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ICC releases trade register report

4th July 2014

By: Callie Lombard

  

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On June 9, the International Chamber of Commerce (ICC) released the Trade Register Report 2014, which provides empirical evidence that, in all forms, trade and export finance is a low-risk bank-financing technique.

The ICC supports trade finance as a strong contribution to economic recovery and growth. It believes that the evidence in the report has the potential to alter attitudes towards trade finance and, therefore, contribute to the growth of global trade and the global economy.

Based on data contributed by the major global commercial banks, representing more than 4.5-million transactions totalling an exposure in excess of $2.4-trillion, the Trade Register Report 2014 empirically demonstrates that trade finance entails lower risk than many other types of financing and assets. It records that short-term trade finance customer default rates range from a low of 0.033% to a high of 0.241%, which is a fraction of the 1.38% default rate reported by Moody’s for all corporate products (according to 2012 figures).

First launched in 2009 by the ICC’s Banking Commission, the report is widely recognised as one of the world’s leading analytical reports on global risks for the trade finance industry, identifying risks across a range of trade finance products and markets.

The report offers those involved in trade – whether in business, finance, government or multilateral institutions – a tool for understanding the risks, which should support liquidity and the regulatory oversight of the technique. Between 80% and 90% of cross-border trading activity relies on some form of trade finance, making the regulatory treatment of instruments such as letters of credit and pre-export finance vital for the health of the world’s economy. In fact, it was the market’s concern that the regulatory requirements were subjecting trade finance to disproportionately stringent capital- adequacy standards that encouraged the ICC’s Banking Commission, through an initial partnership with the Asian Development Bank, to initiate the Trade Register Report 2014. The same concerns underpin the ICC’s ongoing engagement in this initiative to empirically support what was previously only anecdotally known: that trade finance is a low-risk asset class for lenders.

The findings of the Trade Register Report 2014 have the potential to transform trade and open up trade finance as a lubricant for economic growth. By demonstrating that trade finance entails low risk, not just anecdotally or theoretically, but through data gathered from the major global commercial banks, the Trade Register Report 2014 not only acts as a vital tool for policymakers and financial regulators, but also encourages lenders to finance trade activity in the developed and emerging economies in the short and medium term.

The ICC’s Trade Register and its annual report are now widely recognised as providing comprehensive analyses of global risks for the trade finance industry.

Increase in Rate of Duty
On June 20, the International Trade Administration Commission of South (Itac) extended an invitation for comments on the proposed increase in the ‘general’ rate of customs duty on helical springs, classifiable under tariff subheading 7320.20, from 5% ad valorem to 30% ad valorem through the creation of an additional eight-digit tariff subheading under 7320.20 for “helical springs with a wire diameter of more than 1.32 mm but not exceeding 2.43 mm”.
Comment due is due July 18.

Dumping Lapse
On July 20, Itac announced that, unless a duly substantiated request is made by or on behalf of the Southern African Customs Union (Sacu) industry indicating that the expiry of the antidumping duty would likely lead to continuation or recurrence of dumping and injury, antidumping duties on the following products will expire during 2015: garlic imported from or originating in China (March 25), float and flat glass imported from or originating in China (March 25), polyester staple fibre imported from or originating in China (March 27) and float and flat glass originating in or imported from India (March 25).

Manufacturers of the products in the Sacu region who intend to submit a request for the antidumping duties to be reviewed prior to their expiry are requested to do so by the following dates: garlic (September 25), float and flat glass (September 25), polyester staple fibre (November 27), and float and flat glass (September 25).

Where no replies are received from the Sacu manufacturers within these time limits, Itac will recommend the termination of the duties on the date of expiry.

Sacu manufacturers who wish to submit a request for the antidumping duties to be reviewed prior to their expiry must do so not later than July 28.

Customs Control Act
On June 17, the South African Revenue Service (Sars) published draft customs control rules for chapters 1 and 3 to 10 of the proposed Customs Control Act (currently Customs Control Bill B45B of 2013). Comments must be submitted by no later than July 29.

Dumping Amendment
On June 20, Sars informed of the technical correction to the structure of Schedule No 2, Part 1, the Customs and Excise Act, which deals with dumping, to ensure alignment with industries in accordance with sections of the Harmonized System. The header ‘Vegetable products’, under item 205.00, has been corrected to 202.00. The correction is effective June 19.

Dumping Duty Imposed
On June 20, Sars informed of the imposition of antidumping duties on disodium carbonate produced by OCI Chemical Corporation, of the US (21%), disodium carbonate produced by Tata Chemicals in the US (8%), disodium carbonate, (excluding that produced by Tata Chemicals) produced by ODA Partners and OCI Chemical Corporation in the US (40%).

LPG Market Inquiry
The Competition Commission on June 20 informed of its market inquiry into the liquefied petroleum gas sector. Members of the public are invited to provide information to the inquiry in accordance with guidelines for participation to be determined by the commission. The inquiry was expected to start sitting in June and likely to be completed by October 2015.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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