RESTRICTED  
  
JOB/GC/95  
 
7 July 2016  
(16-3657)  Page: 1/7  
  Original: English  
 
 ENHANCING THE PARTICIPATION OF MICR O, SMALL AND MEDIUM ENTERPRISES 
(MSMEs) IN INTERNATIONAL TRADE 
COMMUNICATION FROM BRUNEI  DARUSSALAM, LAO PDR, MALAYSIA, THE PHILIPPINES, 
REPUBLIC OF SINGAPORE, AND THAILAND 
The following communication, dated 6 July 2016, is being circulated at the request of the 
Delegation of the Philippines. 
 
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1  BACKGROUND 
1.1.  At the 24 February 2016 meeting of the General Council, the Philippines along with 
Brunei Darussalam, Lao PDR, Malaysia and Singapore laid out an indicative work plan for 
continuing the dialogue on MSMEs in 2016. The work plan took into account the genuine interest of 
Members to hold an open and comprehensive dialogue on MSMEs that would generate new and useful information. More specifically, Members say that there are existing WTO rules which provide 
opportunities for MSMEs and that all of us should  be aware of them. They also say that sharing 
actual experiences of MSMEs engaged in export and trading activities will bring out instances 
where challenges and hurdles towards engaging in international trade could be identified and improvements could be discussed informally. 
1.2.  In implementing this work plan, the Pe rmanent Missions of the Philippines, Lao PDR, 
Malaysia, Brunei Darussalam, the Republic of Singapore and Thailand with the International Trade Centre (ITC) organized the workshop entitled "Enhancing the Participation of Micro, Small and 
Medium Enterprises (MSMEs) in International Trade" on 21 June 2016 as part of the WTO Geneva 
Week programme. 
1.3.  The workshop aimed to create another opportunity to enhance awareness on the role of 
MSMEs in international trade, provide a platform to  share experiences, and identify best practices, 
success factors and challenges related to the part icipation of MSMEs in international trade. The 
intention of the workshop was to offer the WTO Members the best source for this information through peer-led exchange by people who work directly with MSMEs, complemented by expert 
input. 
1.4.  ITC Executive Director Arancha Gonzales and WTO Director General Roberto Azevêdo 
provided the broad context for the workshop high lighting the importance of MSMEs in inclusive 
growth and the role international cooperation can play in further advancing their interests. The two 
(2) panelists, Undersecretary Nora Terrado and Dr. Hafsah Hashim, shared national perspective on 
MSMEs; former DDG Alejandro Jara has shared in sights on how the present toolbox in the WTO 
rules can help MSMEs integrate in global markets; Ms. Anabel Gonzalez of the World Bank and 
Ms. Marion Jansen from ITC also shared their views on MSMEs from the perspective of their respective international organizations; Mr. Carlos Tanner of the Global Express Association provided practical experience on dealing with MSMEs on the ground; and finally, Mr. Robert 
Koopman of the WTO provided a preview of how the 2016 World Trade Report considers MSME in 
relation to international trade. The programme for the workshop is attached as Annex I. JOB/GC/95 
 
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  2  WORKSHOP HIGHLIGHTS 
2.1.  The workshop offered a platform for dialogue-based exchange among Members, 
practitioners, and policy-makers, thus generati ng more awareness and better understanding on 
MSMEs. The presentations highlighted that it ofte n happens that the challenges ranked by MSMEs 
are different from the challenges ranked by th e policy makers. In this regard, synergy among 
MSMEs, policy makers, and international trade institutions (ITIs) is needed to ensure that we complement the many efforts currently being undertaken to understand the world of MSMEs and 
for developing evidence-based practical solutions. While the speakers and participants are diverse 
with respect to areas of specialization, th e views converged towards a few broad themes. 
2.2.  SMEs are relevant because they account for more than 90% of businesses, and more than 
60% of employment in any country. Evidence further shows that SMEs that participate in 
international trade are more competitive, productive, and pay better wages. It is in this context 
that the UN Sustainable Development Goals (SDGs) have put SMEs at the heart of their agenda. More importantly, Micro enterprises, the smallest component of the SME sector are increasingly 
the largest sources of employment in many developing and least-developed countries, especially 
for women and youth. Helping MSMEs, therefore,  could help transform many lives around the 
world and supporting MSMEs to trade can help reduce poverty by boosting the quality and quantity 
of jobs in all segments of society. 
2.3.  MSMEs participation in trade doesn't match up. It was highlighted that MSMEs participate in 
trade less than multinational corporations. MSMEs also have a productivity gap compared to larger firms. This gap is bigger in the developing world, almost two (2) or three (3) times the size of the 
gap in the industrialized world. It was further highlighted that over 99% of enterprises in Lao PDR 
are MSMEs but contribution to the economy is qu ite small and mostly produce for local market. 
They struggle with access to markets, finance, te chnologies, and people and while there have been 
integration in regional and global value chains, the value-added of production is not at the higher-
end of spectrum. 
2.4.  For MSMEs, the trade costs are also bigger.  MSMEs face disproportionately a large share of 
fixed and variable costs of trade due to their relatively small turnover, these include access to 
information, access to finance, tariffs, mandatory and voluntary standards, and rules of origin. MSMEs also have to grasp e-commerce opportunities, address productivity gaps, access knowledge and technology, and understand the intricacies of integrating in the global value chains. 
a. Non-tariff measures (NTMs) are big hurdles for MSMEs to cross borders. This is the 
evidence provided in the ITC survey conducted across 52 countries as well as in EU-28 countries. The top five (5) NTMs included standards (SPS and TBT) and rules of origin. It 
was further highlighted that it is important for information on these NTMs to be made 
available immediately and in a manner that is understandable and usable for MSMEs. 
b. E-commerce is a tool widely used by MSMEs in doing business. However, it is a tool used 
mostly in domestic transactions. This data points to a complexity in shipping between 
borders (logistics). It was highlighted that MSMEs face the same regulations in shipping across borders as large companies. They face the same complexities, but must deal with them with fewer resources. The data also further supports the assertion that non-tariff 
measures are hurdles for MSMEs to cross borders. 
c. Innovative firms are more productive and mo re likely to export. However, MSMEs remain 
to have low adaptability to new technologies due to lack of knowledge of its benefits, 
resistance to technological innovation, the high cost of technology, and the lack of 
foreign markets. This pushes MSMEs to offer their products and services at high prices losing competitiveness. It is therefore, im portant to build an environment for MSMEs to 
thrive in an innovation economy. This includes the need for MSMEs to have access to 
technology and considerations on how MSMEs can thrive in the algorithm economy. 
2.5.  National initiatives are thriving and should be complemented by international cooperation. A 
number of countries that provided interventions during the workshop, including the panelists have 
initiated MSME-friendly policies and are working towards building on these policies through the 
development of strategic plans and roadmaps. It is notable that national policies and initiatives on JOB/GC/95 
 
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  MSMEs are developed against the backdrop of existing trade rules and made possible because of 
the existing flexibilities espoused by the multilateral trading system and the WTO. 
2.6.  WTO agreements help MSMEs by reducing the variable and fixed costs of trade and by 
increasing transparency and predictability. The special situation of MSMEs is acknowledged and 
addressed in a number of WTO agreements, plur ilateral agreements, work programmes and in 
technical cooperation. Flexibilities for SME policies are likewise built in several WTO agreements. 
a. The WTO has made it easier to access information with, for example, the Integrated 
Trade Intelligence Portal (with World Bank). This has been helpful in levelling the playing 
field in terms of available information, but there is still a long road ahead in terms of providing better information – a public good for MSMEs. 
b. The Trade Facilitation Agreement (TFA) was emphasized as a step towards the right 
direction for streamlined process for MSMEs through the single window. Additional 
improvements in implementation that looks further into addressing the low value shipments of MSMEs by further reducing procedural requirements was likewise 
highlighted. 
c. Flexibilities for SME policies have been identified in the Anti-Dumping Agreement (AD), 
Subsidies and Countervailing Measures Agreement (SCM), and the Agreement on 
Intellectual Property Rights (TRIPS). It was likewise flagged that subsidies are actionable 
and a 'rebuttable presumption' that MSMEs are too small to cause injury to domestic industry in other countries may spare MSMEs the costs of complying with the procedures of a CVD investigation. 
d. Other areas included improving the participation of MSMEs in public procurement; 
facilitation of MSMEs going out to other markets and undertaking investments, and enhancing the ability of MSMEs to defend their situation and avoid unnecessary injury 
through competition law. 
e. WTO's support provided through initiatives such as Aid for Trade (AfT), the Enhanced 
Integrated Framework (EIF), the Standards and Trade Development Facility (STDF), and 
the recent initiative on trade finance have been identified as essential tools for 
developing countries and LDCs. 
2.7.  In the discussions, it was emphasized that  MSMEs must be the prism through the facets of 
which light is shed on policies and actions that affect international trade. Can the smallest 
component in our economies – micro enterprises – comply with and benefit from the application of 
these rules? How would these discussions be catalysts for inclusive growth? 
3  POTENTIAL KEY AREAS  
3.1.  Potential areas relating to the effective implementation of WTO provisions to make them 
"MSME-friendly" have been cite d during the workshop. These included up-to-date market 
intelligence, an enabling regulatory environment, access to finance, logistics, e-commerce, and 
innovation. 
Have an improved and continuous dialogue 3.2.  Create awareness about MSMEs' chal lenges across the board and develop a better 
understanding of what the major barriers are for MSMEs. 
3.3.  Learn from each other's experiences and national initiatives as well as consider best practices 
of government programs for MSMEs. Initiatives high lighted in the workshop included the following: 
a. The Philippines' Shared Service Facilities (SSFs) have been set up to help address the 
gaps and bottlenecks in the value chain, en abling MSMEs to manufacture high-quality 
products at a stable rate and improve the quality and productivity of MSMEs in different parts of the country. SlingshotPH and incubator projects have likewise been initiated for 
startups and innovation ecosystem development. JOB/GC/95 
 
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  b. Malaysia's Ratings, Certifications & Awards scheme include SCORE, MCORE, 
Enterprise 50, National mark of Malaysian Brand, and 1-InnoCERT. 
c. Brunei's DARe or "Darussalam Enterprise DARe " provides capacity building, facilitating 
access to funding, invest and access to domestic and international markets, as well as 
getting halal certifications. The Business Support Centre was likewise recently launched 
to facilitate and act as the consolidated front-end and includes all services relevant to enterprises of all sizes throughout their lifecycle from starting a business, applying for 
permits, getting industrial land, and paying taxes, among others. 
d. Singapore's single portal covers all stages  from planning and growing SME's business 
and financing options. It consolidates in formation from all government agencies.  
e. Nigeria's SME programs were designed to create a conducive SME environment and 
improve business capacities, including a new national policy for 2015-2025. 
f. Chile's "SMEs exports" program include arrangements to facilitate exports in postal 
offices and the developments of SME´s export promotion centers throughout Chile's 
15 regions, and the Human Capital for Innovation aimed to hire PHD graduates to work 
on SMEs and help them innovate. 
g. Panama's "hub for entrepreneurs" aims to train entrepreneurs in topics such as 
management for the creation, formalization of businesses and provide them academic 
training in line with current trends in order to take advantage of the Panama Canal expansion. 
h. Chinese Taipei's online to offline business models aim to assist SMEs to compete in the 
global marketplace with less cost, with less trade barriers and fast. 
Further improve transparency to enha nce MSMEs' access to information 
3.4.  Improve the organization of information (i.e . WTO members' notifications) to keep it user-
friendly, up-to-date, and useful. 
3.5.  Encourage national administrations to access and translate available information. Help MSMEs navigate the world of regula tory environment, particularly NTMs 
3.6.  Assist MSMEs with policy and legal analysis by having the WTO and other international 
organizations cooperate so that a methodology can be designed for MSMEs, such study cost impact of new, emerging, and existing trade measures. 
3.7.  Cooperation between agencies is something that can be deepened. How can we ask key 
people in different agencies to sit down and esta blish a methodology to be employed by MSMEs so 
that any rule can be assessed on what it means fo r MSMEs so that they are aware of the costs for 
them (ITC, UNCTAD, WB, Regional Development Banks). 
3.8.  MSMEs do not have full capacity to protect their full interest when there is a new law that 
affects them. ACWL can be more proactive in looking out there at measures being drafted and alert their members – an "early warning system". 
Help TFA become a reality on the ground an d help MSMEs adjust to new provisions 
3.9.  MSMEs send lower value shipments and a simplified treatment of those shipments could 
unlock their trading potential. Regulation in this sense exists, but varies greatly across countries. International guidelines also exist (OECD, WCO), but are 'soft law' approaches. 
3.10.  A common threshold in requirements for low-value shipments could be agreed upon. This 
could then be adapted to an online tool to facilitate access to information. Would not need to be a treaty, could be scheduled by countries. JOB/GC/95 
 
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  3.11.  'Middleman' approach in taxation – consider not having tax collection at the border for 
MSMEs but streamline it via an agent who could do it periodically, saving time and resources. 
Facilitate cheaper and faster start up through innovation 3.12.  Look at how new technologies can fa cilitate new participation of small traders. 
3.13.  Facilitate dialogue on how MSMEs can thrive in today's dynamic and growing innovation 
economy. 
Technical assistance and capacity building is important 
3.14.  More advocacy and research on this topic, e.g. World Bank  efforts with G20. 
3.15.  Improve access to finance. This is a big challenge, especially for micro enterprises. 
Innovative solutions for credit could have a big impact. In April 2016, WTO Director-General Roberto Azevêdo issued a call for action to help cl ose the gaps in the availability of trade finance 
that affect the trade prospects of small and medium-sized enterprises (SMEs), particularly in Africa 
and Asia. Among the actions recommended was to ramp up existing trade finance facilitation programmes by US$50 billion. 
3.16.  Tailor assistance to MSME capacity/skills.  Tools like SCORE (Malaysia) can help understand 
the stage of internationalization of the business an d which assistance is needed to catapult them 
into international trade. 
 
 
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 JOB/GC/95 
 
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  ANNEX 1 
ENHANCING THE PARTICIPATION OF MICR O, SMALL AND MEDIUM ENTERPRISES 
(MSMES) IN INTERNATIONAL TRADE 
Tuesday, 21 June, 15:00–18:00 – WTO, Room W 
A workshop organized by the Permanent Mission s of the Philippines, Lao PDR, Malaysia, 
Brunei Darussalam, the Republic of Singapore and Thailand with the International Trade Centre (ITC). 
 
Small and medium-sized enterprises (SMEs) constitute the overwhelming majority of firms and are a major source of employment in the economies of WTO members. Globally, SMEs make up over 
95% of all firms, account for approximately 50% of value added and 60% of total employment 
(ACCA, 2010; Ayyagari et al., 2011; Edinburgh Group, 2013). 
 Micro enterprises, the smallest component of the SME sector, are increasingly the largest sources 
of employment in many developing countries, especially for women and youth. 
 MSMEs are especially vulnerable to trade barriers.  They typically export in smaller volumes and 
therefore have higher export-related per-unit costs than bigger firms. Larger firms are more 
productive, with the productivity gap between sm all and large firms tending to be much more 
pronounced in developing countries than in indust rialized countries. Closing this productivity gap 
would lead to significant opportunities for inclusive growth (ITC: SME Competitiveness 
Outlook 2015). 
 Although innovation in communications and transportation has dramatically lowered the overall 
barriers to market entry for small firms, MSMEs continue to lag behind large firms not only with 
regard to productivity but also level of competitiveness and ability to internationalize. Evidence shows that while around 20% of new firms go out of business after their first year, and just over 
50% after five years (Dunne, Robertson and Samuelson, 1988; van Praag, 2003; Knaup and 
Piazza, 2007; Geroski, Mata and Portugal, 2010), young MSMEs are more likely to survive if they export. If policymakers address the market failures that constitute barriers to trade for MSMEs, the enterprises will be able to become more competitive. 
 
These barriers are complex and can be both internal to a particular firm or emanate from the larger business and trade policy environment in which MSMEs operate. 
 
 JOB/GC/95 
 
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WORKSHOP PROGRAMME  
15:00–15:07 Welcome remarks 
H.E. Mr. Esteban Conejos, Jr.,  Ambassador, Permanent Representative, 
Philippine Mission to the WTO 
 15:07–15:15 Opening remarks 
Ms. Arancha González , Executive Director, ITC 
    15:15–15:25 Keynote address  
Mr. Roberto Azevêdo , Director-General, WTO 
 
15:25 –15:35 Session 1: Learning to grow: Revitalizing the SME Agenda   
Ms. Anabel Gonzalez , Senior Director, World Bank Group Global Practice on 
Trade and Competitiveness – video message  
 15:35-15:45 Session 2: MSMEs in Regional and Global Markets 
   Ms. Marion Jansen , Chief Economist, ITC 
 15:45–15:55 Session 3: Role of trade policy in the internationalization of MSMEs 
Mr. Alejandro Jara , Senior Counsel, King and Spalding LLP, Geneva and 
former DDG, WTO 
 15:55–16:05 Session 4 : Start-ups and Innovation 
H.E. Ms. Nora K. Terrado , Vice-Minister of Trade and Industry, Philippines 
 16:05–16:15 Session 5 : Complying with Standards and Regulations 
Ms. Hafsah Hashim , Chief Executive Officer, SME Corporation Malaysia 
 16:15–16:25 Session 6 : Cross-border issues – logistics and trade facilitation 
Mr. Carlos Grau Tanner , Director-General, Global Express Association 
 
16:25–16:35  Session 7: Helping MSMEs to trade: initial findings of the WTO's 2016 World 
Trade Report 
Mr. Robert Koopman , Chief Economist and Director of Economic Research and 
Statistics, WTO 
 
16:35–17:50     Moderator opens the floor for questions and reactions from participants 
 17:50–18:00 Synthesis and closing remarks  
Organized by the Permanent Missions of the Phili ppines, Lao PDR, Malaysia, Brunei Darussalam, 
the Republic of Singapore and Thailand with the International Trade Centre (ITC).  
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