09 February 2004

Export-Import Bank's Philip Merrill Praises India's Economic

Progress

Attributes growth to good economic and investment policies

India's trade reforms and investments in math and science education

have resulted in tremendous growth and prosperity over the past
decade, according to U.S. Export-Import Bank (Ex-Im) Chairman Philip
Merrill.

Commenting on his four decades of work with India, he said, "I cannot
help but reflect on India's profound, and positive, changes. Although
India faces geopolitical and social challenges -- as all great nations do
-- the Indian economy continues to grow at a blistering pace of 6 to 7
percent per year. I hear that this year it might be 8 percent."

Merrill visited the South Asian nation in an effort to highlight

opportunities for Indian companies to benefit from advanced
technology U.S. exports. "The United States -- and the Bush
Administration, in particular -- is committed to deepening the
cooperation, friendship, and economic and strategic partnership
between our two countries," he said.

Merrill noted that the Ex-Im Bank has identified information

technology, pollution-control equipment, medical equipment, and
airport and ground-support equipment as areas in which U.S. exports
could be of particular value to Indian industry.

Explaining the function of the U.S. government funded Ex-Im Bank,

Merrill said, "We offer financing to help foreign buyers of all sizes --
small, medium, and large -- purchase advanced goods and services to
grow their businesses, capitalize on new technologies, and enter new
markets."

"Throughout the world, Ex-Im Bank can offer favorable credit terms to
international buyers, and provide longer repayment terms where they
otherwise would be unavailable," he said.
INDIAN PROJECT FINANCING GETS
EX-IM BANK BOOST
Global Finance , May 2008 by Bedell, Denise
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INDIA

Bhopal Medical College Trust is the first Indian project to reap the benefits of US Export-
Import Bank's (Ex-Im Bank) Indian infrastructure support program. The bank approved
$29.4 million in loan guarantees to back the supply of US eguipment and services for the
Bhopal Medical College construction.

The Bhopal financing facility, guaranteed by Punjab National Bank in New Delhi, will
support the import of building, medical and office services and supplies from US
companies, and the 30-acre Bhopal project will include the medical college, a 750-bed
hospital and staff housing, among other things.

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With $500 billion needed to finance upcoming infrastructure, projects in India, the Ex-Im
Bank launched its $2.2 billion Indian infrastructure facility in April to support US
equipment and service export for infrastructure development.

Guarantor Punjab National Bank is one of eight Indian financial institutions approved
under the Ex-Im Bank program to receive pre-approved credit lines of between $50
million and $800 million for US export guarantees. Other firms include India
Infrastructure Finance Co., India Renewable Energy Development Agency, Industrial
Development Bank of India, Infrastructure Development Finance Corp., Infrastructure
Leasing & Financial Services, Power Finance Co. and State Bank of India. Additional
projects are expected in the airport, healthcare, oil and gas, power and renewable energy
generation, and small aircraft sectors.

The Asian Development Bank has also approved a $500 million India infrastructure
project financing facility for developments in the agribusiness, energy, irrigation and
water management systems, and transport sectors.

Infrastructure projects in India are often plagued by redtape-from land ownership

disputes to the need to satisfy competing political interests and unmanageable budgets.
For example, the construction of Bangalore International Airport, which is expected to
open for commercial traffic this month, was first launched in 1991 and was 14 years in
the development stages before construction could begin. A consortium including Siemens
and Unique Zurich Airport is now handling the project. The 111-kilometer (69-mile)
Bangalore-Mysore expressway is also experiencing serious delays. The $790 million
project has been 12 years in the making and is still mired in red tape.

-Denise Bedell

RESEARCH AND ANALYSIS: WORKING PAPERS

Boosting trade finance in developing countries:
What link with the WTO?
The paper discusses the efforts deployed by various players, mainly multilateral
financial institutions, regional development banks, export credit agencies, to
mobilize greater flows of trade finance for developing countries, with a view to
help them integrate in world trade.
> Guide to downloading files As an institution geared towards the balanced expansion of world
trade, the WTO is in the business of making trade possible. Its
various functions include reducing trade barriers, negotiating and
implementing global trade rules, and settling disputes on the basis
of the rule of law. The WTO is also interested in strengthening the
“supply-side” of developing countries so that they can respond to
new market opportunities. To this end, it supports various
initiatives aimed at improving the “trade infrastructures” of
developing countries, ranging from the ability to meet international
product, safety and sanitary standards, to run efficient customs, or
to participate effectively to the multilateral trade negotiations by
training public servants. The WTO carries out various initiatives
with other partners (public and private sector institutions), in the
context of its own technical assistance program, or in the context
of multi-agency projects such as the Integrated Framework or the
Aid-for-Trade Initiative.

Since more than 90% of trade transactions involve some form of

credit, insurance or guarantee, one can reasonably say that trade
finance is the lifeline of trade. Producers and traders in developing
or least-developed countries need to have access to affordable
flows of trade financing and insurance to be able to import and
export, and hence integrate in world trade. From that perspective,
an efficient financial system is one indispensable infrastructure to
allow trade to happen. In line with the above initiatives, the WTO
has been following actively, and at times, directly supporting,
initiatives to boost the availability of trade finance in developing
and least-developed countries wherever it was needed. Since the
WTO is not a financial institution, it has been supporting in the past
few years partners engaged in this effort such as international
financial institutions, export credit agencies, large banks and
regional development banks.

Initially, the WTO has been asked by its members at several points
in recent years to examine the issue of availability of trade
financing – as a key infrastructure needed by developing and least-
developed countries to integrate in world trade. Paragraph 36 of
the Ministerial Declaration of Doha requested WTO Members to
examine, and if necessary come up with recommendations, on
measures that the WTO could take, within its remit, to minimize
the consequences of financial instabilities on their trade
opportunities. In the context of the newly created Working Group
on Trade, Debt and Finance (WGTDF), the interruptions of the flows
of trade finance in emerging markets during the Asian and Latin
American financial crises were quickly identified as concerns by
Members, as well as the chronic difficulties of low income Members
to secure more affordable flows of trade financing in the long-run.
These concerns were channelled to the WTO Ministerial Meetings in
Cancun (2003) and Hong-Kong (2005). During this period of
examination, the Heads of the IMF, World Bank and the WTO agreed
at the General Council Meeting on Coherence of 2002 to form an
expert group including all interested parties, multilateral and
regional public institutions, export credit agencies, private banks
to examine what went wrong in this segment of financial markets,
and how to create an enabling environment in local markets to
provide adequate flows of trade finance on a on-going basis.

In chairing one of these meetings, the Director-General of the WTO

defined the role of the WTO in this area: encouraging liberalization
of this type of financial services under the financial services
agreement, being a regulator of export credit and guarantee
subsidies under the ASCM, and serving as a forum to discuss WTO-
compatible ways of providing support to developing countries.
Conclusions by the Working Group were presented at the WGTDF,
and later at the General Council. WTO Secretariat work on this
topic up to 2003, in particular its contribution to the WGTDF and to
the expert group, was summarized in WTO Discussion Paper 2.

While the liquidity in financial markets improved from 2002 until

the recent turmoil created by the crisis of the sub-prime mortgage
markets, trade finance remained an issue for concern for WTO
Members, in particular the poorest, which do not have access to
international financial markets or for emerging markets which
remain prone to changes in market sentiment, and hence credit
rating. Despite the rapid development of “trade finance
facilitation” schemes developed by regional development banks
and the IFC, with immediate success in low income countries, the
issue of availability of trade finance came back among other
“supply-side” constraints identified by the Aid-for-Trade Task
Force, after the WTO Ministerial Meeting in Hong-Kong. While the
mandate of the WTO under the Aid-for-Trade is essentially one of
evaluation and monitoring, it may be in cases one of advocacy.
Based on the work being carried out since 2002, and after
consultation with partners (regional development banks,
multilateral institutions, export credit institutions,...), input by the
WTO Secretariat to boost the availability of trade finance for
developing countries under the Aid-for-Trade umbrella was
welcomed by Members. Lack of trade financing and guarantee
infrastructures were identified as one of the barriers to integration
of low income countries in world trade by each of the three
regional Aid-for-Trade Reviews. It was acknowledged that the
current Aid-for-Trade Initiative could provide the extra leverage to
convince WTO partners to deliver more plentiful of trade credit and
guarantees to WTO members that need it the most.

This paper provides background on the difficulties of some

countries and traders to access affordable trade credit and finance,
on the growing divide between these low income countries and
economically advanced countries in handling modern trade finance
instruments, and on the joint reflection undertaken by the WTO,
most recently under the Aid-for-Trade programme, and previously
under the umbrella of the WGTDF and the Coherence Mandate, to
help strengthen developing countries' capacities in this area.

No: ERSD-2007-04

Authors:
Marc Auboin — WTO

Manuscript date: November 2007

Key Words:

Trade financing, cooperation with international financial

institutions, aid-for-trade, coherence

JEL classification numbers:

E44, F13, F34, F36, O19

Working Paper 114
Mirabelle Muûls, Mauro Pisu

Imports and Exports at the Level of the Firm: Evidence from Belgium

This paper explores a newly-available panel data set merging balance sheet and international trade transaction
data for Belgium. Both imports and exports appear to be highly concentrated among few firms and seem to have
become more so over time. Focusing on manufacturing, we find that facts previously reported in the literature for
exports only actually apply to imports too. We note that the number of trading firms diminishes as the number of
export destinations or import origins increases. The same is true if we consider the number of products traded.
With regard to productivity differentials, firms that both import and export appear to be the most productive,
followed, in descending order, by importers only, exporters only and non-traders. These results point to the
presence of fixed costs not only of exporting, but also of importing and to a process of self-selection in both export
and import markets. Also, the productivity advantage of exporters reported in the literature may be overstated
because imports were not considered.

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