WORLD TRADE  
ORGANIZATION  WT/WGTDF/W/23 
25 March 2004 
 (04-1374) 
Working Group on Trade, Debt 
and Finance  
 
 
IMPROVING THE AVAILABILITY OF TRADE FINANCING: 
REPORT OF PRELIMINARY WORK 
  
Note by the Secretariat
 
 
 
 
 
  
 
 
I. INTRODUCTION 
1. During periods of extreme financial crisis, su ch as those experienced by emerging market 
economies in the 1990's, situations of general credit shortage can reduce access to trade financing, in 
particular at the short-term end of the market, a nd hence disrupt trade which should usually be a prime 
vector for the recovery of economic growth and th e balance-of-payments.  Both exports and imports 
can be adversely affected. 
2. In response, several initiatives have been take n, by the IMF, the World Bank, regional 
development banks, some export credit agencies (E CAs) and certain private sector banks, each 
playing a different role in the process of finding solutions.   
3. For its part, the Working Group on Trade, Debt  and Finance identified the trade-financing 
theme as one of several on which it felt further wo rk was warranted after the fifth Ministerial 
Meeting.  Its Report to the General Council (WT/WGTDF/2) stated: 
"Based mainly on experience gained in Asia a nd elsewhere, there is a need to improve the 
stability and security of sources of trade-finance,  especially to help deal with periods of 
financial crisis. Further efforts are needed by countries, intergovernmental organizations and 
all interested partners in the private sector, to  explore ways and means to secure appropriate 
and predictable sources of trade-finance, in particular in exceptional circumstances of financial crises." 
4. The issue of shortages of trade-financing occurri ng in periods of economic crisis was raised at 
the General Council meeting on Coherence in May 2003.  The Managing Director of the IMF 
proposed hosting an expert seminar involving priv ate and public institutions in order to improve 
coordination efforts and, if possible, to define a framework for action in event of future financial 
crises.
1  Subsequently, the Director-General convene d a follow-up meeting of the expert group to 
                                                      
1 The IMF's report on this seminar can be found on its website:  "IMF, Trade Finance in Financial 
Crisis – Assessment of Key Issues", 23 January 2004.  One of the solution presented in the paper is to increase 
the harmonization of emergency schemes proposed by pub lic institutions such as export credit agencies and 
regional development banks, and the coordination of the activities of public and private financial institutions 
through co-financing operations.  In addition, the positive role that central banks might play in some of these 
circumstances has been acknowledged. This document has been prepa red under the Secretariat's own 
responsibility and without prejudice to the positions of Members and to their rights and obligations under the WTO. WT/WGTDF/W/23 
Page 2  
 
discuss how the WTO can best contribute to improving the access of developing countries to more plentiful and secure sources of trade financing, par ticularly in periods of financial crisis.  The 
Secretariat's report on that seminar was circul ated in WT/GC/W/527—WT/WGTDF/W/22, and the 
Director-General provided a brief oral report to th e General Council at its meeting on 11 February 
2004 (WT/GC/85, paragraphs 90-92).   
5. This Note provides background to WT/WTGDF/W/22.
2  It summarizes the state of play on 
the issue, and examines the scope for public interv ention at a global level on both the financial aspect 
which is within the remit of international financia l institutions (IFIs), and the market access and rule-
making aspect which is within the remit of the WTO,  the OECD and regulatory financial authorities.  
Section II describes the disruptions to trade r esulting from the drying up of trade finance during 
periods of crisis, based on recent country experien ces, and provides a description of the response of 
central banks, regional development banks, and e xport credit agencies when private sector trade 
financing is lacking.  Section III identifies areas where action by WTO Members can contribute to the 
resolution of the problem. 
6. This Note focuses only on the issue of the availa bility of emergency trade financing in periods 
of financial crisis.  The more general issue has al so been raised in the Working Group of improving 
the access of developing countries to adequate and reliable sources of tr ade financing, in particular for 
small and low-income economies, as well as for the de velopment of South-South trade.  As indicated 
in WTO Discussion Paper No. 2, "a more structural  reason behind the fall in the supply-capacity in 
short-term credits seems to be linked to the movement  of the concentration recorded in recent years in 
international banking markets" and the gradual shift of international banks away from products such 
as trade-financing which are increasingly regarded  as generating only low value-added and low 
profitability.  This issue may require furthe r consideration in the Working Group.     
II. THE TRADE-FINANCING MARKET AND DIFFICULTIES ENCOUNTERED 
DURING PERIODS OF FINANCIAL CRISIS 
A. RISK, LIQUIDITY AND SOLVENCY PROBLEMS AND TRADE  
7. The expansion of trade depends on reliable, adequate, and cost -effective sources of financing, 
both long-term (for capital investment needed to  produce tradeable goods and services) and short-
term, in particular trade financing.3  The latter is the basis on which the large majority of world trade 
operates, as there is generally a time-lag between  when goods are produced and shipped, and when 
payment is received.  Trade-financing provides credit,  generally up to 180-days, to enterprises to fill 
this gap.  Cash transactions also take place, but to a smaller extent in many developing and least-
developed countries.  
8. Short-term credit for trade financing is in gene ral considered a routine operation.  Financing 
instruments are relatively well defined in the mark et, e.g. letter of credits, open accounts, overdraft 
and cash with order in the case of short-term form s of credit, and bills of exchange and promissory 
notes in the case of longer maturities or one-off operations.4  Trade-related credit is granted primarily 
by banks, but credit can also be granted directly  by enterprises (suppliers' credit, exchange of 
commercial notes and paper), without a banking intermediary. (Box 1)   
                                                      
2 See also Auboin, M. and Meier-Ewert, M. (2003),  "Improving the Availability of Trade Finance 
During Financial Crisis", WTO Discussion Paper No. 2, Geneva, on which this Note draws.    
3 The trade finance market has several segments acco rding to maturity, from s hort-term (usually 0 to 
180 days, but possibly to 360 days) to medium and long-term.  The medium to long-term end is generally considered to be over 2 years, and is subject to the OECD Arrangement on Guidelines for Officially Supported 
Exported Credits (the Arrangement) when insured or guaranteed by a Participant to the Arrangement. 
4 Stephens (1998).  WT/WGTDF/W/23 
 Page 3 
 
 
9. However, routine though it may be, there is an el ement of risk to be borne for trade finance, 
as for other forms of credit.  Commercial risk stem s essentially from the inability of one of the parties 
involved to fulfil its part of the contract: for exam ple an exporter not being able to secure payment for 
his merchandise in case of rejection by the importer or in case of bankruptcy or insolvency of the 
importer.  Alternatively, the importer bears the risk  of a delayed delivery of goods.  Traders further 
have to deal with the risk of exchange rate fluctuation, transportation risk and political risk.5  A n  
unexpected change in exchange rates can disrupt th e profitability of the trade, and the imposition of a 
currency conversion or transfer retraction can be even more damaging. 
10. Trade finance instruments can to some extent  mitigate commercial risk, by providing an 
exporter with assurance that the importer will pay th rough the use of a letter-of-credit (L/C) issued by 
the importer's bank and conf irmed by the exporter's bank, or by advancing to the exporter the amount 
owed under the contract, thereby partly bearing the exchange rate risk.  But these instruments do not 
offer total security for the parties involved in the tr ansaction.  To protect exporters against the risk of 
non payment by the importer when the transaction is on open account, or the confirming bank when a L/C is used, export or trade credit insurance schemes  are provided by official export credit agencies 
(ECAs) or private sector insurance companies to fill the gap in developed countries and in some 
developing countries.  Export or trade credit insurance can cover the commercial risk
, which is 
generally provided and priced on a commercial basis, and political risk , which can include currency 
nonconvertibility and transfer restrictions, confi scation or expropriation, import licence cancellation, 
breach of contract by a government buyer, and political violence which causes non-payment by an 
importer.  (Box 2)  
11. Export credit insurance schemes are subject to a number of rules and disciplines, under the 
WTO Agreement on Subsidies and Countervailin g Measures, and guidelines under the OECD 
Arrangement and Berne Union.  The restructuri ng of sovereign bilateral debt, such as publicly 
guaranteed commercial credits under Official Development Assistance terms, fall under the 
methodology and aegis of the Paris Club. 
B. FINANCIAL CRISES AND TRADE FINANCE IN PERIODS OF INSTABILITY  
1. Financial deregulation and trade 
12. The expansion of international trade depends  on a well-functioning international financial 
system in several respects.  Among the most impor tant are the relationship between exchange rates 
and trade, financial flows and trade, and balance-of -payments adjustment and trade.  In the 1980s and 
1990s, financial integration occurred on a global scal e, with the deregulation of domestic financial 
markets, the liberalization of international capital flows, and financial and technological innovation.  
One feature of this was a large increase in pr ivate capital flows from developed to developing 
countries.   
13. The lending exposure of G-7 banks to devel oping countries stood at some US$1 trillion in 
mid-1998, at the time of the Asian financial crisis.  This brought with it greater vulnerability of these 
countries to changes in sentiment by international in vestors and banks, since market expectations play 
a key role in setting financial asset prices and dire cting financial flows.  Episodes of more intense 
financial instability are to some extent a corollary of financial deregulation and liberalization.  The 
decisive factor for many emerging market economies in the 1990s was that the seeds of instability had 
been sown in the more sheltered and controlled fi nancial environment that prevailed beforehand.  
Competition exposed bloated and rigid cost struct ures in the financial and industrial sectors of 
                                                      
5 In developed countries and some developing countries exchange rate risk can be hedged through 
derivatives on foreign currencies, while political risks (including currency conversion and transfer blockage, 
confiscation and expropriation, political violence and breach of contract by a governme nt buyer) can be insured. WT/WGTDF/W/23 
Page 4  
 
recipient countries, poor management of risk, and il l-designed or non-existent prudential safety nets.  
In some cases too, it exposed unsustainable monetary  policies and public and foreign debt obligations.   
14. The resurgence of international financial crises  in the late-1990's, with negative effects on 
GDP, poverty and social development in the affected countries, revived fears of the kind of contagion 
that occurred in the 1930s – originating in the fina ncial sector and spreading to the real economy.  
Fortunately this did not happen, and the WTO played an  important role in this respect by ensuring that 
its Members did not resort to restrictive trade po licies to try to cushion the adverse effects of 
international financial instability on the real sect ors of their economies (WTO, 1998).  Nonetheless, a 
sense of vulnerability to instability in international financial markets and to sudden changes in market 
sentiment large enough to create systemic difficulti es for trade and the trading system remains, 
particularly in emerging market economies. 
2. Implications of recent financial crisis 
15. There were several episodes of international fi nancial crisis in the 1990s, affecting mainly 
emerging market economies.  While each crisis has its own causes and characteristics, to some extent the crises that occurred in 1997-98 all involved a ge neral movement of capital out of emerging market 
economies.  The threat of contagion among borrowers  also created serious problems for international 
lenders providing various forms of short, medium and long-term credit, and together this took on 
proportions of international systemic crisis in the late-1990s.  It is genera lly acknowledged that capital 
account instability played a much more significant role  during this period than in the more traditional 
current account/balance-of-payments crises of the 1970s and 1980s which were linked to uncontrolled 
spending, high inflation, and excessive public debt.  
16. Financial sector fragility and inadequate banking supervision in the crisis-hit countries, in 
combination with the role of highly leveraged fina ncial institutions, hedge funds and off-balance sheet 
operations of some institutional investors, and lack  of prudential control over their activities, have 
been the main contributing factors.  "Herd" behaviou r on the part of foreign capital is felt by many to 
explain why the retreat turned into a rout in so me of the crisis-hit countries, where inadequate 
information, particularly about the level of forei gn exchange reserves, made an objective evaluation of 
the situation more difficult.  Internal weaknesses out side the financial sector are viewed by many as 
having reduced the defences of the crisis-hit ec onomies to external shocks.  Macroeconomic 
imbalances do not seem to have been the main fa ctor behind the crisis in South-East Asia (IMF 
(1998), WTO (1999)). 
17. More important are the  implications, both macroeconomic a nd for international trade.  Two 
have drawn particular attention in the Wo rking Group on Trade, Debt and Finance:  
- first, large swings in exchange ra tes exacerbated the fundamental weaknesses 
described above (financial fragility, external vulnerab ility, and poor governance).  In particular they 
created a vicious circle of currency depreciation,  bringing more financia l institutions and their 
customers into insolvency, and further weakening conf idence which in turn fuelled more capital flight 
(for details about the impact of exchange rate volatility, see WT/WGTDF/W/4).  
  WT/WGTDF/W/23 
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 Box 1  
 
Trade Finance Instruments – A typology  
 
The availability of trade finance, particularly in developi ng and least-developed countries, plays a crucial role in 
facilitating international trade. Expo rters with limited access to working ca pital often require financing to 
process or manufacture products before receiving payments. Conversely, importers often need credit to buy raw 
materials, goods and equipment from ov erseas. The need for trade finance is underlined by the fact that 
competition for export contracts is often based on the attr activeness of the payment terms offered, with stronger 
importers preferring to buy on an open account basis wi th extended terms as compar ed to stronger exporters 
who prefer to sell on a cash basis, or secured basis if extended terms are needed. A number of common trade financing instruments have been developed to cater to this need: 
A.) Trade Finance provided by banks
:  
  a.) A bank may extend credit to an importing company,  and thereby commit to pay the exporter. Under 
a letter of credit issued by the bank, payment will us ually be made upon the presentation of stipulated 
documents, such as shipping and insurance documents as well as commercial invoices (Documentary Credit ), 
or at a later specified date.  
 b.) A bank may extend short-term loans, discount letters of credit or provide advance payment bonds 
for the exporter, to ensure that the company has sufficien t working capital for the period before shipment of the 
goods, and that the company can bridge the period between shipping the goods and receiving payment from the 
importer ( Pre-and Post-shipping Financing ). 
 c.) To assist an exporter, a bank in the exportin g country may extend a loan to a foreign buyer to 
finance the purchase of exports. This  arrangement allows the buyer extended time to pay the seller under the 
contract ( Buyer's Credit ). 
Trade Finance facilities provided by banks to impor ters and exporters can include the provision of: 
 
• Working capital loans or overdraft,  
• Issuing performance, bid and advance payment bonds, 
• Opening letters of credit (L/Cs), 
• Accepting and confirming L/Cs, 
• Discounting L/Cs. 
 
Such facilities are usually denominated in hard currenci es, with the possible exception of the working capital 
loan or overdraft. 
 
B.) Other forms of financing:  
 
Without the intermediary role of banks, companies may also use other instruments to finance their transactions, including: 
 
• Bills of Exchange, by which a seller can get an undertaking from the buyer to pay at a specified future 
date, as well as 
• Promissory Notes, in which a buyer promises to pay at a future date, but which offer less legal 
protection than Bills of Exchange. 
 
 a.) The exporting company may extend credit directly to the buyer in the importing country, again to 
allow the buyer time to pay the seller under the contract ( Supplier's Credit ). 
 b.) The exporter sells receivables without recourse at a discounted rate to a specialized house, the 
receivables becoming a tradable security ( Forfaiting ).  
 c.) Exchange of valued goods at an agreed value without cash or credit terms, involving a barter-
exchange, counterpurch ase, or buy-back ( Countertrade ). 
Sources:  UNESCAP (2002), "Tra de Facilitation Handbook for the greater Mekong Subregion", Bangkok 
  ITC (1998), “The financing of exports – A guide fo r developing and transition economies”, Geneva   
  Asian Development Bank. WT/WGTDF/W/23 
Page 6  
 
 
  
Box 2  
 
Export and Trade Credit Insurance  
 
In addition to securing adequate finance, exporters face a number of additional ri sks including non payment 
by the buyer or importer for insolvency or political reas ons, as well as foreign exchange fluctuation (FX) 
risk. In developed countries and some developing countries, insurance provided by ex port credit agencies 
(ECAs) on behalf of the state (offici al export credit) or by private sect or insurance companies can cover non 
payment risks, while banks can help with other risks. 
  
i.) Non Payment risk:  
- ECAs and insurance companies offer short-term e xport or trade credit insurance at market rates 
covering both pre- and post-shipment periods. These insurance contracts cover the risk of insolvency of the 
buyer.  
- Many of these insurers can also offer insu rance or guarantees for medium- and long-term buyer and 
supplier credit transactions, which in OECD member countries should comply with the OECD Agreement. 
While this cover may be of less importance in guaran teeing the maintenance of crucial trade flows during 
short periods of financial crises, such medium and long term export credit is important for developing and least-developed countries needing new and updated technology and capital goods. 
- The cost of insurance is determined both by the terms of the contract (proportion of the exposure 
covered and length of the transaction), as well as the ri sk associated with the insured party. For medium and 
long export credit covered by a participant to the OECD Arrangement, minimum premiums apply. 
- A letter of credit (L/C) issued by an importer’s ba nk is probably the best way for an exporter to 
mitigate non payment risk. However, this does not protect the exporter from failure by the issuing bank to meet its obligations to pay under the L/C. In this cas e the exporter’s bank could be asked to confirm the L/C 
and hence take the risk of the issuing bank.   
 
ii.) Political risk:
 
- Export or trade credit insurance can also cover a variety of political risks, including currency 
inconvertibility and transfer restricti ons, confiscation or expr opriation, import license cancellation, breach of 
contract by a government buyer, and political violence which cause the non payment by a buyer. 
- For long-term buyer credit and project finance tran sactions, political risk insurance (PRI) can play a 
critical role in mobilizing foreign direct investment for developing and least-developed countries. However, 
in the wake of the Asian financial crisis in the 1990’s, 9/11, the collapse of Enron and the economic 
problems currently facing Argentina, it has become mo re difficult for the insurance market to offer PRI for 
the longer tenors and larger amounts needed to support foreign direct investment into developing and least-
developed countries. Because of this, collaboration between official ECAs, multilateral development banks 
and private sector insurance companies has substantially  increased during the past few years and needs to be 
encouraged. 
 
iii.) Foreign Exchange risk:  
- Exchange rate fluctuation risk between major traded currencies can be minimised through a hedging 
operation by taking a reverse position in the forward market or using options (to buy or to sell) foreign 
exchange in the futures market. - These operations are available at a relatively low fee (about 0.3 per cent depending on amount and 
currency) plus the price of the option. But for importers and exporters in developing and least-developed 
countries that do not have freely traded currencies or ef ficient FX markets, these operations can be too costly 
or simply not available. 
 
iv.) Other risk:
 
- Commercial insurance is available to cover freight-related losses for a fraction of 1 per cent of the 
freight value and transportation costs de pending on the risk and destination. 
 
Sources:   International Trade Centre (1998), "Export Credit Insurance and Guarantee Schemes", Geneva,  and 
 Asian Development Bank.   WT/WGTDF/W/23 
 Page 7 
 
 
- second, the scarcity of short-term trade-fi nancing facilities (in particular the opening 
of L/Cs and subsequent confirmation).   Cross border international trade finance for imports became a 
particular problem at the peak of the crisis in Indonesia, where international banks reportedly refused 
to confirm or underwrite L/Cs opened by local bank s because of a general loss of confidence in the 
domestic banking system.  Given the high import content of exports (over 40 per cent in the 
manufacturing sector), Indonesia's growth of exports  was seriously affected by the difficulty of 
financing imported raw materials, spare parts and capital equipment used in its export sectors (WTO 
(1998)).  The financing of exports became an issue for enterprises which bore the exchange rate risk 
or the risk of non payment from their clients.6  
18. Indonesia was not the only country caught up in this  situation.  In Thailand, Korea, Pakistan, 
Argentina and several other emerging economies in  the late 1990's and early 2000's, illiquidity and 
insolvency problems encountered by local banking sy stems made it difficult for local producers to get 
pre- and post-shipment finance, open L/Cs, obt ain advance payment bonds and other forms of 
"domestic" trade financing.  Despite the scarcity of foreign currency and of liquidity in local markets, 
standard theory would indicate that demand for credit emanating from companies with good credit 
ratings should meet supply at a higher price.  In pe riods of extreme crisis, this supply simply did not 
exist in certain countries, indicating market failure.  In light of a general loss of confidence in a local 
banking system, international banks forced up conf irmation fees or inter-bank loan margins, and 
reduced or cancelled "bank limits" as well as "country limits".  In Indonesia, for example, the total 
value of trade finance bank limits fell from US $6 billion, from 400 international banks, to some 
US$1.6 billion, from 50 banks (WT/WGTDF/6). 
C. TRADE FINANCE DURING PERIODS OF INSTABILITY  
19. Statistics on external debt, compiled jointly by  the BIS, IMF, OECD and World Bank show 
that for some countries the stock of outstanding sh ort-term credit limits or lines recovered after the 
crisis, while for some others it has not.  Regarding the first category, it may simply reflect the fact 
that, in absence of a clear system of sovereign debt  restructuring, credit lines had to be rolled over by 
banks – which implies an increase in the cost of borrowing for the countries concerned.  For others, 
such as Indonesia and Argentina, both local and in ternational banks have been unwilling to roll-over 
existing lines of trade-finance without strong guarant ees that they will be repaid at a given maturity, 
i.e. without a wider agreement with debtors that a pr ocess of restructuring of all debts will start.  After 
the crisis, some local banks may still suffer from illiquidity/insolvency, or not feel adequately 
equipped to assess the creditworthiness of importers and exporters.  Internati onal banks are likely to 
have consolidated their exposure to risky market s, and are unwilling to take renewed risks by 
confirming L/Cs or extending other forms of cred it to their correspondent bank relations in those 
markets. 
1. Supply-side failures 
20. Representatives from the staff of the IMF, the WTO, the World Bank, regional development 
banks (ADB, EBRD, IADB), ECAs and private sector credit insurers and banks participated in the 
expert group seminar organized by the IMF in May 2003 .  Most agreed that there had been a failure 
by private markets and other institutions to m eet the demand for cross border and domestic trade 
finance during the Asian and other recent emerging economies crises, despite the low level of risk 
generally involved in such operations.  
21. One area of discussion regarding the Asian crisis is what is now referred to as "herd 
behaviour", reflecting a general withdrawal by re gional or international banks from any type of 
                                                      
6 Spillovers through trade links exist essentially at bilateral or regional level;  with high levels of 
bilateral trade, a financial crisis will negatively affect all other trading partners through loss of competitiveness 
or fall in demand. WT/WGTDF/W/23 
Page 8  
 
activity in emerging markets at the time, regardless of the type of lending and of risk.  Whether herd 
behaviour is irrational or not has been subject to de bate for some time.  To some extent, international 
banks with long experience in the country might be expected to consider also the opportunities arising 
from the situation, and not only the potential losses, in particular when market tightening may place 
them in a favourable situation as competition collaps es.  Profit opportunities may arise, as remaining 
banks select their clients more stringently and are able to adjust rates and charges upwards as they 
face less competitors.  The irrational component of herd behaviour is therefore linked to a 
disproportionate response by lenders, based on risk  aversion and fear of losses rather than on a 
thorough analysis of the potential costs and benef its in staying in the market under new conditions. 
22. Private bank representatives explained that the rapi d withdrawal of their institutions from this 
type of activity was linked to a more general withdrawal from emerging markets at the time, 
regardless of the type of lending.  Many portfolio managers made no distinction between trade finance 
and other forms of short, medium and long-term credit when reducing country exposure, and hence 
lines of credit to the countries hit by crisis.  The concern was to limit overall exposure rather than to 
maintain selective presence on the basis of risk prof iles of clients.  Thus, the provision of trade 
finance stopped, even though it is commonly a relatively low risk (and low profit) area of activity.  
Domestic lenders were too cash-strapped to provide it, while international lenders were too uncertain 
about the continued creditworthiness of their borrowers.   
23. A more structural reason advanced by banks was that global consolidati on in the international 
banking market led to a focus on the most profitable markets and caused lines to smaller or more risky 
countries and their banks to be reduced or cancelled altogether.  At present, only 20 large international 
banks appear to be active in the global trade-fina nce market, but few have restored lines to emerging 
markets to their pre-crisis level.  One factor preven ting this is the slow resolution of unpaid credits in 
certain crisis-stricken countries, as well as the absence of a dis pute resolution mechanism for these 
claims.  
24. The rapid withdrawal of capita l seems to have been abetted by worrying signals from credit 
rating agencies which, after having failed to detect  the onset of the crisis, rapidly and severely 
downgraded the affected countries, thereby contri buting to the herd behaviour of international 
creditors.
7  Recent research confirms that while the rati ngs of credit rating agencies did not adequately 
predict currency crises in emerging markets, conversely the incidence of a financial crisis is correlated 
with a future downgrading.  The reason for this may be related to the fact that the indicators that credit 
rating agencies use to derive their verdict are much  better suited to predict sovereign default on debt 
then a currency crisis.  While these two events have  often coincided in the past, they have been 
increasingly de-coupled since 1994 (Sy (2003)).  
25. In the presence of apparent market failure on the supply-side, participants recognized that 
there was scope for carefully targeted public interv ention, either on a bilateral basis through export 
credit agencies, or regionally/globally with IFIs.  Successful and less successful country experiences 
were reviewed.  The trade financing problem in Kore a was largely dealt with on a bilateral basis, with 
enhanced lines of credit provided by the U.S. Exim bank.  Inter-regional trade within ASEAN is more 
complex, so the trade finance problem in South East  Asia called for a variety of solutions.  The Asian 
Development Bank supported the Expor t Import Bank of Thailand to ra ise US$1 billion of 5-year debt 
to help export related enterprises access much needed  pre- and post-shipment finance.  This solution 
was largely inspired by the successf ul scheme put in place by Bank Indonesia (the Indonesian central 
                                                      
7 The downgrading of individual countr y risk took place in a very short period of time and in an abrupt 
manner. Thailand was downgraded four notches by both Moody's and Standard and Poor's between July 1997 and early 1998, Indonesia five notches by Moody's and six by Standard and Poor's between June 1997 and early 
1998, and the Republic of Korea six notches by Moody's and no less than 10 by Standard and Poor's during the 
same period (Cornford (2000)).  WT/WGTDF/W/23 
 Page 9 
 
 
bank) which had in the early hours of the crisis  deposited US$1 billion in cash with the 10 largest 
international banks stationed in Singapore to guarantee any default on L/Cs issued by local banks.   
26. The EBRD commented on its successful Trad e Facilitation Programme, which can protect 
any international bank against loss as a result of confirming a L/C issued by an approved bank in an EBRD developing member country.  The ADB also explained how its similar programme in Pakistan 
works, but noted that it only covers political risk a nd advised that it was planning to launch within the 
year a more comprehensive regional trade fac ilitation programme modelled on the EBRD program. 
The IFC/World Bank advised that they had just extended to Brazil a US$800 million credit line for trade financing, backed up by derivative instruments (Box 3). 
27. It was agreed that the ad hoc solutions de veloped by regional development banks had 
generally been successful in terms of having suffe red no default or losses, while keeping minimum 
cross-border trade financing available.  Urgent tr ade finance schemes have become more standardized 
among regional development banks, which is a positive development.  However, while now being 
moderately optimistic about their ability to cope with sudden crisis, regiona l development banks and 
ECAs are relatively pessimistic about being able to fully restore stable, liquid private sources of short-
term cross-border trade financing until certain cruc ial issues are resolved.  First, some banks that 
provide cross-border trade finance argue that they  need "preferential creditor" status in debt 
restructuring if they are to return to more ri sky emerging markets.  Second, little progress has been 
achieved in the settlement of existing credit lines (whi ch have been rolled-over since the Asian crisis), 
in particular since the rejection of the Sovereign Debt Restructuring Mechanism proposed by the IMF. 
No-one has offered any plan for the securitization of outstanding trade credits (like the Brady Plan), 
so little hope exists on that side.  In addition,  ECAs from G7 countries indicated that budgetary 
problems had limited their governments' ability to take  on political risk related to trade.  ECAs have 
become increasingly commercially oriented, and he nce subject to the same constraints as private 
banks.  Finally, moral hazard problems arose if IFIs were to intervene systematically, as guarantees of L/Cs could tend to protect only the best issuing banks, thereby creating a risk of "picking winners". 
28. The risk of "picking winners" is heightened by th e fact that the impact of the credit-crunch in 
the crisis country is likely to differ significantly among different kinds of companies.  Some companies, for example, are likely to find alternativ e ways of financing their trading activities.  These 
can include obtaining credit directly from the importing company or making use of the services of a factoring house.  Of course, the former will only be a viable alternative if the importing company 
itself is sufficiently creditworthy, and if the revenu es from the sale of exports are sufficient to cover 
the costs of ongoing production.  For these companie s, a heavy depreciation of the currency is likely 
to prove a competitive advantage.  Other companies,  however, will not be able to take advantage of 
this competitive opportunity.  Small local suppliers  who sell specialized products to international 
buyers on a one-off basis are much less likely to be able to obtain company financing, since they do 
not have an established relationship with their buye rs.  In the absence of trade finance from banks, 
they are unlikely to be able to fulfil their contr acts. The highly differential impact of a crisis on 
various types of companies makes it more difficu lt to design appropriate, selective programmes to 
keep trade finance alive.  A scheme to provide trad e financing that is too indiscriminate may end up 
subsidizing a small group of large in ternational banks as well as those la rge companies in the crisis-hit 
country which would have had access to finance anyw ay.  On the other hand, an intervention whose 
selective targeting places high administrative burdens  on customers may miss its target.  Regional 
development banks put a lot of effort into designing  appropriate and selective instruments for the most 
affected actors, applying principles of non-discrimination and market conditions. 
2. Demand-side constraints 
29. While lack of trade-finance was a frequent source of complaint during the Asian financial 
crisis, which saw widespread bank failures and runs on the currencies of the five affected countries, 
Stephens (1998) points out that during the initial period of a crisis the problem may be one of lack of WT/WGTDF/W/23 
Page 10  
 
demand for trade credit as well as l ack of supply.  When the withdrawal of funds by foreign investors 
causes the exchange-rate to fall rapidly, overshootin g any conceivable long-term equilibrium, very 
few companies want to purchase imports in fore ign currency since they cannot know what the 
exchange-rate will be when the goods arrive or when  the buyer or supply credit is repaid.  While it is 
technically possible to insure ag ainst such exchange-rate risks th rough hedging, for companies in 
developing and least-developed countries that do not ha ve freely traded currencies or efficient foreign 
exchange markets these operations can be too costly or simply not available.   
30. Given general uncertainty about market-conditio ns, companies may also not be able to 
anticipate the level of demand for their products, si nce domestic demand will have contracted, while 
international demand – despite the boost from a more competitive exchange-rate – may suffer from 
financial contagion and second-order effects due to lower export-revenues to the crisis country.  Not 
only will many local banks not be able to afford to supply working capital or trade credit due to 
insolvency, but they then also face large obstacl es in appraising the creditworthiness of companies 
under conditions of uncertainty.  This is particular ly the case for companies w ith high exposures to 
foreign short-term debt.  They will also be unw illing to open L/Cs in foreign currencies while the 
exchange-rate is still depreciating rapidly.  Even if domestic banks do issue L/Cs, foreign banks may 
not be willing to confirm them, beca use of uncertainty about the solvency of local banks or certain 
political risks that could affect payment.  Nor ar e international banks likely to consider providing 
domestic trade-credit, since they may not know en ough about local market conditions as a result of 
not having a correspondent bank relations hip or actual presence in the country. 
31. The drying up of trade credit does not necessarily mean that companies will run short of cash 
or credit.  Trade credit can also be  provided by one company to anot her (its supplier or customer).  
Relevant instruments are described in Box 1.  Su ch credit may actually prove less expensive as it 
avoids the cost of intermediation and may provide for discounts to attract buyers. 
32. Recent research (Choi and Kim (2003)) using US data seems to corroborate this, as it 
indicates that private companies are often in a pos ition to substitute for ba nks in providing necessary 
trade finance in times of crisis.  Ev idence found in this paper has neverthe less to be used with care, as 
the market in the United States is far more diverse and liquid than anywhere in developing countries.  
Active and short-term cash and treasury management  by companies allows them, through financial 
engineering, to act as lenders in the international trade markets.  Some large US companies have even 
set up financial subsidiaries which provi de finance for projects and trade. 
33. One current limitation for developing countries to develop a company-based credit market, is 
the relatively limited number of companies with suff icient working capital that are able to sustain 
their operations until payment, particularly in the case  of large contracts.  Secondly, foreign exchange 
regulation may prevent local companies from enga ging in short-term credit operations with non-
residents, or repatriation obligations may prevent them from having sufficient working capital in their 
foreign-exchange accounts that they are authorized to hold for international trade purposes.  The Choi 
and Kim paper tends to show that, while US firms increase both accounts receivable and accounts 
payable in times of tight monetary policy (tight liq uidity), smaller firms tend to extend trade credit 
proportionally more than large firms.  This may be  very unlikely in the case of developing countries, 
since they either lack the necessar y working capital or could hardly extend credit in foreign exchange 
in times of large devaluation unless they have liqui d foreign exchange balances  in foreign banks.  In 
addition, the characteristics of the Asian financia l crisis have prevented a company-based credit 
market from substituting for the lack of bank-based tr ade credit.  In countries such as Indonesia, banks 
had actually been set up by industrial conglomerates in  need of credit to finance the expansion of their 
international business.  The collapse of their banks, which were hit by a balance-sheet mis-match after 
the fall of the rupiah against the dollar (thereby  creating a strong imbalance between dollar liabilities 
and assets in rupiah) resulted in the bankruptcy of certain of these conglomerates (WTO, 1998).   
  WT/WGTDF/W/23 
 Page 11 
 
 
 Box 3  
 
Selected ad-hoc Programs by Public Institutions to make Trade Financing and Guarantees available to 
Emerging Economies  
 
 
a.) Indonesia:   - Bank Indonesia deposits a $1 billion collateral fund offshore in mid-1998 to encourage  
    acceptance of letters of cred it issued by Indonesian banks.  
  - The Government also insured trade-financing extended by Indonesian banks in late 1998  
    using budget funds, but little advantage was taken of the facility.  
  - Creation of a $1 million short-term credit gu arantee program in collaboration with foreign  
    export credit agencies.  
 b.) Thailand:
 - In 1998, the Asian Development Bank extended a $1 billion export financing facility to  
    Thailand. This first export financing facility  of the ADB consisted of two 5-year loans to  
    the Thai Export-Import Bank: a $50 million loan from the ADB, and a $950 million       syndicated loan fully underwritten and arranged by 10 international banks, and partially  
    guaranteed by the ADB. Both loans were lent directly or through selected Thai  
    intermediaries to provide pre- and  post-shipment financing to Thai exporters.    - Initially, local banks were not keen to intermediate the risk. Draw down of the fund was  
    modest, since the liquidity of the banking system improved faster than expected 
    (WT/WGTF/W/6).  
c.) Pakistan:
 - In 2000, the Asian Development Bank made available a $150 million Political Risk  
    Guarantee Facility to international ba nks confirming Pakistani letters of credit.  
  - The facility provided open access to any international bank, covering only political risks,  
    while leaving commercial ri sks to the banks (WT/WGTF/W/6). 
 d.) S. Korea:
 - The Export-Import Bank of the United States in 1998 provided short-term insurance for    
    more than $1 billion of U.S. export sales to South Korea.  
 
e.) Brazil:  - In August 2002, the International Finance Corporation provided separate credit lines and  
  syndicated loans to banks, e.g. $200 million to Banco Itau and $275 million to Unibanco,    so as to help Brazil address the shortfall in commercial credit. The money was to be lent to  
    private sector entities to fund  Brazilian trade-related activities.  
  - In March 2003, the Inter-American Development Bank extended a loan of  $110 million to      Banco Bradesco as part of the joint IDB-IF C initiative to restore access to trade finance.    
    The loan will fund pre- and post-shipment financing for Brazilian companies and their  
    subsidiaries abroad.   
d.) E. Europe:
  - In 1999, the European Bank for Reconstruction and Development (EBRD) launched its  
    Trade Facilitation Programme, which has so far guaranteed and financed more than 1,300  
    foreign trade transactions in central and eastern Europe and the Commonwealth of  
    Independent States, totalling more than 900 million Euros.  
 
Sources: U.S. Department of State (2003), "Country Commercial Guide - In donesia", US Embassy,Jakarta, Indonesia 
 Websites: the Asian De velopment Bank (www.adb.org), the U.S.  Export-Import Bank (www.exim.gov), the 
International Finance Corporation ( www.ifc.org), the Inter-American Deve lopment Bank (www.iadb.org) and the 
European Bank for Reconstructio n and Development (www.ebrd.org) WT/WGTDF/W/23 
Page 12  
 
34. The plight of those dependent on bank finance in times of crises is  heightened by the fact that 
major buyers in the biggest export markets of  emerging economies are increasingly demanding 
contracts on an open account basis.  Suppliers will ha ve to secure their own financing if they are to 
offer open account financing to thei r importers.  As competition over e xport contracts is often fought 
on the basis of the financing terms offered, a financia l crisis may not only disrupt the flow of trade, 
but also realign the competitive positions of companies in the long run. 
3. Possible long-term solutions on the financial side 
(a) Improving financial stability in individual markets 
35. As indicated in the IMF paper (cited in footnot e 1), in the medium-term part of the solution 
lies in crisis prevention, including the pursuit of  sound macroeconomic policies fostering financial 
stability and investor confidence, the development by countries and international organizations of 
crisis prevention tools, such as early warning i ndicators, and the adherence by member countries to 
internationally accepted codes and standards, such as  those promoted by the FSAP (Financial Stability 
Assessment Programme).  In situations of crisis, the limited use of international reserves as a guarantee for trade finance, as done by Bank Indon esia, has been acknowledged, although this can 
only be a temporary solution.   
(b) Developing modern market techniques and institutions in developing countries 
36. Among other solutions, securitization of lending an d the hedging of exchange rate and other 
risks appear to be good market-based solutions, as indi cated in the IMF paper.  However, it must be 
acknowledged that the securitization of lending requir es modern markets and instruments that are not 
necessarily available to low-income countries.  Also, currency hedging is only available in 
international markets for transactions of fairly larg e amounts, at relatively high costs for traders, and 
often only for widely traded currencies. 
37. Of the US$6,000 billion of trade transactions ca rried out each year world-wide, public sector 
institutions such as ECAs and IFIs can undertake to finance or insure no more than a small share.  
While the public sector may need to take on a more ac tive role than in the past, its interventions can 
be no more than "surgical" so as to restore confid ence in markets and maintain the minimum volumes 
of trade flows that are needed for private sector fina ncial institutions to remain in this segment of the 
market.  So far, the long-term tre nd has been rather in the opposite direction, particularly through the 
reduction of the flow of publicly guaranteed-credit, so that the share of tr ade financed by public 
institutions has declined.  Ad hoc solutions in pe riods of extreme crises can only be temporary and 
substitute minimally for market failure, in particular  when large swings in exchange rate paralyse all 
trade and related financing.  Nonetheless, intern ational rules need to accommodate these short-term 
solutions, provided that the solutions respect ag reed principles of international trade law (non-
discrimination, transparency of access, etc.), so  as to support those international and domestic 
operators that continue to provide the necessary sources of finance in the most difficult times. 
(c) Eliminating market imperfections (tra nsparency, symmetry of information) 
38. Some participants representing private sector  financial institutions at the IMF meeting 
suggested preventive approaches that would invo lve the generation of symmetric, credit-risk 
information at the country and company level which could be used in selecting who might be granted 
a government or central bank guarantee.
8  This, they felt, would provide them with a clearer view of 
who to provide international or domestic trade cred it to during times of crisis.  They suggested that 
governments, along with international agencies, defi ne in advance a list of "strategic enterprises", 
                                                      
8 See in particular Mulder and Sheikh (2003), Banks, Trade Finance and Financial Distress, presented 
at the IMF seminar on 15 May 2003.  WT/WGTDF/W/23 
 Page 13 
 
 
which should have excellent international credit ratings, on which they would extend guarantees in 
exchange for international bank su pport.  However, the potential problems of moral hazard involved 
in such an approach were recognized.   
(d) Regulatory aspects 
39. Apart from local prudential rules, regulations a nd guidelines that apply to trade financing are 
set internationally by different international institutions including the Bank for International 
Settlements (BASLE II rules), the WTO (ASCM), and the OECD Arrangement on Guidelines for 
Officially Supported Export Credits.  Work is curren tly underway, for example in the OECD which is 
reviewing the parameters regarding the calculation of  the formulas applicable to the subsidy element. 
(e) Need for a lender of last resort ?   
40. Some regional development banks  believe that the trade financing programmes described in 
this paper provide for a practical and partial long-te rm solution to the problems of the availability of 
trade finance in periods of crisis.  However, b ecause those programmes take only a part of the normal 
bank risks and are deemed to apply in crisis situa tions, their contribution to overall trade is bound to 
remain relatively small.  Some of them have rais ed the question of whether a "lender of last resort" 
may be needed, either the regiona l banks themselves or a multilatera l institution, in so far as this 
comes as part of an overall macroeconomic progra mme and restructuring of the financial sector.9 
(f) Need for a process 
41. As indicated throughout this paper, the solution to the trade finance problem does not rely on 
a single programme or institution.  It involves a wide  circle of participants, public and private, at 
local, regional and international level.  These particip ants need to work together and create a process, 
by which each institution responsible would interv ene and bring an element of the confidence and 
support that the private sector needs to continue providing the bulk of the necessary financing.  
Regional development banks and EC As can all provide emergency financing, possibly also in co-
financing with private institutions or by guarant eeing private finance.  At the same time, IFIs 
providing support for macroeconomic reforms need to take into account the trade finance issue as it is 
a basis for the recovery of trade in a crisis c ountry. From a regulatory point of view, a good balance 
should be struck between the need not to discourag e the expansion of short-term trade financing and 
at the same time avoid uncompetitive behaviour  or excessive exposure to risky markets. 
III. THE WTO AND TRADE FINANCING 
42. The expert group discussions suggested two areas in which the WTO may have a relevant role 
to play on the issue of trade financing. 
43. First, the supply of trade financing falls unde r financial services as defined in the GATS.  
Members' commitments determine the degree of co mpetition allowed for the provision of this service 
at the country level.  Generally speaking, the larg er the number of operators in the market, the more 
liquid it will be, resulting in lower costs and less  likelihood that all financial intermediaries will 
collapse at once.  WTO Members may have an inter est in promoting competition in the local market 
for trade financing by allowing foreign operators  to establish a commercial presence (Mode 3) or 
provide such services cross-border (Mode 1).  Commitments in GATS schedules help generate a 
climate of predictability and legal certainty for the provision of trade-financi ng by foreign banks.  It 
allows Members also to benefit from the experience of  large international banks active in this area of 
finance, and provides them with a substitute for local ECAs.  
                                                      
9 Question raised by experts from the EBRD in particular. WT/WGTDF/W/23 
Page 14  
 
44. GATS commitments can be formulated so as to target trade-financing services in particular, 
within the broad category of "all types of lending"  and the narrower one of "financing of commercial 
activities".  Ninety WTO Members currently have GATS commitments on lending activities in 
general, including trade-financing.  Most of these commitments have been made under Mode 3  under 
which limitations may be placed on, for example, foreign ownership or on the number of foreign 
service providers.  Thirty-eight Members have made commitments on lending activities in general 
under Mode 1.  At the time of the Asian financial cr isis, some Members liberalized their restrictions 
on trade in financial services shortly after maki ng commitments under the Fifth Protocol of the 
Agreement on Trade in Financial Services, but th ey have not yet reflected this in their GATS 
schedules. 
45. There is no impediment to defining trade-fina ncing activities specifically and narrowly in a 
GATS schedule.  One example of a Member that has u sed its own terminology in this regard is Chile, 
which has made a GATS commitment in "credit granti ng, defined as current loans, loans in letters of 
credit, issue and negotiation of letters of credit for imports and exports, i ssue and confirmation of 
stand-by letters of credit".  Similarly, Moro cco defines trade-financing as "lending to finance 
commercial transactions with Morocco".  Other fina ncial services linked to trade-financing can also 
be considered for similar treatment, for example cr edit reference analysis, and the insurance of cargo 
or goods in transit which is part of the transaction th at is made through a letter of credit.  It was noted 
in the expert group discussion that although such GATS commitments may not prevent foreign banks 
from cutting credit lines in periods of crisis, they foster local, regional and international financial 
activity and lead to stronger and more resilient ma rkets that can encourage foreign banks to remain 
engaged. 
46. The contribution of WTO membership, and of  commitments under the Agreement on Trade 
in Financial Services, is seen more broadly also  in the expert group as helping Members to build 
modern, more efficient, financial markets with hi gher standards of management and regulation that 
are more resilient in times of crisis.  For exam ple, certain emergency programmes offered by export 
credit agencies cannot be activated in the absence of local infrastructural support, such as a proper 
legal environment, accounting standards, and in ternational commitments with respect to the 
enforcement of debt obligations.  Nor can ne w Basle standards of banking supervision be 
implemented without this infrastructure.  In additio n, some of the technical proposals made in the IMF 
report to favour the participation of private banks, such as the securitization of trade-financing claims, 
are posited on the existence of a relativ ely liberal financial environment.  
47. Second, the disciplines of the ASCM apply to subsidies provided through the financial 
system, including the provision by a government (o r a central bank) of export credit insurance or 
guarantee programmes where the premium charged is in adequate to cover the costs and losses of the 
programme, or if export credits are provided at below the government's cost of borrowing.  The 
ASCM provides for a minimum set of agreed principles:  
 
     WT/WGTDF/W/23 
 Page 15 
 
 
• It prohibits subsidies that are contingent up on export performance, and export credits, guarantees 
and insurance may under certain circumstances fall within the scope of that prohibition.10 
 
• Under item (k) second paragraph of Annex I, export credit practices that are in conformity with 
the interest rate provisions of the OECD Arrange ment on Officially Supported Export Credits are 
not prohibited.11 Given that the OECD Arrangement app lies only to medium and long-term credit 
(2 years or more), and that the main concern on trade finance discussed in this paper related to 
short-term financing, however,  this provision is of limited relevance to the problem under 
consideration here.  
 
• Least-developed country Members are exempted fro m the prohibition on export subsidies, as are 
certain other developing country Members listed in Annex VII(b) to the Agreement until their 
GNP per capita reaches US$1000 (in 1990 cons tant dollars) for three consecutive years.12  
 
48. Although the ASCM is not clear in all respects,  certain observations can be made regarding 
the risk that measures taken to address the probl ems identified in this paper could be deemed 
inconsistent with it.  First, the Agreement prohibits only two types of  subsidies: those contingent upon 
exportation, and those contingent upon the use of domestic over imported goods .  Thus, schemes that 
deal only with the financing of essential imported input s, that are available irrespective of whether the 
imported inputs are for use for the production of goods for export or for domestic consumption, and 
that do not discriminate with respect to the origin of the inputs, are not likely to run afoul of the 
prohibitions found in the ASCM.  Second, some Me mbers seem to be of the view that multilateral 
development assistance is not within the scope of Article 1 of the ASCM.  Thus, schemes that are 
funded entirely by multilateral institutions are less lik ely to give rise to dispute settlement challenges 
in the WTO, and no Member has challenged them to date.  Also, the ASCM is in general drafted to 
address situations where a WTO Member is subsidiz ing the production or sale of its own goods, and it 
is not entirely clear whether or not the Agreement applies where the subsidizing entity is not within 
the territory of the Member whose goods are allegedl y being subsidized.  Finally, and as noted above, 
a significant number of low income developing country Members are not currently subject to the 
WTO prohibition on export subsidies.  For these Member s, there is substantially greater flexibility to 
address the problems identified in this paper, incl uding through measures that are oriented towards 
problems of trade financing faced by exporters.   
                                                      
10 Under Article 1 of the ASCM, a subsidy is defined as (a) a financial contribution (b) by a 
government of public body within the territory of a Member (c) which confers a benefit. Export credit, 
guarantee and insurance schemes involve “financial contributions”, and central banks, ECAs and other 
government-owned or controlled entities that provide such schemes likely constitute “governments” or “public bodies”.  While the existence of “benefit” will depe nd upon the terms and conditions of the financial 
contribution provided, export credit, guarantee and insura nce schemes likely confer a “benefit” in cases where 
they place the recipient in a more favo urable situation than it would be if it needed to rely on the marketplace.  
As for export contingency, this will almost  always be satisfied in the case of export  credits, guarantees and 
insurance. Article 3 of the SCM Agreement, however, re fers to Annex I of the ASCM, the Illustrative List of 
Export Subsidies. Relevant for trade finance are sections (j) and (k), first paragraph, pertaining to export credit guarantee and insurance schemes, and to export credit schemes, respectively.  In general terms, item (j) provides 
that export credit guarantee and in surance schemes are prohibited export subsidies where premiums are 
inadequate to cover long-term operating costs and losses,  while item (k) first paragraph provides that export 
credits are prohibited export subsidies where, inter alia , they are provided at less than  the government’s cost of 
borrowing.  It is not clear whether items (j) and (k) first paragraph can be used to establish that a scheme, which does not satisfy the conditions therein, is not prohibited, even in cases where there is a prohibited export subsidy 
within the meaning of Articles 1 and 3. 
11 This is the case whether or not the WTO Member is a participant to the Arrangement, so developing 
country Members not participants to the Arrangement may also invoke the safe haven. 
12 Exports benefiting from export subsidies could however be subject  to countervailing measures or to 
dispute settlement claims alleging adverse effects, where certain conditions are met. WT/WGTDF/W/23 
Page 16  
 
49. At the expert group meeting, the Director-General 
13suggested that when circumstances arise 
in which the international financial community tak es coordinated action to provide special financial 
support to maintain trade flows in periods of crisis, he would bring this promptly to the attention of 
WTO Members through the General Council.  In doi ng this, he would consult closely with the 
Managing Director of the IMF.  In the interest of greater coherence between trade and financial 
policies, it would seem that such circumstances should be taken duly into account by WTO Members 
when making trade policy decisions, and every effort  should be made to keep markets open to exports 
from crisis-hit economies.  
                                                      
13 see in particular WT/WGTDF/W/22, paragraph 24.  WT/WGTDF/W/23 
 Page 17 
 
 
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