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Move to harmonise supply chain finance terminology

16th May 2014

By: Callie Lombard

  

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Iwas fortunate enough to attend, as the South African Legal Banking Committee representative, the recent International Chamber of Commerce (ICC) Banking Commission meeting, held in Dubai from April 27 to 30, under the theme Dubai 2014 – Gateway to Sustainable Trade and Development. A total of 421 bankers attended the meeting, which was also attended by business leaders, finance experts, lawyers and government officials from more than 50 countries.

The meeting provided trade finance professionals and representatives from financial institutions, corporations and international organisations with an opportunity to discuss the challenges the industry faces in providing trade finance services around the world. Keynote and panel topics focused on issues such as the new engines of growth in trade finance, value-creation opportunities and prospects for the industry, as well as the harmonisation of business practices, the development of a common terminology for supply chain finance, and the impact of compliance requirements and sanctions on business. Kah Chye Tan, chairperson of the ICC Banking Commission, said: “Over the past 83 years, the ICC Banking Commission has established itself as the pre- eminent global forum for the trade finance industry and is playing an increasingly influential role in drafting rules and standards adopted by business at large.”

It was announced that five leading business associations had joined forces with the ICC Banking Commission to undertake a major project to standardise and harmonise market terminology for global supply chain finance products and services. The newly formed Global Supply Chain Finance (SCF) Forum seeks to clarify existing definitions and supply chain finance terminology and will be led by the ICC Banking Commission, the Euro Banking Association, the Bankers Association for Finance and Trade (BAFT), Factors Chain International, International Factors Group and the International Forfaiting Association. In an effort to build consensus on the proposed SCF market terminology, a series of non- binding open consultations will be conducted, including with, where appropriate, corporates and end-clients, with the aim being to complete the set of recommended definitions within a 12 month timeframe. SCF Forum drafting group chairperson Alexander Malaket said: “Today, the term ‘SCF’ covers a wide range of products, programmes and solutions in the financing of international trade, to the extent that it can be used to refer to a single product or a comprehensive programme of solutions aimed at addressing the full range of needs of importers and exporters. SCF is at times positioned as a complement, a subset or even a superset of global trade finance, and the inconsistency in definitions, nomenclature and general language around the financing of trade linked to open account terms and to the support of global supply chains is proving to be challenging for importers, exporters, bankers, financiers and other service providers.”

BAFT, ICC Banking Commission in Cooperation Agreement
On April 29, it was announced that the ICC Banking Commission, the leading standard setter for the trade finance industry, and the BAFT, the international financial services association, had concluded a cooperation agreement to improve consumer services and strengthen the global voice of the industry. The ICC and the BAFT will collaborate on facilitating domestic and cross-border trade by harmonising definitions and business practice.

One of the objectives of the agreement is to streamline certain workflows across both organisations and leverage each other’s strengths. Initial areas of cooperation will include establishing global SCF definitions, adopting standardised industry documenta- tion, including the BAFT master loan agree- ment and the ICC rules for bank payment obligations, increasing awareness of industry initiatives, such as Sustainable Trade Finance, and coordinating industry surveys.

The BAFT Global Trade Industry Council and the ICC Banking Commission Advisory Board will also jointly discuss other opportunities for collaboration on trade finance industry needs. Each organisation will continue to pursue core initiatives and will coordinate efforts where there is common interest in order to achieve a better outcome for the industry.

Bahrain’s Implementation of ATA Carnets
On April 28, the Kingdom of Bahrain became the seventy-fourth country to implement the ATA Carnet system, which provides for the temporary duty- and tax-free export or import goods for up to one year.

Readers of this column may recall that, each year, over 175 000 ATA Carnets, covering hundreds of thousands of customs transactions, are issued worldwide for merchandise valued at about $25-billion. The ATA Carnet system, administered by the ICC World Chambers Federation and the Brussels-based World Customs Organisation, facilitates international trade and provides companies with a cost- effective tool to reach new markets for their products.

Dust Mask Rebate Provision
On April 25, the South African Revenue Service (Sars) informed of the insertion of rebate items 311.14/3919.10.07/01.08 and 311.14/4016.99.90/01.08 to provide for rebates on polyurethane flat shapes with dimensions not exceeding 50 mm × 2 mm × 10 mm, self-adhesive on one side only, in rolls of a width not exceeding 20 cm, and natural rubber straps with a length not exceeding 315 mm and a width not exceeding 7 mm, for use in the manufacture of dust masks classifiable under tariff subheading 6307.90.10. The extent of the rebate items are full duty and are effective from the day of the notice.

Washing Preparations Rebate Provision
On April 25, Sars informed of the insertion of rebate item 306.06/3402.11.20/01.08 for methyl ester sulphate for the manufacture of washing preparations (detergents) classifiable under tariff heading 34.02. The extent of the rebate item is full duty and is effective from the day of the notice.

Heat Exchange Units Tariff
On April 25, Sars informed of the increase in the ‘general’ rate of customs duty on heat exchange units, classifiable under tariff heading 8419.50, from ‘free’ to the World Trade Organisation bound rate of 15% ad valorem.

EU GSP Preferences
On April 25, Sars informed of the insertion, after the heading of Part 2 and before rule 46A2.01, of the following heading and rule: “46A2A Termination of Generalised System of Preferences (GSP)”. On December 31, 2013, the GSP, granted by the European Union (EU) and for which these rules provide, ceased to apply. With effect from January 1, 2014, the EU will grant any GSP rates of duty that are more favourable than those under the Agreement on Trade, Development and Cooperation (TDCA) between EU member States and South Africa on goods exported from South Africa under the TDCA if the goods have originating status in accordance with the TDCA.

Proposed Beadwire Customs Duty Increase
The International Trade Administration Commission of South Africa informed on April 17 of the application for the proposed increase in the ‘general’ rate of customs duty on wire of iron or nonalloy steel, plated or coated with other base metals (known in the industry as beadwire), classifiable under tariff subheading 7217.30, from free of customs duty to 10% ad valorem.
Comment was due by May 15.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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