International trade finance, a report on the methods of trade finance used in Europe for cross-border trade

International trade finance is concerned broadly with all aspects of the post-production financing of international trade transactions. Thus, it includes methods of international settlement, the documentation of international trade, risk management techniques, short- and long-term lending and borrowing facilities and other services available for companies involved in importing and exporting activities. The main providers of trade financing facilities are commercial banks, merchant banks, credit insurers, export houses, foreign exchange brokers, factoring companies and government agencies. In the first section of the report, we aim to provide a general guide to many of the services available, and issues often raised, in the area of trade finance, outline the risks of international trade and the likely effects of the developing EU single market on trade finance. We conclude the first section of the report by outlining alternative methods of international settlement, the main documents used in international trade finance and examine the financial services available for exporters and importers, including forfaiting, international factoring and counter-trading. In the second part of the report we examine the current issues affecting the major players in the world of trade finance. First, the prospects for EU banks and private export credit insurers are discussed in the light of the Asian crisis and the imminent introduction of the euro. Secondly, international factoring companies in the UK and the EU are considered, together with an assessment of their future prospects. The roles of the official export credit agencies in EU member states and the USA are then outlined, and the chapter ends with a discussion of the issues concerning the regulation of export credit insurance. With the final section profiles of the major international suppliers of trade finance are presented.