Dictionary Definitions

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facilitation

Any of a number of programs designed to expedite the flow of international commerce through modernizing and simplifying customs procedures, duty collection, and other procedures to which international cargo and passengers are subject. Examples of progress in facilitation include the elimination of certain export declaration requirements, more expeditious release of cargo from customs, and clearance of cargo at point of origin.

facsimile (fax)

(a) An office machine used to transmit a copy of a document (including graphic images) via telephone lines. (b) The physical paper output of a fax machine which is a copy of the document transmitted. Facsimile use has grown significantly in the past few years. Note that in some countries some facsimile documents are not considered legal documents.

(a) An agent who receives merchandise under a consignment or bailment contract, who sells it for the principal or in the factor's own name, and who is paid a commission for each sale. (b) A firm, such as a finance company, that purchases another company's receivables at a discount and processes and collects the remaining account balances.

The commission or other compensation paid to a factor.

factor's lien

The right of a factor to retain the principal's merchandise until the factor receives full compensation from the principal.

The discounting of an account receivable in order to receive immediate payment. In international trade 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 accounts receivable) for cash at a discount from the face value. Factoring is often done without recourse to the exporter. Factoring of foreign accounts receivable is less common than with domestic receivables.

factoring houses

Certain companies which purchase domestic or foreign accounts receivables (e.g., the as yet unpaid invoices to domestic and foreign buyers) at a discounted price, usually about two to four percent less than their face value. See factor; factoring.

(U.S. Customs) 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. See dumping; constructed value.

(shipping) Freight all kinds. Usually refers to consolidated cargo.

family corporation

See closely held corporation.

FAS

See free alongside ship; Incoterms 1990.

(U.S.) Fast track procedures for approval of trade agreements were included by the U.S. 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, yes or no, 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 Free Trade Agreement (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.

(measurement) A unit of length equal to six feet. Used primarily to measure the depth of water.

fax

Federal Aviation Administration (FAA)

(U.S.) Created under the Federal Aviation Act of 1958 as the Federal Aviation Agency and charged with the responsibility of promulgating operational standards and procedures for all classes of aviation in the United States. With the creation of the cabinet level Department of Transportation in 1966, FAA became a unit within the new Department and received the new designation Federal Aviation Administration. The FAA Administrator, however, continues to be a presidential appointee and the FAA remains a separate entity with most of its former functions. In the field of air cargo FAA promulgates certain stress standards which must be met in the tiedown of cargo in flight. For information: Federal Aviation Administration, 800 Independence Avenue, #1010, Washington, DC 20591; Tel: [1] (202) 267-3484; http://www.faa.gov.

federally chartered bank

(U.S. banking) In the United States, a bank that has been chartered by the comptroller of currency, that belongs to the Federal Reserve System and meets the requirements for a national bank as defined under the National Bank Act. In the U.S. only federally and state chartered banks and other authorized institutions may receive deposits.

Federal Maritime Commission (FMC)

(U.S.) The U.S. federal agency responsible for overseeing rates and practices of ocean carriers who handle cargo to or from U.S. ports. Address: Federal Maritime Commission, 800 North Capitol St. NW, Washington, DC 20573-0001; Tel: [1] (202) 523-5911; http://www.fmc.gov.

Federal Reserve System

(U.S. banking) The central banking system of the U.S. It has twelve Federal Reserve Banks divided up by geographical regions. The Board of Governors supervises the operations of the regional banks and coordinates monetary policy through its Federal Open Market Committee.

Federal Trade Commission (FTC)

(U.S.) Plays a key role in ensuring that consumers are protected against unfair methods of competition in the market place. Address: Federal Trade Commission, Pennsylvania Avenue and 6th Street NW, Washington, DC 20580; Tel: [1] (202) 326-2222; http://www.ftc.gov.

feeder vessel

(shipping) A vessel used to connect with a line vessel to service a port which is not served directly by the line vessel. See line haul vessel.

FEU

(shipping) Forty foot equivalent units. Two 20 ft. containers equal one FEU.

fieri facias writ

(law) A judicial order issued to "cause to be done," which generally orders an officer of law or another authorized person to satisfy a judgment by seizure and sale of a debtor's property. See execution.

final determination

(U.S.) In antidumping investigations a final determination is made 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 (ITC) 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. See dumping; International Trade Commission.

financial instrument

(banking/finance) A document which has monetary value, or is evidence of a financial transaction. Examples of financial instruments are: checks, bonds, stock certificates, bills of exchange, promissory notes and bills of lading.

financial market

(banking/finance) Market for the exchange of capital and credit in an economy. It is divided into money markets, and capital market(s).

Financial Times (of London)

(publication) Considered by professionals as one of the best English-language newspapers for business and financial news.

Fines, Penalties, and Forfeitures System (FPFS)

(U.S. Customs) A part of the U.S. 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. See Automated Commercial System.

fire insurance

(insurance) Marine insurance coverage that includes both direct fire damage and also consequential damage, as by smoke or steam, and loss resulting from efforts to extinguish a fire. Includes explosion caused by fire.

first world countries

(economics) Western, industrialized, non-communist countries.

five dragons

See five tigers; five dragons.

Five-K Countries (5(k) Countries)

Those countries as defined under Section 5(k) of the U.S. Export Administration Amendments Act of 1985. Such countries are eligible for the same treatment as Coordinating Committee on Multilateral Export Controls (CoCom) countries in relation to export control requirements if those countries maintain comparable export control programs. See Coordinating Committee on Multilateral Export Controls.

five tigers; five dragons

Terms used to describe the emerging economies of Hong Kong, Singapore, South Korea, Taiwan and Thailand.

fixed charges

(general) Charges which do not vary with an increase in production or sales volume.

(shipping) Charges which do not vary with an increase or decrease in traffic.

fixed exchange

(foreign exchange) (a) An administratively fixed exchange rate. With rate fixed exchange rates, no rate fluctuations are possible. (b) A concept within the European Monetary System, where all members except Britain maintain fixed exchange rates between their currencies, promoting monetary stability in Europe and throughout the world. See also European Monetary System.

fixed exchange rate

See exchange rate; fixed exchange.

(foreign exchange) Establishing of the official exchange rate of a domestic currency against other negotiable currencies.

flag

(shipping) A reference to the country of registry of a vessel. A vessel flying the flag of the country of its registry.

flag of convenience

(shipping) The national flag flown by a ship that is registered in a country other than that of its owners (e.g., to escape taxes and high domestic wages).

(shipping) Any substance capable of catching fire. See flammable liquid; flammable solid.

flammable liquid

(shipping) Liquids with a flash point less than 100°F. (UN CLASS 3) Examples are ether, acetone, gasoline, toluene and pentane. Hazards/precautions are: no flares, smoking, flames, or sparks in the hazard area; vapors are an explosion hazard; can be poisonous; check labels; if it is poisonous, it can cause death when inhaled, swallowed or touched.

flammable solid

(shipping) Any solid material which, under certain conditions, might cause fires or which can be ignited readily and burns vigorously. (UN CLASS 4) Examples are: calcium resinate; potassium, sodium amide. Hazards/precautions are: may ignite when exposed to air or moisture, may re-ignite after extinguishing; fires may produce irritation or poisonous gases; contact may cause burns to skin or eyes.

flight of capital

(banking/finance) The movement of capital, which has usually been converted into a liquid asset, from one place to another to avoid loss or to increase gain.

(foreign exchange) (a) Clean floating: Free determination of exchange rates without intervention on the part of the central bank. Correspondingly, exchange rates are determined by supply and demand on the foreign exchange market. (b) Dirty floating: Monetary policy which in principle recognizes floating exchange rates, but which tries to influence the exchange rate level through more or less frequent interventions. See floating currency.

floating currency

(banking/foreign exchange) One whose value in terms of foreign currency is not kept stable (on the basis of the par value or a fixed relationship to some other currency) but instead is allowed, without a multiplicity of exchange rates, to be determined (entirely or to some degree) by market forces. Even where a currency is floating, the authorities may influence its movements by official intervention; if such intervention is absent or minor, the expression "clean float" is sometimes used. See floating.

The currency of Aruba. 1F=100 cents.

(banking/finance) With cash investments, where the rate of interest is subject to adjustment to the market rate, a so-called floor can be agreed upon, i.e. for a premium, a minimum interest rate is stipulated and remains valid even if the market interest rate is lower.

(shipping) Floating debris or wreckage of a ship or a ship's cargo. See also jetsam.

FOB

(trade term) An abbreviation used in some international sales contracts, when imports are valued at a designated point, as agreed between buyer and seller, that is considered "Free on Board." In such contracts, the seller is obligated to have the goods packaged and ready for shipment from the agreed point, whether his own place of business or some intermediate point, and the buyer normally assumes the burden of all inland transportation costs and risks in the exporting country, as well as all subsequent transportation costs, including the costs of loading the merchandise on the vessel. However, if the contract stipulates "FOB vessel" the seller bears all transportation costs to the vessel named by the buyer, as well as the costs of loading the goods on to that vessel. The same principle applies to the abbreviations "FOR" (free on rail) and "FOT" (free on truck). See free on board (Incoterm); Incoterms 1990.

FOB Airport

(trade term) t145

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. See free on board (Incoterm); FOB: Incoterms 1990.

FOB Destination, Freight Collect

(trade term) A sales price quotation for the price of the goods, plus seller responsibility for shipping the goods to the named destination point, but where the seller retains title to the goods while in transit, and the buyer is responsible for payment of freight charges upon delivery. This means that the seller is responsible for insurance for the shipment to the named destination point and may file a claim for any loss or damage to the goods while in transit. See free on board (Incoterm); FOB; Incoterms 1990.

FOB Destination, Freight Prepaid

(trade term) A sales price quotation for the price of the goods, plus cost of shipping to the named destination point. The seller retains title to the goods while in transit, is responsible for insurance for the shipment to the named destination point, and may file a claim for any loss or damage to the goods while in transit. See free on board (Incoterm); FOB; Incoterms 1990.

FOB Origin, Freight Collect

(trade term) A sales price quotation for the price of the goods, available to the buyer or his freight carrier at the point of origin. Title to the goods and responsibility for payment of any freight and insurance charges passes to the buyer at the point of origin. See free on board (Incoterm); FOB; Incoterms 1990.

FOB Origin, Freight Prepaid and Charged

(trade term) A sales price quotation for the price of the goods, plus seller responsibility for shipping and payment of freight charges, but where the seller collects the freight charges from the buyer by adding them to his invoice to the buyer. See free on board (Incoterm); FOB; Incoterms 1990.

Food and Agricultural Organization (FAO)

A specialized agency of the United Nations established in 1945 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. Address: Food and Agriculture Organization, Via delle Terme di Caracalla, 00100 Rome, Italy; Tel: [39] 065-2251; Telex: 610181; Fax: [39] 065-225-5155.

Food and Drug Administration (FDA)

U.S. governmental agency which enforces the Federal Food Drug and Cosmetic Act, the Fair Packaging and Labeling Act, and sections of the Public Health Service Act. Address: Food and Drug Administration, Public Relations, 5600 Fishers Lane, Rockwell, MD, 20857; Tel: [1] (301) 827-7130.

Food For Progress (FFP)

A U.S. government program 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 provides commodities to needy countries to encourage agricultural reform. In fiscal year 1991, no agreements were signed under the FFP program. Public Law 480 is a food aid and market development program which focuses on the needs of developing countries and is aimed at establishing a U.S. presence in such markets and supporting their economic growth. Section 416 of the Agricultural Act of 1949 provides for the donation of food and feed commodities owned by Agriculture's Commodity Credit Corporation and is focused on people in developing countries. See United States Department of Agriculture.

FOR

(trade term) Abbreviation for "free on rail" used in connection with transportation by rail, indicating that the price covers the goods loaded on the railcar. See free on board (Incoterm); FOB; Incoterms 1990.

force majeure

(shipping) Any condition or set of circumstances, such as earthquakes, floods, or war, beyond the carrier's control that prevents the carrier from performing fulfillment of their obligations.

force majeure clause

(law/insurance/shipping) A contract clause, which usually excuses a party who breaches the contract because that party's performance is prevented by the occurrence of an event that is beyond the party's reasonable control. A force majeure clause may excuse performance on the occurrence of such events as natural disasters, labor strikes, bankruptcy, or failure of subcontractors to perform. If a force majeure clause is not expressly included in a contract, a legal action may be brought on the basis that such a clause should be implied under the doctrine of commercial frustration or commercial impracticability. See commercial frustration; commercial impracticability.

foreign affiliate

foreign affiliate of a foreign parent

(U.S.) Any member of an affiliated foreign group owning a U.S. affiliate that is not a foreign parent of the U.S. affiliate. See affiliate.

Foreign Agricultural Service (FAS)

(U.S.) An agency of the U.S. Department of Agriculture (USDA). FAS maintains a global network of agricultural officers as well as a Washington-based staff to analyze and disseminate information on world agriculture and trade, develop and expand export markets, and represent the agricultural trade policy interests of U.S. producers in multilateral forums. FAS also administers USDA's export credit and concessional sales programs. Address: Information Staff, Foreign Agriculture Service, Department of Agriculture, Washington, DC 20250; Tel: (202) 720-7115.

Foreign Assets Control (FAC)

(U.S.) An agency of the U.S. Treasury Department that administers sanctions programs involving specific countries and restricts the involvement of U.S. persons in third country strategic exports. Address: Office of Foreign Assets Control, Department of Treasury, 1500 Pennsylvania Avenue NW, Washington DC 20220; Tel: [1] (202) 622-2480; Fax-on-demand: [1] (202) 622-0077 to request licensing.

Foreign Assistance Act of 1991

(U.S.) 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 former Soviet republics.

foreign availability

(U.S.) The U.S. Bureau of Export Administration conducts reviews to determine the foreign availability of selected commodities or technology subject to U.S. 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.

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. See Bureau of Export Administration.

foreign bills

(banking) Bills of exchange or drafts drawn on a foreign party and denominated in foreign currency. See bill of exchange.

foreign bond

(banking/finance) An international bond denominated in the currency of the country where it is issued.

Foreign Buyer Program

See International Buyer Program.

foreign commerce

(trade) Trade between individuals or legal entities in different countries.

Foreign Corrupt Practices Act (FCPA)

(U.S. law) The FCPA makes it unlawful for any United States citizen or firm (or any person who acts on behalf of a U.S. citizen or firm) to offer, pay, transfer, promise to pay or transfer, or authorize a payment, transfer, or promise of money or anything of value to any foreign appointed or elected government official, foreign political party, or candidate for a foreign political office for a corrupt purpose, (that is, to influence a discretionary act or decision of the official) and for the purpose of obtaining or retaining business.

It is also unlawful for a U.S. business owner to make such an offer, promise, payment, or transfer to any person if the U.S. business owner knows, or has reason to know, that the person will offer, give, or promise directly or indirectly all or any part of the payment to a foreign government official, political party, or candidate. For purposes of the FCPA, the term knowledge means actual knowledge--the business owner in fact knew that the offer, payment, or transfer was included in the transaction--and implied knowledge--the business owner should have known from the facts and circumstances of a transaction that the agent paid a bribe, but failed to carry out a reasonable investigation into the transaction.

The provisions of the FCPA do not prohibit payments made to facilitate a routine government action. A facilitating payment is one made in connection with an action that a foreign official must perform as part of the job. In comparison, a corrupt payment is made to influence an official's discretionary decision. For example, payments are not generally considered corrupt if made to cover an official's overtime required to expedite the processing of export documentation for a legal shipment of merchandise, or to cover the expense of additional crew to handle a shipment.

Any person may request the Department of Justice to issue a statement of opinion on whether specific proposed business conduct would be considered a violation of the FCPA. The opinion procedure is detailed in 28 C.F.R. Part 77. If the Department of Justice issues an opinion stating that certain conduct conforms with current enforcement policy, conduct in accordance with that opinion is presumed to comply with FCPA provisions. Contact: United States Department of Justice, Washington, DC.

Foreign Credit Insurance Association

(U.S.) An agency established in 1961 to offer insurance covering political and commercial risks on U.S. export receivables in partnership with the Export-Import Bank (Eximbank) of the United States.

The FCIA was founded in 1961 as a partnership of the Eximbank and a group of private insurance companies. Eximbank is responsible for the political risk and may underwrite or reinsure the commercial risk. The FCIA acts as an agent responsible for the marketing and daily administration of the program. Address: F.C.I.A. Management Co., Inc., 40 Rector St., 11th Floor, New York, NY 10006; Tel: [1] (212) 306-5084. See Export-Import Bank of the United States.

foreign currency

(banking) The currency of any foreign country which is the authorized medium of circulation and the basis for record keeping in that country. Foreign currency is traded in by banks either by the actual handling of currency or checks, or by establishing balances in foreign currency with banks in those countries.

foreign currency account

(banking) An account maintained in a foreign bank in the currency of the country in which the bank is located. Foreign currency accounts are also maintained by banks in the United States for depositors. When such accounts are kept, they usually represent that portion of the carrying bank's foreign currency account that is in excess of its contractual requirements.

foreign direct investment in the United States (FDIUS)

(foreign investment) 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. See Committee on Foreign Investment in the United States; foreign person; portfolio investment; affiliate; United States Affiliate.

foreign draft

(banking) A draft drawn by an individual (drawer) or bank in one country on another individual (drawee) or bank in another country. See bill of exchange.

Foreign Economic Trends

(publication) 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 development and the possible impacts on American exports; review newly announced foreign government policies as well as consumption, investment, and foreign debt trends. Available from: Superintendent of Documents, U.S. Government Printing Office, Washington DC 20402; Tel: [1] (202) 512-1800.

foreign exchange

(banking/foreign exchange) Current or liquid claims payable in foreign currency and in a foreign country (bank balances, checks, bills of exchange). Not to be confused with foreign bank notes and coin, which are not included in this definition. See also bank notes.

foreign exchange auctions

(foreign exchange) Auctions of foreign currency, as used in some developing countries, whereby the price obtained for the foreign currency at the auction is the rate of exchange applied till the next auction.

foreign exchange contract

(foreign exchange) A contract for the sale or purchase of foreign exchange specifying an exchange rate and delivery date.

foreign exchange control

(foreign exchange) Governmental control and supervision of: transactions within the country involving its currency, foreign exchange for imports and exports, capital movements of any currency or monetary instruments into and out of the country, and expenditures of currency by its own citizens traveling abroad.

foreign exchange desk

(Federal Reserve Bank) The foreign exchange trading desk at the New York Federal Reserve Bank. The desk undertakes operations in the exchange markets for the account of the Federal Open Market Committee, as agent for the U.S. Treasury and as agent for foreign central banks.

foreign exchange holdings

(foreign exchange) Holdings of current or liquid foreign exchange claims denominated in the currency of another country.

foreign exchange market

(foreign exchange) (a) The worldwide system of contacts, either by telephone, teleprinter or in writing, which take place between non-bank foreign exchange dealers and foreign exchange traders at banks as well as foreign exchange traders amongst themselves, where the monies of different countries are bought and sold. (b) Wherever foreign exchange rates are determined.

foreign exchange rate

(foreign exchange) The price of one currency in terms of another.

foreign exchange trader

(foreign exchange) An individual engaged in the business of buying and selling foreign exchange on his own account or as an employee of a bank or other business authorized to deal in foreign exchange.

foreign exchange trading

(foreign exchange) Buying and selling of foreign exchange, holding of currency positions, foreign exchange arbitrage, and foreign exchange speculation on the foreign exchange market.

foreign exchange transactions

(foreign exchange) The purchase or sale of one currency with another. Foreign exchange rates refer to the number of units of one currency needed to purchase one unit of another, or the value of one currency in terms of another.

foreign exports

(U.S.) The U.S. export of foreign merchandise (re-exports), consisting 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. See reexport.

foreign flag

(shipping) A reference to a carrier not registered in a country, but which flies that country's flag. The term applies to both air and sea transportation.

foreign freight forwarder

See freight forwarder.

foreign income

(economics-U.S.) Income earned by Americans from work performed in another country. Under the Tax Reform Act of 1976, the amount of annual income that can be excluded from taxable income by Americans working abroad was reduced from $20,000 (in some cases from $25,000) to $15,000. Foreign employees of U.S. charitable organizations are able to exclude $20,000 each year.

foreign investment

(banking) The purchase of assets from abroad.

foreign investments

(economics) The flow of foreign capital into U.S. business enterprises in which foreign residents have significant control.

Foreign Labor Trends

(publication) Published by U.S. Department of Labor, provides an overview of the labor sector of a country's economy. Includes information on labor standards, conditions of employment, human resource development and labor relations. Can be purchased from: Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402; Tel: [1] (202) 512-1800.

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.

(U.S.) In U.S. dumping investigations, if information on foreign home market sales is not available, 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. See dumping; constructive value.

foreign military sales (FMS)

See conventional arms transfer.

foreign-owned affiliate in the U.S.

(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; or 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.

See also United States Affiliate; foreign parent group; person; ultimate beneficial owner; affiliate; foreign parent.

foreign parent

(U.S.) 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 (FPG)

(U.S.) Consists of: (a) the foreign parent, (b) 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 (c) 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. See also United States Affiliate; affiliate; ultimate beneficial owner.

foreign person

(U.S.) 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

(U.S.) U.S. export controls that are distinct from national security controls (such as the Coordinating Committee in Multilateral Export Controls 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 remittances

(banking) The transfer of any monetary instrument across national boundaries.

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 Service (U.S.)

(U.S. diplomacy) The Foreign Service supports the President of the United States 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; and 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. See commercial officers; economic officers.

Foreign Service Institute

(U.S. government) The FSI was founded in 1946 to train U.S. foreign and civil service officials. Training courses cover administrative, consular, economic, commercial, and political work; foreign languages; and diplomatic life overseas. Address: Foreign Service Institute, National Foreign Affairs Training Center, 4000 Arlington Blvd., Arlington, VA 22204-1500. Tel: (703) 302-6729.

foreign status merchandise

(U.S. foreign trade zones) Imported merchandise which has not been released from U.S. Customs custody. Also refers to domestically-produced merchandise which has been exported and later reimported into the U.S.

See foreign trade zone; Foreign Trade Zone Board; Foreign Trade Zone Act; grantee; operator; zone user; subzone.

Foreign Traders Index (FTI)

(publication) The foreign traders index is the U.S. and Foreign Commercial Service (US&FCS) headquarters compilation of overseas contact files, intended for use by domestic U.S. businesses. The FTI includes background information on foreign companies, address, contact person, sales figures, size of company, and products by SIC code. Contact: U.S. and Foreign Commercial Service, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; Tel: [1] (202) 482-5777; Fax: (202) 482-5013.

foreign trade zone (FTZ)

FTZs (or free zones, free ports, or bonded warehouses) are special commercial and industrial areas in or near ports of entry where foreign and domestic merchandise, including raw materials, components, and finished goods, may be brought in without being subject to payment of customs duties. Merchandise brought into these zones may be stored, sold, exhibited, repacked, assembled, sorted, graded, cleaned, or otherwise manipulated prior to reexport or entry into the national customs territory.

(U.S.) FTZs are restricted-access sites in or near ports of entry, which are licensed by the Foreign-Trade Zones Board and operated under the supervision of the U.S. Customs Service. Zones are operated under public utility principles to create and maintain employment by encouraging operations in the U.S. which might otherwise have been carried on abroad.

Subzones are a special-purpose type of ancillary zone authorized by the Board for companies unable to operate effectively at public zone sites. Subzones may be approved when it can be demonstrated that the activity to be performed there will result in significant public benefit and is in the public interest.

A Foreign Trade Zones Board, created by the Foreign Trade Zones Act of 1934, reviews and approves applications to establish, operate, and maintain foreign trade zones.

See free trade area; grantee; operator; zone user, subzones; free trade agreement.

Location of and general information on U.S. Foreign Trade Zones may be obtained from Foreign Trade Zones Board, Department of Commerce, Washington, DC 20230; Tel: [1] (202) 482-2862; Fax: [1] (202) 482-0002.

Questions relating to legal aspects of Customs Service responsibilities in regard to FTZs should be addressed to Chief, Entry Rulings Branch, U.S. Customs Service, 1301 Constitution Avenue NW, Washington, DC 20229; Tel: [1] (202) 482-7040.

Questions relating to operational aspects of such responsibilities should be addressed to the appropriate district/area director of U.S. Customs.

The Foreign Trade Zones Manual, for grantees, operators, users, Customs brokers, may be purchased from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402; Tel: [1] (202) 512-1800. When ordering, refer to GPO stock No. 048-002-00111-7 and Customs publication No. 559.

Additional information may be obtained from the National Association of Foreign Trade Zones, 1000 Connecticut Ave. NW, Suite 1001, Washington, DC 20036; Tel: [1] (202) 331-1950; Fax: [1] (202) 331-1994.

Foreign Trade Zone Act (FTZA)

(U.S. law) The principal statute governing foreign trade zones, is the Foreign Trade Zones Act of 1934 (FTZA), which has been codified in the United States Code as Title 19, Sections 81a through 81u. The FTZA has been periodically amended. The FTZA generally covers how and where zones are established, how they are administered and what may and may not be done in them. See foreign trade zone; Foreign Trade Zone Board.

Foreign Trade Zones Board

(U.S. Customs) The administrative group responsible for the establishment, maintenance and administration of foreign trade zones in the United States under the Foreign Trade Zone Act. The Foreign Trade Zones Board consists of the U.S. Secretary of Commerce who is chairman and executive officer of the Board, the Secretary of the Treasury, and the Secretary of the Army. Address: Foreign Trade Zone Board, Department of Commerce, Room 3716, Washington, DC 20230; Tel: [1] (202) 482-2862; Fax: [1] (202) 482-0002; http://www.ita.doc.gov/import_admin/records/fgzpage/. See foreign trade zone.

foreign trade zone entry

(U.S. Customs) The transfer of goods into a foreign trade zone. See foreign trade zone; entry.

Abbreviation for foreign exchange. See foreign exchange.

(trade/finance) The selling, at a discount, of medium to longer term accounts receivable or promissory notes of a foreign buyer (including those arising out of a letter of credit transaction) for immediate payment. These instruments may also carry the guarantee of the foreign government. Forfaiting emerged after the Second World War to expedite finance transactions between Eastern and Western European countries. More recently, it has become popular in Asian and Third world countries. Both U.S. and European forfaiting houses, which purchase the instruments at a discount from the exporters, are active in the U.S. market. See also factoring.

The currency of Hungary. 1Ft=100 fillér.

See Certificate of Origin Form A.

forward contract

(trade/finance) Purchase or sale of a specific quantity of a commodity, security, currency or other financial instrument at a predetermined rate with delivery and settlement at a specified future date.

See freight forwarder.

forwarder's bill of lading

(shipping) A bill of lading issued by a forwarding agent. See bill of lading.

forward foreign exchange

(foreign exchange) An agreement to purchase foreign exchange (currency) at a future date at a predetermined rate of exchange. Forward foreign exchange contracts are often purchased by international buyers of goods who wish to hedge against foreign exchange fluctuations between the time the contract is negotiated and the time payment is to be made.

forwarding agent's bill of lading

(shipping) A bill of lading issued by a forwarding agent. See bill of lading.

forwarding agent's receipt

(shipping) Receipt issued by a forwarding agent for goods received.

forward market

(foreign exchange) The market for the purchase and sale of forward foreign exchange. Forward dates are usually one, three, six or twelve months in the future. See forward foreign exchange.

forward operations

(foreign exchange) Foreign exchange transactions, on which the fulfillment of the mutual delivery obligations is made on a date later than the second business day after the transaction was concluded.

forward rate

(foreign exchange) A contractually agreed upon exchange rate for a forward foreign exchange contract.

forward rate agreements

(banking) With forward rate agreements (also known as future rate agreements) two counterparties can hedge themselves against future interest rate changes. They agree upon an interest rate for a future period within a specific currency segment, which is valid for a pre-determined amount. In contrast to futures, FRA's are not standardized and are not traded on exchanges but are used in interbank trading.

FOT

See free on rail; free on truck; Incoterms 1990.

foul bill of lading

(shipping) A receipt for goods issued by a carrier with an indication that the goods were damaged or short in quantity when received. See bill of lading.

four tigers; four dragons

A term used to describe the emerging economies of Hong Kong, Singapore, South Korea and Taiwan.

fractional currency

(banking) Any currency that is smaller than a standard money unit (e.g., any coin worth less than $1).

framework agreement

(a) (GATT): The Tokyo Round called for 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.

(b) 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, 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. See General Agreement on Tariffs and Trade.

The currency for:

Andorra (uses French franc);

Belgium, 1BF=100 centimes;

Benin, 1 CFAF=100 centimes;

Burkina Faso, 1CFAF=100 centimes;

Burundi, 1 FBu=100 centimes;

Cameroon, 1 CFAF=100 centimes;

Central African Republic, 1CFAF=100 centimes;

Chad, 1 CFAF=100 centimes;

Comoros, 1CF=100 centimes;

Congo, 1 CFAF=100 centimes;

Djibouti, 1DF=100 centimes;

Equatorial Guinea, 1CFAF=100 centimes;

France, 1F=100 centimes;

French Guiana, 1F=100 centimes;

French Pacific Islands, 1CFPF=100 centimes;

Gabon, 1CFAF=100 centimes;

Guadeloupe, 1F=100 centimes;

Guinea, 1GFr=100 centimes;

Ivory Coast, 1CFAF=100 centimes;

Liechtenstein (uses Swiss franc);

Luxembourg, 1LuxF=100 centimes;

Madagascar, 1FMG=100 centimes;

Mali, 1CFAF=100 centimes;

Martinique, 1F=100 centimes;

Monaco (uses French franc);

Niger, 1CFAF=100 centimes;

Reunion Island, 1F=100 centimes;

Rwanda, 1RF=100 centimes;

St. Pierre, 1F=100 centimes;

Senegal, 1CFAF=100 centimes;

Switzerland, 1SwF=100 centimes;

Togo, 1 CFAF=100 centimes.

(trade term) Free from duties, transportation charges and other levies. Used also as delivery condition, e.g., franco ... (named place of delivery), which means that the seller must bear all transportation charges and duties up to the named place. See also Incoterms 1990.

(law) An intentional deception or false representation made to induce another person to act in reliance on that representation with the result that the person incurs damages. A buyer acts fraudulently, for example, by promising to pay for goods on delivery even though the buyer does not have the funds needed, accepting the goods as satisfactory, but not paying for them.

free alongside ship ... (named port of shipment)

(Incoterm) "Free Alongside Ship" (FAS) means that the seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment. The FAS term requires the buyer to clear the goods for export. It should not be used when the buyer cannot carry out directly or indirectly the export formalities.

This term can only be used for sea or inland waterway transport.

See Incoterms 1990 for a list of the thirteen Incoterms 1990.

free-astray

(shipping) A shipment miscarried or unloaded at the wrong station is billed and forwarded to the correct station, free of charges, on account of being astray, hence the term free astray.

free carrier ... (named place)

(Incoterm) "Free Carrier" (FCA) means that the seller fulfills his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into his charge. When, according to commercial practice, the seller's assistance is required in making the contract with the carrier (such as in rail or air transport) the seller may act at the buyer's risk and expense.

This term may be used for any mode of transport, including multimodal transport.

"Carrier" means any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage by rail, road, sea, air, inland waterway or by a combination of such modes. If the buyer instructs the seller to deliver the cargo to a person, e.g., a freight forwarder who is not a "carrier," the seller is deemed to have fulfilled his obligation to deliver the goods when they are in the custody of that person.

"Transport terminal" means a railway terminal, a freight station, a container terminal or yard, a multi-purpose cargo terminal or any similar receiving point.

"Container" includes any equipment used to unitize cargo, e.g., all types of containers and/or flats, whether ISO accepted or not, trailers, swap bodies, ro-ro equipment, igloos, and applies to all modes of transport.

See Incoterms 1990 for a list of the thirteen Incoterms 1990.

free domicile

(shipping) A term used in international transportation where the shipper pays all transportation charges and any applicable duties and/or taxes. See Incoterms 1990.

free exchange rate

See exchange rate; floating.

(shipping) A pricing term indicating that the loading charges are for the account of the supplier.

free in and out (FIO)

(shipping) A pricing term indicating that the charterer of a vessel is responsible for the cost of loading and unloading goods from the vessel.

(customs) A statement, prepared by the customs department of a country, of items that are not liable to the payment of duties.

freely negotiable

(banking) When a letter of credit is stated as "freely negotiable," the beneficiary of the letter of credit has the right to present his documents at a bank of his choice for negotiation. See letter of credit.

free market

(economics) Describes the unrestricted movement of items in and out from the market, unhampered by the existence of tariffs or other trade barriers.

free of capture and seizure (F.C.&S.)

(insurance) An insurance policy provision stating that the policy does not cover warlike operations or its consequences, whether before or after the actual declaration of war. Currently, most open policies omit war perils from its insuring conditions and in all cases will include a F.C.&S. clause. War coverage is customarily furnished in conjunction with an open cargo policy and is written under a separate, distinct policy-the War Risk Only Policy. See war risk; all risk; special marine policy.

free of particular average (FPA)

(insurance) A clause in an insurance policy that provides that in addition to total losses, partial losses resulting from perils of the sea are recoverable, but only in the event that the carrying vessel has stranded, sunk, burnt, been on fire or been in collision. See also average; particular average; general average; with average; deductible average.

free on board ... (named port of shipment)

(Incoterm) "Free On Board" (FOB) means that the seller fulfills his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export.

This term can only be used for sea or inland waterway transport. When the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off or container traffic, the FCA (free carrier) term is more appropriate to use.

See free carrier; Incoterms 1990 for a list of the thirteen Incoterms 1990.

free on rail; free on truck (FOR/FOT)

(trade terms) These terms are synonymous, since the word "truck" relates to the railway wagons. The terms should only be used when the goods are to be carried by rail. See free carrier; Incoterms 1990.

(shipping) A pricing term indicating that unloading charges are for the account of the receiver.

An area, such as a port city, into which imported merchandise may legally be moved without payment of duties. See also foreign trade zone.

(shipping) The time allowed shippers or receivers to load or unload cars before demurrage, detention, or storage charges accrue. See demurrage; detention.

(economics) A theoretical concept that assumes international trade unhampered by government measures such as tariffs or non-tariff barriers. The objective of trade liberalization is to achieve "freer trade" rather than "free trade," it being generally recognized among trade policy officials that some restrictions on trade are likely to remain in effect for the foreseeable future.

free trade agreement (FTA)

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 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 group of two or more countries that have eliminated tariff and most non-tariff barriers affecting trade among themselves, while each participating country applies its own independent schedule of tariffs to imports from countries that are not members. A free trade area allows member countries to maintain individually separate tariff schedules for external countries; members of a customs union employ a common external tariff. The best known example is the European Free Trade Association (EFTA) and the free trade area for manufactured goods that has been created through the trade agreements that have been concluded between the European Community and the individual EFTA countries. The General Agreement on Tariffs and Trade (GATT) Article XXIV spells out the meaning of a free trade area in GATT and specifies the applicability of other GATT provisions to free trade areas. See European Community; European Free Trade Association; General Agreement on Tariffs and Trade; common market.

free trade zone

See foreign trade zone; free zone.

An area within a country (a seaport, airport, warehouse or any designated area) regarded as being outside its customs territory. Importers may therefore bring goods of foreign origin into such an area without paying customs duties and taxes, pending their eventual processing, transshipment or re-exportation. Free zones are also known as "free ports," "free warehouses," and "foreign trade zones."

(shipping) All merchandise, goods, products, or commodities shipped by rail, air, road, or water, other than baggage, express mail, or regular mail.

freight bill

(shipping) (a) Destination freight bill--A bill rendered by a transportation line to consignee, giving a description of the freight, the name of shipper, point or origin, weight and amount of charges (if not prepaid).

(b) Prepaid freight bill--A bill rendered by a transportation line to shipper, giving a description of the freight, the names of consignee and destination, weight and amount of charges.

freight carriage ... and insurance paid to

See cost, insurance, freight; Incoterms 1990.

freight carriage ... paid to

See carriage paid to; Incoterms 1990.

freight charge

(shipping) The charge assessed for transporting freight.

freight claim

(shipping) A demand upon a carrier for the payment of overcharge or loss or damage sustained by shipper or consignee.

(shipping) A ship or airplane used primarily to carry freight.

freight forwarder

(shipping) A person engaged in the business of assembling, collection, consolidating, shipping and distributing less-than-carload or less-than-truckload freight. Also, a person acting as agent in the trans-shipping of freight to or from foreign countries and the clearing of freight through customs, including full preparation of documents, arranging for shipping, warehousing, delivery and export clearance.

All the originals of a particular document (usually the bill of lading). The number of originals is usually indicated on the document itself.

fundamental analysis

(economics) Analysis of basic economic data in a market (supply and demand), in order to be able to make assertions as to the future price trend of a traded commodity. Fundamental exchange rate analysis is based on the economic and business cycle data of the country in question and leads to longer-term exchange rate forecasts.

(law) Goods that are identical with other goods of the same nature. A merchant who is unable to deliver a specific load of grain, for example, may negotiate to replace that grain with fungibles, that is another load of grain of the same nature and quality.

future exchange contract

See futures contract.

futures contract

(finance/foreign exchange) A contract for the future delivery of a specified commodity, currency or security on a specific date at a rate determined in the present. Standardized forward contracts are officially traded on an exchange (Chicago Board of Trade (CBOT), London International Financial Futures Exchange (LIFFE), Commodity Exchange Inc. (COMEX), New York Mercantile Exchange (NYMEX)). The contract is valid for a specific amount of a commodity or a fixed amount of a financial instrument.

future trading

The sale or purchase of a commodity, currency or security for future delivery.

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