ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (81)134
V ol.1981/9007

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COMMISSION
DES
COMMUNAUTES EUROPEENNES
Secrétariat généralCOM(81)134final
Bruxelles,le^6thMarch1981
RECOMMENDATION FORACOUNCILDECISION^
onthestandtobeadoptedbytheCommunityattheinternational
negotiations ontheamendmentof provisions oftheArran-
gementonGuidelinesforOfficiallySupportedExportCredits
(Communication oftheCommissiontotheCouncil)
C0M(81)134final

Introduction
1. Ashappens every year >the Arrangement onguidelines for
officially supported export credits "(usually called "Consensus ")
istobereviewed bythe countries which adhere toitC'Participants ").
X
The next such review isscheduled totake place on11May 1981 .
2. The discussion which will take place will naturally be^
influenced bythe outcome ofthenegotiations oflast year which
ended 19December with aset of"conclusions "which infact reflected
diverging views . <\^
a)Ontheonehand,certain Participants (US,C^feda ,Sweden ,etc.)sought achange inthesystem ofinterest H^fes,referring to
the conclusions ofthe OECD Ministerial Council and tothe
Communique ofthe Venice Western Summit ;these Delegations advocated
asystem which would 1bring theirrtS^est rate matrix oftheConsensuscS2
nearer tothegeneral level o-^yrarket interest rates .Inthatcontext theyadvocated a"(liferent iatedRate System "(i.e.with
differentiated rates for each currency ). Other Participants
suggested a"Uniform Moving Matrix "(i.e. asystem ofuniform
interest rates which would beadjusted automatically according to
anaverage ^.
Inaddition^j ^large number ofParticipants regretted theabsence
of"transparency "concerning tied aidcredits .
b)The Community foritspart proposed ,inaccordance with the
^liberations oftheCouncil on17November and 15December
animmediate increase ofthe minimum rates ofthe Consensus by
1%forcategories IandII,and by0.8 %forcategory 3JIJ,as
well asareview ,inmid"19&,1 andbefore the endof1981 atthe
latest ,oftheadvisability ofanew adaptation ofthe minimum
interest rates inthe light ofthe then prevailing economic and
monetary situation ;
~asregards tied aidcredits ,tosubmit those where the grant
element isless than 15 Xtotheprior notification and discussion
procedure (para 9(a)1ofthe Arrangement .

CD
c)Notonly were the Community proposals considered insufficient
but the discussions highlighted anadditional difficulty relating
tothesituation ofJapan :given that the Japanese commercial
market interest rate would allegedly fall below theConsensus ^
minima ifthelatter weretobeincreased according tothe5^
proposals ,this country wanted theExport~Import Bank ofi^an ,
although anofficial financing agency ,tobeallowed toapply
the commercial market interest rate,and even tomaintain the
samedifferentials asnowexist infavour ofca^^&ry IIand
III countries .
Thisposition wasnotacceptable ,infull^^inpart,tocertain
Participants ,including the Community .Ineffect the Consensus
does not foresee thepossibility for anofficial financing insti "
tutiontoprovide finance atar^e lower thantheConsensus .In
that context ,atthe time of discussion on15December ,the
Council hadindicated the forallpertinent information tobe
supplied about commercias^nterest rates andstressed theneedto
clarify thepossibility forother countries *exporters tohave
access tofinancing inthe currency concerned ,inthe present case
Ye".
3. Itt^fcgainst this background that the"Conclusions adopted
bytheParticipants "on19December 1980 limit themselves tomention
the idea ofanannual review oftheinterest rates grill ofthe
Cor^sensus without introducing anymodification ofthepresent matrix
Xxj)*ofanyother provisions oftheConsensus .
ft. Thepresent Communication ofthe Commission will therefore
start from thepositions reached last December ,and,taking into
account the elements ofthe Directives already approved bythe Council
aswell asoftheclarifications obtained onthe functioning ofpublic
export credit Agencies and ofthe financial market inJapan ,itseeks
topropose tothe Council the elements ofaCommunity position such as
touphold andtoimprove the Consensus *and which could open the door
toacompromise next May.The absence ofacompromise inMay wculj
risk putting theoperation ofthe Consensus indanger which would
.bedamaging "foralltheindustrialized countries andforthe Community
itself . ,
C1)See footnote onpage 3

Proposals for aCommunity position
(1)These proposals were :toraise the minimum down payment from 15%to
20 %forCategory I,tolimit official support for local costs toinsu-^ ranee andguarantees forCategory II,tolimit thelength ofcredit for
Category Ito5years ,toinclude nuclear power plants inthe scope of
the Consensus with auniform maximum length ofcredit of10years for
these aswell asforconventional power plants ,toinclude disciplines
concerning thesale ofagricultural products ,andto .include liquid
natural gascarriers with amaximum length ofcredit of10years and
the same minimum interest rate asprovided for intheSectoral Arrange "
ment onShips .5. One should recall that,following the Directives approved
bythe Council on6May 1980,the Community has already proposed
(1)anumber ofimprovements tothe Consensus .These proposals have
innowaylosttheir value andtheCommission will continue todefen^
them . \
6. Given that the preoccupations ofthird countries were mainly
concentrated on :
-the "system "ofinterest rates inthe Consensus ,
-thepractice oftied aidtredits ,
-theproblem ofthecountries where commercial ^§fketinterest rates
areorwill bebelow Consensus levels,^
the Commission proposes tothe Council the following elements for a
Community position .
7. Themostimportant -objective ^jfceountries likethe US,Canada ,
Sweden andSwitzerland istochangj^rhe system ofinterest rates in
theConsensus ,with aviewto"^l^iging Consensus rates closer to
market interest rates "aswelf^s to"reducing oreliminating interest
rate subsidies ".
TheCommissi q^,has already submitted itsviews totheCouncil
(C0M(80)330 final <^^16June 1980)anddoesnotpropose tojustify them
again .
CN
However ,inthe Light ofthe discussions ofthe Council in
1980 and under present economic circumstances ,characterised ,inter
byviolent swings inexchange rates ,anoscillating evolution of
^&erest rates (mainly short termbutalso medium andlongterm),the^ 4difficulty ofachieving concerted monetary policies amongst t,he main
■••/■■

industrialised countries# :thepersistence Oftrade and/ofbalance
Ofpayments deficitsat 1least forEurope ;these circumstances seem
.toindicate *prQgres$itfeafi<fpragmatieapproach father than making
^ 1**î[ \ *v * ^ j-' •animmedUt *choice of#'radically pew ,fcysttar . "#\•»
* "-*rv -* «** v* 1jI ¥ i* '
*-I, ItIsthereforeproposedto theCouncU -s
,1·-·;■■,■ ,;' ;■■·■■.-Λ,;--,. . - * ■Λ :Λ^' .· ■
a)asaft *immediate measure ,anIncrease pf <the minimum rates ofthe
Consensus by-\T Xfoi*categories I D.f*for
category -with .effect' 'We^\1 ;/iuiy
,■':■-ν^ ■V ·'·: ■':.· ^ '
b)>toconf irmthenotion **•already introduced irf^he last "Conclusions
.*'}ofiythf Participants "of>;rtarta#d syst<pm Inwhich Participants
.':would discuss anddecidt \adjustwent sateach annual review ;
:v :
> ..vt-"A■■■■>■. <-■
c>totake into consideratiorv ^ateasSyannual review ,thevarious
elementsof thethen existing jsSBhomic 'and monetary situation ;among
these elements tobeconsidfi^d-'theaverage ofthe medium 'term-M.v : . .. ' -05? '■.interest rates inthe five currencies ofthe revised "basket "of
the SDR.<USDollar ,DM^Sterling ^FF^Yen)calculated onthelast
v.';,,sixmonths before thedate ofth^annual ;review ^would serve asa
,|"flashing light'^^e *Annex ):ifthataverage hasitself increasedbymore than JBl&rpercentage point there would beapresumption for
.1.' - ■'
<^. .. _•(\V a ,» .. ,^the need otNsrt upward adjustments :*,t,<
d)finally# that,as-thesituation exists both in_lawand
'in^fact inside the Community byvirtue ofArticle 92oftheTreaty ,
<fc?ieParticipants commit themselves ftoftosubsidise interest rates
■ ν\. ■·.. . (2) .,«^ onsales amongst themselves affroffl 1January 1982.This would
atthe same time eliminate theexisting discrimination which works
agalnst flember States .!"
'..· Vν. ,:νΛ '·■■\ .· ■·...· ,. ■
(1)Inorder toavoid theadministrative comfTTfcations $ndthebureaur
1cratic burden ofratifying "prior commitments ",another possibility
^1stopropose that such anincrease beimplemented on 1Septer-ber ,
i.e. 3ninths after thedate atwhich Participants have taken the
decision ,andthat noprior commitments would beaccepted after
.tSeptember . :
<2)Katurally ,thelimitation ofcredit length to5years aswell asthee
Increase inminimum down payments to20X#which have already been>approved ;bytheCouncil inftay 19$0 >would also apply .

Since then ,several countries (and the most recent casaSFs8. Regarding the practice oftied aidcredits ,the Council has
already approved inDecember 1980 the proposal tosubmit those with
agrant element below 15 %totheprior notification anddiscussion
procedure foreseen inArticle 9(a)1ofthe Arrangement .
Since then,several countries (andthemostrecent cas^S>s
Japan )have either decided tointroduce orare studying theintro­
duction ofmixed credit facilities .Itseems therefore inthe
interest oftheCommunity itself anduseful tothe^jpctioning of
theConsensus toimprove transparency regarding ^ftreepractices ,
andthe Commission therefore suggests tocompare this discipline
interms ofprocedure byproposing tosubmi«^*
a)tied aidcredits with agrant element above 15 %and less than 25 %
totheprior notification without discussion procedure foreseen in
Article 9(b)1oftheArranc^jpnt (these comeatthepresent timeunder theprompt notif icatiJ$ ^procedure ofArticle 9(c)J);
b)tied aidcredits with agrant element of25 %and above tothe
prompt notification procedure ofArticle 9(c)1ofthe Arrangement
(at present^hese credits arenotsubject toanynotificationunder theAre^&ement ).
9. InDSrember last,one ofthedifficulties onwhich thediscussions
had broken down was that relating tothe position ofcountries or
rather currencies for which the commercial market interest rate is
q^Would fall below Consensus minima .This problem isparticularly
^S^cute inthecaseofJapan .
*
Inthis context ,itisnecessary todefine "official support ".
Work onthis element isinprogress butitisnotpossible atthis
stage tooffer aclear definition which would take into account ,inter
alia,therealities ofthe market and the mechanisms ofintervention
byall theParticipants .

That iswhythe Commission proposes that,inthe case
ofJapan ,and Inconformity with theprovisions ofthe Consensus ,
the Japanese Government undertakes ,when the long~term commercial
rates ofinterest are below the levels ofthe Consensus
-either ,toallow Eximbank -anofficial organisation creat^
toaid exports -tofinance export credits only insuch amanner
that the ratesof interest onexport credits conform tothose of
theConsensus ; 0^
~or,toallow Japanese exporters tofinance tt^^elves onthe
commercial market without theintervention ^^Eximbank .

Conclusion
" .\
10. Taken together /allthese elements ,i.e. those already approvecf -
bytheCouncil inMayandinDecember 1980,combined with those proposed
totheCouncil setoutabqve,couldintheviewoftheCommissi^§orm
thebasis ofaconsensus within theCouncil andV/ouldconsti^j ^
aCommunity position such as
-toreduce the burden (budgetary orotherwise )which results for
therespective national economies fromthevariou^Techniques of
xSJ*interest rate subsidisation ;
**toimprove the "transparency "ofvarious nqvional practices inthe
field oftied aidcredits ;
-todeal with the problem oflowinterest rate countries and
especially ofJapan /
-andfinally tostrengthen thQ^C-onsensus .
y

A. INTEREST RATES TAUX D'INTERET ANNEX
%Classif icatvdk ,
ofcountry ^Nur.ber ofyears in
Délais maximum de
2to 5maximum repayments term
remboursement ennombre d'anné
over 5to8.5es
over 8.5 to10
dupays
1/4/78 1/7/80 1/7/81* 1/4/78 1/7/80 1/7/81 1/4/78 1/7/80 1/7/81*
CAT.1 . %758.50 9.50 - 8.00 8.75 9.75 Not applicable
CAT.IIV
7.25 r 8.00 9.00 7.75 8.50 9.50 Not applicable
CAT.Ilt 7.257'5Q%8.50 7.50 7.75 8.75 7.50 7.75 8.55
*According tothe present proposal
*Selon laproposition actuelle
B.BASIC MINIMUM RATES WEIGHTED BY NEW SDR-WEIGHTS**
June 1977
June 1978
June 19798.25
8.125
8.75
June 1980 10.125Oct.1977 8.0
Oct.1978 8.2
Oct.1979 9.5
Oct.1980 10.58.0 Nov.1977
8.25' Nov.1978
9.5 Nov.1979
0.5 Nov.1980- TAUX MINIMA .DEBASE PONDERES SELON LA PONDERATION DU DTS
__ ; ^
7.875 Rates ofinterest ofsecondary market bonds for each
____^pfthe 5currencies inthenew SDRaveraged over^KnmonthS /ormarket rate oflast month ofperiod
9.375
10.750«oPmon
wrajfehever isthe lower,weighted bynew SDRweights .
**Taux d'intérêt des marchés secondaires pour lesobligations
dans chacune deces 5devises dans lenouveau DTS;moyenne
de6mois ou,taux demarché pour ledernier mois,enpre~
nant lechiftyte leplus basdesdeux,pondéré selon la
pondération di^^uveau DTS.%'
\%

COUNCIL DECISION
onthe stand tobeadopted bythe Community atthe international
negotiations ontheamendment ofcertain provisions oftf^»
Arrangement onGuidelines forOfficially Supported Credits
THE COUNCIL OFTHE EUROPEAN COMMUNITIES ,^
Having regard tothe Treaty establis&Sng the European Economic Community ,
andinparticular Article 113thaJ&of ,
Having regard tothe Recommendation from the Commission ,

Whereas itisnecessary toamend and augment the directives adopted by
the Council Decisions of6May 1980 /25November 1980 and 16December 1980
onthe stand tobeadopted bythe Community atthe international
negotiations onthe amendment ofthe Arrangement onGuidelines for
Officially Supported Export Credits , .cS^*
<#N
HAS DECIDED AS FOLLOWS
Sole Article
Attheinternational negotiations ontheamendm|^ofthe
Arrangement onGuidelines forOfficially Support^Export Credits /
the Commission shall express the Community position inaccordance
with the attached directives .
A#
Itshall act inconsultation witfrowe special Committee provided
forinArticle 113oftheTreaty^which shall assist itinitstask .
Done atBrussels / .v#For the Council^ ThePresident
* 

.I
1
Negotiatingdirective®concerningthtamendment
ofthtArrangement onGuidelinesforOfficiallySupported
€*portCredits
Confirmation oftheCouncilnegotiating directives adoptedbythe'
Decisionsof6May1980,of25November198Qandof16December1$§b
RegardingtheleveloftheminimuminterestratesintheArrangement
theCommissionwillproposetotheotherParticipants :a<#
animmediateincreaseof1XforCategoriesIandII,of0,8X
forCategorylitwitheffectfrom1July1981*^
Additional Councilnegotiating directives
RegardingthtsystemofInterestrate^thtCommission*111propose
tothtotherParticipants t'
'••thatthenotionwillbtcon^^edof•"managedsysten"1nwhich.
Participants woulddiscusaanddtddtadjustmentsateachannual
Rtvltw.
•»toconsider,ateact^annualreview,thevariouselementsofthethen
existingeconom^bndmonetarysituation,Includingtheaverageof
themediumte^Nnterestrates1nthefivecurrenciesoftherevised
!"basket"oftWSDR<USDollar,DM,Sterling,FF,Yen)calculatedon
thtlast6*monthsbeforethedateoftheannualreviewservingasa
"flashinglight"/andIfthataveragehasItselfIncreasedbymore
,t^onepercentagepointtherewouldbtapresumptionfortheneed
anupwardadjustment I***"–-
-V'
A"
f**thatParticipantswillcommitthemselvesnottosubsidise
'Interestratesonsalesamongstthemselvesssfrom1January1982;
•••/••
CI)Or»tsomt©thtrappropflattd*ttthisytar

ν2.RegardingtiedaidcreditstheCommissionvltlproposetothe
otherParticipants tosubmit:
•thosecreditswith'agrantelementabove15Xandlessthan2SX
tothepriornotificationwithoutdiscussionprocedureunder^
paragraph9(b)1ofth^Arrangement;
•mthosecreditswithagrantelementof25Xandabovetoth«£?
)promptnotification procedureunderparagraphe 9(c)1oftht
Arrangement .
• RegardingJapan,theCommlssloq^Uproposeto
theotherParticipants,whenthelong-termco^berdalratesof
InterestarebelowthelevelsoftheConsensu*thattheJapanese
Governmentundertakes,inconformity^iththeprovisionsofthe
Consensu*thattheEximbankofJap<^^will.onlyfinanceexports
1nsuch•mannerthattheinter^j^rateonExportCredits1*,
1nconformitywiththelevel*£^theConsensus.
i•
#••« '.• t
^.