The volume of world trade contracted sharply in 2009 as a result of a collapse in global demand and of shortages of trade finance, thus creating constraints to export growth in many developing countries. This caused serious situation risks being compounded by an increase in protectionist measures. The effects of the banking and financial crisis on international trade, furthermore, led to the tightening of liquidity.
The sharp deterioration of global economic prospects further triggered a re-assessment of credit risk, entailing a sharp increase in the cost of credit, insurance and guarantees for trade operations, in particular for developing countries and the least developed countries. With the crisis constraining the budgets of donors, there was also a risk that commitments in the area of Aid for Trade will not be honored.
Responding to these developments, the Trade Initiative:
monitors trade and investment developments to counter protectionism;
regularly convene relevant stakeholders and prepare periodic reports on the situation of trade finance markets to foster transparency and best practices and ensure delivery of commitments;
convene World Trade Organization members to advance the conclusion of the Doha Development Round, which would contribute to reviving economic growth around the world;
and advocate and make the case for maintaining Aid for Trade.