REPORT OF THE WORKING GROUP ON TRADE, DEBT AND FINANCE (2020)

TO THE GENERAL COUNCIL

DRAFT

1.1.  The Working Group held two meetings, on 2 July 2020 and 10 November 2020, under the Chairmanship of H.E. Dr. Rashidi Said (Malaysia).

1.2.  At the meeting on 2 July 2020, the Working Group discussed the impact of the COVID-19 pandemic on trade finance availability. Several Members from Africa, Latin America and Asia took the floor to note that since the beginning of the pandemic, trade finance shortages, which had existed before the pandemic, had actually increased, and had impeded the imports of goods and medical equipment necessary to fight the COVID-19 pandemic, and the exports of essential goods in their countries. They described operational difficulties encountered during lockdowns and immediately after, including the lack of availability of documents for the processing of trade finance requests, the occurrence of payment refusals by buyers, as well as increased difficulties met by SMEs in obtaining trade loans and repaying them. This SME dimension was particularly emphasized, a large majority of traders in developing countries fell in this category of enterprises. Some Members described policy steps implemented by their governments to address the situation, such as trade loan repayments extension and deferral schemes, as well as credit guarantee schemes whenever available. The role of the Director-General in advocacy and in directly mobilizing the heads of six other heads of relevant multilateral organizations was acknowledged. After a brief exchange of views regarding next steps, notably the possibility of inviting external speakers to provide additional information and briefing, it was agreed to invite one representative of a multilateral development agency and one representative of the private sector at the following meeting. The Chairman also invited Members to provide written submissions on this topic, in time for other Members to examine them.

1.3.  At the meeting on 10 November 2020, the WGTDF reverted to the topic of trade finance and current gaps. As agreed at the previous meeting, a representative of a multilateral development bank (the European Bank for Reconstruction and Development, EBRD) and a representative of the International Chamber of Commerce (ICC) had been invited to further brief the Working Group. The Representative of the EBRD indicated that while the COVID-19 crisis had caused significant disruptions to existing supply chains (through temporary plant closures, retail lockdowns, as well as through border closures), the availability of trade finance had shrunk even faster in the EBRD countries of operation, with the risk appetite of confirming banks being very quickly reduced, especially for emerging markets. The EBRD has doubled its trade finance facilitation programme's intervention limits to support its membership in these difficult times. The representative of the ICC indicated that trade finance supply had been falling by 20% down year-on-year, with several large banks exiting the market, some as a result of fraud, some in refocusing their businesses on larger corporates where the risk profiles were perceived to be better. He emphasised the need to move forward on the digitisation of trade finance. In the absence of further remarks by Members, one delegation emphasized that the work of the Working Group on Trade, Debt and Finance needed to remain Member-driven. This delegation's view was that the Working Group should meet on the basis of: (i) Members' requests for agenda items; (ii) Members' submissions to the Working Group; and (iii) Members' requests, agreed by consensus, for information and analysis from experts and the Secretariat. This was noted by the Chair in his concluding remarks.

1.4.  On 17 December 2020, one delegation proposed a written submission regarding access to trade finance in the context of Covid-19, for the consideration of other Members (WT/WGTDF/W/98).

1.5.  [On …, the Working Group adopted its Annual Report (2020) to the General Council].

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