RESTRICTED  
  
WT/WGTDF/M/29  
 
11 July 2014  
(14-4001)  Page: 1/6  
Working Group on Trade, Debt and Finance    
 
 REPORT OF THE MEETING OF 13 JUNE 2014 
1.  The twenty ninth meeting of the Working Grou p on Trade, Debt and Finance (WGTDF) was held 
on 13 June 2014 under the Chairmanship of Amba ssador B. de Crombrugghe (Belgium). In his 
introductory remarks, the Chairman detailed the proposed agenda for the meeting: under point 
one, a representative of the International Monetary  Fund (IMF) was invited to make a presentation 
on the Fund's progress in exchange rates and macroeconomic surveillance, to be followed by 
questions and remarks by Members. Point two of the agenda would focus on trade finance, in 
particular on the recent meeting of the WTO Dire ctor-General and the Secretariat with the expert 
group on trade finance. Under point three of the agenda, Members would “brainstorm” on how to carry the WGTDF work forward. The delegation of  Brazil agreed to present its new submission 
(WT/WGTDF/W73) on exchange rates and trade un der point three of the agenda. The Chairman 
asked whether the agenda could be adopted.  
2.  It was so agreed. 
1  AGENDA ITEM I: EXCHANGE RATES AND TRADE – PRESENTATION BY THE IMF  3.  The Representative of the IMF made a presentation on "IMF's External Assessment 
Framework", developing four sub-titles; "mandate and guidelines"; "bilateral and multilateral 
surveillance"; "systemic and non-systemic cases" ; and "methodologies". This presentation was 
distributed to Members and circulated as a room document. The IMF Representative answered a number of requests for clarifications by delega tions, notably on what constituted the "hard 
obligations" of Fund members on exchange rates policies, and on the binding or non-binding 
character of staff recommendations relative to polic y "gaps" that may be at the origin of exchange 
rates and external imbalances. The IMF Representative confirmed that the external assessment analyses were shared and published within the G-20 context. 
4.  The Ambassador of China congratulated the IMF representative for his presentation, and, more 
generally, for the professional work of the Fund on recent exchange rates and macroeconomic 
surveillance. He reminded the Working Group that there had been a mix of differing opinions on 
WTO involvement in this matter.  He reiterated China's position, notably that the monitoring of 
exchange rate volatility and its economic impact was the task of the Fund. Activities of international organizations should not in any way prejudice or interfere with the competencies of the IMF.  The WTO, as the international organizati on regulating global trade, was no exception. 
With respect to coherence, most of the WTO Members were also the Members of the IMF. One 
could rely, within each government, on colleagues in the Ministry of Finance, Treasury or the Central Bank to competently handle the currency volatility issue within the framework of the IMF. 
Moreover, monetary policy, including exchange rates, was a major macro-economic policy 
instrument, that did not fall within the mandate of the WGTDF. While it could be understood that the Working Group could examine the relationship between currency volatility and trade from an 
economic or academic point of view, the Wo rking Group could not exceed its mandate. 
5.  The Chairman thanked the representative of the IMF for his presentation and delegations for 
this initial discussion on exchange rates and trade. He would wait for the discussion under point 
three of the agenda to summarize exchanges on the matter. 
2  AGENDA ITEM II: REPORT ON TRADE FINANCE 
6.  The Chairman invited the Secretariat to repo rt on the meeting of the Expert Group on Trade 
Finance, held on 25 April, 2014, under the Chairman ship of the Director-General of the WTO. He WT/WGTDF/M/29 
 
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  had attended the Expert Group meeting.  He shared a number of figures and features of trade 
finance that had been discussed during this meeting.  Global trade transactions accounted for more than US$18 trillion of goods and services, roughly 80% of which was subject of a credit 
arrangement, a guarantee contract or a credit insurance policy.  Fees for such credits or 
guarantees in North America and Asia were relatively cheap, but in the some of the most dynamic 
markets for trade, such as Africa, they were not.  Hence, the gap for financing trade could be as high as US$70 billion or 10% of the trade concerned in that region.  The demand for trade finance 
programs of multilateral institutions, an indicator of the global trade finance gap, had never been 
so high.  This was food for thought. 
7.  The Secretariat debriefed the Working Group orally on the Expert Group on Trade Finance, 
along the lines of WTO Document WT/WGTDF/W72. He reported some of the messages given by 
the Director-General to the Expert Group during the meeting. In particular, while trade finance did 
not feature in the core texts of the WTO, there wa s no question about its centrality of WTO work in 
this area. The Asian crisis and the global financial crisis had demonstrated that fact beyond doubt, 
as their impact on trade finance had hit international trade flows hard. Increasing academic 
evidence had shown a causal, supply-side impact of the lack of trade finance on trade. Trade 
finance was not only demand-driven. Current estimates showed that up to 10% of the 2009 trade 
collapse could be explained by shortages in trade finance.  
8.  The G-20 has stressed that the continuing structural gaps in trade finance in developing 
countries had been exacerbated by the crisis: the deleveraging of international financial institutions has had a significant impact on exposures in low-income countries. Besides, the 
increased concentration of the banking sector in those countries had meant a re-focusing on the 
largest customers at the expense of SMEs. In some countries the regulatory response had increased the cost of doing business. All of the ava ilable evidence pointed to growing difficulties at 
the lower end of the market. This was not just  the WTO view. The 2013 report of the World 
Economic Forum on World Competitiveness had made this point very clearly.  It had ranked the lack of access to finance as the most problematic factor for doing business in Sub-Saharan Africa – 
above the lack of physical infrastructure. A 2012 survey by the Dutch government had also 
identified lack of access to trade finance as the main obstacle to SMEs exporters, notably in the tourism and agricultural sectors – a problem that had worsened since the crisis; and a survey conducted by the WTO with the OECD in 2013 concluded that the  lack of access to trade finance 
was a key element in the inability of low income countries to participate in global value chains.  
9.  Global value chains accounted for between ha lf and two-thirds of global trade; there was a 
need to consider very carefully what this meant for the less and least-developed economies. 
Integration into these production networks held real potential – but it needed to be carefully 
managed. One key aspect to the problem was that, in some regions, these production networks were moving faster than the ability of the local financial sectors to support new trade and 
production. At the WTO, work with multilateral development banks and other donors continued, to 
support the creation, or expansion, of trade fina nce facilitation programs. The African Development 
Bank's trade finance program has been up and running for a year. The Islamic Development Bank and the International Finance Corporation of the World Bank were complementing the work of the 
African Development Bank to support trade in Africa. Still, the trade finance and insurance gap in 
Africa was estimated to be anywhere betw een US$50 and 100 billion. The Inter-American 
Development Bank was focusing on supporting trade in the most challenging markets of the 
western hemisphere, while the Asian Development Bank was doing the same in developing Asia. 
Similarly, the EBRD had been in recent months the guarantor or lender of last resort for trade operations in and out of Ukraine and Russia. Th e Secretariat was ready to prepare a background 
note for Members summarising the latest factual developments, with an emphasis on market gaps 
in developing countries.  
10.  The Representative of Nigeria emphasized the need for concrete delivery for African countries 
to be further undertaken by the Working Group. This said, he acknowledged the importance of 
work on trade finance and its linkage with trade, the impact of the financial crisis on the 
availability of trade finance in Africa – despit e the lack of comprehensive statistics, and the 
desirability of further work in the Working Group on this topic.  
11.  The Representative of China acknowledged the Director-General's statement that “although 
trade finance did not feature in the WTO’s core text, there was no doubt about the centrality of 
this work for the institution.”  All the recent evidence had shown the continued difficulties faced by WT/WGTDF/M/29 
 
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  the developing countries in getting access to trade finance, in particular in the smallest and/or the 
poorest, and even for small and medium sized ente rprises in larger and more developed countries. 
The importance of trade finance for developing countries could not be underestimated. China was providing its contribution to solving trade fina nce difficulties faced by Sub-Sahara African 
countries; in the context of China’s President Xi Ji nping visit to Africa in 2013, China renewed an 
offer of US$ 20 billion in loans to Africa for the period 2013-15.  China’s Premier Li Keqiang had also pledged to double China-Africa trade and qu adruple Chinese direct investment by 2020. Half 
of China's its overseas development aid was directed to Africa.  
12.  China was also a large and growing source of finance for Latin America. Chinese financing to 
the region since 2005 was exceeding US$100 billion overall. In 2013, Chinese banks had extended approximately US$15 billion in loans to individual Latin American and Caribbean governments and 
companies. Bank of China, China Agriculture Bank, China Ex-Im Bank, China Minsheng Bank, and 
other financial institutions of China had signed a Guarantee and Reinsurance Bank Agreement for the Trade Finance Facilitation Project with the Inter-American Development Bank. Chinese finance 
to sovereign governments, state-owned enterprises and some private firms in the LAC region had 
reached us$20.1 billion in 2013. In addition, the China Export Credit Insurance Corporation, and other Chinese financial institutions had been active at developing buyer’s credit and credit 
insurance with other the developing countries. China did not want to be alone in this effort, and 
welcomed any other Members willing to help developing countries in a similar way. The Representative had found the initiatives developed by the Director-General in context of the Expert Group to be most useful, particularly work with multilateral development banks, to achieve more 
affordable trade finance in  low income countries.  
13.  The Chairman said that Members had an opportunity to revert to this topic under item three 
of the agenda. 
3   AGENDA ITEM III:  INFORMAL DISCUSSION ON TOPICS THAT MEMBERS WOULD LIKE 
TO ADDRESS IN FUTURE MEETINGS 
14.  The Chairman said that the starting point of  the discussion was provided by the conclusions of 
last year's Report of the Working Group to th e General Council (WT/WGTDF/12). He reported on a 
number of exploratory conversations with some Members, which he intended to pursue in the coming weeks with other Members. There was still a great deal of interest for the work carried out in the Working Group; Members attached some importance to the continuation of the discussion 
initiated in 2011 on the relationship between exch ange rates and trade, notably from the point of 
view of coherence. While there seemed to be limited interest on any further work regarding the relationship between trade and debt, by contrast, there was considerable interest in pursuing work 
on trade finance, particularly from the angle of availability to economic operators, exporters and 
importers, in developing countries.  Interlocutors had pointed out how much the availability of trade finance was under threat with the resizing of financial markets and the reforms underway on 
prudential controls. Several interlocutors had made the connection with trade facilitation.  The Bali 
agreement ran the risk of remaining dead letter if trade did not take place as a result of unavailable finance to make it happen.   
15.  As part of the October "Public Forum" of the WTO, the Secretariat had scheduled a "trade 
finance panel".  Institutional partners of the WTO, such as multilateral development banks and the 
World Bank, had been invited to explain how they raised trade finance in favour of developing economies. Members were encouraged to attend.  Finally, there seemed to be some interest in 
exploring the wider issue of how th e multilateral trading system could contribute to the definition 
of development objectives for the 15 years to come  after 2015. One had to bear in mind the need 
to respect the mandate of this working group, and not overlap with other WTO bodies. 
16.  In the following discussion, Members ex pressed various points of views, which are 
summarized below.  
17.  The Representative of Nigeria reiterated th at discussions in the Working Group needed to be 
driven towards tangible outcomes to generate en gagement from developing country Members. He 
asked that the discussion between trade and debt be reintroduced in the work program. The 
representative of China agreed in principle that the Working Group could give greater attention to 
debt, which was part of the Group's mandate under paragraph 36 of the Doha Ministerial WT/WGTDF/M/29 
 
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  Declaration, and to trade finance, as indicated under the previous agenda item. The representative 
of the United States pointed out that the examinat ion of any issue in the Working Group needed to 
be Member-driven, as was the examination of the relationship between exchange rates and trade. 
It was not clear what the issue of debt entailed (which kind of debt, what relationship with trade). 
This issue needed to be treated bottom-up by Me mbers. On trade and development, he cautioned 
about possible overlap with other WTO bodies.  
18.  The Representative of Australia supported the commissioning of a Secretariat paper on 
developments in trade finance since the global financial crisis, focusing on areas such as the 
availability of trade finance in developing countri es, and current activities of regional development 
banks in dealing with the problem. The Representative of the Kingdom of Saudi Arabia 
acknowledged the primacy of the IMF on exchange rates surveillance and work. The IMF was well 
equipped to assess currency misalignments. The WTO needed to concentrate on its own mandate 
and avoid any conflict of competency with other international institutions. The Representative of the Philippines supported the commissioning of a pa per on trade finance. On debt, she agreed with 
the US position that any engagement should rely only on contributions by Members. The 
Representative of the European Union pointed ou t that the WGTDF was mainly a study group, not 
a negotiating one. The Working Group was theref ore useful in shaping a common understanding 
on issues such as exchange rates and trade – a to pic that could usefully be discussed on analytical 
grounds, based on Members' submissions.  In this  vein, he thought that there would be a value for 
the working Group to study how the inclusion of countries in global value chains affected the understanding of the issue. His delegation was al so keen on discussing trade finance based on a 
background note by the Secretariat, in line with the Australian proposal.  
19.  The Representative of Canada highlighted the cyclical and structural dimensions of the WGTDF 
work program. The earlier (cyclical element) provided a limited role for the WTO. In this regard, 
the best role for the WTO was to continue liberalizing trade. On structural issues, he found future 
engagement on trade finance to be desirable, ba sed on a Secretariat factual note. He cautioned 
about any further work on debt, as a lot of work had already been done by more competent 
international organizations. The Representative of India was supportive of WTO activities held 
within the coherence mandate, bearing in mind the need to respect the competencies of each 
international institution and avoid overlap between them. As long as such principles were respected, her delegation was open to discuss any consensual topic within the mandate of the 
Working Group. The Representative of Barbados th ought that it was worth exploring the issues of 
debt and of trade finance, respectively. There was also a merit in continuing the discussion on 
exchange rates and trade. She asked that documents of the Working Group be made available to 
small delegations. The Representative of Jama ica endorsed the suggestions by Nigeria and 
Barbados to increase the level of awareness on de bt issues within the Working Group, based on a 
contribution by the Secretariat. The Representative  of the United States said that his delegation 
did not accept to hand over a long list of papers to the Secretariat, particularly on the topic of 
debt, for which it was unclear what the proponent wanted. He supported Australia's suggestion to have only one Secretariat note on trade finance, focusing on what other institutions such as the multilateral development banks were doing with respect to increase the availability of trade finance 
in low income countries.  
20.  The Representative of Brazil supported Australia's proposal on trade finance. In this area, the 
Secretariat could do a useful compilation of information and of issues related to trade finance. 
There was no reason to prevent any submission by Members on debt, which could hence help the 
Working Group decide on what aspect of debt issues to focus, consistent with the WGTDF 
mandate.  
21.  He introduced the new submission tabled by his delegation, under WTO Document 
WT/WGTDF/W73. He described the context in which this fourth submission was made. He reminded the steps followed by the Working Grou p under the analytical pillar, and the topics 
discussed at the time. After this, Members had wished to focus on the institutional pillar. Brazil's 
new submission was a response to such wish. While welcoming the IMF presentation under the 
institutional pillar, there was a need for the WTO to "dig" deeper about its own role, based on the 
coherence mandate. He described the three concrete proposals made by Brazil in Document 
WT/WGTDF/W73. He was mindful of the limited time left to other delegations to examine Brazil's 
submission, therefore he was not expecting any fina l views at this meeting. He expected Members 
to revert to it at the next meeting of the WGTDF.  WT/WGTDF/M/29 
 
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  22.  The Representative of China made preliminary comments. In substance, his delegation had 
found this fourth submission no different to th e third one. It did not provide answers to the 
questions raised by former WGTDF Chair, Ambassador Ismael, and by other members at previous Working Group meetings. Hence, China’s earlier position remained unchanged. China was willing 
to exchange views with the proponent, only within  the mandate of this Working Group and that of 
the WTO in general. 
23.  The Representatives of Columbia and Mexico also offered preliminary comments, and made 
similar points. They welcomed studies and views on policy interactions with other institutions. This 
was, nonetheless, as far as one could go. The WTO could not go on having trade disciplines on exchange rates. Currency devaluations were consequences of domestic or international policies, not the cause. While further discussion could proceed  on from an analytical standpoint, it should 
neither extend to WTO disciplines nor to possible changes in tariffs. Competitiveness was not only 
based on exchange rates, there were many other elements affecting competitiveness. One needed 
to have more clarity as to what the Working Group wanted to do on the topic of exchange rates 
and trade. There were many possible causes to exchange rates changes. One needed to be careful 
about the idea that the WTO would find a solution to this problem. Trade rules would not help in reducing current account imbalances. The WTO did not have the medicine within existing trade 
rules to deal with these problems. Within these limits, the two delegations were open to dialogue. 
24.  The Representative of Canada offered preliminary views. Brazil's proposal seemed to focus on 
coherence rather than on remedies, consistent with the Working Group's mandate. Canada was 
open to have international organizations work together as long as the mandates of such 
organizations were respected. In the continued an d fruitful dialogue with IMF, there was also a 
need to consider the role of the WTO and its limitations. It was not clear what the World Bank role was with respect to exchange rates, when considering participation in any possible joint study. 
Finally, on the proposed factual note regarding previous cases, there seemed to be elements that 
could go beyond the comfort zone of some Memb ers. Any proposal would need to respect such 
views. 
25.  The delegation of Hong-Kong, China reiterated  its earlier position that the IMF’s jurisdiction 
over the international system of exchange rate arrangements was undisputable.  The WTO should 
defer to the IMF to tackle the issue of the rela tionship between exchange rates and international 
trade.  Hong-Kong, China did not support creating  any new WTO rules on this aspect.  This said, 
further analytical discussions on the relationship between exchange rates and international trade 
could be pursued. A preliminary examination of Br azil's submission led to the following comments: 
the continuation of the ongoing dialogue with the IMF, and the commissioning of a discussion 
paper on how the "coherence mandate" is bein g implemented between the IMF and WTO, seemed 
to be in line with Members’ past discussions to build up the relationship between the IMF and the 
WTO and to strengthen the “coherence mandate”.  Regarding the third element of the paper to 
commission a factual note by the WTO Secretariat on the instances and cases in the history of the 
GATT/WTO, she noted that the paper proposed to place a special focus on the technical contribution by the IMF in those instances. IMF involvement in this regard would be welcome. 
26.  The Representative of India was not yet in position to comment on the paper, and reserved 
her comments for next meeting of the Working Group. Her delegation had learned from previous 
discussions on the matter that the IMF had primary responsibility for surveillance of exchange 
rates policies. Hence, any further work should not step on the IMF mandate, and should avoid 
duplication of work. The Representative of Barbad os supported the principle of factual notes, but 
thought that the Working Group needed to further define their content. 
27.  The Representative of the United States we lcomed the new submission by Brazil. Persistent 
misalignments of exchange rates could create serious difficulties for trade, growth and the financial 
system. He generally supported consideration for further work on exchange rates and trade, but such work needed to be well focused and respec t the competencies of the respective multilateral 
institutions. Before assessing the need for remedial action on this issue, further work had to be 
done to define and understand the problem, as  pointed out by Mexico and Columbia. The US 
delegation would revert to Brazil's submission after consulting with its capital. The Representative of the European Union also promised further examination of the submission by its Members. The 
focus of the submission seemed to be on cohere nce, but further discussion needed to refine the 
issue. It was clear that work on exchange ra tes and trade in the WTO could not cut across the 
competencies of the IMF. The Representative of Au stralia also needed to further examine Brazil's WT/WGTDF/M/29 
 
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  submission, but was open to consider further disc ussion on exchange rates and trade, provided 
that the mandates of international institutions were respected.  
28.  The Chairman concluded the meeting with the following remarks. He thanked all participants 
for comments and ideas. Regarding Brazil's submission, most Members had expressed their 
readiness to examine the paper in depth at the next meeting of the Working Group, bearing in 
mind that most delegations had not had the time to consult fully with capitals. There was a need to evaluate what the proposal consisted of an d where it would lead the Working Group. With 
respect to the issue of debt, there was interest expressed by some Members to discuss the matter, 
but also a request by the other Members to narrow down the subject, and to initiate discussions 
only on the basis of Members' written submission s. The Chairman proposed to re-circulate the 
Secretariat issues paper on the relationship between trade and debt, as produced at the beginning 
of the Working Group. He would put the subject for further consideration on the agenda of the 
next meeting, to see whether the Working Group would be in a position to better define what Members wanted to do on this topic. On trade finance, there had been general support on 
Australia's proposal for a factual paper by the Secretariat to be discussed at the next meeting. He 
committed to continue meeting informally with heads of delegations. Some delegations sought clarifications regarding the Secretariat paper to be re-circulated. The Chairman confirmed that this 
was only an issues paper. It would be re-circulated as it was. The basic idea was to ask these Members eager to take up new work on trade and debt to better identify what issue they would 
like the Working Group to focus upon. He added th at there was a reasonable expectation by other 
Members that the subject needed to be delineated it more clearly. There were ample recent work 
and material on debt, including by UNCTAD and other relevant international organizations, which 
would help proponent to update basic information on debt.  
29.  It was so agreed. With this, the Chairman closed the meeting. 
 
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