Proposal for a COUNCIL DECISION on the positions to be taken on behalf of the European Union by written procedure by the Participants to the Arrangement on Officially Supported Export Credits and the Participants to the Sector Understanding on Export Credits for Civil Aircraft (“ASU”) regarding the requests by the United Kingdom to become a Participant thereto
Date: 2021-04-21
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: State aid, United Kingdom, accession to an agreement, aircraft, civil aviation, export aid, export credit, framework agreement, multilateral agreement, sectoral agreement

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   EUROPEAN COMMISSION  Brussels, 21.4.2021  COM(2021) 195 final 2021/0101 (NLE)  Proposal for a COUNCIL DECISION on the positions to be taken on behalf of the European Union by written procedure by the Participants to the Arrangement on Officially Supported Export Credits and the Participants to the Sector Understanding on Export Credits for Civil Aircraft (“ASU”) regarding the requests by the United Kingdom to become a Participant thereto  
 
EXPLANATORY MEMORANDUM 

1. 

SUBJECT MATTER OF THE PROPOSAL 

This proposal concerns the decision establishing the position to be taken on the Union's behalf 
by written procedure by the Participants to the Arrangement on Officially Supported Export 
Credits  (‘Arrangement’)  and  the Participants  to  the Sector Understanding on Export Credits 
for  Civil  Aircraft  (‘Aircraft  Sector  Understanding’  or  ‘ASU’)  regarding  the  requests  by  the 
United Kingdom of Great Britain and Northern Ireland (‘the United Kingdom’) to become a 
Participant to the Arrangement and in the ASU. 

2. 

CONTEXT OF THE PROPOSAL 

2.1. 

The Arrangement and the Aircraft Sector Understanding 

The  Arrangement  is  a  gentlemen's  agreement  which  aims  to  provide  a  framework  for  the 
orderly use of officially supported export credits. In practice, this means establishing a level 
playing  field  (whereby  competition  is  based  on  the  price  and  quality  of  the  exported  goods 
and  services  and  not  on the  financial  terms  provided),  while  working  to  eliminate  subsidies 
and  trade  distortions  related  to  officially  supported  export  credits  (‘official  support’).  The 
Arrangement entered into force in April 1978 and it is of indefinite duration. 

The Aircraft Sector Understanding forms Annex III to the Arrangement and aims to provide a 
framework  for  the  predictable,  consistent  and  transparent  use  of  officially  supported  export 
credits for the sale or lease of aircraft and related goods and services specified in Article 4a) 
of the ASU. Thus, also the ASU seeks to foster a level playing field for the exports in aircraft 
sector  and  elimination  of  subsidies  and  trade  distortions  related  to  the  official  support.  The 
Aircraft Sector Understanding became effective on 1 February 2011.  

The Arrangement, including the Aircraft Sector Understanding, is administratively embedded 
in the OECD, and receives support from the OECD Credit Secretariat. Nevertheless, neither 
the Arrangement nor the Aircraft Sector Understanding are OECD Acts1. 

The European Union – and not the Member States – is a Participant to the Arrangement and 
the  Aircraft  Sector  Understanding  and  both  have  been  transposed  into  the  acquis 
communautaire by virtue of the Regulation  (EU) No 1233/2011 of the European Parliament 
and  of  the  Council  of  16  November  2011.2  Hence  the  Arrangement  and  the  Aircraft  Sector 
Understanding are legally binding as a matter of Union law. 

2.2. 

The Arrangement Participants and the ASU Participants 

There  are  currently  ten  Participants  to  the  Arrangement  (‘Arrangement  Participants’): 
Australia,  Canada,  the  European  Union,  Japan,  Korea,  New  Zealand,  Norway,  Switzerland, 
Turkey and the United States. 

The Aircraft Sector Understanding has ten Participants (‘ASU Participants’) and participation 
in the ASU is largely the same as in the Arrangement. The only differences are that Brazil is 
an ASU Participant (but not an Arrangement Participant), while Turkey does not participate in 
the ASU (though it is an Arrangement Participant). 

1 
2 

As defined in Article 5 of the OECD Convention.  
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/EC (OJ L 326, 8.12.2011, p. 45 of). 

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Both  the  Arrangement  and  the  ASU  Participants  take  decisions  on  modifications  of  the 
Arrangement, or the ASU, by consensus. 

In  accordance  with  Article  3  of  the  Arrangement,  other  OECD  Members  and  non-members 
may  be  invited  to  become  Participants  by  the  current  Participants.  A  non-Participant  may 
become a Participant to the ASU in accordance with the procedures set out in Appendix I of 
the ASU. 

The  European  Commission  represents  the  Union  in  the  meetings  of  the  Arrangement 
Participants  and  the  ASU,  as  well  as  in  the  written  procedures  for  decision-making  by  the 
Arrangement Participants and ASU. 

2.3. 

The envisaged act of the Arrangement Participants and the ASU Participants 

The  envisaged  act  would  be  the  granting  to  the  UK  of  the  status  of  the  Participant  to  the 
Arrangement  and  to  ASU,  following  the  United  Kindgom  (‘UK’)  requests  to  become  a 
Participant both in the Arrangement and in the ASU.  

As a result of leaving the EU, the UK is no longer represented in the Arrangement and in the 
ASU. In a letter of 28 January 2021, the UK requested that the relevant Participants formally 
agree  to  the  UK  becoming  a  Participant  to  both  instruments.  The  Chairman  of  the 
Arrangement  and  the  ASU  Participants  circulated  the  UK  requests  on  29  January  and  set  a 
deadline  of  31  March  2021  for  the  existing  Participants  to  formally  respond.  In  the 
Chairman’s  message  of  11  February  2021,  the  deadline  was  extended  until  the  end  of  May 
2021. 

The  confirmation  of  participation  of  the  UK  in  the  Arrangement  and  in  the  ASU  would 
require  a  change  to  Article  3  of  the  Arrangement  and  to  Article  3  of  the  ASU,  i.e.  the 
provisions that list the relevant Participants. 

In  light  of  the  above,  it  is  appropriate  to  establish  the  Union’s  position  to  be  taken  on  the 
Union's behalf in a body set up by an agreement, because the decision will be binding on the 
Union and it will affect Union law, by virtue of Article 1 of Regulation (EU) No 1233/2011, 
which  states  that  "The  guidelines  contained  in  the  Arrangement  on  Officially  Supported 
Export Credits (‘the Arrangement’) shall apply in the Union. The text of the Arrangement is 
annexed to this Regulation." 

3. 

POSITION TO BE TAKEN ON THE UNION'S BEHALF 

The envisaged acts would permit the UK to become a Participant to the Arrangement and an 
ASU Participant. 

The  Chairman’s  message  of  29  January  2021  states:  “The  UK  was  one  of  the  original 
countries involved in establishing financial disciplines for officially supported export credits 
in  the 1970s and, since then, has been a significant  provider of both  standard export credits 
and  export  credits  for  aircraft.  It  is  also  an  active  Member  of  the  Working  Party  on  Export 
Credits and Credit Guarantees. As a result, it would be logical and of mutual benefit for the 
UK  to  continue  to  be  a  Participant.  I  hope,  therefore,  that  the  Participants  will  support  this 
request.” Indeed, it is expected that all Participants to the Arrangement and ASU Participants 
will support the UK requests. 

It is in the Union’s interest that the UK participates in both the Arrangement and the ASU. Both 
instruments  provide  a  framework  for  the  orderly  and  transparent  use  of  officially  supported 
export credits in their respective areas of application and seek to foster a level playing field for 
officially supported export credits. Over recent years, the UK has become increasingly active in 
official support. In 2018, UK Export Finance (‘UKEF’, UK government’s export credit support 

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department)  provided  less  than  EUR  2  billion  of  official  support.  In  2019,  it  was  already 
approximately  EUR  5.5  billion.  As  a  Participant  to  the  Arrangement  and  the  Aircraft  Sector 
Understanding, the UK would have to follow the rules thereof. 

In addition, with regard to the Aircraft Sector Understanding specifically, it is important to bear in 
mind  the  UK’s  continuing  stake  in  Airbus.  The  official  export  credits  regulation  in  the  aircraft 
manufacturing sector therefore relates to a common interest of the EU Member States and the UK.  

Considering that the purpose of the envisaged decision is to ensure the level playing field for 
the EU export industry as well as to take due account of the alignment of specific economic 
interests between the EU and the UK in the aircraft manufacturing sector, the positions to be 
taken  on  the  Union's  behalf  should  be  to  agree  that  the  UK  becomes  a  Participant  to  the 
Arrangement and in the Aircraft Sector Understanding. 

4. 

LEGAL BASIS 

3.1. 

Procedural legal basis 

3.1.1.  Principles 

Article 218(9) of the Treaty on the Functioning of the European Union (TFEU) provides for 
decisions establishing ‘the positions to be adopted on the Union’s behalf in a body set up by 
an  agreement,  when  that  body  is  called  upon  to  adopt  acts  having  legal  effects,  with  the 
exception of acts supplementing or amending the institutional framework of the agreement.’ 

The concept of ‘acts having legal effects’ includes acts that have legal effects by virtue of the 
rules of international law governing the body in question. It also includes instruments that do 
not  have  a  binding  effect  under  international  law,  but  that  are  ‘capable  of  decisively 
influencing the content of the legislation adopted by the EU legislature’3. 

3.1.2.  Application to the present case 

The two acts, which the Arrangement Participants and the ASU Participants are called upon to 
adopt (i.e. to decide on the UK requests to become a Participant to the Arrangement and in the 
ASU), constitute acts having legal effects. The envisaged acts have legal effects by virtue of 
Article 1 of 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/EC, which states that 
"The  guidelines  contained  in  the  Arrangement  on  Officially  Supported  Export  Credits  (‘the 
Arrangement’)  shall  apply  in  the  Union.  The  text  of  the  Arrangement  is  annexed  to  this 
Regulation." 

Therefore, the procedural legal basis for the proposed decision is Article 218(9) TFEU. 

3.2. 

Substantive legal basis 

3.2.1.  Principles 

The  substantive  legal  basis  for  a  decision  under  Article  218(9)  TFEU  depends  primarily  on 
the objective and content of the envisaged act in respect of which a position is taken on the 
Union's behalf. 

3.2.2.  Application to the present case 

The  main  objective  and  content  of  the  envisaged  acts  relate  to  the  common  commercial 
policy. Therefore, the substantive legal basis of the proposed decision is Article 207. 

3 

Judgment  of 
ECLI:EU:C:2014:2258, paragraphs 61 to 64.  

the  Court  of  Justice  of  7  October  2014,  Germany  v  Council,  C-399/12, 

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3.3. 

Conclusion 

The  legal  basis  of  the  proposed  decision  should  be  the  first  subparagraph  of  Article  207(4) 
TFEU in conjunction with Article 218(9). 

5. 

PUBLICATION OF THE ENVISAGED ACT 

As the acts of the Partipants in the Arrangement and the Participants in the ASU will amend 
the Arrangement and the Aircraft Sector Undertaking, it is appropriate to publish them in the 
Official Journal of the European Union after their acceptance. 

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2021/0101 (NLE) 

Proposal for a 

COUNCIL DECISION 

on the positions to be taken on behalf of the European Union by written procedure by 
the Participants to the Arrangement on Officially Supported Export Credits and the 
Participants to the Sector Understanding on Export Credits for Civil Aircraft (“ASU”) 
regarding the requests by the United Kingdom to become a Participant thereto 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 207(4), first subparagraph, in conjunction with Article 218(9) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

4 

5 

6 

7 

The guidelines contained in the Arrangement on Officially Supported Export Credits 
(‘Arrangement’)  have  been  transposed,  and  hence  been  made  legally  binding  in  the 
Union  by  Regulation  (EU)  No  1233/2011  of  the  European  Parliament  and  of  the 
Council.4 5 

The  Participants  to  the  Arrangement  are  Australia,  Canada,  the  European  Union, 
Japan, Korea, New Zealand, Norway, Switzerland, Turkey and the United States. 

The  Sector  Understanding  on  Export  Credits  for  Civil  Aircraft  (‘Aircraft  Sector 
Understanding’  or  ‘ASU’)  forms  Annex  III  of  the  Arrangement  and  in  accordance 
with  Article 2 of the ASU is  an integral  part of the Arrangement. As such,  the ASU 
has  also  been  transposed,  and  made  legally  binding  in  the  Union,  by  virtue  of 
Regulation (EU) No 1233/2011 of the European Parliament and of the Council.6 7  

The Participants to the ASU are Australia, Brazil, Canada, the European Union, Japan, 
Korea, New Zealand, Norway, Switzerland and the United States. 

Both the Arrangement and the Aircraft Sector Understanding provide a framework for 
the orderly and transparent use of officially supported export credits in their respective 
areas of application. They seek to foster a level  playing field for officially supported 
export  credits,  in  order  to  encourage  competition  among  exporters  based  on  quality 
and price of goods and services exported rather than on the most favourable officially 
supported financial terms and conditions. 

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/EC (OJ L 326, 8.12.2011, p. 45). 
In the past, through Council Decisions earlier versions of the OECD Arrangement have been transposed 
into EU law.  
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/EC (OJ L 326, 8.12.2011, p. 45). 
In the past, through Council Decisions earlier versions of the OECD Arrangement have been transposed 
into EU law.  

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(6) 

(7) 

(8) 

(9) 

The  United  Kingdom  of  Great  Britain  and  Northern  Ireland  (‘the  United  Kingdom) 
withdrew from the Union with effect on 31 January 2020. 8  

In  accordance  with  Article  3  of  the  Arrangement,  other  OECD  Members  and  non-
members  may  be  invited  to  become  Participants  by  the  current  Participants.  A  non-
Participant  of  the  ASU  may  become  a  Participant  to  the  ASU  pursuant  to  the 
procedures set out in Appendix I of the ASU.  

In a letter of 28 January 2021, the United Kingdom requested that the Participants to 
the Arrangement and the Participants to the Aircraft Sector Understanding agree to the 
United  Kingdom  becoming  a  Participant  to  the  Arrangement  and  the  Aircraft  Sector 
Understanding, respectively. The Participants to the Arrangement and the Participants 
to the ASU are to decide by written procedure on these requests.  

It  is  appropriate  to  establish  the  position  to  be  taken  on  the  Union's  behalf  by  the 
Participants  to  the  Arrangement,  as  well  as  the  position  to  be  taken  on  the  Union's 
behalf by the Participants to the Aircraft Sector Understanding, as the decisions of the 
Arrangement Participants and of the ASU Participants will be binding on the Union by 
virtue of Article 2 of Regulation (EU) No 1233/2011, 

HAS ADOPTED THIS DECISION: 

Article 1 

The position to be taken on the Union's behalf in the written procedure by the Participants to 
the Arrangement on Officially Supported Export Credits regarding the request by the United 
Kingdom to become a Participant to the Arrangement is to support this request. 

Article 1a 

The position to be taken on the Union's behalf in the written procedure by the Participants to 
the  Sector  Understanding  on  Export  Credits  for  Civil  Aircraft  regarding  the  request  by  the 
United  Kingdom  to  become  a  Participant  to  this  Sector  Understanding  is  to  support  this 
request. 

This Decision is addressed to the Commission. 

Done at Brussels, 

Article 2 

For the Council 
The President 

8 

Council  Decision  (EU)  2020/135  of  30  January  2020  on  the  conclusion  of  the  Agreement  on  the 
withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and 
the European Atomic Energy Community (OJ L 29, 31.1.2020, p. 1). 

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