WT/WGTDF/W/82  
 
15 Sept embe r 2016 
(16-4884) Page: 1/2 
Working Group on Trade, Debt and Finance   
 
 PROGRESS REPORT  – TRADE FINANCE AND SM ES 
WTO SECRETARIAT  
1.1.  This paper is aimed at updating  WTO Members on recent  trade finance  developments  which 
could be linked to areas identified in the Director -General 's report,  "Trade Finance and SMEs". 
Informatio n pres ented below emanates from recent meetings and interaction with  partner 
institutions .   
1.2.  Since the issuance of the Director -General's document  in May , the Asian Development Bank  
(ADB) , with support from several institutions (including from the  UN, ITC and the WTO), has 
released its 2016 Trade Finance Gap Survey, confirming the large global gap in provision.1 The 
estimated global trade finance gap was US$1.6 trillion in 2015, against an estimated gap of 
US$1.4 trillion in 2014, despite the fall in trade by 13%  in 2015, in US dollar  value. US$700 billion 
of the gap is estimated to be in Asia (mostly in China and India, but also in other countries such as 
Viet Nam, Cambodia, the Philippines,  Bangladesh, Pakistan, Myanmar  and countries of the Pacific). 
Other regio ns are also affected by gaps (Latin America, Africa, Europe /CIS). Asia  and the Pacific 
have the highest rejection rate from banks on trade finance requests, followed by Africa and the 
CIS. 56% of SME trade finance requests are rejected by banks, while larg er corporates face 
rejection rates of 34% and multinational corporations, 10% . While new types of trade finance 
providers are entering the market, banks are digitizin g their internal processes to reduce costs. 
Still, 70% of the 800 surveyed firms ( from 91 countries) are unfamiliar with digital finance. WTO 
Secretariat and ADB staff will further exploit data from these surveys to better understand the 
reasons for the persistence of such large gaps – despite the low -risk profile o f trade finance.  The 
ADB survey, and in general gap detection work,  will also be continued , as per WTO 
recommendations . 
1.3.  As suggested earlier, part of the trade finance gap reflect s a knowledge gap, notably in 
developing countries; local financial sectors ha ve limited human resource capacities in the area of 
trade finance. Training efforts need to be increased , also as part of  the proposal s by the Director -
General . Several partner institutions are helping to " leverage" the newly -created International 
Chamber of Commerce's  (ICC)  Academy . The Academy has many advantages, not least in 
providing ICC certification and reaching out to developing countries' customers through its wide 
network of ICC national committees. However, the Academy would  run in parallel with other 
existing learning platforms , as there is enough demand for several  providers in the market. 
Currently, large markets such as China and India are under -served. In a recent visit to Singapore's  
ICC Academy headquarters, the Secretariat learned that 700 trade financiers will be t rained by the 
Academy  in its first year of operation  – a conservative number based on already signed contracts 
with banks . The first batch of e -courses is  ready. More efforts are needed within the ICC to market 
the Academy. Courses are only available in En glish for the time being . Still, the ICC had 
established its Academy in record time.  The World Bank's International Financial Corporation ( IFC) 
and Islamic Development Bank (IDB) announced  in 2016  that they will also ramp up trade finance 
training.  These are complementary efforts.  In the past ten years, the IFC ha s already provided 
training to more 6,000 professionals , providing  numerous courses on various areas of trade 
finance. It has also engaged in longer -term training arrangements with regional partne rs, such as 
Ecobank in Africa. The IDB has also provided direct training to hundreds of participants, and it is 
                                                
1 The WTO Secretariat participated in the "launch" of the 2016 ADB Trade Finance Gaps , Growt h and 
Jobs Survey.  The survey can be found at http://www.adb.org/ , as the ADB Brief number 64, "2016 Trade 
Finance Gaps, Growth, and Jobs Survey", August 2016. The 2016 survey benefitted from replies by 337 banks 
in 114 c ountries, and 791 firms in 96 countries. Export credit insurers and factoring companies also provided 
replies to the survey questionnaires.  WT/WGTDF/W/82  
 
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  sponsoring country and regional training activities. In 2015, the European Bank for Reconstruction 
and Development ( EBRD ) provided e -learning co urses on "introduction to trade finance" and "ICC 
rules for documentary credit" to over 1,000 bankers, of whom 440 passed their exams. More 
collaboration is envisaged, notably between the EBRD and Factor Chain International. The African 
Development Bank is  looking at "mobile clinics" through external consultants. All in all, the 
objective of training 1,000 trade financiers per annum, under the existing  platforms, is largely 
achievable.  
1.4.  Questions about regulations largely focused, in the past couple of years , on the cost of 
compliance to non-prudential  regulation , so-called "know -your-customers" (KYC) requirements and 
related regulations on anti -money laundering (AML). Such requirements and checks are not 
specific to trade finance – they involve the whole spe ctrum of cross-border financial activities. The 
causality between the cost of compliance and "de -risking" by global banks has been difficult to 
establish. However, the de -risking phenomenon has been considered sufficiently worrying by 
international financi al institutions that several reports have been focusing on the matter  lately . In 
2015, t he World Bank has been mapping the reduction of correspondent banking relationship s, 
while the Bank of International Settlements (BIS) has provided very specific recomm endations 
regarding  how to  implement such regulations while limiting the cost of it. One of the solution s 
emerging has been to promote a greater use of KYC "utilities". Ideas had already emerged from 
the WTO export group on trade finance , notably from the IFC, on establishing "utilities" such as 
the KYC repository that was eventually created by the SWIFT  corporation . During the summer of 
2016, the s peech by Mme Christine Lagarde at the Federal Reserve Bank of New York focused on 
the drastic reduction in cor respondent banking relationships, which  had become "macro -critical " 
for countries reliant on remittances, trade finance and other cross -border financial services. As a 
result, t here is a growing consensus within the global financial community  (IMF, World B ank, BIS) 
to address this issue .  
1.5.  Regarding trade finance facilitation programmes, discussions are under way in partner 
institutions  concerning  ramping up existing programmes or promoting new ones. One temporary 
obstacle regarding the increase in existing limits by multilateral institutions is the fact that trade 
has been falling in value (albeit not in volume) in 2015 and in early 2016. Th e amount of trade to 
be financed in low -income countries  – in particular in the commodity area, has also fallen.  This 
seems to be contradictory with the ADB survey which indicates that the trade finance gap is 
significant. This apparent contradiction can be explained by the fact that some multilateral 
development banks operate mainly in favour of low-income countries ' bank s, or at a somewhat 
higher GDP-per-capita level . Countries with the largest estimated trade finance gaps (China and 
India) are not eligible  for these programs . In the short -run, lower trade in low -income countries 
results in some unused limits in trade fin ance facilitation programs. Multilateral development bank s 
are working at expanding the network of eligible  banks in low-income  countries. At th e present 
moment, one development bank (the Islamic Development Bank) is implementing an increase in 
its program , while another one is seeking Board approval for an ex tension (as well as an 
expansion)  of its overall scheme (the African Development Bank) . Other banks are currently 
reflecting on how to be more effective with existing resources.     
1.6.  The Director -General  continue s to advocat e in favour of his proposals in various fora, as a 
continuous process. He has written to all heads of partner  institutions, and he received  very 
positive feedback from the heads of the IFC and the ICC , in particular . He also received s trong 
support from representatives of SMEs, in the context of the dialogue with the private sector. 
During the 2016 Fall Meetings of the IMF and World Bank Group, a  meeting is organized between 
the CEO of the IFC and the D -G of the WTO, to examine prospect s for joint cooperation. In other 
fora, such as the G20, the Director -General has advocated in favour of commitments towards  
"enhanced trade finance".   
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