ITC Charts Businesses’ Path Through COVID-19 Crisis
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The International Trade Centre released a 15-point action plan to support micro, small and medium-sized enterprises based on five recommendations for businesses, five for business support organizations, and five for governments.

Trade aspects feature prominently throughout the action plan and are especially strong in the section intended for governments.

Recommendations for governments include the resistance to trade protectionism, facilitation of cross-border trade, expansion of access to trade finance for micro, small and medium-sized enterprises, and promoting the digitalization of trade documentation.

The International Trade Centre (ITC) has released a 15-point action plan to support micro, small and medium-sized enterprises (MSMEs) through the COVID-19 pandemic.

MSMEs, the action plan notes, are “the driving force behind” many essential services in the pandemic. However, they are also particularly vulnerable to the repercussions of the crisis, especially in developing and transition economies. Beyond facing weaker consumer confidence and being overrepresented in the hardest-hit sectors such as retail trade, tourism, and personal and professional services, MSMEs have fewer assets, reduced access to credit, and a more challenging trade environment relative to large companies.

The plan for MSMEs is centered around five recommendations for businesses, five for business support organizations, and five for governments. An ITC news release featuring a consolidated set of recommendations reminds the reader in each of the three sections to both “prepare your immediate response to the crisis” and to “get ready for the ‘new normal’.”

Free movement of goods and services is critical to producing essential products, including medical equipment and food.

The plan’s introduction highlights that the UN Conference on Trade and Development (UNCTAD) estimates a decline in cross-border investment flows by up to 30-40% in 2020-2021. Accordingly, trade aspects feature prominently throughout the action plan, and are especially strong in the section for governments, though the plan emphasizes that governments, business support organizations, and small business alike should coordinate the immediate response in a collaborative manner. The plan calls on governments to implement support measures built around concessional financing, tax reductions and grants, employment incentives, and targeted interventions.

Resisting the allure of trade protectionism is paramount, the plan argues. It emphasizes that free movement of goods and services is critical to producing essential products, including medical equipment and food. Thus, the plan also recommends that governments facilitate cross-border trade in goods and services, and streamline the movement of essential products by following best practices as outlined in the World Trade Organization (WTO) Trade Facilitation Agreement. Actions include, inter alia: certificates for medical equipment and essential food items; enhanced border management coordination, for example between customs and sanitary authorities; special regimes for expedited clearance of certain goods; and accelerating clearance processes for trusted traders or authorized economic operators who respect health-related rules and regulations.

The plan also notes that governments can expand and facilitate access to trade finance for MSMEs, including those run by women and young entrepreneurs. The pandemic, the plan notes, has negatively impacted the availability of trade finance for small business due to higher liquidity costs and the perceived risk of short-term finance, leaving a void for governments to fill. The document notes that several economies have expanded short-term programmes that provide financial support to national exporters. Flagging that nearly all MSMEs rely on goods that have been sourced internationally, the plan stresses that now more than ever is the time “to conserve the links between small businesses and international markets.”

The plan underscores that trade documents and procedures can be digitalized in collaboration with the private sector, noting that the WTO Trade Facilitation Agreement encourages countries to introduce digital clearance processes. As noted above, such processes can simplify cross-border trade whilst limiting physical contact and in-person interactions. While the plan points to the private sector as having responsibility for digitalizing trade documents, it acknowledges that the onus is on governments to provide legal certainty that these documents will be recognized within their respective jurisdictions.

Additional information related to ITC and COVID-19 is available here. ITC is a joint agency of the WTO and the UN. [Publication: Supporting Small Businesses Through the COVID-19 Crisis and Towards the Future: A 15-Point Action Plan] [ITC News Release]

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