* WTO chief says global market for trade finance still tense
* Exporter lending costs stabilise in Brazil, India, China
* Africa, Asia, Latin America, Eastern Europe "need support"
By Laura MacInnis
GENEVA, July 2 (Reuters) - Exporters are struggling to get the loans they need to ship their goods, the head of the World Trade Organisation said ahead of a high-level meeting on poor countries' aid-for-trade needs.
"Anecdotal evidence shows that the global market situation remains tense, with increased payment defaults and high costs of credit," WTO Director-General Pascal Lamy said in a report on protectionism whose main findings were made public on Thursday.
Interventions from the Brazilian, Indian and Chinese central banks and governments have stabilised trade finance costs that shot up during the credit crunch, Lamy said, estimating their local spreads are now 150-200 basis points above policy rates.
"In other areas of the world the situation has not improved," he said in the report, which will inform discussion at a July 6-7 WTO meeting involving the heads of major regional lenders and the World Bank and International Monetary Fund.
The African Development Bank has seen a 50 percent drop in trade finance deals since January 2009, and many Asian exporters rely on the Asian Development Bank and the World Bank's private sector arm "to facilitate their trade transactions due to the deterioration of the country risk," Lamy found.
"In Latin America, some of the smallest Central American countries, or larger but poor countries, also need support," he said, further noting that several eastern European countries currently have no access to new trade credit in the markets.
"Even in the United States, spreads on opening new letters of credit are up, at 100-200 basis points depending on the quality of risk," he said, adding: "The WTO, along with partner institutions, will continue to monitor the market situation."
FREE TRADE SWEETENER
Lamy's protectionism report, his third review of trade barriers imposed in response to the world's economic slide, also raised questions about when G20 states and international lenders will disburse $250 billion in trade support they proposed in April.
"No specific indication of the utilisation of such a package is available yet," he said.
Aid for trade was promised to poorer nations at a 2005 WTO meeting in Hong Kong to help "to build the supply-side capacity and infrastructure they need to take advantage of trade opening and to connect with the global economy."
Diplomats say the funds are seen as a sweetener to encourage developing states to accept exposing their industries to more competition under a new global free trade accord, which has been under negotiation since 2001.
A new report from the WTO and the Organisation for Economic Cooperation and Development, to be launched in Geneva next week, will find that projects to help poorer countries reach export markets were edging closer to fruition.
"The main conclusion of the report is that in 2007, as was the case in 2006, 'Aid for Trade' grew by more than 10 per cent in real terms," Lamy wrote, saying that donors committed $25.4 billion and non-concessional lending freed up an extra $27.3 billion in trade-related financing.
"Partner countries have mainstreamed trade in their development strategies, and clarified their needs and priorities. Donors have scaled up their resources and improved their programming and delivery," he said.
In his full 77-page report, a copy of which was obtained by Reuters on Wednesday, Lamy said that the global economy remains "fragile" and that 10 percent fewer goods would be traded this year than in 2008.
Wealthy nations are set to suffer a 14 percent merchandise trade drop in 2009, with cars and machinery performing worst, Lamy said. Emerging economies will also be pinched by lower demand for iron ore, steel and minerals, with overall goods trade down 7 percent, he estimated. [ID:nL1326500] (Editing by Charles Dick)