FABRICATED COMPONENT To the Top

In customs usage, a manufacturing article ready for assembly in the condition as exported except for operations incidental to the assembly

FABRICATION IN TRANSIT

The stopping of metal goods at a point located between the points of origin and destination for further process of manufacture.

FACE VALUE

The value indicated in the wording of the instrument. For example, the face value of a bank check is the amount the check is written for. The interest rate of a bond refers to the face value, not the market value. Face value is also called par value.

FACTORING

A procedure of financing trade whereby the factor purchases the seller’s accounts receivable, usually advancing a portion of the receivables, with the balance paid upon maturity of the accounts. In the majority of cases the factor assumes all commercial risks associated with the receivables purchased including nonpayment.

FACTORING HOUSES

Certain companies which purchase export receivables (e.g., the invoices to foreign buyers) at a discounted price, usually about two to four percent less than their face value.

FACTOR INTENSITIES

The proportions in which different factors of production including land, unskilled and skilled labor, human capital and physical capital, natural resources, and technology, are combined in the production of a particular product or group of products.

FACTOR MOBILITY

The capacity of the factors of production to move freely among nations in search of maximum economic return.

FACTOR REVERSIBILITY

The action of intensifying the input of a given production factor and reducing the input of another contrary to traditional behavior.

FACTORS

Limited agents who buy accounts receivable from small firms at discount. Funds are advanced upon the delivery of the goods. Those performing such a factoring service for the textile trade are also known as “textile banks”. Factors frequently perform all accounting functions in connection with the accounts receivable, in which case, purchasers are notified to remit directly to the factor.

FACTOR SERVICE

Payment remitted abroad for the local use of foreign-origin factors of production e.g., payments sent home by foreign workers or interest paid to foreign lenders.

FAIR MARKET VALUE

The value an imported product would yield, under similar circumstances of sale, were the goods sold in the country of origin. Customs authorities are usually interested in fair market value of imported merchandise, inasmuch as sales below such value may serve as basis of a dumping investigation.

FALLING

As used in The General Rules of Interpretation of the Harmonized System of the United States meaning the same as “considered”. Proper “ Oxford” English is used throughout the Harmonized System, thus introducing terms unfamiliar to many.

FALSE BILLING

Describing freight on shipping documents so as to misrepresent the actual contents or lading.

FAMILIAR DRAWING TECHNIQUES

A process within the International Monetary Fund where a member nation suffering balance of payments problems may obtain foreign currencies from the IMF in exchange for its own.

FAR WEST

Western Coast of Pacific ocean in vicinity of Japan, China, and Philippine Islands.

FEDERAL BILLS OF LADING ACT

The principal Federal statute on the subject of bills of lading covering transportation of goods in interstate and foreign commerce. Commonly known as the Pomerane Act, passed in 1915, deals with substantive issues of form, endorsement, and delivery of bills of lading. The act also provides criminal penalties for forgeries and frauds relating to bills covered by the act.

FEDERAL FUNDS

Commercial bank reserves in excess of legally required reserves that are offered to other banks that are suffering temporary reserve deficiencies. These loans are for very short periods, usually overnight. The rate a borrowing bank pays for these funds is the Federal fund rate; it represents the rate at which banks lend funds to one another.

FEDERAL MARITIME COMMISSION (FMC)

A U.S. government organization that, among other things, licenses Foreign Freight Forwarders, and administers the rate setting scheduling activities of ocean liner conferences.

FEDERAL REGULATIONS

See Code of Regulations.

FEDERATION OF INTERNATIONAL TRADE ASSOCIATIONS (FITA)

The FITA helps to promote trade and strengthen U.S exports through local networks of business executives engaged in exporting. It represents the 150 world trade clubs and international trade associations located throughout the United States. The FITA major goals are to help strengthen the local associations through sharing information; foster establishment of international trade associations in areas without them; promote the benefits of belonging to a local world-trade association; conduct seminars on topics important to U.S trade; and represent the interests of international trade associations and their membership on a national and international level.

FEEDER VESSEL

A small vessel or barge that carries goods from a principal port to outlying ports not served directly by the mother ship.

FEED GRAINS

Grains, especially corn, characterized as high energy grains due to their relatively high levels of nitrogen free extract and low levels of crude fiber.

FIAT MONEY

Currency that has value only because the state that issues it declares it to be legal tender. It has no value beyond the faith of the government that issues it. This paper money is not freely exchangeable for gold or silver.

FIBER CONSTRAINTS

The United States is party to various multilateral and bilateral agreements concerning the importation of certain textile products. In order to monitor compliance with these agreements, and to identify products subject to specific quantitative or other controls, it is necessary that certain products containing cotton, wool, or man-made fibers, or combinations thereof, be specially identified. Most articles having their whole or chief value of cotton, wool, or man-made fibers are adequately identified for monitoring purposes in the Harmonized Tariff System of The United States.

Despite the standard chief weight criterion under the Harmonized System, the United States includes exceptions for selected products and fiber blends.

In the apparel chapters, for example, knit apparel items which are in chief weight of man-made fiber, but contain 23 percent or more by weight of wool, will be considered wool products for duty and quota purposes where breakouts exist in the HTSUS. Woven apparel items which are in chief weight of man-made fiber, but contain 36 percent or more by weight of wool, will also be treated as wool products for duty and quota purposes.

The United States has continued the category placement of non-cotton vegetable fiber and silk blend products which are 50 percent or more by weight of cotton, wool, and man-made fiber in combination, or greater than 17 percent by weight of wool in accordance with the following fiber classification hierarchy:

A. Cotton categories - where cotton equals or exceeds by weight each of the man-made fiber and wool components;

Example:

A women’s woven blouse consisting of:

21 % by weight of Cotton fibers,

20 % by weight of Man-made fibers,

21 % by weight of Wool fibers,

38 % by weight of Ramie fibers.

B. Wool categories - if not cotton, and the wool component exceeds 17 percent by weight; or

Example:

A women’s woven blouse consisting of:

37 % by weight of Ramie fibers,

15 % by weight of Cotton,

30 % by weight of Man-made,

18 % by weight of Wool

C. Man-made Fiber categories - if not cotton or wool as established by A or B above.

Example:

A women’s woven blouse consisting of:

38 % by weight of Ramie fibers,

15 % by weight of Cotton

32 % by weight of Man-made,

15 % by weight of Wool

Products falling within the above hierarchy are identified in the HTSUS in subheading descriptions as;

A. subject to cotton restraints;

B. subject to wool restraints; or

C. subject to man-made restraints.

Products classified in these HTSUS classifications are in chief weight of non-cotton vegetable fiber or silk for duty purposes, but will appear in the cotton, wool, or man-made fiber categories for quota purposes.

FIDUCIARY CURRENCY To the Top

A currency backed solely by the faith of the government that issues it. The term does not carry the negative import often associated with Fiat Money.

FIFTH INTERNATIONAL TIN AGREEMENT

An international commodity agreement among major tin-producing and consuming nations. Principal features of the agreement are (1) establishment of the International Tin Council in which votes are divided equally among producing and consuming nations; the council establishes agreed ceiling and floor prices for the metal; (2) maintenance of a reserve stock of

at least 20,000 metric tons of tin that may be sold off as prices approach the ceiling, or added to as prices approach the floor, to ensure stable prices; (3) imposition of export controls by producers after a threshold of falling prices has been reached; and (4) requirement that members consult with the council before selling from national stocks.

FIFTY-MILE RULE

An arrangement between the International Longshoremen Association and steamship operators providing that work for longshoremen will be preserved by permitting ILA labor to load and/or unload ocean containers bound from or to points within fifty miles of an ocean port.

FILER

Means the party certifying the electronic filing of the application for immediate delivery, entry or entry summary. Filer may be a broker or an importer of record filing his own entries through ABI without the use of a broker.

FILING

Means:(1) the delivery to Customs of the entry documentation to obtain the release of merchandise, or (2) the delivery to Customs, together with the deposit of estimated duties, of the entry summary documentation required to assess duties, collect statistics, and determine whether other requirements of law or regulation are met, or (3) the delivery to Customs, together with the deposit of estimated duties, of the entry summary documentation which shall serve as both entry and entry summary.

FINAL SAILING

The passage by a vessel out of the commonly recognized commercial boundaries of the port on the contemplated voyage without intentions of returning.

FINANCIAL PAPERS

Short-term, unsecured promissory notes issued by finance companies. The funds raised by the sale of financial paper are loaned out to commercial firms to finance inventories and current receivables.

FINANCIAL RISK

The risk borne by an exporter that his foreign customer may be unable or unwilling to pay for the merchandise purchased; the financial risk relates purely to commercial consideration and not to such “political” risks as expropriation or inconvertibility of currency.

FINANCIAL SOLIDARITY

A component principle of the Common Agricultural Policy of the European Economic Community.

FINDLEY AMENDMENT

Sponsored by Congressman Paul Findley of New Jersey, an amendment to the Agricultural Trade Development and Assistance Act of 1954, Public Law 408, that precludes sales of agricultural produce under Title 1 of the act to any country engaged in trade with Cuba or Vietnam.

FIRM OFFER

A formal offer by a principal in a vessel charter transaction stipulating the precise terms under which he will enter the charter.

FIRST CARRIER

The carrier who actually performs the first part of the air transportation.

FIRST ENGLARGEMENT

The addition of Great Britain, Ireland, and Denmark in 1972 to the original six members (France, Federal Republic of Germany, Italy, Belgium, Netherlands, Luxembourg) of the European Economic Community.

FIRST OF EXCHANGE

The original copy of a draft when two or more are drawn.

FIRST FLAG CARRIAGE

The shipment of goods aboard a vessel flying the flag of the exporting country.

FIRST WORLD

A general reference to the industrialized nations of the West, primarily the members of the Organization for Economic Cooperation and Development, but often including other prosperous nations as well.

FISHYBACK

The transporting of truck trailers on water carriers.

FIXED ASSETS

Those assets of a permanent nature required for the normal conduct of business and which will not be normally converted into cash during the ensuing fiscal period.

FIXED CAPITAL

Capital invested in fixed assets.

FIXED EXCHANGE RATE

An exchange rate which does not fluctuate, or which fluctuates only within a narrow prescribed ban.

FIXING CHARTER

The conclusion of a contract (contract party) for the charter of a vessel.

FIXING LETTER

A summary of the agreement between a vessel owner and charterer pending signing of the actual charter party.

FIXTURE

The act whereby a contract for the charter of a vessel is fixed, or concluded.

FLAG

The country of registration of a vessel or aircraft.

FLAG DISCRIMINATION

Actions taken by a government to favor or discourage movement of cargoes aboard vessels flying certain flags.

FLAGGING OUT To the Top

The act of transferring a vessel’s registry to a lower cost jurisdiction.

FLAG OF CONVENIENCE

Registration of a vessel in a country other than that of the ship’s owners, because the registering nation affords the owners tax or other benefits not available in the home country.

FLASH

A feeder-Lash system used in Malaysia and Indonesia in which a Lash barge is positioned on top of a semi-submersible barge; the barge is pumped out, and the Lash barge towed to the pier or wharf for loading.

FLATION

A period of generally stable prices, absent of both inflation and deflation.

FLIGHT NUMBER

The designation of a flight.

FLOATING EXCHANGE RATE

An exchange rate which is allowed to fluctuate according to the supply and demand of the currency involved.

FLOOR PLAN FINANCING

A type of financing which supplies the capital to permit a dealer in a certain product or products to acquire samples of the product or products to display for sale, and which is liquidated when the sale is consummated.

FLEXIBLE TARIFF

A customs tariff in which rates of duty can be raised or lowered by administrative action.

FLOATING CURRENCY EXCHANGE RATE

A system in which market forces determine the international value of a country’s currency and the country itself does not engage in policies that would affect this value.

FLOATING EXCHANGE RATES

The movement of a foreign currency exchange rate in response to changes in the market forces of supply and demand; also known as flexible exchange rate. Currencies strengthen or weaken based on a nation’s reserves of hard currency and gold, its international trade balance, its rate of inflation and interest rates, and the general strength of its economy.

FLOATING POLICY

A contract of marine insurance that remains in force until canceled.

FOOD AND DRUG ADMINISTRATION (FDA)

Administrative agency of the U.S. Department of Health and Human Services that regulates the safety and quality of foodstuffs, pharmaceuticals, cosmetics, and medical devices.

FOLDED

An article folded in such a manner as to reduce its bulk 33 1/3% from its normal shipping cubage when not folded.

FLOOR

In the case of a variable rate loan a prearranged minimum rate of interest that will be imposed, irrespective of how low the money market index falls.

FLOTSAM

Wreckage of a ship or its cargo found floating upon the sea.

FOOD FOR PEACE PROGRAM (Public Law 408)

Allows developing countries to buy U.S. agricultural products for U.S. dollars, with payments extended over 20 years at very low interest rates. For countries unable to go directly to 20 year dollar credit sales, financing is available for credit sales with 40 year terms and grace periods of up to 10 years.

FOOTLOOSE INDUSTRY

A manufacturing operation in which the cost of transportation, either of raw materials or the finished product, is not significant, thereby eliminating the requirement that the factory be located near either raw materials or the market.

FORCED LABOR

Means all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily.

FORCE MAJEURE

The title of a standard clause in marine contract exempting the parties for nonfulfillment of their obligations as a result of conditions beyond their control, such as earthquakes, floods or war.

FORCED TAX SYSTEM

A practice applied in some countries in which corporate income taxes are computed by a government agency. Unlike the American system where the firm prepares its own return, subject to review by the government, the forced tax system involves the government in the actual preparation of the return.

FOREIGN AGRICULTURAL SERVICE (FAS)

The FAS of the U.S. Dept. of Agriculture is the principle agency for strengthening U.S. farm exports. Through international trade shows and trade groups, FAS helps expand international markets for U.S. agricultural and food commodities as well as value added products. International contacts are arranged and promotional assistance provided through a network of counselors, attaches, trade officers, commodity analysts and marketing specialist. FAS trade offices are in 15 major market countries and function as service centers for U.S. exporters and foreign buyers. In addition, agricultural affairs officers are located in U.S. embassies in over 50 countries. The principle programs and services of the FAS come under two divisions. (1) Commodity and marketing programs (2) Export Credits.

FOREIGN ASSETS CONTROL REGULATIONS

A pronouncement issued under authority of Section 5(b) of the Trading With The Enemy Act, that prohibits importation of products manufactured in, or containing components originating in, countries proscribed by the president. Exports to proscribed countries are forbidden also. The Secretary of the Treasury, however, may license specific transaction with listed countries.

FOREIGN BASE FINANCE COMPANY

A financing operation organized abroad that has as its main purpose the arranging of loans abroad in eurocurrencies, almost always on behalf of its parent or affiliates.

FOREIGN BILL OF EXCHANGE

A bill of exchange drawn in one state or country and payable in another.

FOREIGN BUYER PROGRAM

Trade shows in the United States where you can meet qualified foreign purchasers for your products or services. The Department of Commerce promotes the shows worldwide to attract foreign buyer delegations.

FOREIGN CREDIT INSURANCE ASSOC. (FCIA) To the Top

The FCIA is a private insurance association which operates as Eximbank’s agent. It provides export credit insurance to cover selected losses to commercial banks and exporters for political reason (war, expropriation, and currency inconvertibility) and commercial losses (nonpayment to the buyer due to insolvency or default). Having such insurance can allow you to extend credit on more favorable terms to foreign buyers and thus be more competitive.

FOREIGN CORPORATION

A corporation operating in a jurisdiction other than the one in which it was chartered. A corporation chartered in England and one chartered in Boston would be equally foreign in New York.

FOREIGN CORRUPT PRACTICES ACT

A Federal law, adopted in 1977, that forbids any U.S. company, its officers, employees, directors, agents, or major stockholders to make payments to any foreign official, candidates for office, or political party as an inducement to obtain, retain, or expand, business. Violation of the act authorizes fines up to one million dollars on corporate violators, as well as fines up to ten thousand dollars and/or five years in prison for individual violators.

FOREIGN CURRENCY

The currency of any foreign country which is the authorized media of circulation and the basis for record keeping in that country. Foreign currency is traded in by banks either by the actual handling of currency or checks or by the establishment of balance in foreign currency with banks in those countries.

FOREIGN CURRENCY CREDIT

A letter of credit term denoting a letter of credit payable in a currency other than that of the beneficiary’s country.

FOREIGN CURRENCY STATEMENT

A financial statement prepared using a functional currency other than that in which the firm customarily reports.

FOREIGN CURRENCY TRANSACTION

The accounting process employed in expressing, in terms of a firm’s reporting currency, those transactions that are denominated in a different currency.

FOREIGN CURRENCY TRANSLATION

The process of expressing amounts denominated in one currency in terms of a second currency, by using the exchange rate between the currencies. Assets and liabilities are translated at the current exchange rate at the balance sheet date. Income statement items are typically translated at the weighted average exchange rate for the period.

FOREIGN DIRECT INVESTMENT

The foreign investment by a multinational company involving either the establishment of a wholly-owned foreign subsidiary or the acquisition of a controlling interest, usually taken to be a minimum 10 per cent of equity capital, in a foreign company.

FOREIGN EXCHANGE

The currency or credit instruments of a foreign country. Also, transactions involving purchase and/or sale of currencies.

FOREIGN INTERNATIONAL SALES CORP. (F.I.S.C )

A U.S. government approved mechanism granting certain tax deduction for U.S. companies having an overseas sales office.

FOREIGN INVESTMENT REVIEW ACT

An act of the Canadian parliament directed toward protection of Canada’s economy from domination by foreign direct and portfolio investments.

FOREIGN ORIGIN

Refers to a country of origin other than the U.S. or its possession and territories.

FOREIGN SALES AGENT

An individual or firm that serves as the foreign representative of a domestic supplier and seeks sales abroad for the supplier.

FOREIGN SALES CORPORATION

A corporation formed in a foreign country or a U.S. possession other than Puerto Rico, structured so as to derive a corporate tax exemption on a portion of the earning from the sale of U.S. exports.

FOREIGN SALES CORPORATION ACT (FSC)

A component of the Tax Reform Act of 1984, which permits formation of Foreign Sales Corporations as a tax incentive to American exporters, and revises tax treatment of income earned by DISC’S (Domestic International Sales Corporation), which have been criticized by many foreign governments as an unlawful export subsidy under the rules of the General Agreement on Tariffs and Trade.

FOREIGN TRADE ZONE

An area where goods of foreign origin may be brought in for re-export or transhipment without payment of customs duty. See also Free Trade Zone.

FOREIGN TAX CREDIT

Credit allowed against U.S. income taxes for foreign taxes paid. The credit can be used only to lower U.S. taxes on income earned overseas. A foreign tax credit limitation is computed by multiplying the U.S. tax liability prior to the credit by the ratio of foreign taxable income to total taxable income ( U.S. and foreign).

FOREX

An acronym for foreign exchange.

FORFAIT

Forfait financing is a medium-term limited recourse form of note purchase. The demand for a forfait financing developed as a result of the large expansion of international trade and the need by importers for financing beyond the customary 90 - 180 day credit period. Forfait financing is generally used when direct bank financing to the buyer is too cumbersome, when exporters are not able to provide medium-term financing and when the seller wishes to be competitive by offering fixed rate financing.

FORTY FOOTER

An ocean container with an overall length of approximately forty feet. A standard forty-foot container has an external height of approximately eight feet.

FORWARDER

A person or firm employed by a shipper of merchandise to book passage for the goods, prepare documents, and generally coordinate the shipping transaction.

FORWARDER RECEIPT

A document issued by a freight forwarder acknowledging receipt of merchandise into is custody for purposes of shipment to a specified location. This receipt is not a bill of lading and does not attest to actual shipment of the goods. It is not acceptable under letter of credit transactions unless specifically provided for by the letter of credit.

FORWARD EXCHANGE RATE

The rate paid for one currency in terms of another when the currency bought is delivered at a future date.

FORWARD EXCHANGE CONTRACT

An arrangement to exchange, at a specified future date, a fixed number of units of one currency for a fixed number of units of another currency.

FORWARD MARGIN To the Top

In foreign exchange transactions, the difference between the current, or “spot” price for a given currency and the price at some future date. If the “futures” price, that quoted by sellers of contracts for future purchase of that currency, is higher than the spot price, the subject currency is said to be trading at a “premium”; if the futures price is less than the spot price, however, the currency is trading at a “discount”.

FOUL BILL OF LADING

A receipt for goods issued by a carrier with a notation that the goods were damaged when received.

FOURTH SEACOAST

A reference to the Great Lakes as an area of maritime activity.

FOURTH WORLD

A general reference to the poorest nations of the world.

FRANCHISE

A provision in a marine cargo policy that partial losses will be adjusted if the loss exceeds a certain percentage of the total value of the shipment.

FRANCO DELIVERY

A delivery to a consignee of goods upon which all charges, including freight, have been paid.

FRAUDULENT ENTRY

The deliberate undervaluing or wrongly classifying merchandise for purpose of evading duties or customs control.

FREE ALONGSIDE SHIP - NAMED PORT OF SHIPMENT (FAS)

“Free Alongside Ship” means the seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay (dock) or in lighters at the name port of shipment. This means buyer must bear all costs and risks of loss or damage to goods from time goods are delivered alongside vessel at named port of shipment. FAS requires buyer to clear the goods for export.

The cost factors normally included in FAS are merchandise value, marking costs, packing, and inland freight costs to alongside ship. “Main Carriage” transportation will be Collect. The FAS term is used for sea and water transport only.

FREE ASTRAY

The free onward movement to the consignee by a common carrier of merchandise that has been erroneously discharged at the wrong terminal.

FREEBOARD OF VESSEL

Height of side of the vessel measured amidships, from the center of the disc to the tip of the weather deck.

FREE CARRIER -NAMED POINT (FCA)

“Free Carrier” means seller fulfills his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into his charge. When according to commercial practice the seller’s assistance is required in making the contract with the carrier (such as in rail or air transport) the seller may act at the buyer’s risk and expense. The risk of loss or damage to goods is transferred from seller to buyer at the time delivered to designated carrier. “Carrier” means any person by whom, or in whose name, a contract for carriage by road, rail, air, sea or a combination of modes has been made. When the seller must furnish a bill of lading, waybill, or carrier’s receipt, he fulfills this obligation by presenting such a document.

The cost factors normally included in FCA are merchandise value, marking costs, packing, inland freight to designated carrier and costs related to export clearance. “Main Carriage” transportation will be Collect. The FCA term may be used for any mode of transport.

FREE DISPATCH

A provision in a charter party that precludes payment of despatch money for early release of a vessel.

FREE DOMICILE (also known as “CIF Delivered”)

The price of the merchandise will include all charges incurred in getting the merchandise from the seller’s warehouse to the buyer’s door. This includes all foreign inland freight, loading charges, international freight, insurance, U.S. duties, U.S. handling fees and delivery to the buyer.

FREE IN (F.I.) (FI)

Cost of loading a vessel is borne by the charterer.

FREE IN AND OUT (F.I.O.) (FIO)

Cost of loading and unloading a vessel is borne by the charterer.

FREELY OFFERED

Goods offered in the normal course of trade to all buying on essentially the same basis e.g., with like prices, terms, discounts etc.

FREE MARKET ECONOMY

The economic system of a nation in which market forces determine which goods and services are produced, and at what price they are offered with little or no interference by government or by any other powerful economic force or entity.

FREE OF CAPTURE AND SEIZURE (F.C.& S.)

An insurance clause providing that loss is not insured if due to capture, seizure, confiscation and like actions, whether legal or not, or from such acts as piracy, civil wars, rebellion and civil strife.

FREE OF PARTICULAR AVERAGE (F.P.A.)

The title of a clause used in marine insurance indicating that partial loss or damage to a foreign shipment is not covered. (Loss resulting from certain conditions, such as the sinking or burning of the ship, may be specifically exempted from the effect of the clause.)

FREE ON BOARD- NAMED PORT OF SHIPMENT (FOB)

“Free on Board” means the seller fulfills his obligation to deliver when goods have passed over ship’s rail at port of shipment named in sales contract. Risk of Loss or damage is transferred from seller to buyer when the goods pass ship’s rail. The seller must deliver merchandise and bear all cost to delivery on board carrier designated by the buyer. Seller is responsible for providing documentation necessary for export by the country of export. The cost factors normally included in FOB are merchandise value, marking costs, packing, inland freight costs to ship, any vessel loading charges and costs related to export clearance. “Main Carriage” transportation will be Collect. The FOB term is used for sea and water transport only.

FREE OUT

Cost of unloading a vessel is borne by the charterer.

FREE PERIMETER

A free trade area similar to a free port, consisting of a defined geographical area, often in a nation’s interior, where customary trade regulations, taxes, and/or duties are not imposed, the usual object in establishing such a perimeter is to stimulate local production.

FREE PORT

An entire port area, in which goods can be shipped, stored, and exported free of duty. Hong Kong, Singapore, and the Canary Islands are among the free ports.

FREE PRATIQUE

The condition of a vessel which is in compliance with the health and sanitation laws of the country where it is berthed at any point in time.

FREE TIME

The period of time allowed for the removal of cargo before charges become applicable.

FREE TRADE To the Top

Technically, a condition in which no restrictions are imposed on the movement of goods in international trade. Restriction that are abolished to achieve free trade are customs duties, quotas, import license, exchange controls and domestic subsidies.

FREE TRADE AREA

As association of states that seek to overcome impediments to trade among members by reducing or eliminating tariffs among the participants. The members of a free trade area do not maintain a common external tariff nor do they provide for the free flow of labor or capital among the members.

FREE TRADE AGREEMENT

A bilateral agreement to eliminate trade barriers and tariffs between countries; examples of FTAs include those between the U.S. and Canada, and the U.S. and Israel.

FREE TRADE ZONE

An area 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 within the zone and re-exported without duties being paid. duties are imposed on the merchandise (or items manufactured from the merchandise) only when the goods pass from the zone into an area of the country subject to the customs authority.

FREIGHT

The earnings that a carrier derives from the carriage of merchandise. Freight should not be confused with cargo, which is the merchandise itself.

FREIGHT ALL KINDS (F.A.K)

Products shipped under an FAK classification are charged rates that are different, and usually higher, than rates for specific commodity classifications. FAK cargo is usually shipped in a container filled with units of a variety of merchandise or commodities.

FREIGHT FORWARDER

An independent business that handles export shipments for compensation. A freight forwarder is among the best sources of information and assistance on U.S. export regulations and documentation, shipping methods, and foreign import regulations.

FRUSTRATION

A condition or occurrence during the period when a vessel is under charter that precludes performance of the charter contract or has the effect of defeating the object of the charter. Where frustration occurs, the charter is terminated.

FULL BERTH TERMS

Conditions of carriage by water under which the owner of the goods is not responsible for the costs of loading or discharging his cargo to or from the vessel.

FULL TERMS

A promise in an offer to charter a vessel that the owners must accept certain allowance or reduction in addition to normal commissions.

FUMIGATION

Fumigation is the destruction of pests by professional personnel, trained in the application of fumigants, i.e., chemicals that at a required temperature and pressure can exist in the gaseous state in sufficient strength and quantities to be lethal to a given pest organism. Fumigants are some of the most toxic and unique pesticides. Methylbromide and hydrogen phosphide are the fumigants most commonly used on grain.

FUNCTIONAL CURRENCY

The currency primarily employed by a multinational firm in its principal transactions. Normally this is the currency of the nation in which the firm is based.

FUNCTIONAL UNIT CONCEPT

As found in Section XVI, LN 4 (1) of the Harmonized System a machine or combinations of machines (2) consisting of individual components either separate or interconnected by; piping, transmission devises, electrical cables or other devices (3) contributing a clearly defined function

FUNGIBLE GOODS

Goods of a given type or class, any unit of which is interchangeable with any other unit and would be equally acceptable in settling obligations denominated in terms of the commodity.

FURTHER REVIEW

Means review of the decision which is the subject of the protest by Customs officers on a higher level than the district, and in Region ll by custom officers who did not participate directly in the decision which is the subject of the protest.

FUTURE EXCHANGE CONTRACT To the Top

A contract between a bank and its customer to purchase or sell foreign exchange at a fixed rate with delivery at a specified time, generally used because the customer desires to preclude the risk of fluctuations in foreign exchange rates.