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BANKER’S BIBLE
UCP 500, commonly
referred to as the banker’s bible, because it sets down practices,
which must be adhered to by all parties dealing with international
letters of credit, will become obsolete on July 1, 2007.
UCP 500 went into effect on January 1, 1994 and replaced UCP
400.
On July 1, 2007 the
new UCP 600 will become effective.
There are extensive changes, but the changes are not as
daunting as some had anticipated.
At first glance, comparing UCP 500 with forty-nine articles
with the new UCP 600 with only thirty-nine articles, one would
expect wholesale changes. For
the most part there is a lot of consolidation in the new
publication. Where
certain topics may have been spread over a number of articles in UCP
500, they are now packaged into one article in the new UCP 600, some
with little or no change in the regulation of the topic.
Now would be a good
time to visit your international banker and request a copy of the
new UCP 600. Ask your
banker for the bank’s interpretation of the changes.
Next, visit your international freight forwarder and ask the
same question about their take on the changes.
If you find any discrepancy between the stories you get from
your banker versus the freight forwarder, then you need to do some
homework. This is
extremely important, because it will determine if, and how quickly,
you will get paid under your international letter of credit.
While UCP 500 will become obsolete and UCP 600 will
become effective on July 1, 2007, this date can be negotiated.
For example, if you present an international letter of credit
after July 1, and your letter of credit states that your documents
must comply with UCP 500, UCP 500 will apply even though it is
obsolete. Be sure to
pay attention to letters of credit and their associated documents particularly
during this transition period.
And, of course, as always, ask questions.
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EXPORT COMPLIANCE
The first thought
that should come to your mind when you receive an export order is
may I ship there. For
instance, you need to know which countries you may or may not ship
to. If you don’t, be
sure to consult your forwarder.
As an example, it may be possible to ship humanitarian cargo
to Cuba, even though, as a general rule, it is illegal to ship U.S.
cargo to Cuba. One
website to visit for help in this regard is www.ustreas.gov/ofac/.
This is the Office of Foreign Assets Control and should
provide current information regarding embargoed destinations as well
as prohibited transactions. There
is never such a thing in international trade as a dumb question.
If you have questions, be sure to check with your forwarder
and/or the U.S. Department of Commerce or the Wisconsin Department
of Commerce.
INTERNATIONAL TRADE
PROGRAMS
During Spring and
Summer keep eyes and ears open for notices for transportation and
world trade associations regarding their seminar season usually
beginning in Fall. These
programs and dinners usually present a wealth of information at a
very reasonable cost on a wide variety of international topics.
This is a great opportunity to keep up to date on changes,
which could affect your handling of your import or export shipments.
GOLF
The upcoming Spring and Summer will provide lots of
opportunity to play golf in the northern areas of the globe.
Schedule your trips to areas well south of the equator in the
fall or winter, if you plan to golf on your trip.
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