On January 7, the International Chamber of Commerce (ICC) informed that its new Uniform Rules for Forfaiting (URFs) had come into effect on January 1, after more than three years of drafting. The rules, which were approved at the last ICC Banking Commission meeting, will govern a market estimated at more than $300-billion a year.

Forfaiting, a form of international supply chain financing, provides a vital finance component for a number of trade instruments, including letters of credit, bills of exchange, promissory notes and invoice purchases. Accordingly, the new URFs provide the contractual framework to transform these instruments into viable banking investments.

The URFs, developed in cooperation with the International Forfaiting Association, complement other ICC uniform rules, notably the Uniform Customs and Practice for Documentary Credits, the ICC’s universally used rules on letters of credit. Letters of credit are largely forfaited, especially in China, where forfaiting constitutes the bulk of transactions.

The URFs are designed for use in both primary and secondary markets. They deal with the needs of these two markets by employing mirror provisions amended only when necessary to take account of structural and commercial differences. For ease of use, the rules are accompanied by model form agreements for both markets.

Since forfaiting normally operates without recourse to the seller, the URFs provide certain safeguards to guarantee that transactions sold into the market are robust. Among these are a provision specifying that all parties in both primary and secondary markets are liable if certain basic breaches occur, such as the lack of authority of either the buyer or seller to sign transaction documentation.

The ICC Banking Commission’s entrance into this new field is an indication of its expanding role, encompassing the entire field of trade finance. According to the ICC, next on its agenda will be approval of rules for the Bank Payment Obligation, the joint ICC/Swift product that places a legal obligation on the issuing bank to pay the recipient bank, subject to the successful electronic matching of compliant data.

The ICC states that its Banking Commission is the world’s rule-writing body for the banking industry. With more than 600 members in more than 100 countries, it has gained a reputation as the authoritative voice in the field of trade finance.

WTO Director-General Candidates
On January 3, the World Trade Organisation (WTO) informed that nine candidates had been nominated by their respective governments for the post of WTO director-general to succeed the current director-general, Pascal Lamy, whose term of office expires on August 31.

The candidates, listed in the order in which their nominations were received, are Alan Jon Kwadwo Kyerematen (Ghana), Anabel González (Costa Rica), Mari Elka Pangestu (Indonesia), Tim Groser (New Zealand), Amina C Mohamed (Kenya), Ahmad Thougan Hindawi (Jordan), Herminio Blanco (Mexico), Taeho Bark (Republic of Korea) and Roberto Carvalho de Azevêdo (Brazil).

The nomination period closed on December 31. A formal General Council meeting will now be held on January 29, where the candidates will have the opportunity to make a presentation to WTO members. The selection process will conclude with a decision by the General Council no later than May 31.

Year of Innovation
The World Customs Organisation (WCO) has announced that 2013 will be dedicated to promoting innovation under the slogan Innovation for Customs Progress.

The Year of Innovation will be launched on International Customs Day, celebrated annually by the global customs community on January 26 in honour of the inaugural session of the Customs Cooperation Council (CCC) which took place on January 26, 1953. In 1994, the CCC adopted the informal working name of World Customs Organisation to better reflect its worldwide growth in membership, which now totals 179 customs administrations. The WCO has urged all customs authorities and its stakeholders to be innovative and creative in taking forward the innovation theme in all its facets throughout 2013.

PTFE Tape Duty Increase
The International Trade Administration Commission of South Africa (Itac) has informed, by means of a Government Gazette notice dated December 21, 2012, of the proposed increase in the rate of customs duty on polytetrafluoroethylene (PTFE) tape, classifiable under tariff subheading 3920.99.25, from 10% ad valorem to 20% ad valorem.

The application was lodged by RIC Manufacturing, which provided numerous reasons for the application. The applicant is the only manufacturer of PTFE tape in the Southern African Customs Union (Sacu) region. It is a small company, yet it employs a significant number of people. Government has prioritised entrepreneurship and the advancement of small, medium-sized and micro- enterprises as a catalyst to achieving economic growth and development in South Africa.

The applicant needs to increase its selling prices to recover production costs. Although its products are of a high quality, most clients are purely price driven. The WTO bound rate of 20% ad valorem is required to curb the flood of cheap imports into the Sacu region to ensure that the region retains this industry and to afford the relevant industry a chance to grow.

Comment is due by January 25.