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The International Trade and Forfaiting Association (ITFA) has issued the Washington Declaration, a call to action urging the United Nations to formally recognise the global trade finance gap as a critical barrier to achieving the Sustainable Development Goals (SDGs).

ITFA has proposed ambitious targets for the trade finance industry: halving the US$2.5tn gap by 2030 and eliminating it entirely by 2040. The declaration was announced at the inaugural Trade Finance Conference of Parties (TF Cop) meeting in Washington, DC, on October 28, and is today being made public.

Co-hosted by ITFA and the International Finance Corporation (IFC), the summit gathered over 80 stakeholders from across the trade finance ecosystem, including development finance institutions (DFIs), banks, insurers, fintechs, investment funds and trade bodies. Discussions centred on aligning public and private sector efforts to address the financing shortfall, which disproportionately affects SMEs in emerging markets.

The Washington Declaration not only positions the trade finance gap as a sustainability issue but outlines potential solutions, including the development of innovative financing mechanisms that could be similar to green and social bonds. These would leverage public and private sector expertise and liquidity to create scalable, impactful solutions.

“The trade finance gap is a major hindrance to achieving the UN’s SDGs, particularly for SMEs in emerging markets,” says Duarte Pedreira, ITFA board member and TF Cop co-chair, who read the declaration at the summit’s conclusion. “This initiative moves beyond identifying the problem to creating actionable, collaborative solutions. The Washington Declaration sets the stage for measurable progress.”

Among its other commitments, the declaration calls for the establishment of a permanent TF Cop Task Force, responsible for driving forward these efforts and maintaining momentum. The task force will oversee working groups, pilot projects and eventual solutions.

Pedreira and Nathalie Louat, the IFC’s global director of trade and supply chain finance, speak to GTR about the importance of public-private partnerships and how embedding trade finance into sustainability frameworks can attract new investment to the space.

 

GTR: What specific conditions or challenges in global trade finance led ITFA and IFC to collaborate on the TF Cop initiative? Why now?

Pedreira: The trade finance gap has grown substantially, reaching US$2.5tn last year, according to the Asian Development Bank. This alarming trend cannot continue unchecked. Historically, efforts have focused on identifying root causes, but we need to pivot to practical, solution-driven discussions involving all stakeholders, including both the public and private sectors. Bringing everyone into one room, as we did at the TF Cop event, replicates the broader trade finance ecosystem, which is essential for driving change.

Louat: The situation in emerging markets has worsened, with SMEs being particularly hard hit. Around 50% of trade finance requests from SMEs are rejected compared to less than 10% for larger corporates. This has significant implications for job creation and economic development, which makes addressing the gap a key priority for IFC, the World Bank and other multilateral development banks (MDBs). The urgency is compounded by crises like the pandemic and geopolitical tensions. Our collective efforts, including a recent joint MDB statement on supply chain finance, reflect a shared commitment to tackling this issue now. Beyond supply chain finance, we are also focusing on traditional trade products and commodity financing, all tailored to the needs of SMEs and emerging markets.

 

GTR: How does this initiative stand out from previous efforts to support trade finance in emerging markets, and what new approaches are being introduced to address long-standing challenges? What’s new?

Pedreira: What’s new is that for the first time, we as an industry are seeking to have the trade finance gap recognised as a hindrance to the UN SDGs, framing it as an ESG issue to attract new capital sources and broaden risk-sharing mechanisms.

What’s also different is that we’re going to be actively exploring potential securitisation mechanisms, such as first-loss funds, to address the issue of risk appetite for SMEs in emerging markets. This collaborative approach between DFIs and private sector participants could be a real game-changer.

 

GTR: Collaboration, incentivisation and data were highlighted as key themes at TF Cop in Washington. What specific actions is the IFC currently undertaking to drive these priorities, and what additional steps will the task force take to address them effectively?

Louat: Collaboration is key. IFC works closely with banks and insurance companies to bring new investors into trade finance, leveraging our 20-year track record to build trust. We’re also exploring ways to integrate climate trade into the agenda, including establishing criteria for green trade. On data, we’ve partnered with organisations like the WTO to conduct in-depth studies in regions such as West Africa and the Mekong. This provides granular insights to better address the trade finance gap.

Pedreira: TF Cop serves as a willing aggregator, bringing together stakeholders from DFIs, trade bodies and the private sector. Initiatives like pilot programmes for securitisation and trade facilitation are concrete examples of how collaboration can be realised. Data sharing and creating financing incentives will require practical frameworks, but the task force’s ability to align diverse stakeholders is what will make these efforts effective.

 

GTR: SMEs are often left out of conversations about financial access. Who is currently representing their interests, and what plans do you have to increase SME engagement and visibility in these initiatives?

Louat: IFC has long engaged SMEs through advisory programmes and training sessions. Recently, we’ve invited SMEs directly to forums and worked with governments to identify relevant industry associations as participants. Collaborating with professional associations enables us to better disseminate trade finance knowledge to SMEs, as has been the case recently in Africa, the Mekong and Latin America.

Pedreira: TF Cop will work closely with SME trade associations and industry bodies to ensure they have a voice. By including SMEs in working groups and fostering opinion panels across regions, we aim to truly address their needs. If we fail to listen and adapt to their realities, we risk creating solutions that miss the mark.

 

GTR: How will the TF Cop Task Force be structured to ensure sustained momentum and achieve measurable outcomes?

Pedreira: The task force will be the engine driving TF Cop’s commitments. It will house working groups focused on regional and thematic issues, leveraging industry support, resources and volunteer engagement. Securing adequate funding is critical, and recognising the trade finance gap as an ESG issue will open new funding streams. Representation will include DFIs, trade bodies, private sector stakeholders and SMEs, ensuring a balanced and inclusive approach.

 

GTR: Looking towards 2030 and 2040, what are the key success factors in closing the trade finance gap?

Louat: Success lies in maintaining the involvement of financial institutions in high-risk markets with the support of MDBs. Innovative structures that mobilise new players and distribute risk effectively will be essential. Additionally, embedding trade finance into ESG criteria will attract much-needed investment.

Pedreira: A near-term priority is getting the trade finance gap recognised as an ESG issue by the UN. Beyond that, we need to pilot and scale up the most effective solutions, whether through securitisation, trade facilitation programs or other mechanisms. Collaboration, data-driven insights and practical innovation will ultimately determine whether we can close the gap by 2040.