Sec. 402. Promoting adoption of United Nations Convention on Assignment of Receivables in International Trade
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Congress makes the following findings: The United Nations Convention on the Assignment of Receivables in International Trade, done at New York December 12, 2001, and signed by the United States on December 30, 2003 (in this section referred to as the Convention ), establishes uniform international rules governing a form of financing widely used in the United States involving the assignment of receivables. Receivables financing is an important tool in helping United States businesses secure working capital financing.
Within the United States, lenders and buyers of receivables provide financing based on the use of receivables from debtors located within the United States as working capital collateral. Receivables financing occurs in transactions in which businesses either sell their rights to payments from their customers (known as receivables ) to a bank or other financial institution, or use their rights to those payments as collateral for a loan from a lender. The businesses selling or using their receivables as collateral are referred to as assignors and buyers and lenders are referred to as assignees .
Many countries, however, do not have the kinds of modern commercial finance laws on the assignment of receivables required to implement the Convention. United States-based lenders are less willing to make loans secured by receivables owed by debtors located outside the United States, as such cross-border transactions may involve countries the laws of which are inconsistent with modern financial practices. Because of the risk, cost, and uncertainty created by receivables financing laws in other countries, which vary greatly or can be vague or unpredictable, the ability of small and medium-sized United States businesses to access financing from lenders using international accounts receivables derived from exports or other cross-border transactions is severely limited.
Expanded access to receivables financing in international trade, which the Convention would promote, will provide United States businesses with an additional source of capital at no cost to the United States taxpayer, benefitting small and medium-sized businesses that use receivables financing. The Convention is consistent with article 9 of the United States Uniform Commercial Code, as adopted by all 50 States, the District of Columbia, and the territories of Puerto Rico and the Virgin Islands.
The Convention includes extensive rules on the use of receivables to finance operations, using receivables as collateral, and how to resolve potential conflicts of law arising from the use of receivables. Adoption of the Convention would establish more predictability and uniformity with respect to receivables financing in cross-border transactions, thereby opening up new opportunities for trade and economic growth between the United States and its partners in the developing world.
The Senate consented to ratification of the Convention in January 2019. The President ratified the Convention in October 2019. It is the sense of the Senate that the Secretary of State should, in the regular course of economic dialogues with developing countries that are partners of the United States, promote the adoption and implementation of the Convention as an important tool— to help attract foreign investment to and trade with such countries; and to establish a predictable, rules-based framework that can help such countries create additional sources of capital at no cost, benefitting small and medium-sized businesses that use receivables financing.