FITT CITP key terms

The principle that a country gains from trade by specializing in goods it can produce at a lower opportunity cost than its trading partners, even if it is less efficient at everything.

The ratio at which a country's exports exchange for its imports, usually expressed as an index of export prices divided by import prices; a rise means one unit of exports buys more imports.

The welfare gain that occurs when a preferential trade agreement shifts consumption from a higher-cost domestic producer to a lower-cost partner producer, increasing total trade within the bloc.

The welfare loss that occurs when a preferential agreement causes imports to shift from a more efficient non-member country to a less efficient member country that enjoys a tariff advantage.

A WTO principle requiring a member to extend any trade advantage it gives one trading partner to all other WTO members immediately and unconditionally, subject to defined exceptions such as free trade areas.

A WTO principle under which imported goods, once they have cleared customs, must be treated no less favourably than equivalent domestic goods with respect to internal taxes and regulations.

Analysis of data already collected and published by others, such as government statistics, industry reports and trade association surveys, gathered before or instead of commissioning primary fieldwork.

A staged filtering process that ranks candidate countries using progressively finer criteria, from broad macro indicators to detailed competitive and regulatory factors, to shortlist viable export markets.

A composite score that weights country-level indicators such as market size, growth rate, purchasing power and ease of doing business to compare the relative attractiveness of export markets.

The exposure to losses in a foreign market arising from political, economic or social conditions there, including currency inconvertibility, expropriation, civil unrest and sovereign default.

A market entry arrangement in which two or more parties create and jointly own a separate business entity, sharing capital, control, profits and risk in a defined territory or activity.

A foreign market entry mode in which the investor holds 100 percent of a locally incorporated company, retaining full control and profits but bearing the entire commercial and political risk.

The marketing dilemma of whether to apply one global mix of product, price, promotion and distribution everywhere, or to tailor elements to local culture, regulation and competitive conditions.

Internationally recognized three-letter trade rules published by the ICC that allocate costs, risks and delivery obligations between buyer and seller, for example FOB, CIF and DAP.

An Incoterm under which the seller delivers goods on board the vessel nominated by the buyer at the named port of shipment, after which the buyer bears cost and risk.

An Incoterm under which the seller pays freight and marine insurance to the named destination port, though risk passes to the buyer when goods are loaded on board.

A six-digit international nomenclature classifying traded goods by product type, used by customs authorities worldwide as the basis for tariffs, statistics and rules of origin.

The method used by customs to determine the dutiable value of imported goods, normally the transaction value, to which ad valorem duty rates are applied.

A customs duty calculated as a percentage of the value of the imported goods, as opposed to a specific duty charged per unit of weight, volume or quantity.

Criteria that determine the national source of a product, including wholly obtained goods and substantial transformation tests, needed to claim preferential tariff treatment under a trade agreement.

A document certified by an authorized body that states the country in which goods were produced, required by customs to apply preferential or non-preferential tariff treatment.

A written decision by a customs authority, issued in advance of import, that fixes the classification, origin or valuation treatment of specified goods for a stated period.

A bank undertaking to pay the beneficiary against presentation of complying documents, substituting the creditworthiness of a bank for that of the buyer in an international sale.

A payment method in which banks act as intermediaries to release shipping documents to the buyer only against payment or acceptance of a draft, without guaranteeing payment.

The ICC's Uniform Customs and Practice for Documentary Credits, a set of contractual rules governing how banks examine and honour letters of credit when incorporated into the credit.

A mismatch between documents presented under a letter of credit and the terms of the credit, which entitles the issuing bank to refuse payment unless the applicant waives it.

An unconditional written order from one party to another to pay a stated sum at a fixed or determinable future date, widely used in trade as a draft drawn on the buyer or a bank.

The sale of accounts receivable at a discount to a financial institution, which then collects payment, converting credit sales into immediate cash and transferring collection risk.

A treaty governing contracts for the cross-border sale of goods, setting default rules on formation, delivery, conformity, risk and remedies that apply unless the parties exclude them.

A contract clause excusing a party from performance when an unforeseen event beyond its control, such as natural disaster, war or government action, prevents it from fulfilling obligations.

A contractual provision requiring parties to renegotiate when changed circumstances make performance substantially more onerous without rendering it impossible, unlike a force majeure excuse.

The national law chosen by the parties, or determined by conflict-of-laws rules, to govern the interpretation and enforcement of an international commercial contract.

A dispute resolution process in which parties refer their dispute to one or more neutral arbitrators whose award is binding and enforceable across borders under the New York Convention.

Frameworks describing how national cultures differ on traits such as power distance, individualism, uncertainty avoidance and long-term orientation, used to anticipate negotiation and management styles.

A communication style in which much meaning is carried by situation, relationships and non-verbal cues rather than explicit words, common in many Asian and Middle Eastern business settings.

The practice of preserving a counterpart's dignity and reputation during disagreement or concession, which shapes how directly problems can be raised in many negotiation cultures.

Coverage purchased from a public or private insurer against losses from host-government actions such as expropriation, currency inconvertibility, political violence or wrongful calling of guarantees.

A policy protecting an exporter against non-payment by foreign buyers due to commercial insolvency or political events, often enabling bank financing at better terms.

The sensitivity of a firm's cash flows, balance sheet or competitive position to movements in exchange rates, classified as transaction, translation and economic exposure.

A binding agreement to buy or sell a fixed amount of currency on a future date at a rate set today, used to lock in the home-currency value of a known foreign payment.

A United States law that prohibits bribery of foreign officials to obtain or retain business and requires issuers to keep accurate books and adequate internal accounting controls.

A small payment made to a low-level official to speed up a routine, non-discretionary action; narrowly excused under some anti-bribery laws but prohibited under others.

The structured investigation of a prospective partner, agent or acquisition target covering ownership, reputation, sanctions exposure and compliance history before committing to a relationship.

The process of checking customers, agents and shipments against restricted-party and embargo lists to avoid prohibited transactions before goods or funds change hands.

Items, software and technology with both civilian and military applications, whose export is controlled and may require a licence depending on destination and end user.

A government's seizure of privately owned assets, sometimes with compensation and sometimes without, a core political risk for firms holding foreign subsidiaries or plant.

A planning tool that maps a firm's internal strengths and weaknesses against external opportunities and threats, used to set export objectives and choose target markets.

A written document setting out target markets, entry mode, resourcing, pricing, logistics and financial projections, together with milestones and measures for an export venture.