Policymakers & Researchers
Welcome to our dedicated resources for policymakers and researchers. Here you will learn about the various aspects of trade and MSME-related policymaking.
Why MSMES and Trade?
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Why MSMEs and trade? There is no universal definition of an MSME. Some economies categorize them by number of employees, some by annual turnover, others by assets, and still others by a combination of the above. Although there may be no exact agreement on what a MSME is, what is clear is that they are a large part of the global economy. Some estimates indicate that MSMEs account for roughly 60% of global employment, 50% of value-added, and 95% of enterprises worldwide (See the World Trade Organization’s (WTO) World Trade Report 2016 for more information). Additionally, when considering their number of employees, the majority of MSMEs are very small (or micro, less than 10 employees) enterprises. In some parts of the world, they can also be part of the informal sector. MSMEs trade less than large firms International trade, and especially participation in global value chains (GVCs), has been shown to hold a number of advantages for participants, from input and market diversification to technology transfer and increased productivity. However, not all businesses have the same capacity to participate and there is a growing body of evidence showing that MSMEs need support to trade. For more research on this, see the WTO World Trade Report 2016: Levelling the trading field for SMEs, the International Trade Centre’s (ITC) SME Competitiveness Outlook: Connect, compete and change for inclusive growth, and the Organisation for Economic Co-operation and Development (OECD) and World Bank’s publication on Inclusive Global Value Chains). MSMEs and services trade Services are an important sector for MSME economic participation, especially as the digital economy continues to grow. MSMEs that supply services have been found to export earlier than manufacturing MSMEs, having relatively lower fixed costs to enter international trade (see WTO World Trade Report 2019: The future of services trade). Support for services trade through lowering barriers can be an important way to open trade opportunities for MSMEs. MSMEs and digitalization The digital economy has many opportunities for MSME to begin to trade internationally. From “born global” firms to e-commerce, those MSMEs that digitalize have access to tools that can reduce business costs and facilitate trade. However, MSMEs remain much slower to digitalize, be it due to access to infrastructure, costs, or lack of digital know-how. For more information, see the ITC SME Competitiveness Outlook: Business Ecosystems for the Digital Age, OECD Digital Transformation of SMEs, and the United Nations Conference on Trade and Development’s (UNCTAD) Digital Economy Reports. MSMEs, trade, and gender MSMEs are important for trade inclusiveness, especially when it comes to women. There are large gaps in trade participation between women and men-owned firms. Women-owned firms generally are smaller than men-owned firms, according to the WTO Women and Trade Report. Understanding the nexus between MSMEs, trade, and gender is important, especially given findings that women-owned exporting businesses pay more, hire more, and are more productive than their non-exporting counterparts (see the ITC Unlocking Markets for Women to Trade). MSMEs and innovation Innovation is crucial for long term growth and development. MSMEs at the forefront of new business innovations can be more agile than large firms and more willing to experiment. However, on average MSMEs are less innovative than large firms according to work by the OECD. More policy effort is necessary in order to foster MSME innovation (see OECD Promoting innovation in established SMEs).
Policymaker guides on key issues to help MSMEs trade
Cross-cutting issues
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Gender
Trade and Gender There is a growing body of research showing that while international trade can be important for business development, innovation, and resilience, there is a need for trade to become more inclusive. Barriers exist not just for MSMEs to trade, but also more specifically for women traders and entrepreneurs, complicating their efforts at realizing the benefits of trade’s economic opportunities. Trade can foster women’s economic empowerment and advance gender equality. Governments can make this possible through the development and implementation of gender-responsive trade policies, as well as by implementing the WTO Agreements with a gender lens. Trade policy can support women entrepreneurs by lifting the many additional obstacles they face through financial and non-financial incentives, government procurement, or capacity building in trade. Why MSMEs and Gender? Women entrepreneurs constitute a significant share of MSMEs globally. They represent about 30% to 37% (8–10 million) of all MSMEs in emerging markets (see MSME FINANCE GAP from 2017). In Nigeria, women represent 41% of micro-business owners, with 23 million female entrepreneurs operating in the country. Nigeria has one of the highest female entrepreneurship rates globally (the PWC report can be found here). Women entrepreneurs mostly own, and lead, micro enterprises and they are typically smaller than men-owned, or led, firms. For instance, in Canada, 92.7% of women-owned firms employ less than 20 staff members (the Women Entrepreneurship Knowledge Hub and Women’s Enterprise Organizations of Canada report can be found here). Their micro size makes competing in the international market very difficult and it is one of the many reasons why they are not integrated in the global market (See Unlocking Markets for Women to Trade for more information). Women entrepreneurs not only face the same trade challenges as MSMEs, such as relatively higher cost burdens imposed by non-tariff measures and customs procedures, they can also face additional barriers and trade costs such as legal prohibitions to economic participation, additional discrimination for access to finance, and unequal access to the digital economy due to the persisting gender digital divide. Where can policymakers access more resources? For more resources on trade and gender, please see: The World Trade Organization’s (WTO) women and trade website contains information on relevant resources and events, as well as a link to the WTO informal working group on trade and gender webpage. Published in 2020, a World Trade Organization and World Bank report, Women and Trade: The role of trade in promoting gender equality, looks at the role of trade in promoting gender equality and provides new information and data on this important topic. Other papers of interest are: Women’s economic empowerment: an inherent part of Aid for Trade “; Gender Provisions in African Trade Agreements: Assessment of the Commitments for Reconciling Women’s Empowerment and Global Trade ; and Trade Policies Supporting Women’s Economic Empowerment: Trends in WTO Members. The International Trade Centre’s (ITC) women and trade webpage links to resources including the ITC’s SheTrades initiative, which is a platform for women-owned businesses, organizations, and companies to connect, access workshops, and find suppliers. The ITC also issued a publication in 2020 on Mainstreaming Gender in Free Trade Agreements, among other relevant reports. The Organisation for Economic Co-operation and Development (OECD) also has a trade and gender webpage with related research and publications on ways trade can contribute to women’s economic empowerment. The United Nations Conference on Trade and Development (UNCTAD) provides a webpage on gender equality, its importance for sustainable development, and the role for trade. This webpage features all recent publications, projects, and events on the subject. The World Bank’s trade and gender webpage is another resource linking to relevant publications and upcoming events on women and trade. Where can policymakers access good practices or national examples? The WTO Informal Working Group on Trade and Gender has prepared a progress report outlining the technical work that WTO Members and Observers have undertaken on women’s economic empowerment. It can be accessed at the WTO website
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Regional Trade Agreements
What do small businesses matter for RTA negotiations? Small businesses are the backbone of economies by accounting for most businesses and employment worldwide.
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Voluntary sustainability standards
What are voluntary sustainability standards (VSS)? Voluntary Sustainability Standards (VSS) are a set of standards which aim to encourage...
Digitalization
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Blockchain / Distributed Ledger Technology (DLT)
What is blockchain? Blockchain, or distributed ledger technology (DLT), is a decentralized digital network of records that can be simultaneously accessed by all permitted users and that are automatically updated and validated if an authorized change is made. All changes are time-stamped and DLT transactions are based on consensus, replication, and immutability. This provides a high level of security, even in transactions where parties do not know each other or have other verification tools. Why does blockchain matter for MSMEs and trade? Blockchain technology holds the potential to facilitate trade transactions and access to finance, along with reducing costs. By providing an immutable record of transactions, MSME with access to IT infrastructure and the right digital know-how may be able to use this technology in their international trade dealings or provide alternative documentation to verify their credibility when trying to access finance. From identity management to smart contracts, a Finextra article entitled Blockchain: A game-changer for Small and Medium-sized enterprises provides additional information on the benefits of blockchain for MSMEs. What can policymakers do? While blockchain technology could reduce barriers for MSMES to engage more in international trade, there are a number of challenges that need to be overcome. Some challenges relate to blockchain technology adoption, including: scalability; security; interoperability; and the lack of clear legal framework. Other challenges relate to MSMEs themselves, including the lack of technical skills and internet access to adopt, use and seize the benefits of blockchain technology. Where can policymakers access more resources? The International Trade Centre’s (ITC) SME Academy: In partnership with the World Trade Organization, the ITC has a free online course called Introduction to Blockchain. Information Technology and Innovation Foundation (ITIF): The ITIF has A Policymaker’s Guide to Blockchain that is a resource on what blockchain is and its applications. It also outlines considerations for regulating this technology. The International Telecommunications Union (ITU): The ITU provides a focus group on the application of distributed ledger technology. More information is available here. The Organisation for Economic Co-operation and Development (OECD): The OECD has several resources for policymakers on blockchain, including a chapter in their report entitled The Digital Transformation of SMEs. This chapter is called How can blockchain ecosystems serve SMEs. They also have a 2019 report on The Policy Environment for Blockchain Innovation and Adoption. The United Nations Economic Commission for Europe (UNECE): The UNECE continues to look into blockchain technology and its relation to trade, including through events and papers such as the technical applications of blockchain in UN/CEFACT deliverables and blockchain in trade facilitation. UN/CEFACT refers to the United Nations Centre for Trade Facilitation and Electronic Business. The United Nations Conference on Trade and Development (UNCTAD): UNCTAD has published A Policymaker’s Guide to Blockchain Technology Implementation and Innovation with practical information for policymakers on the regulatory requirements. The World Trade Organization: The WTO has published various reports related to DLT, including the 2018 World Trade Report on The future of world trade: How digital technologies are transforming global commerce, as well as Can blockchain revolutionize international trade? These reports provide insights into the ways this technology can impact trade and MSMEs. Other resources, including the above-mentioned joint online course with the ITC, are available here. Where can policymakers access best practices and national examples? The European Blockchain Partnership (EBP): This is an initiative to develop an EU strategy on blockchain and build a blockchain infrastructure for public services. Visit the EU Commission website. The Arab Regional Fintech Working Group: This working group published a report on Strategies for adopting DLT/ Blockchain Technologies in Arab Countries. The report includes recommendations and an overview of other national blockchain initiatives, including in Australia and the Russian Federation. The ITU Distributed Ledger Technology use cases: Visit the ITU website to access a series of cases studying how DLT is put into practice.
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Cross-Border Paperless Trade
What is cross-border paperless trade? Paperless trade refers to the digitalization of information flows required to support goods and services crossing borders.
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Cyber readiness and cybersecurity
What is cybersecurity? Cybersecurity embodies a set of systems, processes, and actions that protect businesses from digital attacks.
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Digital Economy
What is the digital economy? According to the Organisation for Economic Co-operation (OECD), "the Digital Economy incorporates all economic activity reliant on, ...
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E-commerce Readiness Assessment
How can a country be ready for e-commerce? E-commerce readiness refers to a variety of policies, frameworks, and institutional actions that enable countries to engage effectively in e-commerce.
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Electronic Cross-border Payments
What are e-payments? Electronic payments (e-payments) are digital transactions that users make to pay for goods and services on the internet. To execute payments electronically, businesses and individuals use a variety of e-payment methods that range from debit and card payments to bank transfers to mobile pay and automated clearing house (ACH) transactions. E-payments are basically financial operations enabled by electronic devices, such as computers, smartphones, or tablets. For more information on e-payment models and transaction types, see the International Chamber of Commerce’s (ICC) Electronic Payment Services and E-Commerce and the International Monetary Fund’s (IMF) fintech note 19/91 “The Rise of Digital Money.” Why do e-payments matter for MSMEs to trade? Technological developments in recent years have been enabling financial and non-financial institutions to modernize the payment methods they offer to users. Studies by the Bank for International Settlements (BIS) and the International Monetary Fund have documented the rapid growth that digital technologies are seeing relative to traditional instruments. As digital technologies offer more efficient and less expensive payment instruments, small businesses can benefit from using e-payment options to reduce uncertainty and costs, especially for international trade transactions. Other advantages that e-payments have for MSMEs when it comes to engaging in trade range from speeding up cross-border payment activities at customs to reducing fraud risks and burdensome administrative expenses. For more information on e-payments and online transactions, see the following articles and papers: The BIS article on trends in digital payments, “Payments go (even more) digital”; The IMF working paper WP/21/177 “Is Mobile Money Part of Money? Understanding the Trends and Measurement“; The United Nations Economic Commission for Europe’s (UNECE) Trade Facilitation Implementation Guide; and The Organisation for Economic Co-operation and Development’s (OECD) paper on “Trade finance for SMEs in the digital era.” Which challenges do MSMEs encounter in using e-payments? While digital technologies have contributed to the rapid expansion of financial services, e-payment markets face regulatory challenges that hinder the ability of small businesses to have greater access to cross-border payment options for trade. A recent World Trade Organization (WTO) study has shown that only a quarter of WTO Members have fully liberalized cross-border payments under the General Agreement on Trade in Services (GATS) commitments. The World Economic Forum (WEF) and International Chamber of Commerce (ICC) have identified four key areas where policymakers could engage to reduce frictions in e-payment markets: (a) market access and national treatment barriers; (b) technical standards; (c) security and trust; and (d) policy coordination and oversight. For more information, see the WEF’s Connecting Digital Economies page and their white paper on Addressing E-Payment Challenges in Global E-Commerce, as well as the ICC’s Issues Brief on Electronic payment services and e-commerce. Where can I access resources on frameworks and policy recommendations? Policy recommendations for cross-border payments: The WEF outlines key areas where policymakers can engage and cooperate to reduce complexity in e-payments markets. Visit Connecting Digital Economies: Policy Recommendations for Cross-Border Payments. Scope of existing commitments on e-payment services: The WEF describes the current state of multilateral commitments and plurilateral negotiations on trade-related aspects of e-payment services and e-commerce. Read the WEF paper. Consumer policy guidance on mobile and online payments: The Organisation for Economic Cooperation and Development (OECD) offers guidance that policymakers can use to address consumer protection issues when designing policies targeting mobile and online payment markets. Read the OECD guide. Analytical framework on fintech and payments regulations: The International Monetary Fund (IMF) documents recent international experiences in modernizing legal and regulatory frameworks for payments services. Link to IMF framework. Where can I find best practices and national examples? E-payments guide for developing countries: The International Trade Centre (ITC) developed a guide on legal and regulatory reforms and best practices that policymakers can use to address e-payment policy issues in developing countries. Visit the ITC guide. Electronic payments acceptance initiatives: The World Bank has documented a review of literature and country examples to guide policymakers in designing incentives to foster electronic payments acceptance. Access the World Bank review.
Legal considerations and intellectual property
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Business Contracts and Disputes
Why do MSMEs need model contracts? MSME often have relatively lower access to legal advice when negotiating a contract or managing a dispute than large firms.
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Intellectual Property Protection and Disputes
What is intellectual property (IP) and what are IP rights? IP refers to creations of the mind and includes inventive products or processes, designs, distinctive signs, and creative works.
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Trade remedies
What are trade remedies? Trade remedies are border measures applied by governments on imports of a product where the total imports have surged (safeguards) or the imports are dumped...
Regulation
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Competition Policy
What is competition policy? Competition policy comprises the full range of measures that may be used to promote competitive market structures and behaviour by enterprises, ...
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Government Procurement
What is government procurement? Government procurement (GP) refers generally to the purchase, lease or rental of goods, services, and construction services by governmental bodies...
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Non-tariff Measures
What are non-tariff measures? Non-tariff measures are policy measures that can potentially affect traded goods by changing their quantities, prices, or both. The purposes of non-tariff measures include the protection of public health, or the environment, and may imply information, compliance, and procedural costs. These measures can apply to both imports and exports and are divided into 16 categories. The United Nations Conference on Trade and Development (UNCTAD) provides a full list of non-tariff measures and their definitions. What are the different types of non-tariff measures? Below is a table with broad categories of non-tariff measures that you may encounter. The first two, A and B, apply to importers, or buyers, and item P at the bottom of the table applies only to exporters, or sellers. It is important to note that some of these, such as quotas and trade-related investment measures, are prohibited under World Trade Organization (WTO) rules except for specific circumstances. For more details, please see the WTO’s General Agreement on Tariffs and Trade (GATT). Technical measures on imports A Sanitary and phytosanitary (SPS) measures: These include measures to restrict substances, ensure food safety, and prevent the dissemination of diseases or pests. (See guide on SPS measures) B Technical barriers to trade: These relate to product, technical, or quality requirements. They also include measures on labelling and packaging. (See guide on TBT) C Pre-shipment inspection and other Customs formalities: These involve other technical measures. Non-technical measures on imports D Contingent measures: These include antidumping, countervailing, and safeguard measures. E Licensing and quotas: These also cover quantity controls and other related restrictions. F Price control measures: These affect the prices of imported goods. G Finance measures: These restrict payment of imports and terms of payment. H Competition measures: These grant privileges to one or more economic operators. I Trade-related investment measures: These impose local content or export conditions on investment. J Distribution restrictions: These regulate the internal distribution of imported products. K Restrictions on post-sales services: These restrict, for example, the provision of accessory services. L Subsidies and other forms of support: These include financial transfers to enterprises, individuals, or households. M Government procurement restrictions: These restrict bidders from selling products to a foreign government. N Intellectual property: These involve restrictions or rules related to intellectual property rights. O Rules of origin: These are criteria involving the origin of products or their inputs, which can affect whether these are subject to restrictions, duties, or other measures. P Export-related measures: include export quotas and other export prohibitions. How can I start identifying non-tariff measures? Chambers of commerce, industry associations, and trade agencies may provide online portals with lists of non-tariff measures applicable for your products. Businesses can also identify trade restrictions in their targeted markets by using four available online tools, described below: Market Access Map: This database features specific non-tariff regulations that apply to exports or imports of products, as well as a tracker of temporary trade measures put in place in response to COVID-19. Trade Analysis Information System (TRAINS): The TRAINS database provides an exhaustive list of non-tariff measures available for more than 160 countries, covering more than four fifths of world trade. Global Trade Helpdesk: The Global Trade Helpdesk provides an overview non-tariff measures coming from the Market Access Map and TRAINS, as well other information on rules of origin, trade statistics, and related procedures for importers or exporters targeting foreign markets. World Integrated Trade Solution (WITS): The WITS presents country profiles on non-tariff measures by type. Links to Supporting Information The United Nations Conference on Trade and Development (UNCTAD) provides a full list of non-tariff measures and their definitions International Classification of Non-tariff Measures – 2019 edition (unctad.org) World Trade Organization (WTO)’s General Agreement on Tariffs and Trade (GATT) WTO | legal texts – Marrakesh Agreement Trade4MSMEs guide Sanitary and Phytosanitary Measures Trade4MSMEs guide Technical Barriers to Trade International Trade Centre ITC Market Access Map UNCTAD TRAINS International Trade Centre ITC Global Trade Helpdesk World Integrated Trade System WITS
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Sanitary and Phytosanitary Measures and Technical Barriers to Trade
What are sanitary and phytosanitary (SPS) measures? SPS measures consist of laws, decrees, regulations, requirements, and procedures that countries adopt to protect human, animal, or plant life and health against certain risks.
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“Think Small First” or “Small Business Lens” Principle
What is the “Think Small First” or “Small Business Lens” principle? The “Think Small First” or “Small Business Lens” principle is a policy approach to consider small business needs, points of views and impacts when designing legislation, policies, and regulations. The “Think Small First” or “Small Business Lens” principle relies on the fact that “one size does not fit all”, meaning that policymaking needs to account for the disproportionate effects regulations have in businesses of all sizes, and thus, deliver streamlined requirements that are easy to comply with by all final users. The European Commission’s Think Small First document, Canada’s Small Business Lens, and the SME Policy Institute Association’s SME Test all provide useful resources on this principle that will be further discussed in this guide. Why does considering small businesses in policymaking matter? Small businesses account for most employment and economic activity in countries across the globe. And yet, they are often hard to reach by policy consultation processes and face higher burdens and costs in complying with policy requirements. The “Think Small First” or “Small Business Lens” principle stands as a core guideline policymakers can take to mainstream small business considerations into all stages involved in designing, implementing and evaluating regulations. Adopting small business lenses in policymaking can help reduce the regulatory complexity and compliance costs that new policies can have for small businesses. Policies that deliver simplified administrative rules and procedures for small businesses ultimately make it easier for them to comply with the law. How can the “Think Small” or “Small Business Lens” Principle support small businesses to trade? With the same importance small business considerations have for general policy making processes, thinking small first matters for designing, negotiating, and implementing trade policy. Although small businesses are the main engines of employment and economic activity, they do not participate in international trade on equal terms with larger firms. Applying the “Think Small Principle” can enable trade policies and agreements at national, bilateral, regional and multilateral levels to be inclusive of small businesses. In turn, this plays a role in developing trade requirements and provisions for enabling small business to engage in cross-border trade by facing less compliance costs and having better access to business support, finance and information needed for doing international business. The Federation of Small Business Trading Forward provides further information on how policymakers can start approaching the “Think Small First” principle to support small businesses to trade. Where can policymakers access further resources on policy frameworks, guidelines and tools? OECD’s SME Policy Index: The Organization for Economic Co-operation and Development (OECD) uses a small and medium-sized enterprises (SME) policy index for guiding countries to setting targets for developing policies affecting small businesses. Visit the OECD website. Where can policymakers access good practices and national examples? Australia’s Guidance Note on Best Practice Consultation: The Government of Australia developed guidelines for regulators to undertake inclusive policy consultation processes and consider practical matters when involving small businesses. Visit this website of the Government of Australia. Canada’s Small Business Lens Checklist: The Government of Canada formulated nine checklist items for regulators to include small businesses in policymaking processes and consider their needs and potential impacts in meeting regulatory requirements. Visit this website of the Government of Canada. European Commission’s Consultation with Stakeholders in Shaping Policies Affecting Small Businesses: The European Commission assessed methods and procedures on policy consultation processes to identify how small businesses can be better involved in policymaking at national and regional levels. Visit this European Commission website
Services trade and investment facilitation
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Services Trade – Overview
Modes of services supply: The World Trade Organization’s (WTO) General Agreement on Trade in Services (GATS) distinguishes...
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Investment facilitation
The relationship between trade and investment in the global economy is rapidly evolving as a result of technological...
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Electronic Cross-border Payments
What are e-payments? Electronic payments (e-payments) are digital transactions that users make to pay for goods and services on the internet. To execute payments electronically, businesses and individuals use a variety of e-payment methods that range from debit and card payments to bank transfers to mobile pay and automated clearing house (ACH) transactions. E-payments are basically financial operations enabled by electronic devices, such as computers, smartphones, or tablets. For more information on e-payment models and transaction types, see the International Chamber of Commerce’s (ICC) Electronic Payment Services and E-Commerce and the International Monetary Fund’s (IMF) fintech note 19/91 “The Rise of Digital Money.” Why do e-payments matter for MSMEs to trade? Technological developments in recent years have been enabling financial and non-financial institutions to modernize the payment methods they offer to users. Studies by the Bank for International Settlements (BIS) and the International Monetary Fund have documented the rapid growth that digital technologies are seeing relative to traditional instruments. As digital technologies offer more efficient and less expensive payment instruments, small businesses can benefit from using e-payment options to reduce uncertainty and costs, especially for international trade transactions. Other advantages that e-payments have for MSMEs when it comes to engaging in trade range from speeding up cross-border payment activities at customs to reducing fraud risks and burdensome administrative expenses. For more information on e-payments and online transactions, see the following articles and papers: The BIS article on trends in digital payments, “Payments go (even more) digital”; The IMF working paper WP/21/177 “Is Mobile Money Part of Money? Understanding the Trends and Measurement“; The United Nations Economic Commission for Europe’s (UNECE) Trade Facilitation Implementation Guide; and The Organisation for Economic Co-operation and Development’s (OECD) paper on “Trade finance for SMEs in the digital era.” Which challenges do MSMEs encounter in using e-payments? While digital technologies have contributed to the rapid expansion of financial services, e-payment markets face regulatory challenges that hinder the ability of small businesses to have greater access to cross-border payment options for trade. A recent World Trade Organization (WTO) study has shown that only a quarter of WTO Members have fully liberalized cross-border payments under the General Agreement on Trade in Services (GATS) commitments. The World Economic Forum (WEF) and International Chamber of Commerce (ICC) have identified four key areas where policymakers could engage to reduce frictions in e-payment markets: (a) market access and national treatment barriers; (b) technical standards; (c) security and trust; and (d) policy coordination and oversight. For more information, see the WEF’s Connecting Digital Economies page and their white paper on Addressing E-Payment Challenges in Global E-Commerce, as well as the ICC’s Issues Brief on Electronic payment services and e-commerce. Where can I access resources on frameworks and policy recommendations? Policy recommendations for cross-border payments: The WEF outlines key areas where policymakers can engage and cooperate to reduce complexity in e-payments markets. Visit Connecting Digital Economies: Policy Recommendations for Cross-Border Payments. Scope of existing commitments on e-payment services: The WEF describes the current state of multilateral commitments and plurilateral negotiations on trade-related aspects of e-payment services and e-commerce. Read the WEF paper. Consumer policy guidance on mobile and online payments: The Organisation for Economic Cooperation and Development (OECD) offers guidance that policymakers can use to address consumer protection issues when designing policies targeting mobile and online payment markets. Read the OECD guide. Analytical framework on fintech and payments regulations: The International Monetary Fund (IMF) documents recent international experiences in modernizing legal and regulatory frameworks for payments services. Link to IMF framework. Where can I find best practices and national examples? E-payments guide for developing countries: The International Trade Centre (ITC) developed a guide on legal and regulatory reforms and best practices that policymakers can use to address e-payment policy issues in developing countries. Visit the ITC guide. Electronic payments acceptance initiatives: The World Bank has documented a review of literature and country examples to guide policymakers in designing incentives to foster electronic payments acceptance. Access the World Bank review.
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Cross-Border Paperless Trade
What is cross-border paperless trade? Paperless trade refers to the digitalization of information flows required to support goods and services crossing borders.
Trade facilitation
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Trade Facilitation
What is the Trade Facilitation Agreement? From the 2013 Bali Ministerial Conference and after almost ten years of subsequent negotiation, the WTO Trade Facilitation Agreement (TFA) emerged, recognizing the need for improvement in trade processes. Ratified at the beginning of 2017, the TFA is an important step to facilitate border procedures. Recent evidence from an ex-post analysis undertaken by the United Nations Economic and Social Commission for East Asia and the Pacific (UNESCAP) suggests that implementation of the WTO TFA to date (as it is a gradual process in most developing economies) has contributed to reduce trade costs by 1-4% on average. Why does the TFA matter for MSMEs? Although the changes proposed by the TFA benefit all traders, smaller traders, with fewer resources, were identified as benefitting more. Section I of the agreement lists all the various areas and processes that should be aligned and modernized (see the guide on cross-border paperless trade), with changes focused principally on two areas, communication and border procedures. The ITC has highlighted certain articles of the TFA as especially relevant for MSME trade. They include articles on trade procedure information dissemination to SMEs; authorized operators and criteria that will not restrict SME participation (see Getting Down to Business or the guide on authorized economic operators); SME support for single windows (see guide on single windows and national portals); reduced fees and charges for SMEs and expedited shipments; and national committees on trade facilitation and SMEs (see guide on national committees on trade facilitation). For more details, see Making the WTO Trade Facilitation Agreement Work for SMEs. Where can policymakers access more resources? There are many resources for policymakers related to implementation of the TFA. Below are just a few, more can be found in the policymaker resource library. ITC not only provides research and capacity building information on their dedicated webpage to the trade facilitation programme, they also offer a policymaker e-learning course on the WTO trade facilitation agreement and training manual on SMEs and the WTO Trade Facilitation Agreement. OECD trade facilitation page contains useful links to research, video explanations and tools with information on implementation of the agreement and related challenges. World Customs Organization (WCO) resources on trade facilitation include a guide on national committees on trade facilitation and information sheets on specific topics such as advance rulings, appeals in customs matters, single window, risk management/post clearance control and simplified procedure/authorized persons, all of which are accessible here. The WCO also has produced many guides and handbooks related to trade facilitation available through the WCO Tools. World Trade Organization (WTO) resources include the trade facilitation webpage, which contains information on the agreement itself as well as links to videos and publications. Additional resources linked on the page include: The dedicated website of the Trade facilitation Agreement Facility which includes information on the agreement itself, resources and case studies for each TFA provision, numerous general resources such from the WTO’s TFA Facility webpage, as well as links to e-learning courses for policymakers provided by the WTO, IDB, ITC, UNESCAP and others. The trade facilitation agreement database with charts on the state of play of the TFA and the status of the implementation of commitments by WTO Members. Where can policymakers access good practices or national examples? ITC, UNCECE and UNCTAD guide titled Getting Down to Business, Making the Most of the WTO Trade Facilitation Agreement includes information on best practices and other useful information on implementation. OECD trade facilitation indicators simulator and compare your country tool provide governments with a basis to prioritize trade facilitation actions and to identify strengths and weaknesses in trade facilitation. UNCTAD similarly offers a Reform Tracker for monitoring of trade facilitation reforms.
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Authorized Economic Operators
What are authorized economic operators (AEOs)? AEOs are businesses and other entities certified by customs authorities to...
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Express Consignments and Low-value Shipments
What are express consignments and low-value shipments? With the advent of e-commerce in the digital economy, the Universal Postal Union (UPU) has recognized the increasing “parcelization” of trade. In fact, over 80% of cross-border goods bought online are small packets weighing up to 2 kilograms, and the majority of those packages (roughly 70%) are delivered through the postal system. This has changed the needs of customs processing as more and more shipments are sent by individual or small sellers with different capacities. Why does it matter for MSMEs? MSMEs may not have the expertise to comply with customs requirements, or may be deterred from entering trade altogether given the paperwork and requirements to ship commercial packages abroad. Making tax/duty information readily available and easy to understand in order to calculate expected costs is a first step in the process. What can policymakers do? Some governments have introduced new approaches to deal with low value shipments. For example, Australia applies a goods and services tax – known as GST – which takes the form of a broad-based tax of 10% applied to sales of most goods, services and other items consumed domestically. Canada has developed a generic harmonized system for household imports, which has been proposed as a model for developing a standard application programming interface with standard classification headings for harmonizing identification codes for low value shipments. Other group of countries have decided to apply a flat import rate at a reasonable level that replaces all duties and taxes. On the basis of these approaches, the Global Express Association (GEA) has conceptualized three broad options that policymakers can consider for collecting taxes and duties on low-value shipments. For more information, see the GEA’s Proposal on Tax/Duty Collection on Imported Low Value Shipments. Where can policymakers access more resources? The Universal Postal Union has a number of resources, including a mobile phone application for submitting electronic advance data (EAD) for customs declarations, along with guidelines and guides, recommendations, and standards. Where can policymakers access good practices or national examples? Australia’s GST system applies to goods imported into the economy as well as domestic production. An explanation of how Australia’s GST system works can be found here and an explanation of importing goods with GST is available here, along with a presentation on Australia’s e-commerce experience. Canada’s generic harmonized system for household imports is described in the GEA’s a proposal on tax/duty collection on imported low value shipments. There is also a presentation on Canada’s low-value shipments policy. The Enhanced Integrated Framework (EIF) and UPU, in conjunction with the United Nations Conference on Trade and Development (UNCTAD) have launched a project in Vanuatu to facilitate the efficient post–customs clearance of postal packages through the exchange of pre-arrival/pre-departure information. An additional 23 least developed countries (LDCs) in which the national interfaces between UPU’s Customs Declaration System (CDS) and UNCTAD’s ASYCUDA (a computerized customs management system) can be established quickly have also been identified. For more information, visit the EIF’s Trade for Development News. New Zealand, similar to Australia, also has a GST system in place. More information on GST for overseas business in New Zealand is available here. UPU publishes both case studies and best practices, such as Easy Export to develop a simplified and easy export system for MSMEs. Originally created for Brazil, Easy Export is now being applied in other economies as well, including Tunisia and Morocco.
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Single Windows and National Portals
What is a national single window? A national single window refers to a facility where actors involved in trade and transport share...
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Rules of Origin
What are rules of origin? Rules of origin (ROOs) are a set of laws, regulations, and administrative procedures that countries...
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National Committees on Trade Facilitation
What are National Committees on Trade Facilitation (NCTFs)? National Committees on Trade Facilitation (NCTFs), also sometimes...
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Cross-Border Paperless Trade
What is cross-border paperless trade? Paperless trade refers to the digitalization of information flows required to support goods and services crossing borders.
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Business Identification and the Legal Entity Identifier
What is a legal entity identifier (LEI)? An LEI is a 20-character, alphanumeric code that provides a clear and unique identification to businesses and other entities participating in financial transactions (for a detailed description of the code itself, please see the Global Legal Entity Identifier Foundation website). It contains information on business ownership structures that regulators require to assess financial risks and promote market integrity. LEIs are part of global standards that rely on high data quality for enhancing transparency in marketplaces. More information on what an LEI is can be found at the Global Legal Entity Identifier Foundation’s website and at LEI Worldwide. Following the 2008 financial crisis, there was an acknowledgement by regulators of the difficulty in identifying the parties to a transaction across markets, products, and regions (see the Financial Stability Board’s article on the LEI). The LEI became a regulatory response to this issue, allowing for the incorporation of key information for legal entities in a financial transaction (including digital) on “who is who” and “who owns whom.” Although the LEI was initially adopted for use in trade of financial derivatives, it has a host of other applications, including for loan issuance and business identification. For more information on the history of the LEI, see the Financial Stability Board’s website, along with SWIFT and this McKinsey report. Why does an LEI matter for MSMEs and trade? Although an LEI is not a legal requirement, there are several benefits for small businesses. For one, the LEI reduces the cost of onboarding clients, which are sometimes prohibitively high for bringing in new MSME clients. For trade finance, LEIs can speed up access to finance through better identification and can enable faster processing of letters of credit. LEIs also help with KYC (Know Your Customer) requirements, which are financial services guidelines requiring that identity is verified. Working with others that have an LEI number can also provide MSMEs with security in knowing about suppliers and partners and doing business overseas. Finally, LEIs can help MSMEs to comply with international regulations, secure their brand identity, and enhance their compliance reporting requirements. More information can be found in LEI Worldwide. How can policymakers help? Governments and policymakers have a role to play in encouraging the adoption of the LEI, namely by raising awareness that this tool exists and has particular uses. Not only is it important to understand that an identity solution such as the LEI has been developed, it is also important to raise awareness of the ways it can benefit MSMEs by reducing their transaction costs and increasing their access to financial markets. Where can policymakers learn more about policy frameworks and guidelines? Why a Trusted Identity is the First Step to Financial Inclusion for SMEs: This publication underscores the role that trusted digital identities can play for increasing financial inclusion for small businesses. Access this page at the GLEIF website. The LEI in Digital Certificates: The Global Legal Entity Identifier Foundation provides a variety of resources that policymakers and regulatory authorities could use to embed LEIs into certificates and seals, when they are issued in a business context. Visit the GLEIF website. Thematic Review on Implementation of the Legal Entity Identifier: This publication presents a peer review on cross-country and cross-sector LEI implementation progress conducted by the Financial Stability Board (FSB). Visit the FSB website. Where can policymakers access best practices and national examples? Recommendation on the Use of Legal Entity Identifier (LEI) in EU countries: This recommendation outlines information items required under EU regulations to obtain a pre-LEI code for reporting purposes. Visit the European Banking Authority (EBA) for more. The LEI: The Key to Unlocking Financial Inclusion in Developing Countries: This resource identifies ways in which financial institutions in developing countries can increase financial inclusion by providing capacity to small businesses to adopt LEIs. It provides Africa-specific examples. Access this resource at the GLEIF website. How Legal Entity Identifiers Will Transform Small Business in Asia: This resource provides insights on the role that LEIs could have to help small businesses to increase their access to finance and participation in supply chains. Visit the Asian Development Bank (ADB) website.
What is happening at the international and regional level for MSME trade policy?
Overview of MSME trade-related policy at International Organizations
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The International Trade Centre
The International Trade Centre (ITC) is a joint agency of the United Nations and the World Trade Organization (WTO), with its mission focusing specifically on small and medium-sized enterprises. It is headquartered in Geneva, Switzerland, and maintains a variety of tools and resources for policymakers and SMEs. These include the following from their Market Info & Tools web page. E-learning Training on a variety of trade topics for policymakers and MSMEs is available through the SME Trade Academy, including on topics like the WTO Trade Facilitation Agreement or how to develop e-commerce content. Market Analysis Tools These are the ITC’s tools for MSMEs and policymakers. They provide information on export and import statistics from more than 220 countries and territories on about 5,300 internationally traded products. These tools include: Trade Map Market Access Map Investment Map Trade Competitiveness Map Procurement Map Export Potential Map Sustainability Map Market Information Market information is provided by the ITC for MSMEs and policymakers through resources including the Market Insider blog and the Global Trade Helpdesk. The Global Trade Helpdesk is an initiative in coordination with the United Nations Conference on Trade and Development and the WTO, linking to many ITC market analysis tools and other important trade resources. Library An online library of trade-information sources is publicly available. The library’s online catalogue is available to all users, as is a full list of ITC publications. Relevant reports for policymakers include the ITC’s flagship SME Competitiveness Outlook (SMECO) and policymaker guides such as Getting Down to Business: Making the Most of the WTO Trade Facilitation Agreement.
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The Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development (OECD) is a Paris-based body with 38 member countries. Among other areas of responsibility, its secretariat provides a broad range of policy research and data to support the economic development and inclusion of entrepreneurs and SMEs. Their SME, entrepreneurship, and tourism webpage can be accessed here. Other resources include: Entrepreneurship Entrepreneurship is an important focus of the OECD. The OECD provides analyses and information on entrepreneurship policies, including case studies and reviews. In this context, the OECD examines primarily the obstacles and enablers of entrepreneurship for industrial transition and growth. Financing SMEs The OECD has included financing SMEs as one part of its research and policy recommendations. Through the documentation of SME finance trends and the sharing of knowledge and learning in this subject, the OECD seeks to strengthen SMEs’ access to credit. The G20 & SME Agenda The G20 & SME agenda, in particular as regards SME finance, has been pushed by the OECD as an important piece of international SME policy. Ways that the OECD has contributed to this work include through the G20/OECD High-Level Principles on SME Financing and the report on G20/OECD Effective Approaches for Implementing the G20/OECD High-Level Principles on SME Financing. Other examples include its contribution to platforms like the Global Partnership for Financial Inclusion (GPFI). The OECD iLibrary The OECD iLibrary is an important resource that provides searchable access to OECD research, including on SMEs. SME Digitalisation SME Digitalisation, or the OECD “Digital for SMEs Global Initiative,” is a platform for OECD governments, large business, industry experts, and the SMEs themselves to work together on the digital transformation of SMEs. The initiative’s focus is on providing research, SME experience sharing, and a space for policy dialogue on SMEs and digitalization. SME Performance Analysis An SME Performance analysis by the OECD in conjunction with national and local governments can be undertaken to analyze the potential of SMEs in a specific economy and examine how to unlock this capacity. SME Ministerial Meeting The 2018 SME Ministerial Meeting was a ministerial-level conference of 55 OECD Member and Non-Member countries, as well as international organizations and associations. Held in Mexico, the conference was held to discuss ways to enhance SME productivity and inclusive growth. At the end of the session, the 55 countries adopted the Declaration on Strengthening SMEs and Entrepreneurship for Productivity and Inclusive Growth (also available in French).
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The United Nations Conference on Trade and Development
The United Nations Conference on Trade and Development is a UN body headquartered in Geneva, Switzerland, with a specific focus on developing countries. It supports enterprise development through training and projects, among other duties. A full list of their enterprise development resources, including UNCTAD’s entrepreneurship policy framework and a Global Initiative towards post-Covid-19 resurgence of the MSME sector, are available here. UNCTAD also offers the following MSME-relevant resources, including the following: Information on e-commerce and an e-commerce readiness assessment for national economies. Trade training and capacity building focused on non-tariff measures and other trade measures that can impact MSMEs. Information on transport, logistics and trade facilitation, including ASYCUDA. ASYCUDA (Automated System for Customs Data) is a computerized customs management system from UNCTAD that covers most foreign trade procedures, including manifests, customs declarations, accounting procedures, and transit and suspense procedures. ASYCUDA can speed up and facilitate the customs clearance process, benefiting all businesses, especially MSMEs.
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World Intellectual Property Organization
WIPO is the UN agency devoted to intellectual property (IP), with headquarters in Geneva. It is home to several IP treaties and also hosts several resources for policymakers, businesses, and other interested parties. A summary of these resources is provided below. WIPO IP Diagnostic WIPO provides an online IP self-assessment tool, which was launched in November 2021. The tool includes a questionnaire on several IP-related issues that may affect your business and generates a report upon the questionnaire’s completion. The tool is accessible online on the WIPO website. WIPO’s IP for Business Series of Guides WIPO also has several guides that outline how intellectual property issues can be dealt with by companies. The full series of guides can be accessed on the WIPO website, and a brief list of the key ones for MSMEs can be found below. Enterprising Ideas, A Guide to Intellectual Property for Startups (2021) Looking Good – An Introduction to Industrial Designs for Small and Medium-sized Enterprises (updated and revised 2019). In Good Company: Managing Intellectual Property Issues in Franchising (revised 2019) Inventing the Future: An Introduction to Patents for Small and Medium sized Enterprises (updated and revised 2018) Making a Mark: An Introduction to Trademarks for Small and Medium-sized Enterprises (updated and revised 2017) Creative Expression: An Introduction to Copyright and Related Rights for Small and Medium-sized Enterprises (2006 – currently being revised) There are also several other guides in development, which should be available on the WIPO website in due course. SME Support Institutions Platform (SSIP) WIPO has a directory of institutions that can help unlock the value of intellectual property SME Support Institutions Platform (SSIP). IP Office Business Solutions WIPO also provides support for national IP offices as they develop their own services for domestic users. Further information on the support available is on the WIPO website.
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World Trade Organization
Recognizing the importance of MSME trade inclusion, the WTO provides a number of different resources to support trade policymakers and traders. Aid for Trade Aid for Trade – The WTO-led Aid for Trade (A4T) initiative has referred to MSME needs and issues on various occasions. The 2018-19 Work Programme for Aid for Trade looked into how trade could contribute to economic diversification, empowerment, and poverty reduction through the effective participation of MSMEs, women, and youth. The programme also reviewed how A4T addresses trade-related infrastructure constraints, including for MSMEs. The work programme for 2020-22 stressed the importance of MSME-dominated sectors in boosting economic development. The Enhanced Integrated Framework The Enhanced Integrated Framework (EIF) helps least developed country governments address constraints related to competitiveness, growth potential, and supply chain weaknesses, including specific constraints faced by MSMEs. The EIF is a partnership bringing together various countries, donors, and partner agencies. ePing ePing, a joint project by the United Nations Department for Economic and Social Affairs (UNDESA), the WTO, and the International Trade Centre (ITC), shares information on product requirements. Through the site, users are able to search sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT), receive alerts, and collaborate. Government Procurement The WTO’s Government Procurement Committee launched a work programme on MSMEs in 2012 to facilitate MSME participation in government procurement projects and to maximize their potential for growth. Increasing MSMEs’ participation in government procurement also ensures a more competitive bidding process, thus achieving better value for money in government purchases. Informal Working Group on MSMEs The Informal Working Group on MSMEs was launched at the WTO’s Eleventh Ministerial Conference in December 2017. The Group aims to identify and address obstacles to MSME participation in international trade. It currently consists of 91 WTO members and is open to all members. Documents issued by the Group are available on WTO Docs Online and are searchable as “INF/MSME/*”. Intellectual Property The Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) is devoted to the implementation of the WTO’s intellectual property rules. In this context, WTO Members also exchange information about their policies aimed at supporting MSMEs’ creativity, inventiveness, and investments in research and technology. Members have recognized the particular significance of intellectual property rights for small businesses, whose intellectual capital is often their main asset. The MSME-related policies presented in that context include financial assistance schemes, efforts at streamlining application procedures, and enhanced transparency of intellectual property rules. The Standards and Trade Development Facility The Standards and Trade Development Facility (STDF) is a partnership that helps governments improve the implementation of sanitary and phytosanitary measures, among other responsibilities. These efforts help increase trading opportunities for MSMEs. Trade and Gender To improve the inclusiveness of trade, some WTO Members have also been exploring how to support women’s economic empowerment through trade. This work is closely linked to the work on trade and MSMEs, with more information available at the following link. The Global Trade Helpdesk Finally, together with the ITC and United Nations Conference on Trade and Development (UNCTAD), the WTO is one of the agencies behind the Global Trade Helpdesk.
