(FREE) We asked you to explain what 35 random global trade terms mean. How many did you get right? Here is our solution....
PART 2 of 2: The Quiz
We asked you to explain 35 top terms you will hear in importing and exporting all the time. How many did you get right?
To recall the results key:
35-30 correct answers = Customs Geek. We want to hire you or at least meet you. Get in touch to claim a free coffee :-)
29-20 correct answers = Customs Geek in training. Little brush up cannot help.
19-10 correct answers = Well, this is going to get tough for you. Get in touch, we need to talk.
9 - 0 correct answers = We think you are looking for CustomERS, not Customs. You might be at the wrong place. Get in touch, we can help.
These were the terms we wanted you to define:
Bill of lading
Certificate of Origin (COO)
Pro forma invoice
Terms of Sale
Statement on origin
UK Global Tariff
Returned Goods Relief
Goods subject to any form of operation
Certificate of conformity
Here are our answers:
1. Air waybill
An air waybill is a receipt issued by an international airline for goods, and evidence of the contract of carriage. It obliges the carrier to carry the goods to the airport of destination, according to specified conditions. It is a document of title, which proves ownership, and is non-negotiable.
2. Bill of lading
A bill of lading is a contract between the owner of the goods and the carrier. It is a receipt, contains the terms of the carriage contract, and importantly, is a document of title, which proves ownership of the goods. For ships, there are two types:
A straight bill of lading. This is not negotiable. It indicates that the carrier has accepted the goods listed, and obliges the carrier to carry the goods to the port of destination, according to specific conditions.
A ‘shipper’s orders’ bill of lading. This is negotiable. It can be bought, sold or traded whilst the goods are in transit.
3. Certificate of Origin (COO)
A certificate of origin is a signed statement guaranteeing the origin of the export item. Certificates of origin are usually validated by a chamber of commerce in the UK.
4. Commercial invoice
A commercial invoice provides the information needed to clear your goods through customs in the destination country. It is prepared by the exporter or freight forwarder and required by the buyer to arrange for payment to the exporter. It should provide a description of goods, the address of the shipper and seller, and the delivery and payment terms. In most cases, the commercial invoice is used to assess customs duties and taxes.
A consignment is an arrangement where an exporter delivers goods to a distributor, who agrees to only pay the exporter once they have sold it. The exporter retains ownership of the goods until they are sold, but also carries all the financial burden and risk.
6. Consular invoice
An invoice covering a shipment of goods certified by the embassy or consulate of the country for which the merchandise is destined. A consular invoice describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. It is used by the country’s customs officials to verify the value, quantity, and nature of the shipment.
7. Customs declaration
A customs declaration needs to be made in a country for any goods that are being exported out of the country or imported into it.
8. Customs invoice
A customs invoice is a document used to clear goods through customs in the country you are exporting to. It provides evidence for the value of the goods. In some countries, it might be sufficient to use the commercial invoice for this.
9. Export licence
An export licence is a government document that authorises the export of restricted goods.
10. Packing list
A packing list is a document that indicates the type of package being used to transport goods for export, such as a box, crate, drum or carton. It also itemises the goods for export in each package. An export packing list is considerably more detailed than a standard domestic packing list. For example, it shows individual weights and measurements for each package.
11. Freight forwarder
A freight forwarder is a third party agent that you can hire to move your goods from the country to the country you are exporting to. Most companies choose to use a freight forwarder to move their goods.
A freight forwarder can take on full responsibility for the documentation required to clear domestic and foreign customs and the movement of goods between these points. The split of responsibility between you and the freight forwarder will depend on the type of incoterms you choose. Read our guidance on moving goods and using freight forwarders
Incoterms are a set of rules which define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. They are published by the International Chamber of Commerce (ICC) and are widely used in commercial transactions.
A freight forwarder can also advise you on selecting the most appropriate Incoterms for your business, defining delivery responsibilities for you and your overseas buyer. You may decide on a company policy of the Incoterm you will use in all but exceptional circumstances. This makes your pricing and sales terms clear. However, an overseas buyer may insist on which of you organizes the freight and that will determine the Incoterm you eventually use.
13. Inspection certificate
A pre-shipment inspection (PSI), is required in certain countries. The certificate issued guarantees the specifications of the goods being shipped. The inspection is performed by a third party such as Intertec, SGS, Cotecna, and Bureau Veritas. The required inspection agency is contracted by the country of destination.
14. Insurance certificate
An insurance certificate is a document prepared by the exporter or freight forwarder to provide evidence that insurance against loss or damage has been obtained for the goods.
15. Pro forma invoice
A pro forma invoice can act as a quotation and is prepared by the exporter before shipping the goods. It informs the buyer of the goods to be sent, their value, and other key specifications. Sometimes exporters say they are being paid by ‘Proforma’. They mean payment in advance with their buyer using this document as a notification of the full amount to be paid
Tax or duty imposed on a product when it is imported into a country. When an exporter knows the tariff code for their product they can look up the import duty. This duty would usually be paid by the buyer/importer unless the exporter is selling on incoterms such as DDP where they include the duty in their selling price.
17. Tariff code
A tariff, or commodity code, is a unique number that’s assigned to every product type. The same code is used in all countries of the world so it's relatively easy to find out the import duty for your product.
18. Terms of Sale
Terms that define the obligations, risks, and costs of the buyer and seller involving the delivery of goods that comprise the export transaction. These terms are commonly known as Incoterms.
Rules of origin determine where your goods originate from. This means that the origin is the economic nationality of goods being imported and exported (where they have been produced or manufactured). It is not just where they have been shipped or bought from.
20. TCA preference
A zero rate of duty is provided under the UK-EU Trade and Co-Operation Agreement (TCA).
A reduced or zero rate of duty is provided under an agreement that a country/region has entered into with another country.
22. Union goods
Union goods mean:
a) Goods wholly obtained in the EU and not incorporating goods imported from outside the EU
b) Goods imported into the EU and released into free circulation in the EU
c) Goods obtained or produced in the EU from goods in categories a) and b)
23. Preferential origin
Applies to goods that are being traded between the Parties to a preference agreement and which meet the rules of origin and origin procedures within that agreement.
These are rules that apply for purposes other than preferential duty, for example, if trade embargoes or Anti-Dumping Duties apply or for compiling statistics.
24. Statement on origin
This is an origin declaration (also known as an ‘invoice declaration’) that is made by using a commercial document that has enough detail to identify the origin of the goods. This can be an invoice, packing list or delivery note.
25. Importer’s knowledge
This allows the importer to claim preferential tariff treatment merely based on their own knowledge about the originating status of imported products.
26. Free circulation
This applies to goods that are duty paid and cleared by Customs and which can now be sold, or used within the customs territory.
The Common Transit Convention is used to ease the movement of goods between or through any common transit countries. The UK is a member of the Common Transit Convention.
28. Special Procedures
Customs special procedures allow you to store, temporarily use, process or repair your goods and get partial or full relief from import duty, or in some cases suspension of duty.
29. UK Global Tariff
The UK Global Tariff (UKGT) applies to all goods imported into the UK unless the country you’re importing from has a trade agreement with the UK or an exception applies, such as a relief or tariff suspension or the goods come from developing countries covered by the Generalised Scheme of Preferences.
30. Returned Goods Relief
This is a relief that can be applied to goods which are being re-imported into the UK that have previously been exported from the UK. You may also be able to claim relief on goods that you re-export to the EU that have previously been exported from the EU, but you will need to check with the relevant EU customs authority.
31 Product-specific rules
For every product traded under a free trade agreement, there is a corresponding product-specific rule (PSR) that must be met to demonstrate the product originates in the free trade area and qualifies for preferential tariff treatment.
32. Goods subject to any form of operation
Goods that are not substantially processed or transformed but undergo some form of minimal processing.
33. Wholly obtained
Your goods are normally classed as ‘wholly obtained’ if they’re natural products, or products manufactured entirely from them that completely originate from the country or territory covered in preference agreements.
34. Wholly produced
Wholly produced goods are those produced or manufactured exclusively from wholly obtained inputs.
35. Certificate of conformity
A certificate of conformity is a signed statement from a manufacturer guaranteeing that a product meets certain technical standards.
How did you do? Let us know by posting your results in the comments below!