WT/WGTDF/16  
 
10 November  2017 
(17-6124) Page: 1/3 
  
 
REPORT OF THE WORKIN G GROUP  ON TRADE, DEBT AND F INANCE (2017 ) 
TO THE GENERAL COUNC IL 
 
 
1  INTRODUCTION  
1.1.  The Working Group on Trade, Debt and Finance ("the Working Group") was established at the 
4th Session of the Ministerial Conference in Doha in November 2001  with the following mandate 
("the mandate)1:  
"We agree to an examination, in a Working Group under the auspices of the General Council, 
of the relationship between trade, debt and finance, and of any possible recommendations 
on steps that might be taken w ithin the mandate and competence of the WTO to enhance 
the capacity of the multilateral trading system to contribute to a durable solution to the 
problem of external indebtedness of developing and least developed countries, and to 
strengthen the coherence of international trade and financial policies, with a view to 
safeguarding the multilateral trading system from the effect of financial and monetary 
instability. The General Council shall report to the Fifth Session of the Ministerial Conference 
on progres s in the examination".  
1.2.  This report describes the activities of the Working Group since the 10th Session of the 
Ministerial Conference in December 201 5. 
2  THE WORKING GROUP'S ACTIVITIES SINCE THE  10TH SESSION OF THE MINIS TERIAL 
CONFERENCE  
2.1.  The Working Group he ld four formal meetings in 2016 and 2017 : on 31 May and 20 October 
2016, under the Chairmanship of H.E. Atanas Paparizov (Bulgaria); on 18 July and 8 November , 
2017, under the Chairmanship of  Mr. Asi Yosef (Israel).  
2.2.   At the meeting on 31 May 2016, the Work ing Group discussed the Director -General's 
proposals, laid out in his document "Trade Finance and SMEs", circulated in advance to Members, 
and presented orally by him at that meeting. The Director -General suggested that, on this 
important topic for many me mbers, a number of actions were within reach. The WTO could work 
with partners to: enhance existing trade finance facilitation programmes, with a view to reduce the 
gaps in trade finance; address knowledge gaps in local financial institutions by increasing  capacity 
building; foster dialogue with regulators; and monitor trade finance gaps. The Working Group's 
input was very important to address each of these issues. Many Members requested the floor. In 
summarizing their interventions (WTO  document WT/WGTDF/M 32), the Chairman indicated that 
the Director -General's report had generally been considered by delegations as a necessary and 
positive step in resolving the problems of access to trade finance, notably for SMEs in developing 
countries. Still, this was onl y the beginning of an in -depth discussion, to be continued in future 
meetings of the Working Group, step -by-step. Several delegations expressed the wish to discuss 
new methods of financing trade, such as supply chain financing and digital trade, and ways i n 
which Micro and Small and Medium sized -enterprises (MSMEs) could be covered by the discussions 
on trade finance and proposals. Discussions in the 2016 Public Forum were expected to help clarify 
some of these issues. While interventions had confirmed that  trade finance was the main topic for 
the Working Group's current work, other topics have been raised by some delegations for possible 
future submissions.  
                                                
1 WT/MIN(01)/DEC/1, paragraph 36.  WT/WGTDF/ 16 
 
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2.3.  At the meeting on 20 October 2016, the Working Group on Trade, Debt and Finance reverted 
to the topic  on trade finance and SMEs, notably in developing countries. The Secretariat had 
circulated a progress report, in WTO Document WT/WGTDF/W/82. The 2016 Asian Development 
Bank's global trade finance gap survey showed that global trade finance gaps had remain ed large 
(US$1.6 trillion in 2015 despite the fall in trade in US dollar value, against US$1.4 trillion in 2014). 
They affected disproportionally SMEs. Globally, 58% of trade finance requests by SMEs to banks 
had been rejected, against 10% for multinationa l companies. Half of SMEs did not seek alternative 
funding, either because of the absence of it (in many developing countries), unawareness (70% of 
surveyed SMEs are unaware of digital finance) and other reasons. Trade finance gaps existed in all 
continent s, including in developing Asia, Europe, Africa, Latin America, and the Pacific. The 
Secretariat also provided an update on the Director -General's meetings with heads of partner 
institutions, such as the International Trade Finance Corporation (Islamic Dev elopment Bank 
Group), and the International Finance Corporation (IFC, part of the World Bank Group). The 
Director -General and the Chief Executive Officer aimed at organizing a high -level round table on 
the topic of trade finance and SMEs at the next spring  meetings of the IMF and World Bank, based 
on good, solid analysis. The issue of withdrawal by large banks from many developing countries, 
through the termination of correspondent banking relationship had been discussed by the 
Director -General, with a focu s on its impact on the smaller traders. Based on this update, 
Members expressed their support to these advocacy efforts, bearing in mind the limitations of the 
WTO's mandate. They decided to continue to discuss the topic of trade finance and SMEs in the 
year 2017. No other topic had been raised by delegations for possible future submission.  
2.4.  At the meeting on 18 July 2017,  Members reviewed progress reported by the expert group on 
trade finance (Document WT/WGTDF/W/84). The Chairman also indicated that the Di rector -
General held a private, informal round table on trade finance with senior officials from multilateral 
development banks (MDBs), on the margins of the 6th Global Aid for Trade Review. The Secretariat 
reported on this round table. Senior officials fro m MDBs and the Director -General shared the same 
diagnosis on trade finance gaps. Many international banks had pulled back from developing 
countries markets, which had restricted access to trade finance in those countries, particularly for 
SMEs. This reduct ion had been documented by recent reports by the International Monetary (IMF) 
and the Bank of International Settlements (BIS) for example, in the April 2017 IMF report on 
recent trends in correspondent banking relationships, and in the July 2016 BIS report  on 
correspondent banking. MDBs confirmed that th is was r eduction in correspondent banking 
relationships was very much visible on the ground. As a result, the trade finance gap was very 
high, and affected SMEs traders disproportionally . This trend had resulted in a poor state of affairs 
given the importance of SMEs in providing jobs and growth in many countries.  
2.5.  During the  round table, multilateral development banks generally indicated a willingness to 
increas e their capacity to serve markets, but the over all message was there was "only so much" 
they could do. With global trade  having fallen by 16% in US dollar value terms  in 2015 -16, trade 
finance facilitation programs, taken altogether, had supported an average of $20 to 25 billion of 
trade per annum  in the most challenging markets of the world , an amount somewhat below the 
average of previous years. The two institutions having the largest programs said that they had 
space under existing programs to respond to increasing demand, as trade seemed to  pick up  in 
2017. Other institutions said that an expansion of their programs would be constrained by their 
capital base . Since the resources devoted by MDBs to trade finance were limited, it was important 
for them to do more together, by way of co -financing and co -risk sharing, where geographical 
coverage overlapped. At the end of the round table, the IFC and the Islamic Trade Finance 
Corporation (ITFC) signed a Memorandum of Understanding to conduct joint trade finance 
operations in Western Africa.  All heads of MD Bs asked for a regulatory dialogue with the Financial 
Stability Board. Two arguments were put forward: first, multilateral development banks, in their 
support to local banks, could do a lot to get these banks to comply with international norms. At the 
same  time, it had become obvious that the international bar had been placed quite high for these 
smaller banks, in small countries. It was felt that they could never do enough to satisfy compliance 
requirements, which, at times, differed from country -to-countr y. It was concluded that this 
dialogue with the Director -General on trade finance had been fruitful and could be continued.  
2.6.  Members  said that s mall and medium -sized enterprises faced challenges similar to those 
described by the Secretariat.  Hence, they su pported this inter -institutional initiative.  The 
availability of trade finance was as an important challenge preventing SMEs from realizing the 
benefits of trade. In this regard, some Members had put in place plans aimed at prom oting 
financial access for S MEs, and improving compliance of international financial rules. Support for  a WT/WGTDF/ 16 
 
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continued dialogue and cooperation on this matter would help tackle trade financing gaps and 
support SMEs' growth. The Chairman concluded on this item that he had heard a good le vel of 
interest and support by Members which had made statements . This was is one area of the WTO 
work in which the interaction between Members and the Director -General seemed to bear fruit. 
The SME/MSMEs dimension of trade finance had been highlighted. Fo llow-up by the Director -
General was encouraging.  
2.7.  At the meeting on 8 November, the Chairman asked the Secretariat to update Members on 
recent developments regarding trade finance gaps  and recent action by the Director -General. The 
Secretariat mentioned the  2017 survey by the Asian Development Bank and related institutions. 
The trade finance gaps remained stable,  at $1.5 trillion, despite the fall in trade in value in the 
period 2014 -2016. SMEs remained disproportionally affected ; three -quarters of the rejec tions 
recorded in the survey of 515 banks in 90 countries involved SMEs and mid -cap enterprises. The 
"holes" which have appeared  in the web of bank relations irrigating the trading system had 
become increasing large and entrenched . Essential imports and ex ports in some developing 
countri es could no longer be financed. Several examples provided by multilateral development 
banks were reported. There was so much that such multilateral  banks could do. The situation had 
become critical in some poor countries. Th e Secretariat des cribed progress in the 
Director -General's initiative, notably regarding capacity -building and multilateral development 
banks' interventions, but a regulatory dialogue had become necessary on so-called sanction 
regulations (anti -money laund ering, know -your-customer) which had been hindering  trade finance  
supply lately . International financial regulators had undertaken to clarify regulatory requirements 
in 2016 to avoid over -compliance  by banks , but even developing countries' bank s had become  
more selective in fear of sanctions . There were several comments and questions  from Members, 
such as Brazil, Canada, Colombia, Ecuador and India . The Director -General was working at 
establishing an improved dialogue with high -level representatives of inte rnational regulatory 
bodies such as the Financial Stability Board. Questions were asked on the scope and content of the 
Director -General's proposed dialogue. Comments were gener ally supportive of the 
Director -General's efforts. Other comments pointed to the interactions between regulation, crime 
and trade. In examining the draft annual report of the Working Group to the General Council, 
Members  showed interest in continuing the discussion on trade finance and SMEs next year. They 
agreed to use the same lang uage in conclusion to their report (section 3.1 below), than the one 
used before the 10th Ministerial Conference.  
3  CONCLUSION  
3.1.  In accordance with the terms of Article 36 of the Doha Ministerial declaration, Members 
recommended that the Working Group continue s to "examine the relationship between trade, debt 
and finance, and of any possible recommendations on steps that might be taken within the 
mandate and competence of the WTO to enhance the capacity of the multilateral trading system to 
contribute to a dura ble solution to the problem of external indeb tedness of developing and 
least-developed countries, and to strengthen the coherence of international trade and financial 
policies, with a view to safeguarding the multilateral trading system from the effects of  financial 
and monetary instability". In doing so, Members showed interest in continuing the discussion on  
trade finance and SMEs , and are 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 ].   
3.2.  On November  8, the Working Group adopted its Annual Report (201 7) to the General Council . 
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