. /.   WORLD TRADE  
ORGANIZATION   
WT/WGTDF/W/63 
23 May 2012 
 (12-2696) 
Working Group on Trade, Debt and Finance  
 
 
 
EXPERT GROUP MEETING ON TRADE FINANCE – 15 MAY 2012 
 
Informal Report by the WTO Secretariat 
 
  1. The objective of the May meeting was threefol d: (i) to take stock of the current market 
situation, with a focus on factors such as liquidity, risks and price patterns by countries and regions (ii) to consider progress on the G-20 mandates relating to trade finance, in particular with respect to 
supporting trade finance facilitati on programs of multilateral devel opment banks and improving the 
data gathering and availability situ ation (iii) to discuss the approach to be followed regarding Basel 
issues. 
 2. With respect to the current market situati on, there was a consensus among participants that 
market conditions returned to some normality in th e beginning of the year, after the pressures felt at 
the end of 2011 on liquidity and capital linked to the simultaneous implementation of Basel II and III 
regulatory requirements. The volumes of trade fi nance were growing only slowly but this was 
consistent with the slowing down in the growth of  volumes of world trade, as the two were linked by 
an almost one-to-one relationship. The Director-G eneral explained that the slowing down of trade 
growth relative to trend was linked to the re balancing of the world economy towards domestic 
demand in emerging markets as well as lower grow th in developed countries. US dollar funding 
remained an issue outside the United States, although swap agreements helped alleviate the situation. 
While liquidity had come back on the main routes of  trade and spreads fell somewhat relative to end-
2011 levels, the market remained characterized by a greater selectivity in risk-taking and flight to 
"quality" customers. In that environment, the lower end of the market was struggling to obtain 
affordable finance, with the smaller companies in the smaller, poorer countries most affected. With 
respect to conditions in different regions, the relatively easy market situation in Asia contrasted the 
difficult situation felt in Europe (Western and East ern), the MENA region, and some African regions 
(sub-saharan Africa, for example).  3. This assessment was well understood by the Dir ector-General, who pointed to the persistence 
of a trade finance gap in the most challenging region s of the world. This justified the continued need 
for risk mitigation provided by multilateral developm ent banks, several of which saw demand for their 
products increase significantly since the last meeti ng (in particular the Asian Development Bank). The 
African Development Bank reported progress on the establishment of a "permanent" trade finance 
facilitation program comparable to that of the Asian Development Bank. Trade finance facilitation 
programs corrected usefully failures at the low end of the market and were clearly development-oriented. The Asian Development Bank had engaged in a study, soon to be released, estimating the 
trade finance gap globally, and linking it to eco nomic activity and jobs. The Director-General 
expressed the view that continued G-20 involvement  was necessary not only to keep the trade and 
development mobilized, but also to get the support of  Finance Ministries, which were represented at 
the Boards of MDBs.   4. A discussion took place on the other G-20 trade fi nance-related topics, i.e., data improvement. 
With respect to market surveys providing qualitative information about trade finance trends, there was WT/WGTDF/W/63 
Page 2  
 
  a consensus that one survey per year produced by the ICC, with input by organizations such as 
SWIFT and the Berne Union, was sufficient in norma l times. Should market ci rcumstances change, it 
would be up to the ICC and its partners to decide on a snapshot survey to take the "temperature" of 
the markets. With respect to loan -level data collected to feed the dialogue with regulatory agencies 
("the registry"), there was a con sensus that the current ICC registry containing short-term trade 
finance data would be usefully enriched by long-ter m data. The Director-General said that the registry 
was key in achieving dialogue with the regulator, and that its integrity had to be preserved as well as 
the incentive of banks to participate. The data  contained private, commercially-sensitive, and 
confidential information. If the ICC decided to pr ovide information to others institutions, the data 
confidentiality would have to be preserved, a nd handed out on a transparent basis, making it 
accessible to all policy-making organi zations on an equal footing.  
 5. With respect to regulatory matters under th e Basel framework, there was a consensus that 
progress on Basel II issues was beneficial from a development perspective, and that the dialogue with the Basel Committee should be usefully pursued on elements of Basel III regulation that were 
technical and prioritized. Invoking the specificity of the trade finance industry to waive wider new 
regulation affecting liquidity, capital or asset-cl assification would not work. Every segment of the 
financial industry probably invoked its own sp ecificity. What mattered was to insist on the 
development impact of the industry (contributing to the expansion of trade and hence economic 
growth), its low risk character (trade finance bei ng safer than major sovereign risks), and the absence 
of leverage (one-to-one relationship with the tr ansaction on merchandise). The industry needed to 
prioritize its demands more realistically and collect  information in accordance with these priorities. 
There was great interest in seeing the European Parl iament adopting an approach to implement trade 
finance provisions in Basel II and III regulations (i n the package called CRD4) allowing for: the one-
year maturity floor to be waived for all short-term  trade finance instruments, and the credit conversion 
factor for the calculation of the leverage ratio to  be set at 20% and 50% depending on products. The 
Director-General viewed these developments as encouraging and hoped that the European Union’s 
authorities would confirm these options.       6. The WTO Director-General concluded that, at the next G-20 meeting, a message of support to 
multilateral development institutions should be issued, to keep them engaged in trade finance, bearing 
in mind the development dimension of their program s. The permanent existence of a market gap for 
poor countries required long-term public involvement , without which crisis intervention would be 
meaningless. Finally, it would be useful to obtai n from the G-20 any sort of encouragement on data 
collection on trade finance. The Expert Group would meet again in the fall.  
 
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