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Global rules
Banking plays an undeniable role in making trade work for all, allowing even
small businesses to take risks and conquer new international markets. Banks
underpin more than a third of global trade transactions, representing trillions
of dollars each year.

And if trade needs financing to flow smoothly around the world, banks in turn need
common rules and guidelines to deal with their counterparts from other countries in
order to avoid the confusion that comes with conflicting national rules.

Having companies across the globe voluntarily abide by the same guidelines also
levels the playing field, making it easier for small- and medium-sized enterprises to
integrate foreign markets and global value chains, and ensuring that trade is more
inclusive.

ICC’s global rules for documentary credits were established in the 1930s—a time of
growing nationalism and protectionism—and have since become the most
successful privately drafted rules for trade ever developed.

Every year, trade transactions of over US$1 trillion are conducted on the basis of
these ICC rules on documentary credits—now known as UCP600—yet international
trade is constantly evolving. This leads ICC to continually adjust and overhaul our
rules to reflect the changing nature of banking in trade.

ICC also develops guidelines for fields, such as forfaiting, demand guarantees and
supply chain finance—all ways that banks work with companies to mitigate the risks
involved in trade.

As disputes between companies and banks inevitably occur within this vast area of
work, ICC’s expertise is also used to help parties resolve their disagreements around
trade finance documents quickly and without going to court.

When disputes around global trade finance rules are resolved in a rapid, fair and
cost-effective manner, trade can avoid the slowdowns and hassle that stem from
protracted international litigation. In this spirit, ICC has developed rules
for documentary dispute resolution (DOCDEX), where parties are provided with a
specially-appointed panel of experts that deliver a decision within 30 days of
receiving the necessary documents.

Home / Global issues & trends / Banking & finance / Access to trade finance
Access to trade finance
Engaging in world trade holds enormous potential for business yet many
companies, especially small- and medium-sized enterprises (SMEs), depend
on access to banking services in order to unlock new markets. Trade finance
allows companies to mitigate the risks associated with importing or exporting
goods and services, permitting world trade to flow in a predictable and secure
manner.

Trade finance has been a key catalyst of the expansion of international trade in the
past century, and bank-intermediated transactions now represent more than a third
of world trade, equal to trillions of dollars each year.

More than simply maintaining our international trading system though, trade finance
is essential for the future outlook of global growth. SMEs are the backbone of the
global economy, representing around 95% of the world’s companies and 60% of
private sector jobs, and play a great role in promoting employment and social
cohesion.

The supply or shortage of trade finance hurts SMEs the most, and thus has negative
knock-on effects for economies and families across the globe.

While robust regulation is crucial for banks following the financial crisis, it is also
essential that rules do not hamper banks’ ability to help businesses get financing for
their international operations

Given the importance of trade finance for trade and economic growth, ICC publishes
an annual Global Survey on Trade Finance with data from over 100 countries. The
survey provides in-depth analysis on how trade finance trends are evolving over
time, observing how policies are impacting banks’ funding and risk mitigation
activities and where there is room for improvement.

The 2018 ICC Global Survey shows that over 60% of banks surveyed have
implemented or are in process of implementing technology solutions to digitalise
their trade finance operations. However, only 9% of banks reported that the solutions
implemented have so far led to a reduction of time and costs in trade finance
transactions. The report also reveals that the industry needs to do more to agree on
common standards so that all the benefits of trade digitalisation can be realised.

ICC regularly uses its data to develop concrete policy recommendations to stimulate
trade finance alongside international organisations and other public and private
sector partners.

https://iccwbo.org/publication/global-survey-2018-securing-future-growth/
Risk & regulation
Comprehensive data is vital to assess risk and make new policies in the US$16
trillion global trade and export finance market. The ICC Trade Register
provides the essential empirical basis for discussions regarding the treatment
of trade financing under the Basel framework—with the aim of ensuring
essential trade products receive appropriate treatment by regulators.

When world trade collapsed during the global economic meltdown that began in
2008, trade and export finance suffered a consequent decline. The traditional role of
trade and export finance as a low-risk asset class even came into question amid the
turmoil in global financial markets. When regulators and bankers tried to assess the
trade and export finance picture and its role during the crisis, timely, accurate and
comprehensive data were lacking.

Because of its long tenure as a respected source of independent policy and market
analysis, ICC is uniquely placed to supply up-to-date and all-inclusive data on trade
and export finance to help the banking industry make sense of this fast-changing
sector.

The demand for further data that can provide a complete portrait of the trade and
export finance sector will only increase over the next 15 years, as global trade is
poised to grow substantially. This need is made all the more urgent since a rebound
in world trade is essential to propel the continued recovery of the global economy.

ICC established the ICC Trade Register to advance understanding of various

products and their risk characteristics in trade and export finance. This
initiative assists the industry, which draws on data from 25 international banks, in
developing a pool of data to evaluate the long-held claim that trade and export
finance is a relatively low-risk form of financing. It also provides a much-needed
empirical basis for discussions regarding the treatment of trade financing under the
Basel framework.

Knowing the volume of trade and export finance, and the likelihood of default for
trade and export finance products, is vital to crafting fair regulations necessary for a
well-functioning global trading and banking system.

https://cdn.iccwbo.org/content/uploads/sites/3/2018/02/icc-trade-register-report-2017.pdf
AML & compliance
Money laundering, the financing of terrorism, financial fraud and other
financial crimes can have significant negative economic effects. Financial
crimes activities severely undermine the integrity and stability of financial
institutions and systems, discourage investment into productive sectors and
distort international capital flows.

They may have negative consequences for a country’s financial and economic
performance; they also have significant spill over effects on the capacity of financial
institutions to carry on normal business activity and provide financing, in particular to
SMEs in the less developed and emerging markets whereby there is a perception of
higher financial crime risk.

ICC has made the fight against money laundering and terrorist financing a major
priority. Leveraging our position as the leading global rules writer for international
trade finance, we develop guidance for banks and industry – as well as leading
industry dialogue with national and international regulators on all topics related to
financial crime risk issues.