RESTRICTED  
  
WT/WGTDF/M/32  
 
14 July 2016  
(16-3779)  Page: 1/10  
Working Group on Trade, Debt and Finance   
 
 REPORT OF THE MEETING OF 31 MAY 2016 
The thirty-third meeting of the Working Group on  Trade, Debt and Finance (WGTDF) was held on 
31 May 2016 under the Chairmanship of Amba ssador Atanas Paparisov (Bulgaria). In his 
introductory remarks, the Chairman detailed the proposed agenda for the meeting, contained in 
WTO/AIR/W/3. Under point one, trade finance, it was proposed to discuss and react to the 
Director-General's proposals, laid out in his document "Trade Finance and SMEs", circulated in 
advance to Members. Experts from the expert group on trade finance had also been invited by the 
Chair, respectively from the World Bank's International Financial Corporation (IFC) and the International Chamber of Commerce (ICC), to answer questions that Members might have on issues discussed at the recent expert group, as summarized in WTO Document WT/WGTDF/W/81. 
Under point two of the agenda, it was proposed to have an informal discussion on the topics that 
Members would like to address in future meetings, as suggested by the conclusions of the WGTDF Annual Report for 2015. Given timing of the Director-General's presentation, the Chair 
suggested to invert the order of the proposed agenda, taking up point two before point one. 
The Working Group agreed to inverse the order of  the proposed points and adopted the agenda. 
1  AGENDA ITEM I: INFORMAL DISCUSSION ON TOPICS THAT MEMBERS WOULD LIKE TO 
ADDRESS IN FUTURE MEETINGS 
1.1.  The Chairman recalled that, in accordance with the conclusions reached by Members in their 
Annual Report for 2015, Members had shown interest  in "continuing the discussion on exchange 
rates and trade, trade finance, and were prepared to positively consider any other topic presented 
by Members in the form of a specific contribution  falling within the realm of the Working Group's 
mandate". 
1.2.  The Representative of Brazil said that hi s delegation was still interested in examining the 
relationship between exchange rates and trade. As a proof of it, its delegation had circulated the 
paper (WT/WGTDF/W/80) reflecting the oral intervention made at the meeting of the Working Group in September 2015. The delegation of Brazil was still reflecting on how and when 
to pursue this issue. 
1.3.  The Representative of Colombia was intere sted in submitting a contribution about issues 
surrounding illicit trade, including how the trade system was being used and abused to channel 
illicit products and launder money, thereby fuelling drug trade and terrorism. Colombia had been 
trying to integrate this item in the organization’s work program, and would be interested in 
presenting a proposal on this topic in the Working Group for consideration. 
1.4.  The Representative of Canada said that his delegation was interested in maintaining and 
strengthening the coherence mandate between the WTO, the International Monetary Fund (IMF) 
and the World Bank. For example, the IMF had been  making presentations in recent years on the 
progress of multilateral surveillance, something that his delegation had been supportive of. His 
delegation was interested in having the IMF and World Bank continue to present on various 
aspects of their work. The Working Group could t hus examine how such work overlapped with the 
work and the mandate of the Working Group. 
1.5.  The Representative of India took note of  the statements by other delegations and looked 
forward to examining such new submissions with an open mind, while reminding to be mindful of 
the mandate of the working group. WT/WGTDF/M/32 
 
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  1.6.  The Representative of Benin said, on behalf of the Least Developed Countries' (LDC) Group, 
that the LDCs accorded much importance to the work of the Working Group on Trade, Debt and 
Finance. By the next meeting, he hoped that the LDC Group would be in a position to make a submission that would be both targeted and cons istent with the mandate of the Working Group. 
He intended to consult within the LDC Group for this purpose. 
1.7.  In summary, the Chairman noted that a number of delegations intended to make 
submissions to the Group, in areas of exchange ra tes and trade, illicit commerce, and trade, debt 
and finance issues related to the interest of LDCs. some delegations had underlined the need for 
the submissions to fall within the realm of the Working Group's mandate. It would be up to Members to decide on this point when the su bmissions are made available. The Chairman 
suggested that new proposals be submitted sufficient ly in advance so as to allow other delegations 
to analyse them in time for a proper discussion. 
2  AGENDA ITEM 2: TRADE FINANCE – PRESENTATION BY THE DIRECTOR-GENERAL AND 
DISCUSSION BASED ON THE REPORT OF  THE EXPERT GROUP (WT/WGTDF/W/81) 
2.1.  The Chairman introduced this agenda item with a few remarks. In 2015, Members had held a 
seminar on the challenges met by many countries in obtaining trade finance. The Working Group 
had invited the Director-General to act by way of increased advocacy. The Director-General had 
recently announced proposals, and had agreed to present them to Members at this meeting. Since 
the Director-General was expected somewhat later,  the Chairman suggested that the dialogue with 
the other guests be opened. He introduced Mr. Alexander Malaket, from the International Chamber of Commerce (ICC), Banking Commission, and Mr . Shezhad Sharjeel, from the World Bank's 
International Financial Corporation (IFC). 
2.2.  The Chairman asked a question about the impact of bank's capital requirements on the 
supply of trade finance to small and medium-sized  enterprises (SMEs). The representative of the 
ICC agreed that, while the banking sector had a tendency to underserve SMEs in the current 
post-crisis environment, the awareness of this issue had been growing among banks. However, 
banks had also been under pressure to meet ne w prudential requirements, which had made them 
more selective in the choice of their customers. At the present moment, there was too much 
liquidity "chasing" too few clients.  
2.3.  The representative of the IFC said that SMEs were the prime beneficiaries of IFC programs, 
notably in emerging market economies. The IFC was supporting SME financing in many ways, 
including by helping them to access trade finance. In some countries, supporting SMEs was made 
more difficult by the absence of basic lending infr astructures, such as credit bureau and company 
registries. Lack of understanding by SMEs of le nding products available to them was also an 
obstacle to better support.  
2.4.  The Representative of the United States asked whether any new relevant economic or 
financial developments had taken place since the expert group on trade finance had last met. The 
representative of IFC said that there had not been any major changes. The fundamental challenge 
affecting trade finance markets was the persistence of trade financing gaps, the exit of some global banks from certain core markets in the developing world, and more recently issues related to the fall in commodity prices. The representa tive of the ICC highlighted the role of the 
B20 process in addressing trade finance issues at the global level. He presented features of the 
newly-created ICC trade finance Academy. He shared  the analysis made by the WTO in the recent 
Director-General's publication, "Trade Finance and SMEs". 
2.5.  The Representative of India wondered about th e implications of insufficient data in the area 
of trade finance. He highlighted the existence of the ICC trade finance risk register, but asked 
whether any progress had been made in sharing this data with developing countries. Given the low 
risk profile of the industry, such dissemination co uld perhaps have a bearing on risk perception in 
developing countries and, in the end, perhaps help release credit for SMEs. 
2.6.  The Representative of the ICC said that the ICC trade finance register had been in place 
since 2009, and had expanded ever since. The register received data contributions from 24 leading 
international banks, covering US$ 7.6 trillion of bank-intermediated trade finance exposure. The 
results from the register had been useful in rece nt dialogues with regulatory authorities such as WT/WGTDF/M/32 
 
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  the Basel Committee on Banking Supervision (BCBS). He gave a specific example of discussions on 
the one-year maturity floor for letters of credit, which was lifted thanks to the existence of such data. More work was needed, though, notably in integrating data from developing countries. 
2.7.  The Representative of Canada wondered, in considering the impact of capital requirements on 
banks, whether there was any specific factor in the market which influenced the risk profile of 
SMEs. 
2.8.  The Representative of China said that hi s delegation attached a great importance to the 
problem of trade finance availability and its impact on SMEs. This was a global issue requiring a 
global solution. International cooperation was needed in this area. During its G20 Presidency, China had proposed that trade finance be part of the G20 Global Growth Strategy. China was willing to cooperate with other members to strengthen policy and regulatory cooperation. His 
delegation also supported further cooperation between the WTO and other international 
organizations such as multilateral development ba nks. The shortage of data had made it very 
difficult to understand why trade finance did not reach SMEs. The Bank of China, the country's 
main commercial bank for international trade, had very significant exposures on trade finance, 
although lack of data did not allow for an analysis of how such large lending affected SMEs. It was therefore useful to pursue work in this area, in the WTO. There were also efforts from the private 
sector to support trade finance for SMEs, notably in the context of e-commerce platforms. Alibaba, 
the e-commerce leader in China, had initiated a specific programme to support the attribution of working capital to some of its SME suppliers. It wo uld be worthwhile for the Working Group to look 
at good practice in this area. 
2.9.  The Representative of Côte d'Ivoire said th at the report had highlighted the difficulties of 
local banks in supporting SMEs. Locally, though, it was important to make a distinction between 
domestic and foreign-owned banks. In many LD Cs, domestically-owned banks did not have the 
resources to assist SME traders. Only subsidiaries or branches of international banks were in a 
position to give sufficient support to their own clients. However, the latter were being constrained by Basel and other rules, so the question was how th ey could, in this environment, consider taking 
more risks on local SMEs and support the local economic environment. 
2.10.  In replying to the above-mentioned questi ons and observations, the Representative of the 
ICC acknowledged that there was a significant chal lenge with respect to access to data on trade 
finance. Before the 2009 financial crisis, there was hardly any robust analysis and data source in 
this area. 2009 called for collaborative efforts to share data within the banking industry, and 
between the banking industry and other players (e xport credit agencies, multilateral development 
banks and the WTO). Initiatives to gather and an alyse data had started in the expert group on 
trade finance. Since then, trade financiers have been more inclined to share data. The data was 
not ideal, but the ICC continued to support collaboration with other institutions. Regarding the ICC trade credit register, this was the only source of trade-related, risk-based data on credit risk 
for trade. It carried millions of individual transactions, the analysis of which had established that 
trade finance was one of the safest segment of the financial industry, which a loss rate of only 0.02 per cent. Such analysis had been essential in facilitating a dialogue with national, regional and global prudential regulators. 
2.11.  The Representative of the IFC said that his institution supported as a priority trade in 
low-income countries such as Côte d'Ivoire. The IFC dealt primarily with private sector 
counterparts, but did not shy away from offering trade payment guarantees to state-owned banks 
when this was important for the country in question. The IFC also provided financing directly to 
SMEs in the context of its supplier finance, warehouse finance, and commodity finance programs. 
2.12.  The Chairman welcomed the arrival of the Director-General. He suggested that questions 
and answers be continued after the presentation  by the Director-General. The report "Trade 
Finance and SMEs" had been prepared in response to WGTDF discussions. It covered issues raised 
by Members since the beginning of the meeting, such as the need to increase support by multilateral development banks, boost trade finance capacity-building in developing countries, 
improving data collection and dialoguing with bank regulators. WT/WGTDF/M/32 
 
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  2.13.  The Director-General thought that issues  issued by the Working Group were of utmost 
importance. His remarks have been made public and are accessible through the following link: 
https://www.wto.org/english/news_e/spra_e/spra125_e.htm . 
2.14.  In his remarks, the Director-General referred several times to the meeting held on the 
previous day with business leaders ("Trade Dialogue"). During this meeting, the issue of trade 
finance availability came up as one of the main preoccupations of the SMEs group. He thought that 
a number of actions were within reach, and therefore that it was worthwhile to move from 
reflection into action. By way of action, he reiterated the same proposals that were circulated in 
the "Trade Finance and SMEs" publication: the WTO could work with partners to enhance existing trade finance facilitation programmes, with a view to reduce the gaps in trade finance; a second step was to address knowledge gaps in local financial institutions and increase capacity building 
with partner institutions; a third step was to increase dialogue with regulators. Finally, it was 
important to improve the monitoring of trade finance provision. More details were available in the "Trade Finance and SMEs" document. The Working Group's input was very important to address 
each of these issues. 
2.15.  The Chairman thanked the Director-General  for his presentation and opened the floor to 
delegations wishing to make statements. Questions could be addressed to the ICC and IFC 
representatives. 
2.16.  The Representative of Benin, on behalf of the LDCs, said that the Director-General's 
presentation had emphasized the relevance of issues discussed in the meeting. The LDC Group 
was most interested in the topic of access to trade finance by SMEs, notably in LDCs. The 
LDC Group supported the recommendations made in the Director-General's report. While the 
discussion focused on well "structured" SMEs, smaller businesses, such as cooperatives and micro SMEs (MSMEs), should not be ignored. It was important to see to what extent the analysis 
and solutions could cover these entities as well. This applied in particular to trade finance 
facilitation programmes, capacity-building and prud ential rules, which needed to be reviewed in 
the light of the needs of MSMEs. When considering these problems, one should not only take into 
account the situation of the bankers and exporters,  but also that of the cooperatives, the farmers 
and the intermediaries involved at different levels of the supply chain. Ideally, all actors should be able to benefit from those schemes. In this respect, the exchange of information on best practices would be most useful to LDCs. Successes in certain regions should be highlighted for other regions 
to benefit. The LDC Group was committed to participate in further discussions and would soon 
make more targeted suggestions. 
2.17.  The Representative of Ecuador highlighted  the difficulties encountered by the sector of 
MSMEs in obtaining trade finance in his country. In the seven years up to 2013, the number of 
MSMEs had grown from 66,000 to 93,000. They accounted for 97 per cent of all companies, produced 25 per cent of non-oil GDP, and employ ed 75 per cent of the working population. Only 
13.8 per cent of them had access to finance. As a result, Ecuador could only share the 
Director-General's observations and conclusions. La ck of finance was the key factor in MSMEs’ lack 
of access to export markets. Action by the in ternational community was therefore justified, 
although MSMEs often lacked knowledge about th e programmes available to them. Several such 
programmes had been implemented in Ecuador, wi th varying degrees of success and duration. In 
relation to the Director-General's proposals, Ecuador suggested to integrate into any solution the notion of ethical banking and fair trade throughout the value chain. It was also important to work 
towards better financial education of the actors concerned. Local bank staff needed to be trained 
on the realities of small producers such as fa rmers and other MSMEs. Financial products could 
hence be adapted to their needs. Rates and guarantee fees should also reflect the real risk of trade 
finance and not its perception. More informatio n on experiences from Latin America would be 
warranted in future publications, as realities di ffered across regions. While the recommendations 
by the Director-General were valid to address the la ck of trade finance, by themselves they did not 
represent the full solution to the lack of internationalization of SMEs, especially in developing 
countries. Other important obstacles such as access to information on export opportunities, tariffs, 
transportation, had been identified in other WTO fora. 
2.18.  The Representative of El Salvador thanke d the Director-General and other guests for their 
contribution. They had highlighted the importance of trade finance. The Trade Dialogue held with 
the business community had also identified access to trade finance as the second most important challenge faced by SMEs. Regarding the WTO publication, the delegation of El Salvador agreed WT/WGTDF/M/32 
 
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  with the need for better financing for SMEs and MSMEs as a way to facilitate their integration in 
global trade. Many firms faced difficulties in accessing finance to grow and create jobs. SMEs faced the greatest challenges. Hence, the delegation of El Salvador was interested in discussing possible solutions for SMEs and MSMEs. Specific recommendations raised great interest and had to be 
considered in greater detail. El Salvador would continue to participate in this dialogue, hoping that 
it would be accompanied by concrete measures for the integration of SMEs in global trade. 
2.19.  The Representative of Guatemala supported a deepening of discussions on trade finance and 
SMEs. It was important to include MSMEs in that discussion, since they were essential in many 
small and vulnerable economies. They did not face the same difficulties than somewhat larger firms. MSMEs were smaller than SMEs, as traditio nally defined, and could comprise just one or a 
few workers, often in the context of family businesses. It was important to promote technical 
assistance to support the capacity of local financ ial sectors, as global banks had withdrawn after 
the financial crisis. It was also important to determine which solution could be applied locally, and which could be applied internationally. In the WTO's context, it was also interesting to analyse 
global policy issues, such as the reasons behind trade finance gaps, the spill-over from crisis 
regions to other regions, and the most effective solutions from the perspective of developing countries. After the crisis of 2008-09, the situ ation had not returned to normal, and even 
deteriorated in developing countries. In this regard, it was important to examine the way to ensure 
the financing for trade both during times of crisis and periods of calm. Guatemala supported discussions on the solutions proposed by multilater al development banks. In this context, efforts 
to provide financial instruments to MSMEs were appreciated. 
2.20.  The Representative of the European Union thanked the Director-General for his report and 
engagement on this issue. His report covered a lot of issues and the analysis provided new 
insights. SMEs were the backbone of each Member 's economy, including in the European Union. 
The capacity of SMEs to participate in international trade depended on their access to trade 
finance. If there was a need for confirmation of this link, it came out clearly during the 
Trade Dialogue with the business community. The European Union was already working with other 
partners in relevant fora, including with multilateral development banks, international regulatory 
bodies, and other international financial institutions, with a view to identify and reduce constraints faced by SMEs in accessing trade finance, and to narrow down the gap between global demand and supply. The Director-General's report represente d another important step in this direction. The 
European Union was ready to contribute to the work  of the Director-General and of the Secretariat 
in the coming months. 
2.21.  The Representative of India thanked the Secretariat for its report entitled, "Trade Finance 
and SMEs", and for the introductory remarks by th e Director General. Access to affordable finance 
was a critical factor for trading entities, particularly SMEs in developing economies, in order to benefit from trading opportunities available globally. SMEs faced the greatest challenge in 
accessing trade finance. It was estimated that globally over half of trade finance requests by SMEs 
were rejected. It should not come as a surprise that large gaps existed in the provision of trade finance. Indeed, lack of affordable trade finance had emerged as a significant non-tariff barrier to trade, particularly for SMEs in developing economies. The financial crisis of 2008-09, the resultant 
strong regulatory oversight of the financial syst em under Basel III, growing risk perception, all 
taken together led to unintended consequences insofar as availability of trade finance was concerned. Stark facts have been brought out in the WTO paper, and highlighted by the 
Director-General in his remarks. Given the direct  linkage between access to affordable finance and 
utilization of available trading opportunities, th e delegation of India welcomed the WTO paper, 
turning the "spotlight" on the trade financing gaps, and suggesting some concrete actions that 
could be taken by relevant stakeholders to address it. 
2.22.  Addressing limitations in trade facilitation programs, expanding their size and coverage, 
bridging knowledge gaps, work on data and statistics and enhanced policy dialogue and coordination among relevant partners institutions were some practical steps to address the trade 
financing gaps. For example, greater coordination  between the WTO, the World Bank and the Basel 
Committee on Banking Supervision had already resulted in some steps to improve the regulatory treatment of trade finance. The ICC’s trade finance risk register was also a useful initiative. 
Similarly, it was encouraging to note in the latest report of the Expert Group on Trade Finance held 
last month that several multilateral development banks had been considering plans to scale up their trade finance facilitation programmes. Given the scale of the problem, much more needed to 
be done. The recommendations mooted in the Secretariat paper therefore merited thorough WT/WGTDF/M/32 
 
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  examination and appropriate action by all concer ned entities – multilateral development banks, 
private sector banks and banking regulators. India had been supportive of a greater advocacy role 
by the WTO to ensure that the Membership did not lose sight of the challenges of trade financing 
gaps. As noted by the Director-General, the problem was not an abstract but a real one. India 
invited all concerned to give these recommendations a closer look and take appropriate action, 
within their respective ambits, to address existing trade financing gaps.  
2.23.  The Representative of the Philippines expr essed appreciation for the WTO Director-General’s 
report, "Trade Finance and SMEs", as the pr oduct of wide consultations held by the 
Director-General to address the challenges met by Members in accessing affordable trade finance, in particular by SMES in developing countries. SMEs constituted the overwhelming majority of 
firms and the prime source of employment in  the economies of WTO members. Still, the 
Representative wished to highlight that the smallest component of the SME sector, micro 
enterprises (MSMEs), faced specific challenges regarding access to finance and capital, which according to a World Bank Enterprise Survey, thre atened their ability to grow. MSMEs were more 
likely to rely on informal sources of capital. Access to finance was disproportionately difficult for 
smaller firms in the least developed countries (LDCs), with 41 per cent of SMEs in LDCs reporting access to finance as a major constraint to their growth and development, by comparison to 
30 per cent in middle-income countries (MICs) and only 15 per cent in high-income countries 
(HICs). The World Bank had made recommendations for improving MSMEs access to finance. Hence, the Representative of the Philippines welcomed the proposals detailed in the WTO 
publication, notably regarding trade finance facilitation programme, technical assistance and 
capacity building, dialogue with trade finance regulators, and monitoring of trade finance gaps. He 
took this opportunity to invite other Members to join the WTO's MSME event, "Enhancing the 
Participation of MSMEs in Global Markets", on 21 June, 2016.  
2.24.  The Chairman informed Members that one session dedicated to trade finance was likely to 
take place at the 2016 Public Forum. He invited Members to attend. 
2.25.  The Representative of the United St ates welcomed the report presented by the 
Director-General as contributing to a fuller understanding of the issues and challenges faced by 
SMEs in accessing trade finance. The report also was a good tool in terms of engagement on the part of the WTO with other relevant organizations. It seemed to be particularly timely in terms of the discussion happening more broadly within the WTO on how the WTO Membership could be 
more responsive to the concerns of SMEs. He had one specific question regarding the practical 
implications, for multilateral development banks, of setting a target for trade coverage by trade 
finance facilitation programmes. He thought of the implications in terms of the decision-making 
process for multilateral development banks, whether it could have an impact on shareholders, how 
would the target be shared between the various implications. 
2.26.  The Representative of Morocco, who spoke on behalf of the African Group, thanked the 
Chairman for having convened this meeting to  examine the ways and means to improve trade 
finance for SMEs. He also thanked the Director-General for his relentless efforts and proposals made in the document. The document reflected a true desire to support and implement a WTO initiative aimed at reducing the global trade finance gaps, affecting notably SMEs in 
developing countries. SMEs were the backbone of developing and emerging economies. They 
contributed to value-added, employment, innovation and development. Lack of trade finance constituted one of the most important obstacles preventing them to expand, in particular in 
developing countries. Filling the financing gap would open trade opportunities to SMEs, in a way 
that would promote trade and development overall. In the African continent, SMEs met ample difficulty to access trade finance. There were many factors preventing local banks to supply 
sufficient amounts of finance, including a lack of US dollar availability and insufficient limits from 
confirming banks. The African Group was satisfie d with the changes made in recent years to 
prudential rules, on development grounds. The WTO had a role to play, in cooperation with 
national governments and multilateral development banks, to help trade finance flow more easily 
to African SMEs, notably in the current context of increased sovereign risk and lower commodity 
prices. The African Group strongly supported and adhered to the DG's proposals and was committed to their implementation.  
2.27.  The Representative of China noted that the G-20 Working Group on Trade and Investment 
was meeting in Paris on the same day and comm itted to brief Members about its outcome. He 
thanked the Director-General and Secretariat for their engagement and contribution in this matter. WT/WGTDF/M/32 
 
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  Taking into consideration the slow growth of international trade, China appreciated the 
action-orientated recommendations which the Director-General raised in his presentation, especially tangible objectives such as the increase of the trade volume supported by multilateral trade finance facilitation programmes from US$ 30 billion to US$ 50 billion, and the training of 
5000 experts in this area. China had always attach ed a great importance to the issue of trade 
finance, and would work closely with the WTO secretariat and other international institutions to strengthen policy and regulatory coordination. Trade finance was a global issue, requiring a global 
solution to solve the challenges faced by the developing members in particular. China had 
proposed under its G-20 Presidency to increase trad e financing as part of its "global trade growth 
strategy". As indicated earlier, the delegation of China would be happy to brief Members about the outcome of this process. 
2.28.  The Representative of Canada extended hi s appreciation to the Director-General and the 
Secretariat for their dedication to this issue, particularly in raising awareness and bringing 
concrete suggestions. He welcomed the Director-General's report and appreciated the fact that it 
was the outcome of much dialogue with other actors, such as other international institutions, from 
the private and public sectors. He welcomed further discussion on trade finance and SMEs in the Working Group. 
2.29.  The Representative of Brazil joined other delegations in thanking the Director-General for 
producing this document. The interlinkage with SMEs was particularly appreciated, as this aspect 
was particularly important to his delegation. Brazil would provide further and more specific comments once the document had been carefully studied in the capital. Brazil was fully committed 
to continuing this discussion, including if the Working Group was to reach some recommendation 
or support as to the concrete proposals made in the report, and even beyond the report. 
2.30.  The Representative of Australia welcomed th e Secretariat’s paper. The importance of access 
to trade finance, particularly for SMEs, to support growth and integration into global trade was well 
known. The paper certainly contributed to an up dated understanding of the issues and possible 
further actions to improve the situation. As noted in the WTO paper, the Asian Development Bank 
(ADB) estimated that, in 2015, the global trade finance gap may have been as large as 
US$ 1.4 trillion, US$ 693 billion of which was in deve loping Asia (including India and China). ADB’s 
data also highlighted that SME proposals for trade finance had been rejected 52 per cent of the time, while multinational corporations had 87 per cent of their proposals accepted. 46 per cent of 
firms reported that a doubling of trade finance availa bility would fuel an increase in production and 
exports. Efforts to address the gap should therefore be approached in a holistic and comprehensive manner. The recommendations in the report were consistent with this objective. 
2.31.  In a concrete manner, Australia sought  to address this gap through its development 
program. Australia partnered with the ADB for the expansion of its Trade Finance Program (TFP) in Asia and the Pacific. This partnership had been launched in September 2015 at the United Nations 
Summit on the Post-2015 Sustainable Development Goals in New York. The ADB Trade Finance 
Program helped banks in developing countries impr ove their prudential or governance practices to 
build their international reputation; it assisted banks in developing countries to build their capacity to develop new instruments or products that would make financing more readily available to 
SME traders; and provided guarantees and co-insurance for cross-border transactions that reduced 
the risks in the short term for private sector financial institutions. Australia was pleased to note that this ADB program has already had some positive results: training seminars had been run in 
Fiji, Vanuatu and Papua New Guinea with 73 participants. Banks in Samoa and in Vanuatu had also 
qualified for the ADB program. More banks from Bangladesh and Viet Nam had joined the program. Pacific banks would benefit from trade finance capacity building from May 2016 onwards. 
Therefore Australia welcomed ongoing consideration of this topic, in the Working Group, and other 
fora, including the G20. 
2.32.  The Representative of Montenegro joined other delegations in thanking the Director-General 
and Secretariat for the "Trade finance and SMEs" study. Montenegro welcomed and appreciated 
ongoing discussions related to SMEs in the WTO. SMEs in Montenegro contributed around 
60 per cent to the country’s GDP. Responsibility for the design and implementation of policies related to local SMEs was shared among various institutions, in particular the Directorate for SME 
Development. In parallel with the development of strategic documents related to competitiveness, 
as well as capacity building, it has been necessary to provide direct support to SMEs in Montenegro. One of the support mechanisms identified in the 2013 pilot project with OECD, was WT/WGTDF/M/32 
 
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  the SMEs Voucher Scheme, implemented with the financial assistance of the European Union. In 
addition, new mechanisms have been introduced  based on a comprehensive study within the 
context of the "EU Instrument for pre-accession assistance or Montenegro (IPA II) 2014-2020", with particular emphasis on "Enhancement of Business Environment and Competitiveness of the 
Private Sector/SMEs in Montenegro". Similar to the WTO study findings, the main problem facing 
SMEs in Montenegro was still the lack of availability of finance and problems in accessing financial tools and adequate trade finance. In addition, SMEs were facing a lack of knowledge in marketing, 
sales and business planning, managerial skills, as well as the lack of effective local support for 
their operational activities. In this context, Monten egro was very much interested in learning more 
about the ICC Academy in Singapore for trade fina nce for SMEs and training programs developed 
with other partners, particularly IFC and e-training portals. Montenegro would continue to closely 
follow future discussions in the Working Group aime d at supporting the integration of SMEs in the 
global economy. 
2.33.  The Representative of Japan thanked the Director-General for his informative document and 
proposals, which helped the better understanding of the issues and the situation surrounding trade 
finance. Japan remained fully committed to the discussion on trade finance both in WTO and in the G-20. The Representative of Japan asked a questi on similar to that of the delegation of the 
United States about the implications of proposed numerical objectives on multilateral development 
banks and other relevant organizations, as well as to the donor countries. 
2.34.  The Representative of Jamaica welcomed the report and the presentation by the 
Director-General. Jamaica was mindful of the information gap regarding the flows of trade finance 
in developing countries. Jamaica wished to see additional research conducted on the impact of 
de-risking by correspondent banks on trade finance flows to developing countries. The issue of de-risking and correspondent banking was an important and urgent issue pertinent to the region. 
The delegation of Jamaica was looking forward to further engagement on this issue, including at 
the 2016 Public Forum. 
2.35.  The Representative of the Secretariat answered some questions and observations which 
arose on the reports and subsequently in the course of the discussion. He dealt with two main 
issues: the estimation of the global trade finance gap; and background information on some of the 
numerical targets proposed in the report. 
2.36.  Regarding the trade finance gap, there was not a single and comprehensive source of trade 
finance statistics at the global level. Howeve r, the market was very large. For example, 
the Bank of International Settlements had estimate d that the bank-intermediated part of global 
trade finance flows was between US$ 6.5 to US$ 8 trillion in 2011. Further to this, several partners 
such as the Asian and African Development Banks, and the ICC, had joined forces to estimate the 
global trade financing gap. After a first survey in 2014, a second survey in 2015 had estimated the 
global financing gap to be around US$ 1.4 trillion  annually (for the year 2014). These results were 
based on a very large bank survey of more than  500 banks. Broadly speaking, the survey aimed at 
identifying how much trade finance had been requested by traders and how much had been rejected. In 2016, more granularity in the data would be obtained, as the bank survey was being followed-up by a company survey (with probably more than 500 respondents). The company 
survey would help understand how traders dealt with rejections: was there an alternative to bank 
financing; was the trade transaction forgone? The WTO Secretariat was associated with this new information gathering process and would contribute to the analysis. 
2.37.  Regarding numerical targets, the Secretariat discussed first the US$ 50 billion inspirational 
target of the Director-General for trade finance facilitation programmes, before turning to the 
objective of training 5,000 trade finance experts. After consultation with multilateral development 
banks, it appeared that the demand for trade finance facilitation programmes was larger than the 
"inspiration" target of US$ 50 billion proposed by the Director-General. The trade finance gap was US$ 1.4 trillion, of which US$ 700 billion was in developing Asia and US$ 120 billion in Africa. Unserved demand was therefore very large. Ther e was also evidence that Latin America, the 
Caribbean islands and other small and vulnerable economies had been hit by the "de-risking" of 
international banks. Reports by the World Bank an d the Bank of International Settlements (2015) 
had provided evidence of such de-risking. Hence th e increase in guarantees of (mainly) letters of 
credit from US$ 30 to US$ 50 billion (out of a total market of US$ 2.2 trillion, as recorded by the 
SWIFT) was a relatively mild step for multilateral institutions. In fact, the demand to satisfy was larger, but multilateral institutions had to confine their support mainly to SMEs in developing WT/WGTDF/M/32 
 
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  countries – for some institutions even to LDCs. Such an increase would not require any re-
capitalization or increase in the general resources of these institutions. Under their programs, multilateral development banks provided payment guarantees on endorsing banks, to the benefit 
of issuing banks as well. These guarantees were hardly being called in. Hence, the underlying 
capital to back such guarantees was very small compared to any other transactions of multilateral 
banks. Besides, the guarantees were granted for short term transactions of 90 days on average, so US$ 1 dollar in guarantee would support US$ 4 do llars of trade on average. The real increase in 
exposure limits by multilateral would therefore only be US$ 5 billion for all multilateral 
development banks, to support an extra US$ 20 billion in trade.  
2.38.  Finally, the number proposed in the report of 5000 trainees was conservative. In addition to 
the ICC Academy, other training platforms were oper ational, such as those operated by IFC and by 
the European Bank for Reconstruction and Development (EBRD). The ICC Academy alone was 
planning to train more than 1000 students per year, which would add up  to the IFC and EBRD 
existing platforms. The objective of 5000 trainees in five years was certainly achievable, and would 
help to boost cooperation between the ICC and multilateral institutions with a view to also optimize 
resources, share courses and increase the overal l quality of training dispensed, notably in 
developing countries. 
2.39.  The Chairman suggested that questions to guests from the ICC and IFC be resumed. He had 
noted there were a few unanswered questions left. 
2.40.  The Representative of the IFC reverted to the objectives for trade finance facilitation 
programmes. Under the IFC's Trade Finance Programs, the IFC had issued US$ 45 billion in total 
guarantees in the past 10 years, out of 45,000 transactions. The IFC had not encountered a single 
default yet. Like its sister institutions, the IFC operated mainly unfunded risk mitigation programmes, basically providing payment guarantees. Therefore, it was not asking for any 
additional funding. The Representative of the IFC felt that its institution had the capacity to expand 
its program. There was also unmet demand in the market, in part related to the impact of capital and other regulatory requirements on global ba nks, which had retrenched from several regions 
and had left a financing gap. This type of guarantee issued by multilateral development banks 
provided the endorsing bank with capital relief from  a Basel perspective. This was certainly of help 
to facilitate trade in this environment in which banks retrenched. The World Bank Group had a dialogue with Basel on this issue, and was ready to continue either from the perspective of the IFC 
or from that of the World Bank Group in general. The World Bank had provided a report on 
de-risking to the G20 Summit in Turkey. On regu latory issues, continued dialogue was the way 
forward. 
2.41.  The Representative of the ICC said that th e support of private institutions by public-backed 
institutions was necessary in meeting the demand for trade finance both during periods of crises 
and in the current period in which banks met challenges. The intervention of international 
institutions in 2009-10 had been critical in restor ing confidence and capacity in affected markets. 
The public-private engagement was also important in allowing adequate levels of trade finance to reach as broadly as possible the different geographic markets, and customer segments such as SMEs. The private sector did not always have the capacity to deal with all the demand. If looking 
only at commercial drivers, certain transactions would not be served, while public policy or 
development drivers would make it happen. Private-public partnerships such as trade finance facilitation programmes were hence necess ary. Regarding the interaction with the 
Basel Committee on Banking Supervision, private sector representative institutions had been 
engaged in an on-going dialogue which was iter ative. Trade finance was getting more attention 
from local and international regulators as a result of this dialogue. 
2.42.  The Representative of Paraguay said that guarantee programmes were important for his 
country. Currently, traders faced more uncertainty, which was reflected in the higher interest rates 
charged to them. Guarantee programmes allowed for greater affordability of trade finance. It was an issue that needed to be discussed in the Working Group. 
2.43.  The Representative of Guatemala asked the ICC about details of its engagement with the 
Basel Committee on Banking Supervision, and generally about its ability to formulate comments 
and observations on new or existing regulation. Prudential rules and their potential consequences 
had to be addressed and subject to discussion, before being drafted and issued. Once rules were in WT/WGTDF/M/32 
 
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  place, it was much more difficult to be heard. This was an issue that needed to be further 
discussed. 
2.44.  The Representative of ICC said that in the past the private sector trade finance had not 
been engaged early enough in discussions on th e development of previous versions of the 
Basel framework of rules, notably on the so-called Basel II framework. Since then, progress had 
been made and the tone had been more collaborative, particularly on the Basel III update. The Basel Committee on Banking Supervision acknowledged trade finance as a useful tool to facilitate 
trade and create value. It has acknowledged its low risk profile. The regulatory dialogue was not 
limited to the Basel Committee on Banking Supervision but it took place at the national, regional and multilateral level with stakeholders. For this purpose, the ICC had established a regulatory compliance working group to structure the ICC efforts regarding advocacy. 
2.45.  The Chairman noted that since there were no further questions, he would summarize the 
discussion. The report by the Director-General had been considered by all delegations as a 
necessary and positive step in resolving the problems of access to trade finance, notably for SMEs 
in developing countries. At the same time, this was only the beginning of an in-depth discussion, 
to be continued in future meetings of the Wo rking Group. Many delegations had supported the 
report, and in doing so had expressed the wish to discuss the different proposals. The most 
discussed proposal was the amount of trade to  be supported by trade finance facilitation 
programmes supplied by multilateral developm ent banks. Another important issue was the 
development of expertise. Several examples had been given, notably the newly-created ICC Academy. A related issue was the dialogue with regulators. The WTO, along with the ICC and 
multilateral development banks, had a role to play. It was also important to improve data and 
analysis about trade finance gaps. Finally, seve ral delegations have expressed a wish to discuss 
new methods of financing trade, such as supply chain financing and digital trade, and ways in 
which MSMEs could be covered by the discussions on trade finance and proposals. Discussions in 
the Public Forum 2016 might help the Chair and the Secretariat clarify these issues and make more specific proposals for discussion at the next meeting, with a view to promote the initiative by 
the Director-General. Finally, while interventions had confirmed that trade finance was the main 
topic for the Working Group's current work, other to pics have been raised by some delegations for 
possible future submissions. 
2.46.  With this, the Chairman closed the meeting. 
 
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