on the position to be taken on behalf of the European Union in the Meeting of the Participants to the Arrangement on Officially Supported Export Credits

EXPLANATORY MEMORANDUM

1.Subject matter of the proposal

This proposal concerns the decision establishing the position to be taken on the Union's behalf in the Meeting of the Participants to the Arrangement on Officially Supported Export Credits (the Meeting of the Participants) in connection with the envisaged adoption of a decision concerning the expansion of the scope of Annex V of the Arrangement on Officially Supported Export Credits (Sector Understanding on Export Credits for Rail Infrastructure (RSU)) to include cable cars and trolleybuses.

2.Context of the proposal

2.1.The Arrangement on Officially Supported Export Credits

The Arrangement is a Gentlemen's Agreement between the EU, the US, Canada, Japan, Korea, Norway, Switzerland, Australia and New Zealand which aims to provide a framework for the orderly use of officially supported export credits. In practice, this means providing for a level playing field (whereby competition is based on the price and quality of the exported goods and not on the financial terms provided) and working to eliminate subsidies and trade distortions related to officially supported export credits. The Arrangement entered into force in April 1978, it is of indefinite duration and although it receives the administrative support of the OECD Secretariat, is not an OECD Act.

The Arrangement is subject to regular updates, to take into account new technical and policy developments affecting export credits in various sectors. The guidelines contained Arrangement have been incorporated in Union legislation , and hence been made legally binding in the EU by Regulation (EU) No 1233/2011 of the European Parliament and of the Council. Updates are regularly incorporated into EU legislation through delegated Acts pursuant to Article 2 of this Regulation.

2.2.The Meeting of the Participants to the Arrangement on Officially Supported Export Credits

The European Commission represents the Union in the Participants meeting, where decisions on all modifications to the Arrangement are taken by consensus among the 9 Participants. The positions of the Union are prepared in consultation with the Member States represented in the Council Working Group on Export Credits.

Article 67 of the Arrangement provides that "The Participants shall review regularly the functioning of the Arrangement. In the review the Participants shall examine, inter alia, notification procedures, implementation and operation of the DDR system, rules and procedures on tied aid, questions of matching, prior commitments and possibilities of wider participation in the Arrangement".

2.3.The envisaged act of the Meeting of the Participants to the Arrangement on Officially Supported Export Credits

During the 136th and 137th Meetings of the Participants on the 16th of November 2017, the Participants discussed the Union’s proposal to expand the scope of the RSU to include cable cars and trolleybuses. At the 137th Meeting of the Participants the Union was asked to provide additional information on the financial rationale to expand the scope of the RSU to cover these infrastructures, this information was provided by the EU delegates during the 138th Meeting of the Participants, which took place on the 14th and 15th of March 2018. During that meeting no Participant opposed the proposed expansion of the scope.

On the week of the 14 November 2018, during its 140th session, the Meeting of the Participants is to adopt a decision drafted by the Secretariat on the basis of the proposal put forward by the Union (‘the envisaged act’).

3.Position to be taken on the Union's behalf

The current scope of the RSU is limited to rail infrastructure projects. However, there are other transportation systems which are not based on rail infrastructure but which form an integrated part of public transportation systems, especially in urban areas. Cable cars and trolleybuses are such an example of non-rail-based public transportation systems which are becoming increasingly interesting in urban transport infrastructure of large cities, in particular, in emerging countries. Currently, however, these projects cannot benefit from the terms and conditions of the RSU which are more adapted to the nature of these projects. EU manufacturers of this type of infrastructure would benefit from the expansion of the scope, being able to provide better terms and conditions to their clients.

Cable car and trolleybuses projects usually have building costs above the minimum RSU overall contract value of SDR 10 millions, and the useful life of their infrastructure is normally longer than 20 years. Therefore they are similar to other rail infrastructure projects currently under the scope of the RSU and therefore benefiting from longer repayment terms.

Cable car and trolleybuses projects are primarily commissioned by public entities with often limited access to financial commercial markets. Expanding the scope of the RSU to include cable car and trolleybuses would allow the use of officially supported export credits for these projects under the specific RSU terms and conditions, providing longer repayment terms which would facilitate the implementation of these projects.

Therefore, it is recommended that the EU supports the expansion of the scope of the RSU in order to include cable cars and trolleybuses.

4.Legal basis