JOB/GC/127  
 
9 June 2017  
(17-3103) Page: 1/4 
General Council  Original: English  
 
 FOSTERING THE PARTIC IPATION OF MICRO, SM ALL AND MEDIUM ENTER PRISES 
(MSME S) IN INTERNATIONAL T RADE  
COMMUNICATION FROM A RGENTINA, BRAZIL, PA RAGUAY AND URUGUAY  
The following communication , dated 8 June 2017, is being circulated at the request of the 
delegatio ns of Argentina, Brazil, Paraguay and Uruguay as an input for discussions at the Informal 
Dialogue on MSMEs (Friends of MSMEs) . 
 
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1  INTRODUCTION  
1.1.  Micro, small and medium -sized enterprises (MSMEs) represent, on average, 95% of 
companies in alm ost every country around the world1; they concentrate around 60% of jobs in 
developed countries and 80% in developing countries (including an estimate of the informal 
sector)2 and are estimated to account for 60 to 70% of the global GDP3. Therefore, they p lay a 
major role in social and economic policies, and also in the UN Sustainable Development Objectives, 
which seek to encourage the expansion of MSMEs promoting inclusive and sustainable growth, full 
and productive employment , and decent work for everyone . 
1.2.  Developments such as e -commerce, new communication and information technologies, are 
generating new opportunities for the international insertion of MSMEs. However, their share in 
global trade remains low. According to WTO calculations based on the World  Bank Enterprise 
Surveys, which include over 25,000 MSMEs in developing countries, direct exports account for only 
7.6% of total sales in the manufacture sector, in comparison with 14.1% by large manufacture 
businesses. In developed countries, businesses w ith under 250 employees represent 78% of 
exporters, but j ust 34% of exports on average.  
1.3.  The participation of MSMEs in international trade has emerged as an important issue in the 
WTO agenda. Although not completely absent from existing trade disciplines, i t seems to deserve 
closer attention and possibly a more comprehensive approach.  
1.4.  Some proposals and ideas recently presented have made reference to the subject 
(JOB/GC/80, WT/GC/W/708, WT/GC/W/731 and JOB/RO/6), demonstrating the interest of 
membership on t his issue. This growing importance can also be seen in bilateral and regional trade 
agreements notified to the WTO, about half of which include provisions related to MSMEs.4 The 
co-sponsors of this paper are State Parties to the Common Market of the South (MERCOSUR), 
which has developed a number of policies and  mechanisms in favor of MSMEs.  
1.5.  Members should cooperate with a view to improving the infrastructure and technical 
conditions necessary to enhance the sustainable development and capacity of MSMEs, the ir 
internationalization, and effective integration in production valu e chains. In this sense, the 
co-sponsors encourage the exchange of experiences relating to financial education, quality 
standards and commerc ial intelligence, among others.  
                                                
1 World Trade Report 2016: Levelling the trading field for SMEs, WTO, 2016.  
2 Evaluation of the World Bank Group 's targeted support for small and mediu m enterprises ", 
Independent Evaluation Group (IEG) approach paper, World Bank, 2013.  
3 Small and M edium -Sized Enterprises and Decent  and Productive Employment Creation , OIT, 2015.  
4 Provisions on Small and Medium -Sized Enterprises in Regional Trade Agreeme nts, WTO, 2016.  JOB/GC/127  
 
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  1.6.  In the G eneral  Council meeting held on 18 May 2017, a group of Members, including 
Argentina, Brazil, Paraguay and Uruguay announced the establishment of an Informal Dialogue on 
MSMEs at the WTO (RD/GC/5). With a view to accomplishing the objective of reaching outcomes a t 
the 11th Ministerial Conference (MC 11), the co -sponsors of this communication raise some ideas 
to contribute to the current discussions on the insertion of MSMEs in international trade, 
encouraging Members to add contributions and suggestions. These idea s are without prejudice to 
other possibilities, and they are intended to serve as a t rigger for an agenda for MC 11. 
2  TOWARDS AN AGENDA AT  THE MC 11 
2.1  MSMEs as a development outcome  
2.1.  We recognize that MSMEs in both developed and developing countries face signifi cant 
obstacles to participation in international trade, and welcome the opportunity to address the 
specific needs of MSMEs at the WTO with the aim of promoting their growth and development, 
contributing to increased world trade, global employment and susta inable development.  
2.2.  MSMEs should become an important component of a development -oriented agenda at the 
WTO. By undertaking to consider the issue of MSMEs as part of future discussions within the 
framework of the WTO, Members have the opportunity to take a decisive step to accomplish the 
WTO's mission of contributing to economic development and raising standards of living. While 
some challenges are shared by MSMEs from both developed and developing countries, particular 
attention and specific positive effort s should be aimed at levelling  the playing field in favour  of 
MSMEs from developing countries and least developed countries (LDCs), which face additional 
obstacles and gaps in productivity.  
2.2  Internationa l trade issues related to MSMEs  
2.2.1   Information and Transp arency  
2.3.  The high costs associated with access to information are one of the main obstacles that 
prevent MSMEs from developing export activities. Most MSMEs simply lack the appropriate 
resources and skills to identify sales prospects, consumer preferences an d business opportunities 
in third markets, which is often the first barrier preventing them from engaging in international 
trade or expanding their participation therein.  
2.4.  MSMEs ' limited ability to acquire information about foreign markets is directly relat ed to their 
relatively low level of exporting participation. Establishing and maintaining a predictable regulatory 
environment for economic operators is important for investment decisions in general and 
particularly relevant to MSMEs.  
2.5.  In this regard, bilat eral and regional agreements have included proposals and initiatives 
about the establishment of online portals or helpdesks for exporters with a wide coverage, public 
access and simple navigation.  
2.6.  Following these ideas, Members could promote the establishm ent of online helpdesks/contact 
points with information on customs regulations and procedures, technical regulations, certificates 
of origin, sanitary and phytosanitary measures, compliance, Intellectual Property rights, 
regulations on public procurement, regional agreements in force, along with any kind of 
information that may contribute to the insertion of MSMEs in international trade.  
2.7.  In practical terms, such efforts could build upon the experience of the Enquiry Points being 
created under the Trade Faci litation Agreement, by reviewing their design from the perspective of 
MSMEs needs and capabilities. At the same time, a broad range of WTO -related issues of interest 
to MSMEs, including services, could be dealt with by such Enquiry Points, besides trade in  goods.  
2.8.  The WTO website could contain an exclusive entry dedicated to MSMEs containing the 
relevant information and links to national portals, international organizations ' websites, or relevant 
information on trade financing arrangements.  JOB/GC/127  
 
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  2.9.  In the same vein,  Members should consider alternatives to strengthen the notification and 
publication mechanisms established in the WTO, in order to contribute to a predictable regulatory 
environment for MSMEs.  
2.10.   Human and financial resources in international organizations c ould also be allocated to 
helping MSMEs improve their capacity to deal with non -tariff barriers. Cooperation, technical 
assistance and capacity building tools could be devoted to assist MSMEs to comply with standards, 
technical regulations and conformity a ssessment procedures needed to access foreign markets, 
without prejudice to measures taken by governments to challenge those laws and regulations 
adopted by other Members which they deem inconsistent with WTO rules.  
2.2.2   Trade Facilitation  
2.11.   The proportion that t he administrative costs of trade represent over the total cost of the 
activity is significantly higher for MSMEs than for large enterprises, which move a larger volume of 
goods and have higher levels of productivity. In line with the membership commitment to the 
Trade Facilitation Agreement, we propose to give particular consideration on meeting the deadlines 
set in the parts of the Agreement with a greater impact on the specific needs of MSMEs, such as 
paperless trade, single window, and other measures.  
2.12.   The membership should also consider concrete measures to simplify procedures and 
requirements in the area of certification of origin, with a focus on MSMEs, which could include 
digital certification, certification for multiple transactions and exceptions und er certain 
circumstances.  
2.13.   Additionally, Members could encourage the supply of more affordable logistics services to 
MSMEs, which view logistics costs as a major obstacle to their participation in international trade. 
In the context of implementation of the  Trade Facilitation Agreement, for example, the 
membership could explore ways to tackle logistical hurdles that particularly affect MSMEs.  
2.2.3   E-commerce  
2.14.   The growth of e -commerce promises to increase export opportunities for MSMEs by 
connecting producers and c onsumers located at great distances at a comparatively low cost, giving 
them a global presence previously reserved for large multinational companies. In fact, according to 
the WTO 2016 World Trade Report, commercial MSMEs using the Internet not only export  more, 
but also export to a larger n umber of foreign destinations.  
2.15.   However, MSMEs still have a smaller online presence than large companies. The first 
obstacle to electronic sales is affordability and access to communications infrastructure. While 
there is  a gap in Internet connectivity between small and large enterprises in all countries, this gap 
is especially large in LDCs. The digital divide between developed and developing countries, which 
have an impact on the latter 's MSMEs, should al so be a part of the discussion.  
2.16.   In this regard, Members have expressed interest (JOB/GC/96/Rev.1 - JOB/GC/101/Rev.1 - 
JOB/GC/97/Rev.3 - JOB/GC/110/Rev.1, JOB/CTG/2/Rev.1, JOB/SERV/243/Rev.1, 
JOB/DEV/39/Rev.1) in examining the positive linkages of MSME participation in e -commerce and 
their implications for economic development and international trade; as well as in promoting 
capacity -building and technical assistance to facilitat e their use by these companies.  
2.17.   In the context of the Work Program on Electronic Commerce, Membe rs could promote 
cross-border recognition of electronic signatures, international electronic payments, among other 
measures, which would positively impact MSMEs.  JOB/GC/127  
 
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  2.2.4   MSME trade financing  
2.18.   In both developed and developing countries, there is great disparity rega rding access to 
finance for different types of companies. On a global level, according to WTO statistics, around half 
of funding requests from MSMEs are rejected, compared to only 7% when it comes to 
multinational corporations5. Taking into account that ab out 80% of the world trade is supported by 
some type of financing, MSMEs are obviously at a dis advantage in this area as well.  
2.19.   In this regard, we welcome the initiatives to support the development of MSMEs from the 
World Forum of MSMEs, the G20, the World Bank, the Inter -American Development Bank, UNCTAD 
and OECD, among others.6  We encourage Members to cooperate with these and other relevant 
institutions in order to achieve greater financial inclusion of MSMEs, for instance by creating 
instruments to facil itate lending and credit guarantees not only for the development of external 
markets, but also for investment projects that tend to reduce the productivity gap between MSMEs 
and large companies.  
2.20.   MSMEs would also benefit from larger availability of tools to  assess their counterparts ' credit 
risk, the lack of which increases the cost of financing and represents an obstacle for MSMEs to 
comple te foreign trade transactions.  
2.2.5   Other issues  
2.21.   In addition to the ideas set out above in order to start a fruitful discuss ion on MSMEs, 
Members could also discuss measures related to transparency in procurement procedures, 
inclusion of issues of particular interest to MSMEs in WTO Trade Policy Reports, concrete actions to 
help reduce trade costs of non -tariff barriers (NTBs),  which place a disproportionate burden on 
MSMEs, and technical assistance and capacity building initiatives f ocused on trade needs of 
MSMEs.  
3  NEXT STEPS  
3.1.  We invite all Members to present their proposals and suggestions on the topics identified 
above, and oth er ideas that could be of interest for discussion, aiming to address the specific 
difficulties and needs of MSMEs in t he multilateral trading system.  
3.2.  We call the membership to participate in the open -ended, informal dialogue on Micro, Small 
and Medium Ente rprises ( "Friends of MSMEs ") to explore concrete measures that Members could 
take to enable their  participation in world trade.  
3.3.  We encourage Members to work together in order to adopt, at the Ministerial Conference in 
Buenos Aires, a Ministerial Decision c reating a Work Program that addresses the specific needs of 
MSMEs, considering the issues mentioned in this document and others that may be suggested, 
taking into account the special relationship between the insertion of MSMEs into international trade 
and the need to ensure inclusive and sustainable growth of a maj or share of global employment.  
 
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5 Trade finance and SMEs. Bridging the gaps in provision, WTO, 2016.  
6 Financing SMEs and Entrepreneurs 2016, OECD, 2016; G20/OECD High -level principles on SME 
financing, G20/OECD, 2015.