English for International Trade: Essential Vocabulary

"bill of lading"

A legal document issued by a carrier to a shipper, acknowledging receipt of cargo and detailing the terms of transport.

"The freight forwarder released the bill of lading once full payment had been confirmed by the bank."

"commercial invoice"

An official document from seller to buyer listing goods, quantities, agreed prices, and payment terms for customs purposes.

"Customs officials held the shipment because the commercial invoice did not match the packing list."

"certificate of origin"

A document certifying the country in which the traded goods were produced, manufactured, or processed.

"To benefit from the preferential tariff rate, the exporter had to provide a valid certificate of origin."

"packing list"

A document accompanying a shipment that details the contents, weight, and dimensions of each package in the consignment.

"The warehouse team cross-checked every item against the packing list before sealing the container."

"letter of credit"

A bank document guaranteeing a seller will receive payment from a buyer, provided specified conditions and documents are met.

"The Vietnamese manufacturer insisted on an irrevocable letter of credit before beginning production."

"pro forma invoice"

A preliminary invoice sent before a sale is confirmed, providing an estimated cost of goods to help the buyer arrange financing or import permits.

"The buyer submitted the pro forma invoice to their bank to apply for a foreign exchange allocation."

"customs declaration"

A formal statement filed with customs authorities listing the details and value of goods being imported or exported.

"An error on the customs declaration caused a three-day delay at the port of entry."

"airway bill"

A non-negotiable transport document issued for air cargo, serving as a receipt and contract of carriage between shipper and airline.

"The airway bill number allowed the importer to track the medical equipment in real time."

"freight forwarder"

A company or agent that organises the transportation of goods on behalf of exporters or importers, managing documentation and logistics.

"The freight forwarder coordinated sea, rail, and road transport to deliver the machinery across four countries."

"Incoterms"

Internationally recognised trade terms that define the responsibilities of buyers and sellers for the delivery of goods under sales contracts.

"The contract specified CIF Incoterms, meaning the seller covered insurance and freight to the destination port."

"free on board"

An Incoterm (FOB) indicating that the seller is responsible for the goods until they are loaded onto the vessel at the named port of shipment.

"Under FOB Shanghai terms, the risk transferred to the buyer the moment the goods crossed the ship's rail."

"demurrage"

A charge levied when a ship, container, or freight car is kept beyond the agreed time for loading or unloading.

"The port strike led to significant demurrage charges as containers sat idle for two additional weeks."

"bonded warehouse"

A secured facility where imported goods can be stored without paying customs duties until the goods are released for domestic distribution.

"The importer kept the wine in a bonded warehouse while arranging the paperwork for duty payment."

"last-mile delivery"

The final step in a supply chain where goods travel from a distribution hub to the end customer, often the most costly stage.

"The e-commerce company invested in electric cargo bikes to improve last-mile delivery in city centres."

"consolidation"

The process of combining several small shipments from different shippers into one larger load to reduce freight costs.

"Using consolidation, the exporter shared a container with two other companies and cut shipping costs by 40%."

"transshipment"

The transfer of cargo from one vessel or mode of transport to another at an intermediate port before reaching the final destination.

"The goods were routed through Singapore for transshipment before continuing to their final port in Europe."

"ad valorem duty"

A customs charge calculated as a percentage of the declared value of the imported goods rather than a fixed amount per unit.

"The electronics faced a 15% ad valorem duty, making the final landed cost significantly higher than expected."

"harmonised system code"

A standardised international six-digit code used to classify traded goods for customs and statistical purposes.

"Getting the harmonised system code wrong resulted in the goods being classified at a higher duty rate."

"tariff quota"

A trade policy that allows a set quantity of a product to be imported at a lower duty rate, with higher duties applied once the quota is reached.

"European cheese exporters competed fiercely to fill the US tariff quota before it was exhausted in spring."

"anti-dumping duty"

An import levy imposed to protect domestic industries when foreign goods are sold below their normal market price.

"The government imposed anti-dumping duties on imported steel after local producers complained of unfair pricing."

"customs clearance"

The process of obtaining official permission from customs authorities to import or export goods, including payment of applicable duties.

"Using a customs broker cut the customs clearance time from five days to under 24 hours."

"rules of origin"

Criteria used to determine the national source of a product, which affects the tariff rate and whether a good qualifies for preferential trade agreements.

"The product failed to meet the rules of origin requirements and therefore did not qualify for the free trade agreement rate."

"de minimis threshold"

The minimum value below which imported goods are exempt from duties and taxes, varying by country.

"Cross-border e-commerce grew partly because many low-value parcels fell below the de minimis threshold."

"countervailing duty"

A tariff imposed on imported goods that have received government subsidies in the exporting country, aimed at levelling the competitive playing field.

"The WTO panel ruled that the countervailing duty on solar panels was consistent with international trade rules."

"documentary collection"

A trade finance method where an exporter's bank sends shipping documents to the importer's bank, releasing them only upon payment or acceptance of a bill of exchange.

"The exporter chose documentary collection to maintain control of the goods until payment was secured."

"open account"

A payment arrangement where the seller ships goods and invoices the buyer, who pays at a later agreed date, carrying the most risk for the exporter.

"After five years of reliable payments, the distributor was offered open account terms with 60-day credit."

"export credit insurance"

Insurance that protects exporters against the risk of non-payment by foreign buyers due to commercial or political events.

"Export credit insurance allowed the company to confidently enter risky emerging markets without fear of total loss."

"banker's acceptance"

A short-term debt instrument drawn on and accepted by a bank, widely used in trade finance to guarantee future payment.

"The importer's bank issued a banker's acceptance, giving the exporter a secure and tradeable payment guarantee."

"supply chain finance"

A set of technology-based solutions that optimise cash flow by allowing buyers to extend payment terms while enabling suppliers to get paid early.

"Supply chain finance helped the small supplier maintain cash flow despite the retailer's 90-day payment terms."

"factoring"

Selling outstanding invoices to a third party at a discount in exchange for immediate cash, transferring credit risk to the factor.

"The manufacturer used factoring to release cash tied up in receivables and fund the next production run."

"standby letter of credit"

A bank guarantee that serves as a payment of last resort if the applicant fails to fulfil a contractual obligation.

"The contractor provided a standby letter of credit as security for performance under the construction contract."

"forfaiting"

The purchase of an exporter's medium-term receivables at a discount, providing immediate cash and eliminating credit and political risk.

"Forfaiting was used to finance the sale of capital equipment to the Eastern European buyer on five-year terms."

"most-favoured-nation"

A WTO principle requiring that a trade concession granted to one country must be extended to all WTO member countries equally.

"Under the most-favoured-nation principle, the tariff reduction offered to Canada had to be applied to all other WTO members."

"free trade agreement"

A treaty between two or more countries that reduces or eliminates barriers to trade in goods and services between the signatories.

"The free trade agreement cut tariffs on agricultural products to zero over a ten-year phase-in period."

"non-tariff barrier"

Any trade restriction other than a customs duty, such as quotas, licensing requirements, sanitary standards, or technical regulations.

"Strict labelling requirements acted as a non-tariff barrier that prevented many small exporters from entering the market."

"trade balance"

The difference between the total value of a country's exports and its imports over a given period; a surplus means more exported, a deficit means more imported.

"The country's trade balance swung into surplus after the currency depreciation made its exports more competitive."

"export subsidy"

Government financial support given to domestic producers to lower the cost of their exports, making them artificially cheaper on world markets.

"The WTO ruled that the export subsidy on sugar violated its agricultural agreements and ordered its removal."

"trade embargo"

A government order that restricts or prohibits trade with a specific country, typically imposed for political or security reasons.

"The trade embargo forced the company to find alternative suppliers and reroute its entire distribution network."

"dumping"

The practice of selling goods in a foreign market at a price below the cost of production or below the price in the domestic market.

"Local steel producers filed a dumping complaint after imports from the rival country arrived at prices far below market rates."

"safeguard measure"

A temporary trade restriction imposed by a government to protect a domestic industry from a sudden surge of imports.

"The government invoked a safeguard measure, imposing tariffs on imported textiles for three years while domestic mills restructured."

"force majeure"

A contract clause that frees both parties from liability if an extraordinary event beyond their control prevents fulfilment of the contract.

"The supplier invoked force majeure after the earthquake destroyed the factory and delayed shipments by six months."

"binding arbitration"

A dispute resolution process where both parties agree in advance to accept the arbitrator's decision as final and enforceable.

"The contract included a binding arbitration clause specifying that all disputes would be heard in Singapore."

"penalty clause"

A contractual provision requiring one party to pay a specified sum if they fail to meet an obligation such as a delivery deadline.

"Late delivery triggered the penalty clause, costing the supplier $10,000 for each week beyond the agreed date."

"exclusivity agreement"

A contract granting one party the sole right to sell, distribute, or produce a product in a specified territory or for a set period.

"The exclusivity agreement gave the Korean distributor the sole rights to sell the brand's products across Southeast Asia."

"minimum order quantity"

The smallest number of units a supplier is willing to sell in a single order, often used to ensure production is economically viable.

"The manufacturer's minimum order quantity of 5,000 units was too high for the startup to afford as an initial purchase."

"price escalation clause"

A contract provision allowing the seller to adjust the price if production costs such as raw materials or exchange rates change significantly.

"The price escalation clause protected the exporter from losses when commodity prices rose sharply mid-contract."

"acceptance testing"

A formal procedure verifying that delivered goods meet the agreed specifications and quality standards before final payment is released.

"The buyer's engineers conducted acceptance testing on-site to verify all technical requirements had been met."

"liquidated damages"

A pre-agreed sum specified in a contract as compensation for a particular breach, avoiding the need to prove actual financial loss.

"Liquidated damages of 2% per month were written into the contract to deter late delivery of the turbines."