created. At times, the activity
may be a key element in avoiding a takeover situation. In other situations, this sort of
company organization may be created in order to more eiciently manage resources
used in the operation of a given business. It is important to remember that laws gov-
erning the establishment of a holding company vary from one country to the next.
For this reason, the legal deinition of this type of company is often slightly diferent
around the world. For example, most countries require that a holding company actu-
H ally control a minimum of 50% of the voting shares in order to be legally recognized.
However, some jurisdictions require that the percentage of voting shares be higher.
See parent company; sister company; subsidiary.
Homologation. Certiication by a country that a good (usually equipment goods)

conforms to its safety and security standards. Certiication is granted to a product that
meets a minimum set of regulatory technical & safety requirements as notiied by the
respective Government. he certiication is a must, before a new/modiied product
is launched commercially. Type approval/Homologation is a customized service, and
the terms and conditions vary from country to country.
House airway bill (HAWB). A bill of lading issued by a freight forwarder for consoli-
dated air freights shipments. In documentary letter of credit transactions HAWBs are
treated exactly the same as conventional air waybills, provided they indicate the issuer
itself assumes the liability as carrier or is acting as the agent of a named carrier, or if
the credit expressly permits the acceptance of a HAWB. Sea air waybill; bill of lading.
House bill of lading (House B/L). A bill of lading issued by a freight forwarder.
Often covers a consignment of parcels from various shippers that has been grouped
or consolidated by the forwarder. he forwarder may, for example, receive a single
groupage bill of lading from the carrier, then issue a series of House B/Ls to the re-
spective shipper.
House-to-house. his term generally refers to a container yard to container yard (CY/
CY) shipment, in which case it may be uses merely to quote the rental rate for the
container itself, but it also used in some cases synonymously with door to door, term
which more generally refers to overall transport services from the seller´s premises to
buyer´s premises. See door-to-door.
HS 6-digit. he World Customs Organization’s Harmonized System (HS) uses code

numbers to deine products. A code with a low number of digits deines broad catego-
ries of products; additional digits indicate sub-divisions into more detailed deinitions.
Six-digit codes are the most detailed deinitions that are used as standard. Countries
can add more digits for their own coding to subdivide the deinitions further accord-
ing to their own needs. Products deined at the most detailed level are “tarif lines”.
See Harmonized System (HS).
Hub system. A transport network system in which a carrier routes heavily traicked
lights or voyages among a few large air or sea ports called hubs or base ports, rather
than making direct calls on smaller ones. he respective hinterlands of each hub
are called spokes and are served with smaller equipment such as commuter aircraft,
feeder vessels, barges or ground transportation. he concept resembles wheels, with
the spokes radiating from their central hubs. See base port; feeder vessel.
Human Development Index (HDI). Indicator created by the United Nations De-
velopment Programme (UNDP) measuring the level of development of countries
according to three dimensions: H
• Revenues, based on GDP per capita, purchasing power parity and wages;
• health measured by life expectancy;
• Education as average years of education of the country’s inhabitants.
Normally are the Nordic countries (Norway, Sweden) which topped the index and
the countries of Central Africa (Niger, Chad) who occupy the last positions. Website.
Husbanding. A general term used for managing the afairs of a ship while in port,
including such tasks as customs formalities, fueling, supplies, repairs and any require-
ments of the crew. Husbanding is normally handled by ship line employees, or vessel
owners or their agents.
IATA International Air Transport Association. Air transport industry association

and issuer of standard air waybill form. Established in 1945 and headquartered in
Geneva (Switzerland), IATA is a trade association serving air carriers, passengers,
shippers, travel agents and governments. he Association promotes safety and the
standardization of forms (Baggage checks, tickets, waybills and hazardous material
declarations). Website.
International Bank for Reconstruction and Development (IBRD). IRBD is a

inancial institution that belongs to the World Bank Group and provides low-cost
developmental loans for reasonably creditworthy sovereign buyers by issuing bonds
backed by its own triple-A rating.
ICC International Chamber of Commerce. Founded in 1919 and headquartered

in Paris, France, ICC is the most important world business organization. Its role
is to promote free trade and private enterprise, and to represent business interests
at national and international levels. ICC has drawn up a number of widely ac-
cepted rules that govern the conduct of business across borders - some of its best
products are Incoterms rules, the current version of Uniform Customs and Practice
for Documentary Credit (UPC 600), arbitration services and other publications.
I he ICC International Arbitration Court is one of the best services provided by
ICC. he organization has more than 10000 members in more than 130 countries
throughout the world and is coordinated by national committees in the world´s
major capitals. Website.
ICC International Court of Arbitration. he ICC International Court of Arbitra-

tion was created in 1923 as the arbitration body of the International Chamber of
Commerce. he ICC Arbitration has administered nearly 30.000 cases involving
parties and arbitrators from some 180 countries. ICC arbitration has been conceived
speciically for business disputes in an international context. International Court of
Arbitration supervises arbitrations held under the ICC Rules of Arbitration. It meets
weekly in Paris and monitors the work of ICC arbitral tribunals, which conduct
procedures is countries on all continents. he ICC Court is assisted by a Secretariat,
which closely follows all cases and acts as a neutral link between the parties, arbitra-
tors and the ICC Court. Website.
ICDR. he International Centre for Dispute Resolution (ICDR) is the international
branch of the American Arbitration Association (AAA), providing international ar-
bitration and dispute resolution services. he ICDR is headquartered in New York
City (U.S.A.) and also has oices in Mexico, Ireland, Bahrain and Singapore. he
ICDR is responsible for administering arbitration proceedings. As an administrative
body, the ICDR processes a case from iling to closing, by:
• Providing arbitration rules.
• Appointing arbitrators.
• Assigning case managers.

• Setting hearings.
• Transmitting documents.
• Scheduling conference calls.
he ICDR also maintains a worldwide panel of more than 650 independent arbitra-
tors and mediators, who are assigned to hear and resolve cases. Website.
Ice clause. A standard clause in vessel chartering, dictating the course that a vessel
master may take if the ship is prevented from entering the loading or discharge port
because of ice, or if the vessel is threatened by ice while in port. he clause establishes
the rights and obligations of both vessel owner and charterer in these events occur.
ICEX. he Spanish oicial agency depending on the Ministry of Economy that

administers the export and investment programmes of the Spanish Government.
Website.
IHC Inland Haulage Charges. Inland Haulage Charges means the transportation
charges from inland container freight station to sea port of loading or vice versa. If
Cargo freight station is away from sea port of loading, the shipper completes customs
formalities at such container freight station and arranges to move cargo to port of I
loading either by rail or road. Normally, most of cargo in such locations is moved
by rail. If moved by rail, the charges of moving goods from such location to port of
loading or movement charges from port to inland freight station is known as Inland
Haulage Charges. Inland haulage charges vary CFS to CFS, as the distance from CFS
to port of loading varies one to another. Inland Haulage Charges is collected by a
shipping line when releasing bill of lading for export shipments, and when issuing a
delivery order in case of import. See THC Terminal Handling Charges.
International Development Association (IDA). IDA is a inancial institution that

belongs to the World Bank Group and provides low cost development loans for less-
developed nations from funds donated by nearly 40 countries. Website.
International Finance Corporation (IFC). IFC is an institution that belongs to the

World Bank Group and inances and advises for private-sector ventures and projects
in developing countries. Website.
International Monetary Fund (IMF). IMF is a specialized United Nations agency,

created in 1945, that promotes international monetary harmony, monitors the ex-
change rate and monetary policies of member nations and provides credit for mem-
ber countries that experience temporary balance of payment deicits. Each member
country has a quota, which relects both the relative size of the member´s economy
ant the member´s voting power in the Fund. Over 180 countries are members of
the IMF. See World Bank Group. Website.
Import. 1. To receive goods and services from abroad. 2. An imported item.
Import clearance. he act of complying with the import regulations of an importing

country. Generally, governments require some sort of import declaration. Depend-
ing on the country and the product, additional supporting documentation such as
origin certiicates, consulate documentation and product relates health and safety
certiicates may also be required. Payment or agreement to pay any applicable import
duty and taxes often accompanies customs clearance. Also called customs clearance.
Import contract. he import contract is suitable when a company is buying goods

from abroad by way of import in the course of a business to business transaction.
he contract seta out the standard terms and conditions of purchase. his type of
contract include clauses covering: price and payment, delivery, sub-contracting, title
and risk, packaging, inspection, indemnity, conidentiality, and termination.
Import duty. Any tax on items imported. See tarif.
Import license. A document required and issued by some national governments

authorizing the importation of goods.
Import quota. A protective ruling establishing limits o the quantity of a particular

I product that can be imported. Quotas are a means of restricting imports by the issu-
ance of licenses to importers, assigning each a quota after determination of the total
amount of any commodity that is to be imported during a period of time. Import
licenses may also specify the country from which the importer must purchase the
goods. See export quota; tarif quotas.
Import restrictions. Any one of a series of tarif and no-tarif barriers imposed by
a importing nation to control the volume of goods coming into the country from
other countries. May include the imposition of tarifs or import quotas, restrictions
on the amount of foreign currency available to cover imports, a requirement for
import deposits, the imposition of import surcharges, or the prohibition of various
categories of imports. See non-tarif barriers.
Import substitution. A strategy that emphasizes the replacement of imports with

domestically produced goods, rather than the production of goods for export, to
encourage the development of domestic industry.
Importer. 1. he individual, irm or legal entity that brings articles of trade from a
foreign source into a domestic market in the course of trade. 2. A party responsible
for customs clearance of imported goods. Some countries deine importer as the
party responsible for payment of duty on imported goods, or an authorized agent
acting on behalf of that party.
In transit entry (I.T.). his term allows foreign merchandise arriving at one port to
be transported in bond to another port, where a superseding entry is iled.
In trust (documents). In documentary collections, when a bank releases documents

to the importer/buyer to allow him to inspect them prior to payment.
In-bond. A term used to describe cargo that has not been cleared by customs to
enter the commerce of a country.
Inbound logistics. he activities concerned with receiving, storing and distribut-

ing the inputs to the product or service. hese includes materials, handling, stock
control, transportation, etc.
Incorporated (Inc.). In United States, designation for a private limited liability

corporation with limited liability to shareholders.
Incoterms. A set of 11 international standard trade terms which last version is Inco-
terms 2010. Incoterms allows the parties to designate a point at which the costs and
risks of transport are precisely divided between the seller and the buyer. Incoterms
also allocate responsibility for customs clearance/duties between the parties. Since
Incoterms are not law but are contractual standard terms, they do not apply to a
given transaction unless the parties speciically incorporate them by referring to last
version of Incoterms. Incoterms are elements of the international sale contract, which
may be derived from the seller´s tender or proforma invoice. hus, Incoterms only
apply to the seller and buyer, one of whom will assume dovetail with the Incoterms
in terms of allocation of transport costs and risks, but this will depend on the ship-
I
per giving precise directions to the carrier to ship according to the constraints of
the given Incoterms. he 11 Incoterms are divided in two groups: those than can
be used for any mode or modes of transport, and those used only for sea and inland
waterway transport.
Incoterms for any mode or modes of transport:

• EXW Ex Works.
• FCA Free Carrier.
• CPT Carriage Paid to.
• CIP Carriage and Insurance Paid to.
• DAT Delivered at Terminal.
• DAP Delivered at Place
• DDP Delivered Duty Paid.
Incoterms only for sea and inland waterway transport:

• FAS Free Alongside Ship.
• FOB Free on Board.
• CFR Cost and Freight.
• CIF Cost, Insurance and Freight.
See each Incoterms for deinition of seller´s and buyer´s obligations. Practical
Guide to Incoterms.
Indemnity. To compensate for actual loss sustained. Many insurances policies and
all bonds promise to indemnify the insured. Under such a contract, there can be
no recovery until the insured had actually sufered a loss, at which time he or she is
entitled to be compensated for the damage that has occurred (i.e. to be restored to
the same inancial position enjoyed before loss).
Indirect tax. A tax that is levied on expenditure such as a sales tax imposed at the
retail level. See direct tax; excise tax; sales tax; VAT.
Inducement. When steamship lines publish in their schedules the name of a port
and the words “by inducement” in parentheses, this means the vessel will call at the
port if there is a suicient amount of proitable cargo available and booked.
Industrial design. A scheme, drawing, plan, or other depiction of a new model,

shape or coniguration that is decorative or ornamental. In most of the countries,
the rights to a design can be registered as Intellectual Property Rights (IPR) allowing
I the registrant to claim exclusive used in that country.
Infotrade. International trade database that provides access to 1.000 international trade
best websites classiied by subjects and countries. Some of the subjects covered are:
• Country information.
• International trade statistics.
• Market research reports.
• Customs tarifs and trade barriers.
• Business directories.
• International logistics.
Infotrade also permit access to trade and business websites in more that 70 countries.
Website.
Inherent vice. Damage to goods which one can foresee is bound to occur during
any normal transit, and which arises solely because of the nature or condition of
the goods shipped. Such damage is said to arise from “inherent vice” which may be
deined as an internal cause rather than an external cause of damage. Exclusion of
insurance coverage for inherent vice is implied in every cargo policy. his type of
exclusion is reinforced by the words “from any external causes” and the “all risks”
coverage. he word “risk” itself implies that only fortuitous losses are intended to be
covered. Insurance protects against hazards, not certainties.
Inland carrier. A transportation line that hauls export and import traic between
ports and airports and inland points.
Inland clearance depot. A combination transport terminal and customs clearance

center at a location other than a port. Also called inland dry port.
Institute Cargo Clauses. Standard international transport insurance clauses, pub-

lished by the Institute of London Underwriters. he Institute Cargo Clauses are three
sets of clauses providing diferent level of protection: the “A” Clauses correspond to
the general notion that is commonly referred to trade as “all risks” coverage, while
Clauses “B” an “C” indicate a lower level of coverage and a greater number of exclu-
sions. See all risks.
Insurable interest. A principle of insurance that in order to obtain coverage on a

shipment, a party must have a legal relationship to either the transportation (entitle-
ment to freight cost or wages) or to the insurable property, the carrier itself, or the
cargo. his means that if the insurable property if safe or arrives safely at its destina-
tion, the party itself will beneit. Conversely, if there is loss or damage or detention
to the insurable property, the party will sufer some detriment. Typical parties with
insurable interests include those responsible for the condition of the goods while in
transit, unpaid sellers, and buyers who have prepaid. See party at risk.
Insurance broker. An individual or irm who represents buyers of insurance and

I
deals with insurance companies or their agents in arranging for insurance coverage
for the buyer. An insurance agent represents a single insurance company whereas an
insurance broker is free to obtain insurance coverage from any insurance company.
Insurance certiicate. A document used so that coverage is provided to cover loss or

damage to cargo while in transit when insurance is placed against an open marine
cargo policy. In some cases a shipper may issue a document that certiies that a ship-
ment has been insured under a given open policy, and that the certiicate represents
and takes the place of such open policy, the provisions of which are controlling. Be-
cause of the objections that an instrument of this kind did not constitute a “policy”
within the requirements of letters of credit, it has become the practice to use an
insurance certiicate. Also called cargo insurance certiicate and special cargo policy.
See open marine cargo insurance policy; open policy.
Insurance coverage. he total amount of insurance that is carried.
Insurance policy. he entire written contract of insurance. More speciically, it is

the basic written or printed document, as well as the coverage forms and endorse-
ment added to it.
Insurance premium. he amount paid to an insurance company for coverage under

an insurance policy.
Insured. he person or irm protected under an insurance policy.
Insured value. he combined value of merchandise, inland freight, ocean freight,

cost of packaging, freight forwarding charges, and insurance cost, for which insur-
ance is obtained.
Integrated contract. A contract that states every provision to which the parties in-
tend to agree. Parol evidence cannot be used to change or supplement the provisions
of an integrated contract.
Intellectual Property Rights (IPR). he ownership of the right to posses or other-

wise use or dispose of a product created by human work, including patents, trade-
marks, industrial designs and copyright. Intellectual Property Rights are transmitted
and sold through license agreements such as International Trademark License Agree-
ment and International Manufacturing License Agreement.
Intended. A reference which may appear on marine bills of lading, non-negotiable

sea waybills and multimodal transport documents where the carrier reserves the
right to change the port of loading, the ship or the port of discharge. Examples:
“intended port of shipment Rotterdam”; “intended container vessel CGM Marco
Polo”; “intended port of discharge Veracruz”.
I Intercultural business. Intercultural business refers to business relationships with
people from diferent cultures. Such an interaction is becoming more inevitable with
the growth of globalization and the assurance that any sizable business can expect
to encounter some form of intercultural business during its various transactions.
his sort of business interaction can be viewed from several standpoints, including
the inlux of people from other cultures and the exportation of businesses to other
cultures. We can distinguish mainly three kinds of business culture efects:
• Business roles: the fact that the diferences in cultures usually have a direct
efect on the manner in which business afairs are carried out by the members
of such a community. For example, cultures that do not allow women to have
certain rights will also relect this bias in the business aspect of their dealings,
something that businessmen and women from other less repressive cultures
would have to understand in order for them to communicate efectively.
• Business law: Another consideration in cross-cultural business is the manner in
which the law of the foreign culture afects the manner in which they conduct
their business. his is very important because most times, miscommunications
may occur due to the assumption by one party to a business communication
that the law in his or her country is also the same in the country of the for-
eign business partner. One way to avoid this miscommunication is through
a conscious efort by a business to study the law and customs in a country
before it ventures into that country.
• Language: It is also a concern in cross-cultural business due to the fact that the
language barrier must be surmounted in order for business communication to

occur. Some businesses achieve this by hiring interpreters or using translation
services as a medium for channelling to the other party, and also for them to
decipher what the other party is trying to say.
Also called cross-cultural business. See business culture. Business Culture Guides
by Countries.
Interline. A mutual agreement between airlines to link their route networks.
Intermediary. In international trade, an individual or irm that brings together buy-

ers and sellers for a fee without taking part in actual sales transactions. Due to the
sporadic nature of his/her work, at the end of it, the intermediary does not have the
right to agreements of exclusivity or non-competition. See agent; sales representa-
tive. Intermediary Contract for Trade Operations.
Intermediate consignee. Any party shown in the consignee ield of a transport

document other that the party for whom the shipment is destined. Typical intermedi-
ate consignees include buyer-appointed customs brokers or banks taking a security
interest in shipped goods.
Intermodal transport. he coordinated transport of freight, especially in connection

with relatively long-haul movements using any combination of freight forwarders,
I
piggyback, containerization, air-freight, ocean freight, assembles and motor carriers.
International agreement. A broad term for legally binding arrangements covered

by international law between or among countries. Such arrangements are variously
titled as treaties, conventions, protocols, annexes, accords and memoranda of un-
derstanding, notes, pacts, declarations, statutes, constitutions and processes-verbal.
he title is not an important factor in making distinctions among arrangements.
International Arrangement on Export Credits. An agreement among the members

of OECD (Organization for Economic Cooperation and Development) governments
that they will not lower interest rates for export credits below speciied levels or ofer
most tied-aid credits without informing other OECD governments.
International business plan. Planning is essential for any business. Before venturing
into international markets companies have to draft an International Business Plan
as this document will help them set their goals, efectively allocate their resources
and determine which countries ofer the most potential for their products as well
as how to reach the clients and how to make competitive ofers. he purpose of the
international business plan is to prepare companies, specially middle and small, to
enter the international market place or to better organize their existing international
business activity. he International business plan can be divided into six sections fol-
lowing a time sequence. Each section helps to plan international business strategies
and take efective export decisions.
• Section 1. Export diagnostics.

• Section 2. Market selection.
• Section 3: Market entry methods.
• Section 4: International ofer.
• Section 5: International promotion strategy.
• Section 6: Economic plan.
he Plan will serve as step-by-step guide to lead the company through the process
of exporting products and services to international markets. International Business
Plan Template and Example.
International business protocol. When doing business in a foreign country execu-

tives and managers need to have some knowledge of the rules and behaviors that are
considered acceptable in social and professional relationships. he culture and tradi-
tions of each country make people behave diferently and if international managers
do not know how to adapt to business culture diferences, they can cause rejection
in the other party and even jeopardize the success of the negotiations. Some aspects
related to international business protocol are:
I • Greetings and introductions.

• Names and titles.
• Organizing meetings.
• Punctuality and time.
• Business cards.
• Preliminary conversations.
• Verbal communication.
• Non-verbal communication.
• Business meals.
• Gift giving.
• Tipping tips.
• Business attire.
Also called International business etiquette. See business culture. Business Culture
and Etiquette Guides by countries.
International consultant. International consultants are individuals who assist compa-

nies in inding answers to questions regarding the future activities in foreign markets.
An efective international consultant can work with his/her clients in speciic proj-
ects within a wide range of areas (management, market research, human resources,
corporate strategy, engineering, IT, etc.). While there are exceptions, international
consultants are likely to work closely with the management team of a company that
has already certain experience in foreign trade. As with many types of consulting work,
an international consultant must possess several skills that are essential when work-
ing with a diverse range of clients. he consultant must be well-schooled in the art of
communication (in English and other languages), have the ability to accurately evalu-
ate information and make feasible projections for the outcome of speciic courses of
action, and exhibit enough creativity and vision to see all the potential strategies that
would ultimately beneit the client. Along with these skills, the international consultant
should have a solid educational and also work background in international markets
that is relevant to the consulting jobs that are accepted. he commercial relationships
between the international consultant and their clients in international markets are
governed through an International Consulting Contract.
International Center of Dispute Resolutions (ICDR). Institution that belongs

to the World Bank Group and is one of the most recognized providers of interna-
tional dispute resolution services in the world, handling numerous cases for disputes
throughout the world. Website.
International Container Bureau (BIC). Established in 1933 under the Interna-

tional Chamber of Commerce and headquartered in Paris, France, BIC is the main
organization for promoting and forming international links for the development of
containerization and combined transport. It developed the BIC-CODE, a unique
I
registration system for containers. Website.
International contracts. International contracts refers to a legally binding agreement

between parties, based in diferent countries, in which they are obligated to do or
not do certain things. International contracts may be written in a formal way. Most
businesses create contracts in writing to make the terms of agreement clear, often
seeking legal counsel when drawing important contracts. Contracts can cover all
aspects of international trade, although the most commonly used are:
• International sale contract.
• International distribution contract.
• International agency Contract.
• International sales representative contract.
• International supply contract.
• International manufacturing contact.
• International services contract.
• International strategic alliance contract.
• International joint contract.
• International franchise contract.
In international trade, the UNIDROIT Principles establishes general rules ap-

plicable to commercial contracts. hey shall applied when the parties have agreed
that their contract be governed by them. hey also may be applied when the Par-
ties have not chosen any law to govern their contract. In other cases they may be
used to interpret or supplement domestic law. Models of International Contracts
in several languages.
International franchising. A system based on the licensing of the right to duplicate a

successful business format in foreign markets. he franchisor grants to the franchisee
the exclusive power to distribute its products or services in establishments which are
equivalently equipped and furnished, as well as the right to use Intellectual Property
Rights (commercial signs, brands, trademarks etc.). It also provides the Know-How
(Franchise Handbook), and the technical and commercial support for distribution
to be carried out correctly. he franchisee follows the instructions stated by the
franchisor in regards to the appearance, commercialization and corporate image on
the authorized premises. For the services provided, the franchisee pays the franchi-
sor a series of diferent fees (sales fee, Front-end fee, advertising fee, etc.). he two
principal kinds of franchise contracts in international markets are:
• direct franchise agreement, which are direct contracts between the franchiser
or sub-franchiser and the operator of the franchise unit.
I • master franchise agreement under which the franchiser grants another party
the right to sub-franchise within a given territory.
In international markets, relationships between the franchisor and the franchisee

are governed through a International Franchise Agreement. See master franchise.
Model of International Franchise Contract.
International Group of P & I Clubs. he thirteen principal underwriting member

clubs of the International Group of P&I Clubs (“the Group”). Between them provide
liability cover (protection and indemnity) for approximately 90% of the world’s
ocean-going tonnage. Website.
International Maritime Organization (IMO). Established as a specialized United

Nations agency in 1948 and headquartered in London, England, the IMO facilitates
cooperation on technical matters afecting merchant shipping and traic, includ-
ing improve maritime safety dangerous goods and prevention of marine pollution.
Website.
International product life cycle (IPLC). his marketing describes the difusion
process of an innovation across national boundaries. Typically, demand irst grows in
the innovating country (usually a developed nation like United States). In the begin-
ning, excess production in the innovating country (greater than domestic demand)
will be exported to other developed countries where demand also grows. Only later
does demand begin in less developed countries. Production, consequently, takes
places irst in the innovating country. As the product matures and technology is dif-
fused production occurs in other industrialized countries and then in less developed
countries. Eiciency and comparative advantages shift from developed countries to
developing countries. Finally, advanced countries, no longer cost efective, import
products from their former customers. Examples of typical IPLCs can be found in
the textile industry and the computer/software industry. For example, many textiles
are manufactured in Bangladesh and software in India (Bangalore). See assembly
operations; ofshoring; outsourcing;
International procurement. he process of allowing irms around the world to bid

on contracts for goods and services. he concept has gained popularity as shipping
and transportation costs have decreased due to an inlux of cheap, readily available
fuel. he globalization of large corporations has allowed them to reap the beneits
of lower labor and materials costs while still selling the same quality and quantity
of products. here are three primary beneits to international procurement: lower
costs, stimulation of a global economy, and increased consumer base. In an open
economy as more goods and services are purchased from other countries, the wealth
of those economies increases. his creates the capacity for increased spending, al-
lowing customers and businesses to purchase goods and services. See government
procurement.
International Road Transport Union (IRU). An organization with members in 75

countries, the IRU assists bus, coach and truck operators throughout the world by
I
brieing them on developments afecting their business. Website.
International Road Transportation Convention (CMR). he Convention on the

Contract for the International Carriage by Road was adopted in Geneva in 1956.
his convention applies when goods are taken from one country to another and
at least one of these countries is a party of the convention. In this situation CMR
Document is used. Model of CMR Transport Document.
International sales contract. An agreement between a seller and a buyer for the
sale of goods. he contract should, at a minimum, identify the seller and buyer, the
quantity and type of product, delivery time, price and conditions of payment. In
addition, a well-constructed international sales contract will reference the govern-
ing body of law, the forum where any disputes are to be resolved and the method
of dispute resolution, such as arbitration as opposed to litigation. For international
sales of goods, the body of law will often be the UN Convention on Contracts for
the International Sale of Goods (CISG), known as Vienna Convention. Contracts
for the international sale of goods should also indicate the terms of sale, preferably
one of the 11 Incoterms. Sales contracts covering goods that are not shipped under
a negotiable marine bill of lading should also specify when (time and place) and/
or how ownership passes from seller to buyer. Often international transactions are
conducted without the beneit of an international sales contract. Instead the seller
provides a quotation (often in the form of proforma invoice) and the buyer responds
with a purchase order. his may be suicient for repeat sales between well acquainted
parties that have developed a basis of previous dealings. However, it can lead to unan-
ticipated problems in case of disputes. Major issues not covered in the international
sale contract and without precedence in previous dealings between the parties will
be “illed in” by the dispute resolving authority, often with surprising consequences.
See Incoterms; proforma invoice; purchase order; Vienna Convention. Model of
International Sales Contract.
International service provider. A service provider is a business that supplies expert

care or specialized services rather than an actual product. In international markets,
the term is used for companies that ofer a variety of services such as: business man-
agement, technology, consulting, education and training, software and web services,
engineering, marketing research, advertising and design, etc. Other service-related
businesses, such as banks or mechanics, rarely are called a service provider, even
though the name would it. he commercial relationships between the service pro-
vider and its clients in international markets are governed through an International
Services Contract.
International trade websites. Internet is the main tool to obtain information on

foreign markets. here is a huge amount of information online including: interna-
tional trade statistics, country information, market research, business directories,
model documents and international contracts, etc. Ten of the most relevant websites
I for businesses and professionals involved on international trade are:
• Comtrade. International trade statistics by products and countries.
• Market Access Data Base. Tarifs and import documents in countries that do
not belong to the European Union.
• Coface. Country-risk and macroeconomic data.
• Global Trade Alert. Information about international trade barriers.
• UK Trade and Investment. Doing business guides of most countries
• International Contracts. International contracts models in ive languages.
• Incoterms. Information about the 11 Incoterms rules.
• Globaltrade. Business directory of export services providers and market
analysis.
• Kompass.Worldwide business directory.
A selection of the best websites with information of international trade can be found
in the database Infotrade.
International Underwriting Association of London (IUA). Entity that publishes the

most known marine cargo insurance conditions through its “A”, “B” and “C” clauses.
• “A” Clauses. he broadest type of standard coverage generally available. his
does not include coverage for the perils of war risk, strike, riot and civil com-
motion. hese additional coverages are available for most markets, usually at
modest additional premiums.
• “B” Clauses. It includes partial losses for heavy weather, and covers the fol-
lowing additional perils: lightning, seawater as a result of heavy weather and
jettison.
• “C” Clauses. It provides minimum cover: total or partial loss from stranding
sinking, burning or collision; and total loss from errors in vessel management,
boiler bursting, defects in hull or machinery and explosion.
he IUA was formed in 1998, through the merger of the London International In-
surance and Reinsurance Market Association (LIRMA) and the Institute of London
Underwriters. Website.
Intra-industry trade. Trade in which a country exports and imports goods of the
same industry. Examples of this kind of trade are automobiles, food and beverages,
computers or textiles.
INTRACEN. he International Trade Center is a Geneva based organization that

belongs to the United Nations and provides a wide range of technical assistance
to developing countries seeking to expand and promote their export potential.
Website. I
Intrastat. his is the system for collecting statistical data on the trade between mem-
bers States of European Union (EU). When a country becomes a member state of
the EU, the customs control over the goods movement between this country and
other member states disappears, so that the traders will no longer be obliged to ill
in a customs declaration for theses goods. To replace this data source, it was created
and developed the Intrastat system for collecting statistical data directly from trade
operators from EU member states which undertake activities of exchange of goods
with other EU member states.
Invisible barriers to trade. Government regulations that do not directly restrict

trade, but indirectly impede free trade by imposing excessive or obscure requirements
on goods sold within a country, especially imported goods. hese regulations are
often known to business owners within the country, because they may be required
to comply with them, but are often not known by foreign businesses seeking to ex-
port their products, and therefore such regulations are “invisible”. Examples include
labelling requirements, sanitary standards, and size or measurements standards. See
non-tarif barriers.
Invisible trade. Non-merchandise items such as freight, insurance, and inancial

services that are included in a country´s balance of payments accounts (in the cur-
rent account), even though they are not recorded as physically visible exports and
imports. Also called invisibles. See balance of payment; visible trade.
Invitation to tender (ITT). Asking potential suppliers to submit tenders to supply

goods or services.
Inward foreign manifest (IFM). A complete listing of all cargo entering the country
of discharge. Required at all world ports, it is the primary source of cargo control,
against which duty is assessed by the receiving country.
Ipso jure. By operating of law. Contract terms that are implied by a court from the
conduct of the parties, for example, are enforceable ipso jure.
Irrevocable corporate purchase order (ICPO). An ofer to buy goods under speci-
ied terms and conditions; for example, for misuse.
Irrevocable letter of credit. A letter of credit that cannot be amended or canceled

without prior mutual consent of all parties to the credit. Such a letter of credit
guarantees payments by the bank to the exporter/seller so long as all the terms and
conditions of the credit have been met. Documentary letters of credit issued subject
to the Uniform Customs and Practice for Documentary Credits (UCODC) Pub-
lication No. 500 of ICC, are deemed to be irrevocable unless expressly marked as
revocable. See letter of credit. Model of Irrevocable Letter of Credit.
I ISO. he International Standards Organization was established in 1947 as a world-

wide federation of national bodies representing approximately 90 members. he scope
of ISO covers standardization in all ields except electrical and electronic engineering
standards, which are the responsibility of the International Electrical Commission
(IEC). ISO is the world´s largest non-governmental system for voluntary industrial
and technical collaboration at the international level. he result of ISO technical work
is published in the form of international standards.Website.
ISO codes (currency). Acronyms used to identify a standardized currencies of dif-

ferent countries, according to regulations of the International Standard Organization
(ISO). hese codes have three letters: the irst two for the country and the third for
the currency, so that e.g. USD corresponds to United States Dollar, GPB to Great
Britain Pound GBP or JPY Japan to Yen. he currency of the European Union, the
euro (EUR), is the only one that does not follow this rule as it represents not only
a country but to all member countries of the eurozone. he code of each currency
can be found in website currency converter Oanda. See currency.
Issuance. he establishment of a letter of credit by the issuing bank (buyer´s bank)

based on the buyer´s application and credit relationship with the bank. See letter
of credit.
Issue date. he date a letter of credit was opened, or the date an amendment was
issued.
Issuing bank. he buyer´s bank which establishes a letter of credit at the request of
the buyer, in favour of the beneiciary (exporter/seller). Also called buyer´s bank or
opening bank. See letter of credit.
ITU Intermodal transport unit. Container or pallet suitable for multimodal trans-
port.
I
JETRO. he Japan External Trade Organization, an oicial agency depending on the

Ministry of International Trade and Industry that administers the export and import
promotion programmes of the Japanese Government. Website.
Jetsam. Articles from a ship or ship´s cargo that are thrown overboard, usually to
lighten the load in times of emergency or distress and that sinks or is washed ashore.
Also called lotsam and jettison.
Jettison. To unload or throw overboard at sea a part of a ship´s cargo to lighten the
ship in time of emergency. Also called lotsam and jetsam.
Joint and several liability. Liability for damages imposed on two or more individu-
als or legal entities who are responsible together and individually, allowing the party
harmed to seek full remedy against all or any number of the wrongdoers. he avail-
ability of joint and several liability varies among countries, and some jurisdictions
have placed limitations on the amount of damages for which a single person can be
held liable when multiple parties could be responsible.
Joint venture. An agreement by two companies, typically one foreign and one domes-
J tic to work together for mutual beneit with speciic ownership percentages speciied
in a long-term contract. hese two companies set up a third company (the Joint Ven-
ture). his new company would usually be located in the same country as one of the
two partner companies, with the purpose of mutually establishing an activity with its
own objectives: marketing and distribution, research, manufacturing, etc. he terms
of some joint ventures deals are regulated heavily by governments of certain countries
(mainly developing counties) as to the limits of foreign ownership and the minimum
amounts of money or assets invested. Companies of diferent countries that enter
into a joint venture govern their relationship through the International Joint Venture
Contract. See contractual joint venture; equity joint venture; strategic alliance.
Jurat. A statement signed by a person authorised to take oaths certifying to the au-
thenticity of a document or aidavit. See authentication; notary public.
Juridical person. An individual or legal entity recognized under law as having legal
rights and obligations. Corporations, and partnerships are examples of legal entities
that are recognized as persons under the law. In countries that allow the formation of
limited and unlimited companies, those companies are recognized as persons under
the law. See legal entity.
Keiretsu. he horizontally and vertically linked industrial structure of Japan´s private

economy. Horizontally linked groups include a broad range of industries linked by
banks and trading companies. Vertically linked groups are centered around parent
companies, with subsidiaries frequently serving as suppliers, distributors and retailers.
See sogo shoshas.
Key currency. A major currency in the global economy. Small countries, which are
highly dependent on exports orientate their exchange rate to major currencies in the
global economy, the so-called key currencies. Key currencies include the Euro, the
US dollar, the British pound or the Japanese Yen.
Key performance indicators (KPIs). A set of inancial and non-inancial values

used to measure the success of an organization or a particular activity, e.g. a project
or contract deliverables.
KISS. An acronym for keep it simple and straight. A project management tool used
to set project objectives and evaluate if those objectives it the project. he KISS
principle states that most systems work best if they are kept simple rather than made
complicated; therefore simplicity should be a key goal in business management. he
KISS principle has another variations such “keep it short and simple” and “keep it K
simple stupid” (probably the best known).
Knot. A measure of ship´s speed. On knot is equal to one international nautical mile
(1.852 meters) per hour.
Know-how. Knowledge of how to do something, expertise. In international trade,

Know-how can be deined as conidentially in the form of unpatented inventions,
designs, drawings, procedures and methods, together with accumulated skills and
experience in the hands of a licensor irm’s professional personnel which could assist
a transferee/licensee of the object product in its manufacture and use and bring to it
a competitive advantage. It can be further supported with privately maintained expert
knowledge on the operation, maintenance, use/application of the object product
and of its sale, usage or disposition. Know-how is transmitted form one company to
others through technology transfer agreements. Model of International Technology
Transfer Agreement.
Know loss. Loss or damage that was discovered before delivery.
Kompass. Kompass is the leading online global business directory with nearly 4 mil-
lion registered businesses in 60 countries. he search can be done by country, product
or company name. he classiication of products is very ample wich facilitates the
search for potential customers and suppliers in each country. It has a irst level of free
information (identiication of the company and contact details) and then a second
payment level (commercial report of the company). See Europages; Globaltrade;

Website.
Kosher certiicate. he Kosher certiicate is a document issued by certiication agen-

cies and the Chief Rabbinate of Israel, in which a Rabbi certiies that the products
referred (usually food products) fulil the biblical precepts of the Jewish religion. his
certiicate is not only required for Israel but also for other countries in which there are
Jewish communities calling for kosher products, such as the USA, United Kingdom,
France, Russia, Argentina or Mexico. Kosher certiicates are requested especially for
food: meat (slaughter of animals and salting process), ish, milk and eggs, canned and
preserved foods. hey also include feed additives (preservatives and dyes) and iber
of animal origin. Products that are kosher certiied are often marked with a kosher
symbol, or simply the letter K (as the letter M is used to identify Halal products for
Muslim population). See Halal certiicate. Model of Kosher Certiicate.
KOTRA. he Korean Trade and Investment Agency, and oicial agency depending on
the Korean Government that administers the export, import and invest programmes
of Korea. Website.
K
Landbridge. Multi-modal transportation where containerized cargo is brought to a

port on one coast, unloaded to ground transport, transported to a port on another
coast, and loaded on to another vessel. Usually, a single carrier (often the provider of
main carriage transportation) takes responsibility for the entire shipment.
Landed costs. he costs of the imported goods at the port or point of entry into a
country, including the cost of freight, insurance and port and dock charges. All charges
occurring after the goods leave the import point are not included.
Landed value. he value of cargo at the arrival point on the buyer´s side.; i.e., cost of
goods, packing, forwarding fees, pre-carriage, main carriage and insurance.
Landlocked. Having no direct access to the sea.
Language clause. A clause used in international contract drawn up in two or more

languages (English, Spanish, French, German). he language clause has to establish
which version prevails over the others. An example of language clause is as follows: he
whole text of the present Contract, as well as the documents derived from it, including those
in the Annexes, have been written in ................ and English, both versions being deemed
authentic, but for legal purposes the text in .......... is to be given priority of interpretation. L
Lashing. his is the operation executed by the ship´s personnel or by the palleters,
so that cargo is tied and secured according to navigational techniques. Also called
securing.
Lay order. he period during which imported merchandise may remain at the place
of unlading without some action being taken for its disposition., i.e. beyond the 5-day
general order period. See general order.
Laytime. he time allowed by the shipowner to the charterer or shipper in which to

load or discharge the cargo. May be expressed in days or hours, or tonnes per day.
Laytime may be set in running days (calendar day), working days (excludes Sundays
and holydays observed by the port), or weather working days (excludes in addition
days where operations are prevented by bad weather). It may be contractually provided
that if the charterer or shipper loads/unloads more quickly than is necessary, he will be
eligible for payment of an incentive called dispatch money; if the loading/unloading
time is excessive however, the charterer or shipper may have to pay a penalty known
as demurrage. Also called laydays.
Lead time. he amount of time required for something to happen. For example,
production lead time would be the length of time required to produce a good once
the work order has been placed to the factory, including any lead times for materials
that must be ordered.
LCL Less than container load. Refers to shipments of goods that will have to be
packed together with other consignments in order to ill up a container. A container
may be packed with LCL cargo at a container freight station for LCL delivery.
LCL/FCL. A way of quoting container freight rates in which the carrier agrees to
pack the container at the outset (LCL) but unpacking at destination must be car-
ried out by the receiver or consignee. It is a common approach for importers who
wish to consolidate small purchases from multiple suppliers in a foreign market into
container shipments.
LCL/LCL. A way of quoting container freight rates in which the carrier agrees to pack
the container on departure as well as unpack the container at destination.
Legal entity. And individual, proprietorship, partnership, corporation, association, or

other organization that has, in the eyes of the law, the capacity to make a contract or
an agreement, and the abilities to assume an obligation and to discharge indebtedness.
A legal entity is a responsible being in the eyes of the law and can be sued for damages
if the performance of a contract or agreement is not met. See a juridical person.
Legalized invoice. Occasionally, customs in the Middle East, require invoices to be

both certiied and legalised. After certiication, invoices have to be presented to the
L embassy of the destination country for legalisation. his involves presentation of the
certiied invoices to the embassy which then attaches their stamp to the documents.
Allow suicient time for presentation as goods should not be dispatched before the
invoices are legalised. Legalisation can take between ive and seven working days
depending on the embassy concerned. See commercial invoice.
Less developed country (LDC). A country showing: (1) a poverty level of income;
(2) a high rate of population increase; (3) a substantial portion of its workers employed
in agriculture; (4) a low proportion of adult literacy; (5) high unemployment; and
(6) a signiicant reliance of a few items for export. Terms such as third world, poor,
developing nations, and underdeveloped have been used to describe less developed
countries.
Lesser developed country (LLDC). he classiication LDC was developed by the

United Nations to give some guidance to donor agencies and countries about and eq-
uitable allocation of foreign assistance. he criteria for designating a country an LLDC
include low per capita income, literacy, and manufacturing share of the country´s
total gross domestic product.
Letter of assignment. A document with which the assignor assigns rights to third
party. See assignment.
Letter of correction. A letter addressed to a consulate containing such data as needed

to resolve any necessary corrections in consular documentation.
Letter of credit (L/C). A document issued by the importer´s bank stating its com-
mitment to honor a draft, or otherwise pay, on presentation of speciic documents by
the exporter within a stated period of time. he documents the importer requires in
the credit usually include, at least, a commercial invoice and clean bill of lading, but
may also include a certiicate of origin, inspection certiicate or other documents. he
most widely used type of credit in international trade is the irrevocable letter of credit,
which cannot be changed or cancelled without the consent of both, the importer and
the exporter. In a conirmed irrevocable letter of credit, the conirming bank adds
its irrevocable commitment to pay the beneiciary (exporter). he conirmation is an
additional guarantee of payment. he types of letters of credit are:
• Advised. A credit the opening of which the beneiciary has been informed by
a local bank.
• Back-to-back. A system utilized by intermediaries/brokers to inance a single
transaction through the use of two L/Cs opened in succession in order to per-
mit the intermediaries/brokers to use the proceeds from the irst credit to pay
of his supplier the second credit.
• Conirmed. L/C that has received an additional guarantee of payment by a
local or highly reputable bank.
• Deferred. L/C of credit under which payment by the importer is to take place
at a speciied time after his receipt of the shipping documents. L
• Red clause. L/C of credit used to provide the supplier with some funds prior
to shipment to inance production of the goods. he credit may be advanced
in part or in full, and the buyer´s bank inances the advance payment.
• Irrevocable. L/C letter of credit that cannot be retracted or revoked once the
beneiciary has been notiied. here is a presumption under UCP 600 that
every L/C is irrevocable.
• Revolving. L/C letter of credit which can be drawn against repeatedly by the
beneiciary; it can take a variety of diferent forms depending on whether the
credit is limited in terms of time, number o possible drafts, maximum quantity
per draft, or maximum total quantity.
• Sight. L/C letter of credit under which the beneiciary is entitled to present
a sight draft or sight bill of exchange, which is a call for immediate payment
upon acceptance of shipping documents.
• Standby. L/C akin to demand guarantee or bank guarantee, the standby L/C
is generally used to assure performance or payment by the counterparty.
• Transferable. L/C which allows the beneiciary to make part or all of his credit
payable to another supplier; used in intermediary/broker context; distinguish-
able from back-to-back L/C as the transferable L/C requires the knowledge
and authorization of the importer.
Also called Documentary credit (D/C). See irrevocable letter of credit; standby L/C.
Model of Letter of Credit.
Letter of Indemnity (LOI). A document that serves to protect the carrier/owner

inancially against possible repercussions in connection with the release of goods
without presentation of an original bill of lading. A letter of indemnity is used in
cases in which the goods arrive at the port of destination before the original bill of
lading. he issuance of the letter of indemnity allows the purchaser to take immedi-
ate delivery of the goods, thus saving himself time, additional demurrage, storage
expenses, insurance costs, etc.
Letter of Intent (LOI). A letter of intent is a collection of key points of an agreement

between two parties that are negotiating a contract; in this respect a letter of intent is
simply the agreement signed prior to the inal contract. Without a certain formality,
the letter of intent is meant to acknowledge the will of the parties to carry out in the
near future all the steps necessary to perform a contract that gives way to a transaction
in international business. It involves a reciprocal wills statement, without binding ef-
fect, but with high ethical value to the parties who sign. Among the purposes of the
letters of intent are include:
• Clarifying the key points of an operation for the convenience of the parties.
• he statement that the parties are currently negotiating.
L • Provides guarantees if the deal collapses during negotiation.
Another characteristic of the letters of intent is that it can resemble a written contract
but is usually not binding on the parties in their entirety. However, the majority of
these agreements, contain provisions that are binding, such as non-disclosure and
non-compete agreements. here are diferent types of letters of intent in international
business. he most common are: Letter of Intent for International Sale, Letter of
Intent for International Distribution and Letter of Intent for Joint Venture.
Letter of Introduction (LOI). A statement, often by a third party, in letter form, that
briely proiles a company with an eye toward doing business together. When written
by a third party it will take on the form of a recommendation.
Leverage. In foreign exchange (options), this term expresses the disproportionately

large change in the premium in terms of the relative price movement of the underly-
ing instrument.
Lex mercatoria. Internationally accepted general trade practices. he principles of

lex mercatoria primarily juxtaposed freedom of contract and alienability of property,
along with an aversion to legal technicalities and choices of going beyond the realm
of law. he branch of law largely draws on the sources of law that include public
international law and the general principles of law, as also from the UNIDROIT
Principles of International Commercial Law.
Licence. In international trade a revocable privilege granted by a government for

activities that would otherwise be illegal, such as an import licence.
License agreements. A contractual arrangement in which the licensor´s patents,

trademarks, service marks, copyrights or know-how may be sold or otherwise made
available to a licensee for compensation negotiated in advance between the parties.
Such compensation may consist of a lump sum royalty, a running royalty (based on
volume of production), or a combination of both. Licensing enables a irm to enter
a foreign market quickly and poses fewer risks than setting up a foreign manufactur-
ing facility. Furthermore, it allows parties to overcome tarif and non-tarif barriers
trade. In international markets the licence agreement most commonly used are the
International Trademark License Agreement and the International Manufacturing
License Agreement.
Licensee. A person to whom a license has been granted to use someone else’s speci-
ied thing such usually of intellectual property (trademark, patents, know how). he
person with the ownership rights which are voluntarily compromised by extending
the license, is called a licensor. he legal arrangement by which this occurs is called
a license. here are many types of licence agreement. he most used in international
trade are the International Manufacturing License Agreement and the International
Trademark License Agreement
Licensor. A person or a company with exclusive legal rights over a thing that gives,
L
sells or otherwise surrenders to another a limited right to use that thing. he person
beneiting from the grant is called a licensee and the legal term used to describe the
authority so given is license. here are many types of licence agreement. he most
used in international trade are the International Manufacturing License Agreement
and the International Trademark License Agreement
LIFO Liner in free out. In international trade, referring to a freight charge which
includes the cost of loading in the port of departure but does not include unloading
costs in the port of destination.
Lift-On/Lift-Of (Lo/Lo). Method by which cargo is loaded onto and discharged

from an ocean vessel, which in this case is by the use of a crane.
Lift truck. Machine that carries out the transportation of loads and also to elevates
them to a certain height. To be able to perform this second function it is provided
with a mast elevator, normally telescopic. As for its traction, it can be manual or
self-propelled.
Lifting cart. he most utilized vehicle of hard work in the loading and discharge
of docks o a store. It is self-propelled (diesel, gasoline or electric). It responds to the
type of counterbalanced truck since they carry the load placed ahead of their point
of support.
Lighterage. Barge transport from pier to vessel or vessel to pier at ports that are too
shallow to permit vessels to berth directly at piers. Goods subject to lighterage provide
one of the few instances where they are actually placed directly alongside a vessel as
deined in the FAS Incoterms.
Limitada (Ltda.). In Brazil and Portugal, designation for a private limited liability
corporation with limited liability to shareholders.
Limitation period. A maximum period set by statute within which a legal action can
be brought or a right enforced. A statute may prohibit, for example, any individual or
legal entity from bringing an action for breach of contract more than one year after
the breach occurred. Also called prescription period.
Limited (Ltd.). In United Kingdom, United States and other countries, designation
for a private limited liability corporation with limited liability to shareholders.
Limited liability. A situation whereby the liability of a party within the company
is limited to some extent. here are many forms of limited liability companies. For
instance, corporations normally limit share holder liability to the amount invested in a
business, while limited partnerships may hold only one or several designated partners
personally liable yet limiting the liability of other partners. Most jurisdictions required
L that a business with limited liability indicate this by using a recognized symbol, such
as Incorporated (Inc.), Limited (Ltd.) or Sociedad Anónima (S.A.).
Limited partnership. A partnership in which at least one partner has general liability
and at least one of the other partners has limited liability.
Line haul. he direct movement of cargo on a single ship between two ports of call.
Liner service. Regularly scheduled marine transportation provided by a carrier having

a ixed port rotation and advertising it as such. Liner service is done on liner terms,
where the shipowner provides vessel loading and unloading.
Liner shipping. Services provided by a steamship company or shipping line, under

which cargo vessels operate according to a ixed schedule and publicly advertised
freight rates.
Liner tarif reduction. A reduction by a given percentage for all tarifs maintained by
countries participating in trade negotiations, with or without exceptions for products
deemed to be sensitive.
Liner terms (LT). Freight rates that include loading/unloading charges according to
the custom of the respective ports, which unfortunately varies. Liner terms is, thus,
not yet a standard designation, and may not include cargo handling charges or the
costs of moving cargo between the ship´s hold and the quay. Traders are therefore
well advised to require full details in advance from carriers.
Liquidated damages. A sum of money that a contracting party agrees to pay to the
other party for breaching and agreement, particularly important in a contract in
which damages for breach may be diicult to assess. A manufacturer, for example,
that agrees to develop, produce, and sell unique products to a buyer may insist on a
contract clause for liquidated damages in the event that the buyer rejects the goods
without justiiable reason because the market for resale of the unique goods will be
so limited that damages will be diicult to assess. See damages.
Lloyd´s Register. An organizational maintained for the surveying and classifying of

ships so that insurance underwriters and other interested parties may know the quality
and condition of the vessels ofered by insurance or employment. Website.
Loading. he physical placing of cargo into a carrier´s container, or onto a vessel.
Logistics platform. he space located strategically in the territory to act as comple-

mentary and central element with the diferent ways of transportation. hese plat-
forms are interspersed inside the network of intermodal traic of merchandise and
they have a mission to serve as a link among the diferent methods of transportation:
railroad-highway, maritime-highway, air cargo-highway, and their possible combina-
tions.
Logistic services contract. he logistics contract regulates relations between the com-
panies that provide these services - known as logistics operators - and their clients.
L
Logistics services include general services such as transportation, distribution and
storage of diferent types of products and merchandises, as well as other more special-
ized services that are considered additional services such as point of sale management,
labelling and marking of prices, invoicing, after sales, collection management, etc.
Model of Logistics Services Contract.
London Court of International Arbitration (LCIA). he LCIA is one of the world’s

leading international institutions for commercial dispute resolution. he international
nature of the LCIA’s services is relected in the fact that, typically, over 80% of parties
in pending LCIA cases are not of English nationality. he LCIA’s dispute resolution
services are available to all contracting parties, without any membership requirements.
See arbitration. Website.
Long date forward. A forward exchange contract whose maturity exceeds one year.
See forward exchange contract.
Longshoreman. A person having charge of the loaded and unloading of ships in

port. Also called stevedore.
Losing face. An essential element of Chinese business culture is reputation (called

Mianzi) which the Chinese have within their personal relationships (Guanxi). Ac-
tions that can result in “losing face” for a Chinese negotiator are: interrupting while
he is talking or directly challenging him or pointing out an error of his. If during
negotiations someone is made to lose face before his peers, this person will react very
negatively and it will be very diicult to reach an agreement, as decisions are reached
as a group. As a counter position to the concept of “losing face” there is also “giving
face” (Gei Mianzi) which is achieved, for example, by paying compliments or praising
their work in front of a superior. his is recommended as it improves their reputation
and will make them take a more favorable attitude in reaching an agreement. See
guanxi. China Business Cultura & Etiquette Guide.
Low context cultures. A type of culture in which managers and executives relay on
spoken and written language for meaning. Senders of messages encode their messages,
expecting that the receivers will accurately decode the words used to gain a good un-
derstanding of the intender message. Examples of low context cultures are countries
such as China, Brazil or Saudi Arabia. See business culture; high context cultures.
LTL Less than truck load. 1. A shipment too small to ill a truck. 2. Rates applicable
when the quantity of freight is less than the volume or truckload minimum weight.
L
Madrid Agreement. Treaty, administered by the World Intellectual Property Organi-

zation (WIPO), Concerning the International Registration of Marks and the Protocol
Relating to that Agreement.
Main carriage. International transportation, as from the departure point on the

seller´s side to the arrival point o the buyer´s side.
Maintenance. he work of keeping something in proper condition, care or upkeep

including: taking steps to avoid something breaking down (preventative maintenance)
and bringing something back to working order (corrective maintenance). Some in-
ternational contracts as the international distribution contracts include a clause of
after-sales services and maintenance: he Distributor undertakes to carry out with its
own staf and means, and assume the costs of, and adequate after-sales and maintenance
service for all Products sold within the Territory. he Supplier shall provide the Distributor
with the spare parts and other means required to service the warranty conditions of the
Products. See after-sale service. International Distribution Contract.
Managing director. A managing director is someone who is responsible for the daily
operations of a company, organization, or corporate division. In some countries, the
term is equivalent to CEO (Chief Executive Oicer) the executive head of a company. M
In other countries, managing directors primarily work as the heads of individual
business units within a company rather than heading up the company as a whole.
As a member of senior management, the managing director is also expected to keep
a company solvent and to promote expansion and innovation within the industry.
Manifest. In international trade, a listing of all cargo transported on a particular ma-

rine voyage or light. he manifest prepared for cargo loaded at a given port or airport
should equal the sum total of all transport documents (bills of lading, air waybills)
issued for cargo taken on at that port or airport.
Manufacturing license agreement. his type of contract establishes a relationship

between two companies, Licensor and Licensee, whereby the Licensor grants a license
of Intellectual Property Rights (patents, trademarks, utility models, industrial designs,
know how) that are required in order for the Licensee to manufacture and sell the
products in a deined territory, usually a country. Model of International Manufactur-
ing License Agreement.
Margin. he diference between the cost of sold items and the total net sale income.
Marine bill of Lading B/L. A receipt for the cargo and a contract for transportation
between a shipper and the ocean carrier. It may also be used as instrument of owner-
ship (negotiable bill of lading) which can be bought, sold or traded while the goods
are in transit. To be used in this manner, it must be a negotiable “order bill of lading”.
here several types of marine bill of lading:

• A Clean bill of lading is issued when the shipment is received in good order.
If damaged or a shortage is noted, a clean bill of lading will no be issued.
• An on board bill of lading certiies that the cargo has been placed aboard the
named vessel and is signed by the master of the vessel or his representative.
In letter of credit transactions, an on board bill of lading is usually necessary
for the shipper to obtain payment from the bank. When all bills of lading are
processed, a ship´s manifest is prepared by the steamship line. his summarizes
all cargo aboard the vessel by port of loading and discharge.
• An inland bill of lading is used to document the transportation of the goods
between the port and the point of origin or destination. It should contain
information such as marks, numbers, steamship line, and similar information
to match with a dock receipt.
Also called ocean bill of lading. See bill of lading. Model of Marine Bill of Lading.
Marine cargo insurance. Insurance covering loss of, or damage to, goods at sea.
Marine insurance typically compensates the owner of merchandise for losses in excess
of those which can be legally recovered from the carrier that are sustained from ire,
shipwreck, piracy and various other cases. he most know marine cargo insurance
M conditions are published by London Institute of Underwriters (Clause “A”, B”, and
“C”). See all risk; Institute Cargo Clauses.
Market Access Data Base. Database of the European Union with comprehensive
information about tarifs in all countries of the world to European products and
documents required for export to each country. It is only accessible to members of
the EU countries. It has two very useful resources for European companies that want
to o export to non EU countries:
• Tarifs: tarifs rates that must be paid to export to each country. he search is
performed by tarif codes (4 or 6 digits) and countries of destination of the
goods.
• Import Documents: all documents required by the customs of non EU member
for each commodity. It is necessary to insert the tarif code of the product (4 or
6 digits) and the countries of destination. For each document the site provides
the model and explains how to complete it.
Market risk. he possibility that results at the time a product is delivered may difer
from expectations held at a time it was ordered. For instance, the market price may
have increased o decreased, or the product may be in greater or lesser demands that
was the cases when the order was placed.
Marks. Information placed on outer surface of shipping containers or packages such as

address labels, identifying numbers. box speciications, caution, or directional warnings.
Markup pricing. Markup pricing refers to the diference between the cost to produce
and market an item for sale, and the retail price that is charged for that item. Typically,
the markup is expressed as a ixed percentage, and is determined by applying that
percentage to the actual cost of the item. When calculating mark up pricing in inter-
national trade you have to take into account the speciic costs of exporting products
such as transportation, customs tarifs or intermediary margins.
Master air waybill (MAWB). An air transport document issued by an undercarrier.

his is the opposite of a house air waybill, which is issued by a carrier other than the
undercarrier.
Master form. Central document in export administrative systems under which all
necessary information is entered into a single master document or computer ile,
which is the used to generate all shipping and export documents.
Master franchise. he master franchise is a type of franchising that involves three

levels of participants: the franchisor, the master franchisee and de franchisees. Typi-
cally, the master franchisee will pay an initial fee and agree to a minimum development
schedule. he master franchisee will beneit from a designated territory, the right to
open and operate units directly and the right to grant third parties the right to open
and operate units. his type of relationships is often well suited for international
markets, as the master franchisee is often far more knowledgeable and connected in
the culture and business of the designated country or countries. See international
M
franchising. Model of Master Franchise Contract.
Mate´s receipt. A document issued by the carrier to the shipper, indicating re-
ceipt of the goods, but not loading on board. Like a Bill of Lading B/L, a mate´s
receipt can be either clean or claused/dirt/foul, depending on whether or not the
goods have been received in apparent good condition he mate´s receipt can later
be exchanged for the bill of lading. Mate´s receipts are used only for charter ship-
ments. Shipments made on liner terms (where the sip line handles vessel loading
an unloading) are covered by dock receipts signed when de goods are delivered to
the ship lines terminal.
Maturity date. he date an obligation becomes due. In bank collections, the due
date of an accepted draft.
Measurement cargo. A cargo on which the transportation charge is assessed on the

basis of measurement.
Measurement ton. A space measurement usually 40 cubic feet or one cubic meter.
he cargo is assessed a certain rate for every 40 cubic feet of space it occupies. Also
known as cargo or freight ton.
Mediation. An attempt to resolve a dispute through discussions under the auspices of

a neutral third party (mediator) where the contending parties are not obliged to accept
the ofered solution. his is in contrast to binding arbitration, where the contending
parties are usually obligated to accept the ofered solution.
Memorandum of Understanding (MOU). An informal record, document or instru-

ment that serves as the basis if a future contract. A Memorandum of Understanding
between companies is a document like a contract but not binding on the parties,
except when conidentiality and non-competition agreements are included. It is es-
sentially a collection of key points of an agreement between two parties that are ne-
gotiating a contract; in this respect a Memorandum of Understanding is simply the
agreement signed prior to the inal contract. Memorandums of Understanding are also
known for its acronym MOU. Main purposes of a Memorandum of Understanding
for in international trade transactions are:
• he statement that the parties are currently negotiating.
• Clarifying the key points of an operation for the convenience of the parties.
• Assess the interest of the other party to carry out the business.
• Collect the advances that occur in each of the negotiations.
• Provides guarantees if the deal collapses during negotiation.
Another characteristic of the Memorandum of Understanding is that can resemble

M a written contract but usually not binding on the parties in their entirety. However,
the majority of these agreements, contain provisions that are binding, such as non-
disclosure and non-compete agreements. he two Memorandums of Understanding
more used in international transactions are the Memorandum of Understanding for
International Distribution and the Memorandum of Understanding for Joint Venture.
Merchant´s credit. A letter of credit issued by the buyer himself. Contains no com-
mitment whatever on the part of a bank. See letter of credit.
Merchant´s haulage. he inland, move from or a port that has all arrangements made
by the cargo interests (Exporter/seller).
MERCOSUR. he Mercado Común del Sur (Southern Common Market) is an eco-

nomic and commercial group of countries is South America comprising Argentina,
Brazil, Paraguay, Uruguay and Venezuela with associate countries like Chile, Bolivia,
Colombia, Ecuador and Peru. Its purpose is to promote free trade and the luid move-
ment of goods, people, and currency till form a common market. Website.
Middleman. An intermediary acting as an agent or dealer between buyers and sell-

ers. In international trade, a middleman usually charges a commission as percentage
of the sales efectively made through a Intermediary Contract for Trade Operations.
MIGA. he Multilateral Investment Guarantee Agency (MIGA) is a inancial institu-

tion that belong to the World Bank Group and provides political risk coinsurance and
reinsurance for investment in client-developing countries. Website.
Mixed container load. A container load with diferent articles in a single consign-
ment.
Money laundering. he process whereby criminal seek to “wash” illicit funds (gener-
ally garnered from international terrorism or drug dealing). By moving funds around
from country to country, a fraudster´s intention is to conceal the source of the funds
and make them appear legitimate.
Money order. An instrument used to remit money to a named payee, often used by
parties who do not hold a current account with a banking institution to pay bills or
transfer money to another party. here are three parties to a money order: the remit-
ter (payer), the payee and the drawee. Drawees are usually inancial institutions or
post oices.
Monopoly. A market with a single supplier for example of telecommunications or

energy (gas, electricity).
Monopsony. A market with a single buyer, for example in certain countries, railway
machinery and equipment.
Most Favoured Nation treatment (MFN). A non discriminatory trade policy com-
mitment on the part of one country to extend to another country the lowest tarif
rates it applies to any other country. All contracting parties to the General Agreement
M
on Tarifs and Trade (GATT) - now World Trade Organization (WTO) - undertake
to apply such treatment to one another under Article 1 of the treaty. Under MFN
principles, when a country agree to cut tarifs on a particular product imported from
one country, the tarif reduction automatically applies to imports of this product from
any other country eligible for most favoured nation treatment. his principal of non
discriminatory treatment of imports appeared in numerous bilateral trade agreements
prior to the establishment of the GATT.
M/T (Metric Ton). 1.000 Kilos.
Multicurrency clause. A clause in a loan agreement stating that more than one cur-
rency may be used in paying or redeeming the loan.
Multidomestic strategy. A multidomestic strategy is an international marketing ap-

proach that chooses to focus advertising and commercial eforts on the needs of a local
market rather than taking a more universal or global approach. his means that com-
panies employing this marketing strategy will seek to understand the culture of various
local markets and tailor their entry into those markets based on the demographics of
that area. With this approach, a great deal of efort is made to adapt advertising and
presentation to appeal to local sensibilities, rather than using a mass market approach.
In order for a multidomestic strategy to be successful, is it important to invest a great
deal of research into the various localities where the products are actively marketed.
his can often provide valuable insights into the nuances of the prevailing culture in
an area, which leads to inspiration on how to present the products to best advantage.
By taking the time to learn how to connect with consumers, it is possible to use the
multidomestic strategy to create a wide range tactics that can be adapted to it markets
that share a lot of similarities, while still customizing the advertising and marketing
eforts to match exactly with the local culture. While employing a multidomestic
strategy can be somewhat costly on the front end, the efort can pay of in a big way.
Assuming the products do in fact capture the attention and the loyalty of the local
populace, those early eforts can yield returns over a number of years, possibly even
decades. For this reason, any business seeking to become established and build a
loyal client base in a number of diferent geographical areas will want to consider the
potential of this particular marketing strategy. See global strategy.
Multilateral agreement. A international agreement involving three or more parties.

For example, the GATT (General Agreement o Tarifs and Trade) has been, since its
establishments in 1947, seeking to promote trade liberalization through multilateral
negotiations. See bilateral trade agreement.
Multilateralism. International economy approach defending that all countries access

to international markets on equal terms.
Multimodal transport. Transport by more than one means. For instance, in door-to-
M door transport one might use ground transport for pre-carriage to the port or airport
on the seller´s side, main carriage by vessel or air to the arriver point on the buyer´s
side and ground transport for on-carriage. Multimodal transport occurs when a carrier
provides more than on of these movements.
Multimodal transport bill of lading. Bill of lading for carriage whenever there are
at last two diferent forms of transport, such as shipping by rail and by sea. See bill
of lading.
Multimodal transport document. A document issued or signed by a carrier indicat-

ing carriage by more than one means of transportation. For example, a multimodal
transport document for a door-to-port shipment with main carriage by vessel might
indicate pickup at the place where the shipment originates (often the seller´s premises)
with pre-carriage by truck and main carriage from the named port of loading to the
named port of discharge by a named vessel. Depending on how the contact carriage
was drafted, the document could be issued either on a received for shipment basis at
any time after the goods entered the control of the main carrier, or on an on-board
basis after the goods were loaded in the named vessel. As some ship lines accept li-
ability only while the cargo is on their vessel, its is important to carefully read the
contract of carriage.
Multimodal transport operator (MTO). A carrier who concludes multimodal trans-

port contracts; i.e., contract involving transport by more than one mode of carriage,
and for which MTO accepts liability as a carrier.
Multinational corporation (MNC). A large commercial organization with ailiates

operating companies in a number of diferent countries. A typically one normally
functions with a headquarters that is based in one country, while other facilities are
based in locations in other countries. In some circles, this type of corporation is re-
ferred to as a multinational enterprise (MBE) or a transnational corporation (TNC).
here are several models of multinational corporations:
• Centralized: in this model the executive headquarters are in one nation, while
production facilities are located in one or more other countries. his model
often allows the company to take advantage of beneits of incorporating in
a given locality, while also being able to produce goods and services in areas
where the cost of production is lower.
• Regional: a third approach to the setup of an MNC involves the establishment
of a headquarters in one country that oversees a diverse conglomeration that
stretches to many diferent countries and industries. With this model, the
corporation includes ailiates, subsidiaries and possibly even some facilities
that report directly to the headquarters.
• Multinational: in this model there is a parent company base in one nation and
operate subsidiaries in other countries around the world. With this model, just
about all the functions of the parent are based in the country of origin. he
subsidiaries more or less function independently, outside of a few basic ties to
the parent. M
In a globalized world multinational corporations sometimes has a greater ability to
adapt to economic and political shifts that corporations that function in a single
nation. Along with decreasing costs associated with producing core products, this
business model also opens the door for diversiication, which often makes it possible
for a company to remain solvent even when one division or subsidiary is posting a
temporary loss. See holding company; parent company; sister company; subsidiary.
Mutual Recognition Agreements (MRAs). Mutual Recognition Agreements are

negotiated on a sectoral basis (such as processed foods, telecommunications. medical
devices, chemicals, etc.) ) and allow countries to accept each other´s inal test results,
although quality assurances may be required. Under MRAs the entire testing and
certiication process may occur outside the importing country.
NAFTA. A free trade agreement comprising Canada, Mexico and the United States.
he objectives of the agreement are to eliminate barriers to trade, promote conditions
of fair competition, increase investment opportunities and also provide protection for
intellectual property rights and established procedures for the resolution of disputes.
Website.
Named place. Sales terms, specially Incoterms, must be accompanied by a geographic

locations such as:
• Named departure point.
• Named airport of departure.
• Named departure port.
• Named vessel.
• Named place of delivery at terminal.
• Named airport of destination.
• Named destination port.
N • Named destination point.
• Named destination place.
NCND Non-circumvention non-disclosure agreement. Type of contract frequently

requested by brokers or intermediaries under which buyers agree to refrain from go-
ing around the broker to deal directly with suppliers. hese agreements sometimes
refer erroneously to ICC Rules for Non-Circumvention Nod-Disclosure Agreements,
which do not exist.
NDA Non-disclosure agreement. Type of legal contract between at least two parties
that outlines conidential material, knowledge, or information that the parties wish to
share with one another for certain purposes, but wish to restrict access to or by third
parties. In the contract the parties agree not to disclose information covered by the
agreement. An NDA creates a conidential relationship between the parties to pro-
tect any type of conidential and proprietary information or trade secrets. NDAs are
commonly signed when two companies are considering doing business as a partners
(joint ventures, strategic alliances, mergers and acquisitions) and need to understand
the processes used in each other’s business for the purpose of evaluating the potential
business relationship. NDAs can be “mutual”, meaning both parties are restricted in
their use of the materials provided, or they can restrict the use of material by a single
party. Non-disclosure agreements are also known as conidentiality agreements. Model
of Conidentiality Agreement.
Nearshoring. he transfer of business processes to companies in a nearby country,

where both parties expect to beneit from one or more of the following dimensions of
proximity: geographic, temporal (time zone), cultural, linguistic, economic, political,
or historical linkages. Nearshoring is a derivative of the business term ofshoring. In
contrast, nearshoring means that the business has shifted work to a lower cost orga-
nization, but within its own region, broadly deined.
Negotiable bill of lading B/L. A marine transport document showing that the ship-
ment has been made with a designated carrier that includes the word “order” in the
consignee ield. Once signed by the carrier and endorsed by the shipper or whoever´s
name follows the word “order” a negotiable B/L becomes a bearer instrument of title
to the shipped gods. A second feature of negotiable B/Ls is that they permit goods to
be sold and resold while in transit by the simple expedient of endorsing and passing
on the original B/L to the new owner. For these reasons, the carrier will insist upon
surrender of the original negotiable B/L prior to releasing the goods. Marine B/Ls are
frequently issued in sets of three originals claused “one original being accomplished,
the others are void” (or similar terminology). As any one of the originals serves to
release the goods, unpaid sellers should carefully control the accessibility of all three
originals. Also called order B/L. See bill of lading.
Negotiable instrument. A written document that can be used to transfer the rights
embodied in it by mere delivery (in the case of instruments made out to bearer) or
by endorsement and delivery (in the case of instruments made out to order). Some
instruments, such as the bill of exchange and the cheque, are negotiable unless their
N
negotiability is explicitly, while the bill of lading is negotiable only if made negotiable
by the shipper.
Negotiable warehouse receipt. A certiicate issued by an approved warehouse that

guarantees the existence and the grade of a commodity held in store.
Negotiating bank. In a letter of credit transaction, the bank that:

• receives and examines the seller´s documents for adherence to the terms and
conditions of the letter of credit,
• gives value to the seller, so long as the terms of the credit have been met, and
• forwards them to the issuing bank (the buyer´s or importer bank).
Depending upon the of credit, the negotiating bank will either credit or pay the
seller/exporter immediately under the terms of the letter of credit, or credit or pay
the exporter once it has received payment from the issuing bank. See advising bank;
issuing bank.
Negotiation. 1. In banking, the action by which a negotiable instrument is circulated

(bought and sold) from holder to another. 2. In letter of credit transactions, the ex-
amination of the seller´s, documentation by the negotiation bank to determine if they
comply with the terms and conditions of the letter of credit and the giving of value
for drafts and/or documents by the bank authorized to negotiate. Mere examination
of the documents without giving value does not constitute a negotiation. See Avail-
ability; letter of credit.
Negotiations. he activities (including discussions, transfer of information, compro-

mise, etc.) leading to a settlement or agreement concerning a business transaction.
Each party to the negotiation must gain enough from the process to make it worth-
while to themselves and concede a suicient amount to keep counterparts interested.
See agenda; win-lose strategy; win-win strategy; zero-sum game.
NES. Not elsewhere speciied is used for an item that is not mention elsewhere in
a classiication system, such as a customs or freight tarif. Similar to NESOI (Not
elsewhere speciied or indicated).
NESOI. Not elsewhere speciied or indicated is used for an item that is not mention
elsewhere in a classiication system, such as a customs or freight tarif. Similar to NES
(Not elsewhere speciied).
Net price. he price paid or payable after all discounts and rebates have been applied.
Net proit. What’s left of the proit after all of the expenses and losses are deducted,
N either before or after tax.
Net terms. Vessel chartering terms under which the vessel owner is not responsible for
the cost of loading, stowing, trimming and unloading the vessel. See FIO and FIOST.
Net tonnage. A vessel´s gross tonnage minus deductions for space occupied by accom-
modations for crew, machinery for navigation, the engine room, and fuel. A vessel´s
net tonnage represents the space available for the accommodations of passengers and
the stowage of cargo.
Net weight. he weight of only the goods in a shipment, exclusive of any packing
materials.
Neutral marks. Cargo marks ha agree with the relevant packing list but which do
not indicate either the shipper or the consignee. Neutral marks are commonly used to
reduce theft, when either the shipper or consignee is generally known to be involved
with products having a “street value”.
No commercial value (NCV). Acronym used in proforma invoices and commercial

invoices to express that the merchandise shipped, usually samples. do not have com-
mercial value and therefore do not pay tarifs in customs clearance.
Non-negotiable B/L. A transport document showing that shipment has been made
with a designated carrier. For vessel shipments, the consignee ield will not contain the
word “order”, but will include the name of the party entitle to claim the cargo. Since
a non-negotiable B/L is not a bearer instrument of title, the carrier will release the
shipped goods to the named party only upon identiication, often without insisting
upon surrender of the original B/L. Goods shipped against a straight B/L cannot be
sold in transit, and only the party named in the consignee ield is entitled to receive
the shipped goods. Also called straight B/L. See bill of lading.
Non-tarif barriers (NTBs). Market access barriers that result from prohibitions,
restrictions, conditions or speciic requirements and make importing products diicult
and/or costly. he term covers any restriction or quota, charge, or policy (other that
traditional customs duties), domestic support programmes, discriminatory labelling
and health standards, and exclusive business practices limit the access of imported
goods. NTBs may result from government or private-sector actions. See Global Trade
Alert; Market Access Data Base.
NOR Notice of readiness is a term used in vessel chartering to indicate that a ship
has arrived and is ready for loading or unloading.
Normal value. A customs term meaning the price at which merchandise is sold or
ofered for sale in principal markets of the country from which it is exported. In some
countries a comparison of the price said paid or payable by a local importer with the
same item´s normal value can provide the basis for and anti dumping investigation.
Nostro account. A bank account held by a bank with its foreign correspondent bank,
N
in the currency of the foreign country.
Notary public. A person commissioned by a state for to administer certain oaths

and to attest and certify documents, thus authorizing him or her to take aidavits
and depositions. A notary is also authorized to “protect” negotiable instruments or
non acceptance.
Not otherwise speciied (NOS). his expression and abbreviation is often applied
to air freight tarifs, indicates that the rate stated in the tarif applies to all commodi-
ties within the commodity group except those appearing under their own rate. his
abbreviation, as used in air freight tarifs, is comparable to the abbreviation NOIBN
(not otherwise indexed by number) and NOS (not otherwise speciied) which appear
in tarifs published by the surface modes. Similar to NESOI (not elsewhere speciied
or indicated).
Notify address. Address mentioned in the transport document (bill of lading or air
waybill) to which the carrier is to give notice when goods are due to arrive.
Notify party. he party to which a carrier should send notice of a shipment´s ar-
rival. his information is normally shown on the transport document or its electronic
equivalent. As some carriers are notoriously negligent in advising arrivals, the party
contracting transportation with the carrier should keep the party awaiting arrival
informed as the shipment´s progresses. his can be done via Internet and sending
copies of all relevant documents including the transport document. Otherwise, de-
murrage charges can quickly accrue for shipments unclaimed because the carrier failed
to inform the notify party.
NVOCC. Non-vessel-operating common carrier is company providing point-to-point

international transport of goods although it does not necessarily operate or own
transport vehicles or equipment. NVCCOs will commonly contract with a shipper
to move goods from the exporter´s premises to the importer´s premises and will issue
their own door-to-door transport document, although they will in fact sub-contract
the diferent stages of the transport chain to various road haulers and ocean carriers.
See VOCC.
N
Oanda. Currency converter and calculator tool used by major corporation, tax au-
thorities, auditing irms, and individuals around the world. See exchange rate.
Ocean bill of lading. A receipt for the cargo and a contract for transportation be-
tween a shipper and the ocean carrier. It may also be used as instrument of ownership
(negotiable bill of lading) which can be bought, sold or traded while the goods are
in transit. To be used in this manner, it must be a negotiable “order bill of lading”.
here several types of ocean bill of lading:
• Clean bill of lading is issued when the shipment is received in good order. If
damaged or a shortage is noted, a clean bill of lading will not be issued.
• On board bill of lading certiies that the cargo has been placed aboard the
named vessel and is signed by the master of the vessel or his representative.
In letter of credit transactions, an on board bill of lading is usually necessary
for the shipper to obtain payment from the bank. When all bills of lading are
processed, a ship´s manifest is prepared by the steamship line. his summarizes
all cargo aboard the vessel by port of loading and discharge.
• Inland bill of lading is used to document the transportation of the goods
between the port and the point of origin or destination. It should contain
information such as marks, numbers, steamship line, and similar information
O
to match with a dock receipt.
Also called marine bill of lading. See bill of lading. Model of Ocean Bill of Lading.
OEM Original Equipment Manufacturing. Type of contract whose purpose is to

ofer a guarantee to foreign companies subcontracting their manufacturing in China
that the manufactured products comply with certain technical and commercial re-
quirements, and also that the Chinese manufacturer complies with the conidential-
ity and intellectual property rights of the foreign company. OEM Manufacturing
Contract for China (en English and Chinese).
Ofer. In international trade, a proposal that is made to a foreign individual or legal

entity to enter into a contract, that is deinitive in its terms, and that indicates the
ofer´s intent to be bound by acceptance. For example, and order delivered on cer-
tain terms is an ofer, but ad advertisement sent to many potential buyers is not. See
counterofer.
Ofset requirements. A type of counter trade transaction, in an ofset contract, which

may be required by an importer´s government as a condition for approval of major
sales agreements, the exporter makes an additional agreement to buy goods and ser-
vices from the importer´s country. here are two types of ofset requirements:
• Direct ofset: the exporter may be required to establish manufacturing facilities
in the importing country or to use a speciied percentage of the components

in the product sold from the importer´s country.
• Indirect ofset: the exporter may be obliged to buy goods o services from the
importing country without any link to the product sold.
See countertrade.
Ofshoring. Ofshoring occurs, when a company moves all or some of its activities
to another country. When the costs of running a company are cheaper in another
country, the company may choose to move their activities or oices abroad in order to
reduce expenses. As opposite to outsourcing, ofshoring requires that the third party
being hired to complete a job, will be located in another country. Companies that
practice ofshoring use International Manufacturing Contracts to produce in low cost
countries of Asia and Latin America. See nearshoring; outsourcing.
Oligopsony. A market where many suppliers compete to sell their product to a few
large and powerful buyers who have a disproportionate inluence over the market.
Oligopoly. A situation where a few large and powerful suppliers and manufacturers
try to maintain their position by excluding newcomers from a particular market. his
situation is not a good for buyers because it limits competition.
O
On-board B/L. A marine transport document indicating that the shipped goods have
been loaded on the carrying vessel.
On-board notation. Loading information shown on on-board B/Ls. he on-board

notation should slow the date that the goods were actually loaded, and should be
initialed by an employee or agent of the carrier.
On-carriage. he movement from the arrival point on the buyer´s side to the place
where transportation will end, often the buyer´s premises. On-carriage is often called
“inland freight on the buyer´s side”.
On-deck. A notation on marine transportations documents that the shipped cargo

was loaded on the deck of the carrying vessel as opposed to within the ship´s hold
(“under deck”). On deck shipments are more susceptible to in-transit damage, and
normally command a higher insurance premium. Further, on-dock shipments consti-
tute automatic discrepancies for letters of credit that do not speciically permit them.
Open account. A payment term under which the buyer promises to pay the seller
within a predetermined number of days, and the seller does not restrict the availabil-
ity of documents that control possession rights to the goods. In practice, required
documentation is sent directly to the buyer or the buyer´s customs broker. Buyers
requesting open account payment terms sums in excess of their seller´s comfort lev-
els can be accommodated by opening standby letters of credit on favour of sellers.
However, this payment term is prudent only when a buyer has absolute conidence
that the seller will not wrongfully draw on the standby letter of credit. Export credit
insurance may also increase open-account seller´s comfort levels. See payment terms.
Open-end contract. A contract by which the buyer may purchase the seller´s goods
at any time within a speciied period without changes in the price or other contract
terms.
Open marine cargo insurance policy. A type of insurance policy intended to cover
an indeinite number of future individual shipments. he insurance contract remains
in force until cancelled. Under the open policy, individual successive shipments are
periodically reported or declared to the insurer and reported shipments are auto-
matically covered on or after the policy´s inception date. Open policies can provide
eiciency and savings for all parties concerned, especially when the insured conducts
a signiicant volume of highly similar transactions.
Open policy (OP). A type of insurance policy intended to cover and indeinite
number of future individual requirement. he insurance contract remains in force
until canceled. Under the open policy, individual successive shipments are periodically
reported or declared to the insurer and automatically covered on or after the inception
date. Open policies can provide eiciency and savings for all parties concerned, espe-
cially when the insured conducts a signiicant volume of highly similar transactions.
Some letter of credit transactions require evidence of an individual policy covering
the speciied shipment. In such cases it has become the practice to use an insurance
O
certiicate. See insurance certiicate. See insurance certiicate; open marine cargo
insurance policy.
Open top container. A container itted with a solid removable roof, or with a tar-
paulin roof so the container can be loaded or unloaded from the top.
Opportunity cost. he cost of any activity, measured in terms of the value of the next
best alternative that was not selected.
Option. In foreign exchange, the contractually agreed upon right to buy (call options)
or sell (put options) a speciic amount of an underlying instrument at a predetermined
price on a speciic date (European option) or up to a future date (American option).
See American option; call option; European option; put option.
Order. A request to deliver, sell, receive, or purchase goods or services.
Order bill of lading. A negotiable bill of lading, which is made out to, or to the
order of, a particular person and can be transferred by endorsement and delivery of
the bill. In practice, the bill is made out either to the shipper´s order or to that of the
consignee or to his order. See bill of lading.
Original documents. In documentary collections and letters of credit, the require-

ment for an original document may also be satisied by the presentation of documents
produced or appearing to have been produced originally and marked as “originals” and
where necessary appearing to be signed. See documentary collection; letter of credit.
Outbound logistics. he collection, storage and distribution of the product to cus-

tomers. For tangible products this would involve warehousing, material handling,
transportation, etc.; in the case of services it may be more concerned with arrange-
ments for bringing customers to the service if it is in a ixed location.
Outsourcing. Outsourcing, is the process of utilizing third party workers for tra-
ditionally in-house business tasks; this may take place either inside or outside the
company’s home country. It is a common practice that businesses use to cut expenses,
gain access to employees with a special skill set, and obtain other beneits. Unlike
ofshoring, outsourcing does not need to take place in a separate country to occur.
Businesses that remain in their countries of origin may seek out local third party
workers, resulting in outsourcing. Outsourcing can, however, take place outside of the
company’s country of origin as well. In this sense companies that practice outsourcing
abroad use International Manufacturing Contracts to produce in low cost countries
of Asia and Latin America. See ofshoring.
Outright. In foreign exchange, a forward purchase or sale of currency which is not

ofset by a corresponding spot transaction. i.e. which has not been contracted through
O swaps. See foreign exchange.
Overdraft. A deicit in a bank account caused by drawing more money that is cred-
ited to it.
Paciic Alliance. he Paciic Alliance is a regional integration initiative created in

2011 in Latin America whose member states are Chile, Colombia, Mexico and Peru.
Its main objective is create an area of deep economic integration and to move gradu-
ally toward the free circulation of goods, services, capital and persons. See APEC;
Andean Community; Website.
Packaging ilm. Packaging ilm can produce a tightly wrapped package and is particu-
larly useful in unitizing smaller packages on pallets. here are two types in common
use: shrink ilm and stretch ilm. Shrink ilm, also called shrink wrap, contracts when
heated after packing; stretch ilm attempts to return to its original dimensions after
packing without the necessity of heat application.
Packing list. A seller-prepared commercial document indicating the net and gross
weights, dimensions and contents of all shipping pieces (boxes, crates, bundles, etc.)
in a shipment. Each packing list should reference the shipment for which is made,
and the line item totals should agree with the relevant commercial invoice. A packing
list should be made for all shipments consisting of more than one shipping piece for
the following reasons:
• hey aid in identifying lost cargo, especially for carrier and insurance claims. P
• hey permit selective inspection by customs authorities, and many government
require them for large shipments.
• hey provide a “map” of the shipment, enabling the buyer to easily unpack
and stock the shipped goods.
In certain cases it is advisable elaborate the packing list considering the information
requested by the importer, especially for customs purposes, as may be the case that
the Customs request a “detailed document”, for example, in the case of a machine,
the identiication of each of the parts and components. Model of Packing List.
Pallet. A shallow portable platform used to facilitate handling of goods by forklift

trucks. Often, packages are packed together on a pallet and then over-packed or
shrink-wrapped to form a unitized load. Pallets are commonly made of wood, plastics
or iberboard. A four-way pallet is particularly useful, as it is constructed to enable
forklift truck tines to engage from any of its four sides. To prevent introduction of
non-native pests, some countries, for instance, Australia, prohibit the importation of
non-treated coniferous wood packing materials from certain originating countries.
Although pallets come in all manner of sizes and conigurations, all pallets fall into
two broad categories: stringer pallets and block pallets:
• Stringer pallets: use a frame of three or more parallel pieces of timber (called
stringers). he top deck boards are then aixed to the stringers to create the
pallet structure. Stringer pallets can have a notch cut into them allowing
“four-way” entry.
• Block pallet: are typically stronger than stringer pallets. Block pallets utilize
both parallel and perpendicular stringers to better facilitate eicient handling.
A block pallet is also known as a “four-way” pallet, since a pallet-jack may be
used from any.
Pallet loader. Device employing one or more vertical lift platforms for the mechanical
loading or unloading of palletized freight at planeside. See pallet.
Pallet transporter. Vehicle for the movement of loaded pallets between an aircraft
and the freight terminal or truck dock. Sometimes the functions of a pallet loader
and a pallet transporter are combined into a single vehicle. See pallet.
Palletizing. he loading and securing of a number of sacks, bags, boxes or drums on

a pallet base. See pallet.
Par value. An oicial ixed rate of exchange between two currencies, or between a
currency and a basket of currencies or a speciic weight of gold.
Parallel imports. Imports made by parties other than the factory-authorized importer.
See gray market.
P
Paramount clause. he clause in a bill of lading or charter party invoking coverage
by the Hague Rules or by the particular enactment if these rules in the country with
jurisdiction over the contract.
Parent company. A parent company, sometimes called a holding company, is a cor-

poration that has subsidiaries which are wholly or partially-owned separate businesses
controlled by the parent. Although corporate law varies from one country to another
there are several ways in which a parent company can create a subsidiary. One method
is a takeover, in which the company acquires at least 51% of the stock in another
company. his majority share ensures that the parent controls the subsidiary. It is
also possible to buy another company outright or to create a new company which is
owned by the parent entity. When a parent corporation owns a subsidiary completely
and there are no minority shareholders, the subsidiary is known as a wholly owned
subsidiary. Sometimes a parent company is structured as a holding company. Holding
companies are created speciically to hold subsidiaries and do not produce any prod-
ucts or provide services. People own shares in the holding company, but not any of
the companies it controls, making it easier to control the subsidiaries and to do things
like selling or spinning of subsidiary properties. Holding companies may be created
for the purpose of protecting investors and also for allowing multiple companies to
be controlled under the ownership of a parent, rather than merging with each other.
See holding company; sister company; subsidiary.
Paris Convention. he Paris Convention for the Protection of Industrial Property,

irst adopted in 1833, is the major international agreement providing basic rights for
protecting intellectual property rights. It covers patents, industrial designs, services
marks, trade names, indications of source and unfair competition.
Parity. Exchange relationship of a currency to a legally binding reference, i.e., to a

speciic amount of gold or to other currencies.
Partial shipment. A portion of less than total quantity of an order. See back order.
Particular average. An insurance loss that afects speciic interest only. here are two
kind or particular average losses: the total losses of a part of goods, and the arrival of
goods at destination in damaged condition.
• Total loss: in this situation, it is necessary to determine how much of the total
amount insured is applicable to the missing item. In homogeneous or fungible
cargo - that is, cargo which is capable of mutual substitution, like oil or coal - is
frequently a matter of simple arithmetic.
• Arrival in damaged condition: the method of calculation is slightly diferent.
he value of the insurance is divided by the number of units in the expected ar-
rived quantity rather than the shipped quantity. his can be determined either
by the normal percentage of trade loss for similar shipments or by examinations
of sound arrived cargo forming part of the shipment in question.
P
Partnership. An unincorporated business owned and operated by two or more per-
sons (partners) who may have general or limited liability in accordance with the
partnership agreement. he deinition of status of partnerships varies from country
to country, and is not recognized as a business entity is some countries. See general
partnership; limited partnership.
Party at risk. Between the seller and the buyer, that party who has the most to lose
in the event of damage or loss to a shipment, such as:
• Unpaid sellers, especially if the problem occurs before the point where their
responsibility for the condition of the shipped goods has passed.
• Buyers who have prepaid, especially if the problem occurs after the point where
the seller´s responsibility for the condition of the goods ends.
• Whichever party is shown as shipper for the purpose of general average.
Patent. A grant by law to an inventor of a device of the right to exclude other persons
from making, using, or selling the device. he patent holder has the right to license
to another person or company the right to make use, or sell the device. A patent is
available only for devices that embody a new idea or principle and that involve a
discovery. Patent protection varies from country to country, and may no be available
in some jurisdictions. A country that is a member of the Paris Convention of Protec-
tion Of Industrial Property may recognize patents held in other jurisdictions. Patents
rights are transmitted and sold in international markets through an International

Manufacturing License Agreement. See Paris Convention; WIPO.
Patent Cooperation Treaty (PCT). Established in 1978 and open to any Paris Con-
vention member country, the PCT addresses procedural requirements in order to
simplify the iling, searching and publication of international patent applications.
Website. See patent.
Payee. he party to receive payment of a negotiable instrument. In a cheque or draft,

it is the party shown after the words “pay to the order of ”. See negotiable instru-
ment; payer.
Payer. he party primarily responsible for the payment of the amount owed as evi-
denced by a given negotiable instrument. See negotiable instrument; payee.
Paying bank. he bank designated in a letter of credit as the party that will honour
drafts drawn under the L/C.
Payment at sight. Payment terms used in bank collections that require the drawee to
pay before receiving certain documents. Typically, the drawer will send these docu-
ments to the drawee´s bank with instructions that it secure payment before releasing
P them. Also called CAD (cash against documents).
Payment in advance. A payment term whereby the buyer remits the amount of
money at the time the order is placed. Under this term the buyer is actually extending
credit to the seller. Also called CWO (cash with order).
Payment terms. hat part of a contract that deines when, where, to whom and in
what currency the underlying obligation is to be discharged. he exporter will con-
sider the following factors in negotiating terms of payment for goods to be shipped:
• Practices in the industry.
• Terms ofered by competitors.
• Relative strength (negotiation power) of the buyer and the seller.
Some of the payment terms commonly used in international trade are: cash in ad-
vance; open account; letter of credit, documents against payment and acceptance;
and consignment.
Payment under reserves. In a letter of credit payment made against a non-complaint

or questionable presentation, against which the beneiciary agree to repay if reimburse-
ment is nor received from the opening bank within a speciied time.
Perfect competition. A market situation where a large number of suppliers have equal
opportunity to ofer comparable goods or services to a large number of buyers. It is
the opposite to oligopoly. Also called pure competition.
Performance bond. A bond which guarantees proper fulillment of the terms of a

contract. In practice, the beneiciary of the bond (usually the buyer or services and/
or goods), will claim inancial restitution under the bond if the principal (supplier
of the services and or the gods) fails to comply with the terms and conditions in the
contract. See bid bond; guaranty.
Phytosanitary certiicate. An inspection certiicate issued by a competent govern-

mental authority to show that a particular shipment has been treated to be free from
harmful pests and plant diseases. he phytosanitary certiicate must be issued before
the customs clearance for export and import. It is granted for a period of sixty days
covering the usual deadlines for shipping and international freight. Model of Phyto-
sanitary Certiicate.
Pickup and delivery (PU & D). Freight quote that includes service of picking cargo
up at shipper´s premises and delivering it at consignee´s premises.
Pickup order. An order from a broker (working as the agent of a consignee) to carrier
to pick up freight at location.
Pier-to-house. A shipment loaded into a container at the pier or terminal, thence to

the consignee´s facility.
Pier-to-pier. Freight quote which only covers from export pier to import pier; that P
is, which excludes handling charges to bring cargo to and from piers. Also called
quay-to-quay.
Piggyback distribution. Piggyback is a form of distribution in foreign markets in

which a SME company (the “rider”), deals with a larger company (the “carrier”) which
already operates in certain foreign markets and is willing to act on behalf of the rider
that whishes to export to those markets. his enables the carrier to utilize fully its
established export facilities (sales subsidiaries) and foreign distribution. he carrier is
either paid by commission and so acts as an agent or, alternatively, as an independent
distributor buying the products. Piggyback marketing strategies are typically used
for products from unrelated companies that are non-competitive (but related) and
complementary (allied).
Piggyback logistics. he transportation of truck trailers and containers on specially

equipped railroad lat-cars.
Pilferage. As used in marine insurance policies, the term denotes petty thievery-the
taking of small parts of a shipment-as opposed to the theft of a whole shipment or
large unit. Many ordinary marine insurance policies do not cover against pilferage,
and when this coverage is desired it must be added to the policy.
Place of delivery. Place where cargo leaves the care and custody of carrier.
Place of receipt. Location where cargo enters the care and custody of carrier.
Point of origin. he location at which a shipment is received by a transportation

line from the shipper.
Port of call. A port where the ship discharges or receives traic.
Port of debarkation (POD). he port from which cargo are discharge. his may be
a seaport or aerial port from which merchandises are discharge; it may or may not
coincide with the port of destination. Also called port of discharge.
Port of embarkation (POE). he port from which cargo depart. his may be a sea-
port or aerial port from which merchandises low to a port of debarkation; it may or
may not coincide with the port of origin. Also called port of exit.
Port of entry. he port at which foreign goods are admitted into the receiving coun-
try. Ports of entry are oicially designated by the importing country´s government.
Port of exit. Place where cargo is loaded and leaves a country. Also called port of
loading.
Port of loading. he port where a shipment is loaded aboard a vessel. Also called
P port of exit.
Port-to-port. Main carriage vessel transportation only from the port of loading to
the port of discharge, i.e. excluding pre-carriage and on-carriage.
Portfolio investment. In general, any foreign exchange that is not direct investment
is considered portfolio investment. Foreign portfolio investment includes the purchase
of voting securities (stocks) at less than a 10 percent level, bonds, trade inance, and
governments lending or borrowing, excluding transactions in oicial reserves.
Postdated check. A check bearing a date that has not yet arrived. Such a check can-
not be paid by a bank before the date shown and must be returned to the maker or
to the person attempting to use it. If presented on or after the date shown, the same
check will be honored if the account contains suicient funds.
Post-tender-negotiation (PTN). A practice the public sector uses to negotiate better

terms after receiving formal tenders and before awarding contracts.
Power of attorney. he authority to act for another in legal or inancial matters. In

international, some countries require that a customs broker and/or forwarder have
a power of attorney in order to represent a principal for import or export control
purposes. For example: to enter into contracts, to sign documents, to sign checks,
etc. A principal may execute a special power of attorney authorizing an agent to sign
a speciic contract or a general power of attorney authorizing the agent to sign all
contracts for the principal. When you set up a power of attorney, make sure that it is
broad enough in its language to cover the types of situations likely to arise, but not
so broad that it gives more power to that individual than you intend. Before giving
someone power of attorney in a foreign country, be sure you understand what the
local legal ramiications are. See agent; customs broker; forwarder.
Pre-advice. In letters of credit, at the request of an applicant, the issuing bank may
give a pre-advice of issuance and/or amendment of the letter of credit. A pre-advice
is usually marked with a reference such as “full details to follow”. Unless otherwise
stated, the pre-advice irrevocably commits the issuing bank to issue/amend the credit
in a manner consistent with the said pre-advice. See amendment; advising bank;
issuing bank; letter of credit.
Pre-carriage. Transportation from the place where a shipping originates to the de-
parture point on the seller´s side. Pre-carriage brings the goods to the main carrier,
and is often called “inland freight on the seller´s side”.
Preferences. Special advantages extended by importing countries to exports from

particular trading partner countries, usually by admitting their goods at tarif rates
below those imposed on imports from other supplying countries.
Preferential cargo. Cargo that by the rules of the exporting or importing country
must be transported by a particular lag carrier.
P
Premises. Any building or oices occupied and used for commercial services.
Premium. 1. he amount above regular price paid as an incentive to do something.

For example, a buyer might pay a premium for quick delivery. 2. In insurance, the
amount paid to an insurance company for coverage under an insurance policy. Op-
posite to discount.
Prepaid. A notation on a shipping document indicating that the shipping charges

have already been paid by the shipper or his agent to the carrier.
Pre-qualiied suppliers list. A list of suppliers that a government agency has pre-
approved as capable of delivering speciic goods or services.
Prescription period. A maximum period set by statute within which a legal action can
be brought or a right enforced. A statute may prohibit, for example, any individual or
legal entity from bringing an action for breach of contract more than one year after
the breach occurred. Also called limitation period.
Presentation date. he date on which compliant documents were given to the issuing
bank or any other institution permitted under a letter of credit.
Presenting bank. In bank collections, the collecting bank that deals directly with the
drawee; usually is the drawee´s bank of the account.
Pre-shipment inspection (PSI). An inspection of contract goods prior to shipment

so as to ascertain their quality, quantity or price. Importers may insist on PSI, requir-
ing the exporter to furnish a certiicate of inspection - commonly issued by neutral,
internationally respected irms such as SGS o Bureau Veritas) - so that the importer
is assured of receiving goods of quality/quantity speciied in the sale contract. Gov-
ernment agencies may require inspection certiicates as regards price, so as to prevent
parties from under or over invoicing in an attempt to pay lower customs duties or
evade foreign exchange restrictions. See certiicate of inspection. Model of Certiicate
of Inspection.
Price diferentiation. Price strategy for international markets that allows each local
subsidiary or partner (agent, distributor. etc.) to set a price that is considered to be the
most appropriate for local conditions, and no attempt is made to coordinate prices
from country to country. he weakness of the price diferentiation strategy is the lack
of control that headquarters has over the prices set by the subsidiary operations or
external partner. Signiicantly diferent prices may set in adjacent markets and this
can relect badly on the image of multinational irms. It also encourages the creation
of parallel importing and grey markets, whereby products can be purchased in one
market and sold in another, undercutting the established market prices in the process.
P See price standardization.
Price standardization. Price strategy for international markets based on setting a

price for the product as it leaves de factory. At its simplest it involves setting a ixed
world price at the headquarters of the irm. his ixed world price is then applied in
all markets after taking account of factors such as foreign exchanges rates and variance
in the regularity context. his pricing strategy might be appropriate if the irm sells
to very large customers, who have companies in several countries. In such a situation
the irm might be under pressure from the customer only to deliver at the same price
to every country subsidiary, throughout the customer´s multinational organization.
Another advantage of price standardization includes the potential for rapid introduc-
tion of new products in international markets and the presentation of a consistent
price image across markets. See price diferentiation.
Price undertaking. Undertaking by an exporter to raise the export price of the prod-
uct to avoid the possibility of an anti-dumping duty.
Prima Facie. A Latin term frequently encountered in foreign trade that means “on
irst appearance.” When a steamship company issues a clean bill of lading, it acknowl-
edges that the goods were received “in apparent good order and condition” and this is
said by the courts to constitute prima facie evidence of the conditions of the contain-
ers; that is, if nothing to the contrary appears, it must be inferred that the cargo was
in good condition when received by the carrier.
Principal. 1. In international contracts, an individual or legal entity who authorizes

another party (agent, sales representative) to act on the principal´s behalf. 2. In bank
collections, the party entrusting the handling of a collection to a bank.
Prior import deposit. A deposit required by a government of a speciic sum, in do-

mestic or foreign currency, usually corresponding to a certain percentage of the value
of the imported products. Such deposits are characteristically held without interest,
sometimes for many months -from the time an order is placed until after the import
transaction is completed - and represent real costs to importers. he purpose of prior
deposits is mainly to discourage imports, particularly for balance of payments reasons,
and they are generally recognized as non-tarif barriers to trade.
ProChile. he Chilean oicial agency that administers the export and investment
programmes of the Chilean Government. Website.
Procurement. All aspects of acquiring and delivering goods, services and works. It
starts with identifying a need and inishes with either the end of a service contract or
the end of the useful life and disposal of an asset.
ProExport. he Colombian oicial agency that administers the export and invest-
ment programmes of the Colombian Government. Website.
Proit. he inancial gain resulting from selling goods or services at a price that exceeds
the cost of bringing them to market. See net proit. P
Proforma invoice. A sample invoice provided by an exporter prior to a sale or shipment
or merchandise, informing the buyer of the price, kinds and quantities of goods to be
sent, and important speciications (weight, size, and similar characteristics). he pro-
forma invoice no only acts as a contractual ofer (which may be accepted by importer´s
transmission of a purchase order), it is intended to be exactly replicated in the inal com-
mercial invoice, so that the buyer receives no surprises as regards, either the goods or the
price. Importers may need a proforma invoice to be able to apply for an import licence
or a foreign exchange permit. In the case of a letter of credit, the proforma invoice is
frequently used to inform the importer of the amount for which the letter of credit
has to be opened. he proforma invoice should include the following information:
• A unique proforma invoice number.
• he date the proforma invoice is prepared.
• he identities and addresses of the seller and prospective buyer.
• he proposed terms of sale (preferably Incoterms rules).
• he proposed terms of payment.
• A complete description of all line items including their unit costs and line-item
totals.
• he grand total.
• Any certiications required by import authorities of the buyer´s country.

• he validity period of quotation.
• A signature by authorized person at the seller´s company, if required.
When accepted in their entirety by buyers, proforma invoice often become the “of-
fer” and even act as a sale contract. For this reason, prospective sellers should take
care to quote pricing and delivery terms information that they can live with for any
order received from the prospective buyer during the validity period of quotation.
See commercial invoice. Model of International Proforma Invoice.
ProMéxico. he Mexican oicial agency that administers the export and investment
programmes of the Mexican Government. Website.
Promissory note. An unconditional written promise to pay a speciied sum of money

on demand or at a speciied date to, or to order of. a speciied person, or to the bearer.
Promissory notes are negotiable instruments and perform more or less the same func-
tion as accepted bill of exchange.
Proof of delivery (POD). A document required from the carrier or driver for proper
payment. POD includes the time of delivery, full delivery address, and the name and
P signature of the person who accepted the shipment.
Protectionism. he deliberate use or encouragement of restrictions on imports to enable

relatively ineicient domestic producers to compete successfully with foreign producers.
Protest. he act of formalizing the dishonour of a draft. Laws difer from country to
country, but in general the procedure works as follows:
1. he principal has instructed that dishonoured drafts be protested.
2. A draft matures for payment and is not paid.
3. Whatever applicable grace period in the drawee´s country expires.
4. he banker, often accompanied by a public notary, formally presents the draft for
payment. Notice of the dishonour is recorded by the notary.
he results of a protested draft vary from country to country, but the net result is
often akin to the recording of a judgment entry. Further, in some countries, protested
drafts enjoy preferred status over non protested drafts in case of bankruptcy liquida-
tions. Some countries require that drafts covered by avals (third party guarantees) be
protested if defaulted at maturity. his assures that the guarantor receives due notice
that its contingent liability may be called.
Proxy. A person who is substituted or deputed by another to represent him and act
for him, particularly in some meeting or public body. Also the instrument containing
the appointment of such person. See power of attorney.
Purchase order. A purchaser´s written ofer to a supplier formally stating all terms and
conditions of a proposed transaction. Sometimes, in a certain number of international
trade operations, international sale contracts are not made. In these cases, it is usual to
conirm the operation with an international purchase order. his practise is usual for
sales of a small amount of money and for repetitive sales to the same client concerning
products which are not very complex or for products that do not have a high added
value. Usually it is the exporter who issues this document. Nevertheless, sometimes,
companies with international purchase experience (such trading companies) have
their own international purchase order template where they establish the purchase
conditions to their suppliers. Model of International Purchase Order.
Purchasing agent. An agent that purchases goods in his/her own country on behalf
of foreign purchasers that are his/her clients. he purchasing agent represents and
buys a speciic kind of products within a speciic territory. Also called buying agent.
Model of International Purchasing Agent Contract.
Purchasing power parity (PPP). An economic theory that estimates the amount of
adjustment needed on the exchange rate between countries in order for the exchange
to be equivalent to each currency’s purchasing power. he PPP is calculated as: S = P1
/ P2, where “S” represents exchange rate of currency 1 to currency 2; P1 represents
the cost of good X in currency; and P2 represents the cost of good X in currency 2.
Put option. A contract which entitles one party (exporter or importer), at his option,
P
to sell a speciic amount of currency to another party (usually a bank), at a price ixed
in the contract, within a speciied time limit. See American option; call option; cur-
rency option; European option.
Quality. he degree of excellence of something, as measured against other things of

a similar kind.
Quality assurance. he process of making sure that goods or services perform to

agreed quality standards.
Quality control. he process of making sure that goods and services are produced
and maintained to agreed quality standards.
Quantitative restrictions. Explicit limit, or quotas, on the quantity of a good that

can be imported or exported during a speciied time period. his restrictions may be
applied id a “selective” basis, with the varying limits set according to the country of
origin, or o quantitative global basis that only speciies the total limit and thus tends
to beneit more eicient suppliers. Quantitative restrictions are frequently managed
through quotas a system of licensing. See import quota; quota.
Quay. A structure built for the purpose of mooring a vessel. Also called pier.
Quota. In international trade a limitation of the quantity of goods that may be im-
Q ported into a country from all countries or from speciic countries during a period of
time. here are to type of quotas:
• Global quota. Permit a limited number of unit of speciied merchandise to be
entered or withdrawn for consumption in a country during speciied periods
of time.
• Tarif-rate quotas. Permit a speciied quantity of merchandise to be entered or
withdrawn for consumption in a country at a reduced tarif during a speciied
period of time.
Quotation. An ofer to sell goods or services. In international trade, ofers to sell

goods are often prepared in purchase order or proforma invoice format. Model of
International Purchase Order. Model of International Proforma Invoice.
Railway consignment note. A freight document indicating that the goods have been
received for shipment by rail. he railway consignment note is a rail contract in which
the parties are identiied, the goods transported are described and responsibilities are
assigned. It must be signed by the sender and by the carrier. When this document is
included in the documentation of a letter of credit, if the letter does not identify the
carrier, any signature or stamp of the railway company will be accepted as evidence
that the document has been signed by the carrier. his document do not constitute a
title to the goods (unlike the bill of lading B/ L) and therefore is not negotiable and
cannot be issued “to order”; it is always nominative.
Range. In shipping, range means extent or scope of places. Carriers, particularly ship
lines, quote base rate freight costs based on services from places they serve that are
located within one range to the places they serve that are located within another range.
Since diferent ports have diferent capabilities, cargo handling procedures and termi-
nal handling charges, ship lines quote only base rate freight on a range-to-range basis,
and add a terminal handling charge that depends on which ports are actually used.
Receipt. Any written acknowledgment given in exchange for taking goods into one´s
possession.
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Received for shipment B/L. A bill of lading which conirms the receipt of goods by
the carrier, but not their actual loading on board. his document can be accepted
under letters of credit only if this is expressly permitted in the opening of the let-
ter of credit, or if the credit stipulates a document covering multimodal transport.
Otherwise, received for shipment B/Ls must show an additional “on board” notation
in order to be accepted as a marine bill of lading. See bill of lading; letter of credit.
Red clause L/C. A letter of credit provision allowing the beneiciary to draw partial
advance payments under the credit. his provision in used to be set out in red ink,
therefore red clause designation. Generally, the beneiciary is only required, in order
to receive the payment of the authorize advances, to present drafts along with a state-
ment that the shipping documents will be provided in due time. Liability is assumed
by the issuing bank rather than the correspondent bank. See letter of credit.
Reefer container. A controlled temperature shipping container, usually refrigerated.

Refrigeration may either be mechanical, which means involving an external power
supply, or by expendable refrigerant (dry ice, liqueied gases, etc.), which requires no
external power supply.
Re-exports. Exports of foreign origin merchandise that had previously been imported.
Reimbursing bank. he bank named in a letter of credit from which the paying,
accepting or negotiating bank may request cover after receipt of the documents in
compliance with the letter of credit. he reimbursement bank is often but not always,
the issuing bank. If the reimbursement bank is not the issuing bank, it does not have
a commitment to pay unless it has conirmed the reimbursement instruction. he
issuing bank is not released from its commitment to pay through the nomination of a
reimbursement bank. If cover from the reimbursing bank should not arrived in time,
the issuing bank is obliged to pay (also any accrued interest on arrears).
Reinsurance. Reinsurance occurs when multiple insurance companies share risk by

purchasing insurance policies from other insurers to limit the total loss the original
insurer would experience in case of disaster. By spreading risk, an individual insurance
company can take on clients whose coverage would be too great of a burden for the
single insurance company to handle alone. When reinsurance occurs, the premium
paid by the insured is typically shared by all of the insurance companies involved.
Remittance. Funds forwarded from one person to another as payment for bought
items or services.
Remittance following collection. In instances when a shipper has performed services

incident to the transportation of goods, a carrier will collect payment for these services
from the receiver and remit such payments to the shipper. Carriers charge nominal
fees for this service.
R Remitter. In a documentary collection, an alternative name given to the seller who
forwards documents to the buyer through banks. See documentary collection.
Remitting bank. In a documentary collection, the bank forwarding the exporter´s

documents and the draft to, an receiving payments from, the buyer´s bank (collecting
bank). See documentary collection.
Representative oice. An oice opened in a foreign market as a irst step for es-
tablishing a relationship with potential buyers or sellers. his type of oice allows a
company to show its commitment to the new market while permitting more intense
on-the-ground research. Some developing economies have tight restrictions on the
opening and operation of representative oices. Central government approval may
be required and signiicant restrictions may apply.
Request for information (RFI). A market research tool. A formal request from a
potential buyer (public or private) to the market asking for information to get an
idea of the number and type of suppliers and the range of solutions, technologies and
products or services they can provide.
Request for proposal (RFP). A document issued by a purchaser seeking purveyors

for very speciic goods or services. he RFP will give basic technical requirements
and possibly price restrictions. Purveyors will respond with either a request for more
data or a bid for providing the good or services. Also called request for quotation. See
tender proposal. Model of Request for Quotation Letter.
Request for quotation (RFQ). A negotiation approach whereby the buyer asks for
a price quotation from a potential seller/supplier for speciic quantities of goods (or
services) to speciications the buyer establishes in the request for quotation letter.
Also called request for proposal (RFP). Model of Request for Quotation Letter.
Request for tender (RFT). A formal request from an agency asking for ofers from
potential suppliers to supply clearly deined goods or services or works. Often there
are highly technical requirements and a prescriptive solution.
Rescind. To cancel a contract. A contract may, for example, give one party a right to
rescind if the other party fails to perform within a reasonable time.
Reserve currency. A national currency such as the US dollar, the European euro
EUR, or the Swiss franc CHF, used by many countries to settle debit balances in their
international accounts. Central banks generally hold a large portion of their monetary
reserves in reserve currencies, which are sometimes called “key currencies”.
Restitution. In law, remedy for a breach of contract by which the parties are restored
to their original positions before the contract was made or the breach occurred. Dam-
ages are distinguished from restitution in that damages compensate for a party who
has sufered a loss. If a buyer for example, partially pays for merchandise in advance
and the seller delivers merchandise that fails to meet the buyer´s speciications, the R
buyer may ile a legal action seeking restitution, that is, a return of the advance pay-
ment to the buyer may accept the goods and may sue for damages in the amount by
which the worth of the goods is less than the original contract price.
Restricted letter credit. A letter of credit, the negotiation of which is restricted to a

bank specially mentioned in the letter. See letter of credit.
Retaliation. Action taken by a country whose exports are adversely afected by the
raising of tarif or other trade-restricting measures by another country. Also called
retorsion.
Retention of title clause. A contract clause commonly used in international sale

contracts whereby a seller declares his intention to retain title of ownership over the
contract goods until payment by buyer is complete. Example of retention of title
clause is as follows: It is understood that the Products hereunder remain the property of
the Seller, until the Buyer has completed payment completely. Until such point the Prod-
ucts shall be deemed to be a deposit in possession of the Buyer, and the Buyer shall meet
all obligations incurred by receiving such deposit, while being entitled to administer the
Products with due diligence.
Revaluation. he increase of the value (restoration) of a nation´s currency (that had

once been devalued) in terms of the currency of another nation.
Revenue ton (R/T). A unit measure used in marine transport to compare the volume
and weight of a shipment. Freight rates are usually expressed in terms of cost per
revenue ton. here are three diferent formulas in general use for determining the
total number of revenue tons in a given shipment when the freight is calculated on a
weight or measurement basis:
• he greater of the total number of cubic meters versus the total number of
metric tons;
• he greater of total cubic feet/40 versus the total gross weight in pounds/2.000;
• he greater of total cubic feet/40 versus the total gross weight in pounds/2.234.
Occasionally, carriers assign a per-unit freight cost to a particular type of cargo, for
instance, locomotives up to “x tons” and “y cubic meters” might pay a ixed amount of
money per locomotive. As there are diferent formulas that produce diferent results, it
is important that the carrier and the party contracting for carriage clearly understand
which one applies.
Reverse logistics. Activities associated with a product/service after the point of sale.
he ultimate goal of reverse logistics is to optimize or make more eicient aftermarket
R activity, thus saving money and environmental resources. Some services included in
reverse logistics are:
• Customer service (helpdesk).
• Depot repair.
• Transportation/warehousing.
• Spare parts management.
• Replacement management.
• Refurbishment.
• Screening/count auditing.
• End-of-life manufacturing.
• Recycling.
• Scrape/waste management.
• Sustainability.
• Environmental resources.
Reverse logistics is not to be confused with forward logistics or getting the product to
market commonly known as the forward supply chain. Model of Logistics Services
Contract.
Reverse option. An auction where suppliers bid the price down in competition with
each other. Reverse auctions commonly take place over the internet.
Revocable L/C. A letter of credit that can be cancelled or changed by any party at
any time without the consent of any other parties. At present there are not revocable
L/C; all of them are irrevocable. See letter of credit.
Revolving L/C. A letter of credit which is automatically restored to its full amount
after the completion of each documentary exchange.
Risks analysis. Identifying and assessing the risks that apply to a particular scenario
along with the costs and other efects of those risks if they were to occur and mini-
mising, monitoring and controlling the probability and impact of those efects. See
country risk.
Roll-on/roll-of (RoRo). A combination of road and sea transport, where loaded

road vehicles are driven on to a ferry or ship (roll-on/roll-of ship) and of at the port
of destination. Major beneits of RoRo are reduced handling of the actual goods and
packages, competitive costs for unit loads and schedules services.
Rollover credit. Any line of credit that can be borrowed against up to a stated credit
limit and into which repayments go for crediting. See letter of credit.
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Rounding. 1. In vessel shipments, the practice of rounding up length, width and
height dimensions to the nearest whole centimeter or inch in calculating the di-
mensional weight factor for revenue tons. 2. In air freight shipments, the practice of
rounding up the entire shipment´s dimensional or actual gross weight to the nearest
whole kilo or pound.
Royalties. Compensation for the use of a person´s or company´s intellectual prop-

erty rights based on an agreed percentage of the income arising from its use (e.g. to
an author on sale of his/her book, to an inventor for the use of his/her patent, to a
company for the use of its trademark, etc.).
Rules of origin. he criteria applied by an importing country to determine the ori-

gin of a good. he question of origin is very complex because many goods contain
materials of mixed origin and many preferential trade agreements employ diferent
origin criteria
Importers should be sure that they know and understand the particular rules or origin
that their governments apply.
Running days. A vessel chartering term meaning days that run consecutively after
each other.
SAD. he Single Administration Document is a customs declaration document used

by all countries within the European Union (EU). It is required for all exports of
goods outside the European Union, with the exception of postal exports, and must
accompany the goods to the point of exit from de EU.
Safeguards. Emergency measure taken when increased imports of particular products

cause or threaten to cause serious injury to the importing country´s domestic indus-
try. World Trade Organization (WTO) permits two forms of multilateral safeguards:
(a) a country´s right to impose temporary import controls or other trade restrictions
to prevent commercial injury to domestic industries; (b) the corresponding right to
exporters not to deprived arbitrarily of access to markets.
Said to contain (STC). his is a caveat clause applied to container-shipment trans-

port documents, indicating that the carrier has no irsthand knowledge of what was
loaded in the container. hey do not deny that the quantity invoiced is actually the
quantity shipped, and in themselves do not constitute discrepancies under letters of
credit. Also called Said to weigh (STW). See shipper´s load and count.
Sales agent. A person or a company that acts as a sales agent on behalf of the export-
S ing company (principal), introducing its products to potential buyers in the external
market, in exchange for a commission based on the value of the business deals ar-
ranged and paid to the principal. As with the distributor, this relationship does not
imply a formal interdependence between the principal and the agent intermediary,
unless the laws of the country of destination state otherwise. he mechanism of com-
mission agent or intermediary is therefore very useful to companies that are launch-
ing their export operations. his type of contract is ideal for small companies with
little or no experience in international trade, as it allows them to access international
markets without having to make large investments. Everything is left in the hands of
the agent. In foreign markets, the relationship between the sales agent and his clients
is governed through the International Sales Commission Agreement. See brokerage;
distributor; sales representative.
Sales representative. An individual or irm that serves as the foreign representative

of a domestic supplier and seeks sales abroad for the supplier. he Representative
carries out his/her activity continuously and is paid by commission based on sales
achieved, although on occasions there may be agreement as to the payment of fees
for management and representation expenses. In international markets relationships
between sales representative and his/her clients are governed through an International
Sales Representative Agreement. See agent; distributor.
Sales tax. A tax levied on the exchange of goods and services in the process of distri-
bution. See indirect tax; VAT.
Salvage. 1. Compensation paid for the rescue of a ship, its cargo or passengers from
a loss at sea. 2. he act of saving a ship or its cargo from possible loss. 3. Property
saved from a wreck or ire.
Salvage loss. A method of insurance adjustment where the underwriter pays the
diference between the amount of insurance and the net proceeds of the sale of dam-
aged goods. It is sometimes incorrectly assumed that when damaged goods are sold to
determine the extent of loss, the underwriter is obligated to pay the diference between
the amount of insurance and the net proceeds of the sale. he salvage loss method is
regularly used only if goods are justiiably sold short of destination.
Sample. A portion or piece taken as a representative of a whole. When cost permits,

sellers often provide samples to new customers, or of new products to existing custom-
ers. Either way, this is normally done at low or no charge to the client. In international
trade, sample shipments may present problems as countries´ rules difer in how they
are treated for customs purposes. he safest procedure is to ask the buyer whether a
commercial invoice is required and, if so, what verbiage should be used. For many
countries, a “no charge” invoice stating the lowest defensible value and clearly indi-
cating the phrase “samples - no commercial value - not for resale” will be enough.
Sanction. An embargo imposed against an individual country by the United Na-

tions -or a group of nations - in an efort tom inluence its conduct or its policies.
See embargo.
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Sanitary certiicate. Some countries require a health or sanitary certiicate when
animals, animal products, ish, plants and food products are skilled. hese certiicates
conirm that the goods are free from disease or pests (insects), and that products have
been prepared in such a way that they reach prescribed standards. Normally, these
certiicates are issued by the Department of Agriculture of the exporter´s country.
Also called certiicate of health.
Sanitary measures. Regulations that governments impose to restrict imports for

health protection reasons. See phytosanitary certiicate; sanitary certiicate.
Schedule. An attachment to a particular contract that forms a material part of the

contract. Also called annex or exhibit.
Sea waybill. A transport document for maritime shipment which serves as evidence
of the contract of carriage and as a receipt for the goods, but is not a document of
title. he sea waybill indicates the on board loading of the goods and can be used in
cases where no ocean bill of lading and no other document of title is required. For
receipt of the goods, presentation of the sea waybill by the consignee named therein
is not required, which can speed up processing at the port of destination. See bill of
lading; ocean bill of lading.
Second advising bank. In a letter of credit transaction, the seller usually prefers that
the incoming letters of credit be advised through its bank account. However, if the
seller´s, bank lacks a correspondent banking relation with the issuing bank, it is un-
able to authenticate the letter of credit. In such cases, the issuing bank will transmit
the letter to its correspondent bank (the irst advising bank) for authentication, with
instructions to relay the credit to the seller´s bank (the second advising bank).
Self insured. A shipment on which insurance coverage is not placed. Also called
uninsured.
Settlement date. In banking, the date on which payment for a transaction must be
made.
Severability clause. A contract term that provides that each provision of the contract
is independent of all of the others so that if a court invalidates any of the clauses, the
rest of the contract remains valid. An example of severability clause is as follows: he
invalidity or unenforceability of any clauses of this Contract shall not afect the validity
or enforceability of any clause of this Contract, which shall remain in full force and efect.
SHEX. A term meaning that Sundays and holidays are excluded in calculating the
S SHICN. A term meaning that Sundays and holidays are included in calculating the
Shipbroker. In vessel chartering, a party who acts as an intermediary in return for

a fee or brokerage, negotiating the terms of a contract between charterer and vessel
owner.
Shipment. 1. As in consignment, the act of handing over cargo to a carrier or other

transportation service provider for transport. 2. On board a vessel, the act of placing
cargo on a vessel. his can be literally deined as passing the ship´s rail. Once goods
are successfully loaded, the carrier can issue a marine transportation document bear-
ing an “on-board” notation.
Shipment date. he date a shipment takes place, which is usually the date of the
relevant transport document. For banking purposes, with shipments by vessel for
which on-board marine transport document is issued, the shipment date is considered
to be the date of the on-board notation if it is the same date or later that the date on
which the document is executed.
Shipped on deck. Annotation in a bill of lading stating that the goods have been
shipped on the deck of a ship. See bill of lading.
Shipper. 1. As the party who contracts for carriage, the party who enters in a contract
of carriage with a carrier and pays the carrier is in a position to give the carrier han-
dling instructions. For freight-prepaid shipments this would usually be the seller, for
freight-collect shipments, it would usually be the buyer. 2. As the party who delivers
goods to carrier, the party who hands over cargo for transport is called “shipper”. How-
ever, in case of conlicting instructions, those given to the carrier by the counterparty
may prevail when it is the counterparty who contracts for carriage.
Shipper´s letter of instruction (SLI). A form issued by a shipper to authorize a car-

rier to issue a bill of lading or an air waybill on the shipper´s behalf. he form contains
all details of shipment and authorizes the carrier to sign the bill of lading in the name
of the shipper see bill of lading. See shipping instructions.
Shipper´s load and count (S & C). A carrier´s notation disclaiming responsibility
for the quantity of the cargo´s contents; the quantity declared is thus purely the ship-
pers statement. If there is a dispute because less than a contract quantity is delivered,
the carrier wishes to be free from liability and the receiver will have to claim directly
against the shipper or insurer.
Shipping conference. A group of shipping lines which have associated to ofer regular
service on speciic routes at publicly announced prices. Conferences generally ofer
speciic rebates for regular or high-volume shipments. Shipment by conference lines
is sometimes referred to as liner shipping and the freight rates are referred to as liner
terms. Shipping lines which are not members of a conference for a particular route are
known as outsiders, independent lines, or non-conference lines. Also called steamship
conference. See liner terms.
S
Shipper´s load and count. A carrier´s notation disclaiming responsibility for the
quantity of the cargo´s contents; the quantity declared is thus purely the shipper´s
statement. If there is a dispute because less than a contract quantity is delivered, the
carrier wishes to be free from liability and the receiver will have to claim directly
against the shipper or insurer.
Shipping documents. Documents or electronic iles that detail how a shipment has
taken or should take place. Typical shipping documents include CMR document, bill
of lading, air waybill, sea waybill and multimodal transport document.
Shipping instructions. Information supply by the exporter/shipper providing de-

tailed instructions pertaining to a shipment (e.g., shipper, consignee, bill-to-party,
commodity, pieces, weight, cube, etc.). See shipper´s letter of instruction.
Shipping order. Instructions of shipper to carrier for forwarding o goods; usually the
triplicate copy of the bill of lading.
Shipping weight. he total weight usually expressed in kilograms of shipments,

including the weight of moisture content, wrappings, crates, boxes, and containers
(other than cargo vans and similar substantial outer containers).
Shop in shop. In retail business this concept is used when brand owner (usually a
multinational company) takes space in another retailer’s store and its it out to provide
selling space to show its products. here are beneits to both, brand owners and retail-
ers (e.g. shared costs, shared marketing and demand-generation, and speed to market).
Short delivery (SD). Non-delivery of cargo at the intended port. When reported,
this will result in the ship´s agent sending a cargo tracer to locate the mission cargo.
Short form B/L. A bill of lading that does not include the full terms and conditions
of the contract of carriage. Instead, it contains an abbreviated version of the carrier´s
conditions, with reference to the full set of conditions.
Short-shipped. Cargo manifested but not loaded.
Side loader. A lift truck itted with lifting attachments operating to one side for
handling containers.
Side-door container. A container itted with a rear door and at least one side door.
Silent conirmation. In letters of credit, in addition to the commitment of the issuing

bank, the advising bank can, by silent conirmation, enter into its own, independent
commitment to pay or accept. In contrast to the conirmed letter of credit, in this case
S there is no conirmation instruction given by the issuing bank. Silent conirmations
are thus purely agreements between the beneiciary and the “silently conirming” bank.
In order to enforce its claim, the “silently conirming” bank requires the assignment
of all the rights of the beneiciary under the letter of credit. See letter of credit.
Sister company. A sister company is a company with close ailiations to another

company with a separate name and personnel. Both companies are owned by the same
parent and are considered subsidiaries of the larger company. While some subsidiaries
are not closely related and may have limited interactions with each other, others can
have a close connection, and are examples of sister companies. It is possible for any
number of companies to have this kind of relationship. Each sister company has its
own personnel and branding. It is accountable to the parent company but can operate
largely autonomously when it comes to making purchasing decisions, designing pack-
aging and facilities, and so forth. Companies with a sister relationship to each other
can run cross-promotions, encouraging customers of one to visit the sister company
as well. hey are usually careful to avoid operating in competition, targeting slightly
diferent markets or operating in diferent regions to provide complete coverage of a
given nation or state. See holding company; parent company; subsidiary.
SITC. he Standard International Trade Classiication is a numerical code developed

by the United nations for the classiication of goods. See Brussels Tarif Nomencla-
ture; Harmonized System. H 6-digit.
Sling. A contrivance into which freight is placed to be hoisted into or out of a ship.
SMART. An acronym for speciic, measurable, achievable, realistic, time-bound. A

project management tool used to set project objectives and evaluate if those objec-
tives it the project.
SMEs. he acronym for small and medium size enterprises. While the deinition var-
ies, SMEs are generally considered to be companies that have no more than one-their
capital held by a larger company ad have up to 500 employees.
Smuggling. Conveying goods or persons, without permission, across the borders of

a country.
Sociedad Anónima S.A. In Spain, México and Latin America designation for a joint
stock company with limited personal to shareholders. See limited liability.
Sociedad de Responsabilidad Limitada S.R.L. In Spain, México and Latin America

designation for a private limited liability corporation with limited liability to share-
holders. See limited liability.
Societé Anonyme S.A. In France, Luxemburg and Switzerland designation for a joint
stock company with limited personal to shareholders. See limited liability.
Societé à Responsabilité Limitée S.R.L. In France, Luxemburg and Switzerland

designation for a private limited liability corporation with limited liability to share- S
holders. See limited liability.
Soft currency. A currency of a nation in which exchange may be made with diiculty.
Countries with soft currencies typically have limited exchange reserves so that their
currency is generally considered to be high risk.
Sogo Shosha. In Japan, this term means “general trading company,” Unlike typical
Western trading companies and Japan’s some 9,000 other trading companies, the sogo
shoshas are distinguished by their international networks, their trade of numerous
commodities, and their large market shares. For example, a sogo shosha may control
about 10 percent of Japan’s trade, handle a range of 10,000 to 20,000 products in-
cluding food, clothing, automobiles, and appliances, and have a network of over 200
oices throughout the world. he sogo shosha are also characterized by their ability
to issue large volumes of credit and to help small manufacturers buy and sell goods in
the global market. hese trading companies serve as intermediaries for distribution at
home and abroad for Japanese companies. he major sogo shosha include Mitsubishi,
Mitsui, C. Itoh, Sumitomo, Marubeni, Nichimen, Kanematsu-Gosho, and Nisso Iwai
Corp. See trading company.
Sovereign default. he failure or refusal of a government to pay back its debt in full.
It may be accompanied by a formal declaration of a government not to pay (repudia-
tion) or only partially pay its debts (due receivables), or the de facto cessation of due
payments. Also called insolvency.
Sovereign risk. he reduced possibility of default because of the guarantee of a na-

tional government.
Special cargo policy. A document used to that coverage is provided to cover loss or
damage to cargo while in transit when insurance is placed against an open marine
cargo policy. Usually is called cargo insurance certiicate or insurance certiicate. See
insurance certiicate; open marine cargo insurance policy; open policy.
Special marine policy. An insurance policy which is issued to cover a single shipment.
he special marine policy form calls for the name of the vessel and sailing date, points
of shipment and destination, nature of commodity, description of units comprising
the shipment, and the amount of insurance desired. his document is usually utilized
on export shipments when the sale is inanced through a bank letter of credit and
evidence of insurance is a part of the required documentation. See bordereau; insur-
ance certiicate; open policy.
Speciic duty. A duty base on some measure of quantity, such as weight, length or
number of units. For example, 0,5 cents of dollar per liter or 1,2 euros per kilogram.
See customs duty. See ad valorem duty.
Spot cash. Immediate cash payment in a transaction, as opposed to payment at some

S future time.
Spot exchange. he purchase and sale of foreign exchange for delivery and payment
at the time of the transaction.
Spot exchange rate. he price of one currency expressed in terms of another currency
at a given moment in time.
Spot market. he market (or exchange) for a commodity or foreign exchange available
for immediate delivery (usually one or two days after the transaction date).
Spot price. A price quotation for immediate sale and delivery of a commodity or
currency.
Spot rate. Rate of exchange quoted for purchases and sales of a foreign currency for
immediate delivery and payment.
Standard Shipping Note (SSN). It is the receiving document for ports and con-
tainers bases around the world, and advises of the necessary information to process
and handle the goods safely and with care. In most cases, it is completed by freight
forwarders or agents in the name of exporters or importers.
Standby L/C. he standby letter of credit is very similar in nature to a guarantee. he

beneiciary can claim payment in the event that the principal does not comply with its
obligations to the beneiciary. Payment can usually be realized against presentation of a
sight draft and written statement that the principal has failed to fulill his obligations.
A standby L/C can be used to back up a payment commitment. herefore, an exporter
may agree to sell on open account terms grating the importer 90 day credit terms on
the condition that the importer open a standby credit in the exporter´s favour. If the
importer fails to honor the exporter´s invoices, the exporter simply draws against the
standby letter of credit. See letter of credit.
Start date. he date when a contract begins and the supplier must start providing the
contracted goods or services.
Statement of Work (SOW). A Statement of Work is a document that describes what

needs to be done in the agreed contract. Usually, the SOW is written in a precise and
deinitive language and his prevents any misinterpretations of terms and require-
ments.
An SOW covers the work requirements for a speciic project and addresses the perfor-
mance and design requirements at the same time. Whenever requirements are detailed
or contained within a supplementary document, SOW makes reference to the speciic
document. he SOW deines the scope and the working agreements between two
parties, typically between a client and a service provider. herefore, SOW carries a
legal gravity as well. In international trade, Statement of Work are used mainly with
International Supply Contracts and International Services Contracts. See Vendor
Agreement.
S
STC Said to contain. Notations on transport documents by which carriers give notice
that they do not wish to accept responsibility for the accuracy of a shipper´s declara-
tions as to the contents, weight or quantity of a particular shipment. Also called said
to weigh (STW). See shippers load and count (S&C).
Steamship agent. A duly appointed and authorized representative in a speciied terri-

tory acting on behalf of a steamship line or lines and attending to all matters relating
to the vessels owned by his principals.
Steamship line. A company usually having the following departments: vessel opera-
tions, container operations, tarif department, bookings, outbound rates, inward rates,
and sales. he company can maintain its own in-country oices to handle regional
sales, operations, or other matters, or appoint steamship agents to represent them
doing the same. Some lines have liner oices in several regions and appointed agents
in others.
Stop loss order. An order to buy (on a short position) or to sell (on a long position)
foreign exchange if the rate rises above or falls below a speciic limit. As soon as the
rate reaches the prescribed limit, the order will be carried out at the next rate. De-
pending on the market situation, this rate can difer considerably from the limit rate.
Storage. he keeping of goods in a warehouse.

Storage demurrage. A charge made on property remaining on the dock past the
prescribed “free-tie period”. See demurrage.
Storage in transit. he stopping of freight traic at a point located between the point
or origin and destination to be stored and forwarded at a later date.
Store-door delivery. he movement of gods to the consignee´s place of business,

customarily applied to movement by truck.
Stowage. he arranging and packing of cargo in a vessel for shipment. Sometimes the
shipper or his agent give speciic instructions concerning the way in which cargo is
to be stowed. For example, a shipper may require that his shipment be placed below
deck if it may be damaged by exposure to the elements above deck, or amidships if
it may de damaged by the greater movement of the vessel in fore and aft sections.
Straddle carrier. Mobile truck equipment with the capacity for lifting a container
within its own framework.
Straight B/L. A non-negotiable bill of lading which speciies the consignee to whom
the goods are to be delivered. It is used when payment for the goods has been made
in advance. A straight bill of lading cannot be transferred by endorsement. Also called
S non-negotiable B/L. See bill of lading.
Straight L/C. A letter of credit payable only at the opening bank or at a bank speci-
ied within the credit. See letter of credit.
Strategic alliance. A strategic alliance is an agreement between two separate business

entities to pool resources in order to achieve a common goal. In strategic alliances,
the participants remain separate and do not form a new entity as with joint ventures
and some other types of partnerships. hey retain autonomy and usually embark on
inite projects, rather than an ongoing business relationship. Some of the objectives
of a strategic alliance can be:
• To explore the various synergies which may be obtained by working together,
particularly in a certain ield or industry.
• To undertake joint research projects as may be agreed and consider the joint
commercial exploitation of any new technology or products resulting from
their joint research.
• To share technical expertise in a certain ield or industry to improve research
and development results.
• To explore commercial agreements that will be for the mutual beneit of the
parties.
Strategic alliances are increasingly used by companies that want to ind a way to
become more competitive. Working strategically, even with a competitor, provides
a company with an access to more of the market share. As companies compete in

a global business environment, smaller entities may have diiculty thriving unless
they are willing to work strategically. Forming strategic alliances also provides people
with access to new expertise and technology that might not otherwise be available.
Companies of diferent countries that enter into a strategic alliance govern their re-
lationship through an International Strategic Alliance Agreement. See joint venture.
Strike clause. An insurance clause included in insurance policies to cover against

losses as a result of strikes. See Strikes, Riots and Commotion Clause (SRCC).
Strike price. Price at which the option buyer obtains the right to purchase (call op-
tion) or sell (put option) the underlying security or currency.
Strikes, Riots and Civil Commotion Clause (SRCC). An insurance clause referring
to loss or damage directly caused by strikers, locked-out workmen, persons’ participa-
tion in labor disturbances, and riots of various kinds. he ordinary marine insurance
policy does not cover this risk. Coverage against it can be added only by endorsement.
Stripping. Unloading goods from a container. Also called destuing or devanning.
Stuing. he loading of cargo into a container.
STW Said to weigh. Notations on transport documents by which carriers give notice S
that they do not wish to accept responsibility for the accuracy of a shipper´s declara-
tions as to the contents, weight or quantity of a particular shipment. Also called said
to contain (STW). See shippers load and count (S&C).
Subcontractor. An individual, business, or company a supplier contracts to deliver

or carry out any part of the supplier’s contract obligations.
Subrogation. he transfer of all rights to claim against third parties to an insurance

company upon payment of a claim.
Subsidiary. A company controlled by another company, called parent company, usu-

ally through ownership of, at least, 50 per cent of its shares, or through other organi-
zational or managerial agreement. here are several diferent types of relationship that
a subsidiary company may have with a parent company. In one type of relationship,
the parent company is a holding company, meaning that its primary function is to
control other irms rather than to engage in business of its own. he holding company
owns the majority of in the subsidiary. If the parent company owns all the stock, then
the subsidiary is a wholly-owned subsidiary. he formation of a subsidiary company
may be of beneit to a multinational corporation that wants to adapt its business to
work within the legal parameters of a speciic country. Forming a subsidiary is often
less expensive than merging with another company. In addition, a subsidiary retains
its branding, which may have irreplaceable market value, and maintaining a subsid-
iary rather than merging can limit liability in a risky venture due to the separation of
corporate identities. See holding company; parent company; sister company.
Sue & Labor clause. A provision in marine insurance obligating the assured to do
things necessary after a loss to prevent further loss and to act in the best interests
of the insurer. he sue and labor clause of the open cargo policy reads essentially as
follows: In case of any loss ort misfortune it shall be lawful and necessary to and for the
assured, his or their factors, servants and assigns to sue, labor, and travel, or, in and about
the defense safeguard and recovery of the goods and merchandise or any part thereof …
to the charges whereof this company will contribute according to the rate and quantity of
the sum herein insured.
Sunk costs. Sunk costs are costs incurred in the past that cannot be recovered if a
project is cancelled - e.g. research and development costs.
Supplier. he party furnishing goods or services in a business transaction in return

for the agreed upon compensation. As such, suppliers do not generally interact with
consumers directly, leaving that task to vendors or shop owners. It is not unusual for
a supplier to provide volume discounts to vendors when they agree to sign long-term
contracts or place orders for large quantities. here are suppliers found in just about
any type of business. Wholesale suppliers are very common in the retail industry,
where they are likely to manufacture and deliver large quantities of products to their
S client. Supply companies also work in niche markets as well, such as importing and
exporting packaged foods, ethnic or cultural goods, or any other range of products
that have a small but reliable demand. In general, exporters of this type will handle all
the details for shipment and delivery to the vendor, and include the associated costs
in the inal charges issued to the client. In international trade relationships between
suppliers and its clients are governed by an International Supply Contract.
Supplier appraisal. An assessment of a supplier’s suitability and capability to supply

speciic goods or services, before awarding a contract.
Supplier lead time. he amount of time that normally, elapses between the time an
order is received by a supplier and the time the order is shipped.
Supply. he quantity of a good or service that sellers will make available at a given
price and a certain time in a speciic market.
Supply contract. An agreement by which a seller promises to supply all of the speci-
ied goods or services that a buyer needs over a certain time and at a ixed price, and
the buyer agrees to purchase such goods or services exclusively from the seller during
that time. In international markets a supply contract is often necessary in order to
lock in discounted pricing and other beneits that the supplier is agreeing to provide
to the client for a speciic period of time. he terms of a supply contract often deine
everything from the means whereby the products are delivered, terms of payment,
and any other aspect of the relationship that the two parties have determined to be
necessary.
he supply contract protects the rights of both parties. he client knows what to
expect in terms of the goods received and how they will be delivered. In turn, the
supplier knows what the client is likely to need and how payment will be submitted.
Model of International Supply Contract.
Supply chain. he people, activities, information, and resources involved in trans-

forming raw materials into a inished product for supply to an end customer.
Surcharge. An additional charge for services. Carriers typically assess surcharges for
services that they provide, but for which the costs are not included in their base-rate
freight prices. Typical transportation surcharges include congestion surcharges which
compensate carriers for unusual long delays at crowded ports, currency adjustment
factors (CAF), which compensate for exchange rate diferentials, fuel adjustment fac-
tors, which cover unanticipated increases in the cost of fuel, and terminal handling
charges (THC), which cover port-usage fees that are often port-speciic.
Surety bond. A surety bond is a guaranty, usually issued by an insurance or surety

company, that a particular party will perform according to a contract. In order to col-
lect payment under such a bond, the beneiciary normally must prove actual default
on the part of the counterparty, by furnishing a court judgment, arbitral award or
oicial certiicate. See bid bond; guaranty; performance bond.
Surveyor. An individual or company that acting as an independent third-party expert

S
examines and ascertains the condition of goods or transport equipment (specially
ships). Surveyors often participate in the insurance claim process by examining goods
to determine the level of damage and often how it occurred.
Sustainability. In the context of operating a business, taking into account the so-
cial, environmental and economic impacts of business activities to make sure today’s
needs can be met without compromising the needs of future generations. Examples
of sustainable business practices include building eiciently, minimising waste, and
maximising resources.
Swap. In international trade, the trading of almost identical products (such as oil)
from diferent locations to save transportation costs. See countertrade.
SWIFT. Payment made through international electronic funds transfer via the system
known as SWIFT (Society for Worldwide inter-bank Financial Telecommunications)
ofered by most major banks.
Switch arrangements. A form of countertrade in which the seller sells on credit and
then transfers the credit to a third party. See countertrade.
Tare weight. he weight of a container and/or packing materials, but without the
goods being shipped. he gross weight of a shipment less the net weight of the goods
being shipped.
Tarif. In customs, a schedule of duties or taxes assessed by a government ton goods

as they enter a country. Tarifs may be imposed to protect domestic industries from
imported goods and/or to generate revenue. Types include ad valorem, speciic, vari-
able, or compound. Tarif raise the prices of imported goods, thus making the less
competitive within the market of the importing country.
Tarif biding. Commitment not to increase a rate of duty beyond an agreed level.
Once a rate of duty is bound, it may not be raised without compensating the afected
parties.
Tarif escalation. Higher import duties on semi-processed products than on raw ma-
terials, and higher still on inished products. his practice protects domestic processing
industries and discourages the development of processing activity in the countries
where raw materials originate.
T Tarif quotas. Application of a higher tarif rate to imported goods after a speciied
quantity of the product has entered the country at a lower prevailing rate. See quota.
Tax haven. A country, state or territory that ofers foreign individuals and busi-
nesses little or no tax liability in a politically and economically stable environment.
Tax havens also provide little or no inancial information to foreign tax authorities.
Individuals and businesses that do not reside a tax haven can take advantage of these
countries’ tax regimes to avoid paying taxes in their home countries. Tax havens do
not require that an individual reside in or a business operate out of that country in
order to beneit from its tax policies. Related to international business, tax havens
can be classiied in three types:
• Primary tax havens: the location where inancial capital winds up. Subsidiary
there have obtained rights to collect proits from corporate Intellectual Property
Rights by transfers from their parent.
• Semi-tax havens: locations that produce goods for sale primarily outside of their
territorial boundaries and have lexible regulations to encourage job growth,
such as free trade zones, territorial-only taxation, and similar inducements.
• Conduit tax havens: locations where income from sales, primarily made out-
side their boundaries, is collected, and then distributed. Semi-tax havens are
reimbursed for actual product costs, perhaps with a commodity markup. he
remaining proits are transferred to the primary tax haven, because it holds
rights to proits due to the corporate IP. By matching outlow to income they
do not retain capital and their role, while crucial, remains invisible.
Large multinational corporations may have dozen of such tax haven entities interact-
ing with each other. Each haven can claim that it does not satisfy deinitions that
attempt to place all tax havens into a single class. Even increased transparency does
not change the efectiveness of corporate tax avoidance.
Technical speciications. Buying requirements that sets out the engineering require-
ments of a product or system to be purchased - e.g. functional, mechanical, opera-
tional, and quality and performance requirements.
Technology transfer. he movement of scientiic methods of production or distribu-

tion from one enterprise, institution or country to another, as through foreign invest-
ment, international trade, licensing of patents rights, technical assistance or training.
he process to commercially exploit research varies widely. It can involve licensing
agreements or setting up joint ventures and partnerships to share both the risks and
rewards of bringing new technologies to market. Other corporate vehicles, e.g. spin-
outs, are used where the host organization does not have the necessary resources or
skills to develop a new technology. In international markets, usually, is transmitted
through International Technology Transfer Agreements.
Tender. A ofer or proposal to purchase a speciied quantity of a commodity for a

speciied price. See tender proposal.
Tender proposal. he term tender proposal is used in the procurement ield to de-
T
scribe the response from potential suppliers to a request for proposal (RFP). here are
three aspects to every tender proposal: company overview, response to speciications,
and pricing. Tender proposals are legally binding responses in a procurement process.
he format of a tender proposal varies widely by industry, but all have the same basic
requirements. he most important part of any tender response is the deadlines. All
RFPs have a due date and time clearly speciied on the document. Any responses re-
ceived after this date cannot be accepted or included in the review process. Contract
law is very clear on this issue, and many irms have been taken to court over awarding
contracts to irms who submitted their tender proposal after the deadline. Tender
proposals have mainly three sections:
• Overview of the company: Typically, the irm should include background in
the industry, highlighting successful projects of similar size or larger, to indicate
an ability to meet the company’s requirements.
• Response section: this section will receive the most attention from the client.
As a result, it should be focused on meeting the requirements point for point.
Many irms use the structure of the RFP to format their response, correlating
each section to make comparison easier for the client. Additional supporting
documentation that is required in the response should be listed as appendix
documents and properly indexed. Many irms include the presentation of the
response as a marked item in the evaluation matrix, making the efort well
worth it for the responding irm.
• Pricing section: Usually a separate section of the tender proposal. If there are
multiple pricing options provided, the response should clearly indicate the
primary value, along with the pricing for the diferent alternate solutions.
Many purchase contracts include a recurring charge, such as licensing or an-
nual maintenance. his value should be provided in this section, with a clear
indication of length of term.
Any restriction surrounding acceptance of the tender proposal must be included in

the response. his includes time lines to accept the ofer, scheduling for beginning of
the work, lexibility of resources, and other issues. Payment terms are typically indi-
cated in the response as well, so that the negotiation process can begin. See request
for proposal (RFP).
Termination of contracts. Termination clauses in international contracts, specially

agency and distribution contracts, usually involve rights under local legislation and
it is best that a contract is revised by a local lawyer before signature, rather than after
a relationship has ended and a compensation case could appeared. Termination laws
difer from country to country. For example in the European Union the agent whose
contract is terminated is entitled to the following:
• full payment for any deal resulting from its work, even if concluded after the
end of the agency contract;
T • a lump sum up to one´s year average commission:
• compensation (where appropriate) for damages to the agent´s commercial
reputation caused by unwarranted termination.
Some countries regard agents as basically employees of the client, while others see
agents as self-contained and independent businesses. It is essential to ascertain the
legal position of agency agreements in each country in which a irm is considering
doing business. For example, laws in Saudi Arabia are extremely strong in protecting
agents. See agent; distributor.
Terms and Conditions (TS & Cs). he terms and conditions that detail the rules
that apply to fulilling a particular contract and that form an integral part of that
contract. Buyers and sellers must agree the terms and conditions to form a contract.
In international trade are also know as General Conditions of International Sale.
Terms of trade. he ratio of unit value prices of a country´s exports to the unit value
prices of its imports.
Terms of sale. his expression refers to the price quotation for a speciic product. It
states the price for the product as a speciied delivery location, sets the time of ship-
ment and speciies payment terms. he responsibilities of the buyer and the seller
should be spelled out as they relate to what is and what is not included in the price
quotation and when the ownership of goods passes from the seller to the buyer. See
general conditions of international sale; Incoterms.
Territory. In commercial usage, an area in which a party operates, such as a “sales

territory”. A territory´s size and the degree of exclusivity are often important com-
mercial consideration in international trade specially in distribution agreements. See
exclusive distribution.
TEU Twenty-foot equivalent unit. It is a means of measuring the carrying capacity

of container ships; e.g., a ship can be said to be capable of 3000 TEUs, which roughly
equivalent to saying it could carry 3000 standard containers. See container.
THC Terminal handling charges. Charges assessed for services rendered within the
container terminals or with respect to containers which will be processed through
terminals. When delivery or pickup of the goods is expected to be at a container
terminal, traders are well advised to stipulate precisely which party will pay for all
or part of the terminal charges. TCH varies port to port of each country, as the cost
of handling at each port difers one to another port, depends up on the total cost or
port terminal handling at each location. Normally, Terminal Handling Charges for
exports is collected from shipper by shipping lines while releasing bill of lading after
completion of exports customs clearance procedures. Related to terms of delivery
(Incoterms), if the buyer has to pay such load port THC, such THC is paid at load
port by either buyer´s representative or his authorized agent. In the case of shipments
moved from island destinations other than sea port the said THC is collected at same
T
location while releasing bill of lading by carrier. he import terminal handling charges
is collected by shipping carriers at the time of issuing delivery order to consignee to
take delivery goods. he THC charges at each terminal all over the world vary one to
another. he terminal handling charges of each port in a country also difers with an-
other port of the same country. THC is paid on the terms of delivery agreed between
buyer and seller in their export contract. If contract of terms of delivery is on FOB,
CFR, CIF, CPT, DAP, DDU, DDP etc., the THC is paid by the shipper at load port.
However the destination port THC need to be paid by the buyer under these types
of delivery terms. In an export contract, if term of delivery is Ex-Works, the THC at
load port and destination port has to be paid by the buyer of the goods. See bill of
lading; export contract; Incoterms; IHC Inland haulage charges.
hird-party beneiciary. An individual or legal entity that beneits from, but it not
a contracting party of, a contract between two or more other individuals or legal
entities.
hird-party logistics. Most of exporters and importers employ outside logistics ex-
pertise that are experts in their industry and should therefore concentrate only in
operations of a speciic sector (food and wine, automotive industry). On the other
hand, third party logistics providers are experts solely at logistics, with the knowledge
and means to perform eicient and innovative services for those companies in need.
he goal is improved service at equal or lower cost. Relationships between providers
of logistics services and its clients are governed through Logistics Services Contracts.
hrough bill of lading. A single bill of lading covering receipt of the cargo at the
point of origin for delivery to the ultimate consignee, using two or more modes of
transportation. See bill of lading.
hrough rate. A freight cost that includes pre-carriage, on-carriage or both, in ad-
dition to main carriage.
Time bar. A limit in time as to when an action may be taken, such as claiming against
a carrier for transit-related damage.
Time charter. A charter agreement providing the charterer with the use of a vessel
for a stated length of time, or for one or consecutive voyages among ranges of ports.
Time draft. A inancial instrument demanding payment at a future ixed rate, or at

a speciied period of time after sight (30, 60, 90 day etc.), or after the date of issue.
Also called usance draft.
Time value money. he value of a sum of money, taking into account the amount
of interest that could be earned over a period of time.
TIR Carnet. A document issued pursuant to the TIR (Transport International Routi-
T er) permitting sealed road transport shipments to traverse European TIR-members
countries without undergoing customs inspection until reaching the destination coun-
try. Each TIR Carnet has a unique reference number. A TIR Carnet may have 4, 6,
14, or 20 vouchers, as one pair of vouchers is used per country; the number of vouch-
ers indicates the number of countries that can be transited, including the countries
of departure and destination, under cover of this type of Carnet (e.g. a 20-voucher
Carnet may be used for a TIR transport through up to 10 countries). Each individual
TIR Carnet can be used for only one TIR transport. Once the TIR transport has been
terminated at the Customs oice of destination of the goods, the driver is handed back
the TIR Carnet duly endorsed by the Customs authorities of destination.
Title transfer. he act of point in place or time at which ownership of a thing is

passed from one person to another. In international trade, this is usually speciied in
the international sale contract by statements like:
• “Seller and buyer agree that title for the contract of goods will pass to the buyer
when they have been shipped from the seller´s premises”, or
• “Seller and buyer agree that title for the contact of goods will pass to the buyer
when they have been arrived at .........”, or
• “Seller and buyer agree that the seller will continue to own the contract goods
until such time as payment for them has been received.
In some case, a title-bearing document is created through the shipment process; for
instance, shipments covered by a negotiable marine bill of lading. Also called transfer
of ownership. Model of International Sale Contract.
Total cost of ownership (TCO). An estimate of the total cost of the goods, services
or works over the whole of their life. It’s the combination of the purchase price and all
other expenses and beneits that they agency will incur e.g. installation and training,
operating and maintenance costs, repairs, decommissioning and cost disposal and
residual value on disposal. It is a tool often used to assess the costs, beneits and risks
associated with the investment.
Trade acceptance. A bill of exchange drawn by the exporter/seller on the importer/

buyer of goods sold, and accepted by such purchaser. See bill of exchange.
Trade Act. In U.S. Law legislation granting the President broad authority to enter
into international agreement to reduce import barriers. Major purposes are:
• Protect American industry and workers against unfair or injurious import
competition.
• Provide adjustment assistance to industries, workers and communities injured
or threatened by increase imports.
• Strengthen economic relations with other countries through open and non-
discriminatory trading practices.
he Trade Act allows the President to extend tarif preferences to certain imports
from developing countries and set conditions under which Most-Favoured-Nations T
Treatment could be extended to non market economy countries.
Trade barriers. An impediment to trade, often included in one of the following

classiications:
• Import policies (tarifs and other import charges, quantitative restrictions, im-
port licensing, and customs barriers).
• Standards, testing, labelling, and certiications.
• Government procurement.
• Export subsidies.
• Lack of intellectual property rights protection.
• Service barriers.
• Investment barriers.
Some of the international trade barriers are identiied in the website Global Trade
Alert. See non-tarif barriers.
Trade deicit. A nation´s excess of imports over exports over a period of time.
Trade documents. Paper documents (or electronic iles) used in international trade
that prove that certain events have taken place. For convenience, the documents com-
monly used in international trade may be grouped by function into ive categories:
• Commercial: the invoice and packing list.
• Transport: air waybill, bill of lading, sea waybill. CMR document, rail waybill,
dock receipt, mate´s receipt, forwarder´s receipt, etc.
• Legal: documents that satisfy a governmental requirement, such as certiicates
of origin, export declarations, import licences or consularized documents.
• Insurance: insurance policy and insurance certiicate.
• Banking: letters of credit, drafts, collection letters of instruction.
All these documents are issued by exporters, shipping lines, airlines, international
trucking companies, freight forwarders, logistics companies, customs, banks and in-
surance companies. Models of International Trade Documents.
Trade facilitation. Removing obstacles to the movement of goods across borders (e.g.
simpliication of customs procedures).
Trade fair. A stage-setting event in which irms of several nationalities present their
products or services to prospective clients in a pre-formatted setting, usually a booth
of a certain size which is located adjacent to other potential suppliers. A distinguishing
T factor between trade fairs and trade shows is size. A trade fair is generally viewed as
having a larger number of participants than other trade events, or as an event bringing
together related industries. One of the best website searcher of trade fairs is TSNN.
Trade inance. his is the way in which an exporter requires an importer to prepay
for goods ship. he importer wants to reduce risks by asking the exporter to docu-
ment that the goods have been shipped. he importer´s bank assists by providing a
letter of credit to the exporter (or the exporter´s bank) providing for payment upon
presentation of certain documents, such as a bill of lading. he exporter´s bank may
make a loan to the exporter on the basis of the export contract.
Trade Map. Trade Map is a tool developed by the International Trade Centre (IN-
TRACEN) whose objective is facilitate strategic market research, monitoring both
national and product-speciic trade exports and imports by countries. hrough this
information, users of this tool can identify the potential for market or product diver-
siication. For users of developing countries this tool is free and users of developed
countries have to pay subscription. Website.
Trademark (TM). A distinctive identiication of a manufacture product or of a service

taking the form of a name, logo, motto, and so on; a trademarked brand has legal
protection and only the owner can use the mark. Trademark protection varies from
country to country, and may not be available in some jurisdictions. If trademark is
available under the laws of a particular country, the trademark can be registered only
if it distinguishable from others registered trademarks and it contains a name, brand,
label, signal, devise, or any combination of these items. A country that is a mem-
ber of the Paris Convention for the Protection of industrial Property may recognize
trademarks held in other jurisdictions. In international markets trademarks rights are
transmitted and sold through International Trademark License Agreements.
Trademark license agreement. In a Trademark licence agreement the proprietor (Li-

censor) of a registered trademark gives authorization to another company (Licensee)
to manufacture and distribute products under this trademark. he license is given for
a speciic range of products (typically consumer and fashion products) for which the
licensee obtains exclusivity in a distinct territory (typically a country). In exchange for
the rights granted, the Licensee shall pay to the Licensor a certain amount of money
and a percentage (royalties) based on the sales value of the products sold under the
license. Model of International Trademark License Agreement.
Trade facilitation. Removing obstacles to the movement of goods across borders (e.g.
simpliication of customs procedures).
Trade mission. A trade mission is composed of individuals and companies who are
taken as a group to meet with prospective customers overseas. Missions visit speciic
individuals or places with no speciic stage setting other than the appointments. Ap-
pointments are made with governments agencies, private clients, distributor, import-
ers, agents, sales representatives, etc. T
Trade name. he name under which an organization conduct business, or by which
the business or its goods or services are identiied. it may or may not be registered as
a trademark.
Trade promotion organizations. here are various governmental and non- govern-
mental organizations that play a role in the promotion of international trade. hese
include the following:
• Public departments and agencies that usually depend on the Minister of Trade
of each country, such as UK Trade & Investment in United Kingdom, Ubi-
france in France, ICEX in Spain or Promexico in Mexico.
• Industry and trade associations, national, regional or industry associations.
• Chambers of commerce, both national and international.
• Other organizations concerned with trade promotion, such as organizations
carrying out export research, regional export promotion organizations, world
trade centers, etc.
• Export services organizations such as banks, transport companies, freight for-
warders, trading companies, export credit insurance companies, etc.
Trade secret. A trade secret is a piece of information used in business that is an in-
gredient of a product or key process of a service. A trade secret can be used in any
business. It can be used to make a product, or it can be a part of marketing and sales
methods. Many companies have their own zealously guarded customer lists, and
these are considered trade secrets. he secret is information that is not available to the
public. he best way to keep them secret is to limit the amount of people who know
about them. Trade secrets have virtually no speciic lifespan. As long as they remain
secret, they can be secrets for eternity. here is, however, a risk associated with claim-
ing a trade secret. Companies are not allowed to claim copyright or patents rights.
In this sense trade secret can be transmitted or sold in international markets through
International Technology Transfer Agreements.
Trade surplus. A nation´s excess of exporters over imports over a period of time.
Trade terms. he terms of a sale. he setting of responsibilities of the buyer and the
seller in a sale, including: sale price, responsibility for shipping, insurance and customs
duties. he most widely used trade terms ate Incoterms 2010, which are published by
the International Chamber of Commerce. Practical Guide to Incoterms.
Trademark (TM). A distinctive identiication of a manufacture product or of a

service taking the form of a name, logo, motto, and so on; a trademarked brand
has legal protection and only the owner can use the mark. Trademark protection
varies from country to country, and may not be available in some jurisdictions. If
T trademark is available under the laws of a particular country, the trademark can be
registered only if it distinguishable from others registered trademarks and it contains
a name, brand, label, signal, devise, or any combination of these items. A country
that is a member of the Paris Convention for the Protection of industrial Prop-
erty may recognize trademarks held in other jurisdictions. In international markets
trademarks rights are transmitted and sold through International Trademark License
Agreements.
Trademark license agreement. In a Trademark licence agreement the proprietor (Li-

censor) of a registered trademark gives authorization to another company (Licensee)
to manufacture and distribute products under this trademark. he license is given for
a speciic range of products (typically consumer and fashion products) for which the
licensee obtains exclusivity in a distinct territory (typically a country). In exchange for
the rights granted, the Licensee shall pay to the Licensor a certain amount of money
and a percentage (royalties) based on the sales value of the products sold under the
license. Model of International Trademark License Agreement.
Tradeofs. Interaction between related activities such as the ofsetting of higher costs
in one area with reduced costs or other beneits in another. In air freight, for example,
the classic “tradeof” is one of time (quick delivery) versus money (greater expense).
Trading company. Trading companies are specialists that cover all export and im-
port operations and procedures. A trading company buy products in one country
and sold them in diferent countries where it has its own distribution network. his
kind of companies mostly work with high production volumes of products such as
raw materials, chemicals, generic pharmaceuticals, etc. he activities of a trading

company include:
• Identiication of suppliers in diferent countries with capacity to supply large
volumes of generic products at competitive prices.
• Negotiating the terms of sale and delivery of products.
• Financing and assurance of payment to the supplier-exporter.
• Managing logistics and transport.
• Managing customs and barriers of international trade.
• Distribution and sale of the products through its retail network.
At present, trading companies specialize in emerging countries in areas of Asia, Af-

rica or Latin America. Its function is to identify competitive suppliers, negotiate and
purchase their products and sell them through a distribution network in its country
or neighbouring countries. From a contractual point of view a trading company can
act in four diferent ways:
• Sales agent for those exporters that are domestic. he trading company estab-
lishes the marketing presence in foreign markets soliciting orders from foreign
customers in the name of the manufacturer. Invoicing is done on the name of
the manufacturer and helps the exporter with all details of the export transac- T
tion. he trading company may suggest the export price, but this principal
has the inal say on even whether to accept the order. he relationship with its
clients is established through a International Commercial Agency Contract.
• Buying agent for importers that want to buy a speciic kind of products within
a speciic territory that can be a country or multiple countries well known by
the trading company. he responsibilities of the trading company may include,
among others: identifying manufacturers and suppliers of products within the
described territory; negotiating prices, terms of delivery and payment; and
managing the international transport of documents which comply with export
and import procedures. he relationship with its clients is established through
a International Buying Agent Contract.
• Exclusive distributor on a buy-sell basis. he trading company buys a manu-
facturer at a set price and resells to foreign customers at a price established by
itself. When the trading company is acting as a distributor, the manufacturer
may have no control over the export price and not even know the foreign cli-
ents are. he relationship with its clients is established through an International
Distribution Contract.
• Intermediary in speciic trade operations in which does not act as a buyer or
seller but as an intermediary that charges a commission on export and import
operations. he relationships with its clients (usually the exporter/sellers) are
established through an Intermediary Contract for Trade Operations.
here are thousands of companies and professionals doing this international trading
activity. In the GlobalTrade Directory there are over 3.500 international trade inter-
mediaries classiied by country and sector. See agent; distributor; export manage-
ment company.
Tramp vessel. A vessel which does not operate under any regular schedule from one
port to another, but calls any port where cargo may be obtained. To be distinguished
from liner ships, operating according to advertised routes, schedules and rates.
Transaction value. he price paid or payable for a good or service.
Transfer pricing. Transfer prices are those charged for intracompany movement of
goods and services. Firms need to make transfer-pricing decisions when goods are
transferred from the headquarters to the subsidiaries in another countries. his trans-
fer prices are important because goods transferred from country to country must
have a value for cross-border taxation purposes. here are three basic approaches to
transfer pricing:
• Transfer at cost. he transfer price is set at the level of the production cost and
the international division is credited with the entire proit that the irm makes.
his means that the production center is evaluated on eiciency parameters
rather than proitability.
T • Transfer at arm´s length. Here the international division is charged the same as
any buyer outside the irm. Problems occur if the overseas division is allowed
to buy elsewhere when the price is uncompetitive or the product quality is
inferior, and further problems arise if there are no external buyers, making it
diicult to establish a relevant price. Nevertheless, this approach has now been
accepted worldwide as the preferred (not required) standard by which transfer
prices should be set.
• Transfer at cost plus. his is the usual compromise, where proits are split
between the headquarters and the subsidiaries. he formula used for assessing
the transfer price can vary, but usually it is this method that has the greatest
chance of minimizing time spent on transfer-price disagreements, optimizing
corporate proits and motivating the headquarters and subsidiaries.
he best solution also depends on the tax rates in the countries of the headquarters
and subsidiaries. See price diferentiation; price standardization.
Transferable letter of credit. A letter of credit where de beneiciary speciied in the

credit has the option of instructing his bank to transfer the credit fully or in part to
another beneiciary. A letter of credit can be transferred if it is expressly designated as
“transferable” by the issuing bank. his type of letter of credit enables intermediaries
(irst beneiciaries) to ofer security in the form of a letter of credit to their suppliers
(second beneiciaries). See letter of credit.
Transfer of ownership. he act of point in place or time at which ownership of a

thing is passed from one person to another. In international trade, this usually speci-
ied in the international sale contract by statements like:
when they have been shipped from the seller´s premises”, or
when they have been arrived at .........”, or
• “Seller and buyer agree that the seller will continue to own the contract goods
until such time as payment for them has been received.
In some case, a title-bearing document is created through the shipment process; for
instance, shipments covered by a negotiable marine bill of lading. Also called title
transfer. Model of International Sale Contract.
Transit zone. he area surrounding a port of entry in a coastal country that serves as
a storage and distribution center for the convenience of a neighbouring country - a
landlocked country, for example - lacking adequate port facilities or access to the sea.
A transit zone is administered so the goods in transit to and from the neighbouring
country are not subject to customs duties, import controls or many of the entry and
exit formalities of the host country. See dry port.
T
Transshipment. his term can have several meaning depending on the context in
which is used. he literal deinition is passing of shipped goods from one carrier to an-
other, Under this strict deinition, all through transport shipment would involve trans-
shipment. A more practical deinition might be that transshipment occurs whenever
more than one of the same kind of conveyance is used for main carrier. For example,
transshipment would take place of goods bound for Hamburg are shipped on one
vessel from New York to London and then reloaded on a second vessel from London
to Hamburg. However, a shipment made by truck to New York, where it is loaded on
a vessel bond to Hamburg, would not be considered transshipped, since a single vessel
accomplished main carriage. he issue of transshipment becomes very important with
letters of credit that prohibit it. Because the hub system, widely used in vessel and air
port transport, transshipments frequently take place. When considering vessel ship-
ments, banks consider only the information shown on the transport document, even
though the fact that a feeder vessel is being used can easily ascertained. Further, for
air shipments, banks disregard the fact than an air waybill may show several diferent
light numbers and dates, as long as they shown on only one document.
Triangular trade. Trade between three countries, in which an attempt is made to

create a favorable balance for each. Triangular trade usually evolves when a region
has export commodities that are not required in the region from which its major im-
ports come. Triangular trade thus provides a method for rectifying trade imbalances
between countries.
Trigger price mechanism. Price at which an import causes the importing country
automatically to impose a tarif or quota. For example, a country may have a law
stating that if an import falls below USD 10 per unit, a tarif is imposed that results
in the import becoming USD 13 per unit. Trigger prices are used when the import-
ing country generally wishes to promote free trade but does not want importers to
undercut domestic industry.
Trimming. he operation of shoveling and spreading, within the ship´s hold, dry
bulk cargoes such as cement, ore or grains, so as to avoid weight imbalances that
might hinder the ship´s handling or unloading.
TRIMS. he Trade Related Investment Measures is a World Trade Organization

(WTO) agreement that recognizes that measures and regulations impose on invest-
ments and investors can reduce or distort international trade, and may function as
disincentives for investor in situations where investment is needed. he agreement
restricts the use of three TRIMS requirements: local content requirements, trade
balancing requirement and foreign exchange balancing requirements.
Tri-temp. A container that can maintain three exact temperatures zones in diferent
compartments simultaneously.
T Trust receipt. A document executed by a buyer in favour of a bank inancing an

important transaction, whereby the bank receives a security interest in the goods in
exchange for releasing the documents required by the carrier for delivery. he buyer
is obligated to maintain the goods or to proceeds from their resale at the disposal
of the bank. Trust receipts are used under letters of credit or collections so that the
buyer may receive the goods before paying the issuing bank or collecting bank. See
documentary collection; letter of credit.
TSNN. he Trade Show News Network is one of the best Internet searchers of trade
fairs around the world. Trade fairs can be searched by the name of the event, industry,
date, city and country. Website.
T/T Telegraphic transfer. Refers to an electronic wire transfer, usually in connection

with payment in advance or payment by open account.
Turnkey. A turnkey or turnkey project is a type of project that is constructed so that

it could be sold to any buyer as a completed product. International turnkey construc-
tion projects are often complex transactions, requiring correspondingly complex legal
documentation. Moreover, nowadays such major projects are an important element
in international trade. See Build-Operate-Transfer.
Turnkey contract. An agreement under which a builder agrees to complete a facility

so that it is ready for use when delivered to the other contracting party. A contractor
may agree, for example, to build a fully equipped ad operational factory under the
turkey contract. he responsibility of the contractor ends when he hands the com-
pleted installation over the client. Model of Turnkey Contract for Major Projects.
Tying arrangement. A condition that a seller imposes on a buyer, requirement that

if the buyer desires to purchase one product (tying product), the buyer must also
agree to purchase another product (tied product), which the buyer may or may not
want. he laws of some countries prohibit certain tying arrangements.
T
UBIFRANCE. he French oicial agency depending on the Ministry of Economy

that administers the export and investment programmes of the French Government.
Website.
UCP 600. he Uniform Customs and Practice for Documentary Credits (UCODC)
is a ICC Publication that includes a set of rules which govern international documen-
tary credit practice. UCP 600 are generally considered contractually incorporated into
the documentary credit transaction by virtue of a mention in the credit application
form. he UCP 600 may also have additional force as a trade custom, and in some
countries UCP 600 are even recognized as having legal efect generally. In other
countries, the UCP 600 is complementary to national law and jurisprudence on
documentary credits.
ULD. he Unit load device is a container or pallet for aerial transportation.
UNCITRAL. he United Nations Commission on International Trade Law is a

United Nations agency based in Vienna, specializing in the development of model
legal instruments and conventions in the area of international trade law. Most notable
success is perhaps the so-called 1980 Vienna Convention whose oicial name is he
U Convention of the International Sale of Goods (CISG). Also, UNICITRAL Rules
for Arbitration, which provide a procedural framework for international commercial
arbitration but which, unlike the ICC rules, do not provide direct administrative
supervision of arbitral process. See Vienna Convention. Website.
Unclaimed freight. Freight that has not been called for or picked up by the consignee
or owner.
Unconirmed letter of credit. A documentary letter of credit where the advising

bank makes no commitment to pay, accept or negotiate. See letter of credit; silent
conirmation.
Undercarrier. A carrier which has been subcontracted to carry out part of the trans-
port operation. his term is most commonly used with non-vessel operating common
carriers, which contract for carriage with the shipper and subcontract for the actual
transportation with a ship line. In this situation, the ship line is the undercarrier.
Unenforceable contract. A contract that is valid, but which the court will not en-
force because of some defect such as nondisclosure, an extraordinary event or other
legislation.
Unfair competition. Trading and business activities that are dishonest or fraudulent
as against the activities of other traders. Unfair competition includes fraudulent ad-
vertising, counterfeiting, and similar illegal trade practices.
Unfair calling insurance. Insurance coverage to protect principals who have issued
demand guarantees or bonds against an unfair or abusive call of the bond/guarantee
(i.e., one which is not truly based on non-performance by the principal.
UNIDROIT. he Institute for the Uniication of Private Law is an international

governmental organization headquartered in Rome whose tasks are to study needs
and methods for modernising, harmonising and coordinating private and in par-
ticular commercial law as between States and groups of States and to formulate uni-
form law instruments, principles and rules to achieve those objectives. Member-
ship of UNIDROIT is restricted to States acceding to the UNIDROIT Statute.
UNIDROIT’s 63 member States are drawn from the ive continents and represent a
variety of diferent legal, economic and political systems as well as diferent cultural
backgrounds. Website.
Uniform Rules for Collections (URC). A set of rules published by the International
Chamber of Commerce (ICC) to aid bankers, buyers, and sellers in the collections
process. he Rules have been prepared to resolve problems that practitioners have
experienced in their everyday operations. he URC 522 (last edition) underlines the
need for the principal and/or the remitting bank to attach a separate document, the
collection instruction, to every collection subject to the Rules - makes it very clear that
banks will not examine documents, particularly not to look for instructions - addresses
problems based on bank experiences in respect of documents against acceptance
(D/A) and documents against payment (D/P) - and clearly indicates that banks have
U
no obligation to store and insure goods when instructed.
Uniform Rules for Contract Guarantees (URCG). he International Chamber of

Commerce (ICC) has established a set of contractual rules that may be used for
contract guarantees to achieve a fair balance among the legitimate interests of the
three parties involved in contract guarantees, the beneiciary, the principal and the
guarantor. hese rules are not law, and apply only if the parties to the contract guar-
antee so choose. Such choice needs to be expressed by a reference in the text of the
guarantee. Nevertheless, these rules have been replaced by the Uniform Rules for
Demand Guarantees.
Uniform Rules for Demand Guarantees (URDG). A set of contractual rules es-
tablished by the International Chamber of Commerce (ICC) that may be used for
demand guarantees and counter-guarantees. hese rules are not law, and apply only
if the parties to the demand or counter-guarantee so choose. Such choice needs to be
expressed by a reference in the text of the guarantee.
Unilateral. An action taken by a single country on its own initiative, and not in
any way dependent upon or conditional upon the actions of any other country or
countries.
Unique selling proposition (USP). he unique selling proposition is the decisive

sales argument for customers to buy a product. USP needs to be communicated, and
what the communication is intended to achieve in terms of consumer behaviour in

the country concerned.
Unit load. Packages loaded on a pallet, in a crate or any other way that enables them
to be handled at one time as a unit.
Unitization. he consolidation of a quantity of cargo into one large shipping unit

for easier handling, as in palletizing or containerization.
UNTACD. he United Nations Commission for Trade and Development is a United

Nation Agency based in Geneva, which has developed numerous international instru-
ments as regards trade with developing countries. Notably, UNCTAD houses the
INTRACEN (International Trade Center), a developer of useful guides and manuals
for small and medium sized exporters. Website.
Upstream subsidies. Subsidies provided to a manufacturer´s supplier of inputs for a

product that will be exported.
Usance draft. A written demand for payment which comes due at a speciic future
date. Also called time draft.
U Usance L/C. A letter of credit payable at a predetermined time after the presentation
of conforming documents. hese are also called time L/C or deferred payment L/C
and are the opposite of L/Cs payable at sight.
Validity. he time period for which a letter of credit is valid. After receiving notice
of a letter of opened in his behalf, the seller/exporter/beneiciary must meet all the
requirements of the letter of credit within the period of validity. See letter of credit.
Valuation clause. he clause in a marine cargo insurance policy that contains the
agreed basis for determining the value of covered goods. his sets the amount due un-
der any claim for lows or general average contribution. A valuation clause commonly
in use reads as follows: Valued premium included at amount of invoice, including all
charges in the invoice and including prepaid and/or advanced and/or guaranteed freight,
if any, plus ....... % (this is usually 10% on exports).
Valuation charges. Transportation charges assessed shippers who declare a value of

goods higher that the value of carriers´ limits liability. See declared value for carriage.
Value for money (VFM). A measure of quality that assesses the monetary cost of the
product or service against the quality and/or beneits of that product or service, taking
into account subjective factors such as itness for purpose, along with whole-of-life
costs such as installation, training, maintenance and disposal, and wastage.
Vanning. A term for stowing cargo in a container. V

Variable levy. A tarif subject to alterations as world market prices change. he altera-
tions are designed to assure that the import cost after the payment of the duty will
equal a predetermined “gate” price.
VAT. he Value Added Tax is a tax assessed on the increased value of goods as they
pass from raw material stage through the production and distribution processes to
inal consumption. he tax on processors or merchants is levied on the amount by
which they increase the value of the items they purchase. See indirect tax; sales tax.
Vendor agreement. A vendor agreement is a legal agreement that clearly states the
provisions and conditions of the work to be performed by a contractor. he key
points to be included in a vendor agreement include date, time and location where
the products will be delivered or the services must be provided. A vendor agreement
must always be accompanied with a Statement of Work (SOW). A vendor will not
start work without an acceptable form of SOW. A vendor agreement becomes valid
and enforceable when the customer and vendor signs the agreement in original.
Vienna Convention. Oicially known as United Nations Convention on Contract

for the International Sale of Good (CISG) is a 1980 international treaty signed by over
80 countries, between them most leading trading nations, that amounts to a virtual
commercial code for international sale of goods transactions, but exclude contracts for
services. Although the CIS is the default body of contract law when both the exporter/
seller and the importer/buyer are nationals of countries that have ratiied it, parties
may opt out by explicitly stating so in their international sale contract. A separate but
related agreement, the United Nations Convention on the Limitation Period of the
International Sale of Gods, covers time limits for seller and buyer claims of breach,
termination, or invalidity arising from contracts of international sale of goods. Parties
desiring to opt out of either convention should specify the body of law they wish to
use instead. Care must be taken when doing so, as the conventions may be part or
the body of law the parties wish to use. See international sale contract. Website.
Visible trade. Imports, exports and re-exports of merchandise. See invisible trade.
VOCC. Vessel operating common carrier is a company that operates its own vessels.
See NVOCC.
Voidable contract. A contract that is valid but that can be declared invalid at the
request of one of the parties because of a defect or illegality in making it. For example,
if one party made a fraudulent misrepresentation on which the other party relied in
making the contract, the contract will be enforced against the misrepresenting party
but the other party may seek relief by electing to void the contract.
Vostro account. An account held by a bank with its foreign correspondent bank, in
V the currency of the bank´s domestic country.
Waiver. A formal exemption of a right to claim.
War risk. A peril that is normally excluded by a capture and seizure clause even in
all risk clauses or London Institute of Underwriters Clause A. Insurance coverage is
usually available for an additional premium.
War risk insurance. Insurance coverage against war risks as outlined in detail in some
dozen rather than speciic paragraphs of an insurance policy. he policy conditions
must be read for complete understanding. In general, they cover risks of captured sei-
zure, destruction or damage by warlike operation. Delay or loss of market is excluded.
War risk insurance generally attaches as goods are irst loaded on board a vessel at the
port of shipment, and it ceases to attach as goods are landed at the intended port of
discharge or on the expiry of 15 days from arrival of the overseas vessel whichever
irst occurs. he war risk policy is subject to 48 hours cancellation by either party.
However, it cannot be cancelled on shipments upon which insurance has already at-
tached. Since the cancellation provision is used at times for charging the conditions
of insurance the current coverage should be studied for exact understanding of the
war risk policy.
Warehouse receipt. A document listing the goods or commodities deposited in a W

warehouse. It is a receipt for the commodities listed, and for which the warehouse is
the bailee. Warehouse receipts may be negotiable or non negotiable.
• Negotiable. A warehouse receipt made out to the “order” of a named party is
a bearer instrument. As with order bill of lading, ownership of the warehouse
goods can be transferred by endorsing and passing the documents from party
to party.
• Non-negotiable. A warehouse receipt lacking the word “order” is similar to a
non-negotiable bill of lading, as it permits delivery only to the named party.
Warehouse-to-warehouse clause. Insurance coverage of international cargo from

export warehouse to import warehouse. here is often limitations, such as a limit
on the time coverage is in force after the goods arrive to the buyer´s side, but before
inally delivery takes places. Sellers and buyers should align warehouse-to warehouse
coverage with the terms of sale (Incoterms) they use to ensure seamless coverage.
Warranty. A promise by a contracting party that the other party can rely on certain
facts or representations as being true, A seller, for example, may warrant that certain
products will meet a list of speciications furnished by the buyer.
Warsaw Convention. An international agreement deining the responsibilities and

limiting the liability of air carriers involved in international transport. Among other
things it establishes the international liability of air carriers and the monetary limits
to loss, damage, and delay. he formal name is: he Convention for the Uniication
of Certain Rules Relating to international Carriage by Air.
Waybill. A non-negotiable transport document prepared by a transportation line at

the pint of a shipment, showing the point of origin, destination, route, consignor,
consignee, description of shipment and amount charged for the transportation service,
and forwarded with the shipment, or direct by mail, to the agent at the transfer point
or waybill destination. See air waybill; bill of lading; ocean bill of lading.
WCF. he World Chambers Federation is a ICC´s specialized division for its chamber
of commerce members worldwide. WCF also manages the ATA Carnet System and
its guarantee chain for temporary duty-free imports. Website.
WCO. he World Customs Organization is an independent intergovernmental body

whose mission is to enhance the efectiveness and eiciency of customs administra-
tions. With over 90 member countries, it is the only intergovernmental worldwide
organization competent in customs matters. Website.
Weight. he amount that an object weights. here are three kinds of weight most
frequently uses for cargo:
• Gross: the total scale weight of a shipment, including the goods themselves
W and the packing.
• Net: the weight of only the goods in a shipment, exclusive of any packing
materials;
• Tare: the weight of a container and/or packing materials without the weight
of the goods it contains.
he following weight-related terms are commonly used in international trade:

• Long ton 1016,06 kilos (2240 pounds).
• Short ton 907,20 kilos (2000 pounds).
• Metric ton 1000 kilos (2204,6 pounds).
he terms “dimensional weight” and “measurement ton” refer to the comparison of

a shipment´s weight to volume used to calculate freight costs.
Wharf. A port facility projecting from land to water or parallel to the shoreline where
vessels berth for unloading and loading.
Wharfage. A charge assessed by a pier or dock owner for handling incoming or

outgoing cargo.
Wharinger. Personnel in charge of receiving and registering goods in a port on behalf

of the carrier. he wharinger´s signature of the shipping note assures the shipper that
it can proceed to draw up bills of lading pursuant to the terms of the note. Also called
checker. See apparent damage; apparent good order and condition.
Win-lose strategy. A negotiation based on an attempt to divide up an amount of

resources, resulting in a win-lose situation. When choosing this strategy, one takes on
an adversarial or competitive view. he focus is on achieving immediate goals, with
little or no regard for building future relationships. Little time or energy is needed in
resolving conlicts using a win-lose strategy, because few if any creative solutions are
considered. his negotiation strategy is typical of competitive negotiators that belongs
to such emerging countries as China, Russia or Arab countries. his strategy is the
opposite to win-win strategy. Also known as distributive bargaining. Negotiation and
Win-win strategy. A negotiation strategy where both parties gain roughly equal ad-
vantage. he parties agree to act in both their own interest and in the interest of the
group. he basis for any win-win situation is that compromise and cooperation must
be more or at least as important as competition. his negotiation strategy is typical of
cooperative negotiators that belongs to the most developed countries such as Sweden,
Canada or Japan. his strategy is opposed to a win-lose strategy or zero-sum game.
Negotiation and Business Culture Guides by Countries.
With Average (WA). Insurance coverage which gives the assured protection for par-
tial damage by sea perils, if the partial damage amounts to 3% (or other percentage
W
speciied) or more of the value of the whole shipment or of a shipping package. If the
vessel has stranded, sunk, been on ire or in collision, the percentage requirement is
waived and losses from sea perils are recoverable in full. See all risks; general aver-
age; particular average.
Without prejudice. A term used in the negotiation process to indicate that a particu-
lar conversation or letter cannot be used as evidence in court.
Without reserve. A term indicating that an agent or representative is empowered

to make deinite decisions and adjustments without the approval of the principal
represented. his is the opposite of advisory capacity.
W/M. Weight or measurement is a method of quoting freight rates: 1. for sea freight,
per metric ton (1.000 kilograms) or per cubic meter (35.3 cubic feet) whichever is
greater; 2. for air freight, per kilogram or per 7,000 cubic centimeters (1 cubic foot)
whichever is greater.
WIPO. he World Intellectual Property Organization is specialized agency of the

United Nations system that seeks to promote international cooperation in the pro-
tection of intellectual property rights around the world through cooperation among
states. WIPO administers the International Union for the Protection of Industrial
Property (known as Paris Convention. Website.
World Bank Group. he World Bank Group is a specialized United Nations agency
dedicated to improving living standards in developing countries through facilitation and
inancing development and investment. here are ive organizations within the Group:
• International Bank for Reconstruction and Development (IBRD) provides
low-cost developmental loans for reasonably creditworthy sovereign buyers by
issuing bonds backed by its own triple-A rating.
• International Development Association (IDA) provides low cost development
loans for less-developed nations from funds donated by nearly 40 countries.
• Multilateral Investment Guarantee Agency (MIGA) provides political risk co-
insurance and reinsurance for investment in client-developing countries.
• International Finance Corporation (IFC) inances and advises for private-sector
ventures and projects in developing countries.
• International Centre for Settlement of Investment Disputes (ICSID) provides
facilities for conciliation and arbitration of disputes.
Over 180 countries are members of the World Bank Group. See International Mon-
etary Fund. Website.
World Economic Forum. International institution established in 1971 in Geneva,

W Switzerland, committed to improving the state of the world through public-private
cooperation. Annually the World Economic Forum publishes he Global Competi-
tiveness Report. Website.
WTO. he World Trade Organization was established by the Uruguay Round in

1995 as successor to the GATT (General Agreement of Tarifs and Trade), the WTO
is the only global organization dealing with the rules of trade among nations. It is
responsible for monitoring national trading policies, handling trade disputes and
enforcing the GATT agreements. he mission of the WTO is also reduce tarifs and
other international barriers and eliminate discriminatory treatment in international
commerce. More than 150 countries belong to WTO. Website.
World Economic Forum. International institution established in 1971 in Geneva,

Switzerland, committed to improving the state of the world through public-private
cooperation. Annually the World Economic Forum publishes he Global Competi-
tiveness Report. Website.
York Antwerp Rules. A body of rules adopted by international convention to provide

a uniform basis for adjusting general average claims. Some nations do not follow this
rules, and interested parties should refer to the carrier or to the text of the marine
transport document.
Y
Zeroing. In the World Trade Organization (WTO) dumping procedures, an investi-

gating authority usually calculates the dumping margin by getting the average of the
diferences between the export prices and the home market prices of the product in
question. When it chooses to disregard or put a value of zero on instances when the
export price is higher than the home market price, the practice is called “zeroing”.
Critics claim this practice artiicially inlates dumping margins.
Zero-sum game. A negotiation strategy where one party´s gains are directly ofset by
another party´s losses. his negotiation strategy is typical of competitive negotiators
that belongs to such emerging countries as China, Russia or Arab countries. his
strategy is opposed to a win-win strategy. Negotiation and Business Culture Guides
by Countries.
Z
INTERNATIONAL
TRADE TERMS BY
CATEGORIES
BANKING credit Convertibility

Bank acceptance Convertible currency
About Bank draft Correspondent bank
Acceptance Bank guarantee Country risk
Acceptance letter of Bareboat charter Credit risk insurance
credit
Beneiciary Crossed check
Accepting bank
Bid bond Currency
Acknowledgement
Bill of exchange Currency future
Advance payment
Blank endorsement Currency option
Advance payment
guarantee Bottom line Current account
Advised letter of credit Call option Current balance
Advising bank Capital account Date draft
After date Cash against documents Default
After sight Cash in advance Deferred payment letter
of credit
Allowance Cash on delivery
Del credere
Amendment Cash with order
Demand guarantee
American option Clean collection
Depreciation
Applicant Clean draft
Devaluation
Application Clean loat
Dirty loat
Appreciation Clean letter of credit
Discount
Arbitrage COFACE country risk
Discrepancies
Assignee Collateral
Documentary collection
Assignment Collecting bank
Documentary credit
Assignor Collection
Documentary
At sight Collection fee
instructions
At X days date Collection letter
Domicile
Availability Comfort letter
Draft
Aval Commercial risk
Drawee
Back letter Conirmed letter of credit
Drawer
Back order Conirming
Drawing
Back to back letter of Conirming bank
Due diligence
International Terms by Categories 197
Endorsement In trust (documents) Overdraft

Endorsee International Par value
Arrangement on Export
Endorser Parity
Credits
Escrow account Payee
International Bank for
eUCP Reconstruction and Payer
European option Development Paying bank
Evergreen letter of credit International Payment at sight
Development Association
Exchange control Payment in advance
International Finance
Exchange rate Corporation Payment terms
Exchange risk Irrevocable letter of credit Payment under reserves
Expiration date Issuance Performance bond
Expiry date Issue date Portfolio investment
Factoring Issuing bank Postdated check
Fixing Key currency Pre-advice
Foreign currency Letter of credit Presentation date
Foreign currency account Letter of Indemnity Principal
Foreign exchange Leverage Promissory note
Forfaiting Long date forward Put option
Forward rate Market risk Red clause L/C
Forward exchange Maturity date Reimbursing bank
contract Remittance
Merchant´s credit
Forward exchange option Remittance following
Money order
Freely negotiable collection
Multicurrency clause
Future contract Remitter
Negotiating bank
Gold standard Remitting bank
Negotiation
Grid Reserve currency
Nostro account
Guarantor Restitution
Oanda
Guaranty Restricted letter credit
Open account
Hard money (currency) Revaluation
Option
Hedging Revocable L/C
Original documents
Holder in due course Revolving L/C
Outright
Risks analysis Usance L/C Boilerplate clauses

Rollover credit Validity Bracketed
Second advising bank Vostro account Break clause
Settlement date World Bank Group Business cooperation
contract
Silent conirmation
CONTRACTS & LAW Calvo doctrine
Soft currency
Capacity to contract
Spot cash
Abrogation Carriage contract
Spot exchange
Accord and satisfaction Caveat emptor
Spot exchange rate
Act of God CIETAC
Spot market
Adhesion contract Civil Law
Spot price
Advisory capacity Claimant
Spot rate
Aidavit Commercial in
Standby L/C
conidence
Afreightment
Stop loss order
Commercial sensitive
Alternative Dispute
Straight L/C information
Resolution
Strike price Commission sales
Amendment
SWIFT agreement
American Foreign Trade
Time draft Common Law
Deinitions
Time value money Conidential information
Annex
Trade acceptance Conidentiality
Arbitration clause
agreement
Trade inance As is
Conlict of laws
Transferable letter of Assignment
credit Consignment contract
Attachment
Trust receipt Contract guarantee
Attorney-in-fact
UCP 600 Contract manufacturing
Authentication
Unconirmed letter of Contracting parties
Avoidance of contract
credit Contractual joint venture
Bad faith
Uniform Rules for Copyright
Collections Bailee
Counterparty
Uniform Rules for Bailment
Deal breaker
Contract Guarantees
Bearer
Devil´s advocate
Usance draft
Bearer document
Domicile
End date Ipso jure Notary public

Equity joint venture Joint and several liability OEM Original
Equipment
Equivalence Joint venture
Manufacturing
EUR-Lex Jurat
Open-end contract
European Economic Juridical person
Paramount clause
Interest Grouping
Know-how
Parent company
Exculpatory clause
Language clause
Paris Convention
Execution
Legal entity
Partnership
Exhibit
Letter of Intent
Patent
Expatriate contract
Lex mercatoria
Patent Cooperation
Export contract
License agreements Treaty
Fast track
Licensee Power of attorney
Force majeure clause
Licensor Premises
General conditions of
Limitada (Ltda.) Prescription period
international sale
Limitation period Prima Facie
General partnership
Limited (Ltd.) Principal
GmbH Gesellschaft mit
beschränker Haftung Limited liability Protest
Governing law clause Limited partnership Proxy
ICC International Court Liquidated damages Rescind
of Arbitration Logistic services contract Restitution
Ice clause London Court of Retention of title clause
Import contract International Arbitration
Royalties
Integrated contract Madrid Agreement
Schedule
Intellectual Property Manufacturing license
Severability clause
Rights agreement
Sociedad Anónima S.A.
International agreement Mediation
Sociedad de
International Center of Memorandum of
Responsabilidad Limitada
Dispute Resolutions Understanding
S.R.L.
International franchising NCND Non-
Societé Anonyme S.A.
circumvention non-
International
disclosure agreement Societé à Responsabilité
procurement
Limitée S.R.L.
NDA Non-disclosure
International sales
agreement Strike clause
contract
Subrogation Assist Double column tarif

Supply contract ATA Carnet Downstream dumping
Termination of contracts ATR Declaration Dry port
Terms and Conditions Automated clearing Drawback
house
hird-party beneiciary Dumping
Bonded warehouse
Title transfer Duty
Border protection
Trade Act Duty paid
Brussels Tarif
Trademark Excise tax
Nomenclature
Trademark license Export clearance
Certiicate of conformity
agreement Gateway
Certiicate of Origin
Trade secret General tarif
Certiication of Origin
Turnkey contract Generalized System of
Form A
Tying arrangement Preferences
Clearance
UNCITRAL Global quota
Combined Nomenclature
Unenforceable contract Global Trade Alert
Commercial value
UNIDROIT Harmonized System
Common external tarif
Valuation clause HS 6-digit
Compound duty
Vendor agreement Import clearance
Consular visa
Vienna Convention Import duty
Countervailing duties
Voidable contract Import license
Customs
Waiver Import quota
Customs area
Warranty Import restrictions
Customs bonded
Without prejudice warehouse Indirect tax
WIPO Customs broker Intrastat
Customs classiication Licence
CUSTOMS Customs clearance Liner tarif reduction
Customs duty Market Access Data Base
Ad valorem duty Most Favoured Nation
Customs entry
APHIS treatment
Customs invoice
Apraisement Non-tarif barriers
Customs valuation
Article of extraordinary Normal value
Direct tax
value Rules of origin
SAD Airport-to-airport Carriage contract

Sales tax Alongside Carrier
Sanitary measures American Foreign Trade Carrier liability limit
Deinitions
SITC Cartage
American pallet
Speciic duty Cartment
Apparent damage
Tarif CFR Cost and Freight
Apparent good order and
Tarif biding CFS Container Freight
condition
Station
Tarif escalation
Arrival notice
CFS/CFS
Tarif quotas
As freighted
CFS Charge
Tax haven
Back letter
CFS Receiving Services
Trade barriers
Backhauling
Chargeable Weight
Trade facilitation
BAF
Charges collect
Trigger price mechanism
Bale
Charter party
Variable levy
Barrel (Bbl.)
Charter party bill of
VAT
Base port lading
WCO
Bill-to party Checker
Zeroing
Bonded warehouse Chock
Bordereau CIF Cost, Insurance and
LOGISTICS Freight
Breakbulk
CIM Transport
Bridgeport
Abandonment document
Broken stowage
Accessions CIP Carriage and
Brokerage Insurance Paid to
Accessorial charges
Bulk cargo Claused bill of lading
Advice of shipment
Bulk carrier Clean bill of exchange
Afreightment
Bulk freight Clean bill of lading
Aloat
Cabotage Clean on board bill of
Air freight
Captain´s protest lading
Air freight consolidator
Car seal Clean receipt
Air freight forwarder
Cargo Clean report of indings
Air waybill
Cargo agent Clean transport
Aircraft pallet document
Cargo manifest
CMR Transport Country of destination Detention charges

document Devanning
Country of origin
Collect charges Dimensional weight
CPT Carriage Paid to
Combined transport Discharge
Currency adjustment
Combined transport factor
Dispatch money
document
Cut-of time
Dock
Compact palletization
DAF Delivered at
Dock receipt
Compatible cargo Frontier
Door-to-airport
Concealed damage Dangerous goods
Door-to-door
Congestion surcharge Dangerous Goods
Declaration Door-to-port
Consignee
DAP Delivered at Place Drayage
Consignee marks
DAT Delivered at Drum
Consignment
Terminal Dry port
Consignment contract
DDP Delivered Duty E & OE Errors and
Consignor Paid omissions excepted
Consolidated container DDU Delivered Duty Entrepot
Consolidated shipment Unpaid
ETA Estimated time of
Consolidation Dead freight arrival
Consolidator Deadweight ETD Estimated time of
Deadweight cargo departure
Container
Declared value for Eurobox
Container freight station
carriage. L EURO-pallet
Container handling
charge Deck cargo Ex Cellar
Container manifest Deconsolidation point Ex Factory
Container number Delivery Export marks
Container rental Delivery instructions Export packing
surcharge Delivery lead time EXW Ex Works
Container terminal Demurrage FAK Freight of all kinds
Container vessel DEQ Delivered ex Quay FAS Free Alongside
Container yard DES Delivered ex Ship FCA Free Carrier
Containerizable cargo Destination delivery FCL Full Container Load
Country of departure charge
Feeder vessel
Destuing
FEU Forty-foot Future contract Inducement

equivalent unit Inland carrier
Gauger
FHEX Inland clearance depot
General cargo rate
FHINC Inherent vice
General cargo vessels
FIATA Intended
General order
FIFO First in, irst out Interline
Gross tonnage
FILO First in, last out Intermediate consignee
Gross weight
FIO Free in and out Intermodal transport
Groupage
FIOST Free in, out, International Container
Guaranteed freight
stowed and trimmed Bureau
Hague Rules
Flag carrier International Maritime
Hamburg Rules
Flag of convenience Organization
Harbor fees
Flotsam International Road
Hatch Transport Union
FOB Airport
Haulage International Road
FOB Free on Board
Hazardous materials Transportation
FOR Free on Rail Convention
Heavy lift
Fork lift Inward foreign manifest
High cube
Foul bill of lading ITU Intermodal
Hinterland logistics transport unit
Foul transport document
Hold Jetsam
Four-way pallet
House airway bill Jettison
Free of particular average
House bill of lading Knot
FOR Free on Rail
House-to-house Landbridge
Forklift trucks
Hub system Landed costs
Forwarder
Husbanding Landed value
FOT Free on track
IATA International Air Landlocked
Freely negotiable
Transport Association
Freight Lashing
IHC Inland Haulage
Freight collect Charges Lay order
Freight forwarder In transit entry (I.T.) Laytime
Freight prepayable In-bond LCL
Freight prepaid Inbound logistics LLCL/FCL
Freight rebate Incoterms LCL/LCL

Language clause Neutral marks Port of loading

LIFO Liner in free out NOR Port-to-port
Lift-On/Lift-Of (Lo/Lo) Not otherwise speciied Pre-carriage
Lift truck Notify address Preferential cargo
Lifting cart Notify party Prepaid
Lighterage NVOCC Pre-shipment inspection
Line haul On-board B/L Quay
Liner service On-board notation Range
Liner shipping On-carriage Received for shipment
Liner terms On-deck Reefer container
Loading Open top container Revenue ton
Logistics platform Outbound logistics Reverse logistics
Logistic services contract Packaging ilm Roll-on/roll-of
Longshoreman Pallet Rounding
LTL Less than truck load. Pallet loader Running days
Main carriage Pallet transporter Said to contain
Manifest Palletizing SHEX
Marine bill of Lading B/L Partial shipment SHICN
Measurement cargo Particular average Shipbroker
Measurement ton Pickup and delivery Shipment
Merchant´s haulage Pier-to-house Shipment date
Mixed container load Pier-to-pier Shipped on deck
M/T Metric Ton Piggyback logistics Shipper
Multimodal transport Place of delivery Shipper´s letter of
instruction
Multimodal transport Place of receipt
operator Shipper´s load and count
Point of origin
Named place Shipping conference
Port of call
NESOI Shipping documents
Port of debarkation
Net terms Shipping instructions
Port of embarkation
Net tonnage Shipping order
Port of entry
Net weight Shipping weight
Port of exit
Short delivery Trimming Cargo insurance

certiicate
Short-shipped Tri-temp
Cargo manifest
Side loader ULD
Cartment
Side-door container Unclaimed freight
Certiicate of analysis
Sling Undercarrier
Certiicate of authority
Steamship agent Unit load
Certiicate of conformity
Steamship line Unitization
Certiicate of free sale
Stevedore Valuation charges
Certiicate of health
Storage Vanning
Certiicate of inspection
Storage demurrage VOCC
Certiicate of
Storage in transit Warehouse receipt
manufacture
Store-door delivery Warsaw Convention
Certiicate of Origin
Stowage Weight
Certiication of Origin
Straight B/L Wharf. Form A
Stripping Wharfage Certiicate of
STC Says to contain. Wharinger radioactivity
Stuing W/M L Certiicate of weight
Surcharge Certiied invoice
TEU Twenty-foot DOCUMENTATION CITES

equivalent unit Claused bill of lading
THC Terminal Handling Acknowledgement Clean bill of exchange
Charges
Air waybill Clean bill of lading
hird-party logistics
Arrival notice Clean receipt
hrough bill of lading. L.
ATA Carnet Clean report of indings
hrough rate
ATR Declaration Clean transport
Time bar. L
Bill of adventure document
Time charter
Bill of exchange CMR Transport
Trade documents document
Bill of lading B/L
Tradeofs Combined transport
Bill of parcels document
Tramp vessel
Binder Commercial invoice
Transit zone
Captain´s protest Consular declaration
Transshipment
Consular documentation Letter of assignment Sanitary certiicate

Consular invoice Letter of correction Sea waybill
Container manifest Letter of credit Short form B/L
Container number Letter of Indemnity Special cargo policy
Cover note Letter of Intent Standard Shipping Note
Customs invoice Letter of Introduction Standby L/C
Dangerous Goods Manifest Statement of Work
Declaration hrough bill of lading
Master air waybill
Delivery instructions TIR Carnet
Master form.
Delivery note Trust receipt
Mate´s receipt
Delivery order Warehouse receipt
Multimodal transport bill
Documentary instructions of lading
Waybill
Documents against Negotiable bill of lading
acceptance B/L
INSURANCE
Documents against Negotiable instrument
payment
Negotiable warehouse
All risks
EDI receipt
Average
EDIFACT No comercial value
Brokerage
EUR 1 Movement Non-negotiable B/L
Certiicate Carrier liability limit
Ocean bill of lading
Export declaration Casualty
Order
Export license Contingency insurance
Order bill of lading
Expression of interest COFACE Country Risk
Original documents
FBL FIATA Bill of Lading Country risk
Packing list
FCR Forwarder´s Cover note
Phytosanitary certiicate
certiicate receipt Damages
Pickup order
Foul transport document Del credere
Pre-shipment inspection
General conditions of Delay clause
international sale Proforma invoice
Deviation clause
Halal certiicate Proof of delivery
Free of capture and seizure
Insurance certiicate Purchase order
Free of particular average
Kosher certiicate Railway consignment note
Indemnity
Legalized invoice Receipt
Abbreviations and Acronyms Used in International Trade 207
Institute Cargo Clauses York Antwerp Rules Comparative advantage

Insurable interest Compensatory trade
Insurance broker ECONOMICS Compensation deal
Insurance coverage Competitive intelligence
Absolute advantage
Insurance policy Comtrade
ACP Countries
Insurance premium Counterpurchase
ALADI
Insured Countertrade
Andean Community
Insured value Current account
Antitrust
International Current balance
Underwriting Association APEC
Customs union
of London
ASEAN
Default
Know loss
Balance of payments
Developing countries
Lloyd´s Register
Balance of trade
Distorsion
Marine cargo insurance
Barter
Doing Business Proyect
Open policy
Basel Convention
Duopoly
Particular average
Berne Convention
Economic integration
Party at risk
Bilateral trade agreement
Economic union
Pilferage
Blockade
Embargo
Premium
Boycott
Enabling clause
Reinsurance
Bribery
Eurostat
Salvage
Bufer stocks
Ex ante, ex post
Salvage loss
Build-Operate-Transfer
Expatriate
Self insured
Buy-back
Export
Special marine policy
Capital account
Export incentives
Sue and Labor clause
CARICOM
Export-performance
Surety measure
Cartel
Surveyor Export processing zones
Chargé dáfaires
War risk Export quota
Circumvention
War risk insurance Export subsidies
Commercial treaty
Warehouse-to-warehouse FDI Foreign Direct
Commodity
clause Investment
Common market
With Average Free trade
Free trade area Outsourcing After-sale service

Free trade zone Parallel imports Agenda
Gold standard Parent company Agent
Global Competitiveness Perfect competition Agio
Report Application to qualify
Post-tender-negotiation
Holding company Assembly operations
Pre-qualiied suppliers list
International procurement BATNA
Price undertaking
JETRO Best and inal ofer
Procurement
Keiretsu Born global
Protectionism
Key performance Brokerage agreement
Purchasing power parity
indicators
Quality Bureau International des
Know-how Expositions
Quality assurance
Lead time Business culture
Quality control
Less developed country Buying agent
Quantitative restrictions
Lesser developed country CCC Mark
Quota
Managing director CE Mark
Re-exports
MERCOSUR CEO
Retaliation
MIGA Chaebols
Revaluation
Money laundering Co-branding
Risks analysis
Monopoly Collusion
Safeguards
Monopsony Commercial agency
Sanction
Multilateral agreement Commercial counselor
Sister company
Mutual Recognition Commercial
Agreements SMEs
counterfeiting
NAFTA Smuggling
Commercial presence
Nearshoring Sovereign default
Commission
Non-tarif barriers Sovereign risk
Commission agent
Ofset requirements Commissioning
Ofshoring MARKETING
Competitive intelligence
Oligopsony Comtrade
Accessions
Oligopoly Conirming house
Ailiate company
Opportunity cost Contract manufacturing
Counterfeit Losing face Supplier lead time

Counterofer Low context cultures Technical speciications
Cross-culture business Market access data base Terms of sale
Cultural diferences Markup pricing Territory
Deadline Master franchise Trade fair
Distributive bargain Multidomestic strategy Trade Map
Distributor Net price Trademark
DUNS number Net proit Trade mission
E-auction Piggyback distribution Trade name
E-marketplace Premium Trade promotion
organizations
Europages Price diferentiation
Trading company
Exclusive distribution Price standardization
Transaction value
Export broker ProChile
Transfer pricing
Export business plan ProExport
TSNN
Export entry modes ProMéxico
UBIFRANCE
Export management Purchasing agent
company Unique selling proposition
Quotation
Export manager Value for money
Representative oice
Expression of interest Win-lose strategy
Request for information
Facilitation payment Win-win strategy
Request for proposal
Flagship store Zero-sum game
Request for quotation
Grey market
Request for tender
Guanxi.
Reverse option
High context cultures
Sales agent
ICEX
Sales representative
Intermediary
Sample
International franchising
Shop in shop
International service
Sogo Shosha
provider
Strategic alliance
KISS
Supplier
Kompass
Supplier appraisal
KOTRA
ABBREVIATIONS
AND
ACRONYMS
USED IN
INTERNATIONAL
TRADE
aar - Against all risks. BRICS - Brasil, Russia, India, China

and South Africa.
ACH - Automated clearing house.
BS - Bunker adjustment factor.
act.wt. - Actual weight.
BTN - Brussels Tarif Nomenclature.
ACP Countries - African, Caribbean
and Paciic countries.
A/D - After date. CAC - Currency adjustment charge.
ADR - Alternative dispute resolution. CAD - Cash against documents.
AEV - Article of extraordinary value. CAD - Currency adjustment factor.
ALADI - Asociación Latinoamericana CAI - Cash in advance.
de Integración
CARICOM - Caribbean Common
APHIS - Animal and Plant Health Market.
Inspection Service
CBL - Combined transport bill of
AN - Arrival notice. lading.
AR - All risks. CBOT - Chicago Board of Trade.
Av. - Average. CCC Mark - he China Compulsory
Certiicate Mark.
AS - At sight.
CE Mark - Conformité Européene.
APEC - Asia-Paciic Economic
Cooperation. CEN - Comité Européen de
Normalisation.
ASEAN - Association of Southeast
Asian Nations. CENELEC - Comité Européen de
Normalisation Electrotechnique.
AWB - Air waybill.
CEO - Chief Executive Oicer.
CET - Common external tarif.
BAF - Bunker adjustment factor.
CFO - Chief Financial Oicer.
BATNA - Best alternative to a
negotiated agreement. CFR - Cost and Freight.
B/B - Breakbulk (cargo). CFS - Container Freight Station.
Bbl - Barrel. CIA - Cash in advance.
BCC - Business cooperation contract. CIETAC - China International
and Economic Trade Arbitration
B/D - Bank draft.
Commission.
B/E - Bill of exchange.
CIF - Cost, Insurance and Freight.
BFO - Best and inal ofer.
CIM - Convention Internationale
B/L - Bill of lading. concernant le transport des
BOT - Build operate transfer. Marchandises par chemin de fer.
CIP - Carriage and Insurance Paid to. DDP - Delivered Duty Paid.
CISG - United Nations Convention DDU - Delivered Duty Unpaid.
on Contract for the International Sale
DEQ - Delivered ex Quay.
of Goods.
DES - Delivered ex Ship.
CITES - Convention on International
Trade in Endangered Species. Dk - Dock.
Cld - Cleared (through customs). D/S - Days after sight.
CMR - Contrat de Transport D/P - Delivery order.
International de Marchandises par D/P - Documents against payment.
Route.
CN - Combined Nomenclature
E & OE - Errors and omissions
COD - Cash on delivery. excepted.
COFACE - Compagnie Française EDI - Electronic Data Interchange.
d’Assurance pour le Commerce
Extérieur. EDIFACT - Electronic Data for
Administration, Commerce and
COO - Chief Operating Oicer. Transportation.
CPT - Carriage Paid to. EEIG - European Economic Interest
CS - Container shipment. Grouping
CSC - Container service charge. EFTA - European Free Trade
Association
CTD - Combined transport
document. EJV - Equity joint venture.
CY - Container yard. EMC - Export management company.
Cw - Commercial weight. EPZ - Export processing zone
CWO - Cash with order. ETA - Estimated time of arrival.
Cwt - Hundredweight (unit of ETD - Estimated time of departure.
measurement). EU - European Union.
EXIMBANK - Export-Import Bank
D/A - Documents against of the United States.
acceptance. EXW - Ex Works.
DAF - Delivered at Frontier.
DAP - Delivered at Place. FAK - Freight of all kinds.
DAT - Delivered at Terminal. FAO - Food and Agricultural
D/D - Delivered. Organization.
DDC - Delivered destination charges. FAP - Free of Particular Average.
FAS - Free Alongside. FPA - Free of particular average.

FB - Freight bill. FPAD - Freight payable at destination.
FBL - FIATA Bill of Lading. FTA - Free Trade Agreement.
FCA - Free Carrier. FTZ - Foreign trade zone.
FCL - Full Container Load. FWB - FIATA Waybill.
FCR - Forwarder´s Certiicate Receipt. FWR - FIATA Warehouse Receipt.
FCT - Forwarders Certiicate of
Transport.
GA - General average.
FD - Free domicile.
GATS - General Agreement on Trade
FDI - Foreign Direct Investment Services.
F&D - Freight and demurrage. GATT - General Agreement on Tarifs
and Trade.
FEU - Forty foot equivalent unit.
GmbH - Gesellschaft mit beschränker
FHEX - Fridays and holidays are
Haftung (Germany).
excluded.
G-7 - Group of Seven.
FHINC - Fridays and holidays are
included. G-77 - Group of Seventy Seven.
FI - Free in. GSP - Generalized System of
Preferences.
FIATA - International Federation of
Freight Forwarders Association. GSTP - Global System of Trade
Preferences.
FIATA - FFI Forwarding Instructions.
FIFO - First in, First out.
HAWB - House Airway Bill.
FILO - First in, Last out.
HAZMAT - Hazardous Materials.
FIO - Free in and out.
HS - Harmonized System.
FIOST - Free in, out, Stowed and
Trimmed.
FO - Free out. IATA - International Air Transport
Association.
FOB - Free on Board.
IBRD - International Bank for
Foc - Free of charge.
Reconstruction and Development.
Fod - Free of damage.
ICC - International Chamber of
FOI - Free in and out. Commerce.
FOR - Free on Rail. ICPO - Irrevocable Corporate
FOREX - Foreign Exchange. Purchase Order.
FOT - Free on Track. ICSID - International Centre for

Settlement of Investment Disputes.

IDA - International Development KISS - Keep it simple and straight.
Association.
KPIs - Key performance indicators.
IEC - International Electrical
Commission.
L/C - Letter of credit.
IFC - International Finance
Corporation. LCIA - London Court of
International Arbitration.
IFM - Inward Foreign Manifest.
LCL - Less than container load.
IHC - Inland Haulage Charges.
LDC - Less developed countries.
ILO - International Labour
Organization. Ldg. - Loading.
IMF - International Monetary Fund. LIFFE - London International
Financial and Futures Exchange.
IMO - International Maritime
Organization. LIFO - Liner in free out.
Inc. - Incorporated. LIRMA - London International
Insurance and Reinsurance Market
INCOTERMS - International
Association
Commerce Terms.
Lkg. & Bkg. - Leakage and breakage.
INTRACEN - International Trade
Center. LLDC - Lesser developed countries.
Inv. - Invoice. LOI - Letter of indemnity.
IPLC - International product life LOI - Letter of intent.
cycle. LOI - Letter of introduction.
IPR - Intellectual Property Rights. LO/LO - Lift-On/Lift-Of.
IRU - International Road Transport LT - Liner Terms.
Union.
LTL - Less than truck load.
ISO - International Standards
Organization.
I.T. - In transit entry. MAWB - Master air waybill.
ITT - Invitation to tender. MERCOSUR - Mercado Común del
Sur.
ITU - Intermodal transport unit.
MFN - Most Favoured Nation.
IUA - International Underwriting
Association of London. MIGA - Multilateral Investment
Guarantee Agency
MNC - Multinational corporation.
JETRO - Japan External Trade
Organization. MO - Money order.
MOU - Memorandum of O/o - Order of.

Understanding.
OP - Open policy.
MTAs - Mutual Recognition
Agreements.
PA - Particular average.
M/T - Metric ton.
P/A - Power of attorney.
MTO - Multimodal transport
operator. PCT - Patent Cooperation Treaty.
PD - Port dues.
N/A - Not applicable. P & I Clubs - Protection and
Indemnity Clubs.
NAFTA - North America Free Trade
Agreement. POD - Pay on delivery.
NCND - Non-circumvention non- POD - Port of debarkation.
disclosure agreement. POD - Proof of delivery.
NCV - No comercial value. POE - Port of embarkation.
NE - Not exceeding. P/N - Promisory note.
NES - Not elsewhere speciied. ppd (or PP) - Pre-paid.
NESOI - Not elsewhere speciied or PPP - Purchasing power parity.
indicated.
PSI - Pre-shipment inspection.
NDA Non-disclosure agreement.
PSV - Post-shipment veriication.
N/F - No funds.
PTN - Post-tender-negotiation.
NOR - Notice of readiness.
PU & D - Pickup and delivery.
NOS - Not otherwise speciied.
N/S/F - Not suicient funds.
R & CC - Riots and civil
NTBs - Non-tarif barriers. commotion clause (insurance
NVOCC - Non-vessel-operating clause).
common carrier. RFI - Request for information.
NYMEX - New York Mercantile RFP - Request for proposal.
Exchange.
RFQ - Request for quotation.
RFT - Request for tender.
OECD - Organization for
Economic Cooperation and RO/RO - Roll-on/roll-of.
Development. ROT - Retention of title.
OEM - Original Equipment R/T - Revenue ton.
Manufacturing.
O/N - Order notify.
S.A. - Sociedad Anónima (Spain).

S.A. - Societé Anonyme (France). TBL - hrough bill of lading.
SAD - Single Administration TC - Time charter.
Document.
TCO - Total cost of ownership.
S & C - Shipper´s load and count.
TEU - Twenty-foot equivalent units.
SD - Short delivery.
THC - Terminal handling charges.
SDT - Shipper´s Declaration for the
TIR - Transport International Routier.
Transport of Dangerous goods.
T/L - Total loss.
SHEX - Sundays and holidays
excluded. TM - Trademark.
SHICN - Sundays and holidays TNC - Transnational corporation.
included. TRIMS - Trade Related Investment
SIC - Shippers intermodal weight Measures.
certiicate. TS & Cs - Terms and Conditions.
SITC - Standard International Trade TSNN - Trade Show News Network.
Classiication.
T/T - Telegraphic transfer.
SLI - Shipper´s letter of instruction.
SMART - Speciic, measurable,
achievable, realistic and time-bound. UCODC - Uniform Customs and
Practice for Documentary Credits.
SMEs - Small and medium size
enterprises. UCP 600 - Uniform Customs and
Practice for Documentary Credits.
SOW - Statement of Work.
ULD - Unit load device.
SRCC - Strikes, Riots and Civil
Commotion Clause (insurance UNCITRAL - United Nations
clause). Commission on International Trade
Law.
S.R.L. - Sociedad de Responsabilidad
Limitada (Spain). UNIDROIT - Institute for the
Uniication of Private Law.
S.R.L. - Societé à Responsabilité
Limitée (France). UNTACD - United Nations
Commission for Trade and
SSN - Standard Shipping Note. Development.
S & T - Shipper´s load and tally. URC - Uniform Rules for Collections.
STC - Says to contain. URCG - Uniform Rules for Contract
STW - Said to weigh. Guarantees.
SWIFT - Society for URDG - Uniform Rules for Demand
Worldwide Inter-bank Financial Guarantees.
Telecommunications.
USP - Unique selling proposition.
VAT - Value added tax.

VFM - Value for money.
VOCC - Vessel operating common
carrier.
WA - With average.
WCF - World Chambers Federation.
WCO - World Customs
Organization.
W/M - Weight or measurement.
WPA - With particular average.
WIPO - World Intellectual Property
Organization.
WTO - World Trade Organization.
ZF - Franc zone.
MODEL CONTRACTS
INTERNATIONAL CONTRACTS (ENGLISH, SPANISH, FRENCH, GERMAN & PORTUGUESE)
• International Sale Contract • International Supply Contract

• International Distribution Contract • International Manufacturing Contract
• International Commercial Agency Contract • International Buying Agent Contract
• International Sales Representative Agreement • Logistics Services Contract
• Intermediary Contract for Trade Operations • Export Contract
• International Joint Venture Contract • Con identiality Agreement
• International Strategic Alliance Agreement • Expatriate Contract of Employment
• International Franchise Contract • Memorandum of Understanding for
• International Services Contract International Distribution
• International Consulting Contract • Memorandum of Understanding for Joint Venture
• International Technology Transfer Agreement • Pack 10 Contracts in English
• International Trademark License Agreement • Pack All Contracts in English
BUSINESS CONTRACTS (ENGLISH, SPANISH, FRENCH, GERMAN & PORTUGUESE)
• Distribution Contract • Consulting Contract

• Commercial Agency Contract • Strategic Alliance Agreement
• Sales Representative Agreement • Franchise Contract
• Commission Contract • Supply Contract
• Joint Venture Contract • Pack 12 Commercial Contracts (Premium)
• Services Provider Contract
CHINA CONTRACTS (ENGLISH-CHINESE DUAL VERSION)
• Distribution Contract China • Manufacturing Contract China

• Agency Contract China • Con identiality Contract China
• Commission Contract China • Memorandum of Understanding for Distribution Contract China
• Supply Contract China • Memorandum of Understanding for Joint Venture China
LETTERS OF INTENT (ENGLISH & SPANISH)
• Letter of Intent for International Sale • Letter of Intent for International Joint Venture
• Letter of Intent for International Distribution • Pack 3 Letters on Intent
LETTERS FOR EXPORTERS (ENGLISH & SPANISH) LETTERS FOR IMPORTERS
• Presentation to potential client • Request for information to an overseas supplier

• Proposal for agent/distributor • Offering as agent/distributor
• Proposal to form a strategic alliance • Reply to proposal for strategic alliance
• Invitation to a trade fair • Making contact after a trade fair
• Making a commercial offer • Renegotiation of a contract
• Preparation of a contract • Complaint about delivery of faulty goods
• Reminder of payment pending • Pack 15 Letters for Importers
• Pack 15 Letters for Exporters • Pack 30 Letters for Exporters and Importers
INTERNATIONAL TRADE AND TRANSPORT
DOCUMENTS
MODELS OF THE MAIN INTERNATIONAL TRADE AND TRANSPORT DOCUMENTS READY
TO USE WITH EXPLANATIONS ABOUT WHAT THEY ARE AND
PRACTICAL ADVICE TO COMPLETE THEM
• International Proforma Invoice • ATA Carnet
• International Commercial Invoice • Irrevocable Letter of Credit L/C
• Packing List • Cargo Insurance Certi icate
• Delivery Note • Certi icate of Origin
• International Purchase Order • Certi icate of Origin Form A
• General Conditions of International Sale • Certi icate of Inspection
• CMR Transport Document • Certi icate of Analysis
• Bill of Lading B/L • Phytosanitary Certi icate
• Air Waybill AWB • Kosher Certi icate
• Multimodal Bill of Lading FBL • Halal Certi icate
Pack All Documents

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DICTIONARY OF INTERNATIONAL TRADE

Reprinting, photocopying, online sale or free distribution on Internet of the whole

Intellectual Property Law

Copyright © Global Marketing Strategies 2015

Composition and design: Rubén Sánchez

INTERNATIONAL TRADE TERMS FROM A TO Z ............................................ 6

INTERNATIONAL TRADE TERMS BY CATEGORIES ................................... 195

Banking ......................................................................................................... 196

ABBREVIATIONS AND ACRONYMS USED

Abandonment. he refusal of merchandise by the designated consignee.

Absolute advantage. In the theory of international trade an absolute advantage occurs

Acceptance. he act of formally acknowledging a debt by signing a inancial instru-

Accessorial charges. In shipping, charges made for additional, special or supple-

Accord and satisfaction. A discharge of a contract or cause of action pursuant to

Acknowledgement. 1. Conirmation of receipt of a purchase order. 2. Conirmation

ACP Countries. African, Caribbean and Paciic countries is a group of countries

Act of God. he operation of uncontrollable natural forces. his expression is used

Advance payment. Paying or part-paying a supplier before goods or services are

Advance payment guarantee. A guarantee that advance payments will be returned

Advisory capacity. A term indicating that an agent or representative is not empow-

ered to make deinite decisions or adjustments without approval of the principal

Aidavit. A statement sworn under oath before an authorized oicial.

After-sale service. A collective term for attention to a transaction that normally

Agenda. he list of topics to be covered during a negotiation session. An agenda

Airport-to-airport. he main carriage transportation movement from departure air-

ALADI. he Latin American Integration Association is an international and regional

Allowance. An amount paid or credited by a seller as a refund or reimbursement

Alternative Dispute Resolution (ADR). A general term for a variety of dispute

Amendment. 1. In law, an addition, deletion, or change in a legal document. 2. In a

version and clearly indicate this Practical Guide to Incoterms.

American option. A foreign exchange type of contract containing a provision to the

Andean Community. Community of four Latin America countries (Bolivia, Colom-

Annex. A document attached to a contract or agreement. For example, a document

Antidumping. Laws enacted to remedy dumping, which is deined as the sale of

APEC. he Asia-Paciic Economic Cooperation is a forum of 21 Paciic Rim countries

Apparent damage. his statement in a bill of lading or other transport document is

Application to qualify. An application by a supplier to be included in an agency’s

Appraisement. Determination of the dutiable value of imported merchandise by a

Appreciation. In foreign exchange, an increase in the value of the currency of one

Arbitrage. he simultaneous buying and selling of the same commodity or foreign

Arbitration. A process of dispute resolution in which a neutral third party (arbitror)

Arbitration clause. A contract clause included in may international contracts, stating

Article of extraordinary value (AEV). Commodities identiied as high value items,

As freighted. An explanatory note to a freight surcharge explaining that it is to be

ASEAN. he Association of Southeast Asian nations is a political and economic orga-

Assembly operations. An assembly operation is a variation of the subsidiary. A foreign

ATA Carnet. An ATA (Admission Temporary Admission) Carnet is an international

Attorney-in-fact. A person authorized to transact business generally or to perform a

Authentication. he act of certifying that a written document is genuine, credible,

Automated clearing house (ACH). An electronic clearing system in which payments

Availability. In letters of credit, refers to the availability of documents in exchange

Avoidance of contract. he legal cancellation of a contract because an event occurs

Backhauling. he process of a transportation vehicle returning from the original

Bailment. A delivery of goods or personal property by one person (the bailer) to

Balance of payments. A statistical summary of international transactions. hese

value in monetary terms from residents of one country to residents of another. he

Balance of trade. he diference between a country´s total merchandise exports and

Bale. A shaped packing unit tied or bound under tension.

Bank guarantee. A contract between a bank (as guarantor) and a beneiciary, in

Bareboat charter. he lease (charter) of an entire vessel under an agreement whereby