Almost half of letters of credit received in the UK are unworkable according to recent research – that is the buyer requests documents which the seller is unable to produce.
Recently, for example, a Turkish buyer requested an ATR movement certificate from a UK seller for goods despatched direct from Peru to Izmir in Turkey. This was not possible as the ATR movement certificate can only be issued for goods which meet with the rules or origin that goods must be manufactured and produced within the EC or in free circulation.
Alan Bracken of ABTS Training Services stated at a recent seminar on letters of credit: “You get the letter of credit you deserve, if you don’t ask you don’t get.”
“In order to get a workable letter of credit you must give the seller details of the letter of credit you require.”
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New export figures published by the ONS give cause for optimism according to the British Chambers of Commerce.
David Kern, Chief Economist at the BCC, commenting on the trade deficit for August, said: “The trade figures for August show an improvement in the overall trade deficit, and are better than expected. A revision of previous figures means that the trade deficit was smaller than previously estimated. Excluding all erratic items, exports have increased more strongly than imports over the last month, and also on a three-monthly basis. It is encouraging that, even in a difficult international environment, Britain is able to strengthen its trading position.
“The figures provide a welcome contrast to the steady flow of negative news we have recently. However we cannot underestimate the challenges ahead for exporters, particularly in the face of the serious problems facing the Eurozone, which remains our major trading partner. As the fiscal austerity plan dampens domestic demand, net exports have to be the main engine of Britain’s economic recovery.
“This means that the government must support a national export drive. Unless we accelerate the pace of export growth and we gain market share from imports in the domestic market, it will be difficult to sustain UK growth. The government must strengthen its backing for SME exporters in key areas such as trade finance, insurance and promotion.
“While a competitive pound and low interest rates can help our exporters, further efforts are needed to ensure that our businesses can compete equitably with foreign exporters. On their part, Britain’s exporters must make every effort to diversify their sales towards fast growing economies such as India, China and Brazil.”
Alan Bracken, course director at ABTS Training Services, added: “Companies who need to export from the UK must retain highly trained staff that can confidently provide an export service to support the companies export drive.”