. /. WORLD TRADE  
ORGANIZATION   
WT/WGTDF/W/59 
25 October 2011 
 
 (11-5351) 
Working Group on Trade, Debt and Finance  
 
 
 
EXPERT GROUP MEETING ON TRADE FINANCE – 19 OCTOBER 2011 
 
Informal Report by the WTO Secretariat 
 
 1. The objective of the 19th of October meeting was twofold: (i) to take stock of the current 
market situation, with a focus on factors such as liq uidity, risks and price patterns by countries and 
regions (ii) to consider progress on the G-20 mandat es relating to trade finance, which derived from 
earlier concerns expressed in the Expert Group, notabl y in respect of the structural impediments (both 
regulatory and non-regulatory) limiting the capacity of poor countries to access trade finance. 
2. With respect to the current market situation, there was a consensus among participants that the 
market had reached the end of the recovery phase experienced since mid-2009. Expectations were on 
the downside both in terms of trade volumes and the availability of finance to support them. 
Constraints specific to the financial sector incl uded funding in US dollars for non-US financial 
institutions -- a problem that was felt acutely by the trade and trade finance communities since trade 
was largely denominated in US dollars, and furt her pressures on liquidity and capital linked to the 
simultaneous implementation of Basel II and III regul atory requirements. With respect to conditions 
in different regions, the relatively easy market s ituation in Asia contrasted sharply with the 
deterioration felt in the rest of the world. Everyw here, though, spreads were moving upwards, in Asia 
because inflation and demand for borrowing were on the rise, and in the rest of the world because of 
supply-side constraints. The situation in Africa did not seem to worsen overall, but local capacity 
problems continued to be felt mostly by smaller tr aders, while the bigger, commodity-based traders 
continued to enjoy international support.  
3. This assessment was well understood by the Director -General, who pointed to the persistence of a 
trade finance gap in the most challenging regions of the world, as confirmed by the conclusions of 
Expert Group's report, which had been commissioned by G-20 leaders in Seoul under paragraph 44 of 
the Seoul Summit Document, and whose conclusions ha d been well received at the last meeting of the 
G-20 Sherpas and Development Working Group. He not ed that the report had revealed that only a 
third of the 60 poorest countries in the world benef ited regularly from the services offered under trade 
finance programs, and that the lack of risk mitigation programs in these countries partly explained the high fees and collateral requirements paid by local im porters to receive their shipments. The Director-
General confirmed that the G-20 was in the pr ocess of accepting the Report's recommendations that 
trade finance facilitation programme s should be strengthened where th ey existed, and be created 
where they did not yet exist, in particular in Africa.  In parallel, it seemed th at the dialogue engaged by 
the Director-General with the President of the African Development Bank (AfDB) was bearing fruit, 
and that preparations for the creation of such a fac ility at the AfDB were on-going. In this process, the 
AfDB was benefiting from substantial technical support from the Asian Development Bank and the 
IFC.  Such facilities were in high demand, according to key banks still active in Africa -- at a time of 
withdrawal of large international banks from the c ontinent. One challenge for remaining banks was to 
be able to support both large commodity contracts and at the same time ex tend trade lines to the 
smaller countries, as this stretched existing capacity. US dollar funding was also  an issue in Africa as 
most importers bought international goods in US dollars. Other banks, notab ly from Asia, showed WT/WGTDF/W/59 
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 interest in entering African markets, but had a high  perception of risk.  This was why a trade finance 
facilitation programme would be welcome.  
4. In general, the representatives of multilateral deve lopment banks asked for support in maintaining 
their trade finance programs, at least at current levels, in view of both structural and expected 
conjunctural developments. They asked that the WT O do more by way of advocacy, in particular in 
respect of finance officials (including board member s at their institutions) not sufficiently informed 
about the beneficial development and trade impact of their programmes. The Director-General said 
that he would examine how much more advocacy c ould be done by his services and himself, and how 
the technical assistance efforts unde rtaken in the context of trade finance facilitation programmes 
could be linked with the WTO's own technical as sistance efforts under the Aid-for-Trade chapeau.  
5. Participants acknowledged that the extended dialogue with the Basel Committee on Banking 
Supervision since the Seoul Mandate (paragraph 41 of  the Summit Declaration) had been fruitful and 
contributed to a better understanding of the issu es at stake. This dialogue was supported by the 
continued efforts by the banking community under the ICC Banking Commission to gather information on defaults in trade finance markets. In  this context, in 2010 the quick establishment of a 
"pilot" registry containing informa tion from nine global ba nks had helped consider ably in establishing 
a dialogue based on facts. The registry had been ex tended to a total of 20 global banks in 2011, with 
extended data requirements. Data, to be released very soon, would allow regional breakdowns.  The 
data would demonstrate that trade finance in all pa rts of the world, including in the poorest regions, 
was equally safe, with negligible levels of defaults  of payments. The data w ould be delivered to the 
Basel Committee for consideration. The Director-Gen eral said that the establishment of the registry 
was a success of the Expert Group,  and the institutions active in the Group. He was hopeful that the 
dialogue with the Basel Committee, based on such facts, would bear fruit from the development 
angle, i.e. on removing some of the regulatory obstacles preventing low-income countries from receiving adequate volumes of trade finance. He said  that the data revealed that trade finance was 
mostly structured around short-maturities (90 to  115 days) and he hoped that capital requirements 
would be adapted to fit such a maturity profile. It was up to the Basel Committee, though, to decide 
on the appropriate changes.   
6. The WTO Director-General concluded that the assessment of the market situation and of 
structural gaps in low-income countries made dur ing the meeting required no fundamental change to 
the policy recommendations on trade finance already contained in WTO reports and the latest draft G-20 text prepared by the Sherpas. The current mark et situation only strengthened the case made by the 
WTO and the Experts since the last G-20 meeting. Th e group also needed to remain alert to market 
developments in the current global economic co ntext.  The issues of additional advocacy and 
technical assistance support would be considered after existing recommendations to the G-20 Summit 
in Cannes have been endorsed. 
 
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