Unveiling Foreign Trade: The Terms You Need to Know

With the constant expansion of national markets, foreign trade is a practice that has been gaining increasing prominence on the global stage. The importance attributed to this activity arises from various factors. Among these aspects, the ability of transnational trade to help expand a country's market beyond its borders stands out, facilitating access to new products, services, and technologies, as well as enabling greater demand for domestic goods.

In this context, statistical data from the World Trade Organization (WTO) indicates that the United States and China together imported and exported more than $5 trillion in goods in 2023. Additionally, Brazil also made a significant contribution to international trade, exporting $340 billion and importing $253 billion in the same year. These figures quantitatively represent part of the flow of goods generated by international trade.

Given the importance of foreign trade to the global market, we have listed the main terms that are essential to understanding international negotiations, aiming to promote better knowledge of these practices. Check them out:

Ad Valorem

This refers to a way of applying insurance and tariffs proportionally to the value stated on the invoice. Ad Valorem tariffs are usually applied to high-value goods and large quantities, such as commodities.

Certificate of Origin

This is a document required to prove the origin of a certain product, issued by official bodies like consulates and Chambers of Commerce.

DUIMP

Also known as the Single Import Declaration, it is an electronic certification that centralizes all information and data related to a product import.

International Commercial Terms (INCOTERMS)

These are clauses set by the International Chamber of Commerce that standardize the responsibilities of the importer and exporter during trade. The terms simplify agreements between traders. Examples of Incoterms include:

CFR: Cost and Freight

CIF: Cost, Insurance and Freight

FOB: Free on Board

Mode of Transport

This refers to the method of transporting goods in international trade, which can be by sea, air, road, rail, pipeline, or waterway.

Mercosur Common Nomenclature (MCN)

This is an ordered system based on the Harmonized System to standardize and regulate goods within Mercosur. It also serves as a basis for trade defense, being used for statistical data, specific health inspections, taxation, among other functions.

Packing List

An international document that details the specifications and technical details of the goods, such as weight and volume.

Radar

A tracking tool used by the Brazilian Federal Revenue Service to monitor and inspect foreign trade movements. It is mandatory for those wishing to import or export.

Harmonized System (HS)

An international classification system for goods proposed by the World Customs Organization (WCO). The HS nomenclature standardizes products and facilitates trade and customs inspection worldwide.

Integrated Foreign Trade System (Siscomex)

The Brazilian federal government platform that manages the operational control of merchandise transactions.

Exchange Rate

This represents the price comparison between two currencies in foreign trade. The US dollar is commonly used as a conversion reference.

TEC (Common External Tariff)

This is a common tariff used within Mercosur. Countries like Argentina and Uruguay also use the TEC.

FOB Value

The FOB value is the price of the merchandise plus transportation costs to the place of origin's dispatch. It does not include international freight or other expenses, as these are the importer's responsibility.

It is worth noting that there are numerous other general and specific terms in foreign trade. We have highlighted the most common and significant ones to simplify the understanding of international merchandise transactions and to assist entrepreneurs in entering the foreign trade market.

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We are a company committed to assisting our clients in entering the international market through consulting and providing strategic solutions to overcome obstacles that may arise during this process. Now that you are familiar with the main terms related to international trade processes, how about scheduling a completely free consultation with Líderi?

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Sources: World Trade Organization; Receita Federal; Fazcomex; Remessa Online.

Written by: Nicolas Rocha, Project Consultant

Reviewed by: Eduarda Teixeira, Marketing Consultant