ARCHIVES HISTORIQUES 
DE LA COMMISSION 
 
 
 
COLLECTION RELIEE DES 
DOCUMENTS "COM" 
 
 
 
 
COM (86) 108 
 
 
 
Vol. 1986/00 36 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historical archives of the European Economic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation. 
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 1983 über die Freigabe der historischen Archive der Europäischen 
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983, 
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003 
(ABI. L 243 vom 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit 
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5 
der genannten Verordnung freigegeben. 
COMMISSION  
OF THE
EUROPEAN COMMUNITIES
G e n e ra l S e c re ta ria tC 0M C 86) 108 fin al 
Brussels, 28 February 1986
FOR OFFICIAL USE ONLY
Proposal for a 
C O U N C IL  DECISION
on the application of the Understanding on Guidelines for 
O fficially Supported Export Credits for Civil A ircraft
(submitted to the Council by the Commission)
C0M C86) 108 fin al

E X P L A N A T O R Y  M E M O R A N D U M
IN T R O D U C T IO N
O n  10 December 1984, the Council established negotiating directives 
for international negotiations on export credits for a irc ra ft.
These d irectiv es are divided into two parts (A  :"large a irc ra ft"  - 
B : "other a irc ra ft") and are aimed at a global agreement covering 
a ll categories of a irc ra ft.
Since then, negotiations on each part have been opened. O n  large 
a irc ra ft ("wide bodied je t a irc ra ft" ) which are produced only in 
the U S  and the EC, the Community negotiated b ila te ra lly  with the U S  
and an agreement was concluded by a Decision of the Council with 
effect from 1st July 1985.
This agreement was subsequently endorsed by the OECD. The US also 
agreed that the Understanding on large a irc ra ft should be incorporated 
in a global OECD agreement on export credits for a ll types of a irc ra ft 
when the ongoing negotiations on aircraft other than wide-bodied jet aircraft 
in the OECD had been concluded, w hich w as the case on January 24th 1986 ad referendum.
With the present communication the Council is requested to approve 
a) The addition of two a irc ra ft to the appendix to the Council 
Decision of 1st July 1985 on the application of a sector 
understanding on export credits for a irc ra ft (B A E  146 and F  100).
b) The Sector Understanding on export credits for c iv il a i rc ra ft(o th er 
than large commercial a irc ra ft ) concluded ad referendum in the 
framework of the O E C D  on January 24th.
APPRECIATION OF THE PROPOSAL
a) Addition of aircraft to the list contained in the appendix to 
the Understanding on large commercial aircraft
The appendix to the Understanding on large commercial a irc ra ft 
allows for the addition of sim ilar a irc ra ft by agreement between 
the P articip an ts. O n  account of the competitive market situation an addition 
of the B A E  146 and F  100 is considered ju s tifie d .

-  2 -
b) Understanding on other a irc ra ft
The Commission is of the opinion that the Understanding 
negotiated in the framework of the O E C D  is in conformity 
with the negotiating d irectiv es. In p a rtic u la r :
i. The Understanding covers exports of small and medium size 
a irc ra ft to a ll markets.
i i .  A ircraft are classified  into three categories to take account 
of both th e ir technical ch arac te ristic s and the competitive 
situ atio n  of the market.
i i i .  In terest rate conditions and maximum repayment terms are in 
conformity with general Consensus conditions with a general 
extension of maximum repayment terms to ten years for Category 
A  a irc ra ft.
iv. There is a provision prohibiting tie d  aid financing , 
p a rtia lly  untied aid financing or any other kind of 
financing on credit conditions that are more favourable 
than those set out in the Sector Understanding.
v. A ircraft competing with those from another Category 
w ill be able to benefit from the same export credit 
terms and conditions.
vi. The Understanding provides for review annually in ter alia  
of :
- o ffic ia l support for export of used a irc ra ft
- conditions for maintenance, spare parts and service 
contracts
- wider p articip atio n  in the Understanding
v ii. Terms not covered sp ec ifica lly  in the Understanding 
on other a irc ra ft shall be governed by the appropriate 
provisions of the Arrangement on Guidelines for O fficially  
Supported Export Credits (the Consensus).

- 3 -
3. C O N C L U S IO N S
The Lists of a irc ra ft contained in the appendices to the Understanding
both for Large Commercial A ircraft and Other A ircraft w ill
need to be amended from time to time to take account of the
market situ atio n  and developments; it is , therefore appropriate
to make the additions to the appendix to the Understanding
for Large A ircraft as proposed.
With regard to the Understanding on Other A irc ra ft, given that 
the objectives set out by the Council in December 1984 have been 
achieved, i t  is in the in te re sts of the Community to conclude 
the Sector Understanding as negotiated. The Understanding 
should become effective as foreseen on March 10th 1986.

C O U N C IL  DECISION 
O F
on the application of the Understanding on Guidelines 
for O fficially  Supported Export Credits 
for Civil A ircraft
T H E  C O U N C IL  O F  T H E  E U R O P E A N  C O M M U N IT IE S
Having regard to the Treaty establishing the European Economic 
Community, and in p articu lar A rticle 113 thereof,
Having regard to the proposal from the Commission,

-  2 -
Whereas it is necessary to establish international discipline in 
sectors not covered by the Arrangement on Guidelines for Officially 
Supported Export Credits in order to minimize self-defeating 
and counter-productive credit competition between suppliers in 
these areas;
Whereas negotiations for an Understanding for large a irc ra ft were 
negotiated and by decision of the Council came into effect 
from 1st July 1985;
Whereas i t  is appropriate to amend the lis t of a irc ra ft contained 
in the appendix to the Understanding for large a irc ra ft;
Whereas negotiations were concluded on a irc ra ft other than large 
ai rc ra ft;
Whereas the resu lts of these negotiations meet the in te re sts of 
the Community;
Whereas, in the in te re sts of the Community and in order to give
effect to the principle of international co-operation, it is
necessary to apply th is Understanding on other a irc ra ft in the Community; ;
Whereas both the Large A ircraft Sector Understanding and the 
Understanding on other a irc ra ft are intended as a comprehensive 
c iv il a irc ra ft agreement to be concluded expeditiously,

HAS ADOPTED THIS DECISION
A rticle 1
From 10th March 1986 the appendix to the Large A ircraft 
Understanding shall be amended to include the following 
a irc ra ft :
B ritish Aerospace 146 
Fokker 100
A rticle 2
From 10th March 1986, the Understanding on Guidelines for 
O fficially  Supported Export Credits for Other A ircraft 
shall be applied in the Community.
The text of the Understanding is annexed to this Decision.
A rticle 3
This Decision is addressed to the Member States.
Done at
For the Council

ANNEX
SECTOR UNDERSTANDING ON EXPORT CREDITS FOR CIVIL AIRCRAFT 
Large Commercial Aircraft.
(See Council Decision of 24 June 1985)
All Aircraft Except Large Commercial Aircraft- 
Form and Scope
This Sector Understanding complements the Arrangement on Guidelines for 
Officially Supported Export Credits· It sets out the particular 
complementing Guidelines which are applicable to officially supported 
export credits financing contracts for the international sale or lease 
of new (not used) aircraft and, if ordered concurrently with the 
aircraft or if ordered for manufacturing or assembly into such 
aircraft, engines, sub-assemblies and spare parts of aircraft not 
covered by part I of this Sector Understanding- It does not apply to 
hovercraft. (1)
Participation
The rules on participation of the Arrangement shall apply (2).
Best Endeavours
The provisions of this Sector Understanding represent the most generous 
terms which Participants are allowed to offer when giving official 
support. Participants will however continue to respect customary 
market terms for different types of aircraft and will do everything in 
their power to prevent these terms from being eroded. (3)
Categories of Aircraft
The following categories have been agreed upon in view of the 
competitive situation:
A. —  Turbine-powered aircraft -- including helicopters -- (e.g. turbo
jet, turbo-prop, and turbo-fan aircraft), with generally between 
30 to 70 seats. In case a new large turbine-powered aircraft 
with over 70 seats is being developed, immediate consultations 
shall be held upon request with a view to agree on the 
classification of such an aircraft in this category or in 
chapter I of this Understanding in view of the competitive 
situation.
B. -- Other turbine-powered aircraft, including helicopters
C. -- Other aircraft, including helicopters.
An illustrative list of aircraft in categories A and B is appended to 
this document.

2
5. Credit Terms and Conditions
Participants undertake not to support credit terms more favourable than 
those set out in this article.
* ■ * ‘
Category A. 10 years at matrix rates or respective CIRRs. Credit 
terms longer than 8 years are subject to prior 
notification in accordance with paragraph 9(b) of the 
Arrangement. (4)
Category B. 7 years at matrix rates or respective CIRRs. ,
I
i
Category C. 5 years at matrix rates or respective CIRRs.
6. Sales or Leases to Third Countries (relay countries)
In cases where the aircraft are to be on-sold or on-leased to an 
end-buyer or end-user in a third country, the interest rate shall be 
that applicable to the country of final destination.
t
7. Matching Provisions
In the event of officially supported competition, aircraft competing 
with those from another category or chapter shall for a specific sale 
be able to benefit from matching of the same export credit terms and 
conditions. Before making the matching offer, the matching authority 
shall make reasonable efforts to determine the export credit terms and 
conditions the competing aircraft benefits from. The matching 
autnority will be considered to have made such reasonable efforts if it 
has informed by telex the authority assumed to offer the terms it 
intends to match of its intention to do so but has not been informed 
within three working days that the terms it intends to match will not 
be used to support the transaction in question.
8. Tied Aid Credits Prohibition
Participants shall not provide tied aid financing, partially untied aid 
financing, or any other kind of financing on credit conditions that are 
more favourable than those set out in this Understanding.
9. Consultation and Notification Procedures
The procedures of the Arrangement shall apply to officially supported 
export credits not in conformity with the terms of this Sector 
Understanding. In addition, should any Participant believe that 
another Participant may be offering an officially supported export 
credit not in conformity with this Sector Understanding without giving 
advance notice, consultations shall be held within ten days upon 
request.

3
10. Review
The provisions of this Sector Understanding are subject to review 
annually, normally during the spring meeting of Participants of the 
Arrangement. In the review, Participants will examine possible 
modifications of the provisions notably in order to bring them closer 
to market conditions. In particular, Participants will examine, at the 
first review session, the questions of:
-- the prior notification requirements and procedures of paragraph 5 
(Category A);
-- insurance premiums and guarantee fees;
—  official support for export of used aircraft; (5)
-- conditions for maintenance, spare parts and service contracts; (5)
-- wider participation, including follow-up of contacts with Brazil and 
Indonesia.
Tn addition if market conditions or customary financing practices 
change considerably, any Participant is entitled to ask for a special 
review of the provisions.
NOTES AND REFERENCES
A list of non-conforming commitments outstanding on 1st Decejnber 1.9.85. 
their conditions and expiry date shall be notified to the iecrecariat 
no later than 15th Mar.ch_J.986 and circulated in a separate document. 
Upon their expiiy ,  these commitments shall be brought into conformity 
with this Sector Understanding.
2. Israel, "having accepted the invitation of the Participants of the 
Arrangement to become a Participant of this Sector Understanding, has 
declared its willingness to apply this Sector Understanding including, 
where relevant, the Arrangement on Guidelines for Officially Supported 
Export Credits.
3. Best endeavours shall be made inter alia with respect to the 
willingness to respond favourably to the invitation by another 
Participant to consult on possibilities of achieving conditions as 
close to the market as possible, for example in matching.
The minimum interest rate applicable for repayment terms of over 8.5 
and up to 10 years being the same as for repayment terms of over 5 and 
up to 8.5 years.
Pending the review on these matters, these goods and services shall be 
covered by the Arrangement on Guidelines for Officially Supported 
Export Credits. The tied aid credits prohibition in paragraph 8 of 
this Sector Understanding shall apply.4.
5.

4
Illustrative List of Aircraft
This list is not exhaustive and serves only to indicate the type of
aircraft to be included in the different categories where doubts could arise.
~  +  '
Manufacturer Designation
CATEGORY A
Aeritalia
Aeritalia/Aerospatiale
Aérospatiale/MBB
Avitech
Brit Aerospace
Canadair
De Havilland Cy
De Havilland Cy
De Havilland Cy
Embraer ,
Fokker
Fokker
Fokker
Gulfstream America
Saab
Short
Short.
etc.G 222 
AIR 42
C160 Transall 
CN 235
HS 748 series 2A
a  215
Dash 5
Dash 7
Dash 8
BIB 120 Brasilia 
F 27'
F 28 
F 50
Gulfstream 1-4 
SF 340 
SD 3-30 
SD 3-60
CATEGORY B
Aeritalia
Ahrens
Beech
Beech
Beech
Beech
British Aerospace 
British Aerospace 
Casa 
Cessna
Dassault Breguet
De Havilland Cy
Domier
Dornier
Embraer
Fairchild
Fairchild
IAI
Mitsubishi
Hiatus Britten-Norman
Piper
Hper
Reims
Short
SIAI-Marchetti 
etc.G180
404
1900
B-200 Super King Air
Model 200 Starship 1
300 Super King Air
BAe Jetstream 31
BAe 125
C 212-200
441 Conquest II
Falcon
Dash 6
Do 128-6
Do 228-200
EMB HO P2
Merlin/300
Metro III A
Arava 101 B
Mu2 Marquise
BN2A Islander
T 1 020
T 1 040
Cessna-Caravan II 
Skyvan SC-7 Series 3 
SF 600 Canguro