Trade
How agricultural trade works
A consignment that crosses a border is classified, valued, given an origin, documented, and delivered on terms that someone agreed in advance. Each of those is a mechanism with published rules and a body that operates it. This section describes those mechanisms — what each one does, who decides it, and where its scope ends.
A mechanism, not a transaction
These pages describe how a system works, not what a reader should do in a deal. A page on tariff classification explains what classification is for and who determines it; it does not classify a product. A page on a delivery term explains what such a term allocates; it does not tell anyone which term to use. The distinction is the whole basis of the section.
Trade concepts sit alongside the rest of the chain. Logistics covers how a consignment physically moves, standards cover the normative documents a trade must satisfy, market terms define the vocabulary of price, and supply-chain risks describe how the whole arrangement fails. The commodities themselves are described on their own pages.
Editions decide meaning
Almost nothing here has a fixed meaning across time. Nomenclatures are revised on a cycle, delivery-term sets are reissued, and the obligations behind a familiar abbreviation change between editions. A code or a term without its edition is incomplete, so every entry names the edition it describes and treats the version as part of the fact rather than a footnote.
Delivery terms are described, never reproduced
Incoterms® is a registered trademark of the International Chamber of Commerce, and the Incoterms® rules are an ICC copyrighted publication. This page describes, in general terms, what a delivery term allocates between seller and buyer; it does not reproduce the rules, is not a substitute for the published text, and does not recommend a rule for any transaction. Always work from the edition the contract names.
What these pages are not
This is an educational reference description of how a trade mechanism works, not legal, customs, or contractual advice. Tariff classification, valuation, origin, and admissibility are determinations made by the competent authority for a specific consignment under the law in force at the time. Nothing here substitutes for a customs broker, a qualified adviser, or the authority’s own ruling.
Trade concepts A–Z
Each entry covers the purpose of the mechanism, who administers it, the parties whose obligations it allocates, the documents and standards it operates with, and the limits of a reference description.
32 entries
- Trade concept
Bill of Lading
A bill of lading is a transport document that does three things at once: it receipts the goods, it evidences the contract of carriage, and — in its negotiable form — it functions as a document of title, so that transferring the paper transfers the right to take delivery. That third function is what allows a cargo to be sold while it is at sea.
- Trade concept
Certificate of Origin
A certificate of origin is the instrument by which a consignment’s origin is asserted to a customs authority. It exists in preferential and non-preferential forms, may be issued by a designated body or made by the exporter itself, and is evidence supporting a claim — not a determination, and not immune from being checked afterwards.
- Trade concept
CIF (Cost, Insurance and Freight)
CIF is an Incoterms® rule for sea and inland waterway transport under which the seller contracts and pays for carriage to a named port of destination and procures a specified minimum level of cargo insurance — while risk passes to the buyer at shipment, not on arrival. The separation of cost from risk is the whole point of the term and the source of most misunderstandings about it.
- Trade concept
Commercial Invoice
The commercial invoice is the seller’s statement of what was sold, to whom, and for how much. It is the primary evidence of the transaction, and it is used far beyond the billing it was created for: customs valuation, classification, origin, and documentary payment all rest on what it says.
- Trade concept
Country of Origin and Provenance
"Origin" is not one idea but several that share a word: the country a good is legally treated as originating in, the place it was physically grown, the country it was consigned from, and the story told to consumers about where it comes from. They are determined by different rules, can point to different countries for the same consignment, and are not interchangeable.
- Trade concept
Customs Clearance
Customs clearance is the process by which a declared consignment is checked, assessed, and released to the procedure requested. For agricultural goods it is rarely a customs matter alone: plant-health, animal-health, and food-safety controls run alongside, and a consignment is not free to move until every authority with a say has said it.
- Trade concept
Customs Declaration
A customs declaration is the formal act by which a person states, to a customs authority, what goods are moving, under what procedure, and with what characteristics. It is a legal statement carrying liability for its accuracy — and it is also the record from which national trade statistics are subsequently built.
- Trade concept
Customs Valuation
Customs valuation determines the value on which an ad valorem duty is assessed. The international framework gives primacy to the transaction value — the price actually paid or payable for the goods, with defined adjustments — and provides a fixed sequence of alternative methods for use only when that basis is unavailable.
- Trade concept
DDP (Delivered Duty Paid)
DDP is the Incoterms® rule at the maximum-obligation end of the range for the seller: the goods are delivered at a named place in the country of destination, cleared for import, with the seller having borne cost and risk the whole way. Its difficulty mirrors EXW’s — the party carrying the obligation is often the party least able to discharge it.
- Trade concept
Documentary Collection
In a documentary collection, the seller’s bank forwards shipping documents to the buyer’s bank with instructions to release them only against payment or against acceptance of a bill of exchange. The banks act as agents handling documents — they undertake no payment obligation of their own, which is precisely what separates a collection from a letter of credit.
- Trade concept
Export Licence
An export licence is an authorisation a country requires before goods may leave it. In agriculture it is most consequential as the instrument through which export restrictions operate — measures a government applies to its own outbound trade, often to protect domestic supply, and which fall on importing countries that had no part in the decision.
- Trade concept
EXW (Ex Works)
EXW is the Incoterms® rule at the minimum-obligation end of the range for the seller: the goods are made available at the seller’s own premises or another named place, and the buyer takes on the journey from there. Its apparent simplicity is where its practical difficulties come from.
- Trade concept
FCA (Free Carrier)
FCA is the Incoterms® rule under which the seller delivers by handing the goods to a carrier or other party nominated by the buyer at a named place, having cleared them for export. It is usable for any mode of transport, and the named place decides what "handing over" actually means.
- Trade concept
FOB (Free On Board)
FOB is an Incoterms® rule from the family intended for sea and inland waterway transport, under which the seller delivers on board a vessel nominated by the buyer at a named port of shipment, having cleared the goods for export. Its reference point is the ship itself, which is both its precision and its constraint.
- Trade concept
Free Trade Zone
A free trade zone is a defined area within a country’s territory where goods are treated, for customs purposes, as though they were outside it: they can be stored, handled, and often processed without duty being charged, until and unless they enter the domestic market. It is a customs status attached to a place, and the terminology around it is used loosely enough to be misleading.
- Trade concept
Harmonized System Classification
The Harmonized System is the World Customs Organization’s nomenclature for describing traded goods, and the code assigned to a consignment determines which tariff, quota, and control regime applies to it. Classification is a legal determination about a particular good, not a label a shipper chooses.
- Trade concept
HS Code Versioning
The Harmonized System is revised periodically, and each revision can create, delete, split, merge, or relocate codes. A code therefore only has meaning in relation to its edition, and a trade time series that crosses a revision boundary is discontinuous unless it has been correlated.
- Trade concept
Import Permit
An import permit is a prior authorisation that a consignment must hold before it may be imported. For agricultural goods it commonly does more than grant permission: it states the conditions the consignment must meet, which is why obtaining it is the step that defines what the exporter has to do rather than a formality at the end.
- Trade concept
Incoterms® Rules
The Incoterms® rules are a set of standard three-letter delivery terms published by the International Chamber of Commerce that allocate cost, risk, and specified obligations between a seller and a buyer. They are a shorthand incorporated into a contract of sale — not the contract itself, and not a statement of who owns the goods.
- Trade concept
Letter of Credit
A letter of credit is an undertaking by a bank to pay a seller against the presentation of specified documents, independently of the underlying sale contract. It substitutes a bank’s credit for the buyer’s, and its defining feature is that banks deal in documents alone — not in the goods those documents describe.
- Trade concept
Mirror Statistics
Mirror statistics use one country’s record of a trade flow as a proxy for its partner’s. The technique fills gaps where a country reports late, incompletely, or not at all — but the two sides of a flow are constructed differently, so a mirror figure is an estimate with a known and structural bias, not a substitute observation.
- Trade concept
Non-Tariff Measure
A non-tariff measure is any policy other than a tariff that can affect trade in goods — sanitary requirements, technical regulations, licensing, quotas, and much else. The term is deliberately neutral: most such measures exist for legitimate public purposes, and calling one a barrier is a conclusion about its effect, not a description of what it is.
- Trade concept
Packing List
A packing list states how a consignment is physically made up: what is in each package, how many there are, what they weigh, and how they are marked. It is the document that lets a consignment be checked against its paperwork without opening everything, which is why inspection authorities rely on it more than its humble status suggests.
- Trade concept
Phytosanitary Certificate
A phytosanitary certificate is an official attestation, issued by the exporting country’s national plant protection organisation, that a consignment has been inspected or tested according to appropriate procedures and is considered to conform to the importing country’s plant health requirements. It is a government-to-government communication about pest risk — not a quality certificate, and not a guarantee.
- Trade concept
Preferential Trade Agreement
A preferential trade agreement gives goods from a partner better tariff treatment than the general rate. The preference is never automatic: it must be claimed, the goods must qualify under that agreement’s own rules of origin, and agricultural products are the sector most often carved out, staged over long periods, or admitted only within a quota.
- Trade concept
Re-export and Transit
Re-export and transit are two different ways a consignment can pass through a country that is neither its origin nor its destination: in a re-export it is imported and then exported again, while in transit it moves under customs control without being imported at all. The distinction determines the duty position, the documentation, and how the movement appears in trade statistics.
- Trade concept
Rules of Origin
Rules of origin are the criteria by which a good is attributed to a country for customs purposes. They answer a question the goods themselves cannot: when materials from several places have been combined or processed, which country is the good "from"? The answer is constructed by rule, differs between agreements, and drives access to preferential duty.
- Trade concept
Sanitary Certificate
A sanitary certificate is an official attestation by the competent authority of an exporting country about the health status of a consignment of animals, animal products, or food. Like its plant-health counterpart it is a government-to-government communication — but it rests on an establishment’s approval and a country’s disease status as much as on any inspection of the goods.
- Trade concept
Tariff-Rate Quota
A tariff-rate quota applies one duty rate to imports up to a defined volume and a higher rate to everything beyond it. It is not a quantitative limit — imports above the threshold are permitted, just at a rate that is frequently high enough to make them uncommercial, which is where the instrument gets its effect.
- Trade concept
Tariffs and Duties
A tariff is a charge applied to goods because they cross a border, set out in a national schedule against classification codes. What is actually payable on a consignment depends on its classification, its customs value or quantity, its origin, and the regime it enters under — which is why a tariff schedule is a starting point rather than an answer.
- Trade concept
Trade Flow Direction
Every trade statistic is recorded with a direction — import, export, re-import, or re-export — and the direction determines which country reports it, against which partner, and on what valuation basis. Two figures describing the same physical movement are not comparable unless their directions and bases are understood.
- Trade concept
Transhipment
Transhipment is the transfer of a consignment from one means of transport to another during a journey, typically at a hub port or airport, without the goods entering the intermediary country’s market. It is a logistics operation with customs, documentary, and plant-health consequences, because a cargo that has been handled and re-stowed is not in quite the state it was.
Sources
This article draws on the following authoritative sources. See our sources & methodology for how they are selected.
- Authoritative
Cited for: Harmonized System nomenclature and customs procedure
- Type:
- Intergovernmental organization
- Jurisdiction:
- Global
- Accessed:
- 2026-07-16
- Authoritative
Cited for: Multilateral trade rules, market access, and the SPS and TBT agreements
- Type:
- Intergovernmental organization
- Jurisdiction:
- Global
- Accessed:
- 2026-07-16
- Authoritative
Cited for: Ownership and publication of the Incoterms® rules
- Type:
- Standards body
- Jurisdiction:
- Global
- Accessed:
- 2026-07-16