“ITC Executive Director remarks at the WTO Meeting of Friends of MSMES”
Geneva 29 June 2017
Thank you to Ambassador Hector Casanueva and the WTO Informal group on Micro, Small and Medium-sized Enterprises for inviting me to join you as you celebrate the first ever United Nations MSME Day in the WTO.
Two days ago, you were all with us at ITC to listen to the voices of small businesses, their stories and their challenges as they break into new markets.
You heard from Saganà a small business in The Philippines selling 100% natural coconut sweetener in Switzerland.
Selling to the Swiss market compelled her to improve her production and marketing processes, helping her to add value to her product. The price at which she is selling her product in turn allows her to provide stable jobs for hundreds of people in The Philippines. These are the types of benefits that come from nurturing and supporting MSMEs to grow.
Globally speaking, MSMEs account for more than 90% of enterprises, employ nearly 70% of the global workforce and contribute to more than 50% of the world’s GDP. However, how many of them are connected to international value chains?
According to the WTO’s World Trade Report 2016, on average, MSMEs account for 78 per cent of exporters in developed countries but only 34 per cent of exports.
In developing countries, direct exports represent just 8 per cent of total sales of SMEs in the manufacturing sector; Africa registers the lowest export share with only 3 per cent. As far as direct export of services is concerned, participation by SMEs is insignificant with only 1 per cent of total services sales, at least in the formal market.
The evidence is here. MSMEs are missing opportunities offered by the international market because of a lack of international competitiveness. A challenging business environment; lack of finance; limited access to production infrastructures, technology and information; discriminatory non-tariff measures; and the cost of logistics and trade promotion are some of the difficulties which hinder their internationalisation. Addressing these challenges is crucial for their connection to international value chains.
Part of the answer lies with the MSMEs themselves and their need to “up their game”. Part of the answer will come from an improvement in their ecosystems. Part of the answer will come from domestic measures to improve the business environment.
What is the role of the multilateral trading system? The MSMEs we work with tell us that they look to the WTO to facilitate their business, to help make it faster, less costly and more agile.
Full implementation of the WTO Trade Facilitation Agreement is a very important step in that direction.
But I would like to focus on an important obstacle to trade often cited by MSMEs and that is the trade and market intelligence imbalance.
According to the findings in ITC’s SME Competitiveness Outlook 2015, SMEs rate access to information on export opportunities as one of the top three most important factors holding them back from exporting.
Inadequate provision of business information increases costs and barriers to entry to market for MSMEs. That is why MSMEs need to have better access to quality information about export opportunities, market regulations and standards, trade agreements, and potential business partners to take appropriate export decisions.
ITC has developed a set of market analysis tools that provide detailed and up-to-date information to more than 650,000 users around the world on trade flows, tariffs, NTMs, rules of origin, investments, public procurements, sustainable standards and, recently, export potential. Nine users out of ten find the tools helpful to improve their services according to our latest survey, with ITC trade and market intelligence tools enabling over $300 million in trade transactions in 2016.
Providing relevant information as a global public good levels the playing field for MSMEs, institutions and policy makers. Information technology has made it easier to provide and access information and many other international organisations, including WTO and UNCTAD, are engaged in partnership to provide greater transparency in trade. The recent collaboration between the ITC, the WTO and UNDESA under ‘E-Ping’ is one such example.
This is why we now want to take this collaboration to the next stage by developing an integrated solution that gathers all relevant information available into a single platform.
The information and data is out there. The trade and market analysis can be done. Yet, one would argue that we still have a way to go to translate the information into intelligence for the MSMEs that need it the most.
Information sources are scattered and difficult to match and compare, and much of the data is either not available or it is not processed to ensure that MSMEs can directly benefit from it. For example, some information about non-tariff measures may be in the form of legal texts with complicated formulations that may not be very accessible to businesses.
For MSMEs to benefit from the wealth of existing information there is a need to:
- Merge trade-related information and make the data provided by different sources accessible through a single entry point
- Filter the information that is most relevant for MSMEs
- Make the information easy to understand and navigate by investing in a user-friendly interface, translation of information into business language and adding explanatory texts and guidelines
- Provide flexibilities to build bridges from the international gateway to national trade portals. This will allow benefits from the efficiency implied by centralized data collection and quality control, and national value addition through translations or additional information content.
ITC, WTO and UNCTAD are working towards a single entry point- Trade Helpdesk- that will make trade-related information truly accessible for MSMEs. It will create efficiency gains in data collection, avoiding unnecessary duplication and providing additional information in areas so far insufficiently covered (such as information on market prices, non-tariff measures and trade procedures).
We hope to launch this tool for MSMEs at the WTO Ministerial Conference in December in Argentina as a concrete deliverable of the multilateral trading system for the MSMEs and as a contribution to improve their competitiveness.
For this initiative to come to fruition we would need the support of all members. A first support should come from an improvement in the data available including by improvements in the notifications to the WTO. We would also welcome suggestions to ensure the portal responds to the needs on the ground. Finally we will also require some support in particular to construct the portal.
I look forward to working with the Informal group of MSMEs, the WTO and other partners to celebrate UN MSMSE Day with a concrete tool for the MSMEs on the ground.