RESTRICTED  
  
WT/WGTDF/M/ 40 
 
8 December 2020  
(20-8837) Page: 1/2 
Working Group on Trade, Debt and Finance   
 
 
REPORT OF THE MEETING OF 10 NOVEMBER  2020  
1.1.  The forty -second  meeting of the Working Group on Trade, Debt and Finance (WGTDF) was held 
on 10 November  2020 under the Chairmanship of Ambassador Rashidi Said (Malaysia). The 
Chairman  proposed  that, as Members had agreed at the last meeting, the Working Group on Trade, 
Debt and Finance would continue to discuss the issue of trade finance and SMEs  under agen da 
item 2.A. To support the discussion, the Secretariat circulated an update on the market situation, 
in WTO Document WT/WGTDF/97. He also invited two trade finance specialists , to complement 
Secretariat briefing s on current challenges in global trade fina nce markets. Under agenda item 2. B, 
he suggested having  an informal discussion on any the topics that Members would like to discuss in 
future meetings. The agenda was adopted .  
1.2.  The Chairman  reminded Members that he had concluded the 2 July meeting with a promise to 
invite a representative of a multilateral development agency and a representative of the private 
sector, for them to provide their perspectives and diagnosis, with real life examples. He introduced  
Mr. Rudolf Putz, the Head o f the Trade Finance Facilitation Program at the European Bank for 
Reconstruction and Development (EBRD); and Mr. Michael Vrontamitis, the co -Chair of the 
Working  Group on Digitalisation in Trade Finance, at the International Chamber of Commerce. 
He asked t he Secretariat to briefly present Document WT/WGTDF/97.  
1.3.   The Secretariat  summarized Document WT/WGTDF/97. In view of the factual elements 
contained in this document, the conclusion was that the trade finance situation was likely to remain 
challenging in the months to come, and well into 2021 . A combination of increased commercial risk 
and deteriorated sovereign risk was deter ring many private sector banks from expand ing financing. 
Trade credit insurers also warn ed that potential losses and claims had been d elayed, thanks to 
government programmes. However, such losses are likely to appear at a later stage.  
1.4.  In his presentation, the Representative of the EBRD  indicated that the COVID -19 pandemic 
represented  the greatest disruption to global economic activity si nce the 2008 -09 crisis, and an 
unprecedented challenge to the EBRD and its regions . Several EBRD  economies are highly integrated 
into global supply chains, especially ac ross central and eastern Europe and  Central Asia . 
Furthermore, economies with h igh curr ent account deficits are particularly at risk, including Lebanon, 
Montenegro and Mongolia.  While the COVID -19 crisis ha s caused significant  disruption s to existing 
supply chains (through temporary plant closures, retail  lockdowns and depressed demand , as well 
as through border closures and various import  and export bans) , the av ailability of trade finance  has 
shrunk even faster , with the risk appetite of confirming banks being  very quickly  reduced , especially 
for emergin g markets.    
1.5.  Importers and exporters  have to use new and sometimes more complex supply routes  and 
modes of transportation. As a result, financing periods for the trade cycle ha ve become longer, 
importers ha ve to keep high er stocks, and foreign exporters , previous ly paid on open account , have 
to revert to more secure modes of payment , such as document ary credits, hence increasing the 
demand for trade finance. Many importers and exporters are also request ing extensions of 
guarantees on tenors of payment, perf ormance bonds and cash advances , in order to respond to 
this problem. To make matters worse, the supply  of commercial trade finance ha s diminished due 
to the rapid deterioration of the business climate a nd risk outlook.  
1.6.  Since many foreign commercial banks ha ve reduced their trade finance facilities for issuing 
banks across the EBRD regions , the demand for support from the EBRD 's Trade Facilitation 
Programme ( "TFP") has surged . In January -August 2020, the TFP ha d already supported the 
financ ing of a new record volume of foreign trade in excess of EUR 2 billion. The EBRD  expect s such 
high demand to be sustained for at least another 12 to 18 months.  As a result, t he WT/WGTDF/M/ 40 
 
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 EBRD  Board  of Directors ha s increased the maximum limit s of the trade facilitat ion program from 
EUR 2 billion to EUR 3 billion , to be  made  available  at any point in time. Such an increase help s 
support imports of critical goods into the 30 economies where the EBRD has invest ments , by issuing 
guarantees against the payment risk involv ed in such transactions. It only provide s support to trade 
transactions in challenging countries in which foreign private banks refuse to assume risk. The 
Representative of the EBRD provided examples of transactions supported by his institution.  The 
EBRD extended tenors of its guarantees in support of the import of foodstuffs from Kazakhstan to 
Uzbekistan, where shipments had been delayed due to the coronavirus outbreak. The Bank 
supported imports of medical supplies into Lebanon from  Italy and medical equipment into Greece 
from Germany.  
1.7.  The representative of the International Chamber of Commerce  (ICC) said that ICC bank survey s 
indicate that trade finance supply is currently 20% down year -on-year, with several banks exiting 
the market , some as a result of fraud, some in refocusing their businesses on larger corporates  
where risk profile s are better. He emphasised the need to move forward on the digitisation of trade 
finance . During the early stages of the pandemic, missing  bills of lad ing, inspection certificates, and 
port clearance led  to delays  in trade and trade finance transactions . This demand for e -solutions 
increased , such as "signatures by email " and "e-bills of ladin g". This period illustrated the need for 
business to move towa rds digitisation, in accordance with the proposals by the 
International  Chamber of Commerce. His second observation was about liquidity and risk. At the 
height of the crisis, there was a shortage of liquidity, which was thus reserved for the best clients, 
at a time when the cost of liquidity  was increasing . One saw a positive policy response on liquidity , 
and the introduction of guarantee schemes for insurers and  banks. However, trade credit insurers 
were still reducing coverage on buyer 's risk. A third observation was that , in this crisis, supply chain 
and receivable finance played a very important role in keeping working capital flowing through  the 
value chain. More could be done by Governments to support this form of finance.  One idea was to 
guarantee/insure  schemes for receivables finance. He also argued in favour of the establishment of 
regulatory framework s to encourage large buyers to accept valid receivables and pay on time , in 
line with the United  Nations  Convention on the Assignment of Rece ivables.  
1.8.  The Chairman  thanked the two speakers for their presentations. He opened the floor to remarks 
and comments from Members.  
1.9.  The Representative of Canada  thanked the experts  for their contributions , which reflected the 
difficulties observed by her de legations, notably th ose affecting small and medium -sized enterprises.  
1.10.   In the absence of further remarks by Members, the Chairman  suggested that, as confirmed 
by the EBRD representatives, several WTO Members s aw their trade opportunities held back by 
severe shortages of trade finance in the current period. A temporary exclusion from the financial 
system could also have negative consequences on  their inclusion in the trading system. This  was 
why trade finance matt ered. Hence, he thanked the EBRD  for their efforts , as well as those from all 
multilateral development institutions currently supporting trade finance. The efforts of the ICC to 
increase digitization in trade finance , offers promising means of simplify ing trade finance supply, 
particularly in times of crisis. He also understood that current strains on trade finance supply would 
last longer than initially  expected . Therefore, he thought that the WTO Working Group on Trade, 
Debt and Finance should continue to keep the situation under review, before reporting to the 
Ministerial Conference next year.  He asked whether, according to Item 2.B of the agenda, there had 
been any request s by Members  for making new submission s on other topics covered by the WGTDF. 
This was not the case. Therefore, he presumed that trade finance would remain the main topic of 
work in the WGTDF 's agenda.  
1.11.   The Representative of the United States  indicated that the work of the Working Group on 
Trade, Debt and Finance should remain Member -driven . His delegation 's view was that the 
Working  Group should meet on the basis of : Members ' requests for agenda items ; Members ' 
submissions to the Working Group ; and Members ' requests, agreed by consensus, for information 
and analysis from experts and the Secretariat.  
1.12.   The Chairman  took note  of this statement. There was no other statement by any other 
member. W ith this, he closed  the meeting.   
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