As with the issue of drafts, the removal of ‘negotiation' from the UCP as a form of availability is also an argument that has been brought forward on numerous occasions in an effort to justify a revision of UCP 600.
However, it is important to bear in mind the wide use of ‘negotiation' globally; removing ‘negotiation' from the UCP is not a practical solution and, in any event, would not stop letters of credit being issued available by ‘negotiation'.
On the contrary, removal would actually create uncertainty as to its application based on the fact that financial institutions would create their own specific interpretations that suit their own needs.
Inclusion within UCP ensures a common understanding and provides uniformity in practice. As with any element of UCP, a rule within UCP has the impact of obtaining harmonisation as opposed to differing customs. Although some banks in certain regions may not be supportive of the practice of ‘negotiation', it cannot be ignored that it is used extensively and that removal would be entirely detrimental to practice.
As with the issue of drafts, it is again worth referring to the 2015 Global Survey published by the ICC. SWIFT statistics reveal that 72.3% of all credits issued in 2014 were available by ‘negotiation' and it is unlikely that this figure changes from year to year.
It has always been the intention that ICC rules should reflect existing customs and practice; ‘negotiation', in many parts of the world, is a prime product with a number of supporting finance tools.
The same comment can be made here as was made with the issue of drafts: it is considered vital that UCP's unique characteristic of global acceptance is maintained and suggestions for non-optional changes that only benefit particular business or geographic segments of the user base are opposed.
The way forward is to provide guidance on this issue.