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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 openi ng to the public of the historical archives of the European Econom ic 
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 f ile 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 198 3 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  
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COMMISSION  
OF THE
EUROPEAN COMMUNITIES
General SecretariatC 0M (84) 584 final 
Brussels, 25 October 1984
FOR OFFICIAL USE ONLY
R E C O M M E N D A T I O N  F O R  A
C O U N C IL  D E C IS IO N
on the stand to be adopted by the C om m unity at the international 
negotiations on the am endm ent of certain provisions of the 
Arrangement on Guidelines for Officially Supported Export Credits
(submitted to the Council by the Commission)
C 0 M C 8 4 ) 584 final

E X P L A N A T O R Y  M E M O R A N D U M
B A C K G R O U N D
1. A t the O E C D  Ministerial meeting of 17-18 M a y  1984, a wide-ranging
debate took place on the problem of aid and trade-related concessional 
finance. T he results of these discussions are summarised in paragraph 22 
of the official com m uniqué of the meeting :
Aid and Trade Related Concessional Finance
" Ministers affirmed their com m itm ent to avoid any de jure and de facto 
financing practices which give rise to trade distortions and to 
diversion of aid flows from development objectives and to apply 
fully the guiding principles they have agreed upon. They enjoined 
the competent bodies of the Organisation to take prompt action 
to improve existing arrangements so as to strengthen transparency 
and discipline in this area by all appropriate means. Differing 
views were expressed with respect to the desirability of including 
increases in established m inim um  grant elements in such action.
They requested these bodies to report on progress m ade toward 
these ends by the next Ministerial Council”.
2. T he terms of the Ministerial declaration m ake it incumbent on all 
O E C D  parties to engage in a serious exercise of reflection on 
methods of improving both transparency and discipline in the field 
of Aid and Trade Related Concessional Finance. A s one of the m ain 
providers of this type of finance, it is essential that the 
C om m unity plays an active and leading role in this process.
A N A L Y S IS  O F  T H E  S IT U A T IO N
3. T he difficulties of finding c o m m o n  guidelines a n d  m e th o d s to m o n ito r
tied aid credits, associated financing and other practices encompassed 
within the broad framework of the term "aid and trade related 
concessional finance" have arisen because of countries' different 
perceptions of the extent of the underlying problem. Indeed it is the

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dual aid-trade functions of such financial facilities that m akes 
the issue so difficult to treat.
4. H ow ever, irrespective of the particular positions defended by different 
O E C D  M em b er States, it cannot be denied that, even allowing for 
notable year-to-year fluctuations, the absolute am ount of resources 
devoted to concessional financing is significant. Furthermore
the DAC has recently reported that the pressure for increased 
Associated Financing (combination of tied aid and export credits )  
seems to be mounting.
5. Aside from the question of the actual volume of resources earmarked 
for tied aid credits and associated financing, it is important
to recognise also that the potential volume of such financing 
facilities has increased following the setting-up of n ew  programmes 
by the U SA ,Canada and Sweden, countries which have traditionally 
abstained or refrained from offering such facilities .
6. Furthermore, the growth in tied aid credit facilities m ay  com pound
the difficulties experienced by som e exporters in selling to certain 
developing country markets on anything other than concessional terms 
("spoiled markets"). Indeed it has been reported that on som e occasions 
offers unsupported by concessional financing have not even been
considered by the purchasing country.
7. Finally and perhaps most importantly of all, it is clear that a  
combination of the trends mentioned above cannot but weaken 
the impact of the m inim um  guidelines of the Consensus on officially 
supported export credits. This development is all the m ore regrettable 
given the great efforts m ade by all Participants to stabilise 
the export credit Consensus in October 1983.

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P O S S IB L E  A P P R O A C H E S
8. T he above description of existing trends in the field of aid and 
trade-related concessional finance reinforces the concerns expressed 
by Ministers that som e action should be taken in this field. T w o  
possible approaches appear to be possible :
(a) T he immediate introduction of wholesale across-the-board 
measures aimed at both tightening discipline sharply 
and increasing transparency
(b) A  step-by-step approach beginning with improvements in 
transparency.
9. The following suggestions have been m ade by those countries in 
favour of the approach outlined in (a) above :
- a phase-out of tied aid credits in the short-medium term;
- a substantial increase in the m inim um  grant element (degree 
of concessionality )  of tied aid credits;
- a prohibition of tied aid credits to certain "richer" developing 
countries and in certain industrial sectors (high technology 
areas, industries in oversupply);
- a ban on tied aid credits in the form of lines of credit
Under this approach the problem of undermatching would be 
dealt with as part of a comprehensive package of measures 
to improve discipline.

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10. A n  alternative method of proceeding would be to begin
b y  addressing the problem of transparency before attempting 
to reach a consensus on measures to improve discipline.
In the view of the Com m ission this approach has a num ber of 
distinct advantages since improvements in transparency will 
enable Participants to better appreciate the scale of the 
tied aid credits issue as well as permitting further 
reflection to be given to the efficacy of different 
measures to improve discipline.
Such an approach would seem  justified also by the fact that the M inisters 
themselves could not agree on specific measures to be taken to 
strengthen discipline, notably with respect to the desirability 
of increasing the m inim um  concessionality of tied aid credits.
C O M M IS S IO N  P R O P O S A L S
(i) Definition of tied aid credits
11. In the view of the Com m ission three essential measures must be 
undertaken in order to improve transparency . In the first 
place the definition of tied aid credits must be enlarged 
to cover all de jure and de facto aid and trade-related 
concessional financing practices offered by Participants to the 
O E C D  Consensus. Such a definition should incorporate all 
"associated financing" transactions as defined by the D A C , as 
well as pre-mixed credits of the Swedish and Austrian type,
as well as practices by which development assistance is granted 
for one portion of a project and export credits for another 
without any formal linkage. In the view of the Commission, full 
transparency must be seen to be applied. ’  Without this- 
precondition disciplines will function in only a partial manner 
to the detriment of certain Participants. In the process of 
drawing up this definition full use should be m ade of w ork 
currently being carried out on this question within the framework 
of the 'D A C .
In addition to making improvements in this area, the Commission 
believes'-'that the C om m unity should attempt to arrive at an 
agreement with our Partners on a co m m o n  method of calculating 
the grant element of tied aid credits.

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Pç,ior notification procedures
T he enlargement of the definition of tied aid credits should be 
accompanied by measures to improve transparency through the 
prior notification procedures of the Consensus. In this regard 
it is worth recalling that at present only those tied aid 
credits with a grant element of 25 %  or less are subject to 
the prior notification procedures. In 1983, in fact,only 
about a half of all tied aid credits were covered by the prior 
notification system. The other half, all containing grant 
elements of between 25 and 50 % , and including a large num ber 
of credits from countries such as Austria and Japan, were 
notified only ex post or even not at a ll. For these reasons 
the Commission believes it essential to widen the threshold 
of the prior notification procedures. In addition, in order 
to give other O E C D  countries sufficient time to react, 
the C o m m is s io n  believes there are grounds for extending the duration 
.  of the prior notification period beyond the current limit of 10 days.
CiiiU  '· Face-to-face consultations ---------- ---------- ------------ -----------------------
13
 . The third element to improve transparency /should be the
introduction of ' face-to-face consultations, f o r _ _ _
imp
ortant contracts. The C om m unity itself pift forward this 
idea in its contribution to the 7th review o ,f the functioning 
of the Consensus w hen it stated that
.."greater attempts shouid be m ade 
to arrive at a co m m o n  attitude on 
credi^terms for a particular transaction",
and suggested also that there m ay  be cases where
..."  Participants should have greater freedom 
to call for face-to-face consultations 
in difficult cases."
14. The Community's initiative w as supported by other O E C D  countries, 
and in April 1984 all Participants "firmly undertook"
^  ..."to  consider favourably face-to-face
consultations if a Participant so 
requests in the case of important 
transactions"(iiX
12.

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15. Following the O E C D  Ministerial meeting and in the light of 
Participants' discussions in April 1984, Mr.Wallen, Chairman 
of Consensus Participants, proposed a draft text of a n ew  
face-to-face consultation procedure aimed at encouraging 
the development of c o m m o n  attitudes for important projects, 
and improving transparency, particularly with respect to tied 
aid credits . A  related aim  w as the need to re-establish mutual 
confidence amongst Participants which had been damaged by the 
malfunctioning of existing procedures in a number of cases .
In response to the Chairman's initiative the Com m unity indicated 
that whilst approving the objectives underlying the proposal :  
it had a number of technical questions related to the practical 
implementation of the procedure. Other Participants, notably 
Canada, Australia , N e w  Zealand and the U S  also raised a 
num ber of technical points.
16. In the view of the Commission points of a technical nature should 
not be allowed to obscure the objectives underlying ;
face-to-face consultations which are fully in 
conformity with O E C D  Ministerial directives to strengthen trans­
parency "by all appropriate means." For this reason the Commission 
believes it" essential that the Council makes a firm 
political com m itm ent to the objectives and principles of such 
consultations which will  improve existing arrangements in 
the framework of the Consensus and the O E C D  Exchange of 
Information System.
C O N C L U S I O N
17. In the light of these considerations the Commission considers the 
implementation of the above proposals to be an important
step in meeting Ministerial directives and in overcoming current 
limitations in existing Consensus procedures. Consequently, 
it is recom m ended that the Council authorises the Commission 
to open negotiations on the three elements highlighted above.

N O T  F O R  P U B L IC A T IO N
R E C O M M E N D A T I O N  F O R  A  
C O U N C I L  D E C IS IO N
on the stand to be adopted by the C om m unity at the international 
negotiations on the am endm ent of certain provisions of the 
Arrangement on Guidelines for Officially Supported Export Credits
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 Econom ic 
Com m unity, and in particular Article 113 thereof, ✓  '
Having regard to the Recommendation from  the Commission,

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W hereas it is in the Community's interest that the Arrangement on 
Guidelines for Officially Supported Export Credits should continue 
to play a central role in eliminating wasteful export credit 
and tied aid credit competition and reducing subsidies;
W hereas it is necessary to take prompt action to improve existing
arrangements so as to strengthen transparency and discipline 
in the area of tied aid credits ;
W hereas it is necessary to take such measures in order to ensure 
that the Arrangement's guidelines will not be undermined;
i
H A S  D E C ID E D  A S  F O L L O W S
Sole Article
✓✓
A t the international negotiations on the am endm ent of the 
Arrangement on Guidelines for Officially Supported Export
Credits, the Commission shall express the C om m unity position
1in accordance with the attached directives.
,It shall act in consultation with the special Committee provided 
for in Article 113 of the Treaty, which shall assist it in its 
task.
D o n e at Brussels, '
For the Council 
T he President
»

A N N E X
N E G O T IA T IN G  D IR E C T IV E S
1. D E F IN IT IO N  O F  T IE D  A ID  C R E D IT S
The definition of "tied aid credits" within the framework of the 
Arrangement shall xover all forms of financing, whether in 
the form of Official Development Assistance (O D A ) loans,
O D A  grants, other official flows, or associated financing 
packages defined in the D A C  Guiding Principles, whereby 
procurement is de facto or de jure tied to goods and 
services from one or a limited number of Participants. In 
this framework attempts shall be m ade to arrive at a c o m m o n  
method of calculating the grant element of tied aid credits.
2. P R IO R  N O T IF IC A T IO N  P R O C E D U R E S
For tied aid credits, the thresholds for the implementation of the 
prior notification procedure in the Arrangement shall be adjusted 
upwards. In such cases an extension of the period before a com m itm ent 
can be issued shall be negotiated.
3. F A C E -T O -F A C E  C O N S U L T A T IO N S
T he adoption of c o m m o n  attitudes at an early stage on important 
projects shall be encouraged and facilitated by all appropriate 
means, including face-to-face consultations amongst competing 
Participants.