REPORT
OF THE WORKING GROUP ON TRADE, DEBT AND FINANCE (2020)
TO
THE GENERAL COUNCIL
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. 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 28 January 2021, the Working Group adopted its Annual Report
(2020) to the General Council.
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