CELEX: 51982PC0487
Language: en
Date: 1982-07-20
Title: Proposal for a DECISION OF THE COUNCIL amending the Decisions of 4 April 1978 and 16 November 1981 on the application of certain Guidelines in the field of officially supported export credits (submitted to the Council by the Commission)

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COM (82) 487
Vol. 1982/0164
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 ---pagebreak---                                                               COM(82)487 final
         COMMISSION                                          Brussels, 20 July 1982
           OF THE
  EUROPEAN COMMUNITIES                                       FOR OFFICIAL USE ONLY
       General Secretariat
                                 Proposal for a
                           DECISION OF THE COUNCIL
                                                          I
     amending the Decisions of k April 1978 and 16 November 1981)
     on the application of certain Guidelines in the field
                      of officially supported export credits
              ( submitted to the Council by the Commission )
C0M(82 ) 487 final
 ---pagebreak---                            EXPLANATORY MEMORANDUM
           On June 19 , 1982 , M. WALLEN , Chairman of the meetings of
Participants in the Arrangement      on Guidelines for Officially Supported
                       • •
Export Credits ( the " Consensus ") submitted to the Participants a last
compromise proposal .
           Following the Council meeting of June 30 , 1982 , all
Participants have agreed to the new Arrangement . This Arrangement
became effective on July 6,1982 , and     will remain in force until
May 1 , 1983 .
                                             t
           The present proposal is submitted to the Council in view
of the formal adoption of the new text of the Arrangement .
 ---pagebreak---                  Proposal for a,
          DECISION OF THE COUNCIL
 amending the Decision of 4 April 19?8 and 16 November 1981
 on the application of certain Guidelines in the field
           of officially supported export credits
THE COUNCIL OF THE EUROPEAN COMMUNITIES
Having regard to the Treaty establishing the European
Economic Community , and in particular Article 113 thereof.
Having regard to the proposal from the Commission ,
               /
           /
 ---pagebreak---                            - 2 -
Whereas the Community is party to the Arrangement on guidelines
for officially supported export credits ;
Whereas this Arrangement was the subject of the Council Decision of
4 April 1978 ; whereas that Decision has been extended on a number
of occasions , most recently by the Decision of 16 November 1981 ;
                      • *
Whereas , in view of developments in the world economic situation ,
it continues to be necessary to minimize counterproductive
competition in the field of officially supported export credits
and to reinforce international co-operation to prevent a worsening
of the terms of such credits ;
                                            •i
Whereas the Council accordingly adopted directives in accordance with
                                          .  4
which the Commission was to express the Community 's position in the
international negotiations on the amendment of the Arrangement ;
Whereas the results of the negotiations on the amendment of the
Arrangement correspond to the interests of the Community ;
Whereas the other parties to the Arrangement accept the results
of the above-mentioned negotiations ;
Whereas , in the interests of the Community and in order to give
effect to the principle of international co-operation , it is
necessary for the revised Arrangement to be applied in the
Communi ty ;
 ---pagebreak--- HAS ADOPTED THIS DECISION
                           Article 1
     The validity of the Decision of 16 November 1981 is extended
until 5 July 1982 .
                           Article 2
     Prom 6 July 1982 , the Annexes to the Decisions of 4 April 1978
and 16 November 1981 are amended and completed as indicated in
Annexes I and II hereto .
                                            . 4
                           Article 3
                                  !
     This decision is addressed to the Member States .
                                     Done at Brussels ,
                                     For the Council   .
                                      The President
 ---pagebreak---                                                                                        ANNEX I
           AMENDMENTS TO THE ARRANGEMENT ON GUIDELINES FOR OFFICIALLY
           SUPPORTED EXPORT CREDITS APPLICABLE FROM 6 JULY 1982 TO 1 MAY 1983
      1.    Paragraph 3 shall be replaced by the following :
            " 3 . MINIMUM INTEREST RATE
                  ( a ) The following minimum rates of interest will apply where
                        Participants are providing , off icial financing support by
                        way of direct credit , refinancing or interest rate subsidy
                            CLASSIFICATION           NUMBER OF YEARS IN MAXIMUM
                            OF COUNTRY   (1 )                  REPAYMENT TERMS
                                                               •
                         .
                                                    2 - 5        OVER 5-8.5        OVER 8.5-10
                                                            •l
                            I. RELATIVELY RICH     12.15 %             12.40 %        N /A
                           II . INTERMEDIATE < 2 ) 10.85 %         '   11.35%         N /A
                        III . RELATIVELY POOR      10.0    %           10.0 %        10.0
                                              !
                  ( b ) It is understood that if commercial lending rates of interest
                        for the national currency in a Participant 's country fall
                        below the lowest minimum level at         ( a ) above/ any Participant
                        may provide sjjch official financing support for export credit
                        in that currency carrying interest at rates below the above
                        guidelines , provided that the , interest rate charged for the
                        export - credit which is being financed as a whole or in part
                        with such official support, is not less than the commercial
                        interest reference rate ( 3 ) increased by 0.3 percentage points
                        per annum .
( 1 ) For criteria underlying the classification cf . Paragraph 11 ( a)(8 ).
( 2 ) Specific provisions for countries newly to be classified in category II .
       For countries moving from category III to category ii as a resulf of the
       above reclassification :
       a ) the maximum repayment terms continue to be 10 years , the minimum interest
           rate applicable to the period of over 8.5 to 10 years being the same as that
           for the period of over 5 to 8.5 years .
       b ) Until 31st December , 1982 a minimum interest rate of 10.5 % will be applied
           for repayment terms of between 2 and 5 years and of 10.75 Z for repayment
           terms of over 5 to 10 years .
(3 ) For Japan the commercial interest reference rate is the long term prime rate
       ( LTPR ) .
 ---pagebreak---                                        - 2 -                                  ANNEX I
     ( c ) Interest on an export credit which is officially supported by way
            of direct credit , ref inane ing , eligibility for an interest subsidy /
           guarantee or insurance shall normally not be capitalized during
            the repayment term but shall be payable not less frequently than
            every six months , commencing not later than six months after the
            starting point . If a Participant intends not to follow the normal
            practice , the Participant will give prior notification in accordance
            with the procedure set forth in Paragraph 9(b)(1 ). "
                                                               1 » '      . *
                                                I    i
 Paragraph 6 shall be replaced by the following :
'6 .      COMMITMENTS AND' PRIOR COMMITMENTS
                                                            •i
     ( a ) Individual transactions= not= covered
                                             ^
                                                     by^ lines of    credit
                                                                     ;  ~
            New commitments shall not be made for periods exceeding six months ,
            in the case of changes in the * guidelines of the Arrangement, the
            support of credit terms not in conformity with the guidelines as
            modified shall not be justified after a period of six months from
            th <» date of modi fication.N on-conforming commitments still outstanding
            at that moment shall be notified to other Participants immediately ,
            utilizing the standard form set out in Annex B.
     ( b)   Lines of crédit
            The general conditions of a line of credit, whether new or one that
             is being renewed or prolonged ,shall not be fixed for a period
            exceedi.ng six months . In the case of changes in the guidelines of
                   ψ
             this Arrangement , the support of credit conditions attributable to
             the lines of credit which are not in conformity with the modified
             guidelines shall not be justified after a period of six months
             from the date of modification .     Credit lines not in conformity
           witn the guidelines as modified still outstanding at that moment
           shall then be notified immediately to all other Participants
           utilising the standard form set out in Annex A.
 ---pagebreak---                             - 3 -                            ANNEX I
Ce ) Matching
     (1 )    Any Participant has the right to match the terms supported
             by another Participant under a prior commitment .
     (2 )    The matching Participant will make reasonable efforts to
             determine 'whether non-conforming terms of a prior commitment
             for an individual transaction or of a prior cre.dit line
             will be used to support a particular transaction . This
             Participant will be considered to have made such reasonable
             efforts if it   has • informed by telex the Participant
             assumed to offer such non-conforming terms of    its   intention •
           , to match but has not been informed within three working
             days that the prior commitment or prior credit line     will
          • not be used to support the transaction in question .
     (3 )    Insofar as the individual transactions referred to in
             paragraph 6(a ) are concerned , the matching Participant
             will follow the procedure set forth +» Paragraph 9(b>(2 )
             and ( 3 ).
     (4 )    Insofar as lines of credit referred to in paragraph 6(b )
             are concerned / each Participant has the right to match the credit
             terms offered by another Participant . on an individual
             transactions basis or by means of another line of credit ;
             If the latter metiiod^fi^ciate of expiry of the matching
             line of credit shall not surpass the length of commitment
             made within the framework of the line of credit being
             matched .
     (5 )    If a Participant matching a credit line intends to support
             terms which include any other non-conforming element the
             Participant shall follow the prior notification and discussion
             procedure set forth in Paragraph 9(a)(2)(H ). As soon as
             a Participant commits itself it must in all cases immediately
             inform all other Participants accordingly .
 ---pagebreak---                                                                       ANNEX  I
                               - 4 -
Paragraph 11 Ca ) shall be replaced by the following :
" 11 - DEFINITIONS AND RELATED PROVISIONS
        ( a ) For the purposes of this Arrangement :
              ( 1 ) Cash payments means payments to be received for goods and
                     services exported by the completion of the exporter 's
                     contractual obligations,' the date of completion being
                     determined by the starting point .
              ( 2 ) Commitment means any arrangement or declaration , in whatever
                     form , by means of which the intention or willingness to
                     refinance , insure or guarantee supplier credits or to grant ,
                   , refinance , insure or guarantee financial credits is brought
                     to the attention of the recipient country , the buyer or the
                  • borrower , the exporter , or th£ financial institution .
              ( 3 ) A line of credit signifies any understanding or statement ,
                     in whatever form,i whereby the intention to grant credit
                     benefiting from official financing support up to a ceiling
                     and in respect of a series of transactions , linked or not
                     to a specific project is brought to the attention of the
                     recipient country , the buyer or the borrower , or the
                     financial institution .
              ( 4 ) Tied aid credit means a credit which is provided for development
                     aid purposes and which is financed either exclusively from
                     public funds , or , as a mixed credit , partly from public
                     and partly from private funds . The grant element of each
                     credit is the measure of concessionality of an officially
                     supported credit , expressed as a percentage , as defined by the
                     Development Assistance Committee of the OECD . The grant
                     element of a tied aid credit is determined by dividing ( i )
                     the sum of the results obtained by multiplying the face value
                     of each credit comprising the tied     aid credit by the
                     respective grant element of each credit by     ( ii ) the
                     aggregate face value of the credits .
 ---pagebreak---                                                    ANNEX I
                  - 5 -
( 5 ) Repayment term means the period of time commencing
      at the starting point and terminating on the date of the
      final payment .
( 6 ) Starting point is the same as the Berne Union definition
      currently in use and is as follows :
      ( i ) In the' case of a contract for the sale of capital goods
            consisting of individual items usable in themselves
            ( e.g. locomotives ), the starting point is the mean
            date or actual date when the buyer takes physical
            possession of-the goods in his own country .
    ( n ) In the case of a contract for the sale of capital
            equipment for complete pl'ant or factories where the
            supplier has no responsitji lity for commissioning ,
            the starting point is the date when the buyer is to
            take physical possession of the entire equipment
            ( excluding spare parts ) supplied under the contract .
  ( iii ) In the case of construction contracts where the contractor
            has no responsibility for commissioning , the starting
            point is the date when construction has been completed .
    ( iv ) In the case ofany contract where the supplier or
            contractor has a contractual responsibility for
            commissioning , the starting point is the date when
            he has completed installation of construction and
            preliminary tests to ensure that it is ready for
            operation . This applies whether or not it is handed
            over to the buyer at that time in accordance with the
            terms of the contract and irrespective of any
            continuing commitment which the supplier or contractor
            may have , e.g. for guaranteeing its effective
            functioning or for training local personnel .
 ---pagebreak---                                                        ANNEX  I
                     - 6 -
       ( v ) In the case of paragraphs ( ii ), ( iii ) and ( iv )
             above where the contract involves the separate
             execution of individual parts of a project , the
             date of the starting point is the date of the starting
             point for each separate part , or the mean date of
             those starting points or , where the supplier has
                 » •
             a contract , not for. the whole project but for
             an essential part of it , the starting point may
             be that appropriate to the project as a whole .
(7 )   Interest excludes - :
       ( i ) Any payment by way of premium or other charge for
                                       1
             insuring or guaranteeing supplier credits or financial
             credits ;                  k
     ( ii ) Any other payment by way of banking fees or commissions
             associated with the export credit , other than annual
             or semi-annual bank charges payable throughout the
             repayment term ; and
   ( iii ) Withholding taxes imposed by the importing country .
   The classification of countries in paragraph 3 ( a ) is
   based on the following criteria :
   Cat . I Countries with a per capita income of over US Dollar
              4.000 p. a . according to the definite 1979 figures
              shown in the 1981   World Bank Atlas .
   Cat . II Countries not classified with categories I or III .
   Cat . Ill Countries eligible for IDA credits plus any others
                on the IBRD list of low income countries and
                other countries or territories , the GNP per capita
                of which would not exceed the IDA eligibility level .
 ---pagebreak---                                                             ANNEX II
                   COMPLEMENTARY UNDERTAKINGS AND DECLARATIONS
                   BY PARTICIPANTS TO THE ARRANGEMENT ON GUIDELINES
                       FOR OFFICIALLY SUPPORTED EXPORT CREDITS
                              • •
 ( a ) Declaration of no-derogation engagement
       from 15th October 1982 onward, Participants agree ( i ) not to avail
       themselves of the possibilities provided for in paragraph 9(a)(1 )
       of the Arrangement for derogations with respect to maximum
       repayment terms ( whatever the form of supp'ort ) or minimum interest rates
        ( ii ) not to support tied aid credits having a grant element of
       Less than 20 per cent .
                                                 t
( b ) Access to Yen financing
       Participants noted a statement by the delegate for Japan that yen
       financing will be open to Participants without discrimination between
       Participants .
( c ) Methods of calculation of the grant element of .tied aid credits
       Participants agreed that a study of the method of calculation of the
       cjrant element of tied' aid credits should be undertaken .
( d ) Terms of export credits for aircraft and nuclear power plants
       Participants agreed to proceed    to negotiations on agreements on
       terms of export credits for aircraft and nuclear power plants .