The head of the World Trade Organisation (WTO) has said exporters are still struggling to secure the credit they need to finance international trade.

Letters of credit (L/Cs) are also prohibitively expensive, according to WTO Director-General, Pascal Lamy.

Some improvements

"The global market situation remains tense, with increased payment defaults and high costs of credit," Lamy says in a report on protectionism published last week.

In Brazil, India and China, central bank and government interventions have helped stabilise trade finance costs - Lamy estimates that local spreads in these territories are around 150-200 basis points above policy rates.

But Lamy says poorer countries have seen no such improvement. The African Development Bank has seen a 50 per cent decline in trade finance deals since January 2009, he says.

Many Asian exporters rely on the Asian Development Bank and the World Bank to support their trade transactions due to the deterioration of the country risk.

Americas

"In Latin America, some of the smallest Central American countries, or larger but poor countries, also need support," according to the WTO chief.

Lamy points out that even in the US, spreads on opening new L/Cs are up, at 100-200 basis points depending on the quality of risk.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.