Clarissa Dann Welcome to Trade Finance TV. I’m Clarissa Dann, and joining me here in the studio today is David Meynell of the ICC Banking Commission. He’s going to share some updates on digital trade finance documentation.
David, welcome to Trade Finance TV.
David Meynell Thank you very much. It’s great to be here.
Clarissa Dann Lovely to have you here, too. Now, you’re going to tell us a bit more about this wonderful world of trade finance digitalization. We keep hearing lots about it, but at the core of it is what is happening with standards, what is happening with rules. And the ICC’s been making quite a lot of progress here. Could you update us?
David Meynell Yeah, in business need standards to move forward in this new world. It always has done, and it’s even more important now, the rules and practices need to change. And we’ve seen that quite recently this year with the electronic rules that come out from the ICC. We have the old style paper rule such as UCP for credits, URC for collections. These are now being updated to the digital world to enable us to transact electronically and mitigate the same type of risk we had before, but in a digital fashion.
Clarissa Dann OK, so David, with all this going on, on developing digital rules, who’s actually using them? What’s the feedback been?
David Meynell We had lots of banks, corporates. logistics companies and FinTechs involved in the development of the recent e-rules. So, it’s hopeful that every single one of those who still move forward as they did in the paper world. But that’s just a start, to be honest, to get all of the players on board. Wedon’t just need electronic rules limited to specific instruments such as documentary credits, which is why you the ICC is also looking at uniform rules for digital trade as a whole, an overarching framework of rules, meeting the standards that are required in a digital world, not just specifically linked to specific products.
Clarissa Dann So what’s the working group actually working on now?
David Meynell The Uniform Rules for digital trade – the URDT – the first draft went out to national committees of the ICC in September. We’ve asked for feedback by the end of November. Hopefully the next draft will be out in the new year. The aim is to have these rules released sometime next year. The ICC has greatly changed in the last few years. One of the big complaints was it takes us five years to produce a set of rules.
Clarissa Dann I was gonna say you’ve done that really quick, it’s really impressive.
David Meynell URBPO – that took about just under two years. The e-rules took about 15 months. So that is our target.
Clarissa Dann Let’s go back to the BPO, the bank payment obligation. Are there any learning points in that experience that you’re bringing into this latest incarnation of digital trade?
David Meynell Yeah, there’s quite a lot within the URBPO that can still be used. And in the E-rules and with the URDT. Obviously it’s a different type of instrument, the BPO. Distinct to a specific method for those that know our transaction matching engine. We need to do a far wider framework in the future. But yet there’s certain pieces in there that work in the digital world that we have not ignored.
Clarissa Dann How confident are you that digital trade finance will really happen? It’s been a long time.
David Meynell You mentioned the key word right at the opening; standards. That’s what it’s all about. Now, the ICC have produced a roadmap that they’re looking at, and one of those key pieces with the roadmap is digital standards, I believe, and I think many of our people do, the way to make this work is by adopting the UNCITRAL model laws, UNCITRAL being the United Nations Commission on International Trade Law, they’re free model laws, electronic commerce, electronic signatures and electronic transferrable records. The ICC are lobbying governments around the world to adopt these model laws. That will be a gigantic step forward if we can get these standards in place.
Clarissa Dann Will that deal with the problem of a digital document not being admissible in court and the need for a red stamp and all that stuff, because that seems to be the barrier at the moment?
David Meynell To an extent, but last year, Clyde & Co. did a report for the ICC on electronic bills of lading, the legal status. And there’s no doubt there’s confusion around the world. Electronic bills are still not acceptable in many states, but that does not preclude you from using electronic documents or bills of lading as long as it’s contractually agreed between a buyer and seller. So they can still be used.
Clarissa Dann David, thank you so much for explaining us.
David Meynell No problem. I’ve enjoyed it.
Clarissa Dann I would like to thank our guest, David Meynell for appearing today and, of course all of you for watching. For other reports, do visit TRADEFINANCETV.NET, and don’t forget to follow us on LinkedIn. For further insights, have a look at DB.COM/FLOW.