www.wto.org/debtfinance
Expert Group on Trade Finance
Some 80-90 per cent of world trade relies on trade finance (trade credit and insurance/guarantees ) and during the worst of the financial and economic crisis many companies, especially smaller enterprises in both developed and developing countries, found it impossible or prohibitively expensive to obtain the credit they needed to trade.
Against this backdrop, the Expert Group on Trade Finance continued to meet in 2011, with a view to identifying the remaining gaps in the trade finance markets, especially in the poorest countries, and to propose policy measures to fill such gaps. The report of the expert group, presented in 2011 to the G20 sherpas (senior officials) and development working group, concluded that trade finance facilitation programmes were effective tools to boost the supply of trade finance, and that they should be enhanced where they existed, and created where they did not exist yet (in Africa, for example).
Established in the wake of the Asian financial crisis in the late 1990s, the group brings together representatives of the main players in trade finance, including the World Bank’s International Finance Corporation (IFC), regional development banks, export credit agencies and big commercial banks, as well as the International Chamber of Commerce (ICC), commercial banks and other international organizations.
Trade, debt and finance
In 2011, the Working Group on Trade, Debt and Finance contributed towards
addressing some of the structural gaps in the trade finance markets. In particular, the G20 Summit in Seoul requested the WTO to ‘assess and monitor’ the effectiveness of programmes operated by multilateral development banks to facilitate the provision of trade finance to low-income countries. The work undertaken by the WTO in the area of trade finance has benefited from the positive interaction between WTO members and the Expert Group on Trade Finance convened by the Director-General.
Background on trade, debt and finance WTO ministers decided in Doha in 2001 to establish a Working Group on Trade, Debt and Finance to look at how trade-related measures could contribute to finding a durable solution to the external debt problems faced by many developing countries. Since then the working group has turned its attention to a range of financial issues with an impact on trade, including the provision of trade finance, and more recently, the relationship between exchange rates and trade.
Together with the IFC and the ICC, the WTO Secretariat also worked with the Basel Committee on Banking Supervision, which provides a forum for regular cooperation on banking supervisory matters, to explore ways of further promoting trade and trade finance availability, with a particular focus on the beneficial effects for low-income countries. Changes were made to this effect by the Basel Committee at the end of 2011. The Committee announced a number of flexibilities that were not in Basel II to avoid harming trade finance with poor countries.
These changes were hailed by the Director-General of the WTO and the President of the World Bank.
Working Group on Trade, Debt and Finance
In tandem with the expert group meetings, the WTO Working Group on Trade, Debt and Finance also met twice in 2011. WTO members continued to lend their support to the work of the expert group and of the Director-General. They also continued to look at regulatory obstacles under Basel II, recommendations on banking rules and regulations, and considered the potential impact of proposals made under the new framework, Basel III.
They looked at the state of trade finance markets, based on the analysis of expert group meetings.
In addition, the Working Group on Trade, Debt and Finance adopted a work programme to examine the economics of the relationship between exchange rates and trade, in particular the impact of the former on the latter. At its first meeting in the spring of 2011, it commissioned a review of the recent economic literature on the subject matter.
The review was presented by the WTO Secretariat and discussed by members at its second meeting in the autumn of 2011. During this meeting, members agreed to proceed with the organization of a seminar at WTO headquarters in the spring of 2012 on this subject, with a view to exchanging perspectives on the impact of exchange rate volatility and misalignment on international trade.
82 World Trade Organization Annual Report 2012 Government Procurement Agreement
www.wto.org/gpa
Membership of the agreement
Armenia’s accession to the Government Procurement Agreement (GPA) took effect on 15 September 2011. The committee had agreed in March that Armenia had met the terms and conditions for its accession, specifically with respect to its national legislation. Armenia is the first member of the Commonwealth of Independent States to join. GPA members noted that its accession had clearly shown the relevance of the Agreement for transition economies.
Towards the end of 2011, China submitted a second revised coverage offer, which included a number of China’s larger provinces and municipalities. The revised offer clearly represents an important step forward in China’s accession negotiation.
However, China’s proposals regarding its coverage have not yet met the expectations of the parties to the agreement.
Discussions also took place on aspects of China’s procurement legislation. Intensive further negotiations aimed at completing China’s accession are expected in 2012. Ukraine’s application for accession was submitted on 9 February 2011. Subsequently, Ukraine circulated a description of its procurement laws and institutions, an important step in the GPA accession process...
Apart from the countries mentioned above, and Jordan, whose accession has been under negotiation for many years, six other WTO members not currently parties to the Agreement have applied for accession and submitted relevant documentation:
Albania, Georgia, the Kyrgyz Republic, Moldova, Oman and Panama. A further six WTO members have commitments regarding accession to the agreement in their respective
Protocols of Accession to the WTO: Croatia, the Former Yugoslav Republic of Macedonia, Mongolia, Saudi Arabia and, most recently, Montenegro and the Russian Federation.
At the end of 2011, the GPA comprised 15 parties representing 42 WTO members: Armenia; Canada; the European Union (including its 27 member states); Hong Kong, China; Iceland;
Israel; Japan; the Republic of Korea; Liechtenstein; the Netherlands with respect to Aruba; Norway; Singapore;
Switzerland; Chinese Taipei; and the United States. Overall, public procurement accounts for 15-20 per cent of world GDP, though only a portion of this is covered by the GPA.
The value of the total market access commitments under the GPA was estimated at US$ 1.6 trillion in 2008, representing 2.64 per cent of the world’s GDP.
Government Procurement Agreement
In 2011, significant progress occurred on pending accessions to the Government Procurement Agreement. Armenia joined in September and China submitted an improved accession offer including coverage, for the first time, of its sub-central (provincial and municipal) entities. In addition, Ukraine applied for accession to the Agreement. The demand for technical training in government procurement continues to grow.
Background on the Government Procurement Agreement
The WTO Government Procurement Agreement (GPA) ensures that signatories do not discriminate against the products, services or suppliers of other parties to the Agreement with respect to the procuring agencies, goods and services that they have agreed to open to foreign competition. The agreement requires transparent and competitive purchasing practices in the covered markets. The GPA is a plurilateral agreement, which means that it applies only to those WTO members that have agreed to be bound by it. It is administered by the Committee on Government Procurement.
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Government Procurement Agreement www.wto.org/gpa
Other activities of the Committee
In 2011 the committee also considered modifications to the schedules of the Agreement, statistical reports, notifications of changes in domestic legislation and notifications of the thresholds in national currencies of procurement covered by the agreement. Work continued on the improvement of methodologies for the preparation of statistical reports Technical cooperation and training
The demand for technical assistance in the area of government procurement continues to grow, in part due to the work under way in the committee on pending accessions. In 2011 the WTO Secretariat delivered the following activities focused on the Agreement:
• a national seminar in Armenia
• a series of national seminars in five cities in India: Bangalore, Chennai, Delhi, Hyderabad and Mumbai
• a national seminar in Hanoi, at the request of the Government of Viet Nam
• national seminars in Beijing and Wuhan City, at the request of China
• a two-day national seminar in Kiev, Ukraine.
A Regional Workshop for Asia-Pacific economies was held in Bangkok, Thailand, in December, in cooperation with the United Nations Economic and Social Commission for the Asia Pacific (UN ESCAP). The secretariat also participated in a national seminar on the Agreement organized by Australia.
Cooperation with other international organizations The WTO Secretariat maintains close links with the United Nations Commission on International Trade Law (UNCITRAL) concerning its work in the area of government procurement.
This is to ensure compatibility between the GPA and the UNCITRAL Model Law on Procurement, an important point of reference for many developing countries in reforming their procurement systems. During the year, the secretariat also participated in a meeting of the G20 Anti-corruption Working Group, reflecting that body’s interest in learning about the GPA. Cooperation is also ongoing between the secretariat and other intergovernmental organizations, notably UN ESCAP and various regional development banks and bodies.
Figure 7: Members and observers of the Government Procurement Agreement
Other observers (13 members) Parties to the GPA (15 parties, comprising 42 WTO members) WTO members negotiating GPA accession (Nine members)
1.6
Total market accesscommitments under the GPA: US$ 1.6 trillion (as of 2008)
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