Malaccamax is a naval term for the largest ships capable of fitting through the Straits of Malacca between Singapore and Indonesia. A Malaccamax ship is defined to be, with 18 000 TEUs, of 300 000 deadweight tonnage, 470 m long, 60 m wide, and 20 m of draft. The restriction is caused by the shallow point on the Strait, where minimum depth is 25 m.Source
Manipulation Processing wherein merchandise is packed, unpacked, repacked, cleaned, sorted, graded or otherwise changed in condition but not manufactured.
Manufacture Generally, the production of articles for use from raw or prepared materials by substantially transforming such materials into new forms.
Maquila/Maquiladora A Spanish word for factory which produces products for export; often under sweatshop conditions.
Marine Insurance Insurance that compensates the owners of goods transported overseas in the event of loss that cannot be legally recovered from the carrier.
Market Fundamentalism A strategy to apply strict market principles-free trade, privatization, and reduced government regulation-to all countries and all situations.
Marking Letters, numbers, and other symbols on cargo packages to facilitate identification.
Master Credit In back-to-back operations, the original export credit against which the second credit is opened
Maturity Due date of payment of a usance bill or promissory note.
Mdg The Millennium Development Goals were adopted unanimously by the Millennium Summit of the UN General Assembly in 2000. The MDG goals are intended to promote human development in order to improve living conditions and address key global imbalances in poverty, hunger and disease.
Merchandise Includes goods, wares, and chattels of every description except Prohibited Merchandise, building materials, production equipment and supplies for use in operation of a zone.
Merchandise, Fungible Merchandise which for commercial purposes is identical and interchangeable in all situations.
Merchandise, Mixed Status Foreign Merchandise which has been combined with Domestic Merchandise in the zone.
Merchandise/Operations, Prohibited Merchandise, the importation of which is prohibited by law on grounds of public policy or morals, or excluded by order of the Foreign-Trade Zones Board.
Nafta The North American Free Trade Agreement, between Canada, Mexico, and the United States, went into effect in 1994 and created the largest free trade zone in the world. NAFTA promised to increase the competitiveness of the region in relation to the rest of the world and increase jobs and prosperity in all three nations, but the evidence points to the contrary.
Negotiable/Non-Negotiable Usually used with regard to Bills of Lading: a negotiable B/L is a valid document of title, while a non-negotiable B/L is not – the beneficiary of a DC (the exporter) may send the importer a non-negotiable B/L for information.
Negotiation Purchase of drafts under a documentary credit which the issuing bank has undertaken to pay.
Neoliberalism A view of the world based on the belief that the optimal economic system is achieved by giving free reign to market participants, privatization, free trade, and the shrinking of government intervention in the economy. Critics argue that neoliberal policies prioritize corporate profits over the welfare of the working majority and society at large.
Net Weight The weight of the merchandise before any packaging.
Non-Dc Bills Bills not drawn under DC i.e. sent on a collection basis (D/P or D/A). In common usage we distinguish between Non DC bills which are financed collections and DCs which are non-financed.
Non-Financed Bills Bills sent on collection in which the remitting branch has no financial interest.
Nonprivileged Foreign (Npf) Foreign Merchandise or non-tax-paid domestic merchandise upon which the duty and applicable taxes will be determined at the time of entry from the zone for consumption.
Non-Tariff Barriers Means, other than tariffs, to discourage imports. They may include requiring advance deposits in import payments, requiring excessive customs adherence and excessive administrative procedures.
Non-Vessel Operating Common Carrier (Nvocc) A cargo consolidator of small shipments in ocean trade, generally soliciting business and arranging for or performing containerization functions at the port.
North American Free Trade Agreement (Nafta) It covers the largest free trade area in the world encompassing Canada, the United States and Mexico. This free trade pact was passed by the U.S. Congress in November 1993 and began implementation in January 1994. NAFTA follows the model of the U.S.-Canada Free Trade Agreement and will lower trade barriers among the three countries over the next 15 years to zero in most categories of goods and services.
Noting The first stage in protest of a dishonoured bill: if instructed to protest for non-payment/non- acceptance, the collecting bank must send the bill to a notary public who will represent it to the drawee on the same day it was refused, or the next business day. If the drawee still refuses the bill the notary public notes on the bill: the amount of his charges, the date and his initials. The reason for refusal is shown on a note attached to the bill. The bill is then protested – see Protest
Ocean Bill Of Lading A contract between an exporter and an international carrier for transportation of goods to a specified foreign port. Unlike an inland bill of lading, the ocean bill of lading is a collection document, an instrument of ownership that can be bought, sold or traded while the goods are being shipped. There are two types of ocean bills of lading used to transfer ownership: – Straight (non-negotiable): provides for delivery of goods to the person named in the bill of lading. The bill must be marked non-negotiable. – Shippers Order (negotiable): provides for delivery of goods to the person named in the bill of lading or anyone designated. The shippers order is used with draft or letter-of-credit shipments and enables the bank involved in the export transaction to take title to the goods if the buyer defaults. The bank does not release title to the goods to the buyer until payment is received. The bank does not release funds to the exporter until conditions of sale have been satisfied.
On Board Bill Of Lading A bill of lading in which a carrier certifies that goods have been placed on board a certain vessel.
Open Account (O/A) A trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment. The obvious risk this method poses to the supplier makes it essential that the buyer’s integrity be unquestionable.
Open Insurance Policy A marine insurance policy that applies to all shipments made by an exporter over a period of time rather than to one shipment only.
Opener See Applicant.
Opening Bank See Issuing Bank.
Operator A corporation, partnership, or person that operates a zone or subzone under the terms of an agreement with the Grantee.
Operator’s Bond All zone operators must submit to Customs a bond to assure compliance with Customs regulations.
Order (To) The phrase To Order is sometimes shown on Bills of Lading against consignee: this means that the Bill of Lading must be endorsed in blank by the shipper (i.e. not to any particular named party which makes it bearer document and it becomes transferable by delivery.)
Order Bill Of Lading A negotiable bill of lading made out to the order of the shipper.
Order Bill Of Lading A negotiable bill of lading made out to the order of the shipper.
Overseas Private Investment Corporation (Opic) A wholly owned government corporation designed to promote private U.S. investment in developing countries by providing political risk insurance and some financing, including project financing.
Packing Credit A loan given to the beneficiary by the bank to enable him to purchase raw materials. The beneficiary is usually requested to deposit the DC with the bank as security.
Packing List A list showing the number and kinds of items being shipped, as well as other information needed for transportation purposes.
Panamax Panamax ships are of the maximum dimensions that will fit through the locks of the Panama Canal. This size is determined by the dimensions of the lock chambers, and the depth of the water in the canal. Panamax is a significant factor in the design of cargo ships, with many ships being built to exactly the maximum allowable size, which is length: 294.1 metres (965 ft); width: 32.3 metres (106 ft); draft (depth): 12.0 metres (39.5 ft) in tropical fresh water (the salinity and temperature of water affect its density, and hence how deeply a ship will sit in the water); and height: 57.91 metres (190 ft) measured from the waterline to the vessel’s highest point. A Panamax cargo ship would typically have a displacement of around 65 000 tons..Source
Parcel Post Receipt The postal authorities’ signed acknowledgment of delivery to receiver of a shipment made by parcel post.
Past Due Bill Loan that has not been paid on the maturity date/due date.
Paying Bank The bank that makes payment to the beneficiary of a payment DC after presentation to it of documents stipulated in the DC.
Performance Bond Guarantee If a company is undertaking a contract, it may be asked to give a performance bond for part of the value of the contract. If the customer considers the company’s performance under the terms of the contract has been unsatisfactory, payment of the bond can be demanded from the banker guaranteeing the bond. The bond is issued by the bank on behalf of the company, and therefore increases the banks potential exposure to the company.
Perils Of The Sea A marine insurance term used to designate heavy weather, stranding, lightning, collision, and seawater damage.
Phytosanitary Inspection Certificate A certificate, issued by the U.S. Department of Agriculture to satisfy import regulations for foreign countries, indicating that a U.S. shipment has been inspected and is free from harmful pests and plant diseases.
Piggyback Arrangement An arrangement whereby one company sometimes a smaller one uses the already established distribution channels of another company, which is effective when the two companies wish to sell complementary products.
Political Risk In export financing the risk of loss due to such causes as currency, inconvertibility, government action preventing entry of goods, expropriation or confiscation, war, etc.
Port of Entry Where goods are entered and where the Customs Service accepts entries of merchandise and collects duties.
Power Of Attorney Authority given to one party to act for another.
Presentation Act of requesting the importer’s payment/acceptance of an import bill. – See Handling Import Collections.
Presenting Bank The bank that requests payment of a collection bill – may be the Collecting Bank or its nominated branch or local correspondent, which is better placed to contact the importer.
Price Ex Factory The price of your goods where the buyer has to arrange and pay for all other costs of carriage, insurance, etc.
Principal The exporter in collection transactions, being the initiator of the transaction, whose instructions are followed at all stages (may be used to refer to any customer who initiates a transaction e.g. the opener of a DC).
Prior disclosure Sometimes an importer will find it has violated a customs law before the Customs Service has discovered the violation. A prior disclosure is a voluntary report by an importer of the violation to the Customs Service. The law provides some benefits (but does not speak of the risks) to an importer who does a prior disclosure.
Privatization The process of private, for-profit businesses taking over the provision of public services. Types of government contracts that have been privatized include prisons, water utilities, trash collection, clerical jobs, food service, information system jobs, and job placement for welfare recipients.
Privileged Foreign (Pf) Foreign merchandise or non-tax paid domestic merchandise upon which the duty and applicable taxes have been determined at the time this status is approved.
Pro Forma Invoice An invoice provided by a supplier in advance of the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and other important specifications. The proforma invoice is commonly used to enable payment documents (such as an L/C) to be raised.
Promissory Note A signed statement containing a written promise to pay a stated sum to specified person at a specified date or on demand.
Protest The formal representation of a dishonoured bill of exchange: the bill is presented by a notary public to the drawee – if refused again, it is noted” – see noting. The notary public then issues a formal protest, an official certificate that the bill has been refused: the drawer can use this certificate to sue the drawee in court.
Purchasing Agent An agent who purchases goods in his or her own country on behalf of foreign importers such as government agencies and large private concerns
Quota A limitation on the quantity of goods that may be imported during a specific period of time. Quotas can include limitations on all countries, or can target specific countries
Quotation An offer to sell goods at a stated price and under specified conditions.
Race To The Bottom The constant search for cheaper wages, lower taxes and weaker environmental and other regulations, produces a downward spiral in socio-economic conditions in the United States and in countries around the world. For example, jobs moved from Detroit to Mexico in pursuit of lower wages, and now jobs are being moved from Mexico to China.
Reactivation A resumption of the activated status of an entire area that was previously deactivated without any change in the operator or the area boundaries.
Recourse The right to claim a refund from another party which has handled a bill at an earlier stage.
Red Clause Credit A credit with a clause which authorises the advising bank to make an advance payment to the beneficiary – see special DCs.
Regional Commissioner The Regional Commissioner of Customs for the Customs Region in which the zone is located.
Reimbursing Bank The bank nominated by the DC issuing bank that will pay the value of the DC to the negotiating/paying bank.
Remitting Bank Bank that sends the draft to overseas bank for collection.
Representative See Foreign sales agent.
Resident Member The official that has been delegated authority by the Secretary of the Army to act on nondiscretionary zone matters.
Retail Trade Generally, sales or offers to sell goods or services to individuals for personal use.
Retirement The act of paying or settling an outstanding bill or import loan; i.e. payment by the importer to the Bank.
Revocable Credit One that may be amended or cancelled without notice to the beneficiary.
Revocable Letter Of Credit A letter of credit that can be cancelled or altered by the drawee (buyer) after it has been issued by the drawee’s bank. Compare Irrevocable letter of credit.
Revolving Credit A credit automatically reinstated after each drawing or upon receipt of authorisation from DC issuing bank, with limits as to the duration of the facility and as to the (cumulative or non-cumulative) amount involved for each drawing – see Special DCs.
Ruling Adecision rendered by the Customs Service on an issue or issues surrounding a particular importation of merchandise. Rulings are published and can usually be appealed to a higher administrative body or to a court of law.