Glossary of International Trade Terms

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- S -

Safeguards:Temporary measures to protect an industry when it experiences increased competition by foreign suppliers.  Safeguards can take the form of tariffs or quantitative restrictions.

Sale-leaseback: An arrangement whereby equipment is purchased by a lessor from the company owning and using it. The lessor then becomes the owner and leases it back to the original owner, who continues to use the equipment.

Sales-type Lease: A lease by a lessor who is the manufacturer or dealer, in which the lease meets the definitional criteria of a capital lease or direct financing lease.

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

Second beneficiary: Where a transferable letter of credit is used, party to whom part of the value of this credit is transferred.

Second issuing bank:  Bank issuing the second letter of credit in a back-to-back letter of credit transaction.  Usually the Advising bank to the prime letter of credit.

Ship's manifest:  An instrument in writing, signed by the ship's captain that lists the individual shipments that make up the entire ship's cargo.

Shipper:  The party sending the goods, i.e. seller.

Sight bill:  Bill of exchange payable immediately upon presentation.

Single Investor Lease: (See Full Payout or Finance Lease)  A tax-oriented lease whereby the lessor achieves its desired rate of return via a combination of the rental payments, depreciation, and the fair market value of the equipment at the end of the original lease term. This method is utilized because the value of the tax benefit allows the rental payments to be lower than for a finance lease which can be an incentive to the company leasing the property.

SME:Small and Medium sized business enterprises.  Generally SMEs create the most jobs and have the highest rates of entrepreneurship.

Small-ticket Leasing: Transactions under $100,000.  In leasing, this is usually accomplished through conditional sale leases or single investor true leases.

Sovereign risk:  Risk that a government or sovereign power will default on its payment

Spot rate: Exchange rate for foreign exchange transactions for immediate or
near-immediate execution.

Standard Industrial Classification (SIC): The standardized numerical SIC code used by the US government to classify commodities, used in international trade.

Standard International trade classification (SITC):  A standard numerical code system developed by the United Nations to classify commodities transported in international trade.

Standby letter of credit: A letter of credit designed to be used only when the applicant defaults on another agreed method of payment.

SWIFT: Society for Worldwide Interbank Financial Telecommunication.  An organization that operates the major interbank electronic communication system for financial messages (payments, letters of credit, securities transactions etc.)

- T -

Taking in charge: Receipt of goods by carrier from shipper.

Tare weight:  The weight of a container and packing materials which excludes the weight of the goods it contains.

Tariff:A tax applied to goods transported from one customs area to another, or on imported products.  Tariffs can be imposed to raise income for a country or to limit import competition.

Tax Lease: A lease wherein the lessor recognizes the tax incentives provided by the tax laws for investment and ownership of equipment. Generally, the lease rate factor on tax leases is reduced to reflect the lessor's recognition of this tax incentive.

Technology Transfer:  Through trade or capital flight, the movement or sharing of technology.

TEU:A twenty-foot Equivalent Unit, or 20-foot dry-cargo container.

Telegraphic transfer:  Payment instruction sent from one bank to another by electronic means, either SWIFT or telex. This is generally the method of choice for urgent or high-value payments.

Term bill:  A bill of exchange on which payment is due at a future date.
This is sometimes called a tenor bill.

Through bill of lading:  A single bill of lading converting both the domestic and international carriage of an export shipment.  An air waybill is essentially a through bill of lading used for air shipments.  On the other hand, ocean shipments usually require two documents - an inland bill of lading for domestic carriage and an ocean bill of lading for international shipment.

Time draft: A draft that matures either a certain numbe of days after acceptance or a certain number of days after the date of the draft.

Title document:  A document granting title.  It can also include a transport document in which the bearer has title to the goods, and so can claim them from the carrier at their destination.

To order: Usually means a direction transferring ownership rights - an endorsement.  On a bill of exchange 'order' or 'to order' means that the drawer directs payment to be made to another party (usually a bank).  On a bill of lading, 'order' or 'to order' assigns title to the goods to another party.

Trac Lease: A tax-oriented lease of motor vehicles or trailers that contains a terminal rental adjustment clause and otherwise complies with the requirements of the tax laws.

Trademark: A registration process under which a name, logo, or characteristic can be identified as exclusive.

Transferable letter of credit : A letter of credit part of whose value can be transferred to another party

Transhipment:  Transfer of goods from one vessel to another during its journey. Some letters of credit prohibit this.

Transparency: The concept of making trade-related administrative processes easier to follow, including opening them to public scrutiny and subject to clear methods of challenge or amendment.

Transport document: Document given by the carrier to the shipper (seller)  This document serves as receipt for the goods during shipment and as evidence of a carriage contract. The transport document MAY also serve as a document of title.

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

Transshipment:The practice of shipping a good into a third country and re-exporting it to another market as a product of the third country.

True Lease:  A type of transaction that qualifies as a lease under the Internal Revenue Code. It allows the lessor to claim ownership and the lessee to claim rental payments as tax deductions.

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.

Trustee: A bank or trust company that holds title to or a security interest in leased property for the benefit of the lessee, lessor, and/or creditors of the lessor. A leveraged lease often has two trustees: an owner trustee and an indenture trustee.

- U -

Unconfirmed letter of credit: Letter of credit bearing the payment undertaking of a single bank, the Issuing bank.

Uniform Commercial Code (UCC):  Rules that have been adopted by many states and countries in respect to commercial transactions.

Uniform Customs & Practices (UCP):  ICC rules governing the administration of letters of credit Current revision is UCP 500.  Most letters of credit state that they are to be governed by this.

Uniform Rules for Collections (URC):  ICC rules governing the administration of collections. Current revision is URC 522, which replaces URC 322.

- V -

Value-added:The increased value at each stage of a manufacturing assembly process.

Value date: Date on which a foreign exchange contract is executed, i.e. seller delivers
foreign currency.

Vendor Leasing: A financing vehicle between a financing source and a vendor to provide financing to stimulate the vendor's sales. The financing source offers leases or conditional sales contracts to the vendor's customers. The vendor leasing firm substitutes as the captive finance company of a manufacturer or distributor through the extension of leasing to customers, provisions of credit checking, and performance of collections and operational administration. Also known as a lease asset servicing or vendor programs.

Vostro account:  How a correspondent bank refers to funds it holds on behalf of an overseas correspondent.

- W -

Warehouse receipt: A receipt issued by a warehouse listing good received for storage.

Warehouse-to-warehouse:  An Insurance policy which 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. This must agree with the weight declared on the transport document and shown on the invoice.

Without reserve: A term indicating that a shipper's agent or representative is empoered to make definitive decision and adjustments abroad without approval of the group or individual represented.

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


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