INTERNATIONAL TRADE LAW
Need-to-Know Export Terms: A Glossary
Exporting comes with two vocabularies you have to learn: the export-control acronyms that decide whether you need a license, and the Incoterms that decide who pays and who bears the risk in a shipment. This glossary defines both in plain English so you can read a contract, a classification, or a freight quote without getting lost. Bookmark it as a quick reference.
Export-control acronyms
These are the terms that determine whether the U.S. government lets your shipment leave — and they appear constantly once you start exporting controlled goods.
EAR — Export Administration Regulations. The rulebook for most commercial and “dual-use” exports, administered by the Bureau of Industry and Security. If an item is “subject to the EAR,” its export is governed by these rules.
BIS — Bureau of Industry and Security. The Department of Commerce agency that runs the EAR, classifies items, issues licenses, and enforces export-control violations.
CCL — Commerce Control List. The list of controlled items in the EAR. If your product is on the CCL, it has an ECCN.
ECCN — Export Control Classification Number. A five-character code (for example, 3A001) identifying a controlled item on the CCL and the reasons it is controlled. The ECCN plus the destination country tells you whether you need a license. See our ECCN cheatsheet.
EAR99. The catch-all classification for items subject to the EAR but not listed on the CCL. Most everyday commercial goods are EAR99 and usually ship without a license — unless headed to an embargoed country, a restricted party, or a prohibited end use.
ITAR — International Traffic in Arms Regulations. The separate, stricter regime for defense articles and services, administered by the State Department. If your product is on the U.S. Munitions List, it is an ITAR item, not an EAR item.
OFAC — Office of Foreign Assets Control. The Treasury Department office that administers economic sanctions and embargo programs.
SDN — Specially Designated National. A person or entity on OFAC’s blocked list. U.S. persons generally may not transact with an SDN. Screen every party to a deal against the restricted-party lists before shipping.
Incoterms 2020: who does what in a shipment
Incoterms are the International Chamber of Commerce’s standard trade terms that define, for any sale, where the seller’s responsibility ends and the buyer’s begins — covering delivery, transport, risk, and export/import clearance. They are voluntary, but they are so widely used that naming the right one (and the right version) prevents most shipping disputes.
Use the current edition: Incoterms 2020, in effect since January 1, 2020. It replaced Incoterms 2010, and the most notable change was renaming DAT (Delivered at Terminal) to DPU (Delivered at Place Unloaded) to reflect that delivery can happen at any place, not just a terminal. Always state the version in your contract (“FOB Houston, Incoterms 2020”), because the terms have shifted across editions.
Rules for any mode of transport
| Term | Name | Who clears export | Where risk passes to buyer |
|---|---|---|---|
| EXW | Ex Works | Buyer | At seller’s premises (buyer loads) |
| FCA | Free Carrier | Seller | When goods are handed to the carrier |
| CPT | Carriage Paid To | Seller | When goods are handed to the first carrier |
| CIP | Carriage and Insurance Paid To | Seller | When goods are handed to the first carrier (seller insures) |
| DAP | Delivered at Place | Seller | At destination, ready for unloading (buyer unloads) |
| DPU | Delivered at Place Unloaded | Seller | At destination, after seller unloads |
| DDP | Delivered Duty Paid | Seller (and import clearance) | At destination, ready for unloading |
Rules for sea and inland-waterway transport only
| Term | Name | Who clears export | Where risk passes to buyer |
|---|---|---|---|
| FAS | Free Alongside Ship | Seller | Alongside the vessel at the named port |
| FOB | Free on Board | Seller | When goods are loaded on board the vessel |
| CFR | Cost and Freight | Seller | When goods are loaded on board (seller pays freight) |
| CIF | Cost, Insurance and Freight | Seller | When goods are loaded on board (seller pays freight and insurance) |
Two practical points. First, DDP puts the most on the seller — it is the only Incoterm that makes the seller responsible for import clearance and duties in the buyer’s country. Second, Incoterms settle delivery and risk only; they do not cover price, payment terms, title transfer, or what happens on breach. Your sales contract still has to address all of that.
FAQ
What is the current version of the Incoterms? Incoterms 2020, published by the International Chamber of Commerce and effective January 1, 2020. It replaced Incoterms 2010. Specify the version in every contract so there is no ambiguity about which rules apply.
What is the difference between an ECCN and EAR99? An ECCN is a code on the Commerce Control List identifying a controlled item. EAR99 is the designation for items subject to the EAR that are not on the list — typically lower-risk commercial goods that often ship without a license.
Do Incoterms decide whether I need an export license? No. Incoterms allocate cost, risk, and clearance duties between buyer and seller. Whether a license is required is a separate question answered by the item’s classification, the destination, the parties, and the end use.
Is FOB the right term for my air or truck shipment? Usually not. FOB, FAS, CFR, and CIF are designed for sea and inland-waterway transport. For air, rail, road, or multimodal shipments, FCA, CPT, CIP, DAP, DPU, or DDP are the better fit.
Not sure which terms apply to your shipments? Reidel Law Firm prepares flat-fee Import/Export Compliance Memos that classify your product and map your licensing and documentation obligations — with direct attorney access. Request a compliance memo →
