Glossary

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A



Acceptance

Acceptance refers to an accepted bill of exchange or the act of accepting a bill of exchange. The act of the drawee signing the bill already constitutes a legally binding acceptance. The signature usually covers the left side of the bill.

Acts of god

German law considers acts of God to be external events that cause damage. No amount of care can prevent or neutralize these events.

Air waybill

Air waybills are documents that confirm the amount, the appearance and sometimes the contents of the received air freight. They take on the function of airlines’ confirmations of receipt as well as of the shipping documents and papers stipulating property rights during transport.

Approved exporters

Approved exporters are businesses that have been issued a permission to use a simplified export procedure by the main customs office. They are obligated to implement procedures regulating in-house work flows and organization to ensure that the origin of goods can always be proved without a doubt.

ATLAS

ATLAS (“Automatisiertes Tarif- und Lokales Zoll-Abwicklungs-System” = Automated tariff and local customs clearance system) is a software used by German customs officials to automate customs clearance and to handle internal administration. It transforms, for instance, customs declarations and notifications on import duties into electronic messages in EDIFACT format. German customs authorities use ATLAS to forward necessary information to other EU Member States, allowing the processing and control of the international movement of goods to be largely automated.

Authorized consignees

Authorized consignees are permitted to take delivery of goods without the obligation to present them along with the transit declaration at the office of destination. To be granted this status, you must apply to the main customs office located in the customs district of your central accounting.

Authorized consignors

Authorized consignors can carry out Union and common transit procedures without the obligation to present goods. They can issue transit declarations, seal packages or means of transport, and also transport goods without customs authorities needing to become involved. To be granted this status and simplify transit procedures, you must apply at your main customs office.

Authorized economic opperator (AEO)

Pursuant to the European Union’s customs laws, authorized economic operators are certified businesses that benefit from the privilege of having simplified procedures within the entire European Union for receiving approval for procedures with economic impact.

Authorized exporter

Customs legislation confers a special status on authorized exporters granting them privileges during the German export declaration and clearance procedures. Authorized exporters are exempt from the obligation to present goods, which means that they can file their export declarations electronically and then can print out the export accompanying documents (EAD) themselves. However, their status does not authorize them to make use of the simplified option for issuing declarations of origin. You can apply to receive the status of authorized exporter at your local main customs office.

B



Bank guarantee

In terms of loan transactions, bank guarantees refer to guarantees and other assurances that banks provide on behalf of bank customers. They are unilateral contracts between the bank as guarantor and a beneficiary as warrantee, in which the banks commit to paying a certain amount to the warrantee should a third party not perform a specified service.

Bill of exchange (B/E)

A B/E is an unconditional order in writing requiring the drawee to pay a certain sum of money at a certain time and place to the drawer or a third party. You need to be able to present the B/E to enforce your right to payment. The acceptance, maturity and enforceability of the obligations resulting from the B/E come into force after the drawee has accepted the bill. However, they are not tied to the contractual obligations of the original transaction that resulted in the B/E being issued (B/Es are transferable).

Bill lading (B/L)

Bills of lading are documents for transport by sea. They serve several functions, in parallel if needed: receipt, received-for-shipment B/L, on-board B/L, document of title, evidence of the contract of carriage.

C



Certificates of origin

Certificates of origin are used in international trade and provide official confirmation of a product’s country of origin. However, they do not constitute preferential certificates of origin, which would enable nil or reduced import charges.

Certification / Certification of authentication

Certifications represent the official confirmation of the authenticity of signatures or documents, such as certificates of origin or commercial invoices. Chambers of commerce, consulates and other officially authorized bodies can issue them.

Commercial invoice

Commercial invoices are used for billing purposes, as documents for import procedures in import countries, for monitoring contract fulfilment and as evidence in the case of breach of the sales contract. They are invoices issued by the beneficiary detailing the goods delivered to or performances rendered for the buyer. The goods or services listed in the invoice must be described exactly as in the letter of credit. In all other documents, it is sufficient for the description of the goods or services to be general, as long as it does not contradict the descriptions in the letter of credit. Any Incoterms required in the letter of credit are also noted in the commercial invoice.

Commission

Commissions are regular payments for services rendered that are calculated on the basis of a fixed percentage of a specified value. Commission agents are often paid with fixed commission rates for successfully concluded deals.

Commission agent

Commission agents are employed to buy and sell goods in their own name for the account of another. They can be compared with commercial agents. Commission agents are liable towards third parties if they close deals without having recognisably acted in their capacity as an agent. Commission agents usually earn a commission from their principals for successfully concluding business deals.

Community goods (European Community)

Community goods can be traded in free circulation by economic operators without involvement of customs authorities. Goods need to fulfil 1 of 2 requirements to be classified as Community goods: Either they need to be obtained or manufactured entirely within the borders of the tariff union without any non-Community goods being part of their manufacturing or processing procedures; or they have to be declared as non-Community goods and then be released into free circulation as a result of correctly concluded import procedures.

Compliance management

Compliance management covers a business’s entire organizational arrangements intended to ensure compliance with import and export legislation. One of the things compliance management focuses on is the comparison of customer data with sanction lists.

Container

Containers are used for the storage and transport of large volumes of goods. These freight containers come in different, usually standard, sizes.

Country of destination

The country where a consignment of goods is being shipped is called the country of destination.

Country of origin

Countries where a good is obtained or manufactured are countries of origin. According to the Community Customs Code and its ordinances, “country of origin” refers to the country whose agricultural or industrial products are the goods in question.

Customs Declaration

In Germany, customs declarations are tax returns pursuant to the customs code tax laws. They are submitted via the Single Administrative Document (SAD), via an on-line customs declaration, via ATLAS or verbally (value of the goods under 1,000 €). Filing customs declarations with customs authorities constitutes an application for customs procedures to be conducted. The customs declarant is the person submitting the customs declaration. The consignee can be represented by an authorized representative.

Customs duties

Customs duties are charges that need to be paid when goods cross a customs frontier. They are taxes as defined by the German fiscal code and should not be confused with turnover tax on imports. In accordance with the principle of most favoured nation (MFN), if a country grants advantages, exemptions or privileges for a good, then this status is immediately and unconditionally conferred on identical goods from all other countries. As a result, the amount of customs duties is not determined among trade partners, but among goods.

Customs tariff

Customs tariffs comprise a nomenclature, combining a list of goods – usually as number codes – and their customs duty. They also include information about tax rates, import bans or restrictions, special information about the countries of origin or any trade policy measures. Customs tariffs are used during customs clearance and form the basis for the calculations of customs duties.

Customs value

A good's customs value is used for assessing the customs debt. It comprises the invoice total as well as any additional factors increasing or lowering costs. Generally, the invoice amount, less discounts for early payments, if applicable, and the terms of delivery as expressed in Incoterms are the basis of the customs valuation.

D



DGR (Dangerous goods regulations)

The Dangerous Goods Regulations (DGR) are IATA’s set of rules for transporting dangerous goods via their associated airlines. They state that a certain net amount per package may not be exceeded. Furthermore, the packaging needs to conform to specific standards. Goods need to be declared in bills of lading and other transport documentation. Packages must be marked with special hazard and other shipping labels. Consignors must also fill out a Shipper’s Declaration.

Documentary credit

see Letter of credit

Dual-Use-Goods

Dual-use goods are goods that can be used in two ways. These goods (including software and technology) may have been manufactured primarily for civilian uses, but their properties, such as their material properties or their capabilities, make them suitable for military applications as well.

Dual-Use EC Regulation

The Dual-Use EC regulation (Council Regulation (EC) No 428/2009) governs export controls for dual-use goods (see also Dual-use goods). The regulation is based on the Treaty Establishing the European Community, specifically Article 133, section 1, which states: “The common commercial policy shall be based on uniform principles, particularly in regard to charges of tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies.”

E



End-use certificates (EUCs)

End-use certificates (EUCs) are documents to be signed by consignees declaring which specific use the goods are intended for and their final destination if necessary. These certificates are used to ensure only specific applications of certain goods and to control or even forbid (in case of embargoes) the export of goods to certain countries.

Embargo

During embargoes, goods or commodities are prohibited from being imported to or exported out of a certain country. The declaration of embargoes is often used as a political instrument to sanction countries, for instance for breaking public international law. The ban on exports and imports often causes economic problemsm which in turn have political impact inside the sanctioned country.
There are 3 different kinds of embargoes imposing varying scopes of restriction: total, partial and arms embargoes.

Entry certificate

Entry certificates are meant to ensure that VAT-free deliveries from companies subject to German VAT laws actually arrive at their destination in other EU countries. On 01 October 2013, revised regulations came into force governing the obligation to provide documentation of intra-Community trade with the aim of ensuring taxation in the country of destination and preventing tax evasion.

European Community (EC)

The European Community is a supranational organization that developed out the European Economic Community, which was founded in 1957. The legal entity that the EC embodies lies at the core of the European Union (EU), which succeeded the EC on 01 December 2009, when the Lisbon Treaty entered into force.

EUR 1 movement Certificate

EUR 1 is a form used in international trade to ensure preferential origin status. It is used for trade with goods of preferential origin among countries that have signed a trade preference agreement with the EU. The EUR 1 is also legally recognized as a certificate of origin for foreign trade.

EUR 2 movement Certificate

The EUR 2 form can be used as a preference document for the movement of goods by post to Syria. Its use is only authorized for goods originating in the consignor’s country and it functions as a simplified preference document up to a value of 2,820 €. If the value of the package exceeds the maximum amount or if postal services are not used for shipping, then the EUR 1 movement certificate must be used.

European Union (EU)

The European Union comprises 28 European Member States. The European Single Market that the Member States form is the largest common market of the world in terms of the GDP. Within the EU, 18 countries form the European Economic and Monetary Union, using the EURO as a common currency.

Export

Export refers to the paid or unpaid transfer of goods or services produced in one economic area to other economic areas. It is part of foreign trade.

Export officer

Export officers are personally responsible for ensuring compliance with export control legislation. When companies are planning to export goods requiring approval, the export officer must be named in writing to the Federal Office of Economics and Export Control (BAFA). They must be a member of the board or managing director and are held liable in this function for foreign trade law violations.

Evidence of origin

The origin of goods can be proved in various ways. During import you can use a certificate of origin or movement certificates. Chambers of Commerce and Trade issue certificates that are often employed as proof of origin in export. If exporters want a tariff preference to be applied to their goods, then they use movement certificates or special forms as evidence of origin.

F



Federal office of economics and export control (BAFA)

The Federal Office of Economics and Export Control (BAFA) is based in Eschborn (Frankfurt am Main). It is a federal institution answering to the Federal Ministry for Economic Affairs and Energy (BMWi). Economic, security and environmental policy are the 3 core areas covered in its broad range of duties. For instance, it is tasked with controlling exports and issuing surveillance documents or export licenses.

Forwarder

Forwarders are independent businesses that enter into transport contracts obligating them to carry out rail, truck, ocean, air, inland waterway or multimodal transport. They are liable for the entire transport route they cover, regardless of whether they use their own or third-party means of transport.

G



Guarantees

see Bank guarantees

H



Harmonized commodity description and coding system (Harmonized system, HS)

The Harmonized System is a UN system of tariff nomenclature with around 5,000 code numbers used to categorise products for the purposes of reporting to customs and for classifying foreign trade data. The HS was devised under the auspices of the World Customs Organization (WCO). It is employed in more than 200 countries and used mainly as a system for defining and describing different economic classifications.

I



Import

Import refers to the paid or unpaid transfer of economic units whose permanent residence lies outside a certain country.

Import duties

Import duties (also called import charges) are levied on capital, goods and services. They include customs duties and all other fees and taxes, especially turnover taxes. As soon as goods cross the border of a customs territory, domestic consumers and businesses need to pay these charges.


Incoterms

Incoterms are a set of non-binding rules on the interpretation of standard clauses in foreign trade contracts.

International chamber of commerce

The International Chamber of Commerce’s headquarters are in Paris. The international organization’s duties are to support and promote international trade and globalisation. It protects the global economy’s prosperity, economic interests and growth.

International Maritime Organisation (IMO)

The International Maritime Organisation is a United Nations specialised agency based in London. It was founded on 13 January 1959. There are currently 170 Member States (as of 2011) and the three Associate members Hong Kong (China), Macao (China) and Faroes (Denmark). Germany joined the IMO in 1959.

J



K


Known consignor

Known consignors are businesses authorized to ship SECURED cargo. As of 29 April 2013, businesses need to be re-certified in order for the Federal Aviation Office (Luftfahrt-Bundesamt, LBA) to confer the status of officially certified known consignors on them.

L



Letter of Credit (L/C)

A letter of credit is a financial instrument used to balance the interests of buyers and sellers in foreign trade. Buyers have the assurance that they will only have to pay if the sellers deliver the ordered goods and have proven so by providing the necessary documentation. Sellers benefit from the certainty that they will receive payment of the purchase price to the advising bank (or another one, if allowed) after having delivered the goods and presented the required paperwork.

M



Material Safety Data Sheet (MSDS)

Material safety data sheets are instruments for documenting safety-relevant information for downstream users about chemicals, compounds and mixtures along the entire supply chain. They are designed to offer users in occupational settings data and recommendations for handling the chemicals. Their objective is to implement suitable health and safety measures in the workplace and ensure environmental protection.

Maturity / Maturity date

The maturity date is the agreed-upon performance date of a service. The debtor is then immediately obligated to perform the service agreed upon.

N


O


On Board

A pre-printed note in the bill of lading (B/L), which declares that the goods are indeed on board of the stated vessel. In the case of the received for shipment B/L, the following 4 parties are authorized to endorse it: the carrier, the carrier’s agent, the captain of the ship and the captain’s agent.


P



Partial embargo

see Embargo

Preference document

Preference documents are used in international trade and serve mainly to prove the preferential origin of goods with the aim of lowering or completely avoiding import duties during customs clearance in destination countries. Various bilateral and multilateral (free) trade agreements between the trading countries govern these preference documents.

Q


R


Rules of origin

These rules determine whether and under which circumstances a country will be defined as a good’s country of origin. The rules of origin comprise various criteria and conditions. They decide how products will be treated at customs as well as determining how the actual country of origin will be determined for the purposes of international trade.

S



Supplier's Declaration

Supplier’s declarations provide proof of the preferential origin of imported goods. Exporters need them as proof for issuing and for applying for preference documents.

T



TARIC

see Customs tariff

Terms of delivery

Buyers and sellers determine the terms of delivery in the sales contract. The terms cover all details agreed upon regarding the mode, time and price of delivery; exchange and return policies within a given time frame; and the specification of packaging, freight, insurance and passage of risk.

Terms of Payment

Terms of payment are the terms you must comply with when paying an invoice. They are part of the sales contract, where suppliers, sellers and/or buyers agree on them. Terms of payment determine the time and mode of payment, and how costs are shared by seller and buyer. They can also include terms on discounts or bonus payments.

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X


Y


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