World Trade Organization and MSMEs

Informal Working Group on Micro, Small and Medium-sized Enterprises (MSMEs)

Today, 95% of companies across the globe are MSMEs, accounting for 60% of the world’s total employment. However, MSMEs face a number of obstacles when seeking to participate in international trade. To address these obstacles, 88 WTO members signed a statement at the WTO’s 11th Ministerial Conference (MC11) in December 2017 declaring their intention to create an Informal Working Group on MSMEs to explore ways in which WTO members could better support MSMEs’ participation in global trade. The Informal Working Group met for the first time in March 2018.

Why an Informal Working Group on MSMEs? 

1. According to the 2016 World Trade Report, firms with fewer than 250 employees account for 78% of exporters in developed economies but only 34% of exports. These figures remained essentially unchanged in a 2022 update when industrial firms were found to account for only 36% of the total value of exports and 41% of imports. In developing countries, MSMEs’ direct exports amount to only 11% of total sales in the manufacturing sector, compared with nearly one-third (32%) for large manufacturing enterprises.
2. Today, more than 90% of companies across the globe are MSMEs, accounting for roughly two-thirds of the world’s total employment. However, MSMEs face several barriers when seeking to participate in international trade, including:
   1. Limited access to finance, especially trade finance
   2. Lack of relevant skills and knowledge about international markets
   3. Non-tariff barriers and cumbersome regulations
   4. Complex border procedures

The smaller the company, the greater these challenges become (ADB, 2023; ITC, 2018).

• What is the WTO MSME Informal Working Group (MSME Group)

1. 1. 1. To address these obstacles, 88 WTO members signed a statement at the WTO’s 11th Ministerial Conference (MC11) in December 2017 declaring their intention to create an Informal Working Group on MSMEs to explore ways in which WTO members could better support MSMEs’ participation in global trade. The Informal Working Group met for the first time in March 2018.
      2. The MSME Informal Working Group seeks to integrate MSMEs fully into global trade. In the Joint Statement issued in December 2017, the Group committed to identifying solutions that would help companies, particularly MSMEs, increase their participation in world trade while considering the specific needs of developing economies.
      3. As of May 2024, 102 WTO members participated in the Informal Working Group discussions. These participants cover all regions of the world and all levels of development, accounting for around 90 percent of world exports. Ambassador Matthew Wilson of Barbados is currently coordinating the initiative. Previously, Ambassador Jose-Luis Cancela of Uruguay coordinated the Group from February 2018 through April 2023. Before that, in the lead-up to MC11 in Buenos Aires through January 2018, discussions were led by Chile’s Ambassador to the WTO, H.E. Mr Hector Casanueva.

• What has the MSME Group accomplished?

1. 1. The first deliverable of the MSME Group was a package of six recommendations and declarations that was adopted on 11 December 2020 (INF/MSME/4 and INF/MSME/4/Rev.2):
      1. Recommendation on collecting and maintaining MSME-related information (Annex 1). There is no systematic coverage of MSMEs in regular WTO Trade Policy Reviews (TPRs), so the MSME Group encourages WTO Members to voluntarily provide MSME-related information, such as statistics or support programs. As part of Annex 1, the Secretariat developed and maintains a database of all MSME references in WTO Members’ TPRs WTO | MSME references in trade policy reviews.
      2. Declaration on access to information (Annex 2). This declaration calls for the prompt operationalization of the ITC-UNCTAD-WTO Global Trade Helpdesk, an online resource for trade procedures and market information. This point also calls for the voluntary submission of information to support this resource.

• Recommendation on trade facilitation and MSMEs (Annex 3). This recommendation calls for fully implementing the Trade Facilitation Agreement (TFA). It advocates for direct engagement with MSMEs when conducting consultations related to the TFA, and it encourages the exchange of experiences among WTO Members on involving smaller businesses in the TFA implementation process. Finally, it notes that WTO Members should identify opportunities to adopt digital solutions to simplify and speed up customs procedures.

• Recommendation on promoting MSMEs’ inclusion in regulatory development in trade (Annex 4). Regulatory burdens are often relatively heavier the smaller the business. These burdens can be minimized by assessing new trade rules’ impacts on MSMEs before they come into effect and by providing sufficient opportunity for MSMEs to review and comment on proposed trade regulatory changes. Annex 4 encourages WTO Members to consider the specific needs of smaller businesses and promotes the exchange of good practices for MSME regulatory consultations and impact considerations.

1. 1. 1. Recommendation on MSMES and the WTO Integrated Database (Annex 5). This annex supports implementing the May 2019 Integrated Database (IDB) Decision. The WTO IDB is the official source of tariff and other trade-related information, and the 2019 decision updates its operation. WTO Members are encouraged to provide additional information to the database and to set up voluntary agreements with the WTO Secretariat for the automatic electronic transmission of tariff and import data.

• Declaration on addressing the trade-related aspects of MSMEs’ access to finance and cross-border payments (Annex 6). The last annex calls on MSME Group members to engage in relevant fora to identify concrete measures through exchanging good practices and information sharing on technical assistance. The annex also welcomes international initiatives such as the global legal entity identifier (LEI) and encourages all WTO Members to consider trade-related aspects of MSMEs’ access to finance.

The 2020 Package remains active, and members continue to implement its recommendations. 

1. The MSME Group launched the Small Business Champions Initiative in 2021, an annual contest carried out jointly with the International Chamber of Commerce (ICC) and the International Trade Centre (ITC) that rewards outstanding projects that support MSME trade and development. Each year, a different theme is chosen, and other partners, including Zoom, Google, and the World Intellectual Property Organization (WIPO), have joined at various points in time to support. All past competitions can be reviewed at the following web address, which includes descriptions of the winners and their projects: WTO | ICC-ITC-WTO MSME Group Small Business Champions.
2. Another key deliverable of the MSME Group from December 2021 is the Trade4MSMEs website. The Trade4MSMEs website serves as a gateway to trade information for MSMEs, policymakers, and researchers, with guides on relevant topics and a significant library of verified resources. Building on the partnership between key international organizations that provided the information for the website, the Trade4MSMEs Network was established in June 2022 among roughly 20 International Organizations working on MSME and trade-related issues. The Trade4MSMEs Network meets annually to update one another on work undertaken to support each organization’s MSMEs. For MSME Day, an improved version of the Trade4MSMEs Platform, including new guides and country pages, was launched in June 2023.
3. Tied with the revamp of the Trade4MSMEs website and in strategic partnership with the Institute for Export & International Trade (IOE&IT), the MSME Group launched the online Trade Game, a novel approach to export readiness and trade learning. The Trade Trade Game (trade4msmes.org)) challenges players to export their product successfully within a time limit and set a budget, guiding participants through the questions a small business exporter might have to face. 
4. Before the 13th WTO Ministerial, the MSME Group worked to compile two compendiums. The first, developed jointly with the Informal Working Group on Trade and Gender and the ITC, contains more than 70 national and international initiatives to promote financial inclusion of women-led small businesses (INF/MSME/W/46/Rev.1 & INF/TGE/W/7/Rev.1). The second, which was developed together with the collaboration of the World Customs Organization (WCO), contains good practices for MSME-targeted authorized economic operators (AEO) programs to foster the participation of small businesses in such programs and allow them to benefit from their advantages, such as accelerated customs clearance (INF/MSME/W/47/Rev.1). Both compendiums will be updated regularly as new programs are identified.
5. The MSME Group has also maintained a strong interest in MSME trends within regional trade agreements (RTAs). In 2019, the Secretariat undertook an exercise at members’ request to identify all RTAs with MSME references and the associated chapters, which were compiled into a searchable database. The MSME Group also welcomed a series of WTO Secretariat notes on MSMEs and RTAs as well as a review of findings from the RTA database (INF/MSME/W/6, INF/MSME/W/6/Rev.1, INF/MSME/W/6/Rev.2, INF/MSME/W/6/Rev.3 and INF/MSME/W/40). The MSME Group later issued a call for research papers in 2023 and received three submissions available publicly as INF/MSME/W/48.
6. The MSME Group seeks to interact directly with small businesses through workshops, events commemorating the United Nations MSMEs Day, and an annual meeting with the private sector. Under the document symbol INF/MSME/P, the MSME Group can receive recommendations directly from companies or representative groups from the private sector. The Group continues publicizing its work through a regular newsletter with updates on documents, deliverables, and presentations. Those interested in subscribing may do so by emailing MSMEGroup@wto.org. 
7. The MSME Group prides itself on its openness and flexibility. It has collaborated with other WTO groups, including the WTO Informal Working Group on Trade and Gender and the Trade and Environmental Sustainability Structured Discussions (TESSD). These three groups held a joint event in 2023 on “Women-led MSMEs, Trade and Climate Change – Adapting and Investing for the Future” as well as a joint session at MC13 titled “Paving the Way to Strengthening Trade Inclusiveness through WTO Members’ Initiatives.” This collaboration fits the MSME Group’s objective to promote coordination and information exchange on MSME-related issues with other regular WTO working bodies. As part of this objective, the MSME Group members do their best to encourage MSME-related discussions within any relevant WTO body.

• Looking forward, what are some next steps for the MSME Group:

1. 1. A priority of the MSME Group is its 2020 Package of recommendations and declarations. The MSME Group will continue to monitor its implementation and look for new ways to implement the various points. 
   2. The MSME Group also intends to focus on issues of core significance to MSMEs and identify actions that could be taken to promote MSMEs’ participation in international trade, building on its previous work. Based on the success of the 2024 compendiums, MSME Group members are interested in continuing to work to exchange good practices in areas of interest to the Group and to organize workshops and information sessions as appropriate.
   3. Looking ahead, the MSME Group plans to continue its discussions both within the WTO and its various Groups and externally with the private sector and Trade4MSMEs Network. The MSME Group and its members will continue the annual meeting with the private sector and dialogue with other international and regional organizations that work on MSME issues to promote coordination of action at the global level. 
   4. The MSME Group and its members will continue supporting the future development of the Global Trade Helpdesk and the Trade4MSMEs platform as online repositories of trade information and resources for MSMEs and trade policymakers.
   5. Finally, the MSME Group plans to continue exploring joint events and messaging with other WTO Committees and informal groups, including the Informal Working Group on Trade and Gender, the Trade and Environmental Sustainability Structured Discussions, and the Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade.