REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on negotiations undertaken by the Commission in the field of export credits, in the sense of Regulation (EU) No 1233/2011
Date: 2024-09-11
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: OECD, State aid, export credit, financial cooperation, international cooperation, sectoral agreement

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 11.9.2024  COM(2024) 400 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 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  shall  report  to  the  European  Parliament  on 
negotiations  on  officially  supported  export  credits.  The  present  report  covers  the  period 
September 2016 to the end of 2023.   

Since  the  late  1970s,  the  OECD  Arrangement  on  Officially  Supported  Export  Credits 
(“Arrangement”)  is  the  main  forum  for  international  rules  on  export  credits2.  In  addition  to 
general  rules  on  export  credit  transactions,  the  Arrangement  also  contains  “sector 
understandings"  covering  special  financing  rules  for  specific  industrial  sectors  and  types  of 
activity.  During  the  period  covered  by  this  report,  agreement  was  reached  on  the 
modernisation  of  the  Arrangement  (including  alignment  of  its  rules  to  better  support  the 
climate goals of the Paris Agreement), a process which was launched in 2020 and successfully 
concluded in 2023. In addition, Participants to the Arrangement agreed in 2021 to end official 
export credit support for coal-fired electricity generation plants.  

Outside  the  OECD,  the  main  negotiations  took  place  in  the  conext  of  the  International 
Working  Group  on  Export  Credits  ("IWG"),  which  brought  together  OECD  and  major 
emerging  economies.  The  negotiations,  originally  launched  in  2012,  continued  during  the 
reporting period but were suspended in 2020 due to a lack of convergence on core issues.  

2. Developments in the OECD during the reporting period 

Rule-making 

The most notable rule-making negotiations during the reporting period were: the agreement to 
modernise  the  Arrangement  and  further  align  it  with  climate  goals  in  July  2023;  and  the 
agreement in October 2021 to ban official export credit support and tied aid for the export of 
new  coal-fired  electricity  generation  plants  and  the  export  of  equipment  to  existing  plants. 
Other  noteworthy  developments  during  the  reporting  period  were  the  launch  of  a  review  of 
the  coal  ban  in  2022,  the  reform  of  the  Arrangement  provisions  on  local  costs,  and  of  the 
commercial interest reference rate (CIRR). A number of other changes to the Arrangemnt are 
also mentioned below.  

(i) 

Modernisation of the Arrangement and expansion of the scope of the Climate 
Change Sector Understanding (CCSU) 

Following  a  first  proposal  by  the  EU  in  November  2019,  Participants  agreed  on  a  common 
framework  for  negotiations  to  modernise  the  Arrangement  in  November  2020.  Technical 
negotiations began in November 2020 with a final agreement reached in March 2023.  

1 OJ L 326, 8.12.2011, p. 45. 
2 There are 11 Participants to the  Arrangement today: Australia, Canada, the EU, Japan, Korea, New Zealand, 

Norway, Switzerland, Türkiye, the United Kingdom and the United States.  

1 

 
 
  
 
 
 
 
 
 
 
 
 
 
The  modernisation,  which  came  into  force  on  15  July  2023,  allows  for  longer  repayment 
terms to up to 22 years for climate-friendly transactions, and to up to 15 years for most other 
transactions. All countries are subject to the same rules on maximum repayment terms (with 
no distinction between Category I and Category II countries). The modernised Arrangement 
also  provides  more  flexibility  in  the  repayment  profile,  (i.e.  the  structure  of  the  terms 
regarding repayment which includes frequency, size and pattern of repayment of principal and 
payment of interest), while requiring strong transparency. In addition, the minimum credit risk 
premium rates that export credit agencies are obliged to charge for their insurance cover are 
lowered (by a maximum of 15%) for transactions with longer repayment terms.  In the main 
body of the Arrangement, the sector understandings for rail infrastructure and project finance 
structures  were  deleted  as  they  became  superfluous  due  to  their  being  less  flexible  than  the 
general Arrangement rules.  

Furthermore,  Participants  expanded  the  scope  of  the  CCSU  to  include  projects  related  to 
environmentally  sustainable  energy  production;  CO2 capture,  storage,  and  transportation; 
transmission, distribution and storage of energy; clean hydrogen and ammonia; low emissions 
manufacturing;  zero  and  low-emission  transport;  and  clean  energy  minerals  and  ores.   This 
development  will  help  increase  the  impact  of  export  finance  in  efforts  to  secure  climate 
objectives and meet the Paris Agreement commitment to make financial flows consistent with 
a pathway towards low greenhouse gas emissions and climate-resilient development.  

In the framework of the Arrangement modernisation, the Ships Sector Understanding (SSU) 
was also reformulated to become a self-contained sector understanding. (Note: Discussions on 
reform of the SSU were launched in March 2024.) 

(ii) 

Ban on support of coal-fired electricity generation plants 

In June 2021, the EU presented, in a meeting of the Arrangement Participants, its proposal to 
review  the  Sector  Understanding  on  Coal-Fired  Electricity  Generation  Projects  (CFSU  - 
previously  Annex  VI  of  the  Arrangement)  with  a  view  to  ban  officially  supported  export 
credits  or  tied  aid  for  coal-fired  electricity  generation  plants,  supply  of  equipment  for  these 
power  plants  and  related  activities  such  as  mining  and  transport  of  thermal  coal.  Further 
negotiations took place at an extraordinary meeting of Participants held in virtual form on 15 
September  2021.  The  Participants  reached  consensus  in  October  2021,  in  advance  of  the 
United  Nations  Climate  Change  Conference  2021  (COP  26).  The  outcome  contributes  to 
delivering  on  the  ambition  of  the  Union  to  attain  the  objectives  of  the  Paris  Climate 
Agreement.  

The  agreed  text,  which  forms  Article  6  of  the  Arrangement,  contains  an  immediate  ban  on 
officially  supported  export  credits  or  tied  aid  for  the  export  of  new  coal-fired  electricity 
generation plants and the supply of equipment to existing plants. It also foresees a number of 
exceptions.  It  is  permitted  to  provide  support  for  power  plants  that  operate  with  effective 
carbon  capture  utilisation  and  storage  (CCUS)  facilities  or  the  retrofitting  of  existing  coal-
fired  electricity  generation  plants  to  install  CCUS,  based  on  an  emissions  threshold  of  350 
metric ton CO2 per GWh (or similar appropriate criteria listed in Project Class B, Type 1 of 
Appendix 1 of the Climate Change Sector Understanding). A second exception allows export 
credit support for pollution or emissions abatement  equipment  to  be used in  existing plants,  
provided  it  induces  neither  an  extension  of  the  useful  lifetime  of  the  plant  nor  a  capacity 
increase. Finally, the new Article 6 provides that, should effective non-CCUS CO2 emission 

2 

 
 
 
 
 
 
 
abatement technologies be developed in the future, Participants may decide, by consensus, to 
permit support for them. The new Article 6 replaced the CFSU, which was deleted from the 
Arrangement.  

(iii) 

 Launch of Article 6 review 

Building on the new Article 6 and in the context of the expansion of the scope of the CCSU, 
the EU presented to Participants in July 2022 a first discussion paper on a review of Article 6 
of the Arrangement, with a view to covering all fossil fuel (including activities of mining and 
transportation  of  thermal  coal,  activities  of  exploration,  production,  transportation,  storage, 
refining,  distribution  of  crude  oil  and  natural  gas  for  the  energy  sector  and  unabated  power 
generation).  This  was  followed  in  November  2023  with  a  proposal  setting  out  more 
information on an approach. The EU proposal foresees a ban with limited exceptions, subject 
to  a  strong  transparency  mechanism  and  a  requirement  to  disclose  any  continuiçng  support, 
with  a  justification  for  its  provision.  The  proposal  would  also  exclude  all  fossil  fuel-based 
projects from the CCSU. It is currently under discussion by the Participants.  

(iv) 

 Reform of local cost provisions 

In June 2019, the EU presented a proposal to increase the maximum amount of local costs that 
could be supported under the Arrangement rules. The proposal was discussed by Participants 
in  November  2019,  and  in  March  and  June  2020,  by  which  time  there  was  a  general 
consensus on the principle of bringing more flexibility to the Arrangement on this issue but 
not on the mechanism originally proposed by the EU.  

In November 2020, the EU presented a compromise proposal, which suggested to increase the 
maximum level of local cost support to 40% of the Export Contract Value (ECV) in Category 
I  countries  and  50%  of  the  export  contract  value  in  Category  II  countries  for  all  sectors 
(except for the ASU and the SSU), and to leave the prior notification requirements for local 
cost  exceeding  15%  of  the  export  contract  value  unchanged.  The  Participants  agreed 
informally  to  the  proposal;  to  delete  the  specific  local  cost  provisions  contained  in  the 
Renewable  Energy,  Climate  Change  Mitigation  and  Adaptation,  and  Water  Projects  Sector 
Understanding  (CCSU);  and  to  introduce  a  review  clause  which  would  be  set  to  take  place 
three  years  after  the  entry  into  force  of  the  new  local  cost  provisions.  These  changes  were 
formally agreed by all Participants by written procedure in 2021. 

(v) 

Reform of CIRR 

Negotiations on reform began at the 15th meeting of the Technical Experts of the Participants 
(TEP)  in  March  2017.  After  a  long  series  of  technical  exchanges,  a  CIRR  reform  text  was 
formally agreed by Participants on 15 July 2021 and became applicable as of 15 July 2023.  

The  agreement  includes  a  revised  methodology  to  construct  the  base  rates  (with  the  use  of 
eight  government  bond  maturities  instead  of  three  or  even  one  previously),  a  harmonised 
calculation of the CIRR amongst different sector understandings (except  for SSU and ASU, 
which  have  separate  CIRR  methodology),  and  the  introduction  of  disciplines  on  holding  a 
CIRR prior to the signature of a financial contract. The review also established a compulsory 
commitment fee for direct lenders. 

3 

 
 
 
 
 
 
 
 
 
 
 
Furthermore,  due  to  the  discontinuation  of  the  LIBOR  benchmark  rate  in  2021,  it  became 
impossible to use the newly agreed methodology to compute the new CIRR margin (half of 
the  three-month  average  of  the  daily  5-year  swap  rate  yields  +  80  basis points).  To  address 
this  issue,  Participants  agreed  –  in  the  context  of  the  negotiations  on  the  modernisation  in 
2023 - on a temporary fixed margin of 100 basis points until new rules could be found or until 
14 July 2024. In November 2023, experts agreed to extend the temporary margin by one year 
(i.e. until 14 July 2025). 

(vi) 

 Common Lines 

The  adverse  economic  impact  of  the  COVID-19  pandemic  had  also  an  impact  on  the 
development  of  Arrangement  rules,  as  evidenced  by  the  adoption  of  Common  Lines  on  (i) 
deferral  of  repayment  under  the  Aviation  Sector  Understanding  (ASU)  in  2021  and  (ii) 
reduction of down payment, both in 2021 and 2023.  

• 

Deferral of repayment in aviation sector 

In February 2021, the EU submitted to the OECD Secretariat a proposal for a Common Line 
to  reduce  the  severe  impact  of  the  COVID-19  health  crisis  on  the  European  civil  aviation 
industry. The Common Line proposed to allow the ASU Participants to temporarily support 
their  manufacturers  of  civil  aircraft,  whose  business  was  threatened  by  short-term  liquidity 
problems  of  the  operators  and  buyers  of  new  aircraft  and  engines  due  to  pandemic-related 
restrictions on international travel. The Common Line was accepted by Participants and took 
effect on 12 March 2021. It covered the period from 1 November 2020 to 31 October 2021. 

• 

Reduction of down payment 

On 5 November 2021, Participants agreed on a Common Line concerning the decrease of the 
minimum down payment required from buyers in transactions under Arrangement rules. The 
measure was validated by the Participants as an urgent and exceptional step required to react 
to the economic downturn resulting from the Covid-19 health crisis. The 2021 Common Line, 
originally effective until 4 November 2022, was extended for an additional year, thus expiring 
on 4 November 2023. A similar Common Line, on the grounds of increased interest rates and 
continuing inflationary pressures, was agreed by Participants in December 2023 and will be 
effective for one year.  

(vii)  Other rule-making developments 

A  number  of  deadlines  in  relation  to  reviews  of  various  sectoral  understandings  were 
modified  during  the  reporting  period.  In  2021  the  deadline  to  review  the  nuclear  sector 
understanding (NSU) was changed to the end of 2023, and three deadlines regarding the rail 
sector understanding  (RSU) (the review deadline, the sunset clause, and the modification of 
the syndication requirement for transactions in high income OECD countries) were changed 
in  2021  to  the  end  of  2023.  (Note:  the  RSU  was  deleted  as  part  of  the  modernisation.  See 
below.)  Finally,  the  sunset  clause  deadline  of  the  Climate  Change  Sector  Understanding 
(CCSU) applicable to Appendix III (eligibility criteria for climate change adaptation projects) 
was extended by one year to 31 December 2021. 

4 

 
 
 
 
 
 
 
 
 
 
 
Another development during the reporting period was the incorporation of the Agreement on 
Premium for Market Benchmark Countries into the Arrangement in 2017. In November 2016, 
Participants  had  agreed  on  this  new  set  of  rules  for  credit  risk  premium  countries  where 
private market financing is generally available (i.e. market benchmark countries). 

During the reporting period, the Participants continued to agree on two-year extensions of the 
Agreement on Untied ODA Credits Transparency, which originally came into effect in 2005. 
This  took  place  most  recently  in  2022,  when  the  Agreement  was  extended  until  December 
2024,  when  a  discussion  on  making  the  Agreement  permanent  or  extending  it  for  a  longer 
period of time will take place. 

New Participants 

During the reporting period, Türkiye (November 2018) and the United Kingdom (June 2021) 
became  Participants  to  the  Arrangement,  bringing  the  total  number  to  11.  The  United 
Kingdom also became a Participant to the Sector Understanding on Export Credits for Civil 
Aircraft (Aviation Sector Understanding).  

Türkiye  applied  to  become  a  Participant  to  the  Arrangement  in  September  2017.    Its 
participation  in  the Arrangement was agreed in  November 2018 with  immediate effect.  The 
United  Kingdom  had  participated  in  both  the  Arrangement  and  in  the  Aviation  Sector 
Understanding  (“ASU”)  since  their  inception  via  its  membership  in  the  European  Union. 
Following  its  departure  from  the  European  Union  on  31  January  2020,  its  participation 
ceased.  In  meetings  of  the  Arrangement  and  ASU  Participants  between  March  2020  and 
March 2021, the United Kingdom participated as an observer. The United Kingdom became a 
Participant to both the Arrangement and the ASU in June 2021. 

3. The International Working Group on Export Credits: 

Context 

The  IWG  was  launched  in  2012  as  a  forum  for  dialogue  between  the  OECD  and  the  non-
OECD providers of government supported export credits, with a view to  agreeing on  a new 
set  of  multilateral  disciplines,  in  the  form  of  “Guidelines”.  The  IWG  has  18  Members  (the 
then  10  Participants  to  the  OECD  Arrangement  on  Officially  Supported  Export  Credits  – 
“OECD  Arrangement”)3  as  well  as  Brazil,  China,  India,  Indonesia,  Israel,  Malaysia,  the 
Russian  Federation  and  South  Africa.  The  EU’s  participation  in  the  IWG  discussions  was 
endorsed by the Council on 26 November 2015.4 

However,  despite  twenty  IWG  negotiating  sessions  from  2012  to  2019,  progress  was 
insufficient.  There  were  wide  divergences  on  core  structural  issues,  such  as  the  degree  of 
transparency required to demonstrate compliance with the eventual disciplines as well as their 
scope of application. Ultimately, this led to a decision by the EU and a group of other IWG 
Members  to  suspend  their  participation  in  technical  negotiations  on  19  November  2020.5 

3 Australia, Canada, EU, Japan, Korea, Norway, New Zealand, Switzerland, Türkiye and US.  
4 https://www.consilium.europa.eu/media/23017/st14376-fr15.pdf  
5 https://policy.trade.ec.europa.eu/news/eu-and-10-other-members-suspend-participation-negotiations-

international-working-group-export-2020-11-19_en 

5 

 
 
 
 
 
 
 
 
 
 
 
 
While the suspension is temporary, the conditions have not, to date, been fulfilled to allow the 
work to restart.  

During the reporting period, there were 9 official technical meetings of the IWG: in Brasilia 
in 2016, in Washington  DC and Beijing in 2017, in Rome, The Hague, and Luxembourg in 
2018 and in Oslo, Bucharest and Brasilia in 2019.  

IWG Secretary General and working groups 

IWG  Members  appointed  a  Secretary-General  with  the  aim  to  ensure  a  more  efficient 
negotiation  process  and  provide  neutral  facilitation.  Ms.  Michal  Ron  of  Italy  took  up  her 
responsibilities from 1 September 2017, for a period of three years. Members also agreed on 
her successor, as of 2020, Mr. Jian-Ye Wang of China.  

To  facilitate  preparation  of  technical  discussions  between  the  IWG  plenary  meetings,  a 
number  of  working  groups  were  created  on:  maximum  official  support  and  down-payment; 
local costs; maximum repayment terms and repayment profile; information sharing; scope of 
application; pricing; and interest rates. Separate discussions were also launched on ships. 

The  negotiations  achieved  some  convergence  on  a  number  of  technical  questions.  For 
example, at the 17th IWG meeting in Luxembourg, the discussions on maximum official support 
made  incremental  progress,  with  the  approval  by  the  parties  of  definitions  of  “export  contract 
value”,  “export  contract  price”  and  “commercial  contract  value”.  At  the  20th  IWG  meeting  in 
Brasilia in September 2019, parties saw some convergence on maximum repayment terms and 
project  finance. Furthermore, in  the discussions on shipping,  partial  convergence was  found 
on  elements  such  as  co-financing  with  the  private  sector,  the  starting  point  of  credit  and  the 
eligible costs for official support. However, in none of these areas was it possible to achieve fully 
agreed outcomes.  

Moreover,  and  fundamentally,  delegations  could  not  achieve  meaningful  convergence  on  the 
core questions at issue in the negotiations. These concerned how to ensure transparency of the 
terms  offered  in  export  credit  transactions,  in  order  to  demonstrate  compliance  with  the 
guidelines; having a sufficiently broad scope of coverage; and the need for a commitment to 
international standards for debt sustainability. Despite intense negotiations as well as creative 
and good faith efforts by the Secretary General to broker compromise, it became clear from 
the second half of 2019 onwards that consensus on these questions was not possible.  

This  inability  of  the  Participants  to  find  a  consensus  at  technical  level  regarding  core 
questions was raised for the first time at the 19th IWG meeting in Bucharest in 2019. The EU 
among  others  highlighted  the  need  to  shift  the  discussion  from  the  technical  to  the  political 
level  to  attempt  to  overcome  the  impasse.  Further  informal  discussions  in  Brasilia  in 
September yielded no progress. On 21 January 2020 the Council of the European Union took 
note of the situation.  

IWG High-Level Meeting 

The next IWG meeting took place at Vice-Minister (Director-General) level, on 10 July 2020, 
to discuss how the fundamental differences could be bridged in order to unlock the technical 
negotiations. In advance of the meeting, attempts were made to agree on a joint communiqué 

6 

 
 
 
 
 
 
 
 
 
 
 
 
endorsing a way forward on the core issues. However, neither via the communiqué nor in the 
meeting itself could consensus be found.  

This resulted in  a group of IWG members  - Australia, Brazil, Canada, the European Union, 
Japan,  Korea,  New  Zealand,  Norway,  Switzerland,  Türkiye  and  the  United  States  - 
suspending  their  participation  in  the  technical  negotiations  of  the  IWG.  Those  members 
released a public statement on the situation on 19 November 2020.6 The statement noted that, 
“after  eight  years  of  consultation,  the  positions  of  the  members  of  the  IWG  remain 
significantly  divergent  with  respect  to  commitments  on  […]  core  issues.”  It  also  stated  that 
the  signatory  members  could  not  “justify  continued  participation  in  technical  IWG 
negotiations unless and until members make the necessary high-level commitments that will 
allow the resumption of technical negotiations.”  

The signatories of the statement however made clear that, "[d]uring this suspension of further 
technical  negotiations,  [they]  will  remain  open  to  considering  credible  proposals,  especially 
on transparency, by IWG member governments for discussion at vice-ministerial level.” They 
also  announced  their  willingness  to  assess  in  future  whether  conditions  are  right  for  a 
resumption of negotiations and to consider a new IWG high-level meeting at vice-ministerial 
level should circumstances warrant.  

In this context, the Commission and the Council have assessed annually, at the end of 2021, 
2022  and  2023,  whether  there  have  been  any  developments  that  would  justify  a  new  high-
level meeting to discuss a potential reactivation of the IWG. Each of these reviews concluded 
that the necessary conditions have not been met, and that in particular no proposal has been 
made by any of the IWG member governments on any of the core issues. The next review is 
planned for the end of 2024. 

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

6 https://policy.trade.ec.europa.eu/news/eu-and-10-other-members-suspend-participation-negotiations-

international-working-group-export-2020-11-19_en 

7