INF/MSME/R/25  
 
19 May 2021  
(21-4195) Page: 1/4 
  Original: English  
 
 
INFORMAL WORKING GROUP ON MSME  
OPEN -ENDED MEETING OF 4 MAY 2021  
Summary of discussions  
The following communication, dated 1 9 May 2021, is being circulated at the request of the 
Coordinator of the Informal Working Group on MSMEs.  
 
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The MSME Informal Working Group ( MSME Group ) met for its second  open-ended meeting of 2021 
on 4 May . A total of 90 delegations1 attended the meeting, including 23 non-working group members 
(Burundi; Cameroon; Chad; The Gambia; Georgia; Haiti; Indonesia; Jamaica; Jordan; Madagascar; 
Malawi; Nepal; Niger; Panama; Senegal; Sri Lanka; Thailand; Togo; Trinidad  and Tobago; Tunisia; 
United S tates of America ; Zambia; and Zimbabwe) . 
1  SUMMARY OF DISCUSSIONS  
1.1.  Following adoption of the MSME package in December 2020, work is now entering into a new 
phase focused on: MC12 deliverables, implementation of the December 2020 MSME package, and 
exploration of new topics to support MSME trade.  
1.2.  The meeting began with two follow -up presentations on topics discussed at the February 
meeting. From last meeting's presentation on low -value shipments by the Global Express Association 
(GEA), Australia pres ented its own goods and services tax (GST) system and the way it can benefit 
small traders through trade facilitation at the border, which can lead to decreased trade costs. 
TechUK then presented on the cyber vulnerabilities MSMEs face and the ways that pu blic private 
partnerships can support these firms, especially through awareness campaigns, to implement better 
cyber security.  
1.3.  Two new proposals were then put forward by Ecuador and Brazil, the first on MSME innovation 
policies and the second on rural MSME s. MSMEs face a number of barriers to innovation, which can 
be countered by government policies. In order to understand better what has been initiated in this 
regard, Ecuador has proposed issuing a questionnaire to MSME Group members to identify best 
practices. The Group also received two presentations on this issue. The first, by UNCTAD, discussed 
main aspects to consider when setting innovation policies. The second, by the WTO, presented the 
 
1 Afghanistan; Albania; Argentina; Australia; Bahrain , Kingdom of ; Bangladesh; Brazil; 
Brunei  Darussalam; Burundi ; Cameroon ; Canada; Chad; Chile; China; Colombia; Costa Rica; Côte d'Ivoire; 
Czech Republic; Ecuador; El  Salvador; European Union; Finland; France; The Gambia ; Georgia ; Germany; 
Guatemala; Guyana; Haiti; Honduras; Hong  Kong, China; Hungary; Iceland; Indonesia ; Ireland; Israel; Italy; 
Jamaica ; Japan; Jordan ; Kazakhstan; Kenya; Korea, Republic of; Lao People's Democratic Republic; Latvia; 
Lithuania; Madagascar ; Malawi ; Malaysia; Mexico; Moldova , Republic of ; Mongolia; Mont enegro; Myanmar; 
Nepal ; Netherlands; Nicaragua; Niger ; Nigeria; Norway; Pakistan; Panama ; Paraguay; Peru; Philippines; 
Poland; Portugal; Romania; Russian Federation; Saudi Arabia , Kingdom of ; Senegal ; Singapore; 
Slovak  Republic; Slovenia; Spain; Sri Lanka ; Switzerland; Chinese Taipei; Thailand ; Togo; Trinidad and 
Tobago ; Tunisia ; Turkey; Ukraine; United Kingdom; United States of America ; Uruguay; Viet Nam; Zambia ; 
Zimbabwe  (non-MSME Group members are in italics ). INF/MSME/R/25  
 
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  key findings of the 2020 World Trade Report on " Government polic ies to promote innovation in the 
digital age ". 
1.4.  On rural MSMEs, Brazil proposed that the MSME Group could exchange best practices on rural 
MSME policies and hold a dialogue on trade facilitation and rural MSMEs in relation to Annex 3 of the 
package (the rec ommendation on trade facilitation and MSMEs). Rural MSMEs make up a significant 
portion of the economic participants in developing economies. Ensuring that they have access to 
international markets can benefit these actors by ensuring they have demand for their products and 
increasing efficiencies.  
1.5.  Regarding implementation of the package, the Chair informed the Group about progress made 
by the Secretariat in developing the database on MSME -related information in TPRs, as mandated in 
Annex 1 of the MSME pack age. The MSME Group also received two presentations related to Annex  6 
of the MSME Package ("Declaration on trade -related aspects of MSMEs' access to finance and cross -
border payments"). First, following its November 2019 presentation to the MSME Group, th e IFC 
returned to present further on the ways supply chain finance (SCF) can benefit small traders. This 
was followed by dLocal, a Uruguay e -payment company, that discussed the growing opportunities 
of digital payment technology for cross -border payments a nd the need to standardize these 
processes across borders.  
1.6.  Côte d'Ivoire updated the Group on the proposal it submitted to the Working Group on Trade, 
Debt and Finance (WGTDF). The proposal was discussed at the meeting of the WGTDF held on 
17 May. This proposal originates in Annex 6 of the MSME package and follows the approach 
advocated by the Group to bring MSME considerations directly to existing committees, where 
relevant.  
1.7.  Mexico, the lead of the Trade4MSMEs online platform initiative, announced that the 
Trade4MSMEs Taskforce is moving into its third development phase of consolidation of resources; 
development of user interface graphics; and testing with select user groups. Work also continues on 
the development of the MSME, and policymaker, guides on identified MSME trade topics.  
1.8.  In anticipation of MC12, work to reconvene discussions on a draft declaration, based on the 
streamlined text proposed by Switzerland in 2020, was recommended. Members were invited to 
send their suggestions to the Coordinator b y 14 May with small group meetings to be organized 
thereafter so that a revised version could be circulated in time for the Group's next meeting in June. 
Ultimately, the idea is to finalize a Group declaration by July, to be followed by outreach in the fal l. 
1.9.   The idea of a checklist to track progress on implementation of the Group's December 2020 
package was also proposed. The Secretariat was invited to prepare such a checklist for consideration 
by the Group at the June meeting.  
1.10.   Finally, the Group discussed  the organization of MSME Day on 25 June. The MSME Group 
Coordinator suggested launching a "MSME Digital Champion" initiative, potentially in partnership 
with the ICC and/or ITC. The idea would be to call for businesses, private sector organizations and 
business support organizations to step forward with new and innovative proposals to promote the 
digitalization of MSMEs to help them weather the current crisis and participate in international trade. 
A somewhat similar project, called the "Small business cha mpion initiative", was launched a few 
years ago by the WTO. The winners would be announced at MC12, giving visibility both to the 
initiative and to the MSME Group's work.  
2  NEXT STEPS  
2.1.  The next MSME open -ended meeting will be held on 24 June 2021, with a MSME  Day celebration 
planned for the following day, 25 June 2021.  
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  INF/MSME/R/25  
 
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  ANNEX  
PRESENTATION SUMMARIES  
1  AUSTRALIA GOODS AND SERVICES TAX (GST)  
1.1.  The Australian Government's Department of Home Affairs presented to the MSME Group on 
their national e -commerce experience given their goods and services tax (GST) on low -value 
imports. Australia has a de minimis threshold of AUD  1,000 on customs duties, GST and reporting 
obligations, introduced in 2000 before the significant rise in e -commerce. The increase i n 
e-commerce and a rise in cross -border low -value shipments meant a significant GST revenue loss, 
which the government has tried to counter with a new GST on low -value goods, implemented on 
1 July 2018. This new GST requires overseas businesses with a turn over greater than AUD  75,000 
to register with the Australian Taxation Authority. GST is then collected at the point -of-sale, while 
at the border the AUD  1,000 de minimis level remains, thereby preventing double -taxation. 
Registration is simplified and trad ers using an e -commerce marketplace are not required to register 
separately, rather the e -commerce marketplace itself must register and follow the necessary 
requirements, thereby assisting MSME trade.  
2  TECHUK  
2.1.  TechUK is an industry association representing U K businesses on digital and cyber matters. It 
works directly with government and its MSME members to develop technology policy and create an 
environment conducive to technological change. One of the biggest concerns when it comes to 
MSMEs and technology is  cyber security. Despite a growing cybersecurity sector in the UK, MSMEs 
face a number of challenges to access these services including the costs of these services; lack of 
skills and awareness of their business' cyber risks; and brain drain as employees w ith cyber security 
skills can gain higher compensation elsewhere. Actions the UK government has taken to protect 
MSME cyber security includes developing a National Cyber Security Strategy 2016 -2021, creating 
specific cyber security advice for MSMEs, and cr eating a Cyber Essentials certification program for 
firms. Businesses that sign up for Cyber Essentials can be reviewed for security defects and receive 
recommended actions to improve their digital security.  
3  UNCTAD  
3.1.  Clovis Freire, an economist from UNCTAD's division on Technology and Logistics, presented to 
the MSME Group on the importance of innovation, especially in developing economies, in order to 
create new products that lead to economic development, diversification and stronger, broader 
exports . Unfortunately, MSMEs are more challenged to innovate because of market failures that 
make it hard to protect their intellectual property; system failures, like those that make it challenging 
for MSMEs to access capital; and "capability failures", or lack  of adequate education and training. 
Innovation and trade works in both directions: trade can provide opportunities for "emulation" by 
MSMEs when they insert themselves into upstream production, creating low -cost value -added parts 
or repairing imported ite ms, which then leads to more specialization and innovation as they learn 
and even future exports. Targeted policy instruments can be an important way to increase innovation 
and bring MSMEs onboard, including through education, infrastructure, industrial pa rks, special 
economic zones, and industrial institutes.  
4  WTO WORLD TRADE REPORT 2020  
4.1.  Over the past decade, many economies have been adopting new types of policies aimed at 
technological upgrading and transitioning to a new digital economy. The WTO World Tra de 
Report  2020 looked at addressing what has changed with the digital economy, what are the policy 
implications, and what is the role of trade and the WTO given this trend. Government R&D funding 
was found to be important to promote innovation in an econom y generally, especially in developing 
regions, and, for MSMEs, direct financial support was the main instrument to encourage their R&D. 
Trade has an important role in that open trade policies contribute to innovation through GVCs and 
cooperation in the mul tilateral trading system has supported the expansion of digital sectors, which 
in turn provide opportunities for digitally connected MSMEs and new areas for economic exploration 
and innovation.  INF/MSME/R/25  
 
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  5  IFC 
5.1.  Aksinya Sorokina joined the MSME Group to present on suppl y chain finance (SCF), its 
importance for MSMEs, and the role of public entities and industry associations to promote SCF. SCF 
allows for frequently smaller, sub -suppliers or buyers, to access finance based on the reputation of 
a larger, anchor, company an d the contracts it has made with the supplying or buying company. In 
order for SCF to function optimally, it requires visibility of the entire underlying trade flow, which 
new digital technologies have made increasingly possible. Public institutes and indu stry associations 
have an important role to bring awareness to SCF as a finance tool for MSMEs and to push for an 
appropriate legal and regulatory framework. Governments also need to support digital infrastructure 
and technological capacity to build up SCF  programs and increase local bank interest in SCF for 
MSMEs, potentially through risk -assumption. Ms. Sorokina laid out a number of different, specific, 
approaches that Governments can take to support SCF, from an "enabling framework provider 
approach" tha t lays out an appropriate regulatory environment for SCF to a "financing approach" 
where public institutions can provide SCF directly at preferred rates. Ultimately, there is no "one -
size-fits-all" for SCF, but it can be a powerful tool to bring MSMEs into  trade.  
6  DLOCAL  
6.1.  Sergio Fogel, co -founder of dLocal, a Uruguay e -payment company, presented on the current 
state of e -commerce and payments. Currently, there is a lot of innovation and change occurring in 
this field and no clear winning process has emerged. What is clear, is that e -commerce is hindered 
by a number of regulatory frictions, both in terms of the movement of goods but also for payments. 
There is a need for governments both to protect small e -payment innovators that may be able to 
bring n ew solutions to the market, as well as facilitate the integration and interoperability of these 
new technologies for cross -border transactions.  
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