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Business Reading Room
Glossary and Acronyms - from F to
G
A An
B C Con D E F G H I J K L M N O P Q R S Sp T U VWXYZ
FAPT
Foreign Asset Protection Trust
FAS
Free alongside ship. A pricing term indicating that the quoted
price includes the cost of delivering the goods alongside a designated vessel.
FCA
"Free carrier" to named place. Replaces the former term
"FOB named inland port" to designate the seller's responsibility for the cost of
loading goods at the named shipping point. May be used for multimodal transport, container
stations, and any mode of transport, including air.
FCC
Foreign Controlled Corporation
FCIA
Foreign Credit Insurance Association.
F.C.& S.
Free of Capture & Seizure - Clause excluding war risks from the
Marine Policy; war risks can be covered by issuing a separate War Policy with an
additional premium being charged.
F.E.C.
See under Foreign Exchange Certificate.
FI
Free in. A pricing term indicating that the charterer of a vessel
is responsible for the cost of loading and unloading goods from the vessel.
FO
Free out. A pricing term indicating that the charterer of a vessel
is responsible for the cost of loading goods from the vessel.
FOB
F.O.B. (Free On Board)
A pricing term indicating that the quoted price for a good includes
the cost of delivering the good onto a vessel provided by or for the purchaser in the U.S.
port. The term "f.o.b." must be qualified by a name of location, such as
shipping point, destination, name of a city, etc. The stated "f.o.b. point" is
usually the location where the title to the goods passes from the seller to the buyer. The
seller is liable for the risks of loss or damage to the goods up to the point where title
passes to the buyer. The buyer is liable for such charges and risks after passing of
title. Identification of which party is liable for transportation charges is a separate
item.
FOB Airport
FOB Airport is based on the same principle as the ordinary FOB term. The seller's
obligations include delivering the goods to the air carrier at the airport of departure.
The risk of loss of or damage to the goods is transferred from the seller to the buyer
when the goods have been so delivered.
F.O.B./F.A.S. Endorsement.
If a merchant sells on F.O.B., F.A.S., C&F or similar terms, it
is the buyer's responsibility to place the insurance.
FPT
Family Limited Partnership
FSC
Foreign Sales Corporation
F.T.A.A.
See under Free trade Area of the Americas.
Factoring.
Factoring is the discounting of a foreign account receivable that
does not involve a draft. The exporter transfers title to its foreign accounts receivable
to a factoring house (an organization that specializes in the financing of account
receivable) for cash at a discount from the face value. Although factoring is often done
without recourse to the exporter, the specific arrangements should be verified by the
exporter. Factoring of foreign accounts receivables is less comman than factoring of
domestic receivables.
Factoring Houses
Certain companies which purchase export receivables (e.g., the invoices to foreign
buyers) at a discounted price, usually about two to four percent less than their face
value.
Fair Value
The reference against which U.S. purchase prices of imported merchandise are
compared during an antidumping investigation. Generally expressed as the weighted average
of the exporter's domestic market prices, or prices of exports to third countries during
the period of investigation. In some cases fair value is the constructed value.
Constructed value is used if there are no, or virtually no, home market or third country
sales or if the number of such sales made at prices below the cost of production is so
great that remaining sales above the cost of production provide an inadequate basis for
comparison.
Fast Track
Fast track procedures for approval of trade agreements were included by Congress in
trade legislation in 1974, in 1979, and again in the 1988 Trade Act. Fast track provides
two guarantees essential to the successful negotiation of trade agreements: (1) a vote on
implementing legislation within a fixed period of time, and (2) a vote, up or down, with
no amendments to that legislation. Provisions in the Omnibus Trade and Competitiveness Act
of 1988 include that the foreign country request negotiation of an FTA and that the
President give the Congress a 60-legislative-day notice of intent to negotiate an FTA.
During the 60-legislative-day period, either committee can disapprove fast track authority
by a majority vote. Disapproval would likely end the possibility of FTA negotiations. The
60-legislative-days can translate into five to ten months of calendar time, depending on
the Congressional schedule. Formal negotiations would begin following this 60-day
Congressional consideration period.
Federal Grain Inspection Service
FGIS certifies that grain produced in the United States meets the official United
States Standards for Grain. As part of its responsibilities, FGIS works with international
traders. Before any grain can be exported from the United States, it must first be
certified by FGIS as having met a specific standard. FGIS staff explain the national
inspection system, U.S. grain standards, and commodity inspection programs; conduct
briefings and tours; assess foreign inspection and weighing techniques; and respond to
inquiries about quality and quantity of U.S. grain exports. FGIS agencies in eight states
are delegated authority to perform official export services at ports.
Federal Maritime Commission
The FMC is an independent agencys which regulates oceanborne transportation in the
foreign commerce and in the domestic offshore trade of the United States.
Final Determination
The International Trade Administration makes a final determination after the
investigation of sales at "less than fair value" and the receipt of comments
from interested parties. This determination usually is made within 75 days after the date
a preliminary determination is made. However, if the preliminary determination was
affirmative, the exporters who account for a significant proportion of the merchandise
under consideration may request, in writing, a postponement of this determination. If the
preliminary determination was negative, the petitioner may likewise request a
postponement. In neither case can this postponement be more than 135 days after the date
of the preliminary determination. If the final determination is affirmative and follows a
negative preliminary determination, the matter is referred to the International Trade
Commission for a determination of the injury caused or threatened by the sales at less
than fair value. (Had the preliminary determination been affirmative, the ITC would have
begun its investigation at that time.) Not later than 45 days after the date the
International Trade Administration makes an affirmative final determination, in a case
where the preliminary determination also was affirmative, the International Trade
Commission must render its decision on injury. Where the preliminary determination was
negative, the ITC must render a decision not later than 75 days after the affirmative
final determination. A negative final determination by the Assistant
Secretary for Import Administration terminates an antidumping investigation.
Fines, Penalties, and Forfeitures System
The Fines, Penalties, and Forfeitures System, FPFS, a part of Customs' Automated
Commercial System, is used to assess, control, and process penalties resulting from
violations of law or Customs regulations. FPFS provides retrieval of case information for
monitoring case status.
Five-K Countries .... 5(k) Countries
Those countries as defined under Section 5(k) of the Export Administration Act.
Such countries are eligible for some or all of the same treatment as CoCom countries in
relation to export control requirements if those countries maintain comparable export
control programs.
Flag of Convenience
A ship registered under the flag of a nation which offers conveniences in the areas
of taxes, crew, and safety requirements.
Floating policy
See Open policy.
Food and Agricultural Organization
The FAO was established in 1945, as a specialized agency of the United Nations to combat
hunger and malnutrition. The FAO serves as a coordinating body between government
representatives, scientific groups, and non-governmental organizations to carry out
development programs relating to food and agriculture. Headquarters are in Rome, Italy.
Food for Peace
The "Food for Peace" program (also known as "P.L. 480), originally
established by the 1954 Agricultural Trade and Development Act, is the primary means by
which the U.S. provides foreign food assistance. The three primary objectives of the
program are to:
(a) expand U.S. agricultural exports,
(b) provide humanitarian relief, and
(c) aid the economic development of developing countries.
Commodities are transferred in two ways:
- By government-to-government long-term concessional financing or for local currencies in
which priority is given to developing countries which demonstrate the greatest need for
food, are undertaking measures to improve their food security and agricultural
development, and are potential commercial markets for U.S. agricultural commodities --
Title I, administered by the Department of Agriculture; and
- Donations or grants, including:
+ Donations of food commodities for distribution in meeting either emergency conditions or
international cooperative non-emergency assistance -- Title II, administered by AID; and
+ Providing food assistance on a grant basis to least developed countries through
government-to-government agreements.
Proceeds derived from sales on the local market may be used to support a variety of
economic development and related activities in the recipient countries -- Title III,
administered by AID. This assistance is sometimes known as "Food For
Development."
Food For Progress
The "Food for Progress" program, established by the 1985 Farm Bill, is carried
out by the Department of Agriculture, using the authority of either Public Law 480 or
Section 416 of the Agricultural Act of 1949. The program donates surplus government-owned
agricultural commodities or Title I (of P.L. 480) funds to needy countries for development
and agricultural reform purposes. Food for Progress operates in a less restrictive manner
than either P.L. 480 or Section 416.
Force Majeure
The title of a standard clause in marine contract exempting the parties for
non-fulfillment of their obligations as a result of conditions beyond their control, such
as earthquakes, floods, or war.
Foreign Access Zone
FAZ is a term adopted by Japan for its form of free trade zone. FAZs are the outgrowth of
Japan's effort to improve its trade balance and to stimulate regional economic areas. FAZs
are intended to be established around airports and seaports, with facilities (warehouses,
cargo-sorting, distribution, import processing, wholesale, design-in centers, exhibition
halls) on an international scale. The FAZ concept -- which emphasizes imports rather than
the processing and job creation -- extends from the July 1992 Law on Extraordinary
Measures for the Promotion of Imports and the Facilitation of Foreign Direct Investment in
Japan. Passage of the law is linked to the Structural Impediments Initiative (SII).
Foreign Affiliate of a Foreign Parent
A foreign affiliate of a foreign parent is, with reference to a given U.S. affiliate, any
member of the affiliated foreign group owning the U.S. affiliate that is not a foreign
parent of the U.S. affiliate.
Foreign Agricultural Service
The FAS, an agency of the U.S. Department of Agriculture, collects foreign market
information regarding agricultural production and trade, develops foreign markets for U.S.
agricultural products, and represents U.S. agricultural interests overseas and in
multilateral fora. FAS maintains over 60 counselor and attache posts, located in U.S.
embassies and consulates, and about fifteen Agricultural Trade Offices (ATOs) which
provide market development and trade promotion services in overseas locations. FAS also
administers USDA's export credit and concessional sales programs. FAS headquarters are
located in Washington, D.C.
Foreign and Commonwealth Office
The FCO, equivalent to the U.S. State Department, is Britain's Diplomatic Service, with
posts in about 170 countries. Among its functions, the FCO supports overseas trade and
export promotion services in cooperation with Britain's Department of Trade and Industry.
Foreign Assets Control
The Treasury Department's Office of Foreign Assets Control, OFAC, administers sanctions
programs involving specific countries and restricts the involvement of U.S. persons in
third country strategic exports.
Foreign Assistance Act of 1991
This Act replaced the Support for East European Democracy (SEED) Act. The Foreign
Assistance Act allows support to 26 countries, including all East European nations and
most of the Soviet republics, but not to the Soviet Union itself.
Foreign Availability
The Bureau of Export Administration conducts reviews to determine the foreign availability
of selected commodities or technology subject to export control. The reviews use four
criteria to determine foreign availability: comparable quality, availability-in-fact,
foreign source, and adequacy of available quantities that would render continuation of the
U.S. control ineffective in meeting its intended purpose. A positive determination of
foreign availability means that a non-U.S. origin item of comparable quality may be
obtained by one or more proscribed countries in quantities sufficient to satisfy their
needs so that U.S. exports of such item would not make a significant contribution to the
military potential of such countries. A positive determination may result in the decontrol
of a U.S. product that has been under export control, or the approval of an export
license. However, the control may be maintained if the President invokes the national
security override provision of the Act.
Beginning with the 1977 amendments to the Export Administration Act, the Congress directed
that products with foreign availability be identified and decontrolled unless essential to
national security. In January 1983, a program to assess the foreign availability of
specific products was established within the Office of Export Administration, now the
Bureau of Export Administration, or BXA. Further, 1985 amendments to the Act directed that
an Office of Foreign Availability be created.
Foreign Bank Supervision Enhancement Act
The FBSEA, passed in 1991, increased the Federal Reserve's supervisory powers over foreign
banks by: (a) requiring Federal Reserve review before a foreign bank enters or expands in
the United States; (b) tightening the standards for entry and expansion that must be
considered by the Federal Reserve; (c) requiring Federal Reserve Board approval of U.S.
representative offices of foreign banks; and (d) requiring that each U.S. office of a
foreign bank be examined at least once a year by the Federal Reserve.
Foreign Buyer Program
The Foreign Buyer Program, FBP, is a joint industry-International Trade Administration
program to assist exporters in meeting qualified foreign purchasers for their product or
service at trade shows held in the United States. ITA selects leading U.S. trade shows in
industries with high export potential. Each show selected for the FBP receives promotion
through overseas mailings, U.S. embassy and regional commercial newsletters, and other
promotional techniques. ITA trade specialists counsel participating U.S. exhibitors.
Foreign Claims Settlement Commission
The FCSC is authorized to determine claims of United States nationals for loss of property
in specific foreign countries. These losses have occurred either as a result of
nationalization of property by foreign governments or from damage and loss of property as
a result of military operations in specific conflicts. The Commission is an independent
quasi-judicial agency within the Justice Department.
Foreign Corrupt Practices Act
The FCPA prohibits U.S. individuals, companies and direct foreign subsidiaries of U.S.
companies from offering, promising, or paying anything of value to any foreign government
official in order to obtain or retain business.
Foreign Direct Investment in the United States
Foreign direct investment in the United States is the ownership or control, directly or
indirectly, by a single foreign person (an individual, or related group of individuals,
company, or government) of 10 percent or more of the voting securities of an incorporated
U.S. business enterprise or an equivalent interest in an unincorporated U.S. business
enterprise, including real property. Such a business is referred to as a U.S. affiliate of
a foreign direct investor.
Foreign Disclosure and Technical Information System
FORDTIS is a classified information system that contains an automated database of munition
and dual-use export licenses. The system is maintained by the Defense Department's Defense
Technology Security Administration.
Foreign Economic Trends
FETs are reports prepared by U.S. embassies abroad to describe foreign country economic
and commercial trends and trade and investment climates. The reports describe current
economic conditions; provide updates on the principal factors influencing developments and
the possible impacts on American exports; review newly announced foreign government
policies as well as consumption, investment, and foreign debt trends.
Foreign Exchange Option
A foreign exchange option is an arrangement in which a purchaser and a seller of foreign
currencies agree on a specific rate of exchange at a future date. The purchaser may choose
to exercise or pass up the option -- thus setting a limit on unfavorable exchange rates.
The seller is given a fee for tendering the option. Purchasers may exercise the option at
any time -- in the European option, currency exchange is made on the originally
established date; in the American option, exchange is made within a couple of days of the
purchaser exercising the option.
Foreign Exports
Exports of foreign merchandise (re-exports), consist of commodities of foreign origin
which have entered the United States for consumption or into Customs bonded warehouses or
U.S. Foreign Trade Zones, and which, at the time of exportation, are in substantially the
same condition as when imported.
Foreign Flag
A reference to a carrier not registered in the United States that flies the American flag.
The term applies to air and sea transportation.
Foreign Investment Advisory Service
FIAS was established in 1986 as a joint facility of the International Finance Corporation
and the Multilateral Investment Guarantee Agency to help developing countries increase the
inflow of foreign investment. The Service provides advice at the request of member
governments on formulating a general framework of legal, accounting, and regulatory
policies and institutions and procedures to attract and assess investment interest.
Foreign Market Development Program
FMD (also known as the Cooperator Program) is one of several Department of Agriculture
(USDA) programs designed to encourage development, maintenance and expansion of commercial
export markets for U.S. agricultural commodities and products. Under FMD, USDA considers
proposals with preference given to activities promising early results and lasting benefits
in commercial export markets. Funds may be used for trade servicing, consumer promotion,
market research, and to provide technical assistance to actual or potential foreign
purchasers. While agreements under the Cooperator Program may extend from one to five
years, types of activities and amounts of funds are annually negotiated between the
Foreign Agricultural Service (FAS) and participants (cooperators) and authorized in annual
marketing plans. The marketing plans must set forth the objectives and describe the
specific project in detail. The amount of funding provided by FAS varies, dependent upon
circumstances and whether the activities are characterized as generic or market promotion.
Foreign Market Value
The price at which merchandise is sold, or offered for sale, in the principal markets of
the country from which it is exported. If information on foreign home market sales is not
useful, the foreign market value is based on prices of exports to third countries or
constructed value. Adjustments for quantities sold, circumstances of sales, and
differences in the merchandise can be made to those prices to ensure a proper comparison
with the prices of goods exported to the United States.
Foreign-Owned Affiliate in the U. S.
A business in the United States in which there is sufficient foreign investment to be
classified as direct foreign investment. To determine fully the foreign owners of a U.S.
affiliate, three entities must be identified: the foreign parent, the ultimate beneficial
owner, and the foreign parent group. All these entities are "persons" in the
broad sense: thus, they may be individuals; business enterprises; governments; religious,
charitable, and other nonprofit organizations; estates and trusts; and associated groups.
A U.S. affiliate may have an ultimate beneficial owner (UBO) that is not the immediate
foreign parent; moreover, the affiliate may have several ownership chains above it, if it
is owned at least 10 percent by more than one foreign person. In such cases, the affiliate
may have more than one foreign parent, UBO, and/or foreign parent group.
Foreign Parent
The first foreign person or entity outside the United States in an affiliate's ownership
chain that has direct investment in the affiliate. The foreign parent consists only of the
first person or entity outside the United States in the affiliate's ownership chain; all
other affiliated foreign persons are excluded.
Foreign Parent Group
A foreign parent group, FPG, consists of: (1) the foreign parent, (2) any foreign person
or entity, proceeding up the foreign parent's ownership chain, that owns more than 50
percent of the party below it, up to and including the ultimate beneficial owner (UBO),
and (3) any foreign person or entity, proceeding down the ownership chain(s) of each of
these members, that is owned more than 50 percent by the party above it. A particular U.S.
affiliate may have several ownership chains above it, if it is owned at least 10 percent
by more than one foreign party. In such cases, the affiliate may have more than one
foreign parent, UBO, and/or foreign parent group.
Foreign Person
A foreign person is any person resident outside the United States or subject to the
jurisdiction of a country other than the United States. "Person" is any
individual, branch, partnership, association, associated group, estate, trust,
corporation, or other organization (whether or not organized under the laws of any State),
and any government (including a foreign government, the U.S. Government, a State or local
government, and any agency, corporation, financial institution, or other entity or
instrumentality thereof, including a government sponsored agency.)
Foreign Policy Controls
Foreign policy controls are distinct from national security controls (CoCom or other
international agreements) and are imposed to further U.S. foreign policy. The controls are
typically imposed in response to developments in a country or countries -- such as
considerations regarding terrorism and human rights -- or to developments involving a type
or types of commodities and their related technical data. Foreign policy controls expire
annually, unless extended.
Foreign Sales Agent.
An individual or firm that serves as the foreign representative of
a domestic supplier and seeks sales abroad for the supplier.
Foreign Sales Corporation
An FSC is a corporation created to secure U.S. tax exemption on a portion of earnings
derived from the sale of U.S. products in foreign markets. To qualify for special tax
treatment, an FSC must be a foreign corporation, maintain an office outside the U.S.
territory, maintain a summary of its permanent books of account at the foreign office, and
have at least one director resident outside of the U.S. There are some variations:
- Small FSCs are the same as FSCs, exceppt that small FSCs must file an election with the
IRS, and have their tax exemption limited to the income generated by $5 million or less in
gross export revenues. Small FSCs do not have to meet foreign managment or foreign
economic process requirements but must fulfill other requirements.
- Shared FSCs are FSCs which are "sshared" by 25 or fewer unrelated exporter
"shareholders" for the purpose of reducing costs while obtaining the full tax
benefits of an FSC.
Foreign Service
The Foreign Service supports the President and the Secretary of State in pursuing
America's foreign policy objectives. Foreign service functions include: representing U.S.
interests; operating U.S. overseas missions; assisting Americans abroad; public diplomacy
and reporting; communicating and negotiating political, economic, consular,
administrative, cultural, and commercial affairs. The Foreign Service comprises officers
from the Departments of State, Commerce, and Agriculture and the United States Information
Service.
Foreign Trade Division
FTD is the division in the Commerce Department's Census Bureau which compiles and
disseminates official U.S. import and export statistics. The division also maintains
international commodity classification systems and conducts methods research, including
international comparability of trade statistics.
Foreign Trade Zone.
FTZs are the U.S. form of free trade zones. These zones are restricted-access
sites in or near ports of entry, that operate under public utility principles to create
and maintain employment by encouraging operations in the U.S. which might otherwise have
been carried on abroad. Goods brought into a zone for a bona fide Customs reason are
exempt from state and local ad valorem tax. The zones are licensed by the Commerce
Department's Foreign-Trade Zones Board and operate under the supervision of the Customs
Service. Quota restrictions do not normally apply to foreign goods stored in zones, but
the Board can limit or deny zone use in specific cases on public interest grounds.
Domestic goods moved into a zone for export may be considered exported upon entering the
zone for purposes of excise tax rebates and drawback. A foreign trade "subzone"
is a non-contiguous zone site located at a manufacturing plant.
Foreign Traders Index
The foreign traders index is the U.S. and Foreign Commercial Service headquarters
compilation of overseas contact files, intended for use by domestic businesses. The FTI
includes background information on foreign companies, address, contact person, sales
figures, size of company, and products by SIC code.
Forfait Financing.
Nonrecourse financing based on discounting of bills of exchange or
promissory notes by a financing institution that absorbs the risk of collecting
payment from the buyer without recourse to the supplier.
Forfaiting
Forfaiting is a form of supplier credit in which an exporter surrenders possession of
export receivables, which are usually guaranteed by a bank in the importer's country, by
selling them at a discount to a "forfaiter" in exchange for cash. These
instruments may also carry the guarantee of the foreign government. In a typical
forfaiting transaction, an exporter approaches a forfaiter before completing a
transaction's structure. Once the forfaiter commits to the deal and sets the discount
rate, the exporter can incorporate the discount into the selling price. Forfaiters usually
work with bills of exchange or promissory notes, which are unconditional and easily
transferable debt instruments that can be sold on the secondary market.
Three primary differences between export factoring and forfaiting are:
- Factors usually want access to a largee percentage of an exporter's business, while most
forfaiters will work on a one-shot basis;
- Forfaiters generally work with medium and long-term receivables (180 days to seven
years), while factors work with short-term receivables (up to 180 days). Payment terms
usually reflect the type of product involved: forfaiters usually work with capital goods,
commodities, and large projects; factors work mostly with consumer goods.
- Most factors do not have strong capabiilities in developing regions of the world where
legal and financial frameworks are inadequate and credit informaiotn is not readily
available through affiliate factors. However, since forfaiters usually require a bank
guarantee, most are willing to work with receivables from these countries.
Foreign Corrupt Practice Act (FCPA).
The FCPA makes it unlawful for any person or firm (as well as
persons acting on behalf of the firm) to offer, pay, or promise to pay (or authorize any
such payment or promise) money or anything of value to any foreign official (or foreign
political party or candidate for foreign political office) for the purpose of obtaining or
retaining business. For further information, contact:
U.S. Department of Justice, Criminal Division, Fraud Section
Room 3402 Bond Building, 1400 New York Avenue, N.W., Washington,
D.C. 20530
Tel. (202) 514-0880
Foreign Exchange.
The currency or credit instruments of a foreign country. Also,
transactions involving purchase or sale of currencies.
Foreign Exchange Certificate (FEC)
China's currency. The FEC is convertible into foreign currency at
government controlled rates and was designed to be used for the purchase of imported
goods. See also Renminbi (RMB) which is a part of two tiered currency system
Foreign Sales Corporations ((FSC).
A FSC is a corporation set up in certain foreign countries or U.S.
possessions to obtain a corporate tax exemption on a portion of its earnings generated by
the sale or lease of export property. A corporation initially qualifies as a FSC by
meeting six basic formation tests. A FSC (unless it is a small FSC) must also meet several
fooreign management tests throughout the year, If it complies with those requirements, it
is entitled to an exemption on qualified transactions in which it performs the required
foreign economic processes. The tax exemtpion can be as great as 15 percent on gross
income from exporting, and the expenses can be kept low through the use of
intermediaries who are familiar with and able to carry out the formal requirements.
Forfait Financing.
Nonrecourse financing based on discounting of bills of exchange or
promissory notes by a financing institution that absorbs the risk of collecting payment
from the buyer without recourse to the supplier.
Forward Exchange Rate
A forward exchange rate is the price set between two parties for delivery of a foreign
currency on an agreed future date. If that date will occur within a week, the agreement is
called a spot transaction; if the date is more than a week in the future, the arrangement
is called a forward exchange transaction.
Foul Bill Of Lading.
A receipt for goods issued by a carrier with an indication that the
goods were damaged when received. Compare Clean bill of lading.
Framework Agreement
- Tokyo Round: The Tokyo Round called foor consideration to be given "to improvements
in the international framework for the conduct of world trade." Four separate
agreements make up what is known as the "framework agreement." They concern:
(1) differential and more favorable treatment for, and reciprocity and fuller
participation by, developing countries in the international framework for trade;
(2) trade measures taken for balance of payments purposes;
(3) safeguard actions for development purposes; and
(4) an understanding on notification, consultation, dispute settlement, and surveillance
in the GATT.
- Enterprise for the Americas Initiativee: Under the umbrella of the Enterprise for the
Americas Initiative the United States and interested Western hemisphere countries are
negotiating bilateral framework agreements which establish agreed upon stages for
eliminating counter-productive barriers to trade and investment. They also provide a forum
for bilateral dispute settlement.
Generally, the bilateral framework agreements contain similar objectives. They are based
on a statement of agreed principles regarding the benefits of open trade and investment,
increased importance of services to economies, the need for adequate intellectual property
rights protection, the importance of observing and promoting internationally-recognized
worker rights, and the desirability of resolving trade and investment problems
expeditiously. The parties establish a Council on Trade and Investment to monitor trade
and investment relations, hold consultations on specific trade and investment matters of
interest to both sides, and work toward removing impediments to trade and investment
flows. Framework agreements do not bind signatories to implement specific trade
liberalization measures.
Franc Zone
The Franc Zone (French: Zone Franc, ZF) is a monetary union among countries whose
currencies are linked to the French franc at a fixed rate of exchange: Benin, Burkina, the
Cameroon, Central African Republic, Chad, Comoros, Congo, Equatorial Guinea, France,
Gabon, Cote d'Ivoire, Mali, Niger, Senegal, and Togo. These countries have agreed to hold
their reserves primarily in French francs and to transact exchanges on the Paris market.
The zone was established in May 1951 under the auspices of a French government agency:
Comit‚ Mon‚taire de ZF.
Free Alongside Ship
Free Alongside Ship, FAS, at a named port of export. Under FAS, the seller quotes a price
for the goods that includes charges for delivery of the goods alongside a vessel at the
port of departure. The seller handles the cost of unloading and wharfage; loading, ocean
transportation, and insurance are left to the buyer. FAS is also a method of export and
import valuation.
Free Carrier ... (named point)
Free Carrier, FCA, to a named place. This term replaces the former "FOB named inland
port" to designate the seller's responsibility for the cost of loading goods at the
named shipping point. It may be used for multimodal transport, container stations, and any
mode of transport, including air.
Free-Choice Clause.
Clause in a countertrade contract that authorizes the primary
supplier or its delegate to place orders for any products manufactured in the primary
importer's country, without restrictions as to the sectors or companies that are entitled
to receive these orders.
Free In
A pricing term indicating that the charterer of a vessel is responsible for the cost of
loading goods onto the vessel.
Free In and Out
A pricing term indicating that the charterer of a vessel is responsible for the cost of
loading and unloading goods from the vessel.
Free of Particular Average
F.P.A., a type of marine insurance, is the minimum coverage in use and covers total and
partial losses if the ship carrying an exporter's goods is involved in a collision or
fire, or is stranded or sunk.
Free on Board
Free On Board (FOB) at a named port of export. The seller quotes the buyer a price that
covers all costs up to and including delivery of goods aboard a vessel at a port. FOB is
also a method of export valuation.
Free on Rail/Free on Truck
These terms are synonymous, since the word "truck" relates to the railway
wagons. The terms should only be used then the goods are to be carried by rail.
Free Out
A pricing term indicating that the quoted prices includes the cost of unloading the goods
from the vessel.
Free Ports
Free Ports Free ports are a form of free trade zone that usually encompass an
entire port area (examples include Hong Kong and Singapore).
Free-Trade Zone.
A port designated by the government of a
country for duty-free entry of any nonprohibited goods. Merchandise may be
stored, displayed, used for manufacturing, etc., within the zone
and reexported without duties being paid. Duties are
imposed on the merchandise (or items manufactured from the
merchandise) only when the goods pass from the zone into
an area of the country subject to the Customs Authority. Also
called Foreign Trade Zone.
Free Trade Agreement
An FTA is an arrangement which establishes unimpeded exchange and flow of goods and
services between trading partners regardless of national borders. An FTA does not (as
opposed to a common market) address labor mobility across borders, common currencies or
uniform standards or other common policies such as taxes. Member countries of a free trade
area apply their individual tariff rates to countries outside the free trade area.
Free Trade Area
A free trade area is a cooperative arrangement among two or more nations, pursuant
to the General Agreement on Tariffs and Trade, whereby trade barriers are removed among
the members. The arrangement generally includes a customs union with a common external
tariff, although there are exceptions in which members maintain individually separate
tariff schedules for external countries.
Free Trade Zones
"Free Trade Zones" (sometimes called "customs free zones" or
"duty free zones") is a generic term referring to special commercial and
industrial areas at which special customs procedures allow the importation of foreign
merchandise (including raw materials, components, and finished goods) without the
requirement that duties be paid immediately. If the merchandise is later exported, duty
free treatment is given to reexports. The zones are usually located in or near ports of
entry. Merchandise brought into these zones may be stored, exhibited, assembled, processed
or used in manufacture prior to reexport or entry into the national customs territory.
When manufacturing activity occurs in free trade zones, it usually involves a combination
of foreign and domestic merchandise, and usually requires special governmental authority.
Types of free trade zones include: foreign trade zones (and foreign trade subzones); free
ports; and transit zones.
Freedom Support Act
The FSA, signed into law in October 1992, authorizes a range of programs to support
free market and democratic reforms in Russia, Ukraine, Armenia, and other states of the
former Soviet Union.
Freight.
The money charged by the carrier for transporting goods.
Freight All Kinds
FAK is a shipping classification. Goods classified FAK are usually charged higher
rates than those marked with a specific classification and are frequently in a container
which includes various classes of cargo.
Freight Carriage ... paid to
Like C & F, "Freight/Carriage paid to ..." means that the seller pays
the freight for the carriage of the goods to the named destination. However, the risk of
loss of or damage to the goods, as well as of any cost increases, is transferred from the
seller to the buyer when the goods have been delivered into the custody of the first
carrier and not at the ship's rail. The term can be used for all modes of transport
including multi-modal operations and container or "roll on-roll off" traffic by
trailer and ferries. When the seller has to furnish a bill of lading, waybill or carrier's
receipt, he duly fulfills this obligation by presenting such a document issued by the
person with whom he has contracted for carriage to the named destination.
Freight Carriage ... and insurance paid to
This term is the same as "Freight/Carriage Paid to ..." but with the
addition that the seller has to procure transport insurance against the risk of loss of
damage to the goods during the carriage. The seller contracts with the insurer and pays
the insurance premium.
Freight Forwarder
An independent business which handles export shipments for compensation. At the
request of the shipper, the forwarder makes the actual arrangements and provides the
necessary services for expediting the shipment to its overseas destination. The forwarder
takes care of all documentation needed to move the shipment from origin to destination,
making up and assembling the necessary documentation for submission to the bank in the
exporter's name. The forwarder arranges for cargo insurance, makes the necessary overseas
communications, and advises the shipper on overseas requirements of marking and labeling.
The forwarder operates on a fee basis paid by the exporter and often receives an
additional percentage of the freight charge from the common carrier. An export freight
forwarder must be licensed by the Federal Maritime Commission to handle ocean freight and
by the International Air Transport Association (IATA) to handle air freight. An ocean
freight forwarder dispatches shipments from the United States via common carriers, books
or arranges space for the shipments, and handles the shipping documentation.
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