Global Trade and Financial Institutions Confront US$25 Billion Trade Finance Gap
January 5, 2009
David Hartridge CMG, Magdalene Bayim-Adomako, Duane D. Wall, Gregory J. Spak
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Summary
The effect of the global financial crisis has attracted the attention of high-level policy makers during the last quarter of 2008. The Director General of the World Trade Organization (WTO) convened a meeting of major financial institutions on November 12, 2008 to discuss the effects of the global financial crisis on the availability and cost of trade finance. The Organisation for Economic Co-operation and Development (OECD) held a meeting on the same subject on November 17. On November 26, the WTO's Working Group on Trade, Debt and Finance discussed the problem of trade finance in developing countries and confirmed the Expert Group's assessment of the extent of the shortage and its consequences for developing countries. The consensus emerging from these meetings is that:
- the world currently confronts a shortfall of trade financing in the amount of approximately US$25 billion
- the cost of available trade financing has risen significantly
- the adverse conditions in the trade finance market affect most directly developing countries and their exporters
International organizations such as the WTO and the OECD are urging action to close this gap so that global trade does not diminish and contribute further to worsening economic conditions.
Contacts:
David Hartridge CMG
Senior WTO Counsellor
41 22 906 9801
Magdalene Bayim-Adomako
Partner
44 20 7532 1202
Duane D. Wall
Partner
1 212 819 8453
Gregory J. Spak
Partner
1 202 626 3641
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