IATA To the Top

International Air Transport Association.

IATA Cargo Agent

An agent approved by IATA and registered in the IATA Cargo Agency List. This enables the agent, upon authorization of the IATA carrier, to receive shipments, execute air waybills and collect charges.

ICC

International Chamber of Commerce.

ICING CHARGE

A charge made for icing perishable freight

IDENTICAL MERCHANDISE

Identical merchandise is merchandise identical in all respects to, and produced in the same country and by the same person as, the merchandise being appraised. If identical merchandise cannot be found then merchandise identical in all respects to and produced in the same country as, but not produced by the same person as, the merchandise being appraised, may be treated as “identical merchandise”. “Identical Merchandise” does not include merchandise that incorporates or reflects any engineering, development, artwork, design work, or plan or sketch supplied free of charge or at a reduced cost by the buyer of the merchandise for use in connection with the production or sale for export to the U.S. of the merchandise, and is not an assist because undertaken within the U.S.

IDENTITY OF SHIPMENT

Preservation of original character of shipments stopped in transit, so that no substitution occurs outbound from the transit point.

IMMEDIATE TRANSPORTATION ENTRY (I.T.)

A customs document (CF7515) that allows further transit of cargo from the port of entry to final or intermediate destination prior to formal entry of the goods and payment of duty charges.

IMPORT

To bring foreign goods into a country.

IMPORTED DIRECTLY

(a) Direct shipment from the beneficiary developing country to the U.S. without passing through the territory of any other country; or

(b) If the shipment is from a beneficiary developing country to the U.S. through the territory of any other country, the merchandise in the shipment does not enter into the commerce of any other country while enroute to the U.S., and the invoice, bills of lading, and other shipping documents show the U.S. as the final destination; or (c)If shipped from the beneficiary developing country to the U.S. through a free trade zone in a beneficiary developing country, the merchandise shall not enter into the commerce of the country maintaining the free trade zone, and

(1) The eligible articles must not undergo operations other than specific operations listed in part 10.175 (c) (l) (i- iv) of the Custom Regulations.

(2) Merchandise may be purchased and resold, other than at retail, for export within the free trade zone.

(3) The certificate of origin issued by the designated beneficiary developing country of origin shall state that the eligible articles comply with the origin require ments for goods exported to the U.S. under the Generalized System of Prefer ence (GSP)

(4) The certifying authority in the designated beneficiary developing country maintain ing the free trade zone shall issue a Certificate of Origin Form A, declaring what operations were performed in the free trade zone.

IMPORTER

The person primarily liable for the payment of any duties on the merchandise, or any authorized agent acting on his behalf. The importer may be:

(1) The consignee, or

(2) The importer of record, or

(3) The actual owner of the merchan dise, if any actual owner declara tion and superseding bond has been filed in accordance with part 141.20 of the Custom Regulations or

(4) The transferee of the merchandise, if the right to withdraw merchandise in a bonded warehouse has been transferred in accordance with subpart C of Part 144 of the Customs Regulations.

IMPORTER OF RECORD

The party designated on custom entry. The importer of record is the individual or firm liable for payment of all duties and meeting all statuary requirements incurred as result of importation.

IMPORTERS’ CARTAGE

Inland transportation performed by any licensed customhouse cartman.

IMPORT LICENSE

A document required and issued by some national governments authorizing the importation of goods into their individual countries.

IMPORT QUOTA

An import quota is a quantity control on imported merchandise for a certain period of time. Quotas are established by legislation, by directives and by proclamations issued under the authority contained in specific legislation. The majority of import quotas are administered by the U.S. Customs Service. The Commissioner of Customs controls the importation of quota merchandise but has no authority to change or modify the quota. United States import quota may be divided into two types: absolute and tariff-rate.

Tariff-rate quotas provide for the entry of a specified quantity of the quota product at a reduced rate of duty during a given period. There is no limitation on the amount of the product which may be entered during the quota period, but quantities entered in excess of the quota for the period are subject to higher duty rates. In most cases, products of Communist-controlled areas are not entitled to the benefits of tariff-rate quotas.

Absolute quotas are quantitative; that is, no more than the amount specified may be permitted entry during a quota period. Some absolute quotas are global, while others are allocated to specified foreign countries. Imports in excess of a specified quota may be exported or warehoused for entry in a subsequent quota period.

IMPORT SUBSTITUTION

An attempt by a country to reduce imports (and hence foreign exchange expenditures) by encouraging the development of domestic industries.

IN BOND

A term applied to the status of merchandise admitted provisionally to a country without payment of duties, either for storage in a bonded warehouse or for trans-shipment to another point where duties eventually will be imposed.

IN BOND TRANSIT

The movement of goods without completion of custom formalities, from a point of arrival in the customs territory to a point of exportation or another point for customs examination and release.

IN CASE OF NEED

A term used for the agent or representative of a shipper abroad to who a bank may apply for instructions when so directed by the shipper.

INCHMAREE CLAUSE

A customary provision in marine cargo policies for coverage from losses sustained because of bursting of boiler, breakage of shafts, latent defects in the hull or machinery of the ship, or errors in the navigation or management of the vessel.

INCHOATE DRAFT

A draft which has been started but is not completely finished. Example: the date or amount has not been filled in.

INCOME STATEMENT

The profit and loss statement of a given concern for a particular period of time.

INCONVERTIBILITY

The inability to exchange the currency of one country for the currency of another.

INCOTERMS

The International Chamber of Commerce (ICC), headquartered in Paris, France, set out to overcome problems of conflicting national laws and interpretations by establishing a standard set of trade terms and definitions providing “neutral” rules and practices. The first Incoterms - uniform rules for interpretation of trade terms- were published by the ICC in 1936. As transportation and documentation techniques change, Incoterms are updated. The current version is “1990 Incoterms”.

The Incoterms of 1990 are private definitions. They do not have the force of law. The buyer and seller must agree to make them applicable to the contract. This would imply that the rights and obligations as defined by the Incoterms of 1990 are accepted by both parties. By simple reference to one of the trade terms expressly stating that it should be interpreted according to Incoterms (e.g. CIF Incoterms), Incoterms will be included in the contract, whatever its form (written document or exchange of telex, etc.). This express reference to Incoterms is advisable as it assures both parties their legal relations are grounded in fair and reasonable international standards.

INDEMNIFY

To insure; to secure against loss or damage that may occur in the future.

INDEMNITY

An obligation to make good any loss or damage another person has incurred or may incur.

INDEMNITY BOND To the Top

An agreement to hold harmless a carrier as regards to a liability to which it would otherwise be subject.

INDENT

An offer to purchase at prices and under such terms as are stipulated by a prospective buyer; the term is often used to apply to any foreign order.

INDENT AGENT

A sales agent abroad who markets the products of foreign supplier on a commission basis.

INDEPENDENT ACTION

The right of a conference member to depart from common rates, terms or conditions of the conference without the need for prior approval of the membership. Granted in the Shipping Act of 1984.

INDEPENDENT CARRIER

A steamship line that is not a member of a conference.

INDICATION

A nonbinding statement by a principal stipulating generally the terms and conditions under which he would be prepared to conclude a contract to charter a ship. This statement is used in charter transactions as a basis for negotiations.

INDIRECT COST

Manufacturing cost that cannot be easily seen in the product. Electricity, hazard insurance on a building, and real estate taxes are indirect costs.

INDIRECT EXPORTING

Sales by the exporter to the buyer through a domestically located intermediary.

INDIRECT LIABILITY

A party who endorses the note of a maker for a bank, or who guarantees a note as a guarantor for a maker, is said to have indirect liability on the note.

INDIVIDUALLY VALIDATED LICENSE (IVL)

A type of export license that is more detailed than a General license and legally requires that the exported product has the U.S. government authorization.

INDUCEMENT

Some berth liner services publish in their schedules the name of a port and words by inducement in parentheses. This mean the vessel will call at the port if there is a sufficient amount of profitable cargo available and booked.

INDUSTRIAL COMPETITIVENESS INDEX

A measure of the relative competitiveness of various nations’ industrial exports, derived by adjusting the effective exchange rate for a given nation’s currency against that of a competitor nation after adjusting for the inflation of wholesale prices of non food manufacturers.

INDUSTRIAL DEVELOPMENT BONDS (IDB)

Bonds issued by a state or local government to finance plants and facilities that are then leased to private businesses. The purpose of IDBs is to attract industry as part of local economic development efforts. Their appeal to investors is that they are tax exempt, except for those issued after August 7, 1986, which are subject to the Alternative Minimum Tax.

INDUSTRIAL POLICY

Encompasses traditional government policies intended to provide a favorable economic climate for the development of industry in general or specific industrial sectors. They may include tax incentives to promote investments or exports, direct or indirect subsidies, special financing, protection against foreign competition, worker training programs, regional development programs, etc.

INELIGIBLE BANKERS’ ACCEPTANCE

A bankers’ acceptance that does not conform to Regulation A of the Federal Reserve Bank. See Regulation A.

INFANT INDUSTRY ARGUMENT

The view that “temporary protection” for a new industry or firm in a particular country through tariff and non-tariff barriers to imports can help it to become established and eventually competitive in world markets. The rationale underlying the Generalized System of Preferences is comparable to that of the infant industry argument.

INFLATION RISK COVERAGE

Also called escalation coverage. Insurance or guarantee cover that protects the supplier within parameters, against a significant increase in the manufacturing cost of capital goods with a long lead time between contract signing and delivery.

INFORMATION LETTER

Written statement issued by the Headquarters Office or the Regional Commissioner of Customs, New York Region, that does no more than call attention to a well established interpretation or principle of Customs Law, without applying it to a particular set of acts. An information letter may be issued in response to a request for a ruling when

(i) the request suggests that general infor mation, rather than a ruling, is actually being sought

(ii) the request is incomplete or otherwise fails to meet the requirements set forth, or

(iii) the ruling requested cannot be issued for any other reason,and

(iv) it is believed that general information may be of some benefit to the party making the request.

INHERENT VICE

An insurance term referring to any defect or other characteristic of a product that could result in damage to the product without external cause (for example, instability in a chemical that could cause it to explode spontaneously). Insurance policies may specifically exclude losses caused by inherent vice.

INLAND BILL OF LADING

A bill of lading used in transporting goods overland to the exporter’s international carrier. Although a Through bill of lading sometimes can be used, it usually is necessary to prepare both an Inland bill of lading and an overseas Ocean bill of lading for export shipments.

INLAND CARRIER

A transportation company in the business of meeting goods at a port of entry and delivering them to a point inside the continent.

INSPECTION CERTIFICATE

A certificate issued by an independent third party when outside inspection is called for in the merchandise contract.

INSTRUMENT

A written document in which some right is conferred or some contractual relationship expressed.

INSTRUCTION LETTER

A document issued by the exporter accompanying a draft which lists detailed instruction to a bank relating to a draft to be collected.

INSTRUMENTS OF INTERNATIONAL TRAFFIC

Transportation equipment used to transport goods in international commerce. Such equipment is permitted duty-free entry and exemption from local property taxes. Such equipment must itself move in international commerce in order to qualify for the exemption. A container would normally qualify, whereas a container chassis (which does not leave the country) normally would not qualify.

INSULAR POSSESSION

Certain offshore possession of the United States that are considered to be beyond the Customs Territory. The insular possessions are the Virgin Island, Guam, American Samoa, Wake island, Kingman Reef, Johnson Island and Midway Island. Manufacturers of the insular possessions are accorded duty-free entry into the United States so long as they do not contain foreign materials in excess of 50 percent of the value of the finished article.

INSURANCE To the Top

A contract of protection against loss in which the insurer undertakes to indemnify the policyholder in the event of a specified contingency or peril. An Export Credit Agency (ECA) may offer insurance to exporters and banks.

INSURANCE CERTIFICATE

A document issued by an insurance company, under a marine policy and in cover of a particular shipment of merchandise.

INTANGIBLE ASSET

An asset which has no substance or physical body,it is incorporeal. The most widely known types of intangible assets are known as “goodwill” and “patent” right. These assets are purchased sometimes for very substantial outlays of capital. Their value to the purchaser lies in the use he can make of them, although they cannot be seen. A purchaser buys “goodwill” in order to take over a business which has enjoyed a fine business reputation for several years. The purchase price of “goodwill” is determined by the profits a business has enjoyed due to business ethics, quality of the product handled, or desirable location. “Patent rights” permit a manufacturer to use a patent to his advantage, the patent right being transferred for a consideration by the inventor or holder of the patent right.

INTEGRATED CARRIERS

Carriers that have both air and ground fleets. Since they usually handle thousands of small parcels an hour, they are less expensive and offer more diverse services than regular carriers.

INTELLECTUAL PROPERTY

Ownership conferring the right to possess, use, or dispose of products created by human ingenuity, including patents, trademarks and copyright.

INTELPOST

A high speed international electronic (facsimile) mail service operating between the United States and other countries.

INTER

Between

INTER-ALIA

Among other things.

INTER-AMERICAN DEVELOPMENT BANK (IDB)

Provides 10 to 25 loans, repayable in the currency loaned. Concessional financing available through the Fund for Special Operations, which allows repayment, wholly or in part, in local currency.

INTERCHANGE

The transfer of cargo from one carrier to another.

INTERCHANGE AGREEMENT

An agreement among carriers permitting transport equipment (e.g., containers, rail trailers) to move freely between their respective systems.

INTERCHANGE POINT

A location where one carrier delivers freight to another carrier.

INTERCOASTAL

Between one coast and another-as between the Atlantic and Pacific coasts.

INTEREST RATE ARBITRAGE

The movement of funds from one money market center to another through the foreign exchange market in order to obtain higher rates of interest.

INTEREST RATE EQUALIZATION

An Export Credit Agency (ECA) program that provides to commercial bank the interest difference between the subsidized rate payable on the bank’s ECA supported loan and the bank’s market cost of funds plus an agreed interest spread. Also called subsidization or make-up.

INTERIM RECEIPT

A receipt given by a carrier pending execution of an AWB (air waybill).

INTER-INDUSTRY TRADE

This is the name given to trade between countries which involves the exchange of products which belong to different industries. For example, one country exports cloth to another country in exchange for steel.

INTERLINE

The act of passing cargo from on carrier to another to continue the transit. The term is most common among motor carriers and railroads. The comparable term among ocean carriers is transship.

INTERLINE AGREEMENT

A contract between two or more carriers to expedite exchange of traffic between the parties to the agreement.

INTERMEDIATE CLAUSE

A clause or basis contained in a tariff to provide for rates to a point not named therein, but which is intermediate to points that are named.

INTERMEDIATE CONSIGNEE

A person named in a bill of lading or other shipping paper as authorized to receive cargo for the purpose of effecting delivery to the ultimate consignee.

INTERMODAL

A shipment that is transferred from one mode of transport air/truck/rail/water combination to another in the same conveyance without unloading or rehandling of the merchandise.

INTERMODAL CONTAINER TRANSFER FACILITY (I.C.T.F.)

An on-dock facility for moving containers from ship to rail or truck.

INTERNALIZATION

A process whereby, through the multinational expansion of companies, certain transactions, whether in goods or asset rights, are administered internally rather than through the use of external markets.

INTERNATIONAL AIRPORT To the Top

Is any airport designated by:

(1) The Secretary of the Treasury or the Commissioner of Customs as a port of entry for aircraft arriving in the U.S. from any place outside thereof and for the merchandise carried on such aircraft:

(2) The Attorney General as a port of entry for aliens arriving on such aircraft; and

(3) The Secretary of Health and Human Services as a place for quarantine inspection.

INTERNATIONAL AIR TRANSPORT ASSOCIATION (IATA)

A nongovernmental industry organization of the world’s scheduled airlines, the group effectively sets standards and, in many cases, fares for international airlines services. Established in 1945 by an act of Canadian Parliament, the organization succeeded a previous International Air Transport Association which was founded at the Hague in 1919.

INTERNATIONAL BANK FOR ECONOMIC COOPERATIONS

A clearinghouse for international settlements among COMECON members established at Moscow in 1963. The object of the bank was to eliminate the need for strict bilateral settlement of trade balances among members by use of accounts in “transferable rubles.” The transferable ruble, however, has not yet been established as a convertible currency, which has impeded the goals of the bank and left settlements largely at the bilateral level.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD)

Also known as World Bank: United Nations organization founded in 1945 to assist postwar reconstruction in Europe, the bank is an important source of credit for developing countries. Makes loans to member nations when private capital is unavailable. Loans made directly to governments or to private enterprises with government guarantees.

INTERNATIONAL CARTEL

A conglomerate that operates internationally. The best-known example in recent years has been the Organization of Petroleum Export Countries. (OPEC)

INTERNATIONAL CHAMBER OF COMMERCE (ICC)

An organization of businesses with membership from over 80 countries. The ICC meets to resolve business disputes and to harmonize worldwide trade practices by establishing agreed upon rules.

INTERNATIONAL COMMODITY AGREEMENT

A multilateral trade agreement aimed at promoting price and supply stability as related to the production of particular commodities.

INTERNATIONAL DEVELOPMENT ASSOC. (IDA)

Affiliate of the World Bank that provides capital to the poorer developing member nations on more flexible terms than those of the poorest developing member nations on more flexible terms than those of the IBRD.

INTERNATIONAL DEVELOPMENT COOPERATION AGENCY (IDCA)

Plans and coordinates U.S. policy on international economic issues affecting the developing world. Made up of the Agency for International Development, the Overseas Private Investment Corporation, and the Trade and Development Program.

INTERNATIONAL ENERGY AGENCY

An autonomous group within the Organization for Economic Cooperations and Development established in 1974 to coordinate the responses of the developed, oil-importing countries to the 1973 oil embargo and subsequent price escalations.

INTERNATIONAL FINANCE CORPORATION (IFA)

Members of the World Bank group. Created to encourage the flow of capital into private rather than public investment in developing countries. Makes loans at commercial interest rates, usually as lender of last resort.

INTERNATIONAL LAW

The law governing relations of nations with one another. It arises principally from international agreements or from custom that nations adopt. International law includes both public law and private law. The public law regulates political relations between nations. The private law is the community nations grant to each other’s law in enforcing rights arising under foreign law.

INTERNATIONAL LONGSHOREMEN’S ASSOCIATION (ILA)

The union whose members perform waterfront work involved in receiving, loading, stowing, and unlading cargo. Also related activities involving the vessel and equipment repairs.

INTERNATIONAL MARITIME ORGANIZATION (IMO)

A specialized agency of the United Nations concerned with maritime safety and protection of the marine environment.

INTERNATIONAL MONETARY FUND (IMF)

Created to smooth fluctuations in the world trade cycle, promotes international monetary cooperation, and expand world trade. Provides for free currency convertibility between participating nations as well as temporary assistance for members with short or medium term balance-of-payment problems. Loans are contingent upon the fund’s determination that the debtor nation is working to correct its deficit and shore up its currency. Members contribute to the fund on a quota basis designed to reflect relative economic strength. Founded in 1945 as a result of the Bretton Woods Conference.

INTERNATIONAL MONETARY MARKET (IMM)

A division of the Chicago Mercantile Exchange that trades futures in U.S. Treasury bills, foreign currency, certificates of deposit, and Eurodollar deposits.

INTERNATIONAL PRICE INDEX

A price index that serves as a standard to measure inflation in industrialized countries. The index consists of the C.I.F. value (in U.S. dollars) of exports of industrial country manufactures to developing countries.

INTERNATIONAL RESERVES

Gold, hard currencies, and Special Drawing Rights issued by the International Monetary Fund which can be used to settle a nation’s international obligations.

INTERNATIONAL TRADE

The exchange of goods and service between one country and another.

INTERNATIONAL TRADE ADMINISTRATION (ITA)

The ITA is a division of the Department of Commerce designed to promote world trade and to strengthen the international trade and investment position of the United States.

INTERNATIONAL TRADE COMMISSION (ITC)

An independent agency created by Congress in 1916; was given broad investigation powers relating to the customs laws, including competition caused by foreign industries and imported articles.

INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR)

A body of Federal regulations designed to restrain, regulate, and control the manufacture, exportation and importation of military equipment and weapons.

INTERNATIONAL UNION

A union having affiliated locals in more than one country. Examples include International Ladies Garment Workers Union (ILGWU), International Longshoremen’s and Warehousemen’s Union, and International Typographical Union.

INTERSTATE COMMERCE

Business activity among inhabitants of different states, including transportation of persons and property and navigation of public waters for that purpose, as well as purchase, sale and exchange of commodities.

INTERSTATE TRAFFIC

Traffic moving from a point in one state to a point in another state; between points in the same state, but passing within or through another state enroute; and between points in the United States and Foreign countries.

INTERVENTION To the Top

A process within the framework of the Common Agricultural Policy of the European Economic Community whereby the EEC will purchase certain commodities currently selling below a stipulated target price. The price actually paid is the intervention price. Intervention is employed to ensure that EEC farmers receive a fair income, thereby discouraging the conversion of land from agricultural to other uses.

INTRA

Within

INTRA-FIRM TRADE

A trade between a multinational company and its overseas affiliate or associate companies in another country. Sometimes, such trade is called in-house or intra-group trade.

INTRA-INDUSTRY FOREIGN DIRECT INVESTMENT

A two way direct investment between any two countries which takes place within the same industry. Thus when United States chemical manufacturers invest in Western Europe and West European chemical manufacturers invest in the United States, such direct investment is called intra-industry direct investment abroad.

INTRA-INDUSTRY TRADE

A trade between countries which involves the exchange of products which belong to the same industry. For example, Germany exports Volkswagens to Italy and Italy exports Fiats to Germany.

INTRASTATE TRAFFIC

Traffic having origin, destination and entire transportation within one state.

INTRINSIC VALUE

Value of tangible material, regardless of its use; for instance, the value of silver used in a coin.

INVENTORY FINANCING

A synonym for over advances in Factoring, where loans in excess of accounts receivable are made against inventory in anticipation of future sales.

INVESTMENT PERFORMANCE REQUIREMENTS

Special conditions imposed on direct foreign investment by recipient government, sometimes requiring commitments to export a certain percentage of the output, to purchase given supplies locally, or to ensure the employment of a specified percentage of local labor and management.

INVESTMENT PRICE

The price at which the European Economic Community, in accordance with Common Agricultural policy will intervene in the market to buy excess agricultural produce, thereby protecting EEC farmers.

INVISIBLE TRADE

Items such as freight, insurance, and financial services that are included in country’s balance of payments accounts (in the “current” account), even though they are not recorded as physically visible exports and imports.

INVOICE

A bill prepared by a seller of goods or services rendered to the buyer. The invoice usually itemizes all items making up the bill for convenience of the buyer, and to prevent disagreements regarding the amount of the bill. Invoices are used as posting media by the seller in this accounts receivable, and by the buyer in his accounts payable. Invoices are also used in preparing shipments by the seller and in receiving goods by the buyer.

INVOICE, FINAL

This invoice will take the place of the preliminary invoice after goods have arrived at destination and the actual weight, quantity and value is determined and agreed upon.

INVOICE MEMORANDUM

A memo sent by the exporter to the importer in order to, among other things, to place a specific shipment and/or value on record, and may end up being accepted as the final and correct statement of amount due and/or purchase of shipment made.

INVOICE, PRELIMINARY PROVISIONAL

Circumstances sometimes require that a so-called “preliminary” or provisional” invoice be issued instead of a final, definitive invoice. (e.g., when it is not possible at the time of shipment to determine the final weight, quantity, or value of the goods being shipped, when settlement can only be made after importer receives goods and weighs them, etc.)

INWARD COLLECTION

A collection processed by the collecting/presenting bank in the importer’s country; the converse of an outward collection. Also termed Payable Domestic.

I.P.A.

Including particular average.

IRREVOCABLE

Incapable of being recalled or revoked, unchangeable.

IRREVOCABLE CONFIRMED LETTER OF CREDIT

A letter of credit which obligates the issuing bank and second bank, usually in the seller’s country, to pay the exporter when all terms and conditions of the letter of credit have been met. None of the terms and conditions may be changed without the consent of all parties to the letter of credit.

IRREVOCABLE UNCONFIRMED LETTER OF CREDIT

A letter of credit which, once issued, can only be amended with express permission of all parties. It carries only the opening bank’s commitment to pay.

ISSUING BANK (OPENING BANK)

A bank which substitutes its credit standing for the importer’s and guarantees payment of an exporter’s draft if the exporter draws it according to specific terms stipulated in a letter of credit.

ISSUING CARRIER

The carrier by whom a tariff is published, or a bill of lading or other document is created and/or issued.

ITEMS OF TRADE To the Top

Goods or services that a nation buys or sells in the world markets. The three items are: commodities, service, and credit. Commodity transactions are regarded as visible item of trade, whereas service and credit transactions are known as invisible items.