ABD Trade Facilitation Working Group launces a toolkit to boost MSMEs' participation in international trade
The Americas Business Dialogue (ABD) Trade Facilitation Working Group has launched an innovative document designed to strengthen the support that micro, small, and medium-sized enterprises (MSMEs) receive in their integration into international markets. This launch addresses the urgent need to reduce the barriers faced by these enterprises, which are vital to the region’s economy.
The main objective of this document is to provide policymakers with a toolkit of best practices and measures to facilitate the participation of MSMEs in international trade. MSMEs constitute 99.5% of businesses in Latin America and the Caribbean (LAC) and represent 60% of formal productive employment. However, they face significant barriers such as high fixed costs associated with international trade and complex customs and border procedures, which hinder their competitiveness in global markets.
Trade facilitation is crucial for increasing the participation of MSMEs in international trade. Small businesses, which cannot leverage economies of scale like large ones, benefit significantly when the trade facilitation environment improves. Despite their numbers and importance for employment, MSMEs in developed countries only represent 33% of exports, while in developing economies, they barely reach 18%.
A 2015 report by the World Trade Organization (WTO) revealed that trade costs for MSMEs in low-income economies are equivalent to a 219% tariff, 85 percentage points higher than in high-income economies. This disparity is particularly relevant for LAC economies, predominantly middle-income. Reducing these barriers is essential for MSMEs in the region to enhance their competitiveness and participation in international markets.
ABD’s analysis has revealed that, despite the potential of the network of trade agreements in LAC, there are gaps in trade facilitation policies that prevent adequately addressing the barriers for MSMEs to internationalize. These barriers include customs and border procedures, technical regulations, and access to relevant trade information. Reducing these barriers can help MSMEs become more competitive and better integrate into global value chains.
The “Toolkit for Policymakers on Best Practices and Measures to Facilitate the Participation of MSMEs in International Trade” provides examples of successful policies in the region and presents a practical and simplified tool for policymakers. By facilitating the participation of MSMEs in international trade, policymakers can not only help these businesses access new markets but also improve regional integration and create opportunities for cross-border trade and investment.
This document represents a significant effort to support LAC MSMEs, contributing to inclusive economic growth and strengthening value chains in the region. Implementing these best practices and measures can be a catalyst for sustainable development and shared prosperity in the Americas.
With this launch, ABD reaffirms its commitment to the region’s growth and development, providing policymakers with the necessary tools for MSMEs to overcome barriers and maximize their potential in the international market.