President Barak Obama has sent a message to the US Senate asking it to ratify the UN Convention on Independent Guarantees and Standby Letters of Credit (L/Cs).

The convention aims to fill the vacuum that exists in countries that have no modern L/C law and bridge the gap between standby and guarantee law and practice.

Ratifications

The convention was established in 1995 and signed by the US in 1997, but has never been ratified by Washington.

So far only Belarus, Ecuador, El Salvador, Gabon, Kuwait, Liberia, Panama and Tunisia have ratified it.

Essential for trade

Obama told the Senate in his message to them that the US participated in the negotiation of the convention.

He added that it establishes common rules on standby L/Cs as well as other independent guarantees and instruments that are essential to international commerce.

Endorsements

The president expects that ratification by the US of the convention will encourage other countries to become parties to it.

The convention has been endorsed by leading US banking and business associations while the International Chamber of Commerce endorsed it in 1999.

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