- Posted by Dr. Fernando González-Rojas
- On October 12, 2017
- exports, FTAs, SMEs, WTO
The 17th edition of the World Trade Organization’s annual Public Forum came to a close on 28 September 2017, with over 100 sessions and workshops contributing to the continued success of this important three-day event.
Held on the forum’s final day, the Trade Pacts Session “Learning to trade globally: what should SMEs know?” was well received by its over 100-member audience. Five private and public sector expert panellists provided invaluable advice and responded to some of the most pressing questions facing SMEs in Europe and abroad.
“The session, like the overall WTO Public Forum, was a great success, and was a learning curb for panellists and guests alike,” says Trade Pacts Managing Director and session moderator Marina Foltea.
Compete, connect and change
According to Dr Marion Jansen, Chief Economist the International Trade Centre (ITC), trade connectivity is a significant hurdle for SMEs globally. With an estimated 3.9 billion people without access to the Internet, information exchange and digital connectivity – a growing enabler of trade – remains a major issue. Certification and associated costs, too, explained Dr Jansen, is consistently raised as another key barrier to SMEs trading internationally. In terms of change, access to skills and finance, from a production/service point of view, is considered a definite inhibitor to boosting export performance. “The problems and the solutions for SMEs to export are very country-specific, sector-specific and often situation-specific, and the effort we make is to help countries or sectors develop strategies in order to help these firms connect to global markets in a very tailored way,” said Dr Jansen.
Dr Lucian Cernat, Chief Economist, DG Trade, with the European Commission, underlined “the importance of European SMEs to international trade” – an optimistic account which, until only a few years ago, was not well documented.
“In any economy, in particular that of the European Union, SMEs are the backbone. Of the 23 million enterprises in Europe, around 90% are small firms – those with under 250 employees” noted Dr Cernat. Remarkably, a recent survey in Europe found that just one third of the European exporters approached reported significant problems when exporting. These problems are usually related to not understanding complex trade terms and difficulty garnering the necessary information that can lessen the risk of lengthy shipping delays, for example. Of the proposals put forward by Dr Cernat for the panel’s consideration was that WTO members, when introducing new rules, conduct an SME crash test that considers these businesses and the complexity of policies that may well deter them from trading on a larger scale.
Offering the viewpoint of a multinational company’s growth journey was Hermance de La Bastide, Head of Public Affairs (UN Agencies and WTO) for wines and spirits giant Pernod Ricard.
“This international ambition, even for a big company, doesn’t go without its difficulties,” noted Hermance. “There is no ready-made solution. The more we go global and the more we diversify our export destinations, the longer the list of trade barriers tends to become. It’s important to stay informed of policy or regulatory changes. Here, the WTO provides a framework of transparency through notifications and enquiry points, creating a shared culture of pre-notification and a transition before new measures are implemented.” These tools, said Hermance, are available to everyone and should be used. Hermance also pointed out that exporters must join voices to deal with market access barriers, especially under a sectorial umbrellas. Accessing information, via trade platforms and chambers of commerce, and engaging with similar organisations, is vital, she stressed.
Automate as you grow
With so many requirements and topics needing to be dealt with by exporters and importers, trade automation, and the drive for streamlining with a “paperless environment”, is unavoidable.
In his presentation, Michel Anliker, Director and Head of Trade & Customs for KPMG in Switzerland, provided a discerning summary of global trade automation and how trading SMEs should distinguish which solutions are best for them. “Trade automation is a very complex area and a different layer in a company, with solutions ranging in cost and performance – from the cheap solutions to those requiring a lot of investment.” According to Anliker, such solutions, while they can help company administrators enormously, must be planned for from beginning to end, and exporters should first, before implementing a system, carefully consider a design that suits their particular needs. In case of the SMEs, trade automation becomes relevant and important after they already encounter a certain number of export operations. This automation can provide for further cost reduction at that point in time.
Understand your market
Over 75% of Switzerland’s GDP is generated by exports, and 29 Free Trade Agreements are in place with 30 countries outside the EU. 99% of the country’s businesses are SMEs (250 employees or less).
Martina Gmuer, the Head of Export Promotion at Switzerland Global Enterprise (S-GE), outlined the two major constraints facing Switzerland’s smaller businesses. A lack of personnel resources to deal with export-specific issues, and a shortage of financial resources, are particular pains for the country’s small enterprises, she says. “It’s important that these businesses truly think their projects through,” said Gmuer. “While a Free Trade Agreement (for exporting to a particular country) may exist, SMEs must understand whether a market is fitting for their business (or product) and that they have the resources (including monetary resources) for the long term.”
A resounding cohesion amongst session participants was acknowledging the problem of access to information by the SMEs. Participants recognised that rule-makers, too, have a duty to develop legislation that is far more manageable and, in tandem, cost-effective for SMEs to adopt. SMEs must make a concerted effort to stay informed of policy updates, to seek out the various channels that are available to support them, and be willing to accept direction when presented.
Full audio of the Session can be accessed here.
Trade Pacts offers support in understanding and using trade rules to the advantage of SMEs. Contact us at firstname.lastname@example.org for more information.