Changes coming for exporters using letters of credit.(EXTRA CREDIT)

Exporters who utilize letters of credit (LCs) for their overseas sales should be aware of changes in the regulations that pertain to them. Those that attended a teleconference September 29, hosted by FCIB. got the opportunity to learn of some of the major changes likely to take place in how letters of credit are processed. Buddy Baker, of Attradius Trade Credit Insurance. who has many years of experience with letters of credit and other export trade issues, presented the teleconference.

Baker said that rules governing letters of credit are being revised under the proposed Uniform Customs and Practice for Documentary Credits, ICC Publication No. 600 or UCP 600. Changes under UCP 600 will likely go into effect around mid-2007. They are being drafted by the banking committee of the ICC. or International Chamber of Commerce. The current rules for letters of credit are under UCP 500. which Baker said have been in existence--with some modifications along the way--for 13 years. He pointed out these rules are not law. but to the extent they are incorporated in legal documents involved in letters of credit, they have the force of law. "Because it's not a law. its possible banks may continue to use UCP 500; but those who use it will be out of step with those who use UCP 600."

The proposed changes in UCP 600 are designed to improve the ...