Buyer's rep removes sanction clause from RMG LC
The buying house affirmed its commitment to issuing a fresh LC devoid of the contentious clause if necessary
ZXY International, a global apparel buying and sourcing entity, said a clause on sanction has been removed from a Letter of Credit (LC) for an export order issued by the French buyer KARIBAN and subsequently transferred to Bangladesh's Knit Concern.
The buying house affirmed its commitment to issuing a fresh LC devoid of the contentious clause if necessary.
The decision was communicated to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan, who subsequently disseminated the update to the media along with the correspondence from ZXY. However, The Business Standard was unable to independently verify this information with ZXY or KARIBAN.
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In an official statement, BGMEA President Faruque Hassan clarified that ZXY International had transferred the LC against a master LC issued by the French buyer KARIBAN in favour of Knit Concern, a valued member of the BGMEA. The association obtained a copy of the LC issued by Standard Chartered Bank Dubai.
The LC contained a specific clause stating, "We will not process transactions involving any country, region, or party sanctioned by the UN, US, EU, or UK. We are not liable for any delay, non-performance, or disclosure of information for Sanctions Reasons." In response to this clause, the BGMEA sought clarification from ZXY.
The BGMEA received formal clarifications from both ZXY and the original buyer, KARIBAN. The clarification from KARIBAN affirmed that they did not insert the disputed clause in their master LC in favour of ZXY International, rather the clause was added by SCB Dubai that is doing it since 30 November 2023.
"ZXY International confirmed that they will remove the clause in the LC, and if required they will issue a fresh LC without that clause," says Faruque in the statement.
Faruque also debunked rumours suggesting that the LC clause might lead to sanctions against Bangladesh, emphasising its baselessness.
The BGMEA president said LCs are private commercial instruments and not statutory orders or notices. He urged valued brands, retailers, and their agents not to complicate trade with external issues and advised members not to accept any LC with such a clause. He encouraged communication with buyers to seek clarification and amendment if such clauses were found.
Faruque acknowledged the rapidly changing global trade landscape, emphasising the increasing priorities of human rights and environmental due diligence. He reassured that Bangladesh's RMG industry had undergone a paradigm shift in workers' well-being and environmental sustainability, aligning with ESG priorities.
The BGMEA president stressed the need for proactive integration of sustainability into business practices to maintain global standing and pursue growth. He expressed confidence that, given the industry's progress and initiatives, there was no ground to impose sanctions against Bangladesh in the RMG sector.
Faruque said the BGMEA collaborates with the government to address concerns through diplomatic efforts, supporting continued progress and economic security for workers within the industry.
