Export Import Terminology
As the world becomes more and more technologically advanced, international trade becomes more and more rewarding, both in terms of profit and personal satisfaction. 96 percent of exporters are non-corporates who take lion's share of EXIM market. There are EXIM service providers who employee a large number of employees to offer their services. There are CHAs, Logistic companies etc. there are also Export Management and Export Trade Companies (EMCs, ETCs)
EMC (Export Management Company)
An EMC handles export operations for a domestic company that wants to sell its product overseas but doesn't know how (and perhaps doesn't want to know how). The EMC does it all -- hiring dealers, invoicing customers’ distributors and representatives; handling advertising, marketing and promotions; overseeing marking and packaging; arranging shipping; and sometimes arranging financing or BNPL. In some cases, the EMC even takes title to the goods, in essence becoming its own distributor. EMCs usually specialize by product, foreign market or both, and--unless they've taken title--are paid by commission, salary or retainer plus commission.
ETC (Export Trade Company)
While an EMC has merchandise to sell and is using its energies to seek out buyers, an ETC attacks the other side of the trading coin. It identifies what foreign buyers want to spend their money on and then hunts down domestic sources willing to export. An ETC sometimes takes title to the goods and sometimes works on a commission basis.
IEM (Import Export merchant)
This international entrepreneur is a sort of free agent. He has no specific client base, and he doesn't specialize in any one industry or line of products. Instead, he purchases goods directly from a domestic or foreign manufacturer and then packs, ships and resells the goods on his own. This means, of course, that unlike the EMC, he assumes all the risks (as well as all the profits).
Anybody who is associated with Export-Import business, must understand the terminology of world trade. I have tried to put in alphabetical order some of the terms that are often used and need to be understood.
ACP: African, Caribbean and Pacific countries
Ad valorem Tariff: A tariff assessed as a percentage of the value of an import.
Adventure: It is a term of art in the marine insurance business. All insured cargo owners and every shipper on that vessel are part of the adventure.
Advising Bank: Advising Bank is usually in the country of the seller, whose primary function is to authenticate the letter of credit and advise it to the seller, purchase and collection of Export Bills.
African Developmental Bank (ABD): The ABD is one of four major regional developmental banks currently operating in the global economy; it is headquartered in Abidjan, Cote d'Ivoire.
Agent: Someone who represents business in domestic and overseas market. In corporate governance terminology, management is the agent of the principal stakeholders in a principal-agent relationship.
Air Waybill: A no-negotiable instrument of domestic and international air transport that functions as a bill of lading.
Andean Pact: A regional trade pact that includes Venezuela, Colombia, Ecuador, Peru, and Bolivia.
Anti-Dumping Laws: Laws that are enacted to prevent dumping-offering prices in the overseas market that is lower than that at which a product is sold in its home domestic market.
APEC: Asia-Pacific Economic Cooperation: APEC forum designed to promote economic growth, cooperation, and integration among member nations. The most prominent members are China, Japan, and Korea.
Asian Development Bank (ABD): One of four major regional development banks currently operating in the global economy; it is headquartered in Manila, Philippines.
Association of South East Asian Nations (ASEAN): A loose or low economic and geopolitical affiliation that includes Singapore, Brunei, Malaysia, Thailand, the Philippines, Indonesia, and Vietnam. Future members are likely to include Myanmar (Burma), Laos, and Cambodia.
ATC: Agreement on Textiles and Clothing.
Autarky: In models of international trade, a situation in which there is no cross-border trade.
Aval: A guarantee of the buyer's credit provided by the guarantor, unless the buyer is of unquestioned financial standing. The Aval is an endorsement note as opposed to a guarantee agreement.
Avalisation: Payment undertaking given by a bank in respect of a bill of exchange drawn.
AEZs: Refers to a scheme of Agricultural Export Zones.
Ad Valorem: According to value
Advance Against Documents: A loan made on the security of the documents covering the shipment.
Advising Bank: A bank, operating in the exporter's country that handles LETTERS OF CREDIT for a foreign bank by notifying the exporter that the credit has been opened in his or her favor.
Air Waybill: A BILL OF LADING that covers both domestic and international flights transporting goods to a specified destination.
Alongside: A phrase referring to the side of a ship. Goods to be delivered "alongside" are to be placed on the dock or barge within reach of the transport ship's tackle so that they can be loaded aboard the ship.
Alteration: A change in the boundaries of an activated zone or subzone.
Balance of Trade (BOT): The difference between a country’s total imports and exports.
Bank for International Settlements (BIS): An international organization which promotes international monetary and financial cooperation among nations.
Barter: Trade in which goods or merchandise is exchanged directly for others import or export without use of money.
Bill of Lading (B/L): A document that establishes the terms and conditions of a contract between a shipper and a shipping company under which freight is to be moved between specified points for a specified charge. The B/L is Negotiable or Non-Negotiable forms.
Blank Endorsement: The method whereby a bill of lading is made into a freely negotiable document of title.
Bonded Warehouse: A warehouse authorized by customs authorities for storage of goods on which payment of duties is deferred until the goods are removed.
Cash in Advance (CIA): Payment for goods in which the price is paid in full before the shipment is made. This type of payment is usually only made for very small shipments or when goods are made in order.
Certificate of Analysis/certificate of Inspection: Documents that may be asked for by the importer and/or the authorities of the importing country, as evidence of quality or conformity to specifications.
Certificate of Origin: Documents that may be asked for by the authorities of the importing country, as evidence of the country of manufacture of the goods.
Clean Bill of Lading: A receipt for goods issued by a carrier that indicates that the goods were received in apparently good order and without damage.
Clearance: The completion of customs entry requirements that results in the release of goods to the importer.
Cost and Freight(C&F): A pricing term that indicates that the cost of the goods and freight charges are included in the quoted price.
Countervailing Duties: Duties levied on an imported good that has been unfairly subsidized by a foreign government. Imposing duties on the good is meant to raise the product's price to a "fair market value".
CTD: WTO Committee on Trade and Development
Currency (Foreign Exchange) Risk: The risk of unexpected changes in foreign currency exchange rates.
Customhouse Broker: A person or firm obtains the license from the treasury department of its Country when required, and help clients (importers) to enter and declare goods through customs.
Customs: The authorities designated to collect duties levied by a country on imports and exports.
Carnet: A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries without paying duties or posting bonds.
Certificate of Inspection: A document certifying that merchandise was in good condition immediately prior to its shipment.
Cost And Freight (C & F): A pricing term indicating that the cost of the goods and freight charges are included in the quoted price.
Charter Party: Written contract between the owner of a vessel and a "chartered" who rents use of the vessel or a part of its freight space.
Cost, Insurance, Freight: A pricing term indicating that the cost of the goods, insurance, and freight are included in the quoted price.
Confirmation of Letter of Credit: A letter of credit, issued by a foreign bank, whose validity has been confirmed by a Nationalized Indian bank.
Credit Risk Insurance: Insurance designed to cover risks of nonpayment for delivered goods.
Customs Territory: Territory of the India in which the general tariff laws of the India apply.
Custom House Agent (CHA): An individual or firm licensed to enter and clear goods through Customs.
Deferred Payment Credit: A type of LC which provides payment after presentation of the shipping documents by the exporter.
Direct Exporting: Marketer takes direct responsibility for its products abroad by selling them directly to foreign customers or through local representatives in foreign markets.
Dock Receipt/statement: A receipt issued by an ocean carrier to acknowledge receipt of a shipment at the carrier's dock or warehouse.
DSB/P/U: Dispute Settlement Body/Panel/Understanding
Duty: A tax imposed on imports by the customs authority of a country.
Dumping: Economic Dumping means selling of goods or merchandise in another country at a price below the price at which the same merchandise is sold in the home market.
DGFT: Directorate General of Foreign Trade (India).
Deemed Exports: Refers to those transactions in which the goods supplied do not leave the country and the payment for the goods is received by the supplier in India.
Embargo: Economic sanction against a country that totally disallows the imports of a specific product or all products from a specific country.
Euro: The single currency of the European Economic and Monetary Union (EMU) introduced in January 1999. EMU members are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain.
Exim Bank: Export-Import Bank of the India. Provides guarantees of working capital loans for Indian exporters, guarantees the repayment of loans or makes loans to foreign purchasers of Indian goods and services.
Expiry Date: The date when a letter of credit is no longer valid
Export: Any resource, intermediate good, or final good or service that producers in one country sell to buyers in another country.
Export Import Terminology: A foreign or domestic company that acts as a sales agent and distributor for domestic exporters in international markets.
Export Broker: An individual or firm that helps to locate and introduce buyers and seller in international business for a commission but does not take part in actual sales transaction.
Export 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.
Export Subsidies: Any form of government payment that helps an exporter or manufacturing concern to lower its export costs.
Export Trading Company (ETC): A company that facilitates the export of goods and services. An ETC can either act as the export department for producers or take title to the product and export for its own account.
Expropriation: A specific type of political risk in which a government seizes foreign assets.
Exim Policy (India): Refers to Export and Import (Exim) Policy. Exim Policy has got incorporated into the comprehensive Foreign Trade Policy, which was announced by the Commerce & Industry Minister on 31st August, 2004.
EPZs/EOUs: EPZs means Export Processing Zones which are special enclaves, separated from the Domestic Tariff Area (DTA), to provide an internationally competitive duty-free environment for export production.
EOU means Export Oriented Units.
E-Commerce: Refers to electronic commerce. In the context of Foreign Trade Policy, e-commerce relates to electronic filing and processing of applications etc.
Financial Price Risk: The risk of unexpected changes in a financial price, including currency (foreign exchange) risk, interest rate risk, and commodity price risk.
Force Majeure: The title of a standard clause in marine contracts exempting the parties for non-fulfillment of their obligations as a result of conditions beyond their control, such as Acts of God, war.
Foreign Direct investment (FDI): The act of building productive capacity directly in a foreign country.
Foreign Trade Zone: A physical area in which the government allows firms to delay or avoid paying tariffs on imports.
Free Port: An area such as a port city into which merchandise may legally be moved without payment of duties.
Free Trade Zone: An area designated by the government to which goods may be imported for processing and subsequent export on duty-free basis. Merchandise may be stored, used or manufactured in the zone and re-exported without duties being paid.
Freight Forwarder: An independent business that handles export shipment on behalf of the shipper without vested interest in the products. A freight forwarder is a good source of information and assistance on export regulations and documentation.
FTWZ: Free Trade and Warehousing Zone, a new scheme announced in the Foreign Trade Policy 2004-2009.
FoB: Fob means Free on Board - i.e., when an exporter delivers goods "free on board", he pays all charges involved in getting them actually onto the ship.
Free Trade Zone: A port designated by the government of a country for duty-free entry of any non-prohibited goods. Merchandise may be stored, displayed, or used for manufacturing, etc., within the zone and re-exported without duties being paid.
Foul Bill of Lading: A receipt of goods issued by a carrier with an indication that the goods were damaged when received.
Free Port: An area such as a port city into which merchandise may be legally moved without payment of duties.
G-7 countries: A formal organization of seven highly industrialized democracies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
G-8 countries: The G-7 countries and Russia.
Global Economy: The international network of individuals, businesses, governments, and multilateral organizations which collectively make production and consumption decisions.
Gradualism: A steady and calculated approach to transforming an economy from communism to capitalism.
Gross Domestic Product (GDP): A measure of the market value of goods and services produced by a nation. Unlike Gross National Product, GDP excludes profits made by domestic firms overseas, as well as the share of reinvested earning in domestic firms' foreign-based operations.
General Agreement on Tariffs and Trade (GATT): A multilateral treaty intended to help reduce trade barriers between the signatory countries and to promote trade through tariff concessions.
Gross Weight: The full weight of a shipment, including goods and packaging.
Harmonized Tariff Schedule (HTS): A method of classification used by many countries to determine tariffs on imports.
Import: Any resource, intermediate good, or final good or service that buyers in one country purchase from sellers in another country.
Import Licenses: Licenses required by some countries to bring in a foreign-made good. In many cases, import licenses are also used by the issuing country to control the quantity of imported items.
Indirect Exporting: Export products to foreign markets by using an intermediary, usually export trading company based in the exporter’s country.
Intermodal: The use of two or more modes of transportation to complete a cargo move; truck/rail/ship, or truck/air, for example.
International Chamber of Commerce: International non-governmental body concerned with promotion of trade and harmonization of trading practice. Responsible for drafting and publishing.
ISO-9000: Refers to international standards, laid down by the International Standards Organization.
Irrevocable Letter 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.
Landed Cost: The quoted or invoiced cost of a commodity, plus any inbound transportation charges.
Letter of Credit (L/C): A letter issued by an importer’s bank guaranteeing payment upon presentation of specified trade documents (invoice, bill of lading, inspection and insurance certificates, etc.).
Most Favored Nation (MFN): A status granted to one country by another; the granting country then accords the recipient's imports and exports the most favorable treatment that it accords any country.
Marine Insurance: Insurance that compensates the owners of goods transported overseas in the event of loss that cannot be legally recovered from the carrier.
Marking: Letters, numbers, and other symbols on cargo packages to facilitate identification.
Merchandise, Foreign: Imported Merchandise which has not been properly released from Customs custody into the Customs territory of the India.
NFE: Refers to Net Foreign Exchange. Net Foreign Exchange earning is calculated as a percentage of exports (NFEP).
Oligopoly: A market dominated by so few sellers that action by any of them will impact both the price of the good and the competitors.
Ocean Bill of Lading: A bill of lading indicating that the exporter consigns a shipment to an int'l carrier for transportation to a specified foreign market.
On Board Bill of Lading: A bill of lading in which a carrier certifies that goods have been placed on board a certain vessel.
Order Bill of Lading: A negotiable bill of lading made out to the order of the shipper.
Packing List: Document listing the contents of a consignment of goods. May be called for on a letter of credit.
Political Risk: The risk that a sovereign host government will unexpectedly change the rules of the game under which businesses operate. Political risk includes both macro and micro risks.
Proforma 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.
Product Cycle Theory: Product cycle theory views the products of the successful firm as evolving through four stages: (1) infancy, (2) growth, (3) maturity, and (4) decline.
Product Life Cycle (PLC): The complete life of a product, from early planning through sales build-up, maximum sales, declining sales, and withdrawal of the product. Product life cycle lengths and types can vary depending on the type of product, the frequency of replacement.
Phytosanitary Inspection Certificate: A certificate, issued by the Indian Government Department of Agriculture to satisfy import regulations for foreign countries, indicating that an India shipment has been inspected and is free from harmful pests and plant diseases.
Revocable Letter of Credit: A letter of credit that can be canceled or altered by the drawee (buyer) after it has been issued by the drawee's bank.
Shipper: Usually the supplier or owner of commodities shipped.
Subsidy: Monetary assistance granted by the government to an individual or other entity in support of an activity that is regarded as being in the public interest.
SEPC: An exclusive Services Export Promotion Council announced in the Foreign Trade Policy to map opportunities for key services in key markets.
Ship's Manifest: An instrument in writing, signed by the captain of a ship that lists the individual shipments constituting the ship's cargo.
Straight Bill of Lading: A nonnegotiable bill of lading in which the goods are consigned directly to a named consignee.
Trade Deficit: A trade deficit occurs when the value of a country's exports is less than the value of its imports.
Trade Surplus: A trade surplus occurs when the value of a country's exports is greater than the value of its imports.
Tare Weight: The weight of a container and packing materials without the weight of the goods it contains.
Through Bill of Lading: A single bill of lading covering both the domestic and international carriage of an export shipment.
Voluntary Export Restraint (VER): One country promises another country to limit its imports; this is often done when the promising country fears increased tariffs or quotas if it does not self-regulate.
Validated Export License: A required document issued by the Indian Government authorizing the export of specific commodities.
Warehouse Receipt: A receipt issued by a warehouse listing the goods received.
Warehouse-to-Warehouse: An insurance policy that covers goods over the entire journey from the seller's to the buyer's premises.
Weight Note: Document issued by either the exporter or a third party declaring the weight of goods in a consignment.
Wharf age Charge: A charge assessed by a pier or dock owner for handling incoming or outgoing cargo.
World Trade Organization (WTO): The WTO is a multilateral organization that promotes free and fair trade among the nations of the world. It was created in 1994 by 121 nations at the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The WTO is responsible for implementation.
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Syed M Faredie