Basics of Exporting - Appendix B: Glossary of Export Terms

Acceptance: (1) A time draft (or bill of exchange) which the drawee (the payer) has accepted and is unconditionally obligated to pay at maturity. The draft must be presented first for acceptance-the drawee becomes the "acceptor"-then for payment. The word "accepted" and the date and place of payment must be written on the face of the draft. (2) The drawee's act in receiving a draft and thus entering into the obligation to pay its value at maturity. (3) Broadly speaking, any agreement to purchase goods under specified terms.

Alongside: A phrase referring to the side of a ship. 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 ship.

Bill of Lading: A document that establishes the terms of a contract between a shipper and a transportation company under which freight is to be moved between specified points for a specified charge. Usually prepared by the shipper on forms issued by the carrier, it serves as a document of title, a contract of carriage, and a receipt for goods.

Bonded Warehouse: A warehouse authorized by customs authorities for storage of goods which payment of duties is deferred until the goods are removed.

Booking: An arrangement with a steamship company for the acceptance and carriage of freight.

C.& F.: A pricing term indicating that "cost and freight changes" are included in the quoted price.

C.& I.: A pricing term indicating that "cost and insurance" charges are included in the quoted price.

C.I.F.: A pricing term indicating that "cost, insurance, freight" charges are included in the quoted price.

C.I.F. & C.: A pricing term indicating that "cost, insurance, freight, and commission" charges are included in the quoted price.

C.I.F. & E.: A pricing term that indicates that "cost, insurance, freight, and (currency) exchange" charges are included in the quoted price.

Confirmed Letter of Credit: A letter of credit, issued by a foreign bank, with validity confirmed by an American bank. An exporter whose payment terms are a confirmed letter of credit is assured of payment even if the foreign buyer or foreign bank defaults. See LETTER OF CREDIT.

Consignment: Delivery of merchandise from an exporter (the consignor) to an agent the (consignee) under agreement that the agent sells the merchandise for the account of the exporter. The consignor retains title to the goods until the consignee has sold them. The consignee sells the goods for commission and remits the net proceeds to the consignor.

Consular Declaration: A formal statement, made to the consul of a foreign country, describing goods to be shipped.

Consular Invoice: A document, required by some foreign countries describing a shipment of goods and showing information such as the consignor, consignee, and value of the shipment. Certified by a consular official of the foreign country, the invoice is used by the country's Customs officials to verify the value, quantity, and nature of the shipment.

Countertrade: International trade in which the seller is required to accept goods or other instruments of trade in partial or whole payment for its products.

Countervailing Duty: An extra duty imposed by the Secretary of Commerce to offset export grants, bounties, or subsidies paid to foreign suppliers in certain countries by the government of those countries as an incentive to export.

Credit Risk Insurance: Insurance designed to cover risks of nonpayment for delivered goods. Compare MARINE INSURANCE.

Customhouse Broker: An individual or firm licensed to enter and clear goods through customs.

Demurrage: Excess time taken for loading or unloading a vessel. Demurrage refers only to situations in which the charterer or shipper, rather than the vessel's operator is at fault.

Draft (or Bill of Exchange): An unconditional order in writing from one person (the drawer) to another (the drawee), directing the drawee to pay a specified amount to a named payee at a fixed or determinable future date.

Drawee: The individual or firm on whom a draft is drawn and who owes the indicated amount. Compare DRAWER. Also see DRAFT.

Drawer: The individual or firm that issues or signs a draft and thus stands to receive payment of the indicated amount from the drawee. Compare DRAWEE. Also see DRAFT.

Duty: A tax imposed on imports by the customs authority of a country. Duties are generally based on the value of the goods (ad valorem duties), some other factors such as weight or quantity (specific duties), or combination of value and other factors (compound duties).

Export-Import Bank (Ex-Im Bank): An independent U.S. government agency created to facilitate U.S. trade relations primarily through providing financing, insurance, and feasibility studies.

F.A.S.: "Free Alongside (vessel)" is a pricing term indicating that the quoted price includes the cost of delivering the goods alongside a designated vessel.

F.I.: "Free In" is a pricing term indicating that the charterer of a vessel is responsible for the cost of loading goods onto the vessel.

F.I.O.: "Free In and Out" is a pricing term indicating that the charterer of a vessel is responsible for the cost of loading and unloading goods from the vessel.

F.O.: "Free Out" is a pricing term indicating that the charterer of a vessel is responsible for the cost of loading goods from the vessel.

F.O.B.: "Free on Board" is a pricing term indicating that the quoted price includes the cost of loading the goods into transport vessels at the specified place.

Foreign Credit Insurance Association (FCIA): An association of 50 insurance companies that operate in conjunction with the EXIMBANK to provide comprehensive insurance for exporters against nonpayment. FCIA underwrites the commercial credit risks. EXIMBANK covers the political risk and any excessive commercial risks.

Foreign Sales Agent: An individual or firm that serves as the foreign representative of a domestic supplier and seeks sales abroad for the supplier.

Free Trade Zone: A port designated by the government of a country for entry of any non-prohibited goods. Merchandise may be stored, displayed used for manufacturing, etc., within the zone and re-exported without duties being paid. Duties are imposed on the merchandise (or items manufactured from the merchandise) only when the goods pass from the zone into an area of the country subject to Customs.

General Export License: Any of various export licenses covering export commodities for which validated export licenses are not required. No formal application or written authorization is needed to ship under a general export license. Compare VALIDATED EXPORT LICENSES.

Inland Bill of Lading: A bill of lading used in transporting goods overland to the exporters international carrier, although a through bill of lading can sometimes be used, it is usually necessary to prepare both an inland bill of lading and an ocean bill of lading for export shipments.

Irrevocable Letter of Credit: A letter of credit in which the bank guarantees the specified payment if all terms and conditions are not met by the drawee.

Letter of Credit (L/C): A document, issued by a bank under instructions from a buyer of goods, authorizing the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain documents within a given time.

Marine Insurance: Broadly, insurance covering loss or damage of goods at sea. Marine insurance will typically compensate the owner of merchandise for losses sustained from fire, shipwreck, piracy, and various other causes; but it excludes losses which can be legally recovered from the carrier. Compare CREDIT RISK INSURANCE.

Ocean Bill of Lading: A bill of lading indicating that the exporter consigns a shipment to an international carrier for transportation to a specified foreign market. Unlike the inland type, the ocean bill of lading also serves as a collection document. If it is a straight bill of lading, the foreign buyer can obtain the shipment from the carrier by simply showing proof of identity. If a negotiable bill of lading is used, the buyer must first pay for the goods, post a bond, or meet other conditions agreeable to the seller. Compare INLAND BILL OF LADING, THROUGH BILL OF LADING.

Offset: A variation in countertrade in which the seller is required to assist in or to arrange for the marketing of locally produced goods.

Open Account: A trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment. The obvious risk this method poses to the supplier makes it essential that the buyer's integrity be unquestionable.

Phytosanitary Inspection Certificate: A certificate, issued by the USDA to satisfy import regulations of foreign countries, indicating that a U.S. shipment has been inspected and is free of harmful pests and plant diseases.

Pro Forma Invoice: An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (weight, size, etc.)

Revocable Letter of Credit: A letter of credit which can be canceled or altered by the drawee (buyer) after it has been issued by the drawee's bank. Compare IRREVOCABLE LETTER OF CREDIT.

Steamship Conference: A group of steamship operators that operate under agreed upon freight rates.

Swap Arrangements: A form of trade in which title to similar or identical products from different locations is traded to save transportation costs.

Switch Arrangements: A form of countertrade in which the seller sells on credit and then transfers the credit to a third party.

Through Bill of Lading: A single bill of lading covering both the domestic and international carriage of an export shipment. An air waybill, for instance, is essentially a through bill of lading used of air shipments. Ocean shipments, on the other hand, usually require two separate documents, and inland bill of lading for domestic carriage and an ocean bill of lading for international carriage; through bills of lading, therefore cannot be used. Compare INLAND BILL OF LADING, OCEAN BILL OF LADING.

Trade and Development Program (TDP): This program is designed to promote economic development in the Third World and the sale of U.S. goods and services to these developing countries. It operates as part of USDA's Organization for International Cooperation and Development.

Tramp Steamer: A ship not operating on regular routes or schedules.

Validated Export License: A document issued by the U.S. Government authorizing the export of commodities for which written export authorization is required by law. Compare GENERAL EXPORT LICENSE.

W.A.: "With average," is a marine insurance term meaning that a shipment is protected from partial damage when ever the damage exceeds 3 percent (or some other percentage).

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