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International

TRADE

INCOTERMS

merchandise

inspection

pro

form

a in

voic

e

CERTIFICATE

letter of credit

FOB

CFR

CIFCustoms

DUTY

Bonded Warehouse

bill of lading

Bro

ker

merchandise

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merchandiseGoods that are bought and sold in t rade are cal led merchandise .

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When merchandise is being moved or shipped, it may be called freight or cargo.

merchandise

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Trucks took the merchandise in containers from the factory to the port.

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certificate of manufacture

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certificate of manufactureThe manufacturer will issue a certificate of manufacture certifying that the goods are have been made to the buyer’s specifications.

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certificate of inspectionA certificate of inspection shows that the goods meet the required standards prior to shipment.

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“The goods appeared damaged, so the buyer checked to see that the cert if icate of inspection was valid.”

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pro forma invoice

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Before a supplier sends merchandise to a buyer, the supplier provides a pro forma invoice.

pro forma invoice

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pro forma invoiceThis invoice lists the exact quantity, value, and specifications of the merchandise.

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“When the shipment arrived, we checked the contents against the pro forma invoice we had received.”

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letter of credit

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letter of creditIn large trades, a buyer will finance the transaction using a letter of credit.

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letter of creditThis document guarantees that payment will be made when the seller meets the conditions of sale.

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“ Wh e n Way l a n d I n c . rece i ved the le t ter of credi t, they contacted the shipping company to arrange transport.”

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bill of lading

A bill of lading is a contract between an exporter and a transportation company.

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bill of lading

The bill of lading l is ts the goods being carried and must remain with the merchandise at all times.

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bill of lading

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example:“An airline may issue a bill of lading to a seller either before or after payment for goods is made.”

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incoterms

C I PDAT

EXWFOB

INCOTERMSc f r

CIFFAS

FCA

dapDDP

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Free On BoardFree on Board (FOB) means the seller is responsible for the goods until they are loaded.

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Free On BoardThe seller must pay all costs related to getting the goods to port and onto the ship.

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CFR means that a quoted price includes the cost of goods and transport charges to the destination port.

Cost & Freight

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CIF means that the quoted price includes the cost of goods, insurance, and transportation to the destination port.

Cost Insurance Freight

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example:“The seller agreed to pay cost and freight, so the buyer had to buy insurance for the goods.”

Textbonded warehouse

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bonded warehouseA bonded warehouse is a place where goods are stored after shipping but before the payment of duties on those goods.

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“At any major port facility there will be a number of b o n d e d w a r e h o u s e s available to store goods.”

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customs / duty

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customsCustoms is the authority or organization that controls the flow of goods in and out of a country.

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dutyCustoms authorities collect the duties – or taxes - applied to imports and exports.

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“Within a port, customs officials have the right to board and search any ship.”

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customs broker

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customs brokerA customs broker helps importers and exporters move their goods through Customs.

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customs brokerCustoms brokers prepare documents, help with communication, and arrange payment of duties.

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“Many customs brokers specialize in certain types of goods, such as textiles, food, or computer equipment.”

example:

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PracticeNow, it’s

your turn to practice!

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exampleFor example, if you hear…The bank issued a letter of <beep> to the furniture exporter.

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exampleYou can say ...The bank issued a letter of credit to the furniture exporter.

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get ready to speak

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The goods sat in a bonded <beep> for three months before the duty was paid.

question 1

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answer 1The goods sat in a bonded warehouse for three months before the duty was paid.

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The agreed terms were cost and <beep> ,

so the buyer had to buy insurance.

question 2

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The agreed terms were cost and freight,

so the buyer had to buy insurance.

answer 2

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question 3When the shipment arrived, we checked the contents against the bill of <beep>.

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answer 3When the shipment arrived, we checked the contents against the bill of lading.

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question 4After so many delays in customs, we switched to a better customs

<beep>.

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After so many delays in customs, we switched to a better customs broker.

answer 4

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