The inaugural World Trade Symposium was held in London on June 7 and 8. Organised by Misys and FT Live, the event aims to become “the Davos of trade finance”, according to Misys CEO Nadeem Syed.
GTR reports on the main takeaways:
- Trade-driven growth is over
Such was the provocative statement made by Hosuk Lee-Makiyama, director of the European Centre for International Political Economy (ECIPE), and self-proclaimed “biggest pessimist in the room”. He believes the years of trade spurring global growth are over, and something else will soon emerge as the main global driving force, though it remains to be seen what that something could be.
Roberto Azevêdo, director general of the World Trade Organisation (WTO), made concurring comments, as he said trade growth would not go back to pre-2008 levels, but would instead settle around 1.5 times the pace of global GDP growth in the coming years. For his part, Pascal Lamy, the WTO’s former director general, said that the speed of trade growth may change “but it won’t stop or reverse”.
- Technology should be supportive, not disruptive
That was the point of view of Gadi Ruschin, CEO of Wave, a fintech company focused on blockchain applications for trade finance. He added that blockchain has managed to get banks in “super collaborative mode”, but was pessimistic about them sharing data, which could block the progress made so far.
Philippe Gelis, CEO of foreign exchange platform Kantox, pointed to the internet of things as a game changer “because it makes it possible to measure absolutely anything”. He added that the EU Payments Services Directive coming into force this year will force banks to collaborate with fintech or become obsolete, as it entails them allowing complete access to third parties wanting to move money for their clients.
— City Farm Systems (@CityFarmSystems) June 8, 2016
It always goes back to the trade-off of Blockchains as radical transparency machines vs. ensuring data privacy https://t.co/0hbgRsXJn8
— Maya Zehavi (@mayazi) June 8, 2016
- KYC harmonisation is critical
At an off-the-record roundtable chaired by GTR as part of the event, participants identified priorities to improve the current regulatory environment and limit its negative impact on trade. These included international harmonisation through the creation of a KYC gold standard that all financial institutions can adopt. This would avoid the repetition of the KYC process by various institutions or even various country branches of the same institution banking the same client.
Participants also called for the creation of an international utility with accredited domestic arms doing KYC and “validating” clients, instead of it being performed by individual financial institutions.
Speakers said KYC regulations are hindering trade inclusion, as trade banks are retreating from their correspondent relationships and leaving whole regions “orphaned”. But efforts are being made to harmonise these rules, notably between the UK’s Financial Conduct Authority (FCA) and the Monetary Authority of Singapore.
- Inequality trend needs to be reversed
As various organisations are pointing to the growth of social inequalities in developed countries, speakers at the World Trade Symposium noted the importance of economic and social inclusion. Michael Gidney, chief executive of the Fairtrade Foundation UK, pointed out that “producers’ share of value in commodities trade has actually fallen in the past 30 years”.
Azevêdo said that although trade is under siege and the spectre of protectionism is rising, “the path to greater inclusion will be through more trade, not less”.
- UK should not leave EU
The World Trade Symposium was the scene of a very lively Brexit debate, but trade experts were unanimous: the UK should vote remain. Answering arguments that the UK is too important to EU exporters not to keep open trade even after leaving the union, Azevêdo explained that trade negotiations are complex and need willing counterparts. “In the event of Brexit, all trade agreements the UK currently has through the EU would have to be renegotiated, and countries won’t have the negotiation of a UK trade deal as a priority,” he added.
Meanwhile Lamy found “the notion that you can advocate Brexit on trade grounds incredible”, and said the EU would lose 50% of its weight in economic terms without the UK.