ad valorem A tariff levied as a percentage of the stated price of an

imported product is called ... tariff.

Advance payment The payment method where the buyer agrees to make payment
of whole grand values or partial values to the seller before the
seller sends the cargo.
Advised letter of credit A letter of credit issued by a bank and forwarded to the
beneficiary by a second bank in his area. The second bank
validates the signatures and attests to the legitimacy of the first
bank.
Agility The ability to rapidly and cost effectively adapt to market
changes with no significant negative impact on quality or
dependability.
Anti-dumping law Designs to protect domestic producers and sellers of the goods

Ask rate A _________ is called the exchange rate at which the bank
will sell a currency.
Automated guided vehicle A transportation network that automatically routes one or more
system material handling devices, such as carts or pallet trucks, and
positions them at predetermined destinations without operator
intervention.
Back Order Product which has been ordered by a customer but out of stock
and promised to ship when the product becomes available.
Back-to-back letter of Two letters of credit with identical documentary requirements,
credit except for the difference in the price as shown by the invoice
and draft.
Balance of payment A statistical summary of a country's total trade, other economic
transactions and financial flows at a given time.
Balance of trade In standard usage, this is the balance between exports and
imports in an economy. The concept conveys few analytical
insights. The term also refers, however, to the occasional
attempt or unstated longer-term aim of governments, rooted
deeply in mercantilism, to ensure that the value of imports
does not exceed that of exports.
Banker's acceptance A usance draft drawn on a bank that stamps "ACCEPTED"
across the face, making it a prime obligation of that bank to
pay. It is used to finance specified short-term, self-liquidating
transactions, including foreign trade.
Bar Code A symbol consisting of a series of printed bars representing
values.
Base currency In a quoted exchange rate, the currency that is to be purchased
with another currency
Bilateral trade agreement An agreement between two countries setting out the conditions
under which trade between them will be conducted.
Bill of exchange Signed document that orders a person or organization to pay a
fixed sum of money on demand or on a specified date.
Bill of lading Document that shows details of goods being transported; it
entitles the receiver to collect the goods on arrival.

A transportation document that is the contract of carriage

containing the terms and conditions between the shipper and
 carrier.
Bills for collection A negotiable instrument drawn by a company or individual,
presented to the drawee bank for payment.
Bretton Woods Agreement The ______ ______ _______ was an accord among nations to
create a new international monetary system based on the value
of the U.S dollar
Business logistics The systematic and coordinated set of activities required to
provide the physical movement and storage of goods from
vendor/supply services through company facilities to the
customer (market) and the associated activities in an efficient
manner necessary to enable the organization to contribute to
the explicit goals of the company.
Buy rate the exchange rate at which a bank will buy a currency is called
a ______ ______
Capacity Management It should be understood, defined, and measured for each level
in the organization to include market segments, products,
processes, activities, and resources.
Capital account Records currency inflows and outflows due to international
dealinds in financial assets, such as invesments and loans
Carbon Footprint A measure of the total carbon emissions for a given person,
organization, building, operation etc. and the impact their
carbon emissions have on the environment by relating the
amount of greenhouse gases produced to such activities as
burning fossil fuels for electricity, heating transportation, etc.
Cargo Insurance ... is underwritten on the Institute Cargo Clauses, with
coverage on an A, B, or C basis, A having the widest cover and
C the most restricted.
central bank A country's chief bank, which is government owned. It
regulates the commercial banks and holds gold and foreign
currency reserves. It actively intervenes by buying and selling
its own currency in the foreign exchange markets so that the
currency will keep a certain value.
Clean collection A negotiable instrument presented for collection with no
commercial document attached.
Code of conduct Usually a non-binding intergovernmental instrument that seeks
to certain types behaviour of governments or private
corporations
Collecting Bank Bank that confirms they will pay the exporter on evidence of
shipment of goods.
Commercial policy ____ covers governmental acts, policies and practices with
influence trade in goods and services (A term that is now
disappearing & replaced by trade policy)
commodities raw materials or primary products (metals, cereals, coffee,
etc.) that are traded on special markets
Common carrier Transportation available to the public that does not provide
special treatment to any one party and is regulated as to the
rates charged, the liability assumed, and the service provided.
Competitive advantage It states that the success of a firm or an industry is based on
cost advantages in the production of a relatively standardized
product or product-based advantages related to the
 development of differentiated products. Firms with a ... are
often concentrated geographically, which in turn assists the
development of a workforce with the relevant skills
Competition laws Protect consumers and importers

Competition policy Approaches of governments to the promotion and protection of

competition. It consists of competition laws and policies
achieving similar aims.
Compound Duty A tariff levied on an imported product and calculated partly as
a percentage of its stated price, and partly as a specific fee for
each unit is referred to as a (n) ...
Confirmed letter of credit A letter of credit issued by one bank to which a second bank
adds its commitment to pay.
Confirming Bank Bank that confirms they will pay the exporter on evidence of
shipment of goods.
Contingent multilateralism An American term to mean that multilateral action should be
taken whenever possible to improve market access, but
sometimes preferential liberalization in the form of free-trade
agreements and unilateral action would be better.
Contingent protection Protective mechanisms, also called commercial defence
mechanisms, that legal under the WTO agreements. They may
be triggered to counter the effects of dumping, subsidies and
unexpected import surges causing injury to domestic industry.
Such mechanisms include anti-dumping measures,
countervailing duties and safeguards.
Convertible currency Currency that trades freely in the foreign exchange market,
with its price determined by the forces of supply and demand
Core Competence A specific factor that a business sees as being central to the
way it, or its employees, works. It fulfills three key criteria:
1) It provides consumer benefits
2) It is not easy for competitors to imitate
3) It can be leveraged widely to many products and markets.
cover note A ___ proves you have insurance while the policy is being
processed.
Currency arbitrage the instantaneous purchase and sale of a currency in different
markets for profit
Currency hedging practice of insuring against potential losses that result from
adverse changes in exchange rates

making contract to buy or sell a commodity or financial asset

at a pre-arranged price in the future as a protection or
"insurance" against price changes
Currency option a right, or option, to exchange a specific amount of a currency
on a specific date at a specific rate
Currency speculation the purchase or sale of a currency with the expectation that its
value will change and generate a profit

buying securities or other assets in the hope of making a

capital gain by selling them at a higher price (or selling them
in the hope of buying them back at a lower price)
Currency swap the simultaneous purchase and sale of foreign exchange for
two different dates
Current account The component of BOP showing trade in goods and services,
income and unrequited transfers
Deferred payment letter of A letter of credit under which the documents are forwarded to
credit the importer’s bank, while sight draft is presented at a later
future date.
derivatives a general name for all financial instruments whose price
depends on the movement of another price
Distribution Channel One or more companies or individuals who participate in the
flow of goods and services from the manufacturer to the final
user or consumer.
Distributor A business and industry which acts as a third party local
representative and distribution point for a manufacturing firm.
Document of title Document allowing someone to claim ownership of goods.

Documentary collection A collection item with title documents that accompany the
draft. The documents are released to the drawee upon payment
of the draft.
Documentary letter of A document issued by a bank, whereby the bank replaces the
credit importer as the paying party. The exporter is basing his risk of
getting paid on the bank rather than on the importer. The bank
will have to be reimbursed by the importer.
Dumping When a company exports a product at a price lower than the
price normally charged in its domestic market, it is said to
be ...
Embargo A complete ban on trade (imports and exports) in one or more
products with a particular country.
exchange rate the rate at which one currency is exchanged for another

Exporting Sending goods to another country for sale or trade

export tariff A tariff levied by the government of a country that is exporting

a product
Factor endowment theory A trade theory which holds that nations will produce and
export products that use large amounts of production factors
that they have in abundance and will import products requiring
a large amount of production factors that they lack
fixed exchange rate A system whereby central banks are required by international
agreements to maintain their currency at a relatively fixed
value. This is achieved by buying the currency when it reaches
its low point and by selling when it reaches its high point
floating exchange rate A system in which currencies have no specific par value; value
is normally determined by supply and demand. Central banks
are not required to intervene, buy they often do to avoid wild
fluctuations.
Floating policy A policy effected for a fixed sum insured sufficient to cover a
relatively large number of the assured's shipments.
fortuitous loss A ... is one that is unforeseen and unexpected by the insured
and occurs as a result of chance.
Foreign Exchange money or currency of a foreign country

Foreign exchange market the market in which currencies are bought and sold Iand in
which currency prices are determined
forward contract a contract requiring the exchange of an agreed-upon amount of
a currency on an agreed-upon date at a specific exchange rate
forward rate exchange rate at which two parties agree to exchange
currencies on a specified future date
Foreign trade zone A designated geographic region in which merchandise is
allowed to pass through with lower customs duties and/or
fewer customs procedures is called a(n)...
Freight Forwarder An organization which provides logistics services as an
intermediary between the shipper and the carrier, typically on
international shipments.
Free float system _____ is an exchange-rate system in which currencies float
freely against one another, without governments intervening in
currency markets
Free trade In principle, the free movement across borders of goods,
services, capital and people. In practice, national policy and
regulatory objectives put greater or lesser constraints on the
movement of each.
futures contract to buy or sell fixed quantities of a commodity, currency, or
financial asset at a future date, at a price fixed at the time of
making the contract
General Average Expenses and damages incurred as the result of damage to a
ship and its cargo and/or of taking direct action to prevent
initial or further damage to the ship and its cargo. These
expenses and damages are paid by those with an interest in the
ship and its cargo in proportion to their values exposed to the
common danger.

... is the losses/damages caused by special expenses and

sacrifices that are intentionally and reasonably conducted to
save the vessel, cargo, and freight from a threat in the common
ocean voyage.
General Agreement on a treaty that was designed to promote free trade by reducing
Tariffs and Trade/GATT both tariff and non-tariff barriers to international trade
Globalization From an economist's point of view, at its simplest, a decline in
costs of doing business across space. The term describes the
increasing integration of national economic systems through
growth in international trade, investment and capital flows.
Gold standard A international monetary system in which nations linked the
value of their paper currencies to specific values of gold
Heckscher-Ohlin theory A trade theory that extends the concept of (comparative
advantage by bringing into consideration the endowment and
cost of factors of production and helps to explain why nations
with relatively large labour forces will concentrate on
producing labour-intensive goods, whereas countries with
relatively more capital than labour will specialise in capital-
intensive goods.
INCOTERMS International bases of sale developed by the International
Chamber of Commerce to define sellers' and buyers'
responsibilities
Indemnification ... means that the insured is restored to his or her approximate
financial position prior to the occurrence of the loss.
Inherent vice This describes something that occurs due to an action set up in
the property itself without the assistance of an outside agency.
Examples of this type of loss include spontaneous combustion
and deterioration.
Integrated logistics A comprehensive, system-wide view of the entire supply chain
as a single process, from raw materials supply through finished
goods distribution. All functions that make up the supply chain
are managed as a single entity, rather than managing individual
functions separately.
Internationalization The extension of economic activity across national borders to
harness the benefits of lower costs in other economies, with
countries specializing in a particular stage of production. It is
one of the results of decreasing costs of transport and
communications which promotes the integration of markets for
goods, services, technology, ideas, capital and human
resources.
International payment The transmission of some commonly accepted liquid asset in
exchange for goods, services, or non-liquid assets across
national borders.
International product life A theory of the stages of production of a product with new
cycle 'know-how'; it is first produced by the parent firm, then by its
foreign subsidiaries, and finally anywhere in the world where
costs are the lowest; it helps explain why a product that begins
as a nation's export often ends up as an import.
International trade Purchase, sale, or exchange of goods and services across
national borders.
insurer/underwriter the party to an insurance arrangement who undertakes to
indemnity for losses

A company giving insurance cover is known as the ...

insured/policyholder the person or entity buying the insurance and
receiving indemnity on happening of unforeseen events.

A person who has taken out insurance cover is known as the ...
Insurance a contract whereby, in return for the payment of premium by
the insured, the insurers pay the financial losses suffered by
the insured as a result of the occurrence of unforeseen events

... is the pooling of fortuitous losses by transfer of such risks to

insurers, who agree to indemnify insureds for such losses, to
provide other pecuniary benefits on their occurrence, or to
render services connected with the risk.
Insurance Policy a standard form contract between the insured and the insurer,
which determines the claims that the insurer is legally required
to pay.
Invoice List of goods sold as a request for payment.

IMF ________ was the agency created by Breton Woofs Agreement

to regulate fixed exchange rates and enforce the rules of the
international monetary system
Importing Bringing in goods from another country for sale or trade

Import tariff A tariff levied by the government of a country that is importing

a product
Irrevocable letter of credit A letter of credit that cannot be canceled nor amended without
agreement of all parties.
Issuing Bank Bank that issues a letter of credit (i.e. the importer's bank).

Lead time The total time that elapses between an order's placement and
its receipt. It includes the time required for order transmittal,
order processing, order preparation, and transit.
Leakage ... is an extraneous risk that is recovered with the term 'all
risks'.
Leontief paradox A finding by Wassily Leontief, a Nobel Prize-winning
economist, which shows that the United States, surprisingly,
exports relatively more labour-intensive goods and imports
capital-intensive goods
Letter of credit Method of financing overseas trade where payment is made by
a bank in return for delivery of commercial documents,
provided that the terms and conditions of the contract are met.
Linked distributed system Independent computer systems, owned by independent
organizations, linked in a manner to allow direct updates to be
made to one system by another.
local content requirement A requirement that some specific fraction of a good be
produced domestically.
Loan guarantee When a government guarantees that it will repay the loan of a
company if the company should default on repayment, it is
called a (n) ...
Logistics It is the process of planning, implementing and controlling the
flow and storage of goods, which aims at ensuring that the
right product will be in the right place at the right time in the
most cost efficient way based on customers' needs.
Logistics channel The network of supply chain participants engaged in storage,
handling, transfer, transportation, and communications
functions that contribute to the efficient flow of goods.
Logistics data interchange A computerized system to electronically transmit logistics
information.
Logistics management is that part of supply chain management that plans,
implements, and controls the efficient, effective forward and
reverse flow and storage of goods, services, and related
information between the point of origin and the point of
consumption in order to meet customers' requirements
Logistics management is an integrating function which -coordinates and optimizes all
logistics activities, as well as integrates logistics activities with
other functions, including marketing, sales, manufacturing,
 finance, and information technology
Machine-to-Machine A term describing the process whereby machines are remotely
interface monitored for status and problems reported and resolved
automatically or maintenance scheduled by the monitoring
systems.
Managed float system An exchange-rate system in which currencies float against one
another, with governments intervening to stabilize their
currencies at particular target exchange rates is known as a
________
Market forces The determination of price by supply and demand (the
quantity available and the quantity bought and sold)
Market-positioned Warehouse positioned to replenish customer inventory
warehouse assortments and to afford maximum inbound transport
consolidation economies from inventory origin points with
relatively short-haul local delivery.
Marine Insurance ... covers the loss or damage of ships, cargo, terminals, and any
transport or property by which cargo is transferred, acquired,
or held between the points of origin and final destination.
Marshaller/Marshalling This is a service unique to international trade and relates to an
agent individual or firm that specializes in one or more of the
activities preceding Main Carriage, such as consolidation,
packing, marking, sorting of merchandise, inspection, storage,
etc.
Mercantilism A trade theory which holds that a government can improve the
economic well-being of the country by encouraging exports
and stifling imports to accumulate wealth in the form of
precious metals
Mixed policy The policy covers the subject matter insured for a voyage and
a period of time either before, after or during the voyage.
Multilateralism An approach to the conduct of international trade based on
cooperation, equal rights and obligations, non-discrimination
and the participation as equals of many countries regardless of
their size or share of international trade
Multilateral trade Intergovernmental agreements aimed at expanding and -
agreements liberalizing international trade under non-discriminatory,
predictable and transparent conditions set out in an array of
rights and obligations.
Neo-mercantilism A trade theory which holds that a government can improve the
economic well-being of the country by encouraging exports
and stifling imports.
Ocean marine exposure possibility of loss associated with water transportation,
including hull damage or destruction, cargo damage or
destruction, liability to others for bodily injury, and property
damage or destruct
Ocean marine insurance ... covers ocean-going vessels and their cargo from loss or
damage because of perils of the sea; contracts are also written
to cover the legal liability of shippers and owners.

coverage in the event of a marine loss which is damage or

destruction of a ship's hull and the ship's cargo (freight) as the
 result of the occurrence of an insured peril
Order management The planning, directing, monitoring, and controlling of the
processes related to customer orders, manufacturing orders,
and purchase orders.
Ordinary breakage ... is breakage caused by negligence, and since negligence is
not a peril covered by the policy, it is excluded by the Act.
Open account means the exporter ships the goods to the buyer and just waits
till a fixed date as agreed in their contract for payment from
the buyer.
Normally, the exporter only accepts _______ ________
method of payment if he has known the buyer quite well and
they have established a long-term and trustworthy business
relationship.
Open policy A policy embodying a marine cargo open cover; it refers to a
form of cover used for the insurance of consignments that are
regularly and frequently shipped to overseas markets.
options contract giving the right, but not the obligation, to buy or sell a
security, a currency, or a commodity at a fixed price during a
certain period of time.
Particular average Expenses and damages incurred as the result of damage to a
ship and its cargo, and/or of taking direct action to prevent
initial or further damage to the ship and its cargo.
Polycentric staffing A staffing policy in an MNE in which host country nationals
are recruited to manage subsidiaries in their own country,
while parent- country nationals occupy key positions at
corporate headquarters.
Pooling ... is the spreading of losses incurred by the few over the entire
group, so that in the process, average loss is substituted for
actual loss.
Positive sum game A situation in which all countries can benefit even if some
benefit more than others
Premium payments to the insurance company to buy a policy and to
keep it in force.
Principle of Indemnity states that the insurer agrees to pay no more than the actual
amount of the loss; stated differently, the insured should not
profit from a loss.
Principle of Insuarable ... states that the insured must be in a position to lose
Interest financially if a covered loss occurs.
Principle of Subrogation ... means substitution of the insurer in place of the insured for
the purpose of claiming indemnity from a third party for a loss
covered by insurance.
Principle of Utmost good An insurance contract is based on the ... that is, a higher degree
faith of honesty is imposed on both parties to an insurance contract
than is imposed on parties to other contracts.
Protectionism A climate of economic policy formulation which sees merit in
preventing the exposure of domestic producers to the rigours
of the international market. The basic means for achieving this
are tariffs, subsidies, voluntary restraint arrangements and
other non-tariff measures, with an emphasis on the less
transparent measures.
Tariff A government tax levied on a product as it enters or leaves a
country
Tax haven A country with exceptionally tow, or no, income taxes

Theory of absolute A trade theory which holds that nations can increase their
advantage economic well-being by specialising in goods that they can
produce more efficiently than anyone else.
Theory of Comparative A trade theory which holds that nations should produce those
advantage goods for which they have the greatest relative advantage.
Time policy Traditionally, this is a policy effected for a period of 12
months but can certainly be negotiated to be for more,
typically up to 18 months as the reinsurance arrangements of
the insurer may not allow them to offer more, for reasons that
are beyond the scope of this book.
Trade Usually refers to the sale and distribution of goods and
services across international borders. There are many different
ways of doing this, but there must be a commercial element for
a transaction to qualify as trade.
Trade deficit Condition that results when the value of a nation's imports
greater than the value of its exports
Trade liberalization A general term for the gradual or complete removal of existing
impediment to trade in goods and services. Free trade may be
its ultimate aim, but more likely it is freer trade. Investment
restrictions may also be covered by this term i investment in
the target market is necessary for effective market access
Trade policy The complete framework of laws, regulations, international
agreements and negotiating stances adopted by government to
achieve legally binding market access for domestic firms
Trade surplus Condition that results when the value of nation's exports is
greater than the value of its imports.
Transferable letter of credit A letter of credit that can be utilized by someone designated
by the original beneficiary.
Quota Restrictions on the amount of a good that can enter or leave a
country during a certain period of time is called a(n)...
Quoted currency In a quoted exchange rate, the currency with which another
currency is to be purchased
Red clause letter of credit A letter of credit permitting the beneficiary to receive a sum
prior to shipment.
Representations .. are statements made by the applicant for insurance. For
example, if you apply for life insurance, you may be asked
questions concerning your age, weight, height, occupation,
state of health, family history, and other relevant questions.
Revocable letter of credit A letter of credit that may be cancelled at any moment without
prior notice to the beneficiary.
Revolving letter of credit A letter of credit calling for renewed credit to be made
available when the issuing bank informs the beneficiary that
the buyer has reimbursed the issuing bank for the drafts
already drawn.
Risk transfer means that a pure risk is transferred from the insured to the
insurer, who typically is in a stronger financial position to pay
 the loss than the insured.
Shipping network It comprises sea lanes that link up ports, with connecting
services provided by other actors in the shipping industry,
involving a number of commercial activities, including the
provision of infrastructure, the operation of vehicles, and the
management of organizational systems such as enterprise
resource planning, which is an information system that
integrates all the operations and related applications for an
entire enterprise.
Specific duty A tariff levied as a specific fee for each unit (measured by
number, weight, etc.) of an imported product
spot rate an exchange rate requiring delivery of the traded currency
within two business days
Standby letter of credit A letter of credit that can be drawn against, but only if another
business transaction is not performed.
subject-matter insured the person, group, or property for which an insurance policy is
issued.
Subsidy Financial assistance to domestic producers in the ton of cash
payments, low interest loans, tax breaks, product price
supports or some other form is called...
Supply chain management It encompasses the planning and management of all activities
involved in sourcing and procurement, conversion, and all
logistics management activities.
Usance draft/Time draft A draft that has been drawn to be payable after a specific
number of days.
voluntary export restraint A quota on trade imposed from the exporting country's side,
instead of the importer's, usually imposed at the request of the
importing country's government
Voyage policy These policies cover the subject matter insured from one port
or place to another port or place.
World Bank The agency created by Breton Woofs Agreement to provide
funding national economic development efforts is called the
________
World Trade an international body dealing with rules of trade between
Organization/WTO nations.