Trade Glossary

Advance Against Documents (AAD) – A loan made on the security of the actual documents covering a shipment.

Asian Dollars – U.S. funds deposited in banks in Asia and the Pacific Basin.

Balance of Trade – The difference between a country’s total imports and exports; if exports exceed imports, a favorable balance of trade exists; if not, a trade deficit is said to exist.

Barter – Trade in which merchandise is exchanged directly for other merchandise without the use of money. Barter is the oldest form of trade and is currently widely in use in trade with countries using currency that is not readily convertible on world exchange markets.

Big Emerging Markets – A group of fast growing economics identified by the Department of Commerce as having the most potential for U.S. exports. They are: Argentina, Brazil, the Chinese Economic Area (China, Hong Kong, and Taiwan), India, Indonesia, Mexico, Poland, South Africa, South Korea, and Turkey.

Bill of Landing – A document establishing the terms of a contract between a shipper and a transportation company under which the freight is to be moved between specific points for a specified change. An ocean shipment requires two documents: an Inland Bill of Landing to cover the domestic movement of the cargo, and an Ocean Bill of Landing to cover the international carriage; and Air Way Bill is essentially a through Bill of Landing for an air cargo shipment, domestic and/or international.

Carnet – A Customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries for display, demonstration, or other purpose without paying import duties or posting bonds.

Cash Against Document (CAD) – Payment for goods in which a commission house of other intermediary transfers title documents to the buyer upon payment in cash.

Cash in Advance (CIA) – Payment for goods in which the full price is paid in full before the shipment is made. This type of payment is only made for very small shipments or when goods are made to order.

Cash With Order (CWO) – Payment for goods in which a buyer pays when ordering and in which the transaction is binding on both parties.

Cost, Insurance & Freight (CIF) – A pricing term indicating that the cost of goods, the insurance, and freight are included in the total price.

Countertrade – The sale of goods or services that are paid for in whole or part by the transfer for goods or services in foreign countries.

Credit Risk Insurance – Insurance that covers the risk of nonpayment for delivered goods.

Customs – The government authorities designated to collect duties levied by a country on imports and exports. The term also applies to the procedures involved in such a collection.

Customhouse Broker – An individual or company licensed by the government to enter and clear goods through customs.

Deferred Payment Credit – A type of letter of credit which provides a payment some time after presentation of the shipping documents by the exporter.

Devaluation – The official lowering of the value of one country’s currency in terms of one or more foreign countries.

Distributor – A foreign agent who sells for a supplier directly and maintains an inventory of the supplier’s products.

Dock Statement – A receipt issued by an ocean carrier to acknowledge the receipt of a shipment at the carrier’s dock or warehouse facilities.

Dumping – Exporting/importing merchandise into a country below the costs incurred in production and shipment.

Duty – A tax on imports imposed by the customs authority of a country. Duties are generally based on the value of the product being imported (ad valorem), weight, or quantity (specific duties), or a combination of value and other factors (compound duties). Also known as a tariff.

Export Broker – An individual or firm that brings buyers and sellers together for a fee, but does not take part in the actual sales transaction.

Export Management Company (EMC) – A private firm that transacts export business on behalf of its client companies in return for a commission, salary, or retainer.

FEU – A Forty-Foot Equivalent Unit, or 40-foot dry cargo container.

Foreign Trade Zone – Also known as Free Trade Zones, or FTZs, they are ports designated by the government of a country for the duty-free entry of non prohibited goods. Merchandising may be stored, displayed, assembled, packaged, or used for manufacture within the zone and re-exported without duties being levied.

Foul Bill of Landing – A receipt for goods issued by a carrier with the indication that the goods were damaged when received from the shipper.

Freight Along Side (FAS) – A pricing term indicating that the quoted price includes the cost of delivering the goods alongside a designated vessel.

G-7 (Group of Seven) – Seven industrial countries, the U.S., Japan, Germany, France, the United Kingdom, Italy and Canada, whose leaders have met at annual economic summits since 1975 to coordinate economic policies.

GATT – The Generalized Agreement on tariffs and Trade, a multilateral treaty designed to help reduce trade barriers between the signatory countries and to promote trade through tariff concessions.

Intermodal – The use of two ore more modes of transportation to complete a cargo move; truck/rail/ship, or truck/air, for examples.

Irrevocable Letters of Credit – A letter of credit in which the specified payment is guaranteed by the bank if all terms and conditions are met by the drawee. The opposite of a revocable letter of credit, which can be cancelled or altered by the drawee, or buyer, after it has been issued by the drawee’s bank.

Joint venture – An international business collaboration between foreign interests and private parties from the host country, in which two ore more parties establish a new business enterprises to which each contributes and in which ownership and control are shared.

Letter of Credit – A document issued by a bank per instruction from a buyer of goods, authorizing the seller to draw a specified amount of money under specified terms, usually the receipt by the bank of certain documents within a given time.

License – A general export license covers the exportation of goods not restricted under the terms of a validated export license. No formal application or written authorization is needed to ship exports under a general export license.

Markings – The letters, numbers, or other symbols placed on cargo shipments to facilitate identification and handling procedures.

Non-Vessel Operating Common Carrier – Also known as an NVOCC a company which consolidates small shipments from different sources consigned to the same destination into a single container for shipment overseas by either ocean or air carriers.

Open Account – A trade arrangement in which goods are shipped to a foreign buyer without the guarantee of payment.

Open Insurance Policy – A marine insurance policy that applies to all shipments made by an exporter over a period of time rather than to one shipment only.

Perils of the Sea – An insurance term used to designate heavy weather grounding, stranding, collision, water damage, or lightning.

Political Risk – In export financing, the risk of loss due to currency inconvertibility, foreign government action preventing the delivery of goods, revolution, war, expropriation, confiscation, etc.

Quota – The quality of goods of a specific type that may be imported without restriction or the imposition of additional duties.

Schedule B – Short form of Schedule B, Statistical Classification of Domestic and Foreign Commodities Exported from the United States. All commodities exported from the U.S. must be assigned a seven-digit Schedule B number.

Standard Industrial Classification – The standardized numerical SIC code used by the U.S. government to classify products and services.

Standard International Trade Classification – the SITC code system developed by the United Nations to classify commodities, used in international trade.

TEU – A Twenty-Food Equivalent Unit, or 20-foot dry-cargo container.

Transaction Statement – A document that clearly outlines the terms and conditions agreed upon between an importer and an exporter.

Trust Receipt – Release of merchandise by a bank to a buyer in which the bank retains title to the goods. The buyer is obligated to maintain the goods, or the proceeds from their sale, distinct from the remainder of his assets and to hold them ready for repossession by the bank.

World Trade Organization – Created by the Uruguay Round and successor to the GATT, this organization began operations on January 1, 1995, to oversee international trade