Bridges Weekly Trade News Digest • Volume 13 • Number 10 • 18th March 2009
Lamy Hosts Trade Finance Meeting, Will Attend G20 Summit
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WTO Director-General Pascal Lamy met with a high-level group of bankers and finance officials at WTO headquarters in Geneva today to assess the market for trade finance, which has been crumbling since the onset of the economic crisis.
Many developing countries rely on trade finance - loans tied directly to trade transactions - to ship their goods overseas. But with many banks hesitant to lend out cash, such loans have become hard to come by and poorer nations have struggled to get their products to market.
Lamy first addressed the issue in November, when he met with 30 representatives of private banks, financial institutions and export credit agencies to discuss the extent of the problem and potential ways to mitigate it (see Bridges Weekly, 19 November 2008, http://ictsd.net/i/news/bridgesweekly/33962/). The WTO has no authority to regulate trade finance, but Lamy has said that he thinks the global trade body can serve as a catalyst, helping to coordinate an international response to the crisis.
Participants at Wednesday’s meeting reportedly told Lamy that, despite the drastic drop in trade flows in recent months, the gap between supply and demand for trade finance has grown significantly. The experts discussed several ways to address that shortfall. Medium-term goals they identified include increasing opportunities for banks to share risks, improving transparency mechanisms, and promoting co-financing among private banks, international financial institutions and export credit agencies.
The Director-General will summarise the results of Wednesday’s meeting and present it in a report to the WTO’s Working Group on Trade, Debt and Finance, which is scheduled to meet on 31 March.
Also expected from Lamy that week is an update to the report on new protectionist policies in WTO Member countries that the Director-General first presented in January. The revised version is being prepared in advance of the upcoming summit of the Group of 20 nations, a meeting that Lamy will attend, the WTO confirmed on Tuesday.
“He’s been asked by Prime Minister Brown to come – trade is on the agenda,” WTO Spokesman Keith Rockwell told Reuters.
Lamy will be able to bring G20 heads of state up to speed on trade finance, as well as protectionism, the Doha Round and Aid for Trade, Rockwell said.
ICTSD reporting; “WTO meeting to reveal bigger trade finance gap,” REUTERS, 17 March 2009; “WTO’s Lamy to attend G20 London summit,” REUTERS, 17 March 2009.
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