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ICC Banking Commission Global Survey Highlights Impact of Trade Finance Gap on SMEs

Published on September 29, 2015

Cover Page ICC Global Survey on Trade Finance 2015_sourceThe International Chamber of Commerce (ICC) Banking Commission has released the results from its 2015 Global Survey on trade finance – highlighting the impact of the trade finance gap on SMEs, the impact of regulation on correspondent banking, as well as positive trade finance trends, particularly with regards to export finance.

Small and Medium-sized Enterprises (SMEs) are among the hardest-hit by the trade finance gap, reports the Global Survey on trade finance, released on September 29 by the International Chamber of Commerce (ICC) Banking Commission. The Survey received 482 responses from 112 countries around the world and showed that SMEs account for nearly 53 percent of all rejected trade finance transactions. By contrast, 79 percent of the trade finance transactions for larger businesses are accepted.

The trade finance gap is highlighted throughout the Survey, citing compliance as a chief barrier to trade finance. Nearly 46 percent of the banks surveyed terminated correspondent relationships due to the cost or complexity of compliance, while 70 percent of respondents reported declining transactions due to AML/KYC requirements. Furthermore, the percentage of respondents citing anti-financial crimes compliance requirements as a significant impediment to trade finance has increased from 69 percent last year, to 80 percent in this year’s Survey. This trend is expected to continue, as nearly all (93%) of respondents expect compliance requirements to increase during 2015.

“The Global Survey works as a snapshot of market trends, allowing us to compare progress from previous years and gauge global expectations,” said Vincent O’Brien, chair of the ICC Banking Commission Market Intelligence. “This year that snapshot has highlighted the severity of the trade finance gap – which continues to be impacted by regulation, despite the low-risk nature of trade finance – and particularly its impact on SMEs. This is crucial given SMEs constitute over 95 percent of all firms and account for approximately 60 percent of employment worldwide.”

That said, the results from the Survey also show some positive trends in trade finance. Around 63 percent of respondents reported an increase in overall trade finance activity, with 61 percent of banks stating they have increased their capacity to meet trade finance. What’s more, 25 percent of respondents to the Global Survey on trade finance consider trade instruments supporting trade as involving more than 75 percent less inherent risk than conventional lending.

The results from the Global Survey also reflected positively on export finance, with 79 percent of respondents in the industry claiming it remains a profitable business. The industry also observed a significant decrease in pricing, and even more so, fees in 2014.

“While the trade finance industry is certainly facing challenges, and the trade finance gap is a clear issue, the results from the Global Survey on trade finance show that it is not all doom and gloom,” added O’Brien. “The financial landscape is recognizing the importance of trade and, in addition to banks stating they have increased capacity to meet trade finance, we have an array of alternative lenders – such as specialist financiers, export credit agencies, and multilateral development banks – stepping up to fill the trade finance gap.”

Daniel Schmand, chair of the ICC Banking Commission, said: “New players can prove their worth by addressing the shortfall of trade finance; new or alternative financiers may support trade in areas where banks are restricted by risk appetites, regulatory burdens or stakeholder concerns.”

Download the 2015 ICC Global Trade and Finance Survey.

ICC: Business Leaders Call for Collaborative SDG Effort

Published on September 29, 2015
John Danilovich (ICC)
John Danilovich (ICC)

Business leaders representing companies with operations in over 190 countries have thrown their weight behind the new UN Sustainable Development Goals (SDGs).

The SDGs – launched at a major summit in New York during the UN General Assembly – set out a new vision for a brighter, safer and more prosperous world for all. In a letter to the Financial Times the business leaders wrote: “Many businesses are already playing a leading role in promoting sustainable development, but with the right support and incentives from government we can do much more. A collaborative effort is also required to enable the transformation of business practices towards sustainability more broadly – including within the small business sector.”

Commenting on the release of the letter, ICC Secretary General John Danilovich said: “This is a clear and visible demonstration of the business community’s commitment to the new Global Goals. We call on governments to work constructively with the private sector to deliver fully on the promise of the SDGs”.

Read the full text of the letter at ICC’s website.

More Effort Needed on Trade for Jobs and Growth, ICC leaders say

Published on September 22, 2015
New Delhi
New Delhi

The shrinkage in global trade flows over the first two quarters of 2015 was highlighted as a major concern for global business by the International Chamber of Commerce (ICC), at its executive board meeting in New Delhi, India on September 16.

Discussing strategic priorities for the international business community, ICC leaders called for a major push to ensure the potential benefits of the WTO’s Trade Facilitation Agreement are realized. This agreement, concluded in 2013, has significant potential to boost global trade flows, up to an estimated $1 trillion over time.

“The TFA has significant potential to support the recovery of global trade flows, by making it easier, quicker and less costly to export,” said ICC and USCIB Chairman Terry McGraw. “Ratifying the TFA must be the starting point for a concerted effort to promote trade as a driver of growth.”

Comprising CEO’s and business leaders from over 20 countries, executive board members discussed a core work program for ICC focusing on four major summits – each of which is expected to have a major impact on business for years to come. Specifically, the 10th Ministerial meeting of the World Trade Organization in Nairobi, the UN Sustainable Development Goals Summit in New York, the G20 leaders Summit in Antalya and the landmark Climate Conference, COP21, in Paris.

The TFA tops a list of four priorities set out by the Business-20 International Business Advisory Council (IBAC), established under this year’s Turkish presidency. The executive board endorsed the IBAC priorities that also include financing for small- and medium-sized enterprises, youth and women’s engagement in the labor force and infrastructure investment.

“We as businesses can’t generate jobs and growth without government support,” McGraw said. “As the voice of business with representation in over 130 countries we are ready to do all we can in the weeks ahead to promote the G20 agenda for growth, jobs and opportunity.”

ICC Executive Board members met in Delhi on the eve of the 2015 India Economic Convention.

Read more: Our 5 takeaways from the India Economic Convention 2015

ICC Launches Global Export Finance Committee

Published on September 11, 2015
The launch of the ICC Global Finance Committee took place on September 7 in Barcelona, Spain.
The launch of the ICC Global Finance Committee took place on September 7 in Barcelona, Spain.

The International Chamber of Commerce (ICC) launched the “ICC Global Export Finance Committee,” an export finance working group supported by many leading banks across the export finance industry.

Operating under the umbrella of the ICC Banking Commission, the committee is the first step towards building a real global export finance community – representing medium- and long-term (MLT) export finance banks.

The Global Export Finance Committee has three key objectives:
  1. To create a credible standing global discussion forum of banking experts in MLT export financing,
  2. To create a representative body to discuss industry matters with various stakeholders,
  3. To advocate for and help develop improvements and efficiencies through the standardization and harmonization of processes and regulations.

“The Global Export Finance Committee fills a much needed role in the export finance industry,” said Eric de Jonge, head of structured export finance at ING Bank, who chairs the working group. “It aims to not only act as a discussion forum and a body to exchange information and views on export finance but also to enable improvements and increase the efficiency of the processes and regulations governing the export financing industry as a whole.”

Although the export financing industry as a whole is relatively small, it serves an important purpose for OECD governments as well as governments in emerging markets, enabling and facilitating international trade and economic activity. Indeed, governments in many countries are exploring how they can more efficiently support exports, investments and trade.

Not only has the industry observed changes in regulatory requirements such as Capital Requirements Regulation (CRR) and Basel III, it also faces changes in the value chain concerning Export Credit Agencies (ECAs). These developments, together with the involvement of the capital markets, mean it is necessary for banks active across the industry to reach a common approach.

ICC has already made a first step towards reaching a common approach through the inclusion of MLT trade and export finance products in the influential ICC Trade Register Report. The dedicated Trade Register working group has successfully evolved into a platform of active banks that are responsible for ECAs, and that supports transaction data gathering.

While the Trade Register working group focuses primarily on data gathering, there are many more topics relevant to the export finance industry. Cooperation with ECAs, advocacy before governmental and regulatory bodies, standardization, and harmonization, as well as the exchange of views and data to the extent allowed under anti-competition laws, are just a few of the areas that can be explored further by the ICC Global Export Finance Committee.

Download ICC Global Export Finance PDF Document here

New ICC Dispute Board Rules Enter Into Force on October 1

Published on September 11, 2015

ICC DISPUTE BOARD RULENew rules governing ICC Dispute Boards will come into effect on October 1. A half-day global launch, scheduled to take place on September 28, 2015 at ICC Global Headquarters in Paris, will provide an introduction to the nature, purpose and operation of the new rules and offer a chance to discuss the role of dispute boards in preventing disputes and resolving them quickly.

Dispute boards are independent bodies designed to avoid and resolve disagreements between parties as they arise during the performance of an often long-term or mid-term contract.

“The new ICC Dispute Board Rules increase the emphasis on dispute avoidance,” said Peter Wolrich, chairman of the ICC Task Force revising the rules. “In fact one of the most valuable functions of a dispute board is to help the parties to avoid disputes, either by encouraging them to do so on their own or by providing them with informal assistance.”

The replacement of current rules dating from 2004 follows three years of revision undertaken by the ICC Commission on Arbitration and ADR that started in 2012 and received broad input from the international dispute board community, including from the International Federation of Consulting Engineers (FIDIC) and members of other Dispute Resolution Board Associations.

Read more on ICC’s website.

Business Leaders Deliver Priorities to the G20

Published on September 11, 2015

B20 2015 ConferenceMore than 1,400 business leaders and CEOs from 65 countries gathered in Turkey, Ankara for the 2015 Business-20 (B20) Conference from September 3 to 5. The three-day event marked the completion this year’s B20 recommendations and provided an opportunity for the business community to share its priorities with Turkish President Erdoğan ahead of the G20 Leaders’ Summit in Antalya in November. Turkey is the G20 host nation for 2015. Ronnie Goldberg, USCIB’s senior counsel, attended the conference.

During his opening remarks President Erdoğan thanked B20 Turkey Chair Rifat Hisarcıklıoğlu, who also serves on the International Chamber of Commerce (ICC) Executive Board, for hosting an effective B20 process.

“The B20 is the most inclusive of all G20 engagement groups and the regional consultations and events organized by B20 Turkey have made the B20 the most important business platform in the world,” said President Erdoğan. “Turkey will support the B20 recommendations at the G20 Summit in November.”

Rob Mulligan, USCIB’s senior vice president for policy and government affairs, participated directly in meetings of the B20 Trade Taskforce, the recommendations of which are available on the B20 website. At the meetings, Mulligan helped focus the taskforce on 3 recommendations:

  1. pressing for ratifications and implementation of the WTO Trade Facilitation Agreement;
  2. rolling back protectionist measures with a focus on localization barriers to trade;
  3. improving the global trade system for the emerging digital economy including rolling back cross-border data flow restrictions.

Several of USCIB’s member companies had representatives active on the various B20 taskforces.

ICC and USCIB Chairman Terry McGraw led a delegation of the ICC G20 Advisory Group to Ankara for discussions with business and government representatives. ICC Leadership actively participated in the conference, with McGraw, ICC Secretary General John Danilovich and ICC G20 CEO Advisory Group Chairman Marcus Wallenberg delivering business priorities to the opening plenary sessions.

“Growth and job creation should remain at the top of the G20’s priorities,” said McGraw. “These objectives can be achieved by promoting structural reform within G20 economies; by liberalizing trade and investment; by ensuring well-regulated, growth-enhancing financial markets; and by creating a healthy environment for innovation and new businesses.”

Addressing the G20’s past performance and growing demands for global governance, Wallenberg suggested that the G20 focus its attention on implementation of previously agreed reforms and commitments before introducing new areas of work. To illustrate his point Mr Wallenberg highlighted the ICC G20 Business Scorecard as a tool to monitor the G20’s performance on implementing B20 recommendations.

A highlight of the B20 Conference was the official introduction of the World SME Forum (WSF) as a mechanism for implementing the many SME recommendations developed under B20 Turkey. The WSF is a new global platform co-founded by ICC and the Union of Chambers and Commodity Exchanges of Turkey (TOBB) to amplify the voice of SMEs and unlock their potential to stabilize the economy and stimulate economic growth, trade and employment.

“Never before has the B20 taken such a robust approach to correcting the imbalances in the SME sector”, said Mr Danilovich during a special plenary session on the WSF. “I would like to thank the Turkish government and B20 Turkey for championing economic inclusiveness and support to the SME sector as key priorities in 2015.”

With over 21 panel sessions and 123 speakers, the Ankara conference was the largest business gathering in the B20’s 6-year history.

The 2015 G20 Leaders’ Summit will be held in Antalya on November 15-16.

ICC Open Markets Index: More Effort Needed on Trade

Published on September 3, 2015

2015 OMI_twitter_G20_sourceDespite repeated pledges to enable trade as a driver of growth and job creation, G20 economies are failing to demonstrate global leadership on trade openness according to the ICC Open Markets Index 2015 (OMI), published on September 3.

The report – commissioned by the International Chamber of Commerce (ICC) – shows that G20 nations rank below the global standard in terms of openness to trade, with only Germany placing among the world’s top 20 open markets. Singapore and Hong Kong head the 2015 rankings for the third successive edition of the report, far outstripping major economies such as the United States in terms of trade openness.

The Index scores 75 countries on a scale of one to six on four key factors: observed trade openness, trade policy, openness to foreign direct investment and trade-enabling infrastructure. In doing so, the Index also monitors government follow-through on longstanding G20 commitments to boost global trade flows, including pledges made at last year’s leaders’ Summit in Brisbane, Australia.

The latest edition of the Index reveals that 16 of the G20 economies score only average or below average in terms of their overall openness to trade. The two lowest-scoring G20 economies are Brazil and India, though both economies have seen an increase in their score from last year.

“As world leaders look for new engines of growth in the current economic environment, the OMI data shows that there is still substantial scope for G20 leaders to take action to boost global trade,” said ICC Secretary General John Danilovich. “Rolling back protectionism and implementing reforms to facilitate trade flows should be cornerstones of a revitalized G20 agenda to promote renewed growth and stability in the global economy.”

Read more on the ICC website.

#OurClimate ICC Photographic Award 2015

Published on September 1, 2015

2015 COP21 Photo Award facebook_01This year, the International Chamber of Commerce launched the first annual ICC Photographic Award, a celebration of artistic skill and outstanding photography which aims to draw attention to—and stimulate dialogue around—the global challenge of climate change.

The award invites professional and amateur photographers from all over the world to submit applications reflecting on the theme of #OurClimate: from the causes and impacts of a changing climate, to our response (past, present or future), to the single biggest challenge facing humanity.

“The winning photographs will be exhibited alongside a selection of shortlisted images that most powerfully illustrate the theme of #OurClimate,” said ICC Secretary General John Danilovich. “The exhibition will be held in December 2015 during the Paris Climate Conference at ICC Global Headquarters in Paris.”

The winners will be chosen by a high-level judging panel—including ICC and USCIB Chairman Terry McGraw, Christiana Figures of the United Nations Framework Convention on Climate Change and Arancha Gonzalez of the International Trade Center—and will be announced at ICC’s COP21 gala reception on December 8.

The Award is open to all photographers—whether amateur, professional or student—who are invited to submit between 1 to 3 thought-provoking and captivating images exploring the theme of #OurClimate.

The jury members will award three prizes:

  • First prize: € 2,000
  • Second prize: € 1,000
  • ICC Young Photographer of the Year (26 years or under): € 1,000

To learn more about the award and terms of entry, visit: iccwbo.org/photoaward

ICC Chairman, Chinese Vice Premier Strengthen Business Ties

Published on July 30, 2015
L-R: Terry McGraw (ICC) and Chinese Vice Premier Wang Yang
L-R: Terry McGraw (ICC) and Chinese Vice Premier Wang Yang

International Chamber of Commerce (ICC) and USCIB Chairman Terry McGraw met with Chinese Vice Premier Wang Yang in Beijing on July 29 to underscore the importance of incorporating the voice of Chinese companies into global economic governance forums.

McGraw held a series of meetings with Chinese government leaders and business officials seeking to secure the engagement of Chinese companies in ICC’s work to promote cross border trade and investment.

“ICC is the world business organization and our mission is to represent the views of international business to policymakers in key forums such as the G20, the World Trade Organization, the World Customs Organization and the UN Framework Convention on Climate Change,” he said. “China has the world’s second largest GDP and is critical player in the world economy. It is therefore essential that Chinese companies are involved in ICC’s international policy-making process.”

Wang welcomed McGraw’s support and spoke positively of the indispensable role played by ICC in promoting economic growth, global trade and investment, and in strengthening global economic governance.

“We wish to step up our cooperation between Chinese companies and ICC,” said Wang. “China is willing to draw upon your suggestions and I hope ICC will play an active role in China’s reform and increasing exchanges with Chinese business to create more opportunities for foreign cooperation with Chinese companies.”

Wang said the China Chamber of International Commerce (CCOIC) – which houses ICC China – will be responsible for maintaining the close and frequent interactions with ICC.

McGraw also pointed to China’s upcoming G20 presidency, beginning on December 1, and explained that Chinese business will have an increasingly important opportunity to help shape the G20 policy agenda. McGraw shared current Business 20 (B20) priorities under development for the G20 Summit in Antalya, Turkey in November, highlighting trade, investment, infrastructure, human capital and education as priorities for G20 consideration.

“ICC has historically conveyed business priorities to G20 Leaders, and has served as a strategic partner to national B20 hosts to develop policy recommendations for G20 consideration,” said McGraw. “ICC is committed to supporting the Chinese government and the Chinese business community in its preparations for hosting the G20 and we are investing now in our long-run work plan with ICC China and CCOIC.”

Jiang Zengwei, chairman of the China Council for the Promotion of International Trade (CCPIT) joined McGraw in the meeting with Wang.

“We highly value the role of ICC,” said Jiang. “As we grow the participation of Chinese companies in CCOIC, we will work closely with ICC for support on educating Chinese businesses and incorporating their views in critical international policy forums, including trade, investment and intellectual property.”

McGraw and Jiang agreed to a long-term program, featuring a growing number of ICC meetings in China, to develop CCOIC contributions to ICC international business policy.

ICC’s delegation to Beijing also included Cherie Nursalim, vice chairman of GITI Group; Sara Dai, president of Novozymes China; Zhang Yanling, Bank of China and member of ICC Executive Board; Cindy Braddon, vice president for international affairs, McGraw Hill Financial [now S&P Global]; Jeffrey Hardy, director, ICC G20 CEO Advisory Group; and Robert Milliner, senior director, Wesfarmers and B20 Australia Sherpa.

 

 

ICC: New Anti-Corruption Guide for SMEs

Published on July 28, 2015

new-guide-smes_sourceThe International Chamber of Commerce (ICC) has released “Anti-corruption Third Party Due Diligence,” a new guide to help small- and medium-sized enterprises (SMEs) assess and manage corruption risks associated with engaging third party suppliers.

SMEs are often on the receiving end of burdensome due diligence procedures. The new ICC anti-corruption tool inspires businesses to engage in due diligence by creating achievable and manageable goals.

“Corruption hinders economic growth and erodes trust in both businesses and governmental institutions,” said Viviane Schiavi, senior policy manager of the ICC Commission on Corporate Responsibility and Anti-corruption, and co-chair of the B20 Anti-corruption Task Force Training Work Stream. “It remains a major barrier that impacts businesses negatively by increasing the costs of doing business -especially for SMEs – and undermining the quality of both products and services. SMEs are drivers of economic growth in many economies yet often they need relevant training to do their part for responsible supply chains and sustainable growth.”

The ICC guide addresses SMEs’ need for capacity building on integrating global supply chains in an ethical and responsible way. It provides practical advice on how SMEs can cost-effectively conduct due diligence on third parties they engage to perform services on their behalf.”

This new anti-corruption tool is a direct response to the Turkish G20 and B20 efforts to implement concrete actions for private sector integrity, especially to empower SMEs in their fight against corrupt activities. It also supports one of the key United Nations Sustainable Development Goals, to be adopted during the UN’s General Assembly in September, which will work towards substantially reducing corruption and bribery in all its forms.

ICC has been a pioneer in the business fight against corruption, and is at the forefront of the development of ethics, anti-corruption and corporate responsibility advocacy codes and guidelines. The new guide will complement ICC’s robust suite of anti-corruption tools, which includes the Ethics and Compliance Training Handbook .