Term
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Definition
| A quotation, subject to the buyer's approval |
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Term
| Checklist for Pro Forma Invoice |
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Definition
- Description of product
- Price
- Quantity
- Terms of sale
- Terms (methods) of payment
- Length of time prices are valid
- Length of time needed for shipping
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Term
| Pro Forma Invoice: Clarify the Details |
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Definition
- Final shipping date
- expiration date of letter of credit
- other deadlines, if any, that are important to the buyer
- what documents are needed
- special inspections or certifications involved
- specific packing or labeling requirements
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Term
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Definition
| internationally accepted terms defining the responsibilities of exporters and importers in the arrangement of shipments and the transfer of liability involved at the various stages of transaction |
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Term
| Incoterms does not cover: |
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Definition
| ownership or the transfer of title of goods |
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Term
| Incoterms for Sea and Inland Waterway Transport |
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Definition
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Term
| Incoterms for any mode(s) of transportation |
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Definition
EXW
FCA
CPT
CIP
DAT
DAP
DDP
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Term
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Definition
Ex-Works: Seller delivers (without loading) the goods at the disposal of buyer at seller's premises.
Held as preferable term for those new-to-export because it represents the minimum liability to the seller. |
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Term
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Definition
Free Carrier: Seller delivers the goods to the carrier and may be responsible for clearing the goods for export (filing the EEI).
More realistic than EXW because it includes loading at pick-up, which is commonly expected, and the sellers are more concerned about export violations. |
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Term
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Definition
| Carriage Paid To: Seller delivers goods to the carrier at an agreed place, shifting risk to the buyer, but seller must pay cost of carriage to the named place of destination |
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Term
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Definition
| Carriage and Insurance Paid to: seller delivers goods to the carrier at an agreed place, shifting risk to the buyer, but seller pays carriage and insurance to the named place of destination |
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Term
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Definition
| Delivered at Terminal: seller bears cost, risk and responsibility until goods are unloaded (delivered) at named quay, warehouse, yard or terminal at destination. Demurrage or dentention charges may apply to seller. Seller clears goods for export, not import. DAT replaces DEQ, DES |
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Term
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Definition
| Delivered at Place: Seller bears cost, risk and responsibility for goods until made available to buyer at named place of destination. Seller clears goods for export, not import. DAP replaces DAF,DDU |
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Term
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Definition
| Delivered Duty Paid: seller bears cost, risk and responsibility for cleared goods at named place of destination at buyers disposal. Buyer is responsible for unloading. Seller is responsible for import clearance, duties and taxes so buyer is not "importer of record" |
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Term
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Definition
| Free alongside Ship: risk passes to buyer, including payment of all transportation and insurance costs, once delivered alongside the ship (realistically at named port terminal) by the seller. The export clearance obligation rests with the seller. |
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Term
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Definition
| Free on Board: Risk passes to buyer, including payment of all transportation and insurance costs, once delivered on board the ship by the seller. A step further than FAS |
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Term
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Definition
| Cost and Freight: Seller delivers goods and risk passes to buyer when on board the vessel. Seller arranges and pays cost and freight to the named destination port. A step further than FOB |
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Term
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Definition
| Cost, Insurance and Freight: Risk passes to buyer when delivered on board the ship. Seller arranges and pays cost, freight and insurance to destination port. Adds insurance costs to CFR |
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Term
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Definition
| the buyer pays the exporter up-fron |
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Term
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Definition
| The exporter receives payment after the product is delivered to the buyer |
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Term
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Definition
| the exporter receives no payment until the product is sold |
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Term
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Definition
| The export transaction is completed through an exchange of documents which authorizes payment and transfer of title |
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Term
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Definition
| a written promise, usually by a bank, that it will pay a specified sum of money to a specified beneficiary when the conditions in the letter of credit are met. Adds the bank's name and credit to that of the exporter. |
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Term
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Definition
| Society for Worldwide Interbank Transfers: a proprietary electronic network owned by banks |
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Term
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Definition
| at the request of the importer, his/her bank establishes a commercial credit which guarantees payment to the exporter when certain conditions are met. the bank actually pays or agrees to pay when the exporters draft (demand for payment) is presented, usually with documents attached |
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Term
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Definition
| Cash on Delivery: not frequent except for air and truck shipment to Canada |
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Term
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Definition
| Cash in Advance: Advance payment is sometimes demanded by sellers |
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Term
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Definition
| For major projects, large capital equiment sales, and special exports. Both financing and insurance against credit and political risk are often available from government and/or private sources |
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Term
| Letters of Credit: Revocable/Irrevocable |
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Definition
| Distinction between them rests upon the ability of the establishing bank to revoke the letter of credit before the expire date |
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Term
| Letter of Credit: Confirmed/Unconfirmed |
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Definition
| confirmed L/C includes agreement by exporter's bank to pay when conditions are met |
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Term
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Definition
| Clean will pay against draft (demand for payment) with no title documents attached |
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Term
| L/C Transferable vs Non-transferable |
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Definition
| Transferable allows part of proceeds to be assigned by the beneficiary to a third party |
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Term
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Definition
| An irrevocable L/C issued in connection with something other than the movment of goods |
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Term
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Definition
| without recourse means that the bank that purchase drafts assumes full responsibility for payment, discharges the exporter of his/her obligation as guarantor even if the drawewe does not pay |
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Term
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Definition
| the drawer assumes full responbilitily of payment of the draft when the draft is discontinued or sold |
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Term
| Differences between L/Cs and Drafts |
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Definition
L/C: payment is guaranteed by the bank which issues it
Draft: final payment rests upon the ability of the drawee (buyer) to pay
L/Cs are much more secure and attractive from the seller's point of view |
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Term
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Definition
| Available through governmental insurance or private insures. May cover commercial risks as well as political and risk of non-convertibility of currency |
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Term
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Definition
| seller agrees to a reciprocal purchase obligation for all or part of the value of the sale (payments other than money). Appeals to buyers in countries with short of hard currency. |
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Term
| Countertrade: Clearing Arrangements |
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Definition
| This system occurs where two countries agree to exchange a number of products during a specified time period |
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Term
| countertrade: switch trading |
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Definition
| involving a switch trader who arranges for goods not desired by exporter to be sold elsewhere |
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Term
| buy back or compensation agreement |
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Definition
| seller takes part of goods produced by buyer in payment |
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Term
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Definition
| seller assist in or arranges marketing or provides some other benefit to buyer |
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Term
Risk of Non-Payment:
From most risky to no risk |
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Definition
- open account
- Consignment
- Documentary Collection
- Irrevocable Letter of Credit
- Confirmed, Irrevocable L/C
- Advance Payment
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Term
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Definition
| NLR- No License Required (most commodities- 96%) |
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Term
| Export License: Validated License |
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Definition
- Export Administration Regulations (EAR)
- Commodity Control List (CCL)
- Contry Chart
- Denied Persons List
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Term
| Validated License are required for: |
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Definition
- Weapons
- High-Tech products and software that can be used against the U.S. or its allies
- Goods in short supply in the U.S.
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Term
Export Administration Regulations govern the export and re-export of items:
Reasons are... |
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Definition
- National Security
- Non-proliferation (nukes)
- Foreign Policy
- Short supply
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Term
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Definition
- only persons authorized to act as agents for importers
- Power of Attorney
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Term
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Definition
the price actually paid or payable for the merchandise
used as the custom value of merchandise
Not Included: ocean,air,truck or rail freight, insurance fees |
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Term
| Quotas are established by _________ but administered by ___________ |
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Definition
- Legislation
- CBP (Customs Border Patrol)
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Term
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Definition
Absolute: quantity
Tariff-rate: reduced/no tarrifs for first quantity during time period, then next quantity pays higher duty |
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Term
| Foreign Trade Zones (FTZs) |
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Definition
- located in U.S. but considered outside the customs territory
- purpose: stimulate international trade
- duty payment NOT required as long as merch in zone
- merch can remain indefinitely
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Term
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Definition
- sort
- destroy
- clean
- grade
- mix with foreign or domestic goods
- label
- assemble
- manufacture
- exhibit
- sell
- repack
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Term
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Definition
- building or secure area w/in customs territory
- dutiable merch can stay up to 5 yrs no duty paid
- each entry covered by customs bond
- duties are due prior to release from bonded warehouse
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Term
| custom bonded warehouse: operations include- |
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Definition
| cleaning, repacking and sorting |
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