Daily Management Review

WTO Believes G20 Should Back Reforms And Help In Trade Financing For Developing Economies


WTO Believes G20 Should Back Reforms And Help In Trade Financing For Developing Economies
The World Trade Organization suggested that trillions of dollars in trade financing for developing countries should be provided by the group of 20 major economies so that the developing countries as well as the global economy can be helped to emerge from the economic hit of the novel coronavirus pandemic.
Using trade for helping to underwrite the economy, greater trade in essential medical supplies and bringing in reforms in the institutional framework for world trade was critical for the world, said WTO Deputy Director General Alan Wolff while addressing G20 leaders.
“When crops do not move and factories are idled throughout the developing world, the global recovery will be delayed for all,” Wolff, a US citizen, told the leaders. “A trade finance initiative should be seen as an essential part of improving the outlook for economic recovery.”
A gap in global trade finance was being exacerbated by the Covid-19 pandemic, the World Economic Forum this year said. “We must tackle it now that was already at $1.5 trillion before the crisis began, with over 50 per cent of requests for financial support of trade being rejected,” it said.
The least developed countries are hit the hardest by a lack of access to trade financing even as such countries already struggle with the high cost of financial transactions.
In order to free up trillions of dollars in required financing, close cooperation was needed between the global financial institutions, the WTO and the large commercial banks, Wolff said.
Ever since the blocking of both the selection process of a new director general and the functioning of a dispute settlement body at the Geneva-based world trade body by the outgoing US President Donald Trump, the organization has been left in turmoil.
Leaders of the G20 countries were urged by Wolff to engage in a serious manner in a “major institutional reform effort” and strengthen the deliberative and negotiating functions of the WTO.
A call to implement new measures for accelerating the deliberative and negotiating functions to the regions and countries where they are needed most was given by Wolff. Undertaking measures to update the existing agreements so that there is duty-free trade in pharmaceuticals and medical equipment all across the world, was also stressed by Wolff. 
It is important to reduce the use of export restrictions and the barriers at borders, he said. That will help in achieving much greater transparency as well as speeding up enhancements in the efforts for trade facilitation especially for the poorest countries.