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194 Cards in this Set

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Clean Bill of Lading

Goods have been received in good condition

Wet Bill of Lading

Signed, but shipper has concerns about product, so he makes annotations and then signs. (Water, dirty, poorly packaged, rusty, leaking, etc.)

Free-Trade Agreement

Agreement between an importer and an exporter where you have free trade inspection at the border. Example: Canada

EWX: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Ex-Works


Scope: Any Good


Modality: All modes of transportation


Syntax: EXW [Address in City of Departure where goods are made].


Exporter: Packages the goods for the international voyage and provides the importer with the documents necessary to clear Customs in the importing country.


Importer: Does everything else


Transfer Point: When the exporter makes the goods available to the importer.

FCA: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Free Carrier


Scope: Any Good


Modality: All modes of transportation


Syntax: FCA [Address in the City of Departure where goods are handed over to the carrier]


Exporter: packages the good for international voyage, provides the documents necessary to clear Customs, and clears the goods for export.


Importer: Everything else


Transfer Point: When the exporter delivers the goods to the carrier.

CPT: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Carriage Paid To


Scope: Any Good


Modality: All modes


Syntax: CPT [Address in the City of Destination]


Exporter: packages the good for the international voyage, provides the documents necessary to clear Customs, clears the goods for export, and arranges and pays to transport the goods to the city of destination.


Importer: Everything Else


Transfer Point: When goods are delivered to the first carrier in the city of departure.

CIP: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Carriage & Insurance Paid To


Scope: All Goods


Modality: All Modes


Syntax: CIP [Address in the City of Destination]


Exporter: packages the goods for the international voyage, provides the documents necessary to clear Customs, clears the goods for export, arranges and pays to transport the goods to the city of destination, pays for the international insurance (110% of value).


Importer: Everything else


Transfer Point: When the goods are delivered to the first carrier in the city of departure.

DAT: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Delivered At Terminal


Scope: All Goods


Modality: All Modes


Syntax: DAT [Address of Terminal in the Port of Destination or City of Destination]


Exporter: provides the documents necessary to clear Customs, clears the goods for export, arranges and pays to transport the goods to the terminal of destination and unload them.


Importer: Everything Else


Transfer Point: when the goods are delivered to the terminal of destination and unloaded.

DAP: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Delivered At Place


Scope: All Goods


Modality: All Modes


Syntax: DAP [ Address of Delivery Point in the City of Destination]


Exporter: provides the documents necessary to clear Customs, clears the goods for export, arranges and pays to transport the goods to the point of destination, but does not pay for unloading.


Importer: Everything else


Transfer Point: When the goods are delivered to the point of destination, still loaded on the truck.

DDP: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Delivered Duty Paid


Scope: All Goods


Modality: All Modes


Syntax: DDP [ Address in the City of Delivery in the importing country]


Exporter: arranges transportation and pays for transportation from the country of export to the city of delivery.


Importer: take delivery of the goods in the importing country.


Transfer Point:When the goods are delivered to the city in the importing country.

FAS: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Free Alongside Ship


Scope: All Goods


Modality: Ocean Only


Syntax: [Address in the Port of Departure]


Exporter: packages the good for the international voyage, provides the documents necessary to clear Customs, clears the goods for export, and delivers the goods to the port of departure.


Importer: Everything Else


Transfer Point: When the exporter delivers the good to the carrier

FOB: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Free on Board


Scope: All Goods


Modality: Ocean Only


Syntax: FOB [Port of Departure]


Exporter: packages the goods for the international voyage, provides the documents necessary to clear Customs, clears the goods for export, delivers the goods to the port of departure and pays to have them loaded on board.


Importer: Everything Else


Transfer Point: When the goods are "on board" the ship.

CFR: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Cost and Freight


Scope: All Goods


Modality: Ocean Only


Syntax: CFR[Port of Destination]


Exporter: packages the goods for the international voyage, provides the documents necessary to clear Customs, clears the goods for export, and delivers the goods to the port of destination.


Importer: Everything else


Transfer Point: When the goods are on board the ship in the port of departure.

CIF: Scope, Modality, Syntax, Exporter, Importer, and Transfer Point.

Cost, Insurance, & Freight


Scope: All Goods


Modality: Ocean Only


Syntax: CIF [Port of Destination]


Exporter: packages the goods for the international voyage, provides the documents necessary to clear Customs, clears the goods for export, delivers the goods to the port of destination, pays for international insurance (110% of value)


Importer: Everything else


Transfer Point: When the goods on board the ship are in the port of departure.

Factors of choosing the correct Incoterm Rules

- Type of product being sold (weight, volume, perishability, value, sensitivity to temperature changes, and so on.)


- Method of Shipment


- Ability and willingness of either the exporter and importer to perform the task involved.


- The amount of trust placed by either of the parties toward the other.

Every Incoterms' rule has:

Scope, Modality, and Syntax.

Improper use of Correct Incoterm Rules:

- Incoterms are sometimes specific to certain modes of transportation & types of cargo, and cannot be used for others.


- FOB being used within air shipment, FOB can only be used with Ocean Shipments.


- Correct air incoterm rule: FCA to clearly outline importer/ exporter responsibilities.

Incoterms & Marketing

Strategic advantage gained when exporter is willing to facilitate sale of its products by assisting novice importer in handling of shipment.

Characteristics of International Payments

Credit information, lack of personal contact, and Collections are difficult and expensive.

Characteristics of International Payment Issues

1. No easy legal recourse


2. Higher litigation cost

Risk in International Trade

1. Risk of non-payment


2. Exposure: The consequence of a loss to a particular firm.

Country Risk

Different Issues; primarily political and economical. - possibility of not being paid because customers country does not have the foreign currency to pay the debt, or customer is not allowed to pay.

Commercial Risk

An individual firm may not be able (or willing) to pay for a number of reasons. - Difficult to find reliable credit information on international firms.

Terms of Payment: Traditional Methods

Cash in Advance, Open Account, Letter of Credit, and Documentary Collection.

Terms of Payment: Alternative Methods

Procurement Cards, TradeCard, and Bank Guarantees.

Cash in Advance

Exporter request that costumer provides payment in advance (before shipment of goods can take place)

Open Account

Exporter sends an invoice to the customer and expects the customer to pay it promptly or an agreed upon date.

Letter of Credit

Document in which the importer's bank promises to pay the exporter if the importer does not pay.

Documentary Collection

Exporter ask a bank located in the importing country to "safe guard" it's interest by not releasing the documents until the importer satisfies certain requirements.

Drafts

A promissory note (also called a bill of exchange) with which the importer promises to pay the exporter within a defined timeframe.

Sight Draft

Once importer accepts draft (by signing), the importer has to pay the exporter.

Time Draft

Once importer accepts draft (by signing), the importer has to pay the exporter within a certain number of days.



Date Draft

Once importer accepts draft (by signing), the importer has to pay the exporter in a certain number of days after the date of shipment for goods.

Acceptance

Exporter can specify in the letter of instruction whether it wants trade acceptance or bankers acceptance (from importer themselves or the importer's bank to accept "on behalf" of the importer.)

Forfaighting/ Factoring

an exporter can sell the draft to a forfaighting firm who buys them without recourse. - or- They can sell to international receivables to a factoring house who can buy them with or without recourse.

Procurement Cards

conceptually similar to consumers credit cards and are managed by the big credit card networks. Cards have a certain limit and list of authorized suppliers.

Trade Card

a proprietary electronic system that combines payment and document handling and makes no payment until all documents are received and in order.

Bank Guarantees

used in international trade to typically secure the performance of the seller (exporter). (U.S. prohibits bank guarantees)

Stand by Letters (US primary)

Covers more than one shipment and allows for multiple bills of landing; issued on different dates. - secures the performance of the exporter.

Terms of Trade (Incoterms)

Incoterms determine the cost the exporter should pay, the cost the importer should pay, and the point at which the responsibility for the cargo shifts from one to the other.

Terms of Sale

The terms of sale determine the method of payment and the intermediaries involved in the payment and the handling of the documents from the importer to the exporter.

Currency

The currency in which the transaction is undertaken: it can be the exporter's country's currency, the importer's country's currency, or a third country's currency.

Risk of Currency Fluctuation

The risk result could be positive or negative outcomes, depending on which way the exchange rate fluctuates.



Risk of Convertibility of the currency

A payment received in a foreign currency cannot be converted to the exporter's currency.

Currency Choices

The exporter's currency, the importer's currency, or the third country's currency.



The Euro

Originally created as an artificial currency, but now the goal is to eventually transform the euro into a challenger to the U.S. dollar as the preferred third-country currency.

Direct Exchange Rate Quotes

The value of the foreign currency expressed in units of the domestic currency.

Indirect Exchange Rate Quotes

The value of the domestic currency expressed in units of foreign currency.

Exchange Rate Quotes Equation

Direct Quote= 1/Indirect Quote

Spot Exchange Rate

the exchange rate for a foreign currency for immediate delivery.

Forward Exchange Rate

the exchange rate for a foreign currency to be delivered by any number of days in the future.

Forward Exchange Rate

the exchange rate for a foreign currency to be delivered any number number of days in the future.

Currency Futures

Currencies are also traded as commodities, in the futures' markets.

Currency Options

a method used to protect against fluctuations in the value of a currency in the future.

Call Options

An option with which a firm agrees to buy a particular currency at a particular price on a given date.



Put Options

an option with which a firm agrees to sell a particular currency at a particular price on a given date.



Floating Currency

A currency whose value is determined by market forces. The exchange rate of a floating currency varies frequently.

Pegged Currency

A currency whose value is determined by a fixed exchange rate with another, or more widely traded currency.



Artificial Currency

A currency that is not in circulation.

Currency bloc

A group of currencies who's values fluctuate in parallel fashion. - currencies in group have a fixed exchange rate, but their exchange rate with currencies outside of the group float.

Dollarization

A phenomenon where other countries decide to adopt the U.S. dollar as their circulating currencies.

Purchasing Power Parity

an economic theory that holds that exchange rates should reflect the price differences of each and every product between countries. - equalize price differences

Fisher Effect

An economic theory that the interest rates that businesses and individuals pay to borrow money should be uniform throughout the world and that the nominal interest rates that they actually pay in a given country are composed of this common ("real") interest rate and the inflation of that country.



International Fisher Effect

An economic theory that holds that the spot exchange rates between two countries currencies should change in function of the differences between these two countries nominal interest rates.

Interest Rate Parity

an economic theory that holds that the forward exchange rate between two currencies should reflect the differences in the interest rates in those countries.

Forward Rates

an economic theory that holds that forward exchange rates for currencies are good predictors of the future spot exchange rates of that currency.

Exchange Rate Forecasting: Technical Forecasting

A method of forecasting exchange rates based upon time-series analysis. Future movements in the value of a currency are "mathematically" linked to it's past movements

Fundamental Forecasting

A mathematical model that uses the exchange rate of a specific currency as the dependent variable and the expected inflation rates, nominal interest rates, forward interest rates, and real interest rates as the independent variables.

Market-based Forecasting

a method of forecasting based on the premise that "the market knows best" and that, therefore, the forward exchange rate of a given currency is the best unbiased predictor of the future spot rate of a particular currency.

Hedging

Represents eeveral techniques designed to reduce the uncertainty of exchange rate fluctuations

Risk Retention Strategy

risk management strategy in which a company elects to retain a certain type of risk and decides no to insure that risk. - Types of companies that typically chose this option are very large traders, exporters and importers that have little exposure, Firms that do not evaluate the international currency transaction risks clearly.

Hedging Strategies

Determine what it's best decision should be on an invoice by invoice basis, depending on the currency at stake, the amount of the invoice, and of the currency's exchange rate. -or- Set a policy that the firm follows for all of its foreign currency receivables and payables.

Forward Market Hedging

Utilizes the forward market for currencies to manage a firm’s transaction exposure.

Money Market Hedging

Utilizes the banking system in the foreign country to manage a firm’s transaction exposure.

Option Market Hedging

Utilizes the options market for currencies to manage a firm’s transaction exposure.

Central National Banks

Every country in the world has a Central Bank, or some institution that acts as one. They are responsible for the creation and control of the monetary supply, and they function as a check clearinghouse.

International Monetary Fund (IMF)

The IMF was created to oversee the fixed exchange rate system created by the Bretton-Woods Conference. Today it helps countries manage their balance of payments and lends them money when they experience difficulties with their balance of payments.

Bank for International Settlements

The BIS was created after World War I to manage Germany's war reparation payments. Since then, it has evolved into a major international institution, providing support to Central Banks, and acting as a clearinghouse between central banks.

The World Bank

Created to help countries rebuild their infrastructure after World War II, it has slowly changed to become the bank in charge of financing large infrastructure projects. The government borrowing the funds must be a member of the IMF.

Exporter-Import Bank (Ex-Im Bank)

A United States federal agency whose purpose is to provide assistance to U.S. exporters in the form of loans, loan guarantees, and political risk insurance policies.

SWIFT

It allows the communication of Letters of Credit and miscellaneous fund transfers.

Peril

The event that brings about a loss.


Hazard

A situation that increases the probability of a peril and therefore of a loss.

Battatry

An act of disobedience or willful misconduct by the captain or the crew of a ship that causes damage to the ship or the cargo.

Jettison

The act of throwing overboard part of the cargo of a ship (or the fuel of an airplane) in an attempt to lighten the ship

Cargo Movements

Cargo can be damaged by careless handling while being loaded and unloaded.

Ship Movement

A shipment by ocean is subjected to numerous cargo movements. Goods need to be packaged with this in mind, so that they will not be harmed by these movement while in transit.

Wave Action

In stormy seas, waves pound the ships and can damage the containers on board.

Water Damage

As ships encounter stormy seas, waves wash overboard and can slowly infiltrate the containers or cargo on board.

Overboard Losses

It is not uncommon for ships to lose containers overboard. Containers can be improperly tied down or their cargo can shift causing them to fall overboard.

Fire

Because dangerous cargo can only travel internationally by ocean, items like fireworks, explosives, ammunition, and chemicals of all sorts are stowed on decks of ships. If these items happen to be poorly stowed, or containers are damaged in a storm, they can leak and mix with one another, resulting in fires or explosions. The ability of ships to fight fires is limited, resulting in damage to other cargoes.

Stranding

Mechanical breakdown, stormy weather, and sometimes incompetent crews can cause a ship to become grounded (or stranded).

Sinking

Sinking is always a risk, more so for older bulk ships. But even the most modern ships can fall prey to a rogue wave and be lost or seriously damaged at sea.

Piracy

The number of piracy attacks on ships is substantial: the ship or cargo is stolen, or the ship held for ransom. In this photo, the ransom is being dropped onto the ship’s deck.

Collision

It is sometimes not possible to avoid collisions, as ships are far from maneuverable. Cargo can be damaged, or delayed.

Theft

Pilferage, Organized theft, and System's theft.

General Average

The concept of general average is unique to marine insurance. - If there is a major loss during a voyage, the costs are shared by the owner of the ship and all of the cargo owners, including the owners of the goods that were not damaged.

Risk in Air Shipment

Change in air temperature and changes in air pressure.

Risk Management (3 options)

Retain the risk, Transfer the risk to an insurance company, or adopt a mixed approach.

Marine Cargo Open Policy

A firm insures every international shipment it makes for a fixed period of time. Such a policy is formally known as an Open Ocean Cargo Policy and it automatically covers all the shipments of the insured.

Marine Special Cargo Policy

An insurance contract valid for one specific shipment.

Hull Insurance

Contracted by the ship owner to cover the risk of damage to the ship when it is involved in a peril, such as grounding or fire. It also covers the owner in case of a complete loss, such as a sinking.

Protection & Indemnity

A protection against liability to other parties when a ship sinks or is damaged.

Excluded Coverage

Regardless of the coverage purchased, insurance policies will not cover: Improper packaging, Inherent Vice, Ordinary leakage, Unseaworthy vessel, nuclear war.

General Average Clause

The insurer will cover the General Average responsibilities of a shipper toward the ship owner and the other cargo owners.

Constructive Total Coverage

The insurer will reimburse the shipper for goods that have been abandoned after a stranding or a sinking, as long as the costs of recovering the goods and making them marketable is greater than their value. If it is possible to recover the goods at a cost lower than their value, then the insurance company pays for these costs.

Sue and Labor

The shipper will act in the best interest of the insurance company when a loss occurs. The principle is that, after a loss, the insured should protect the cargo from further damage, as it would if it had not been insured, in order to keep the loss to a minimum. The insurer will pay for the costs of protecting the cargo.

Inchmaree Clause

A clause which ensures goods are covered in the event of a burst boiler, broken propeller shaft, as well as errors in navigation and seamanship.

Strikes Coverage

All standard policies include a clause, called the “Strikes, Riots, and Civil Commotions” (S.R. & C.C.) clause in the American policies and the “Strikes Exclusion" clause in the Institute Marine Cargo policies, which excludes coverage of damage to cargo due to strikes and other civil disturbances.

War & Seizure Coverage

A clause that excludes coverage of damage to cargo due to war and warlike situations, such as the seizure of a ship by a foreign government or the accidental collision of a ship with a mine.

Warehouse-to-Warehouse Coverage

An addition to a policy which covers the goods from the time they leave the exporter's warehouse until the time they arrive at the importer's warehouse, or fifteen days after they arrive in the port of destination, whichever occurs first.

Difference in Conditions

An addition to a standard policy, “Difference in Conditions” coverage is designed to fill the gap between what an importer would like to have covered under its open cargo policy and what is covered under its supplier's CIF or CIP coverage.

Lloyd's of London

Oldest insurance market in the history of shipping.

Airfreight Policy

All Risk Policies with the following exclusions: Improper packing, Inherent vice, Ordinary leakage, Un-airworthy aircraft, and Nuclear war.

Political Risk

The risk presented by the country in which the transaction takes place. For example, the government raises tariffs, freezes accounts of foreign currencies, or the country does something to cause other countries to institute an embargo against them.

Credit Insurance

Handles commercial and political credit risk by: Retain the risk, Transfer the risk to an insurance company, Follow a mixed strategy of retaining some of the risks and transferring others.

Export-Import Bank (Ex-Im Bank)

Its mission is to help create jobs in the United States by supporting export sales. It offers political credit insurance and loan guarantees.

The Overseas Private Investment Corporation (OPIC)

Its purpose is to encouraging private investments in developing countries. OPIC offers several programs of loans, political insurance, and private equity investment funds.

The Small Business Administration (SBA)

SBA has programs designed to help exporters finance sales abroad: working capital loans and long-term loans for capital investments.

Foreign Credit Insurance Association (FCIA)

FCIA offers products that combine the Ex-Im Bank's political insurance coverage and commercial credit insurance products.

LLoyd's and Political Risk

Certain Lloyd's syndicates have added coverage of political risks to their underwriting portfolio and present the advantage of offering insurance for countries for which the United States' government will not provide any, such as Afghanistan, Albania, or Belarus.

Commercial Invoices

1. A detailed description of the goods, with HS number


2. The Incoterm of the transaction


3. Details on the costs of domestic transportation, loading, insurance, etc. so as to help determine the dutiable value of the goods


4.Details on the weight and dimensions of the goods


5. Details on the itinerary of the shipment


6. The terms of payment

Pro Forma Invoice

A quote (preview of the commercial invoice) provided by the exporter to the importer for the purpose of obtaining a letter of credit.

Consular Invoice

A commercial invoice that is printed on stationery provided by the consulate of the country in which the good will be imported.

Specialized Commercial Invoice

Some countries require that invoices be printed on special forms.

Export License

An express authorization by a given country’s government to export a specific product before it is shipped.

Commerce Control List: U.S. Export Controls

All products of concern to the United States are given an Export Control Classification Number (ECCN).

The Person or Entity: U.S. Export Controls

1. The “Entity List”


2. The “Unverified List”


3. The “Specially Designated Nationals and Blocked Persons List


4. ”The “Denied Persons List”

The Country: U.S. Export Controls

The U.S. government considers some countries “friendly” and others “unfriendly.”For other countries, the U.S. has an embargo, and very few products can be exported there: Currently the U.S. has an embargo on Cuba, Iran, Libya, North Korea, the Sudan, and Syria.

Destination Control Statement

A Destination Control Statement is required for products that have obtained a Validated Export License.

Shipper's Export Declaration

A data-collection document. It is used to tabulate what products are exported from the United States, and to which countries they are exported.Most other countries have a similar data-gathering export requirement.

End-Use Certificates

A document required by some exporting countries in the case of sensitive exports, such as ammunition, to ensure that the product is used for acceptable (to the exporting country’s government) purposes.

Export Quota's

Some countries require exporters to pay an export tax on certain commodities. Export quotas are a limit, set by the exporting country’s government, on the quantity of a specific commodity that can be exported in a given year.

Certificate of Origin

A document provided by the exporter’s chamber of commerce that attests that the goods originated from the country in which the exporter is located.

Certificate of Manufacture

A document provided by the exporter’s chamber of commerce that attests that the goods were manufactured in the country in which the exporter is located. The NAFTA Certificate of Origin is actually a Certificate of Manufacture.

Certificate of Inspection

A document provided by an independent inspection company that attests that the goods conform to the description contained in the invoice provided by the exporter.

Phyto-Sanitary Certificate

A Phyto-Sanitary Certificate attests that the goods conform to the agricultural standards of the importing country.

Certificate of Analysis

A Certificate of Analysis attests that the goods conform to the chemical description and purity levels contained in the invoice provided by the exporter.

Certificate of Insurance

A Certificate of Insurance is a document provided by the exporter’s insurance company that attests that the goods are insured during their international voyage.

Certificate of Certification

A document provided by an independent inspection company, or by the Agricultural Department of the exporting country’s government, that attests that the goods conform to the agricultural standards of the importing country.

Certificate of Free Sale

A document that attests that the product exported conforms to all of the regulations in place in the exporting country and that it can be sold freely in the exporting country. Some importers use this certificate as a guarantee of quality.

Consular Invoice

A commercial invoice that is printed on stationery provided by the consulate of the country in which the good will be imported.

Import License

The express authorization, granted by the government of the importing country, to import a particular product in a given country.

Import Forms

All countries have specific administrative forms that have to be submitted by the importer in order to clear Customs.

Bill of Lading

A generic term used to describe a document that fulfills three functions in international transport:


1.Contract between Owner and the shipper. The carrier agrees to transport the goods from A to B for a given price.


2. Receipt for goods: The goods were received in good condition.


3. Certificate of Title: Whichever party has the original bill of lading is the owner of the goods.



Contract of Carriage

The shipper (the firm that enters the contact with the carrier)is either the exporter or the importer, depending on the Incoterm used

Consignee

The shipper identifies the firm that will take delivery of the goods from the carrier.


1. If the box is left blank or the words “to order” are used, then the bill of lading is said to be negotiable, and the owner of the goods in the destination port is the entity with the original bill of lading. The goods can be sold while they are being transported.


2. If the name of the consignee is entered, then only that firm can pick up the goods from the carrier. Such a bill of lading is called a straight bill of lading.

Ocean Bill of Lading

A contract of carriage between an ocean shipping line and the shipper.It can be straight or negotiable.

Air Waybill

A contract of carriage between an airline and a shipper.It is always straight.

Uniform Bill of Lading

A bill of lading used in the transportation of goods on trucks and trains, either domestically or internationally.

Intermodal Bill of Lading

A bill of lading used in the intermodal transportation, domestic or international, of goods.

Charter Parties

A type of contract of carriage between a carrier and a shipper, in which the shipper uses all or most of the carrying capacity of the ship to transport commodities.

Wet Lease

The aircraft provides the airplane, insurance, maintenance services, fuel, and a flight crew to the lessor, who has to cover all of the other variable costs, such as airport fees.

Dry Lease

An agreement between the owner (lessor) of an aircraft and the lessee in which the owner provides only the aircraft and no other services.

Aircraft, Crew, Maintenance, and Insurance (ACMI) lease

An agreement under which the owner of the aircraft provides the airplane, crew, maintenance, and insurance to the lessor, who has to cover all of the other variable costs, such as airport fees.

Damp Lease

An agreement between the owner of an aircraft and the lessee, under which the owner provides some services in addition to the aircraft itself.

Packing List

A document that lists out what a shipment contains, in great detail. A packing list always accompanies every shipment.

Manifest

A document, internal to the shipping company (the carrier), which lists all cargo onboard the transportation vehicle.

Shipper's Letter of Instruction

A document in which the shipper spells out how it wants the carrier to handle the goods while they are in transit.

Dangerous Goods

Shipments of dangerous goods are regulated by the International Maritime Organization’s International Maritime Dangerous Goods Code, the International Civil Aviation Transport Association’s Dangerous Goods Regulations, the International Civil Aviation Organization’s Technical Instructions for the Safe Transport of Dangerous Goods by Air or by local shipment codes.All require different documents.

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the electronic exchange of documents, from computer to computer.

Duty

The amount of tax paid on an imported good. Amount of duty paid is contingent on:


1. The type of goods (their classification)


2. The value of the goods (their valuation)


3. The country from which the goods originated (the rules of origin)

Tariff (Duty Rate)

the rate at which an import is taxed; the rate is dependent on the classification of the goods, as well as their country of origin.

Classification

For almost all countries, the classification of goods follows the Harmonized System (HS) of Classification.

Valuation

The amount billed by the exporter and shown on the invoice. However, there are some cases where the invoice amount is modified or superseded.



Comparative Method (Valuation)

The dutiable value of the goods is based upon the value of identical or similar goods imported in similar quantity to the same country.

Deductive Method (Valuation)

The value of the goods is determined from the price at which identical or similar goods are sold within 90 days of importation in the importing country, using “normal” markups in the distribution channel.

Computed or Reconstructed Value Method

The value of the goods is determined by computing the manufacturing costs of the goods, adding customary expenses for overhead, as well as a reasonable profit.

Method of Last Resort

Customs use well-trained and well-informed Customs officials to determine the value of the goods imported; no specific guidelines are given, other than that the valuation cannot be “arbitrary.”

Substantial Transform: Rules of Origin

The country of origin of a product is the country in which it acquired its most substantial transformation.

Change in HS Classification: Rules of Origin

The country of origin is the country in which the last change in the Harmonized System classification of the product occurred.

Tariff Schedult

Lists all the possible Harmonized System classification categories, as well as their associated tariff rates for the different types of countries.

Dumping

Some exporters sell the products they are exporting at a price that is considered “too low” by the importing country’s Customs office to gain market share in the importing country.

Punitive Duty (Tax)

The United States, unhappy about a decision by the European Union to give preferential treatment to bananas imported from certain countries, retaliated by placing a 100 percent duty on certain items coming from any of the European Union countries: cashmere, blue cheese, “handbags covered in plastic sheeting,” and so on.

Border Traffic Tax

Russia, in order to “make a more accurate tally of border flows of people, cargo, and means of transportation,” imposes a 1 percent tax on all goods crossing its borders. Russian travelers are taxed at 0.8 percent of their monthly income.

SafeGaurd Tax

Argentina, after being chastised by the WTO for having increased its duty rate on footwear, reduced them, and immediately re-imposed them through an emergency “safeguard tax” designed to protect its footwear industry against foreign competition.

Temporary Protection Tax

The United States imposed a 33 percent additional tariff on brooms from Mexico to allow U.S. manufacturers to increase their efficiency so that they could compete against imports. It repealed such tax two years later, noting that the industry had not taken advantage of this protection period to improve its efficiency.

Value-Added Tax (VAT)

A tax perceived by many countries that is very similar to a sales tax, but that is collected whenever that product’s value is increased.

Non-Tariff Barriers

Policies and actions that have the effect of reducing the number of items imported in a specific country.

Absolute Quotas

A limit, set by the importing country’s government, on the quantity of a specific commodity that can be imported in a given year.

Tariff-Rate Quota

The importing country places a two-tiered tariff rate on a specific product. Until a specific number of units has been imported, the tariff is low; once the quota is reached, the tariff goes up, sometimes many-fold.

National Standard

Sometimes countries enact “safety measures” designed to protect their populations from defective, dangerous, or unhealthy products.

Pre-Shipment Inspections

Performed by independent companies to determine that the goods shipped are the ones ordered by the importer, in the correct quantity, and sufficiently well packed for an international shipment.

Customs Clearing Process

Entry, Clarence, Liquidated Entry, and Protest.

Require Documentation (Customs's)

1. A form designated for entry (specific to the importing country)


2. A Certificate of Origin to ascertain the country of origin


3.A Commercial Invoice with enough information to determine value and classificationHowever, certain goods require much greater documentation.

Require markings (Customs)

All products must have the marking “Made in [name of country]” or “Product of [name of country].”

Merchangdise Visas

For products whose importation is limited by quotas, and particularly for textile products, a bilateral monitoring system has been implemented by the importing and exporting countries. These types of goods require a special visa to be allowed in the importing country.

Customs Brokers

An independent firm, representing the importer, and that has acquired the knowledge and experience required to make import entries efficiently and to deal with Customs effectively.

Customs Bonds

A bond is either a sum of money deposited with Customs, from which any unpaid duty can be withdrawn, or an insurance policy with a surety company that acts as a guarantor of the importer or the Customs broker, and which it would be required to pay if the duty were not paid on time.

Reasonable Care

A standard of behavior, set and enforced by U.S. Customs, that is expected of importers if they want their Customs entries to be cleared quickly and keep Customs inspections to a minimum.

Informed Compliance

The idea is that if an importer has been found compliant, the likelihood that one of its shipments is going to be inspected is minimal, therefore minimizing delays at entry and allowing the importer to organize its supply chain more predictably. It also lowers costs, as merchandise is cleared quickly.

Duty Drawbacks

A tax break granted by some countries, including the United States, to exporters who are using imported parts in the products they export.

Foreign Trade Zone

Specific locations of a country that have acquired a special Customs status.