  
  
WT/WGTDF/W/97  
 
1 October  2020 
(20-6668) Page: 1/1 
Working Group on Trade, Debt and Finance    
 
 
TRADE FINANCE: RECENT DEVELOPMENTS  
REPORT BY THE WTO SECRETARIAT  
1.1.  This short note summarizes some recent developments in trade finance since the last meeting 
of the Working Group on Trade, Debt and Finance (2 July 2020).  
1.2.  After a dire first semester during which flows of trade finance had plummeted due to the 
combination of the fall in trade flows, operational difficulties to process trade finance documents, 
and the retrenchment of international banks , the situation has eas ed somewhat on the main routes 
of trade  during  the summer thanks to the effects of payment deferral and guarantee schemes from 
national governments, export credit agencies, as well as multilateral development banks.1 The 
demand for trade, hence for trade finance, picked up at the end of the second quarter of 2020, after 
the end of lockdowns.2 
1.3.  However,  with the health crisis lasting longer than had been originally anticipated,  many 
financial institutions indicated informally that one-off extensions of paym ent terms and debts 
accorded by creditors  in the spring of 2020  would no longer be sufficient to alleviate what appeared 
to be a longer, deeper trade finance crisis. In view of already recorded  losses and expected ones, 
several large banks (albeit not all)  had decided either to limit lending for cross -border trade, or to 
withdraw altogether from certain m arket segments and regions , leaving a n additional  gap in 
financing that is currently difficult to fill .3 
1.4.  The countries most affected by greater selectivit y of lending are those not fully  integrated in to 
global supply chains or in to the international financial system . Multilateral development banks 
(MDBs) are reporting an increasing demand for support by middle -income countries, for trade 
transactions that w ould typically be supported by the private sector, such as the importation of grain 
and of energy commodities in preparation for the upcoming winter. MDBs faced difficulties in meeting 
all request in view of their limited resources and stated priority in s upporting smaller -scale 
transactions from least -developed countries.  
1.5.  Looking ahead, the situation is expected to remain challenging for the months to come, as a 
combination of increased commercial risk and deteriorated sovereign risk deter s many private se ctor 
banks to expand financing. Trade credit insurers also warn that potential losses and claims had been 
simply delayed in some cases, thanks to government program mes. In its report on the activity in 
the first semester 2020, the Berne Union President com mented that "the fact that we have not yet 
seen a significant increase in claims payments is in large part due to protection afforded by various 
forms on fiscal support from governments as well as by the quick reaction of lenders and insurers in 
restructur ing deals when necessary. The consensus amongst the industry is that we can expect to 
see a more obvious change in claims trends towards the end of the year (2020) ".4 
 
__________  
 
1 WTO Document WT/WGTDF/W/96.  
2 As an example, please see, Global Trade Review (GTR), "Asian trade finance stages a V -shaped 
recovery while supply chain finance demand surges ", by Eleanor Wragg, dated 9 September 2020, available at 
www.gtreview.com . 
3 Bank retreat is discussed in the following news item: "ABN -AMRO exit threatens commodity -trader 
liquidity squeeze", available at www.bloomberg.com  (12 August 2020).  
4 Berne Union, quote of the September 2020 Press Release: "2020 H1 data: no increase in claims paid 
but contraction in new commitments ", available at www.berneunion.org . 