Commonly Used Terms

Airway Bill

Airway bill is issued by air carrier of goods on receipt of goods after completion of export customs formalities of the country.

Articles of Association

The Articles of Association is a document that contains the purpose of the company as well as the duties and responsibilities of its members defined and recorded clearly. It is an important document which needs to be filed with the Registrar of Companies.

Automated System For Custom Data (ASYCUDA)

ASYCUDA is a computerized customs management system which covers most foreign trade procedures. The system handles manifests and customs declarations, accounting procedures, transit and suspense procedures, and generates trade data that can be used for statistical economic analysis.

Bill of Lading

A bill of lading is a legal document between a shipper and a carrier that details the type, quantity and destination of the goods being carried. The bill of lading also serves as a shipment receipt when the carrier delivers the goods at the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and an authorized representative from the carrier, shipper and receiver must sign it.

Certificate of Origin 

A Certificate of Origin (COO) is an important international trade document that certifies that goods in a particular export shipment are wholly obtained, produced, manufactured or processed in a particular country. They also serve as a declaration by the exporter.

CFR (Cost & Freight)

Cost and Freight (CFR) means that the seller must pay the costs and freight in order to transport the goods to the port of destination in question. The risk of the loss of or damage to the goods, as well as any additional costs as a result of events after the goods are delivered onboard the vessel, transfers from the seller to the buyer when the goods pass the ship’s railing in the shipping port.

CIF( Cost, Insurance and Freight)

“Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

Customs clearing agent 

A person who carries on the business of arranging for the Customs clearance of goods and who deals directly with the Customs for and on behalf of another person.

Customs Duty (CD)

Charge levied on imports and listed in importing country's tariff schedules. Duties may be specific or ad valorem or a combination of the two (ad valorem with a specific minimum, or the greater of the two).

Customs warehouse

A designated place where imported goods are stored under Customs control without payment of import duties and taxes.

Demurrage

A charge made by a shipping company or a port authority for failure to load or remove goods within the time allowed.

Excise duty

A tax on goods that are manufactured locally.

FOB (Free On Board)

“Free On Board” means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

FTA

Free Trade Agreements are treaties between two or more countries to establish a free trade area where commerce in goods and service can be conducted across their common borders.

GAAP

Generally Accepted Accounting Principles - A common set of accounting concepts, standards, and procedures by which financial statements are prepared.

GATT

General Agreement on Tariffs and Trade. A treaty created following the conclusion of World War II. GATT's main objective was to reduce the barriers of international trade through the reduction of tariffs, quotas and subsidies and it was superseded by the WTO as the international organization governing international trade.

Generalized System of Preferences (GSP)

The GSP is a system through which industrialized high-income countries grant preferential access to their markets to developing countries

Harmonized Commodity Description and Coding System (HS)

The Harmonized System is an international nomenclature for the classification of products. It allows participating countries to classify traded goods on a common basis for customs purposes. At the international level, the Harmonized System (HS) for classifying goods is a six-digit code system. 

ISO

International Organization for Standardization - ISO is a worldwide federation of national standardization bodies of more than 159 countries. Established as a non-government organization in 1947, it develops international standards and publishes them. All branches other than electrical engineering standards are within the scope of ISO.

ISO 9000 

International Organization Standardization (ISO) guidelines for quality in manufacturing and service industries.

LDC

Least Developed Country - A country, according to United Nations, characterized as having low gross national income per capita, a weakness in human resources, and economic vulnerability. Note: Many sources prefer LLDC to denote Least Developed Countries and LDC for Less Developed Countries.

L/C

Letter of Credit - A letter issued by an importer’s bank guaranteeing payment upon presentation of specified trade documents (invoice, bill of lading, inspection and insurance certificates, etc.).

NSW

National Single Window is an integrated system realized with the collaboration of Customs and relevant ministries involving in management of import, export. Through NSW,  traders can declare and fulfil specialized inspection requirements of other ministries with regard to their exported - imported goods at a one-stop window.

Phytosanitary Certificate

A certificate issued by the Government agency (by the National Plant Quarantine Service) to satisfy import regulations of foreign countries indicating that a shipment has been inspected and found free from harmful pests and plant diseases.

Preferential tariff

Tariffs lower than those that a country usually applies for the importation of a good, granted to one or more countries when they belong to a certain geographical area, a free trade area, a customs union or a group with specific characteristics, such as “developing countries” and “least developed countries.”

Proforma Invoice

A pro forma invoice is a document that states a commitment on part of the seller to deliver the products or services as notified to the buyer for a specific price. It is thus not a true invoice.

SPS

Sanitary and Phytosanitary are applied to protect human, animal and plant life or health from risks arising from the introduction and spread of pests and diseases, including to protect them from risks arising from imported goods.

Tariff

A duty (or tax) levied upon goods transported from one customs area to another either for protective or revenue purposes. Tariffs raise the prices of imported goods.

Technical Barriers to Trade

Trade restrictive effect arising from the application of technical regulations or standards such as testing requirements, labeling requirements, packaging requirements, marketing standards, certification requirements, origin marking requirements, health and safety regulations, and sanitary and phytosanitary regulations.Technical Barriers to Trade deals with procedures for testing and certifying conformity to technical regulations (compulsory) and standards (voluntary) governing international trade.

UNCTAD

The United Nations Conference on Trade and Development is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues.

VAT (Value Added Tax)

Value Added Tax (VAT) is introduced by the Act No.14 of 2002 and is in force from 1st August, 2002. It is a tax on domestic consumption of goods and services. The goods imported into Sri Lanka and goods and services supplied within the territorial limits of Sri Lanka are the subject matter of this tax. 

WCO

The World Customs Organisation is an intergovernmental organization that acts as forum for dialogue and exchange of experiences between national Customs delegates.

WTO

The World Trade Organisation is an intergovernmental organization which regulates international trade.

 

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