RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTDF/M/16 
17 July 2008 
 
 (08-3465) 
Working Group on Trade, Debt and Finance  
  
 
REPORT OF THE MEETING OF 10 JULY 2008 
 
 1. The sixteenth meeting of the Working Group on Trade, Debt and Finance was held on 10 July 
2008 under the Chairmanship of Mr. Martin Glass (H ong Kong, China).  The Working Group adopted
 
the agenda contained in WTO/AIR/3215. 
2. The Chairman  explained the context in which the meeting was taking place.  At the previous 
meeting, some Members had expressed a desire to  be updated on progress made in areas such as 
international financial stability, trade finance, a nd recent initiatives to foster greater coherence of 
policies at the multilateral level. It had been sugg ested that Members follow up with submissions, and 
possibly invite other organizations to brief the Group on the discussions taking place in their ambit on 
issues of concern to the Group. Subsequently, the Ch airman had been informed by some delegations 
about their willingness to make a submission in a meeting to be held in the middle of the year. Given the heavy work load placed on the WTO in the mean time, it had not been possible to circulate the 
submission in writing, but the delegation in question was nonetheless in a position to make an oral statement to be placed on the record. Other delegations  had indicated their desire to make further oral 
statements. 
3. Since the Chairman had also been  informed that the topic of the implications of the current 
financial crisis for traders, investors, and in gene ral for the world trading system would be one of the 
topics of interest in the statements to be delivered  by Members, he had asked the Secretariat to report 
to the Working Group on on-going work that is being conducted with sister organizations on the issue 
of the availability of trade financing for developi ng countries, which originated in the working group. 
That would be considered under the second sub-item of the agenda. 
Agenda Item 2.A
: Questions to be considered by the Group 
4. The Chairman  gave the floor to the delegation of Br azil and invited any other delegation that 
had indicated a desire to provide ideas on the direc tion of the Group to follow up with a statement. 
5. The representative of Brazil  said that the fulfilment of paragraph 36 of the Doha Ministerial 
Declaration was more timely and more necessary th an ever before. Turbulence in financial markets 
since August 2007 had direct spill-over effects on wo rld trade, and raised wider issues for the 
multilateral trading system. In this vein, the multila teral trading system had been a "shock absorber" 
of the effects of lack of regulation of the monetary  and financial systems. Brazil wished to raise three 
topics of concern in this vein. First, was the direct effect of the financial crisis on trade finance. Trade 
finance was one of the most secure modes of finan ce because of its short maturities and existence of 
physical collateral, but its supply was being negativ ely affected by the current financial crisis. The 
short-term character of trade finance was making it e asy for financial institutions to withdraw existing 
lines of credit in a period of credit retrenchment. As a result, creditworthy exporters in developing countries currently found themselves in the delicate si tuation of being unable to secure access to trade 
finance.  In this regard, the creation of trade finance facilitation programme s by regional development 
banks (RDBs) had been a welcom e development, and the Working Group on Trade, Debt and Finance 
could take some credit for having highlighted th e trade finance issue to various stakeholders WT/WGTDF/M/16 
Page 2  
 
  (including RDBs) at the early stage of its examin ation under paragraph 36 of the Doha Ministerial 
Declaration. However, in current market cond itions, trade finance facilitation programmes had not 
been fully able to meet the demand of developing countries for trade credit. As a result, the Working 
Group should further discuss the multi-faceted aspects of  trade finance, ask the Secretariat to proceed 
with an evaluation, along with its partners, of the re al impact of the credit crunch on trade finance, and 
look at alternative ways of improvi ng the supply of trade financing.  
6. The second issue that Brazi l wished to flag was the Basle II agreement on banking regulation, 
replacing existing Basle I rules. Both agreements  were negotiated within the Basle Committee on 
Banking Supervision, which works under the auspices  of the Bank of International Settlements ( BIS). 
Basle I had become the standard prudential regul ation for more than 100 countries, although it had 
been argued that OECD countries had been favour ed relative to non-OECD, developing countries' 
financial institutions, who had to meet tighter regulatory requirements. Basle II seemed to have 
removed such discrimination as risk was to be assessed on the basis of respective credit ratings only. Questions were arising, though, as to the impact of full implementation of Basle II rules in current turbulent financial circumstances, and its potentia l effect on the availability of trade finance to 
developing countries. There was a concern that Basl e II rules could have a "procyclical" impact on the 
financial system, that is that it could further restrict the supply of credit.  Brazil suggested that the Group invite a representative of the BIS at a subsequent meeting to brief the Working Group on the 
implementation of the Basle II rules, and discuss its  consequences on trade finance and trade flows.  
7. A third issue was what Brazil called "the new cycle of international debt". While being 
mindful that the international financial community  had reduced the debt burden for HIPC-eligible 
countries, the representative indicated that the HIPC  program had not reduced debt for non-eligible 
low-income countries, and had not prevented the recent  resurgence of debt in some poor countries, in 
particular oil-importing ones. It was unclear how long the new cycle of indebtness was going to last, and what its impact would be on regional and globa l trade. This issue should be considered by the 
Working Group, since debt was an important factor  influencing the participation of low-income 
countries in international trade.  
8. Brazil concluded that the above-mentioned issues (spill-over effects of the current financial 
crisis on debt and ability of low-income countries to participate in trade flows, availability of trade 
finance and the impact of Basle II rules) should be  provide the basis for, and be the focus of the 
Group's work in the second half of 2008. He promised  to circulate a revised version of his statement 
in writing after the meeting.    
9. The representative of Argentina
 welcomed the opportunity for the Group to meet at this 
juncture. Paragraphs 36 of the Doha Ministeria l Declaration and paragraph 42 of the Hong Kong 
Declaration were providing the broad framework under which the group would do further work. He 
referred to the summing up of the Chairman at th e previous meeting in September 2007, mentioning 
the interest expressed by some Members to further examine the effects of financial instabilities on the 
multilateral trading system. Since then, developm ents on international financial markets had 
worsened. Hence, spill-over effects of financial in stabilities were subject to a growing literature. He 
mentioned reports by the Chairman of the Fi nancial Stability Forum in April 2008 and by the 
Director-General of the WTO in February 2008 , on coherence (WTO Document WT/TF/COH/S/13).  
One important issue was one of regulation, or lack of, in the international financial system and its 
links with the multilateral trading system. One of  the roles of the Working Group was to be a 
communication vessel and a vector of understanding su ch links, and disregarding the interdependence 
that existed between the solidity of the internatio nal financial system and that of the multilateral 
system would be a mistake with systemic consequences. Besides, the issue of debt was rising again in the current context for both developing and l east-developed countries, as well as the issue of 
availability of finance for trade, both of whic h were impairing the trade opportunities of these 
countries. He therefore supported the work agenda  proposed by the representative of Brazil, in  WT/WGTDF/M/16 
 Page 3 
 
 
  particular issues of the availability of trade fina nce and facilitation programs run by RDBs in this 
regard, the impact of Basle II rules and current de liberations in the Financial Stability Forum, on 
which updates were needed. He added the need to look at the relationship between trade policies and 
financial stability, and between e-commerce and ex ternal debt. These issues were falling within the 
eight topics and three categories initially identified by the Working Group to structure its 
examination. On this basis, he supported the effort s by Brazil to set a work agenda along the lines of 
the topics just mentioned, and showed readiness of  his delegation to bring its contribution to this 
process.  
10. The Representative of th e European Communities  believed that the issues raised by Brazil 
and Argentina deserved fair reflection. He looke d forward to the written submission from Brazil and 
enquired whether Argentina was willing to do the same.  He raised the possibility of having bilateral 
consultations with the proponents, possibly through the Chairman, on looking at how best the issues 
raised fitted with the mandate of the Group and how  could they be most productively addressed by the 
Working Group.   
11. The representative of the United States  appreciated the contribution of the Secretariat set out 
in JOB(08)/69 which helped highlight some of the trade finance issues raised  in the discussion, which 
concerned both the Aid-for-Trade Initiative and the Working Group on Trade, Debt and Finance. He 
thanked the delegations of Brazil and Argentina for their respective contributions, and reiterated the 
position of his delegation that, within the framework  of the Working Group, it was willing to consider 
other's delegations views as to the specific topics th at would deserve further attention in the Working 
Group. The Working Group should only review issu es that were not appropriately covered by 
Negotiating Groups and that were in the purvi ew of the WTO. Having only heard Brazil and 
Argentina's preliminary views, the representative was willing to learn more about these proposals in 
writing so as to allow his delegation to provide comments at the next meeting of the Working Group.  
12. The representative of Brazil  asked the Secretariat to provide some clarifications about 
paragraph 6 of JOB(08)/69, rega rding "know-your customer" information and a related proposal by 
the International Financial Corporation.  
13. The representative of Argentina  agreed to circulate his presentation to other delegations.  
14. The Chairman  gathered some of the thoughts and refl ections heard under this agenda item. He 
had heard elements of substance, in particular an in terest for further work on core issues related to the 
Group's mandate, such as on the multi-faceted aspects of  trade finance, on the impact of Basle II rules 
on trade flows and finance, other implications including developing countries' debt caused by 
financial turbulence in the world trading system, the relationship between e-commerce and external 
debt, as well as reflections on the sequencing of such work later this year. There was a suggestion by 
one delegation to invite representatives from the BIS to discuss Basle II rules further with the Group 
and representatives from the international financial comm unity, as in the past, to come and explain to 
the Group what was being done to strengthen the in ternational financial architecture in current 
circumstances, with a bearing on trade. The Chairman was mindful that the Working Group had 
examined some of these issues in th e early stage of its work, but the recurrence of financial turbulence 
since the Asian crisis was certainly raising questio ns in the WTO since this was part of the WTO's 
external environment.  Issues of contagion, availab ility of trade finance and perhaps others ought to be 
revisited with regard to their potential impact on the real economy and the global trading system. The 
Chairman suggested that once the full written submi ssions were circulated, other delegations would 
be in a position to reflect on them, and react fully at the next meeting of the Group.    WT/WGTDF/M/16 
Page 4  
 
  Agenda Item 2. B
: The Report by the Secretariat on the Expert Group Meeting on trade 
   finance hosted by the WTO in April 2008.   
 
15. The Chairman  invited the Secretariat to report to the Group about on-going work to boost the 
availability of trade finance for developing countries, an issue that was identified as part of one of the 
eight themes for the Working Group's examinati on and on which work had been proceeding since 
2003. The Chairman had been invited by the Direct or-General of the WTO to attend a recent meeting 
on this issue, and had been interested to see how mu ch progress had been made in the past few years 
by international financial institutions in putting in place programs aimed at facilitating developing 
countries' access to trade finance. He felt that the Group should be debriefed about the outcome of this 
meeting. Since the report of the Secretariat was fair ly lengthy, he had asked that it be distributed to 
Members under JOB(08)/69.  
16. The representative of the Secretariat  presented the report contained in JOB(08)/69. In the 
course of his presentation, he answered the ques tion from the representative of Brazil on the IFC's 
willingness to develop a uniform standard of "know-your-customer" information.  
17. The representative of Brazil  asked for further precision on "know-your-customer" 
information, and highlighted the importance of pa rtnerships between private and the public sector 
banks. He informed the Group about the case of the Bladex financial institutions, which was a 
successful example of such partnership that had served well Brazil's and other countries' trade.  
18. The Chairman  said that he thought the case of Bladex was worth looking into. 
19. The representative of the Secretariat  clarified the intentions of the IFC, which were obviously 
not to create alternative standards of credit ratings  but simply to propose a more systematic way of 
exchanging available information be tween partners participating in  joint operations, each institution 
remaining responsible for its own credit weighting and rating strategy. He proposed to follow-up on 
IFC progress in this area and report back to the Group if needed. 
20. The representative of Argentina  commented on specific elements of the Secretariat's paper. 
He was interested in the IFC's pr oposed initiative, in particular in its dealings with other regional 
development banks, and welcomed further information on progress. He also highlighted that the 
Director-General of the WTO had followed-up on the Expert Group Meeting with letters of support to 
heads of international financial institutions that run trade finance facilitation programmes, which had 
on previous occasions received the support of WTO Members as well. 
21. The Chairman  thanked the Secretariat for its repor t and hoped that the Group would benefit 
from further debriefing on future developments . He received consent from Members to turn 
JOB(08)/69 into a working document of the Working Group.1  The submission by Brazil, when made 
available to the Group, would also be issued as a WT/WTGTDF/W.. document.  The Group could 
therefore count on these two documents for reflection after the summer.     
22. It was so agreed . 
23. The Chairman  suggested to revert on the substance of  these documents and submissions in the 
course of the last quarter of 2008, and hence meet ag ain for full views, reactions  and considerations of 
a work programme, in October or November. The se cond meeting of the year would also provide the 
Group with an opportunity to discuss the possible el ements of an annual report, which the Group had 
to make to the General Council at its last session in December.  He thanked delegates for attending the 
                                                      
1 Issued as WT/WGTDF/W/38.  WT/WGTDF/M/16 
 Page 5 
 
 
  meeting during such a busy period for the institution and encouraged the proponents to send their full 
submission to the Secretariat for circulation among Members. 
24. The meeting was adjourned . 
__________