ICC GLOBAL SURVEY ON TRADE FINANCE
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IN THIS REPORTAbout the International Chamber of ate of trade: tension, transition, and turning point8Introduction to the Global Survey10Key findings of the Global Survey and the COVID-19 Survey12Market Outlook on Trade Finance: COVID-19 and Beyond15Survey analysis15Scenario analysis on the impact of COVID-19 on trade finance22The economic impact of COVID-19 on supply chains25COVID-19 Survey analysis31SWIFT Trade Traffic: the year in review39TXF on Export Finance50Supply Chain Finance57Survey analysis57Supply chain finance: evolution or implosion?62Sustainability64Survey analysis64ICC: accelerating progress on sustainable trade finance68Regulation and Compliance71Survey analysis71Regulations in a digital world77Stronger together: combatting trade-based money laundering81Combating money laundering: improving systems, enabling trade83Digitisation85Survey analysis85Digital trade and COVID-19: maintaining the crisis-driven momentum93Financial Inclusion98Survey analysis98SMEs and the trade finance gap: it’s a data problem.104How to increase the professionalisation of trade finance106Successors in Trade: “Is it time to isolate or time to reach out?”108Mind the gap: why we need to think about small exporters1142020 ICC GLOBAL SURVEY ON TRADE FINANCE1
ABOUT THE INTERNATIONALCHAMBER OF COMMERCEThe International Chamber of Commerce (ICC) is the institutional representative of more than45 million companies in over 100 countries. ICC’s core mission is to make business work foreveryone, every day, everywhere. Through a unique mix of advocacy, solutions and standardsetting, we promote international trade, responsible business conduct and a global approachto regulation, in addition to providing market-leading dispute resolution services. Our membersinclude many of the world’s leading companies, SMEs, business associations and local chambers ofcommerce.For more information please visit: iccwbo.orgProject ManagerDavid Bischof – ICC Banking CommissionEditorial CommitteeDominic Broom – ICC Banking CommissionMark Evans – ANZHuny Garg – SWIFTXu Jun – Bank of ChinaAna Kavtaradze – Bank of GeorgiaAlexander R. Malaket – Opus Advisory, ChairDave Meynell – TradeLC AdvisoryVincent O’Brien – ICC Banking CommissionOlivier Paul – ICC Banking CommissionSponsorship ManagerSandra Sanchez NeryBoston Consulting GroupSukand Ramachandran, Managing Director and Senior PartnerRavi Hanspal, PrincipalNoah Mayerson, AssociatePrinted in July 2020Copyright 2020International Chamber of CommerceICC Publication No. WBO891EISBN: 978-92-842-0578-3All rights reserved. ICC holds all copyright and other intellectual property rightsin this collective work.No part of this work may be reproduced, copied, distributed, transmitted,translated or adapted in any form or by any means – graphic, electronicor mechanical, and including without limitation, photocopying, scanning,recording, taping, or by use of computer, the internet or information retrievalsystems – without written permission of ICC through ICC Services, PublicationsDepartment.Visit the ICC Banking Commission website:iccwbo.org/publication/global-survey22020 ICC GLOBAL SURVEY ON TRADE FINANCE
THANK YOU TO OUR SPONSORSTailored cover, whereveryou trade in the worldWherever you trade, the risk of non-payment or non-delivery is always present. Whetherit’s a customer becoming insolvent, a protracted payment default, less stable economicenvironments or political interference, Atradius trade credit insurance can protect yourbusiness from financial loss caused by these risks. For risks that cannot be coveredby traditional trade credit insurance, our Special Products unit can offer you a highlytailored and global approach.For further information please contact one of our team directly.www.atradius.com2020 ICC GLOBAL SURVEY ON TRADE FINANCE3
ACKNOWLEDGEMENTSThis 11th edition of the ICC Global Survey on Trade Finance is the result of a dedicatedcollaboration between ICC, ICC Banking Commission experts and staff, and numerousorganisations and individuals who have contributed with leading market intelligence contentand timely production support. The report was enabled with outstanding guidance andbacking from the Editorial Committee.We express our sincere appreciation to the Editorial Committee for its commitment,engagement and invaluable contributions to shaping both the strategic direction and thecontent and analysis in this flagship ICC publication: Dominic Broom – ICC Banking Commission Mark Evans – ANZ Huny Garg – SWIFT Xu Jun – Bank of China Ana Kavtaradze – Bank of Georgia Alexander R. Malaket – Opus Advisory, Chair Dave Meynell – TradeLC Advisory Vincent O’Brien – ICC Banking Commission Olivier Paul – ICC Banking CommissionThis report depended on the support and expertise of various specialists and partnerorganisations. We would like to thank our contributing authors for this edition and ourcolleagues in partner organisations who have also facilitated these contributions.We extend our appreciation to the 346 respondents to the Global Survey located in85 countries for their comprehensive, considered and insightful answers to the survey, whichare at the heart of the consistently high value and quality of this report. Survey responses,complemented by expert insight, content and commentary, underpin a publication unlike anyother in the market today, richly valuable for practitioners, policy professionals, internationaldevelopment practitioners, academics, multilateral entities and a wide range of members ofthe global ecosystem of trade and trade financing.Boston Consulting Group is a critical partner to the ICC and the Banking Commission inthe conception, development and publication of two flagship ICC reports, this one andthe ICC Trade Register. Our multi-year association has progressed to encompass a widerscope of collaboration, and has been instrumental in raising the robustness, quality andauthoritativeness of these reports. Our thanks to the BCG team for its tireless work, proactiveleadership and skilled program management: Sukand Ramachandran, Ravi Hanspal andNoah Mayerson.We would also like to thank TXF for their ongoing support by providing insightful marketdata and analysis to the ICC Global Survey over recent years. Our thanks go the TXF teamfor their dedication to the project and invaluable contributions: Tom Parkman, Alfonso Olivas,Sergio Lopez, and Max Thompson.42020 ICC GLOBAL SURVEY ON TRADE FINANCE
2020 ICC GLOBAL SURVEY ON TRADE FINANCE5
INTRODUCTIONForewordJohn W.H. Denton AO,Secretary General, International Chamber of CommerceThe year 2020 has not unfolded as anyonewould have anticipated. The rapid spreadof COVID-19 to nearly every country andterritory in mere weeks has challengedassumptions about the resilience of the globaleconomy and put tremendous strain ongovernments, businesses, healthcare systemsand communities.With supply lines and physical movementoften curtailed in response, global trade aswe knew it in ‘pre-COVID-19’ times has beensignificantly disrupted. The consequenceshave been severe, and the IMF predictsunsurprisingly the greatest drop in globalgrowth since the Great Depression. Every day,the ongoing pandemic threatens the viabilityof businesses of all sizes and in nearly everysector. And as lockdowns in many countriesremain in force, the devastating combinationof labour constraints, travel restrictions anddemand shocks continue to cripple businessactivity and escalate unemployment.In such times, the role of ICC as the voice ofglobal business is vital. Our work is animatedby our clear priority to protect and preservelives and livelihoods. As the only privatesector organisation with a permanent seat atthe United Nations, ICC has a crucial role toplay in supporting the international responseto this pandemic. And with an unparalleledreach across global business, we are uniquelyplaced to marshal key evidence to guidepolicymakers through their vital decisions.62020 ICC GLOBAL SURVEY ON TRADE FINANCEThis year’s Global Survey indicates that banksare optimistic about the long-term future oftrade finance and are looking to invest furtherto gain new clients, offer new products(such as supply chain finance), expandgeographically and increase digital offerings.However, in the short term many banksanticipate a steep decline in trade flows dueto COVID-19, with the majority expecting atleast a 20–30% decline in 2020 from originalforecasts. This broadly aligns with BCG’sanalysis in the Global Survey, forecastinga decline of between 11% and 30% in 2020trade flows.Enabling the shift to digitalised tradeICC has already launched several initiativesto ensure that its global network can be putto best use in the fight against COVID-19.One aspect of our response to this crisis hasincorporated key objectives to bring greaterefficiency to the paper-based global tradingsystem. Central to this is expediting the shiftto digitalised trade, which the Global Surveyshows is already underway but will need toaccelerate in the wake of the crisis. Alreadythis year, ICC has launched the Digital TradeStandards Initiative, a cross-industry effortto enable the standardisation of digitaltrade. This effort will bring greater economicinclusion, connect digital islands and ensurethe all-important collective nature of formatsand processes. We are also working withgovernments to implement broader legal
recognition of electronic documentationbased on the uniform model law establishedby UNCITRAL. The far-reaching impacts ofthe pandemic have made plain that we mustimprove the outdated system of trade inoperation at the outset of the crisis.The fight to save SMEs andmaintain open tradeOne of the many benefits of a moredigitalised trading system will be greaterinclusion and increased opportunities forsmaller businesses, which are the driversof economic growth in most countries. TheGlobal Survey reveals that financial inclusionwas already a material concern for manytrade banks even before the COVID-19 crisis,which is expected to have a disproportionateimpact on SMEs. ICC has been vocalabout the urgent need to support SMEsduring and after the pandemic. In March,we launched an urgent call for decisiveaction to ‘Save Our SMEs’ and combat theeconomic repercussions of this pandemic.We are continuing to raise awareness of thechallenges faced by SMEs with governmentsand international financial institutions and areproviding concrete tools to help them stayin business.Responding to a crisis for thebenefit of allUniting our many efforts is ICC’s guidingobjective in these difficult times to preservelives and livelihoods. We are committed toenabling effective response efforts to thepublic health and economic crisis createdby COVID-19 as it is happening, and we areintent on shaping a recovery phase thatleads to a more resilient global economy andtrading system.We will ensure that our unparallelednetwork of 45 million businesses worldwideis positioned to help policymakers takedecisions based on the best evidenceavailable. And we will ensure that the privatesector plays its part in mitigating the globalimpact of this pandemic.We do so in keeping with the spirit of ICC’screation more than 100 years ago, whenthe ravages of the First World War broughtbusinesses together in support of peace,prosperity and opportunity for all. As we lookahead with hope to a ‘post-COVID-19’ future,that driving purpose remains as importantas ever.2020 ICC GLOBAL SURVEY ON TRADE FINANCE7
State of trade: tension, transition, and turning pointAlexander R. Malaket,President, OPUS Advisory Services International Inc.;Chair, ICC Finance for Development Market IntelligenceTrade has been a critically important part ofthe human experience for thousands of years.It has seen periods of tension, transition andtragedy – at the core of war and colonialism,at the heart of impressive progress ineconomic inclusion and internationaldevelopment, and recently at the centre of apolitical posturing and policy that can best bedescribed as controversial.Additionally, and with some justification,trade faces questions today that have neverbeen levelled at this part of commercebefore: questions related to its sustainabilityin its current form and to the carbon footprintof key components of the physical supplychain, such as the global shipping industry.Relatedly, questions about the importanceof supply chain visibility and traceabilityhave come to the forefront of commercialand regulatory dialogue, with increasingresponsibility placed upon large globalbuyers, for the behaviours and actions oftheir suppliers and extended supply chains.As we develop content for the 2020 editionof the ICC Global Survey on Trade Finance,the world – including global supply chains –grapples with the tragedy and as yet opaqueimpact of the COVID-19 crisis.The Bloomberg New Economy newsletterof 7 March 2020 strikes a note of cautiousoptimism by noting that “Globalization facesa bend-but-won’t-break crisis on coronavirus”– a statement that applies equally well to thestate of globalisation linked to trade.We have seen significant ‘bending’, andincurred material costs around the worldfrom a spate of tariffs and ‘trade wars’ thatno one can or will ‘win’, yet the fundamentalcharacter of the system remains resilient.Multilateral, rules-based trade continues to becentral to the governing of trade flows aroundthe world, despite a slowing of global growthto the range of 3% in 2019.82020 ICC GLOBAL SURVEY ON TRADE FINANCEThis temporary moment of tension in thedynamics of trade will normalise as a morethoughtful, strategic and informed approachto policy returns to shape the globaldiscourse and the actions that follow.In the meantime, the forced, now inevitable,search for alternatives – once it succeeds –will set a much more solid, inclusive andsustainable foundation for the globalarchitecture for trade.ICC participated in the annual Trade FinanceExperts’ Group Meeting hosted by the WTOin Geneva in March of this year. This meetingof senior trade leaders from around the world,chaired by WTO Counsellor Marc Auboinand hosted by Deputy Director General Yi,provides a unique forum for a far-reachingupdate on key initiatives and issues across theindustry, as well as substantive dialogue onpolicy and advocacy priorities.It was in this context that anunderappreciated but important reality oftrade today was highlighted: the level ofzero-tariff trade concluded on the basis ofthe WTO’s ‘Most Favoured Nation’ status hasnever been higher (Figure 1).Put another way, despite active, misguidedefforts to dismantle a system that hascontributed to global growth and prosperitysince the post-world war era, the reality isthat the core purpose of the multilateralsystem continues to advance.Trade works and is continuing to workdespite an onslaught of poor decisions, poorpolicy and absent leadership from thosebest positioned to advance and magnify itspositive effects for the world.The prevailing geopolitical and policyenvironment forces a search for alternativesin leadership, in policy and in options forachieving a more balanced, inclusive reality,with trade making an important contribution.
Figure 1Tariffs applied to the value of imports, by processing stage, world average (2002–2017)Total %161412108642020022004All products2006Capital goods20082010Consumer goods20122014Intermediate goods2016Raw materialsNote: trade-weighted average for effectively applied tariffs.Source: World Bank, WITS (World Integrated Trade Solution)We will soon see a period of transition to a‘new normal’ in international economics andtrade. Just as the G20 occupies a growingposition of influence globally as a directresult of its rightly more inclusive nature,this ‘new normal’ will be characterised by agrowing appreciation for the interconnectednature of prosperity, inclusion and security,and will refocus on the necessary growth ofmultilateral engagement.As the ICC starts its second centuryunder new leadership, and as the BankingCommission finds its roots in the new Financefor Development Knowledge Centre, we willcontinue to advocate – clearly, unequivocallyand consistently – in support of multilateralengagement, and inclusive, rules-based trade.This means we will continue to focus onunderstanding and addressing the globalgap in trade financing, while continuing toengage in advocacy through partners like theWTO, the B20/ G20, the United Nations, theFinancial Stability Board, the Financial ActionTask Force, and the Wolfsberg Group amongothers.This includes our traditional areas of work,shaping industry practice, standards andguidance, as well as emerging areas ofcontribution such as digitisation of trade,supply chain finance (with important partnerslike BAFT, the ITFA, FCI and EBA amongothers) regulatory and compliance issues infinancial crime, advancing the developmentof trade finance as an increasingly investableasset class, and a wide range of otherimportant topics.Business, and trade, can and should bepowerful forces for good in the communitiesand societies in which we thrive. Even themost commercially disciplined, profit-orientedorganisations in the world are beginning torecognise that the sands are shifting, withquestions around sustainability increasinglyat the core of commercial dialogue, and theemerging framework of Economic, Social andGovernance (ESG) likewise is increasingly animperative. Our work around enabling accessto trade finance as an element of financial andeconomic inclusion progresses through criticalpartnerships with multilateral developmentbanks, including ADB, EBRD and IFC amongothers, as well as with the Berne Union and itsmembers around the world.ICC, with our network of National Committees,our more than 45 million members worldwide,and our ecosystem of partners, is uniquelypositioned to be a thoughtful voice and aconstructive force as we shift from tension totransition to turning point.2020 ICC GLOBAL SURVEY ON TRADE FINANCE9
ank is yourIntroduction to the Global SurveyThe 11th edition of the ICC Global Surveyon Trade Finance took place over eightweeks, from February to March 2020,gathering insights from 346 respondentsin 85 countries. The Global Survey wasconducted by the ICC Banking Commission,bank?in partnership with Boston ConsultingGroup (BCG), TXF, SWIFT and the AsianDevelopment Bank (ADB). BCG supportedwith the data collection, aggregation ofresults and analysis of the survey data. Giventhe rapidly advancing COVID-19 pandemic,a supplementary survey was conductedto begin to understand the impacts of thepandemic on global trade and trade finance.The profile of the 346 respondents varieswidely, from large multinational banks servingcustomers around the globe to small localbanks with few customers and low tradeflows. The diversity of respondents reflectsthe structure of the trade finance market.The most represented regions in the surveyare Western Europe at 32% and Asia Pacific(APAC) at 30% (Figure 3).Figure 2What type of bank is your bank?27%bank headquartered?42%Regional%LocalGlobal31%Figure 3Where is your bank headquartered?5%5%Western Europe6%32%7%Asia PacificCentral and Eastern Europe%AfricaLatin America and Caribbean13%North AmericaMiddle East30%102020 ICC GLOBAL SURVEY ON TRADE FINANCE
al USD value of all trade finance applications your bank received in 2019?We asked participants to estimate the USDvalue of all trade finance applications thattheir banks received last year. The majority(59%) indicated a small-to-medium sizedtrade finance business of up to USD 25 billion(Figure 4), which is broadly reflective of thedispersed trade finance market around theworld. However, respondents also includedsome large players, with 27% indicating theyreceived at least USD 100 billion in tradefinance
4 2020 ICC GLOBAL SURVEY ON TRADE FINANCE This 11th edition of the ICC Global Survey on Trade Finance is the result of a dedicated collaboration between ICC, ICC Banking Commission experts and staff, and numerous organisations and individuals who have contributed with leading market intelligence content and timely production support.
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