Carnet:This is a standardized international customs document (also known as an ATA Carnet) that allows duty-free temporary admission of certain goods into the countries that are signatories to the ATA Convention. This allows commercial and professional travelers to take commercial samples; tools of the trade; advertising material; audiovisual, or other professional equipment into member countries temporarily, without paying customs duties and taxes. This is often done for goods displayed at international trade shows.
Carriage and Insurance Paid To (CIP): Under this Incoterm, the seller must pay for shipment to the destination port, and procure cargo insurance to cover the buyer's risks of loss or damage to the goods during shipment. The seller contracts for insurance and pays the insurance premium. CIP is used for any mode of transportation.
Carriage Paid To (CPT): This Incoterm means only shipping is paid to a named destination. This term may be used for all modes of transportation, including intermodal. It does not include payment for insurance or tariffs.
Cash in Advance (advance payment): This means the foreign customer must pay in advance for the exporter’s products. It is the least risky form of payment for exporters. However, it is not a customer-friendly payment term, and is most commonly used for new customers, or for shipment to high risk destinations. (Note: credit card payments are not considered as cash-in-advance, since the charges can later be reversed by to overseas customer.)
Central America and Dominican Republic Free Trade Agreement (CAFTA-DR): A free trade agreement involving the U.S. the DR and several Central American countries. Benefits include duty-free or reduced-duty access, better overall market access, treatment equal to local companies, and intellectual property protection.
Certificate of Conformity: A signed statement from the manufacturer attesting that a product meets certain technical standards. This is used by some countries to exclude poor quality or unsafe products.
Certificate of Free Sale: A signed statement from the producer or exporter attesting that a product has been commercially sold within the country of origin. It is considered a warrantee that the product is not an inferior export-only version.
Certificate of Origin: These are documents certifying that the goods originate in a specific country. Certificates of origin are usually validated by a semiofficial organization, such as a local chamber of commerce. Often, Certificates of Origin are required to receive preferential import terms under free trade agreements.
CIF: An Incoterm meaning that the sales price includes all “Costs, Insurance and Freight” for shipping the goods to a given point of import. CIF quotations do not include exporter payment of customs duties or taxes in the destination country.
Commercial Invoice: A commercial invoice is a bill from the seller to the buyer. Commercial invoices are often used by governments to determine the value of goods when assessing customs duties. They should provide basic information about the transaction, including a precise description of the goods, the address of the shipper and seller, and the delivery and payment terms.
Confirming House:A company based in the destination country that acts as the importer’s agent, and which places “confirmed” orders with U.S. exporters. The confirming house also guarantees payment to the US exporters.
Consignment: This implies delivery of merchandise to an overseas buyer or distributor, who agrees to sell it and only then pay the U.S. exporter. The seller (technically) retains ownership of the goods until they are sold, but also carries all of the financial burden and risk. This arrangement is only used when the US exporter knows the customer and is confident of getting paid.
Consular Invoice: A shipping document that describes the goods being shipped, the quantity, consignor, consignee, and cost. It must be certified by a consular official of the foreign country who is stationed in the United States. It is used by that country’s customs officials to verify the value, and nature of the shipment.
Consumer Goods: Goods that directly satisfy human desires (as opposed to capital goods). An automobile used for pleasure is considered a consumer good. An automobile used by a business person to deliver wares is considered a capital good.
Cost and Freight (CFR):This Incoterm specifies that the seller contracts and pays the costs and freight to a named destination. CFR is only used for sea and inland waterway transportation. The buyer undertakes the risk of loss or damage once the goods are delivered to a carrier.
Cost, Insurance, and Freight (CIF): Under this Incoterm, the seller quotes a price for the goods shipped by ocean (including insurance). It includes all transportation costs, and miscellaneous charges to the point of debarkation from the vessel.
Countertrade: General expression meaning the sale or barter of goods on a reciprocal basis. There may also be multilateral transactions involved.
Countervailable Subsidy: Some foreign governments subsidize industries with financial assistance to benefit the production, manufacture or exportation of goods. Subsidies can take many forms, such as direct cash payments, credits against taxes, and loans. When an unfair subsidy has been given, the value of these foreign subsidies may be “countervailed,” through higher import duties.
Countervailing Duties (CVD):Specific duties imposed on imports to offset the value of subsidies given to producers or exporters in the exporting country.
CPT (Carriage Paid To):Under this Incoterm, the seller contracts and pays for the shipment of goods to a named destination port. CPT may be used for any mode of transportation. The buyer assumes the risk of loss or damage once the goods are handed over to the first (or only) carrier.
Customs-Bonded Warehouse: Building or other secured area in which dutiable goods may be stored, manipulated, or used in manufacturing operations without payment of duty. However, duties must be paid if the goods are sold into a destination country. This can be the country where the warehouse is located, or elsewhere.
Customs Declaration: A form prescribed or accepted by Customs in the destination country which gives information they require on the shipment.
Customs Invoice: A document used to clear goods through customs entry that provides evidence of the value of the goods. In some cases, the commercial invoice may be used for this purpose.
These links updated: 4/23/18. This website has been funded in part by the U.S. Commercial Service. Copyright (c) All Rights Reserved by the District Export Council of Georgia. Image: shutterstock_1069133606.