Different Definitions Related to Trade Policy
Tax: An amount of money that a government requires people to pay according to their income, the value
of their property, etc., and that is used to pay for the things done by the government.
Tariff: A tariff is a tax imposed by one country on the goods and services imported from another
country.
Duties: A duty is a form of taxation levied on certain goods, services, or other transactions that
are imported and exported. Duty rates are a percentage determined by the total value of the goods
paid for in another country.
VAT: A value-added tax (VAT), known in some countries as a goods and services tax (GST),
is a type of tax that is assessed incrementally. It is levied on the price of a product or service at
each stage of production, distribution, or sale to the end consumer.
Quota: Quota, in international trade, government-imposed limit on the quantity, or in
exceptional cases the value, of the goods or services that may be exported or imported over a
specified period of time.
Entry Port: A port where foreign goods are admitted into the receiving country
Multiple Entry Visa: A multiple entry visa is a special type of visa that permits its holder
to enter the foreign country multiple times within a given time frame.
Unilateral Trade: A unilateral trade agreement is a commerce treaty that a nation imposes
without regard to others. It benefits that one country only. It is unilateral because other nations
have no choice in the matter. For example, it happens when a country imposes a trade restriction,
such as a tariff, on all imports.
Capital Account: The capital account, on a national level, represents the balance of
payments for a country. The capital account keeps track of the net change in a nation's assets and
liabilities during a year. The capital account's balance will inform economists whether the country
is a net importer or net exporter of capital.
Multinational Trade: Global trade, also known as international trade, is simply the import
and export of goods and services across international boundaries. Goods and services that enter
into a country for sale are called imports. Goods and services that leave a country for sale in another
country are called exports.
Way Bill: A document prepared by the carrier of a shipment of goods that contains details of
the shipment, route, and charges.
Carrier: An individual or legal entity that is the business of transporting passengers or goods
for hire. Shipping lines, airlines, trucking companies and railroad companies are all carriers.
Shipper: The party who enters in a contract of carriage with a carrier and pays the carrier is in
a position to give the carrier handling instructions. As the party who delivers goods to carrier, the
party who hands over cargo for transport is called “shipper”.
Bill of Lading: A bill of lading (BL or BoL) is a legal document issued by a carrier to a
shipper that details the type, quantity, and destination of the goods being carried. A bill of lading
also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination.
Letter of Credit: A letter of credit is a payment mechanism used in international trade to
guarantee payment of a specific amount in a timely manner. Issuing banks undertake letters of
credit based on collateral pledged by the party on whose behalf the bank is guaranteeing payment.
Custom Value: Customs value means the transaction value of imported goods, which is the
price actually paid or payable for the goods when sold for export to the country of importation,
including other leviable charges and adjustment.
Commodity Aid: In the simplified case of two countries and two commodities, terms of
trade are defined as the ratio of the total export revenue a country receives for its export commodity
to the total import revenue it pays for its import commodity. In this case, the imports of one country
are the exports of the other country.
Legal Documents: A legal document is a labeling binding in in the eyes of the court.
Deferred Payment System: A deferred payment option is a right to operationally defer
(delay) payment on an investment until a later date.
Types of Importers:
There are three broad types of importers:
• Looking for any product around the world to import and sell.
• Looking for foreign sourcing to get their products at the cheapest price.
• Using foreign sourcing as part of their global supply chain.
Light Engineering: Light engineering product refers to manufacturing that turns
prefabricated goods into saleable products like automobile, bicycle, cotton etc.
Consignment Note: Consignment Note means the document containing all the particulars
of the Goods issued by the Carrier for the movement of the Consignment delivered to the Customer
by the Carrier.
Harmonized Tariff System: Harmonized codes (or tariffs) are an international customs
classification system now used by most trading nations throughout the world. HS Codes are
commonly used throughout the export process for goods. The Harmonized System is a
standardized numerical method of classifying traded products.
