REPORT OF THE WORKING GROUP ON TRADE, DEBT AND FINANCE (2015)
TO THE GENERAL COUNCIL
1 INTRODUCTION
1.1. The Working Group on Trade, Debt and Finance ("the Working
Group") was established at the 4th Session of the Ministerial
Conference in Doha in November 2001 with the following mandate ("the
mandate)[1]:
"We agree to an
examination, in a Working Group under the auspices of the General Council, of
the relationship between trade, debt and finance, and of any possible
recommendations on steps that might be taken within the mandate and competence
of the WTO to enhance the capacity of the multilateral trading system to
contribute to a durable solution to the problem of external indebtedness of
developing and least developed countries, and to strengthen the coherence of
international trade and financial policies, with a view to safeguarding the
multilateral trading system from the effect of financial and monetary
instability. The General Council shall report to the Fifth Session of the
Ministerial Conference on progress in the examination".
1.2. This report describes the activities of the Working Group since the
9th Session of the Ministerial Conference in Bali, Indonesia, in
December 2013.
2 The Working Group's activities since the 9th session of
the ministerial conference
2.1. The Working Group held four formal meetings between June 2014 and
October 2015: on 13 June 2014 and 11 November 2014, under the Chairmanship
of Ambassador Bertrand de Crombrugghe (Belgium); on 26-27 March 2015, and on 29
September 2015, under the Chairmanship of Ambassador Xavier Carim (South
Africa).
2.2. At the meeting on 13 June 2014, the Working Group discussed how to
proceed with the priorities set out by Members in the context of the
preparations for the 9th Ministerial Conference, that is: to
continue exchanging views on the relationship between exchange rates and trade,
in particular with a view to strengthening the coherence between the IMF and
WTO; and to continue exchanging views on trade finance in relation to market
developments and internationally-agreed initiatives to improve the availability
of trade finance in developing countries. With respect to exchange rates and
trade, Brazil had tabled a submission (WT/WGTDF/W/73) earlier in June. Members
agreed to revert to it at the following meeting, after consulting capitals.
Regarding trade finance, there was general support for Australia's proposal to
commission a factual paper to the Secretariat on the remaining financing gaps
in developing countries. Finally, some Members expressed an interest in reviving
the "the debt pillar" of the Working Group. Other delegations
wondered whether the interested delegations could be more specific about the
nature and extent of the issue and what work, if any, could usefully be
undertaken in the WTO.
2.3. At the meeting on 11 November 2014 Members reverted to Brazil's
submission on the relationship between exchange rates and trade. After careful
consideration by Members of the three proposals made in document WT/WGTDF/W/73,
the Chairman concluded on the following: (a) regarding proposal 1, there
was general support for the continuation of the on-going dialogue with the IMF;
Members did not wish to prescribe the content of such dialogue, which generally
aimed at being better informed and at acquiring a more thorough understanding
of IMF policies with respect to exchange rates (b) there was no consensus to
move forward on proposal 2, i.e. to commission a discussion paper to be jointly
drafted by the WTO Secretariat, the IMF and the World Bank, on how the
coherence mandate was implemented in the area of exchange rates and trade (c)
on proposal 3, there was a consensus to commission a factual note to the
Secretariat on the instances in which Article II.6 of the GATT/WTO has been
invoked in the past. Members issued a strong note of caution, emphasizing the
factual and historical character of that note, which should neither venture
into analysis nor affect their right and obligations under the current
agreements. Members examined the Secretariat background note on the remaining
gaps in trade finance in developing countries (WT/WGTDF/W/74). The note
received overall strong support, notably regarding the need for the WTO,
including its Director-General, to continue its diagnosis, advisory and
advocacy role on the availability of trade finance in developing countries in
partnerships with the IMF, the World Bank and multilateral development banks.
It was also agreed that a seminar on the challenges faced by trade finance
would be held in the spring of 2015, possibly back-to-back with the meeting of
the Director-General's Expert Group. Finally, with regard to the relationship
between trade and debt, while the proponents were not immediately in a position
to present a submission, it was made clear that this pillar of the Working
Group's mandate was still valid and relevant to the Group's work.
2.4. The meeting on 26-27 March 2015 was held in a seminar format to
examine the challenges faced by developing countries in accessing trade finance
after the financial crisis. The Secretariat Note had been revised
(WT/WGTDF/W/74/Rev.1) to incorporate the outcome of new surveys completed by
the African Development Bank (AfDB) and the Asian Development Bank (ADB), the
former estimating the trade financing gap in Africa to be about US$120 billion
and the later estimating the gap to be superior to US$1 trillion in Asia. The
seminar featured speakers from Members' governments, the private sector, and
international institutions. It was held back-to-back with the meeting of the
Director-General's Expert Group on Trade Finance (WT/WGTDF/W/77). In view of
the large number of speakers and interventions during the event, a dedicated
webpage containing the presentations and audio recording had been created.[2]
During the seminar, participants highlighted a number of key points, inter
alia: trade financing gaps were due to a mix of structural and developmental
factors (lack of know-how and capacity of the financial sectors in many
developing countries) as well as the falling appetite of global banks to invest
in developing countries after the financial crisis; developing local and
regional trade finance industries takes time, as it requires knowledge
dissemination, the build-up of institutions, and specific support by
multilateral development agencies; the WTO and its Director-General should pay
greater attention to these gaps as access to trade finance is a key enabling
condition for trade – notably in the poorest countries in which the need was
the largest while the potential growth of trade was also the strongest; this
topic needed to be highlighted in the "financing for development"
agenda post‑2015; the Secretariat and Director-General needed to continue their
efforts to monitor and address the situation, work with other multilateral
institutions, notably in the context of the DG's Expert Group on Trade
Finance.
2.5. At the meeting on 29 September, 2015, the WGTDF examined the factual
Note by the Secretariat (WT/WGTDF/W/78) on the invocation of Article II.6 of
the GATT/WTO. While a range of views was expressed on the use of this provision,
including on its use in a more complex global economic environment, Members showed
interest on pursuing the discussion on exchange rates and trade, including the
impact of exchange rates misalignments on tariffs, on the basis of substantiated
and specific contributions by Members, within the terms of the Working Group's
mandate. The Secretariat also provided a short update of recent developments on
trade finance work after the spring seminar. Members confirmed the usefulness
of the seminar and provided clear support to the continuation of this work in
the Working Group. The Working Group noted that the Director-General intends to
announce an initiative in this regard and decided to revert once more
information is made available.
3 conclusion
3.1. In accordance with the terms of Paragraph 36 of the Doha Ministerial
declaration, Members recommended that the Working Group continues to
"examine the relationship between trade, debt and finance, and of any
possible recommendations on steps that might be taken within the mandate and
competence of the WTO to enhance the capacity of the multilateral trading
system to contribute to a durable solution to the problem of external indebtedness
of developing and least‑developed countries, and to strengthen the coherence of
international trade and financial policies, with a view to safeguarding the
multilateral trading system from the effects of financial and monetary
instability". In doing so, Members showed interest in continuing the
discussion on exchange rates and trade, trade finance, and are prepared to
positively consider any other topic presented by Members in the form of a specific
contribution falling within the realm of the Working Group's mandate.
3.2. On October 16, 2015, the Working Group adopted its Annual Report
(2015) to the General Council.
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[1] WT/MIN(01)/DEC/1, paragraph 36.