REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Annual Report on negotiations undertaken by the Commission in the field of export credits, in the sense of Regulation (EU) No 1233/2011
Date: 2015-10-20
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: OECD, State aid, export credit, financial cooperation, international cooperation, sectoral agreement

EUROPEAN 
COMMISSION 

Brussels, 20.10.2015  
COM(2015) 516 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Annual Report on negotiations undertaken by the Commission in the field of export 
credits, in the sense of Regulation (EU) No 1233/2011 

EN 

   EN 

 
 
 
 
  
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Annual Report on negotiations undertaken by the Commission in the field of export 
credits, in the sense of Regulation (EU) No 1233/2011 

1. Introduction: 

Regulation  (EU)  No  1233/2011  of  the  European  Parliament  and  of  the  Council  of  16 
November  2011  on  the  application  of  certain  guidelines  in  the  field  of  officially  supported 
export credits and repealing Council Decisions 2001/76 EC and 2001/77/EC1 foresees in its 
Annex  I  that  the  European  Commission  "according  to  its  competencies  shall  provide  to  the 
European Parliament an annual report on negotiations undertaken, where the Commission has 
negotiating authorisation in the various forms of international cooperation, to establish global 
standards in the field of officially supported export credits." 

The present report covers the period March 2014 to June 2015.   

2. Major developments in export credits during the reporting period: 

Most  of  the  Commission’s  negotiation  activities  in  this  policy  area  continue  to  take  place 
within  the  Export  Credit  Committees  of  the  Organisation  for  Economic  Co-operation  and 
Development (OECD). The OECD at the time of writing remains the only international body 
which has developed detailed technical rules for export credits. The European Commission, in 
the  framework  of  its  responsibility  to  carry  out  trade  negotiations,  represents  the  EU  in  all 
negotiations concerning the OECD Arrangement on Officially Supported Export Credits2 
and  its  Sector  Understandings  (which  cover  special  financing  rules  for  specific  industrial 
sectors), namely: 

•  the Sector Understanding on Export Credits for Ships 

•  the Sector Understanding on Export Credits for Nuclear Power Plants 

•  the Sector Understanding on Export Credits for Civil Aircraft 

•  the  Sector  Understanding  on  Export  Credits  for  Renewable  Energy,  Climate  Change 

Mitigation and Water Projects 

•  The Sector Understanding on Export Credits for Rail Infrastructure. 

The Arrangement also contains distinct rules for specific categories of transactions (such as a 
special  Annexe  on  Project  Finance).  In  order  to  ensure  an  appropriate  level  of 
complementarity between export credits and trade-related aid, the Arrangement also provides 
a set of disciplines for Tied Aid. 

1. OJ L 326, 8.12.2011, p. 45. 
2  The  "Arrangement"  is  a  Gentlemen's  Agreement  between  the  EU,  the  United  States,  Canada,  Japan,  Korea, 
Norway, Switzerland, New Zealand and Australia that exists since 1978 and has the main objective of ensuring 
a  level  playing  field  between  the  export  credit  programs  of  its  Participants.  The  Arrangement  and  its 
subsequent modifications have regularly been transformed into EU law. 

2 

 
 
 
  
 
 
 
                                                 
The basic idea underlying the OECD Arrangement – to have an informal forum, where the 
major export credit providers not only agree on rules ensuring a level playing field between 
their  respective  programs,  but  also  ensure  appropriate  levels  of  information  exchange  and 
transparency on their export credit transactions – has proven its value over the years. There 
has  been  little  need  to  set  up  more  rigid  instruments  (like  the  WTO  dispute  settlement 
mechanism) to solve potential conflicts in this field of international trade. 

While  the  history  of  the  OECD  Arrangement  may  be  considered  a  success  story,  a  key 
element for the effectiveness of this instrument has obviously been that its membership was 
for  a  long  time  representative  for  the  global  export  credit  community.  This  aspect  has 
however changed substantially in recent years: Many new players have emerged in the field 
of export credits – China, Brazil, India, the Russian Federation and South Africa to name but 
the most important ones. Quite a few among them have shown great reserve to all initiatives 
to invite them to join the OECD Arrangement3. 

The  OECD  remains  the  most  important  platform  for  agreeing  and  monitoring  export  credit 
rules  between  its  9  above-mentioned  Participants.  Due  to  the  fact  that  the  OECD 
Arrangement for several decades has been the only detailed set of technical rules on export 
credits at international level, the OECD has also developed an impressive special institutional 
know-how in this policy field.  

However, due to the growing importance of the newly emerging export credit providers from 
outside  the  OECD,  efforts  to  integrate  them  into  a  new  set  of  international  export  credit 
disciplines  have  become  a  major  priority  in  its  own  right.  During  the  reporting  period,  the 
International  Working  Group  on  Export  Credit  ("IWG")4  has  continued  to  be  the  key 
forum  of  dialogue  with  the  non-OECD  export  credit  providers.  While  still  in  a  relatively 
early  stage,  the  IWG  process  has  developed  into  a  genuine  second  forum  for  the 
Commission's  role  in  representing  the  EU  in  international  talks  on  export  credit  issues  (for 
details see section 3). 

In  parallel,  activities  in  the  OECD  continued  during  the  reporting  period  (for  details  see 
section 4).   

3. The International Working Group on Export Credits: 

During the reporting period, the IWG has had the following official meetings: the 5th Official 
Meeting in May 2014 in Washington, the 6th Official Meeting in September 2014 in Beijing, 
the  7th  Official  Meeting  in  Brussels  in  February  2015  and  the  8th  Official  Meeting  in  May 
2015 in Brasilia. 

3  This notably  concerns  China  and  India. A  particular  case  is  Brazil,  which  is  only  a  Participant  to  the  Sector 

Understanding on Civil Aircraft, but shows no interest to join the general Arrangement as such. 

4 The International Working Group on Export Credits ("IWG") was launched on the basis of a bilateral initiative 
by President Obama and then Vice-Premier Xi-Jinping in 2012, The IWG has 18 Members (all 9 Participants 
to the OECD Arrangement – EU, US. Canada, Japan, Korea, Norway, Switzerland, Australia and New Zealand 
–  as  well  as  China,  Brazil,  India,  the  Russian  Federation,  South  Africa,  Indonesia,  Malaysia,  Turkey  and 
Israel). The long-term objective of the IWG is to agree a new set of multilateral disciplines on export credits, A 
Steering Group consisting of the US, China, the EU and Brazil has been formed. Its four members organise and 
chair IWG meetings on a rotating basis.  

3 

 
 
 
 
 
 
 
 
 
 
                                                 
This regular sequencing of meetings already demonstrates that the IWG has established itself 
as a regular process – a fact which could not have been taken for granted when the initiative 
was launched two years ago. The organisation form of the Group remains rudimentary so 
far (no permanent chair, venue or secretariat), which has not created any major problems up to 
now.  Besides,  in  this  context  the  sensitivities  of  those  IWG  Members  with  limited  or  no 
experience  in  similar  fora  have  to  be  taken  into  consideration.  In  due  course,    the  more 
technical  and  complex  IWG  discussions  become,  it  will  however  certainly  be  necessary  to 
come back on the question of the Group's institutional set-up. 

As  mentioned  in  the  previous  report,  after  the  4th  Official  IWG  Meeting  in  Brasilia,  the 
general conclusion drawn by the Participants had been that the approach used during the first 
year of operation of the process – namely to compare the existing export credit systems and 
practices  of  the  individual  IWG  Participants  –  had  been  exhausted.  Therefore,  with  the  5th 
Official IWG Meeting (Washington 20 -22 May 2014), the Group moved to a new phase of 
work, characterized by "text-based discussions" on the two industrial sectors5, which the IWG 
had agreed to analyse in detail before moving to a real discussion on how a future horizontal 
set  of  export  credit  disciplines  (i.e.  one  that  is  applicable  to  export  credit  transactions  in 
general)  could  look  like.  This  adjustment  in  the  working  methods  of  the  IWG  had  a  very 
positive and dynamising effect on the whole process, an effect which already became visible 
at  the  Washington  meeting.  The  Chinese  delegation  supported  this  new  approach  from  the 
start,  although  they  made  it  clear  that  they  were  under  instruction  to  keep  some  important 
issues  –  premia,  interest  rates  and  transparency  questions  –  out  of  the  discussion  until  the 
IWG had moved to the horizontal phase of talks. 

Despite  this  reserve,  the  following  meetings  were  quite  constructive:  China  hosted  the  6th 
Official Meeting in Beijing on 25 and 26 September 2014. While premia, interest rates and 
transparency  issues  remained  outside  the  official  scope  of  discussions,  the  IWG  delegations 
had  rather  good  exchanges  on  other  technical  matters  (e.g.  maximum  repayment  terms, 
maximum  official  support,  local  cost,  definition  of  starting  point  of  credit,  repayment 
schemes, validity period for export credits). It is recalled that the practice of Chinese export 
credit  providers  of  granting  much  longer  repayment  terms  than  OECD  Arrangement 
Participants has often been caused concern among European exporters. The fact that a serious 
discussion on this topic has already started in the IWG is therefore highly welcome. 

The 7th Official IWG Meeting was hosted by the European Union in Brussels from 3rd to 
5th  February  2015.  The  EU's  approach  to  hosting  this  meeting  consisted  not  only  in 
continuing the "text-based" discussions on the ship-building and medical equipment sectors, 
but    -  in  an  effort  to  allow  the  Group  to  address  also  those  topics,  which  some  delegations 
were for the time being not able to discuss officially – also in inviting OECD  experts to give 
technical  presentations  on  the  way  how  premia-setting,  interest  rates  and  notifications  of 
the  OECD  Arrangement. 
transactions  are  organised  under 
individual  export  credit 
Furthermore, there were presentations by WTO and OECD experts on the legal relationship 
between the OECD Arrangement and the WTO's Agreement on Subsidies and Countervailing 
Measures.  This  approach  –  which  was  generally  appreciated  by  other  delegations  –  also 
allowed to make use on pragmatic manner of the long-standing experience notably the OECD  

5 The Ship-Building Sector and the Medical Equipment Sector 

4 

 
 
 
 
 
 
                                                 
has developed in the area of export credits. The EU also organised a special technical session 
dedicated to the potential scope of future sectorial rules on export credits for ship-building. 

At the 8th Official IWG Meeting organised by Brazil in Brasilia from 19th to 21st May 2015 
a major breakthrough  was reached: The  IWG  Participants agreed  that  the  talks on  sectors 
have  made  sufficient  progress  to  justify  the  launch  of  proper  discussions  on  a  general,  
horizontal system of rules, applicable to export credit transactions in general. This important 
decision  marks  the  transition  to  a  new  phase  in  the  work  of  the  IWG  and  reflects  a  long-
standing request by the US and the EU. It is a clear and welcome indicator that the Group's 
work is making tangible progress. At the same time, the new phase in the life of the IWG will 
also  create  new  challenges.  Discussions  in  the  Group  will  become  even  more  technical  and 
complex  as  demanding  topics  like  premium  setting  and  interest  rates  will  now  be  fully 
included  in  the  agenda.  Besides,  there  will  be  a  need  to  strengthen  the  efficiency  of  the 
Group's  institutional  set-up,  in  particular  the  nomination  of  a  permanent  chair  would  be  a 
crucial asset. 

The 9th meeting of the IWG will be hosted by the US in October 2015 and be dedicated to 
actually implementing the transition to the new phase of horizontal talks. The EU will fully 
support the US in this undertaking.  

Overall, while the IWG has had a difficult start, the process has stabilised itself and is moving 
in the right direction. Further efforts will obviously be required in the next phase, but it seems 
at this stage fully justified to invest further into the IWG as the major forum for outreaching to 
the most important non-OECD export credit providers. 

4. Developments in the OECD during the reporting period: 

The  by  far  most  complex  and  controversial  discussions  in  the  OECD  Export  Credit 
Committees  during  the  reporting  period  have  concerned  the  subject  of  export  credits  and 
fossil fuels, notably when it comes to the financing of coal-fired power plants. The OECD 
Council in its "2014 Ministerial Statement on Climate Change" (6-7 May 2014) states among 
the means to implement further work also to continue discussions on "how export credits can 
contribute to our common goal to address climate change". Over the last year, there have been 
intense  discussions  in  the  OECD  on  this  topic,  which  a  "Chairman's  Framework  for  Export 
Credits and Climate Change" has declared a priority for export credit meetings in 2014 and 
2015.  As  the  European  Union  should  try  to  ensure  that  its  policy  on  export  credits  also 
contributes  to  achieving  its  objectives  in  the  field  of  climate  change  policy,  the  European 
Commission  has  been  fully  supportive  of  the  OECD's  relevant  efforts.  The  OECD  in  April 
2015  has  issued  a  "Revised  Chairman's  proposal",  which  will  play  an  essential  role  in 
continued  discussions  at  OECD  level.  The  Commission  is  currently  in  the  process  of 
preparing a proposal to the Council in view of establishing the EU position on the Chairman's 
proposal. It would be highly desirable that the OECD is able to come to a positive conclusion 
on  these  discussions  in  time  for  the  21st  Conference  of  the  Parties  of  the  UN  Framework 
Convention on Climate Change (Paris, 30 November to 12 December 2015).    

Concerning  another  climate  change-related  topic,  OECD  Participants  have  at  working  level 
reached a preliminary consensus on rules for export credits and smart grids in June 2015. 

5 

 
 
 
 
 
  
 
 
 
On the EU side this deal is under reserve of the adoption of an Article 218 (9) decision by the 
Council.  

As  regards  other  activities  in  the  OECD,  it  is  recalled  that  back  in  November  2013,  the 
Participants  to  the  OECD  Arrangement  agreed  on  a  "Sector  Understanding  on  Export 
Credits  for  Rail  Infrastructure"  ("RSU").  While  this  had  been  a  major  ambition  for  the 
EU, getting acceptance of this deal also by Participants with little commercial interest in the 
field had required a number of important concessions. Due to a favourable development in the 
negotiation environment in 2014, it was possible to have the OECD Participants re-visit the 
text of the RSU and to agree to alleviate some restrictive provisions considerably.  

Implementation  of  the  2011  OECD  Sector  Understanding  on  Export  Credits  for  Civil 
Aircraft (the “ASU 2011”) continued during the reporting period. It can be interpreted as an 
indication  for  the  success  of  the  ASU  2011  that  after  four  years  of  implementation,  no 
substantial arguments for a fundamental revision (which would formally have been possible 
in 2015) were identified and the OECD Participants agreed to postpone the matter until 2019.  
Further  technical  work  on  a  review  of  the  interest  rate  provisions  of  the  OECD 
Arrangement  as  well  as  on  the  premium  system  for  High  Income  OECD  countries  was 
carried out during the reporting period as well, but has not yet resulted in a final outcome. 

The Commission will duly keep the European Parliament informed on new developments. 

6