WT/WGTDF/W/70  
25 April 2013  
(13-2186)  Page: 1/2  
Working Group on Trade, Debt and Finance   
 
  EXPERT GROUP MEETING ON TRADE FINANCE – 12 APRIL 2013 
INFORMAL REPORT BY THE WTO SECRETARIAT 
1.  The objective of the April meeting was threefold: (i) to take stock of the current market 
situation, with a focus on factors such as liqu idity, risks and price patterns by countries and 
regions (ii) to consider progress on prudential and non-prudential regulatory issues (iii) to examine 
possible trade finance issues that may be of G-20 interest during the Russian Presidency. 
2.  With respect to the current market situation, there was a consensus among participants that 
there was no overall capacity constraint in trade finance markets. Lack of trade finance was hence 
not an obstacle to trade globally. Liquidity was abundant in the largest trading hubs, in line with 
the favorable risk profile of the industry and the relatively easy monetary policies run in the major 
economies. Prices were being pushed downwards. US dollar funding was less of an issue outside the United States than it has been. 
3.  However, there were continued difficulties co untry and sector-wise. Small and medium-sized 
enterprises in low-income countries, but also in medium and higher income countries of Europe, were the most affected. This justified the need for continued risk mitigation provided by multilateral development banks. The Asian Development Bank received particularly strong 
demand, inter alia, from clients in Vietnam, Bangladesh, and Sri Lanka. The EBRD had been quite 
active in supporting trade in Ukraine and Russia. Products from the IFC and the Inter-American Development Bank were in strong demand. Th e African Development Bank had started the 
operation of its trade finance program, aimed at supporting further the financing of trade in 
challenging African markets. The Director-General congratulated the representative of the African 
Development Bank for approval by the Board of Di rector of this new program. He also welcomed 
the highly favorable review received from the IFC Global Trade Finance Programs from the World Bank Independent Evaluation Office. 
4.  With respect to regulatory matters under the Basel framework, the Director-General pointed to 
recent successive steps by the Basel Committee on Banking Supervision to ensure fair prudential treatment of the trade finance industry, particularly traditional instruments such as letters of credit and the like. This included changes to the capital treatment of such products (the waivers of the 
maturity and sovereign floors) and relatively favourable new guidelines on liquidity (the 
composition of the liquidity coverage ratio in particular). The Director-General had also noted that the credit conversion factor for the calculation of  the leverage ratio had been set for trade finance 
instruments at rates of 20% and 50% by the Europe an Union. The Director-General concluded that 
the dialogue with Basel Committee had greatly benefited from the facts reported in the trade 
finance register, compiled by the ICC and fed by data from the industry. The ICC representatives 
presented briefly the outcome of the second versio n of the register, which compiled over 8 million 
short-term transactions from 23 banks over the period 2006-2011. The results were close from the 
first version, i.e. that the percentage of defa ult on transactions was 0.02%. The new registry 
included also some data on long-term trade transactions, which also displayed a low default rate. 
5.  The discussion which was initiated at the previous meeting on other non-prudential regulatory 
issues described as "know-your-customers" (KYC) requirements was continued. The debate did not 
focus on the regulatory requirements themselves, rather on the various ways that they are being 
structured, defined and implemented according to different countries and regions. The cost of implementing non-harmonized requirements in di fferent manner and in different constituencies 
was said by industry representative to be rising to a point of discouraging the supply of trade 
finance in developing countries. WT/WGTDF/W/70 
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  6.  The Director-General confirmed that the FAFT (GAFI) forum was the right point of reference 
internationally. He thought that the issue what not in the direct of the WTO remit but that it was worth considering if the lack of harmonization in countries requirements led to missed trade opportunities for developing countries. This ought to be brought to the attention of the international community. He therefore asked whether it was possible to put together a one-pager, 
fact-based argumentation for the consideration of sister organisations (IMF, World Bank and 
OECD) and Members in the context of the G-20 process, at the level of "Sherpas". 
Finally, the Director-General said that he would strongly recommend to his successor to continue 
meeting with the "expert group" on trade finance,  as an advisory body. With the group's support, 
he had been able to develop a number of concre te and successful initiatives, supported by WTO 
Members, which helped improve the functioning of trade finance markets and the opportunities of traders around the world.  
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