SPEECHES — DG ROBERTO AZEVÊDO
Secretary General Kituyi,
Executive Director González,
Ladies and gentlemen,
Good afternoon – and welcome.
I'd like to start by commending the Friends of MSMEs for organising this event, and by wishing you all a slightly belated, but very happy, MSME day!
We all know the importance of MSMEs for the global economy. They account for most of the job creation around the world. They are major employers of women and young people. And they act as incubators for entrepreneurship and innovation.
Helping MSMEs to join trade flows in greater numbers will go a long way to improving the lives of individuals and communities around the world. It would be a big step towards building the more inclusive trading system that we all want to see.
More MSMEs doing business across borders would mean more women benefitting from trade, more people in LDCs, more people in rural areas, more agricultural firms, and more young people benefitting as well.
And in this way it will make a big contribution to achieving the Sustainable Development Goals.
So initiatives like this dialogue today play a very important role. This is an opportunity to focus our minds on ensuring that MSMEs get the support they need.
We know that MSMEs are important. But we also know that they face greater barriers than the larger players.
They are at a disadvantage in dealing with the range of challenges that trading across borders can pose.
They often don’t have the resources, or the ability to absorb risk, or the necessary expertise. Similarly, they don’t always have access to the necessary infrastructure. For example, MSMEs struggle to access trade finance. Globally, 58% of trade finance requests by MSMEs are rejected, against just 10% for multinational companies.
And of course trade costs can be prohibitive.
WTO research shows that the fixed costs involved with trade can be particularly difficult for MSMEs. This includes dealing with standards, costly border procedures, or other non-tariff barriers. The ITC has found that increases in regulatory burdens hit the revenues of MSMEs twice as hard as larger firms.
But as well as fixed costs, variable costs are also an issue. Last year's World Trade Report found that tariffs are considered a major obstacle by MSMEs.
So what can we do about all this?
This has been an ongoing focus of your discussions in recent months. I have been hearing a lot of interesting and very practical ideas. And I would like to highlight just a few today.
First, between all of our organizations we have a lot of information and expertise on regulations and standards in markets around the world. We already work hard to make that information available in an open and transparent way. But perhaps there is more that we can do.
Last year the WTO, UN DESA and ITC launched the ePing notification alert system. The idea is to alert members about new TBT and SPS measures and to facilitate dialogue amongst the public and private sector in addressing potential trade problems at an early stage. It is a fairly simple innovation, and it has been a huge success.
In the digital age, we might want to look at new ways to make the data we already have even more readily available.
This is an area where we are already working together with our institutional partners – and I think there is more that we can do.
So that's the first area where I've heard some interest from members.
The second is how we can work with our partners to tackle other issues which require a shared approach – such as trade finance.
I have been calling for action in this area, and am working with the IFC and regional development banks to see what more we can do to help MSMEs access the resources they need to start trading. After all, this is a very low risk form of finance. The risk of default on short term trade credit is just 0.02 per cent.
I will be hosting a roundtable on this issue during the forthcoming Global Review of Aid for Trade to look at how we can close the gap in trade finance provision.
The final area I wanted to raise concerns is exchanging national experiences on supporting MSMEs.
I frequently hear excellent examples of local initiatives to support MSMEs. Should we consider bringing together from capital the people and institutions responsible for these initiatives to share their stories?
The purpose would be twofold. One, to share practical experiences of supporting MSMEs – what works well and what works less well. Two, to help identify specific areas where we might be able to help.
This kind of information sharing at the technical level might prove quite practical and constructive.
These are just some of the many ideas that I am hearing from members – and I expect that we will hear many more today.
Of course, there are other steps that we are already taking.
Every day at the WTO we strive to make the trading system work better for all of its users. And when we do so, those who face the greatest barriers to their participation are among those who benefit the most.
When we work to implement the Trade Facilitation Agreement to cut trade costs for everyone, we are also tackling a major barrier for MSMEs to enter global markets.
When we implement the Information Technology Agreement to facilitate access to new technologies for all, we are also helping MSMEs to reap the benefits of these innovations.
And when we strengthen our capacity building initiatives to help people develop the skills and tools to trade, again MSMEs are important beneficiaries.
So, this will be a focus of discussion during the Global Review of Aid for Trade in July, so I encourage you to come, get engaged, and make the most out of that opportunity.
To conclude, I think this MSME conversation is very vibrant.
As I have described, it is relevant to many current initiatives that the WTO is already working to deliver.
It forces us to consider how we are serving the users – and potential users – of the trading system, and how we might serve them even better.
And, clearly, it is sparking a range of new ideas among members.
This is very positive. As long as members want to keep discussing these issues, I am more than happy to support you in any way I can.
And I urge you to continue in the spirit of openness and inclusiveness that have defined your conversations so far.
Thank you for listening. I wish you all a very successful event. I look forward to hearing about your discussions.