RESTRICTED  
  
WT/WGTDF/M/37  
 
20 September 2019  
(19-6090) Page: 1/3 
Working Group on Trade, Debt and Finance    
 
REPORT OF THE MEETIN G OF 21 JUNE 2019  
1.1.  The thirty -ninth meeting of the Working Group on Trade, Debt and Finance (WGTDF) was held 
on 21 June 2019 under the Chairmanship of Ambassador Refiloe  Litjobo  (Lesotho ). The Chairman  
suggested to continue to discuss the issue of trade finance and small and medium -sized enterprises 
(SMEs) on the basis of Members' experiences, and of recent meetings held by the Secretariat. The 
Director -General, who had committed before this Working Group last year to continue i ts advocacy 
work, had been following -up on his commitment. It was proposed that the Members examine the 
conclusions of recent meetings, including that of the Expert Group on trade finance. A discussion on 
the upcoming trade finance session at the Aid -for-Trade Global Review, was also welcome. Members 
approved the agenda.  
1.2.  The Chairman  highlighted that background documents had been circulated to support the 
discussion on trade finance. First, WTO document WT/WGTDF/W/88 has been issued in the late fall 
of 2018  as a summary of the session on "Financial Inclusion in Trade Finance: Reducing the Global 
Trade Finance Gap", held during the 2018 Annual Meetings of the International Monetary Fund ( IMF) 
and the World Bank. More recently, in March 2019, the Secretariat h ad issued the latest report of 
the Expert Group on trade finance, in WT/WGTDF/W/89. Finally, the Secretariat had prepared a 
short note, in WT/WGTDF/W/90, on findings regarding trade finance in the context of the preparation 
of the upcoming aid -for-trade gl obal Review.  
1.3.  The Secretariat  report ed on recent progress of the Director -General 's and Secretariat efforts. 
The situation in trade finance markets was contrasted . On the one hand,  there was strong price 
competition in a context of abundant liquidity in the  main financial markets (New York, London, 
Frankfurt). On the other, the withdrawal by international banks had left gaps in developing regions. 
These gaps were hard to fill. In its report on 29 May 2019, the Financial Stability Board (FSB) 
recognized that the number of corresponding bank relationships , which were necessary to distribute 
trade finance globally, had been declining again in 2018 . According to the FSB, the number of such 
relationships had declined  by 20%,  from 1 million to 800.000 , between 2011  and 2018. This meant 
that international cross -border financial flows were channel led through less and less correspondent 
banking relationships. Hence, t he financial system was becoming more concentrated. The number 
of correspondent banking relationship s had fallen by more than the world's average in Africa, South 
America, the Caribbean, the Pacific Island s, with a dverse effects  on the distribution of trade finance 
flows. 
1.4.  According to the African Development Bank , the number of international banks available for 
confirming letter of credits issued by  African Banks ha d fallen by  15%. The significant shortages of 
US dollars resulting from the withdrawal of international banks from Africa had led multilateral 
development ba nks to borrow US  dollars in  Asia to be able to clear trade finance transactions in 
Africa . One of the reasons for international banks terminating correspondent banking relationships 
in developing countries  was a heightened perception of the regulatory risk . In turn, local banks  in 
developing countries  were less inclined to provide trade finance to traders locally, because  of the 
fear that it might compromise the future of their relationship with  international banks . This reality 
had already been mentioned a t the Working Group on Trade, Debt and Finance. SMEs operating 
downstream of industrial supply chains in developing countries had lost from the continuing trend 
of terminating correspondent banking relationships . 
1.5.  Co-operative action  has been  taking place o n several front s. On financing, the WTO has 
continued to  partner with multilateral development banks in mobilizing support at  the international 
level. Multilateral development banks run so -called trade finance facilitation program mes, which 
offered payment  guarantees for banks  and traders  from developing countries. Since 2016, overall  
support to trade finance had increased  by about 50%  under these program mes. Last year, roughly WT/WGTDF/M/37  
 
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  10,000 trade transactions from mostly  SMEs  have been supported , 4,500 just for the Asian 
Development Bank. Such program mes were not intended to close the trade finance gap completely. 
Rather, they had great learning -by-doing value, allowing the importer and exporter's banks to get 
acquainted – and hence to continue trading  further  without support from the multilateral institutions.  
1.6.  Capacity building program mes on trade finance  aimed, until recently, at reducing the 
knowledge gap on trade finance instruments and techniques, and at supporting the eme rgence of a 
new generation of trade financiers in developing countries, where the demand for trade finance was 
high. 1,500 young trade financiers in developing countries had been trained in 2018 . However, 
bearing in mind the extent of de -risking, special c apacity building had to be designed for 
professionals in charge of regulatory compliance . The WTO Secretariat had partnered with the 
International Finance Corporation (IFC) , the FSB and the IMF in a series of capacity -building events  
gathering bankers and regulators of trade finance in Africa . The dissemination of best practices 
regarding compliance in the trade finance field was  also a priority. The IFC and WTO prepared a 
book to show case the best practices which emerged during the above -mentioned capacit y building 
activities . The publication received contributions from the European Bank for Reconstruction and 
Development, the Islamic Trade Finance Corporation, and the Asian Development Bank. The WTO 
Secretariat participated in capacity -building activities  organized by the African Import Export Bank, 
a subsidiary of the African Development Bank.  To date,  the WTO  Secretariat  has helped train more 
300 professionals . The 2019 programme of on -site seminars was likely to reach 500 par ticipants . 
1.7.  The Chairman  thanked the Secretariat for the report. He opened the floor to delegations for 
comments and questions.  
1.8.  The Representative of Mauritius  welcomed this session on access to trade finance by small and 
medium -sized enterprises.  SMEs, especially in small develo ping economies, face d numerous 
challenges such as high trade costs, lack of economies of scale, barriers to access foreign markets, 
lack of access to technology and information.  Difficulties in accessing trade finance also remain ed a 
serious hindrance in t he development of local SMEs. In consequence, SMEs were not able to seize 
investment and trade opportunities, create jobs and thus contribute to economic development and 
poverty alleviatio n. SMEs in Mauritius represent ed a major pillar of the economy with a contribution 
of about 40% to GDP and 55% of total employment. The majority of SMEs use d their own funds. A 
significant number of them had highlighted difficulties in obtaining credit facilities.  SMEs were called 
upon to assume a more impactful role in th e economy as a key driver of inclusive and balanced 
growth, and for the empowerment of vulnerable groups. In this regard, support institutions, the 
authorities and the SMEs themselves need ed to adopt new approaches, and invent novel ways of 
working togethe r to foster competitiveness.  
1.9.  In this regard, the Mauritian Government ha d put in place a number of initiatives and 
programmes to assist and accompany SMEs in their trade and expansion strategies. For instance, 
the SME Development Scheme and the SME Finance  Scheme, inter -alia, include d income tax 
holidays, flexible and soft financing with low interest rates and long repayment periods. Grants were 
also provided for feasibility studies of projects  proposed  by SMEs. There was a SME Equity Fund 
provid ing equity financing of up to 49%.  The Government was working with commercial banks in 
extending trade finance facilities to SMEs such as lending facilities, issuing letter s of credit, export 
factoring, forfaiting, export credits, and credit insurance.  More had to be done to improve access to 
trade finance for SMEs. Some other measures  could be scaled up . They included: helping the local 
banking sectors by providing training programmes;  enhancing existing trade finance facilitation 
programmes , designing alternate and innovative financing instruments , training of SMEs for project 
write up for submission to financing institutions , creating awareness of existing funding facilities 
amongst SMEs. Finally, the recent entry into force of the African Free Trade Area had raised  
expectations of increased intra -African trade. Therefore, it was important to enable SMEs to take a 
central role in this project.  
1.10.   The Secretariat  replied to a few technical questions on its work.  
1.11.   The Chairman  invited Members to attend Session 9 of the 2019 Aid for Trade Global Review, 
to be held on 3 July. In this session, WTO Director -General Roberto Azeved o would  introduce a new 
WTO and IFC publication, entitled "Trade Finance: Meeting the Challenge of Regulatory Compliance", 
in the presence of Mr Philippe Le Houérou, Chief Executive Officer of the International Finance 
Corporation ( IFC). As highlighted by the Secretariat, t he publication had benefited from written 
contributions from other partner organizatio ns. Senior officials of these organizations  were scheduled WT/WGTDF/M/37  
 
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  to participate in the Session . They would be available for a dialogue with  WTO Members. The 
Chairman encouraged Members to attend  and participate activ ely. Such participation would be 
consistent wi th the fact that, in response to the OECD -WTO monitoring and evaluation exercise for 
the current Global Review, 60 Members ha d identified access to trade finance as a major constraint 
to economic diversification; better access to trade finance has also bee n identified as an aid -for-trade 
priority by 17 of the 88 developing country respondents. Donors had also  considered trade finance 
as an area for greater priority under Aid for Trade.  
1.12.   The Chairman  summarized the discussion on trade finance. This was one ar ea of the WTO 
work in which the interaction between Members and the Secretariat had been productive. Follow -up 
by the Director -General was very encouraging. This kep t the momentum and help ed build 
inter-institutional support. A unique opportunity for an in teraction between Members and institutions 
providing trade finance facilitation programmes would take place during the Aid -for-Trade Global 
Review. The Working Group on Trade, Debt and Finance would meet in the autumn  to take stock of  
this discussion and  further progress  made by the Secretariat . 
1.13.   The Chairman  thus asked whether, according to Item 2.B of the agenda, there had been any 
request for  making a new  submission by Members. Since this had not been the case, he reminded 
Members that a draft annual report had to be produced by the Working Group. A short draft report 
prepared by the Secretariat would be up for discussion at the next meeting of the Working  Group, 
to be held in the autumn . It was so agreed . 
1.14.   With this, the Chairman  closed  the meeting.  
 
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