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COM(79)647
Vol.1979/0219

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(79)647Final
Brussels,16november1979.
FOROFFICIAL USEONLY
t
Proposalfora
COUNCILDECISION
concluding theOECDUnderstanding onexportcreditsfor
shipsandestablishing arrangements foritsimplementation
(presented bytheCommissiontotheCouncil)
C0M(79)647final

EXPLANATORY MEMORANDUM
■■ ...... :v.
Since itwasfelt tobenecessary tominimize counter-productive
competition inthefield ofofficially sujJfported export credits for
ships andtoreinforce international cooperation inorder toavoid
aworsening ofthe terms ofsuch credits ,the OECO Council adopted
on30May 1969 aresolution introducing anUnderstanding onexport
credits for ships .Fourteen countries ,including seven Community
Member States (Germany ,Belgium ,Denmark ,France ,Italy ,Netherlands
and the United Kingdom ),areparties tothe Understanding ,which
was amended on16December 1970,18July 1974 and 5November 1975 .
Inthe light ofcurrent trends onthe shipbuilding market and the
entry into force ofthe Understanding onguidelines inthefield of
officially supported export credits (Consensus ),the OECD Working
Party onShipbuilding considered that thepresent text needed tobe
updated .Itadvocated that atthis stage changes should not bemade tothe
Undertaking asawhole butprimarily totheprovisions oncredit terms .
Asexport credits come within thescope ofCommunity commercial policy ,
this opportunity was taken tosecure participation bythe Community
assuch inthe Member States' stead .
On24July the Council adopted directives authorizing the Commission
torepresent the Community inthe OECD negotiations .-These negotiating
directives provided for Community participation inthe Understanding
and amendments tothe substance ofthe text .

-2-
The Commission conducted these negotiations inconjunction with the
Committee specified inArticle 113ofthe Treaty .They were concluded
on26October ^and"theresults ,canbe„consi dejed ,sai:_1sf^iLlpry ^as'the_airns
set bythe Directives ofthe Council have been achieved .Inparticular ,
the Community isnow aparty tothe Understanding ,thenational protocols
annexed totheexisting text aretodisappear ,theprovisions have been
extended toinclude ship conversions already covered bythe EEC Directive
(78/338)onaidtoshipbuilding ,andthe newinterest rate takes_account
ofthe Member States *current practices .
»
The Commission considers these innovations tobeofmajor importance .
Forthefirst time the Community istoparticipate assuch inanOECD
sectoral agreement onexport credits .The Council istherefore asked ,
pursuant toArticle 113 ofthe EEC Treaty ,toconclude this
Understanding andestablish arrangements forits implementation by
adopting theattached decision .

PROPOSAL
FORACOUNCILDECISION
concludingtheOECDUnderstanding onexport
creditsforshipsandestablishing arrangements
foritsimplementation
THE-COUNCILOFTHEEUROPEANCOMMUNITIES,
HavingregardtotheTreatyestablishing theEuropeanEconomicCommunity,
andinparticulartoArticle113thereof,
HavingregardtotheproposalfromtheCommission,
Whereascounter-productive competition inthefield
ofofficially Supportedexportcreditsshouldbeminimizedand
>international cooperation topreventaworseningoftheterms
ofsuchcreditsreinforced,
WhereasmostMemberStatesoftheCommunityarepartiestotheUnderstanding
onexportcreditsforships/approvedbytheOECDCouncilResolutionof
30May1969andamendedbythatCouncil'sResolutionof18July1974,
1WhereasCouncilDirecti«®»Jii/338/EECof4April1978onaidtoshipbuilding stipulates •
thattheaidandintervention forwhichitprovidesmustcomplywith
theOECDCouncilResolutionof18July1974oranyagreementsthatmay
supersedeit;
WhereasitisimportantthattheCommunityassuchshouldbepartyto
thesaidUndertaking intheMemberStates*stead,
0JNoL98,11.4.1978,p.19.

Whereas the Council accordingly issued directives inaccordance with which
the Commission wastostate the Community 'sposition ininternational
negotiations concer ,rM«g~ Community participation
inthe Understanding onexport credits for ships and the amendment ofthat
Understanding ,
Whereas therevised Understanding resulting from those negotiations
isinconformity with thesaid directives , ,
Whereas most ofthe shipbuilding and credit-giving third countries which are
members of OECD .intend toadopt "the measures necessary toapply the revised
Understanding ,
Whereas ,intheinterests ofthe Community ,and inorder togive effect to
theprinciple ofinternational cooperation ,theprovisions -ofthe ■>
Understanding onexport credits forships should beapplied Jnthe .Community ,
Whereas itisdesirable that the revised provisions should beapplied in
the Community for alimited period only,thus enabling the Community to
participate inany updating ofthe Understanding andtoreview the
situation inthe light ofitsexperience ofsuch application ,
HAS DECIDED AS FOLLOWS :
Article 1
The Understanding onexport credits for ships negotiated atthe OECD on
26October 1979 ishereby concluded onbehalf ofthe European Economic
Community .
,1 '► .
The text ofthe Understanding isannexed hereto .
Article 2
The Commission shall give thenotification provided for inClause 11of
the Understanding ,immediately this Decision enters into force .
Article 3
€
The Community shall apply theprovisions ofthe Understanding asfrom a
date tobedetermined inaccordance with Clause 11thereof .

-3-
Article 4
t
Where .athird country which isparty tothe Understanding informs its
partners ofits intention toinvoke Clause 12thereof ,aconsultation
meeting shall beconvened bythe Policy Coordination Group for Credit
Insurance ,Credit Guarantees and Financial Credits ofthe Council of
the Community .The Commission shall ,ifnecessary ,submit' an;appropriate
proposal tothe Council .
Should aMember State ofthe Community orthe Commission consider that
theinterests ofthe Community would justify invoking
Clause 12ofthe Understanding ,the following procedure shall apply :
-the Member State concerned shall notify all other Member States and
the Commission accordingly ,iftheinitiative emanates from the
Commission ,the Commission shall notify all Member States accordingly ;
-ameeting ofthe Policy Coordination Group for Credit Insurance ,
Credit Guarantees and Financial Credits shall beconvened within three
working days ofreceipt ofthe said notification ;
-the Commission shall ,within five working days oftheendofthemeeting of
the Group ,submit anappropriate proposal tothe Council ,which
shall act without delay .
Should the Council decide toseek areview ofthe Understanding ordecide onthe
withdrawal ofthe Community from the Understanding ,the Commission shall
notify theSecretary-General ofthe OECD forthwith .
Article 5
This Decision shall apply until 31May 1980 .
Done at
For the Council
The President

RESOLUTION OFTHEOECOCOUNCIL
CONCERNING ANAMENDMENT OFTHEUNDERSTANDING
ONEXPORTCREDITS FORSHIPS
TheCouncil,
HavingregardtotheResolutions oftheCouncilof30May1969,
16December1970,18July1974and5November1975onanUnderstanding
onExportCreditsforShips,andinparticular Clause12ofthat
Understanding /C(69)60final;C(70)204final;C(74).88final;
C(75)162final;C/M(77)4-final_7,
HavingregardtotheNotebyWorkingPartyNo6onShipbuilding
concerning arevisionoftheUnderstanding onexportcreditsforships,
OntheproposalofitsWorkingPartyNo6,
NOTESthatparticipants intheUnderstanding referredtoaboveon
1ExportCreditsforShipshaveagreedtorevise,witheffectfrom
theUnderstanding ,ofwhichthenewtextisreproduced
intheattachedAnnex,
NOTESparagraph5oftheNoteoftheWorkingPartyNo6totheCouncil^.
1Participants intheUnderstanding asrevisedinthepresentResolution
oftheCouncilare:Australia,Canada,EuropeanEconomicCommunity,
Finland,Japan,NorwayandSweden.
2Participants agreedtoamodification oftheminimumdownpaymentand
ofthemaximumdurationofthecreditwhichwereuntilnowinforcein
theUnderstanding .Asregardstheminimuminterestrate,participants
considerthattheinterestrateof8%,netofallcharges,whichwasin
forceintheUnderstanding shouldremainasarule;someflexibility
beinghowevernecessaryforsomecountries.AsfarastheEuropean
EconomicCommunityisconcerned,andtakingintoaccounttheexisting
practices,thisinterestratemeansaminimuminterestrateof8%,which
mayincludesomecharges,andinanycaseaminimuminterestrateof
7.5%netofallcharges.Thisdoesnotimplyanychangesin.theexisting
policiesorpracticeswiththeCommunity".

UNDERSTANDING ON EXPORT CREDITS FOR SHIPS
I
1. For any contract relating toany new ship orship-conversion
tobenegotiated from onwards ,governments participating
inthis Understanding agree toabolish existing official facilities **
and tointroduce nonewofficial facilities forexport credits onterms
providing :
<i)amaximum duration exceeding 8and ahalf years from delivery
and repayment other than byequal instalments atregular intervals
ofnormally 6months and amaximum of12months ;
(ii)payment bydelivery ofless than 20% ofcontract price ;
** 
(iii)aninterest rate ofless than 8%net ofall charges
Byship-conversion ismeant any conversion ofaseagoing vessel on
condition that conversion operations entail radical alterations tothe
cargo plan,thehull orthepropulsion system .
*0fficial facilities arethose which enable credits tobeinsured ,
guaranteed orfinanced bygovernments ,bygovernmental institutions ,or
with any form ofdirect orindirect governmental participation .
** 
Byinterest rate,net ofall charges ,ismeant that part ofthe credit
costs (excluding any credit insurance premia and/orany banking charges )
which ispaid atregular intervals throughout the credit period and
which isdirectly related tothe amount ofcredit .

2.,This minimum interest rate of8%will apply tothecredit
granted with official support bythe?shipbui Ider tothe buyer (ina
supplier credit transaction )orbyabank orany other party inthe
shipbuilder 'scountry tothe buyer oranyother party inthe buyer 's
country (inabuyer credit transaction ),whether theofficial support
isgiven for the whole amount ofthecredit oronly part ofit.
3. The minimum interest rate will also apply tothecredit granted
with support bygovernments participating inthe ^Understanding ,inthe
shipbuilder 'scountry tothe shipbuilder ortoanyother party ,to
ena'ble credit tobegiven tothe shipowner ortoanyother party inthe
shipowner 'scountry ,whether this official support isgiven for the
whole amount ofthe credit oronly part ofit.
4. Insofar asother public bodies participate inmeasures to
promote exports ,participating governments agree touseallpossible
influence toprevent the financing ofexports onterms which contravene
the above principles .
5. Participating governments ,recognizing that isishighly desirable
toset alimit toterms forexport credits also agree tomake their
best endeavours toensure that nomore favourable terms than set out
above will beoffered tobuyers byany other means .
6. Any Government participating inthe Understanding which wishes ,
forgenuine aid reasons ,toconcede more favourable terms inapart­
icular case isnot precluded from doing so,provided that adequate
notice ofthis decision isgiven toall theparties tothe Understanding
inaccordance with theprocedure established forthis purpose .For
these cases 'adequate notice' shall beinterpreted asrequiring that
notification bemade toallparticipating Governments ifpossible at
least six weeks before apromise isgiven ,atany stage ofthe
negotiations ,tocommit the use offunds forthat purpose ,and inany
case atleast six weeks before authorization isgiven sotocommit them .

7. Adequate notice shall also begiven ofany decision ,taken for
exceptional reasons other than those specified inClause 6,tosupport
terms more favourable inany way than those ofthe Understanding .In
this case,'adequate notice' shall beinterpreted asrequiring that
notification ofsuch adecision bemade toallother participating
governments before anorder has been finally placed and intime
for them tobaable tocompete effectively onthese terms .Incases where
tenders are invited ,notice must begiven atleast seven days before
the closing date fortenders .Support (including -theprovision ofaid)
wilt berefused foranyorder finally placed **** onmore favourable
terms before allother governments participating inthe Understanding
have been given notice asprovided inthis Clause and;incase ofaid,
asprovided inthe above Clause 6.
8. Any government participating inthe Understanding may,provided
that the maximum possible notice ofitsdecision isgiven toall other
participating governments ,support more favourable terms inaparticular
substantiated case tomatch terms ofofficially supported transactions
orcontravention ofthe above terms byother participating governments ,
orcompetition from non-participating countries .
tII
9. Any government participating inthe Understanding may obtain
information from any other participating government onthe terms of
anyofficial support for anexport contract inorder toascertain
whether the terms contravene this Understanding .Participating
governments undertake tosupply allpossible information requested with
allpossible speed .According totherules andpractices ofthe OECD,
anyparticipating government may askthe Secretary-General toact on
its behalf inthe aforementioned matter and tocirculate the information
obtained toallparticipants inthe Understanding .
    
Anorder shall bedeemed tohave been finally placed assoon asthe
buyer has committed himself irrevocably under awritten and signed
agreement tobuy from theexporter and topay according tospecified
terms ,even ifthe agreement issubject toreservations which can be
withdrawn only bythe exporter .

10. Each participating government undertakes tonotify theSecretary -
General its system for theprovision ofofficial support and the means
ofimplementation ofthe Understanding . *'
'III
11. This Understanding becomes effective assoon asall Members of
Working Party No6have notified the Secretary-General oftheir
adherence toitor,assoon asgovernments having sonotified the
Secretary-General ,decide that they constitute arepresentative majority
ofMembers ofWorking Party No6;any government which disagrees asto
what constitues arepresentative majority would not bebound bythe
others' decision .The Understanding isopen toother Member countries of
the OECD .
12. This Understanding shall besubject toreview asoften as
requested byparticipating governments ,and 1nany case atintervals not
exceeding oneyear .Anyparticipating government may withdraw from
this Understanding upon giving toitspartners three calender months *
notice ofitsintention todoso.Within this period ,atthe request
ofany ofthese partners ,there shall beameeting ofWorking Party No6
toreview this Understanding ,and any other participating government ,
onnotification toitspartners ,maywithdraw from this Understanding
atthe same effective date asthe government which first gave notice .