WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/WGTDF/M/25 
20 September 2012 
 
 (12-5056) 
Working Group on Trade, Debt and Finance  
 
 
 
REPORT OF THE MEETING OF 12 JUNE 2012 
 
1. The twenty fifth meeting of the Working Group on Trade, Debt and Finance (WGTDF) was 
held on 12 June 2012 under the Chairmanship of Am bassador H. Badr (Egypt).  The Working Group 
adopted the agenda.  
2. In his introductory remarks, th e Chairman recalled that at the end of the meeting held in a 
seminar format in late March, there had been ge neral support for a continuation of the discussion on 
the relationship between exchange rates and trad e. A number of ideas on how to continue that 
discussion have been expressed by Members during th e seminar. The first agenda item would provide 
Members with the opportunity to exchange views on what to discuss next, and hopefully achieve a 
consensus on it. If not, he would be holding consu ltations after the meeting. The second agenda item 
would provide an opportunity to continue monitoring  developments in relation to the availability of 
trade finance, in particular to the poor countries.  G-20 Leaders in Cannes asked that further progress 
be made by the international community in sup porting the enhancement of trade finance facilitation 
programs in favour of low income countries, and to impr ove data gathering in this area. Partly to take 
stock of this work, a WTO Expert Group meeting on  trade finance has been held under the auspices of 
the Director-General on May 15, 2012. The Chairm an attended the meeting, which he found most 
useful. Based on WTO Document WT/WGTDF/W/63, the Secretariat would debrief Members orally 
in a succinct way. He asked for the adoption of the agenda. 
3. It was so agreed. 
AGENDA ITEM I: EXCHANGE RATES AND TRADE  
5. The Representative of Brazil commented on the state of play after the WGTDF seminar, the 
role of the WTO on the topic and the way forward fo r the WGTDF. With respect to the state of play, 
he expressed satisfaction that the seminar allowed the Membership to take ownership of the work 
programme proposed by his delegation. He had draw n a number of lessons from the seminar; he felt 
in particular that the seminar had evidenced that exchange rates have a significant impact on trade, 
albeit of a complex nature. Some countries suffere d from misalignments, in the form of currency 
undervaluation or overvaluation; ot hers suffered from the effects of exchange rate volatility. 
Exchange rates shifts mattered in the short-term, but apparently less in the long-run. Misalignments 
had to be analysed at disaggregated levels, as globa l effects tended to cancel out. At the country level, 
it was important to identify the winners and th e losers from exchange rates shifts. While the 
determination of equilibrium exch ange rates and the causes for misa lignments were within the remit 
of other institutions (IMF, G-20), the WTO had to focus on the trade and trade policy impact of it. 
6. Brazil intended to work in the months to come  on elements of a dial ogue on the links between 
exchange rates shifts and WTO rules. This dialogue  would first take place in Brazil. Based on its 
outcome, the delegation of Brazil planned to present a submission to the WGTDF in the fall as an 
input for discussion.  Brazil's priority was to id entify the WTO's specific role, under the coherence 
mandate, in tackling the trade impact of exchange ra tes. A first step would be to identify what was 
happening under other institutions' processes.  A sec ond step would be to look at the WTO's own 
competency - it being well understood that disciplin es inherited from the GATT had been written in a WT/WGTDF/M/25 
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 different period of history. Since the creation of the WTO, this would be the first opportunity to 
discuss what these disciplines me an for the Membership.  
7. The Representative of China reminded that, to date, her delegation had been willing to work 
on this controversial topic. She was not sure that the assessment of the seminar could lead to any firm 
conclusion given the multi-dimentional nature of th e relationship between exchange rates and trade, 
except that this relationship was very complex a nd uncertain. As no clarity emerged from pillar one 
work, it was hence difficult to envisage moving into the second pillar. She reiterated China's earlier 
position that, while welcoming work on the trade im pact of exchange rates, the topic was highly 
complicated and sensitive, and needed to take into account the clear division of work between 
international organizations when being considered at the WTO. The seminar had produced a lot of 
interesting information, presentations, facts and anal yses from various sectors, all of which still had to 
be "digested" domestically and multilaterally. She suggested that the WGTDF engage in a deep 
reflection on all presentations made in the seminar.  She encouraged the Chairman to hold informal 
consultations on how to move the work programme forward, and ensu red the full collaboration of her 
delegation in this process. 
8. The Representative of India said that the WGTD F seminar had added to the understanding of 
the complex relationship between ex change rates and trade. The situ ation of her country had been 
highlighted by the speaker from the Reserve Bank of India, who had observed that it was difficult to draw firm conclusions on the basis of the three methodologies developed by the IMF. The sensitivity 
of India's exports and imports to exchange rat es was quite modest. The volatility of the Rupee was 
caused essentially by capital inflow s. While the Reserve Bank of India could at times intervene to 
dampen excessive currency volatility,  India's exchange rate was market-driven. On the whole, the 
WGTDF seminar had proven to be useful.  Ther e was a need to develop a better and deeper 
understanding on this topic before embarking on any further new work. India suggested exploring the 
possibility of conducting further studies on the relati onship between exchange rates and trade flows, 
including case or country studies, and agreed to partic ipate in informal consultations to decide on the 
direction of future work. 
9. The Representative of the European Union made  two comments, one on the seminar, and one 
on next steps.  His delegation found the seminar to ha ve been most useful. The active debate that took 
place confirmed the interest of Members to discuss th e issue further. There was broad recognition that 
exchange rates developments and trade flows were related, although the complexity of the matter had 
been clearly emphasised.  The importance of broade r structural reforms had been highlighted, as well 
as the difficulty of assessing exchange rate misali gnments. Few concrete recommendations had been 
made on whether and how the WTO should deal with the issue of exchange rates and trade. It was important to sustain this technical discussion on th e basis of sound analytical work. The Secretariat 
had already provided a review of existing literature in  this area. This could usefully be updated, in 
particular to take account of any work relating exchange rates and global value chains. Also, any 
analysis of existing institutional co-operation with the IMF and the OECD could usefully be 
highlighted. The delegation of the European Unio n would be happy to review Brazil's upcoming 
paper in the fall, particularly in the context of in formal consultations, before deciding on the direction 
of future work. 
10. The Representative of the United States said th at his delegation had found the seminar to be 
well organized and quite informative.  It had demonstrated the complexi ty of the issues. His delegation 
was open minded on next steps, but would like to  have a clearer idea on what are the proponent's 
views and ideas, in order to inform experts in his capital.  Like the EU, he welcomed the opportunity 
to discuss with Brazil its new, upcoming proposals in the context of informal consultations aimed at 
reviewing possible next steps. On the issue of c oherence, he welcomed any possible input from other 
organizations on their own work on exchange rates issues.  WT/WGTDF/M/25 
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  11. The Representative of Canada joined other Memb ers in considering that the seminar held in 
March had been successful.  It had helped to explore many angles of the relationship between 
exchange rates and trade, in more depth and fro m a wide range of perspectives.  Canada would 
support continued WTO work on the impact of ex change rates on trade, and in particular on 
examining how to strengthen coherence between  the WTO and the IMF. He looked forward to 
discussing this issue further, including through pa rticipation in informal consultations, and to 
receiving an updated paper by Brazil later this year.  
12. The Representative of Turkey thanked the delega tion of Brazil for its leadership in making 
the seminar happen. The seminar had provided Turkey with a good opportunity to look at the issue 
from different angles and perspectives.  There were still quite strong un certainties as to the direction of 
the world economy, and tensions over how to ad dress current policy problems.  Many of these 
developments were linked to some extent to the ne xus of trade, debt and finance. There were close 
connections between structural problems in the world economy and exchange rates developments. 
Further discussion on these issues may help the inte rnational community ease some of the prevailing 
tensions over global economic policy making, a nd foster better cohere nce among international 
organizations. He welcomed Brazil's upcoming pape r reflecting Brazil's domes tic discussions. While 
his delegation did not necessarily share the same understanding of the issues, it nonetheless supported 
Brazil’s efforts to pursue the discussion within the WGTDF. 
13. The Representative of Cuba said that the seminar had raised issues of great interest to 
developing countries, at cross-roads of structural , macro-economic and other policies. He hoped that 
this would increase the momentum for a new intern ational financial monetary system that better 
monitors the world's financial system. The WTO need ed to look at current issues from perspective of 
analysis, not of negotiations.  He supported a cont inuation of current work, but indicated that the 
WGTDF should also comply with its original ma ndate, whereby any additional work on exchange 
rates had to go hand-in-hand with an analysis of the relationship between trade, debt and finance. 
14. The Representative of Argentina congratulat ed Brazil for having initiated the work 
programme on exchange rates and trade which his delegation supported. He thought that it would be 
positive for the debate to be continued at the WTO.  He looked forward to receiving the contribution 
from Brazil and supported any further discussion on this topic. 
15. The Representative of Australia indicated that  her delegation had appreciated the seminar, 
which had provided for useful perspectives on co mplex issues. She looked forward to further 
discussion and proposals on next steps, in which her delegation was ready to participate. 
16. The Representative of the Philippines found the se minar to have been extremely useful and 
insightful on a whole range of complex issues. She thanked Brazil for its leadership in having the 
seminar organized. While the seminar enlightened her on several topics, she nevertheless failed to see 
where and how the WTO came into the "picture".  This was why there was a need to continue 
debating, in order to find out whether there was really  a role for the WTO, or simply a need for more 
coordination with other organi zations. We looked forward to Brazil's new upcoming paper.  
17. The Representative of Chinese Taipei  expressed the appreciation of his delegation for the in-
depth discussion on relationship betw een exchange rates and trade during the recent seminar. Based 
on the views expressed, exchange rate issues were impor tant albeit not the only factor affecting trade. 
Several examples showed that exchange rate fluctuat ions or misalignments were not the driving force 
for import and export growth trade. By contrast, improvements in global demand, trade openness, and 
structural reforms were also key factors influe ncing economic growth. The workshop had highlighted 
the complexity of the relationship between exchange  rates and trade.  The integration of the global 
economy, increasing import content of exports, cha nging of price elasticity of product demand for a 
variety of products, market price transmission mechanisms, were all important factors that influenced WT/WGTDF/M/25 
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 the relationship between exchange rates and trad e. As for future work, he felt that further 
consultations were needed. Also, the dialogue betw een the WTO, the IMF, the World Bank and the 
OECD needed to be strengthened. 
18. The Representative of Saudi Arabia thanked Br azil and the Secretariat for contributing to 
organize the seminar. His delegation was listening caref ully to the debate and learning from it. It will 
continue to participate in forthcoming events.  
19. The Chairman summarized the discussion on this  item.  Members had considered that the 
WGTDF seminar had been useful and had contri buted to deepening their understanding of an 
inherently complex relationship be tween exchange rates and trade. While Members may come out of 
the seminar with different economic policy perspec tives, they still have to "digest" the very large 
amount of information and policy considerations exchanged during the seminar. In principle, 
however, Members are willing to continue the discussi on, mainly from an analytical point of view. In 
this context, further (case-) studies from Members may help deepen the subject-matter and fuel further 
discussion. The Secretariat may also contribute by providing, before the next WGTDF meeting, for a 
limited update of the literature survey  that has been completed less than one year ago, with the same 
focus on the relationship between exchange rates and trade flows. Members may flag new literature as 
well. To prepare for the next step of discussions, Brazil announced that it will submit a proposal based 
on national meetings and seminars.  In the light of  this new submission, Members expressed a desire 
to have informal consultations to discuss how to  move the agenda forward. As part of these 
consultations, the issue of inviting other institutio ns to inform the WTO on their work related to 
exchange rates will be raised. Should Brazil's subm ission be available, the ideal timing for such 
consultations would probably be next September, in the event of a meeting of the WGTDF to be held 
in October.  
20. The Secretariat confirmed that, given its limited resources, the most feasible option by the 
next meeting was to do a limited update of WT/W GTDF/W/57, using essentially new papers flagged 
by some keynote speakers during the Ma rch seminar. It was so agreed.  
AGENDA ITEM II: REPORT ON TRADE FINANCE 
21. The Chairman invited the Secretariat to report on the meeting of the Expert Group on Trade 
Finance, held on 15 May, 2012, and on the state of progress on trade finance work for the G-20. The 
Chairman had attended the Expert Group meeting.  He had found the initiatives developed by the 
Director-General in context of the Expert Group to be most useful, particularly work with multilateral 
development banks to achieve more affordable  trade finance in low income countries.   
22. The Secretariat reported on the meeting of the Expert Group, and on the state of progress on 
trade finance work in the context of the G-20, along the lines of Document WT/WGTDF/W/63, which 
was circulated after this meeting of the WGTDF. He provided subsequent clarifications to Members 
on technical issues. 
23. With this, the Chairman closed the meeting. 
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