U.S. Rail Strike has been Deterred as Freight Railroads and Unions Reach Tentative Agreements. Earlier today, the 46th President of the U.S, Joe Biden has released a statement on the tentative Railway Labor Agreement. It reads as follows:
“The tentative agreement reached tonight is an important win for our economy and the American people. It is a win for tens of thousands of rail workers who worked tirelessly through the pandemic to ensure that America’s families and communities got deliveries of what have kept us going during these difficult years. These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned. The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.
I thank the unions and rail companies for negotiating in good faith and reaching a tentative agreement that will keep our critical rail system working and avoid disruption of our economy.
I am grateful for the hard work that Secretaries Walsh, Buttigieg, and Vilsack, and NEC Director Deese put into reaching this tentative agreement. I especially want to thank Secretary Walsh for his tireless, around-the-clock efforts that delivered a win for the hard working people of the US rail industry: as a result, we will keep Americans on the job in all the industries in this country that are touched by this vital industry.
For the American people, the hard work done to reach this tentative agreement means that our economy can avert the significant damage any shutdown would have brought. With unemployment still near record lows and signs of progress in lowering costs, tonight’s agreement allows us to continue to fight for long term economic growth that finally works for working families.”
The Association of American Railroads released details of the agreement, which indicates that the new contracts provide rail employees a 24 % increase during the 5 years period from 2020-2024, including an immediate payout on average of $11,000 upon ratification, following the recommendations of Presidential Emergency Board (PEB) No. 250.
To read the full statement from AAR, you may clickHERE.
If you have any additional questions, please don’t hesitate to contact us here.
On September 02, 2022 the United States Trade Representative declared a continuation of China 301 Tariffs in a press release.
It reads as follows:
“WASHINGTON – Today, the Office of the United States Trade Representative confirmed that representatives of domestic industries benefiting from the tariff actions in the Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation have requested continuation of the tariffs. Accordingly, as required by statute, the tariffs did not expire on their four-year anniversary dates and USTR will proceed with the next steps as provided in the statute.
USTR’s formal notice of the continuation may be found here. Details on the next steps in the four-year review process will be set out in subsequent notices.
In May 2022, USTR commenced the statutory four-year process by notifying representatives of domestic industries that benefit from the tariff actions of the possible termination of those actions and of the opportunity for the representatives to request continuation. Because requests for continuation were received, the tariff actions have not terminated and USTR will conduct a review of the tariff actions.”
If you have any additional questions, please do not hesitate to contact usHERE.
“The Office of Trade’s National Commodity Specialist Division and the Office of Trade Relations is excited to present a series of approximately 40 commodity-specific, educational webinars to support Customs and Border Protection’s internal and external customers. The webinars began in February and will run through September 2022. Each webinar will be approximately an hour. The date and time will vary, so please be sure to check the time for each webinar.
The schedule for the September webinars is below. Please click on the webinar title to register. The link to join will be sent via email no later than 9 a.m. on the day of the webinar. We look forward to your participation!”
If you have any additional questions, please do not hesitate to contact us HERE.
The latest in user fee changes have been announced by the U.S Customs and Boarder Protection inCSMS #52834229. The message reads as follows:
“Pursuant to the General Notice (87 FR 46973) published August 1, 2022, adjustments to certain customs user fees and corresponding limitations, as codified in 19 U.S.C. § 58c, will take effect on October 1, 2022. These adjustments are being made in accordance with the Fixing America’s Surface Transportation Act of 2015 (FAST Act), Public Law 114-94. The General Notice may be accessed at the link below:
The Merchandise Processing Fee (MPF) ad valorem rate of 0.3464% will NOT change. The MPF minimum and maximum for formal entries (class code 499) will change. The minimum will change from $27.75 to $29.66; and the maximum will change from $538.40 to $575.35.
Some other fees that are changing:
The fee for Informal Entry/Release, automated and not prepared by CBP personnel (class code 311a), will change to $2.37.
The Surcharge for Manual Entry/Release (class code 500) will change to $3.56.
The Dutiable Mail fee (class code 496) will change to $6.52.
The Express Consignment Carrier/Centralized Hub Facility fee will change to $1.19 per individual waybill/bill of lading. An individual air waybill is the bill at the lowest level and is not a master bill or other consolidated document. See82 FR 50523 (Nov. 1, 2017).
The Commercial Vessel or Commercial Aircraft Passenger Arrival customs fee will change to $6.52 per passenger.
The Commercial Vessel Passenger Arrival (from exempt areas) customs fee will change to $2.29 per passenger.
The Commercial Truck Arrival fee will change to $6.50. The Commercial Truck Arrival Fee is the CBP fee only; it does not include the United States Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) Agricultural and Quarantine Inspection (AQI) Services Fee (currently $7.55) that is collected by CBP on behalf of USDA to make a total single crossing fee of $14.05.
Please see the General Notice for the full list of fees that are changing. Another CSMS will be sent when the changes are in the ACE Certification environment for trade testing.”
If you have any additional questions, please do not hesitate to contact us HERE.
Bureau of Industry and Security announced afinal rulingin response to the Russian federation’s ongoing aggression against Ukraine. The Department of Commerce is expanding the existing sanctions against Russian industry sectors by imposing a license requirement for exports, reexports, or transfers (in country) to and within Russia for additional items subject to the Export Administration Regulations (EAR) identified under specific Schedule B numbers or Harmonized Tariff Schedule codes. The Bureau of Industry and Security (BIS) is taking these actions to further restrict Russia’s ability to withstand the economic impact of the multilateral sanctions, further limit sources of revenue that could support Russia’s military capabilities, and to better align with the European Union’s controls.
The article reads as follows:
In response to Russia’s February 2022 invasion of Ukraine, BIS imposed extensive sanctions on Russia under the Export Administration Regulations (15 CFR parts 730 – 774) (EAR) as part of the final rule Implementation of Sanctions Against Russia Under the Export Administration Regulations (EAR) (the Russia Sanctions rule), effective on February 24, 2022, and published on March 3, 2022 (87 FR 12226). Since the publication of the Russia Sanctions rule, BIS has published a number of final rules imposing additional stringent export controls on Russia. These actions reflect the U.S. Government’s position that Russia’s invasion of Ukraine flagrantly violated international law, was contrary to U.S. national security and foreign policy interests, and undermined global order, peace, and security, all of which necessitated the imposition of stringent and expansive sanctions. The export control measures in this final rule build upon the policy objectives set forth in one of the subsequent rules, a final rule effective on March 3, 2022, and published on March 8, 2022 (87 FR 12856), Expansion of Sanctions Against the Russian Industry Sector Under the Export Administration Regulations (EAR) (Russian Industry Sector Sanctions rule). Among other things, the Russian Industry Sector Sanctions rule revised part 746 of the EAR (Embargoes and Other Special Controls) by adding a new paragraph (a)(1)(ii) which imposed an additional license requirement for exports, reexports, and transfers (in-country) to or within Russia of any items subject to the EAR if identified under certain Schedule B or Harmonized Tariff Schedule 6 (HTS) codes. The Russian Industry Sector Sanctions rule also added supplement no. 4 to part 746 – HTS Codes and Schedule B Numbers that Require a License for Export, Reexport, and Transfer (in-country) to or within Russia pursuant to § 746.5(a)(1)(ii) – which identifies HTS codes and Schedule B numbers that are subject to the license requirement set forth in paragraph (a)(1)(ii). The four columns added in supplement no. 4 to part 746 consisted of: the Harmonized Tariff Schedule (HTS)-6 Code, HTS Description, Schedule B and Schedule B Description to assist exporters, reexporters, and transferors in identifying the items subject to this license requirement. This final rule builds upon the policy objectives set forth in the Russian Sanctions rule and the Russian Industry Sector Sanctions rule by expanding upon the latter to further restrict Russia’s access to items that it needs to support its military capabilities. The expansion of these export controls under the EAR, implemented in parallel with similarly stringent measures by partner and ally countries, further limits sources of revenue that could support Russia’s military capabilities, as well as Russia’s ability to withstand the economic impact of the multilateral sanctions.
II. Revisions to the Export Administration Regulations (EAR)
1. Expansion of Russian Industry Sector Sanctions
This final rule amends part 746 of the EAR (Embargoes and Other Special Controls) to further expand the scope of the Russian industry sector sanctions by adding additional HTS codes and Schedule B numbers to supplement no. 4 to part 746 of the EAR, thereby imposing a license requirement for all exports, reexports, and transfers (in-country) to or within Russia for such items. In this final rule, BIS is adding 205 HTS codes at the 6-digit level and 478 corresponding 10-digit Schedule B numbers to better align with the European Union’s controls.
2. Clarifications to Supplement No. 4 to Part 746 Controls
This final rule revises supplement no. 4 to part 746 by re-organizing the list of items subject to a license requirement under § 746.5(a)(1)(ii) in order to make it easier for exporters to determine whether a particular item is described in this supplement. Specifically, the columns in supplement no. 4 were previously listed in the following order: Harmonized Tariff Schedule (HTS)-6 Code, HTS Description, Schedule B, Schedule B Description. This final rule reorganizes the columns to list them in the following order: Schedule B, Schedule B Description, HTS Code, and HTS Description. In addition, this final rule is individually listing the existing Schedule B numbers so each number corresponds with a single HTS Code; previously, some of these Schedule B numbers were listed with multiple HTS Codes. It also reorganizes the list of items by ordering them numerically by Schedule B number; previously they had been organized alphabetically by HTS Description.
This final rule revises the existing language in the introductory text in supplement no. 4 to part 746 to reflect the reorganization of the list. In addition, this final rule adds Schedule B number 8705200000 to the introductory text to indicate it is also listed in both supplements no. 2 and 4 and adds a sentence to indicate that Schedule B number 8412294000 is listed in both supplements no. 4 and 5 to this part.
This final rule also adds a second paragraph to the introductory text in supplement no. 4 to part 746 to clarify the relationship between the four columns included in supplement no. 4 to part 746 by further explaining the scope of the items controlled under § 746.5(a)(1)(ii). The first sentence being added clarifies that under the Foreign Trade Regulations (15 CFR 30.6(a)(12)), exporters can use either the referenced HTS Code or Schedule B number from supplement no. 4 to part 746 when filing Electronic Export Information (EEI) in the Automated Export System (AES). The Russian Industry Sector Sanctions Rule included the applicable HTS-6 Code and Schedule B number and descriptions of items listed in supplement no. 4 to part 746 to assist exporters, reexporters, and transferors who may be more familiar with one or the other of the HTS Code or Schedule B number identification systems. The second sentence being added clarifies that only the items identified in the HTS Description column are subject to the license requirement under § 746.5(a)(1)(ii), which is consistent with how the European Union (EU) applies its comparable controls. Lastly, the third sentence being added clarifies that the other three columns –HTS Code, Schedule B, and Schedule B Description – are only intended to assist exporters with their AES filing responsibilities and does not indicate that all items classified under those HTS Codes or Schedule B numbers are subject to § 746.5(a)(1)(ii)’s restrictions.
3. Conforming changes
This final rule revises the last sentence of the introductory text of supplement no. 2 to part 746 – Russian Industry Sector Sanction List – to provide guidance on certain Schedule B numbers that are identified in both supplement no. 2 and supplement no. 4 to part 746. It now clarifies that in addition to Schedule B number 8479899850, Schedule B number 8705200000 is also listed in both supplements no. 2 and 4, and that exporters, reexporters, and transferors must comply with the license requirements under both § 746.5(a)(1)(i) and (ii), as applicable, for these Schedule B numbers.
In addition, this final rule adds one sentence at the end of the introductory text of supplement no. 5 to part 746 – ‘Luxury Goods’ That Require a License For Export, Reexport, and Transfer (In-Country) to or Within Russia or Belarus Pursuant to § 746.10(a)(1) and (2) – to provide guidance on one Schedule B number that is identified in both supplements no. 4 and no. 5 to part 746. This sentence clarifies that exporters, reexporters, and transferors must comply with the license requirements under both §§ 746.5(a)(ii) and 746.10 as applicable, for Schedule B number 8412294000.
In § 746.5 (Russian industry sector sanctions), this final rule revises the license review policy in paragraph (b)(2) to specify that applications involving items that meet humanitarian needs will be reviewed under a case-by case license review policy. This case-by-case license review policy will allow for discretion in approving licenses for items that meet humanitarian needs while also providing discretion to deny licenses for items that could generate revenue to support Russia’s military capabilities.
For the changes being made in this final rule, shipments of items removed from eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) as a result of this regulatory action that were en route aboard a carrier to a port of export, reexport, or transfer (in-country), on [INSERT DATE OF FILING FOR PUBLIC INSPECTION], pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR).
The United States Department of Commerce has announced that the United States of America will be temporarily suspending 232 tariffs on Ukrainian steel for one year.
The full announcement reads as follows:
Ukraine’s steel industry is uniquely important to the country’s economic strength, employing 1 in 13 Ukrainians with good-paying jobs.
Some of Ukraine’s largest steel communities have been among those hardest hit by Putin’s barbarism, and the steel mill in Mariupol has become a lasting symbol of Ukraine’s determination to resist Russia’s aggression. Many of Ukraine’s steel mills have continued to pay, feed, and even shelter their employees over the course of fighting. Despite nearby fighting, some Ukrainian mills have even started producing again.
Creating export opportunities for these mills is essential to their ability to continue employing their workers and maintaining one of Ukraine’s most important industries.
Statement from Commerce Secretary Gina M. Raimondo:
“Steelworkers are among the world’s most resilient—whether they live in Youngstown or Mariupol. We can’t just admire the fortitude and spirit of the Ukrainian people—we need to have their backs and support one of the most important industries to Ukraine’s economic well-being. For steel mills to continue as an economic lifeline for the people of Ukraine, they must be able to export their steel. Today’s announcement is a signal to the Ukrainian people that we are committed to helping them thrive in the face of Putin’s aggression, and that their work will create a stronger Ukraine, both today and in the future.
“I want to thank President Biden for his leadership in directing us to do all we can to support Ukraine’s people and their economy, as well as the Ukrainian leaders I have had a chance to work with over the past two months. Ukraine’s diplomatic leaders have been essential partners and advocates for their people, and we will continue to do all we can to support their work toward peace, freedom, and prosperity.”
About Commerce’s Support for Ukraine
Since Russia invaded Ukraine on February 24, the Department of Commerce has launched a series of new export control restrictions on Russia in partnership with three dozen allies, including 27 EU member states, Canada, the United Kingdom, Australia, New Zealand, Japan, South Korea, Switzerland, Iceland, and Norway.
The multilateral coordination on export controls and other areas has been impressive and led to swift development and implementation of powerful restrictions that are having a serious impact on Russia’s ability to sustain its aggression.
Commerce has added 260 parties in Russia, Belarus, and multiple other countries to the Entity List. These entities have been involved in, contributed to, or otherwise supported the Russian security services, military and defense sectors, and military and/or defense research and development efforts. (BIS)
U.S. exports to Russia in categories of items subject to new U.S. export licensing requirements have decreased 97% by value as compared to the same time period in 2021 (February 24-April 29). (BIS data)
Overall U.S. exports to Russia have decreased approximately 79% by value over the same time period in 2021. (BIS data)
Public reports indicate Russia’s two largest tank manufacturing facilities have been forced to shut down, due to an inability to access the necessary parts and equipment. (Wall Street Journal, 4/25)
Russia is facing a critical shortage of precision-guided missiles. (Financial Times, 4/30)
The U.S. Trade Representative is commencing the statutory four-year review of the two actions taken under Section 301 of the Trade Act of 1974, as amended, in the investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. The two actions were effective, respectively, on July 6, 2018 and August 23, 2018, and subsequently were modified by imposing additional duties on supplemental lists of products, as well as by the temporary removal of duties on certain products through product exclusions.
The first step in the four-year review process is notifying representatives of domestic industries which benefit from the trade actions, as modified, of the possible termination of the actions, and of the opportunity for these representatives to request continuation of the actions. Requests for continuation must be received in the 60-day window prior to the four-year anniversary of the respective action: Between May 7, 2022, and July 5, 2022, for the July 6, 2018 action, and between June 24, 2022, and August 22, 2022, for the August 23, 2018, action. The Office of the United States Trade Representative (USTR) is opening dockets in these two time windows for representatives of domestic industries which benefit from the trade actions to request continuation of the corresponding trade actions, as modified. If the actions continue as a result of one or more requests from representatives of domestic industries which benefit from the trade actions, USTR will proceed with the next phase of the review.
The second phase of the review will be announced in one or more subsequent notices, and will provide opportunities for public comments from all interested parties.
DATES: For the July 6, 2018 trade action, the web portal at https:// comments.ustr.gov/s/ will open for requests to continue the action on May 7, 2022, and close at 11:59 p.m. on July 5, 2022. For the August 23, 2018 trade action, the web portal at https:// comments.ustr.gov/s/ will open for requests to continue the action on June 24, 2022, and close at 11:59 p.m. on August 22, 2022.
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Assistant General Counsels Megan Grimball or Philip Butler at (202) 395– 5725.
Background: On August 24, 2017, the U.S. Trade Representative initiated an investigation into certain acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation. 82 FR 40213. In a notice published on April 6, 2018 (83 FR 14906), the U.S. Trade Representative announced a determination that the acts, policies, and practices of the Government of China covered in the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce. The April 6 notice also invited public comment on a proposed action in the investigation, in the form of an additional 25 percent ad valorem duty on products of China classified in a list of 1,333 tariff subheadings, with an annual trade value of approximately $50 billion.
Actions Taken Under Section 301 of the Trade Act Following a period of public notice and comment, the U.S. Trade Representative determined to take action under Section 301 of the Trade Act of 1974, as amended (Trade Act) (19 U.S.C. 2411) in the form of additional duties of 25 percent ad valorem on 818 of the proposed tariff subheadings, with an approximate annual trade value of $34 billion, effective July 6, 2018 (List 1). 83 FR 28710 (hereinafter referred to as the July 6, 2018, action). The U.S. Trade Representative also proposed further action in the form of additional ad valorem duties of 25 percent on a list of 284 tariff subheadings with an approximate annual trade value of $16 billion. Following a period of notice and comment, the U.S. Trade Representative determined to take action under Section 301 in the form of additional duties of 25 percent on 279 tariff subheadings with an approximate annual trade value of $16 billion, effective August 23, 2018 (List 2). 83 FR 40823 (hereinafter referred to as the August 23, 2018, action).
2. Subsequent Modifications Under Section 307 The U.S. Trade Representative subsequently modified the July 6, 2018, and August 23, 2018, actions, pursuant to authority under Section 307(a) of the Trade Act. (19 U.S.C. 2417(a)). These modifications were in the form of (i) additional duties on supplemental lists of products, and (ii) the temporary removal of duties on certain products through product exclusions. The modifications to the July 6, 2018, and August 23, 2018, actions that are currently in effect are as follows: a. List 3—83 FR 47974 (September 21, 2018), as modified by 84 FR 20459 (May 9, 2019), and as amended by 84 FR 21892 (May 15, 2019); 84 FR 26930 (June 10, 2019); 86 FR 22092 (April 26, 2021); and 84 FR 9785 (February 22, 2022); b. List 4A—84 FR 43304 (August 20, 2019), as modified by 84 FR 45821 (August 30, 2019), 84 FR 69447 (December 18, 2019), and 85 FR 3741 (January 22, 2020); c. COVID Exclusions—86 FR 63438 (November 16, 2021), as amended: By 86 FR 69350 (December 7, 2021) and 87 FR 4704 (January 28, 2022): and d. Reinstated Exclusions—87 FR 17380 (March 28, 2022). In the four-year review, USTR will examine the July 6, 2018, action, as modified, and August 23, 2018, action, as modified. To ensure comprehensive coverage of the review, USTR will consider the List 3 and List 4A modifications as applicable to both the July 6, 2018, action and August 23, 2018, action.
If you have any additional questions, please do not hesitate to contact us HERE.
The U.S. Census Bureau announced on April 25,2022 that preliminary March steel imports were $3.9 billion (2.8 million metric tons) compared to the preliminary February totals of $3.1 billion (2.1 million metric tons). The March change in steel imports based on metric tonnage reflected an increase in hot rolled sheets. Decreases occurred in used rails; electrical sheets and strips; and pipe and tubing. Increases occurred primarily with Canada. Decreases occurred primarily with Austria, Italy, and Germany. The year-to-date final statistics through February 2022 showed steel imports of 4.9 million metric tons compared with 3.9 million metric tons through February 2021. The largest commodity increases occurred with galvanized hot dipped sheets and strip and cold rolled sheets. Decreases occurred primarily in blooms, billets, and slabs; line pipe; and galvanized electrolyte sheets and strip. The largest country increases occurred with Mexico. Decreases occurred primarily with Brazil. The April report is scheduled for release on May 24, 2022. Yo may view the full report here: https://www.census.gov/foreign-trade/Press-Release/steel/steelp_2203.pdf
CBP’s Modernization of ACE Portal as of April 2022:
U.S. Customs and Border Protection (CBP) is modernizing the Automated Commercial Environment Secure Data Portal (ACE Portal) over multiple phases in 2022. The modernization effort will entail the transition of existing functionality to an upgraded platform, offering easier use and better performance. The ACE Portal offers users real-time access to trade data through features such as ACE Reports, ACE account management, and electronic communication with CBP and Partner Government Agencies (PGA).
National Commodity Specialist Division (NCSD) May 2022 Webinars have been announced by U.S. Customs and Boarder Protection inCSMS #51637091.You may register by accessing each individual link listed below (as the webinar date nears, you will receive additional correspondence from CBP).
The Cargo System Messaging Service looks as follows:
The Office of Trade’s National Commodity Specialist Division (NCSD) and the Office of Trade Relations is excited to present a series of approximately 40 commodity-specific, educational webinars to support Customs and Border Protection’s internal and external customers. The webinars began in February and will run through September 2022. Each webinar will be approximately an hour. The date and time will vary, so please be sure to check the time for each webinar.
To provide a more seamless experience, the webinar platform has been changed to Microsoft Teams, and each webinar will have its own link to join. The schedule for the May webinars is below. Please click on the webinar title to register. The link to join will be sent via email on the day of the webinar. We look forward to your participation!
Deputy FDA Commissioner Frank Yiannas and FDA experts across agency’s human foods program were available to explain and answer questions about the plan with the goal of raising awareness, enhancing understanding, and building support. Stakeholders were welcome to provide their insights as well as ask questions.
This response improvement plan focuses on tech-enabled product traceback, root cause investigations, analysis and dissemination of outbreak data, and operational improvements. It is intended to work in concert with FDA’s New Era of Smarter Food Safety Blueprint, which outlines specific approaches the FDA will take over the next decade to address food safety in the rapidly changing food system.
The plan was also informed by an independent review of the FDA’s structural and functional capacity to support, participate in, or lead multistate foodborne illness outbreak investigation activities. You will hear more about that review in this webinar.
Frank Yiannas, Deputy Commissioner for Food Policy and Response
RADM David Goldman, Chief Medical Officer, Office of Food Policy and Response
Stic Harris, Director, FDA’s Coordinated Response and Evaluation Network (CORE)
CDR Kari Irvin, Deputy Director, CORE
Scott MacIntire, Program Director, Office of Human and Animal Food Operations – West
Craig Hedberg, University of Minnesota, author of “An Independent Review of FDA’s Foodborne Outbreak Response Processes”
To view the webinar recording, you may click here.
Furthermore, FDA has been releasing a series of the “New Era of Smarter Food Safety TechTalk Podcast” episodes. You may find themhere.
Every year, trade transactions exceeding US$2 trillion are conducted under UCP600, totaling some 11% of all import/export transactions.1 The primary goal of the UCP600 is to ease cross-border trade by providing global uniform rules regulating the issuance and usage of letters of credit (“LCs”).
To date, the UCP (“Uniform Customs and Practice for Documentary Credits”) rules are adopted in 175 countries. UCP rules are issued by the International Chamber of Commerce’s (ICC) commission on Banking Technique and Practice. It is important to note that the ICC is a private international organization of industry experts, not a governmental body. The UCP600 is arguably the most widely accepted set of private rules for international trade ever developed.
How is UCP600 different from previous UCP publications?
Since the UCP was first established in 1933, it underwent several revisions, each reflecting the evolution of trade finance practices across banking, insurance, and transport industries. The objective was to create a set of internationally uniform rules to remove confusion caused by individual countries promoting disparate laws and practices governing the use of letters of credit. By guiding banks and other players engaged in global trade, the UCP enables greater trust between multinational actors and drastically increases the reliability, frequency and efficiency of international trade transactions. As of today, the UCP600 is the latest published revision issued on July 1, 2007 and includes 39 Articles.
In contrast to previous UCP publications, UCP600 not only lays out guidelines, but also includes definitions (Article 2) and interpretations (Article 3) on how to apply certain provisions of the code. By providing clear, defined terms and information specifying the role of banks in letters of credit, UCP600 removes ambiguity and provides a more concise and precise set of regulations to govern LCs. As a result, compared to transactions governed by previous versions of the UCP, transactions conducted under UCP600 are more streamlined, less risky and require fewer amendments.
Aiming to adapt the evolving practice of submitting electronic documents under letters of credit, UCP600 introduced the eUCP which has 12 articles. The goal of the eUCP is to ‘accommodate presentation of electronic records alone or in combination with paper documents’.2 However, for a letter of credit to be subject to eUCP, it must explicitly indicate so in the instrument. Letters of credit subject to eUCP are also subject to UCP600 even if this is not explicitly stated in the letter of credit. If there is a conflict, eUCP will prevail in situations where it will produce a different result from UCP.
How is UCP600 beneficial for trade transactions?
1. UCP600 levels the playing field by creating one set of operating rules for all international parties. This makes trade more inclusive because it allows SMEs to participate in international markets and integrate global supply chains. SMEs can now rely on banks and counterparties to follow the UCP600 rather than relying on their network, market position, banking relationships and ability to exercise legal muscle, to hold sway over their trade partners when disputes arise.
2. UCP600 resolves disagreements without court intervention, providing more fair, cost-effective, and efficient global trade transactions. Banks and other LC issuing institutions can perform better as neutral third parties to decide issues that are resolved by the language of UCP600 rather than deferring and referring issues for resolution to courts for fear of incurring liability.
3. UCP600 clearly identifies the roles of parties involved and their responsibilities, reducing risk and increasing transparency and therefore speed for exporters and importers who otherwise would have no recourse beyond suing their trade partners and corresponding banks in courts of foreign jurisdiction.
4. A notable feature of UCP600 is the irrevocable nature of the letter of credit. An irrevocable letter of credit cannot be revoked by the issuing bank or at the request of the letter of credit applicant. It assures the parties involved that the guarantee offered by an LC cannot be rescinded once issued unless all parties mutually agree to cancel it. An LC is irrevocable by default, even if not explicitly stated.
For a letter of credit to adhere to UCP600, it must specify so (unless it states that it is subject to the eUCP in which case, both apply). This ensures that all parties involved understand how their performance under the instrument will be governed. If a transaction requires, certain parts of the UCP600 can be omitted but such exceptions must be specifically and unambiguously written into the LC.
If you would like to find out more about LCs, the UCP600 and how it could benefit your trade transactions, reach out to firstname.lastname@example.org. A comprehensive understanding of UCP600 will help both small and large businesses mitigate risks and conquer new international markets.
To make sure your LCs are issued under UCP600, reach out to us. We issue LCs, SBLCs, BGs, RWAs, and Proof of Funds. Contact us to understand which instrument is best suited for your business needs.
1. Collyer, Gary. Guide to Documentary Credits. The London Institute of Banking & Finance, 2017
2. International Chamber of Commerce. Supplement to the Uniform Customs and Practices for Documentary Credits for Electronic Presentations (eUCP), 2007
International Chamber of Commerce. Uniform Customs and Practices for Documentary Credits, Publication 600 (UCP600), 2007