Keeping markets broadly open to trade and bridging the widening trade finance gap will help nations, especially developing ones, to build a post-COVID economic recovery that is strong, sustainable and inclusive, Roberto Azevêdo, Director-General of the World Trade Organisation (WTO), has stated.
Addressing heads of WTO member delegations for the last time as Chair of the Trade Negotiations Committee, he said the policy choices of members of the global trade body would play an important role in laying the groundwork for a return to growth and job creation.
“International cooperation on trade will be critical to help all countries build back better,” he said.
“Multilateral agreements are possible when the political will is there, and when you are pragmatic about the issues to tackle, open to creative approaches and compromise, and inclusive towards the voices of all members,” he added.
With cross-border trade tipped to drive recovery from the downturn caused by the coronavirus pandemic, the WTO is urging strong partnerships between public and private actors to strengthen trade financing.
“Gaps between trade finance supply and demand could seriously impede the ability of trade to support post-COVID-19 economic recovery,” Mr. Azevêdo said.
Joining that call are the International Chamber of Commerce (ICC) and B24 Saudi Arabia, who are of the view that trade finance is a critical element in re-igniting world-wide growth in imports and exports.
According to the ICC, the trade finance deficit is presently estimated to be between US$2trn and US$5trn, a huge demand shortfall which it admits will be very challenging to meet.
To bridge the huge gap, the three institutions have proposed that countries must facilitate a rapid transition to paperless trading and share knowledge to help mitigate constraints hindering the deployment of essential trade finance—particularly to MSMEs.
According to the WTO boss, failure to address the trade finance shortfall will seriously undermine ongoing efforts to give trade the boost it needs to help global economic recovery post-pandemic.
“There is serious concern that the growing gap between demand and supply will particularly affect micro, small and medium-sized enterprises (MSMEs) and businesses in developing countries, with important implications for jobs and incomes,” he said.