It’s not just governments that determine international trade and investment standards – the International Chamber of Commerce has been doing so for over 80 years.
From time to time, I like to showcase the activities of our global business network. As most readers know, USCIB is the American affiliate of three worldwide business groups: ICC, the International Chamber of Commerce; IOE, the International Organization of Employers; and BIAC, the Business and Industry Advisory Committee to the OECD. This network is part of what makes USCIB a uniquely valuable platform for our business members, and a vital source of industry views for policy makers.
ICC is the oldest of these groups, the “world business organization,” with national committees and direct members in over 130 countries around the world. ICC performs three essential functions: policy advocacy on behalf of global business, arbitration of cross-border commercial disputes, and rules setting. It’s this last role that I want to address in this column.
At the heart of international trade are rules, norms, standards and tools that help facilitate the daily flow of global commerce. Through its longstanding rules-writing function, ICC has developed a large array of standards, codes, voluntary rules and guidelines to facilitate business and foster best practices. These rules help reinforce business self-regulation becoming the standards by which industry agrees to conduct its business. They provide an invaluable service to companies around the world and are used in billions of dollars’ worth of transactions annually.
This rule-making started soon after ICC was founded in 1919. In fact, in the interwar period – when there was no GATT or World Trade Organization – ICC acted as a real international path-breaker, developing rules of the road on trade that effectively paved the way for later, binding agreements by governments following World War II.
Examples of this critical rule-making include the Consolidated ICC Code of Advertising and Marketing Communications. First developed in 1937, and most recently revised in 2011, the ICC marketing code is the most widely recognized model for national self-regulation of ad standards around the world. With rigorous standards on a variety of marketing practices and issues, it most recently served as the basis for new global guidelines on alcohol marketing and digital ad placement.
ICC’s International Commercial Terms, known as Incoterms®, are another example. First developed nearly 80 years ago, these shorthand terms help avoid legal uncertainty by spelling out clear responsibilities between buyers and sellers in cross-border sales contracts, and have been endorsed by the UN Commission on International Trade Law. These terms, such as FOB (Free on Board), are regularly incorporated into sales contracts worldwide and have become part of the daily language of trade, the backbone of global commerce.
While little known outside the trade finance community, ICC’s Uniform Customs and Practices for Documentary Credits, known as UCP 600, and related rules were first issued in 1933 and have been updated and adapted regularly to provide essential standards and templates to lenders and borrowers looking to arrange letters of credit and other financing for exports and imports. ICC’s Banking Commission, which establishes and monitors these crucial rules, includes hundreds of trade finance professionals from around the world, with strong USCIB member participation. Its next semi-annual meeting takes place this November in Istanbul.
Based on industry need, ICC also authors various model contracts, guidelines for certificates of origin, and provides guidance on corporate anti-bribery measures. The USCIB International Bookstore offers many of these trade publications. (Coming soon: Using Franchising to Take Your Business International.) Visit www.internationaltradebooks.org to learn more about these essential titles.
USCIB members play leading roles in all of these ICC rules-setting exercises. But of course, you don’t need to be a member to take advantage of these tools. Companies large and small, all over the world, use and abide by ICC’s rules of the road. (Naturally, if you want to have a hand in developing them, you need to be a member of USCIB.) It’s just another example of the essential role played by the world business organization in the increasingly vibrant and integrated world of international trade and investment.
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