CELEX: 51983PC0511
Language: en
Date: 1983-08-05
Title: PROPOSAL COUNCIL DECISION extending the Decision of 21 february 1983 on the application of certain Guidelines in the field of officially supported export credits (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (83) 511
Vol. 1983/0196
 ---pagebreak--- Disclaimer
Conformément 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
règlement.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (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 file 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 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 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
der genannten Verordnung freigegeben.
 ---pagebreak---                                                                  COM(83) 511 f i n a l
     COMMISSION                                                   Brussels, 5 August 1983
        OF THE
EUROPEAN COMMUNITIES                                              FOR OFFICIAL USE ONLY
    General Secretariat
                                              PROPOSAL
                                         COUNCIL DECISION
                        extending the Decision of 21 february 1983 on the
                        application of certain Guidelines in the field of
                        officially supported export credits
                           (submitted to the Council by the Commission)
     COM(83) 511         fin al
 ---pagebreak---                             EXPLANATORY MEMORANDUM
   BACKGROUND
   1. In Its communication to the Council C0MC83)448 Final of 6 July 1983,the
       Commission argued that the proposal put forward by Mr. Wallen,
       the Chairman of Participants,to revise the Arrangement on Guidelines
       for Officially Supported Export Credits (the "Consensus") constituted
      a fair and balanced compromise between the interests of the Community
       and its trade partners and consequently should be accepted by the
       Council.
   2. Following intensive discussions in the ECO-FIN Council on 11 July, it
       emerged that although eight member states shared the Commission's view­
       point, France and Italy considered that the compromise was unsatisfactory
       in a number of respects. As a result the Commission was authorised'to
       inform Mr: Wallen that
                 - the Community was not in a position to accept the compromise ;
                 - new negotiations on revising the Arrangement should be
                    resumed as soon as possible; and
                 - the validity of the existing Arrangement should be
                    extended until 31 October 1983.
          *                                 ^
    3. In response to the Community's position and following consultations with
        other Participants, Mr. Wallen concluded on 14 July 1983, one day
        before the expiry of the principal dispositions*of the Arrangement,
        that the only possibility of ensuring the continued application
        of the Consensus as an instrument of international cooperation would be
                                    /                         ••
        for all Participants to agree
                  - to prolong the Arrangement until 31 October 1983, as
                    requested by the Community; and
                  - to implement immediately the guidelines for the evaluation
                                                          * *
                    of commercial interest reference rates , as set out in
                      *
                    Annex III to Mr. Wallen's original proposal.
 * As specified in TD/Consensus/82.23
** It should be noted in this context that the implementation of annex :■
   formed part of the fall-back solution originally put forward by Mr. walien
   In the event of disagreement on his proposals to revise the Arrangement.
   The Community reserved its position on this point at the negotiations in P a n s ,
   June.
 ---pagebreak---                                - 2 -
     Furthermore, Mr. Wallen stated that disagreement on either of these two
    elements by any Participant would signify the collapse of the Arrangement
    on 15 July 1983.
 A. Extensive internal consultations within the Community failed to indicate
    a common position which could be communicated to Mr. Wallen. In effet :
              “ Eight member states indicated that they could agree to the
                 proposal;
              “ France stated that it wasjjnable to accept the implementation
                 of Annex III;
              ~ Italy did not     officially communicate its viewpoint
 5. In the absence of a definitive reply from the Community, Mr. Wallen
     informed all Participants on 29 July 1983 :
    "As of today , I have received no notification of disagreement with the
      proposal in four points I made in paragraph 3 of my telex of 14 July 1983.
      I therefore have to conclude that this proposal is implemented".
               i
    This telex puts the Community under the obligation to react immediately.
    Indeed,silence would be interpreted as de facto acceptance of Mr. Wallen's
    conclusion. On the other hand, a negative reaction from the Community
    would signify the coltapse of the Consensus (see paragraph9 below).
    In these circumstances, it is imperative that the Council formally
    pronounces on this issue.
,                              /
    ANALYSIS OF THE SITUATION
 6. The Commission continues to maintain its view that the interests
    of the Community would have been served best if its earlier proposal Lw»
    accept the Wallen compromise had been adopted by the Council.
    Nevertheless, and in accordance with the Decision of the Council, the
    Commission will endeavour to improve this compromise even though, as
    it has stated on numerous occasions, the prospects for obtaining
    substantial concessions from other Participants, notably the U.S. ,
    are not favourable.
 ---pagebreak---                                “ 3 -
   7. The Council has already agreed to extend the present Consensus
        arrangements up to 31 October 1983 . However, it has become evident
        that the only way to achieve this is to also apply Anriex III for the same
        period.The Commission therefore proposes to apply Annex III on a
                   basis, without prejudice to the Community's future negotiating
        position.
  8. In this context it should be stressed that the actual       Annex III
       merely elaborates a general rule already enshrined
       in the Consensus under paragraph 3(b), establishing a certain discipline
       for financing in low interest rate currencies. Of course, Annex III
      would permit Japan temporarily to lower its reference rate by 0.1 X
      However no long term commitment would be given by the Community for the
      period after 31 October 1983 and in the meantime the competitive situation
      of Japanese exports would not be significantly enhanced. It should
      be remembered that the yen rate along with other commercial
      interest reference rates will be subject to review in
      autumn in the light of experience with the aim of ensuring
      equality of treatment amongst all Consensus Participants.
CONSEQUENCES OF A NEGATIVE REACTION PROM THE COMMUNITY
9. In the. event that the Community informs Mr. Wallen that it is unable
     to agree to his latest compromise proposal, the Arrangement will to
    all intents and purposes cease to.be operational, since it follows
     from paragraph 15 of the Consensus--that in the absence of their renewal before
    16 July 1983, Consensus provisions will cease to apply
    with respect to :
             interest rates;
           - low interest rate currencies, including the Japanese yen;
           - the classification of countries.
    Furthermore the Community will have sacrificed the non-derogation clause
   which is the lejmea ns to keep in check export credit offers of the
   US and others, notably with respect to repayment terms.
 ---pagebreak---                                                                 - 4 -
                                                                                 :;h-
 1^. It 1s clear also that in the event of a collapse of the Arrjjpgement          ’£-■.•
        all export credit subsidies, other than those on primary products would
      be prohibited by virtue of Article XVI GATT, and Article 9 of the
     GATT Subsidies Code . Furthermore, given that the' Community has               £ .
     signed the Agreement as such, the. Commission would be obliged to ensure        :
      that the Community respected its dispositions. This implies de facto        '"•
      that a system of market interest rates should be in operation, a result
     which would be welcomed by all of the Community’s partners, notably the U.S.
11. As* to the negotiations which should be resumed in autumn,
 I it is evident that if the Community cannot agree to the
/    temporary prolongation of the current Arrangement and the implementation de facto
                                                  r
     of Annex III, the climate for any new negotiations as requested
      by the Council will be extremely unfavourable. Indeed it is by no means
      certain in such circumstances thdt our Partners would agree to a nevi
     negotiation.
       COMMISSION PROPOSALS
      ’’ T   ' -1 --I - -in r» .i» j i i . r u r m  j . - .iT~■
                                                                        ... - |
                                                                                 *
12* The Commission cannot by any conceivable objective standaids imagine that
    the Council wi'tl judge that the benefits and advantages of the Consensus            <
   to the Community should be sacrificed on the’minor .issue of whether to
V implement de facto commercial interest reference rates for low interest
    rate currencies .While the Commission would prefer the Council the
    formally adopt the latest Wallen compromise, it considers that in the
    light of the strong reserves expressed by France and Italy regarding
   the adoption and implementation of Annex III and faced with the urgent
                                                                      /
   problem of arriving at a common Community position in order to safeguard
   the future of the Arrangement , it would be sufficient under current
   circumstances if Annexe III would be implemented de facto,up to 31
   October 1983, without prejudice to the position that the Community
  will adopt at the next round of negotiations on revising the Consensus.
 ---pagebreak---                           - 5 -
13. To this end/ the Commission proposes that :
    " The Council formally adopts the prolongation of the existing
      Arrangement until 31 October 1983;
    - The Council declares that the guidelines in Annex III are applied
      in the Community : this will be entered into the minutes of the
      Council;
    - The Council invites the Commission to inform other Participants
      to the Arrangement of the preceding elements/    it being underlined
      nevertheless that the application of Annex III shall occur
      de facto without prejudice to the position that the Community
      will adopt at the next round of negotiations on revising the
      Consensus.
 14. The Commission underlines that this proposal constitutes an
     indivisible whole.
 ---pagebreak---                      COU NC I L D E C I S I O N
                                                            \
        extending / ■ /■               .the Decision of 21 February 1983
        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 1s party to the Arrangement on guidelines
for officially supported export credits;
Whereas this Arrangement was the subject of the Decision of 4 April 1978
whereas that Decision has been extended and amended, most recently by
the Decisions of 21 February 1983 and 16 Hay 1983;
Whereas the Decision of 16 Hay 1983 expired on 30 June 1983;
Whereas it is essential to extend application of the Arrangement to
31 October 1983, pending new negotiations on revising the Arrangement
due to take place in autumn 1983.
 HAS ADOPTED THIS DECISION :
 ---pagebreak---                          - 3 -
                           Article 1
Article 2(1) of the Decision of 21 February 1983, amended by Article 1
of the Decision of 16 May 1983, shall be replaced by the following :
1 ."The Decision of A April 1978 is hereby extended until 31 October 1983. "
                                                         *     . __
                           Article .2
                                   -/
                                      V
This Decision is addressed to the Member States.
                                                  For the Council
 Done at Brussels
                                                  The Presi dent
 ---pagebreak---          D EC LA R A T I O N IN THE MINUTES OF THE COUNCI L
"The Council declares that during the period from 16 July 1983 to
31 October 1983/ the guidelines reproduced in the anne,* shall be
applied in the Community.
The Commission is invited to inform Participants to- the Arrangement
that this application shall occur de facto and without prejudice
to the position that the Community will adopt at the next round
of negotiations on revising the Consensus".
 ---pagebreak---                                                                                                          ANNEX
                                                   Ar«*Jp.X   I I I
                          Cu I de 11 ne s        1  or   the     evaluation       of
                      Comrr.e r c i a I      Interest          Reference        Pates
    Par t i c I p a n t s       agreed        that       t he   al ms wh i c h    are h l p h l l z h t e d In
    paragraph             9  of    1 D / C 0 f.'SEM5 US / 8 3 . 2 a s h o u I d     be errp 1 oy e d . . n
    e v a I u a t i ng s p e c i f i c       proposals f o r            e s ta b lis h in g  conrrr.e r c i a I
    interns t r e f e r e n c e            r a te s .       These      ar e t he f o l l o w i n g :
    (i)         The Co mme r c i a l I n t e r e s t R e f e r e n c e B a t e s s h o u l d be
                r e p r e s e n t a t i v e of f i n a l c orrme r c l a l l e n d I n? r a t e s of
                 i n t e r e s t I n t he d o m e s t i c m a r k e t o f t he c u r r e n c y
                concerned;
    (il)       T he C 1W\ s h o u l d c l o s e l y c o r r e s p o n d             to    a rate     for    a
                f i r s t c l a s s acrr.es t i c bor r ower , *
   (III)       The CIPJJ. s h o u l d J: e b a s e d , »vherc a p p r o p r i a t e , on t h e
                f undi ng cost o f f l x e d I n t e r e s t - r a t e f i n a n c e over a
               p e r i o d of not l e s s t ha n 5 year s' ;
   ( i v)      The C IP R s h o u l d not l e a d                   to a d i s t o r t i o n of    d o me s t i c
               competitive conditions;
   ( v)        The C IR R s h o u l d c l o s e l y c o r r e s p o n d t o a r a t e
  :y j .       a v a i l a b l e t o f i r s t - c l a s s f o r e i gvn horrov/ r. r i ,                    •
 P a r t i c i p a n t * ha v e e x a mi n e d pr opo s e . ! * f o r c o mme r c i a l
  i n t e r e s t r e f e r e n c e r a t e s s e t out i n TC/CCY-'SEr'iU?,/ ? 3 . 2 *
 wh i c h w e r e e s t a b l i s h e d t a k i n g a c c o u n t o f s u g g e s t i o n s made,
  i n TC/CCT'S EhSUS / 8 3 , 3 ,                    The y a g r e e d on t he C o n rr.fc rc ia l _* x
  I n t e r e s t R e f e r e n c c • R d r * s p r o p o s e d , on t he b a s i s of m a r k e t
 c o n d i t i o n s i n A p r i l J 9 2 3 , f o r t he n i n e c u r r e n c i e s e x a mi n e d
 h i t h e r t o as v. el l as t he c o n d i t i o n s f o r t h e i r " $ r and the.
 p r o v i s i o n s f o r t h e i r M o d i f i c a t i o n as s t i p u l a t e d I n t he
 f o l l o w i n g t a b l e ann n o t e d t n a t w i d e l y ' u s e d c u r r e n c i e s
-£H              „e __I e a d ' ) V a v a i l a b l e t o o t h e r P a r t i c i o a n n ,
P a r t i c i p a n t s n o t e d t h a t t he P a r t i c i p a n t ! c o n c e r n e d v i l l
n o t i f y t he c o rn r.e rc la ! i n t e r e s t r e f e r e n c e r a t e s t o come
 i n t o e f f e c t as of f ^ t h J u l y l ? 8 3 . . .                                       ' '
In       The     reviews         of   CIP    k   '  s
P a r t i c i p a n t s v , I l ) » b e a r i n mi n e t h e a f o r e m e n t i o n e d a i m*            r.no
o b s e r v a t i o n s i i 'a o c I n P a r t I I I o f S e c t i o n ! ! of
Tr./CCtx'SI;N 5 U 5 / 8 3 . 2 8 .             I t Is f u r t h e r m o r e u n d e r s t o o d t h a t     the-
f i r s t r ev i cv/ wi I f t a k e p I ace i n con j u n c i i on w i t h t he
Autunr/i I 9 £ m e e t i n g of Pa r t i c i pan t s .
 ---pagebreak---                              COMMERCIAL       INTEREST         F.EFEREiiCE    RATES     (CIKRs)  A5  OF  fiPrtIL   1963(3 )
 M o t e : The premi um of 0.3 percent of Pa r a g ra p h 3(b)                         is to be added to there rates when off icial
           financing support is prov id ed.                   Interest is payable semi-annually in arrears, in a cc o rd an c e
           with Pa ragraph 3(c) of the Arrangement.
C urrency              "C I R R "       Construction                                Fixed   from     Re st ri c ti on s         Rate n o t i f i e d
                  X  per annum
Or L                     i)    9-50     G o v e r n m e n t 5 year bond             Di sb ursement                              Weekly
                                        y i el d + fixed spread ♦
                                        fixed m a rg i n
                       ii) 10.00        D i s b u r s e m e n t rate   *            Contract                                    Weekly
                                        var ia ble margin
DM                a)          8.20      G o v e r n m e n t 5 year bond             Contract         Cat I-IX ( S D R          Until further
                                        yield + va ri abl e mar gin                                 A0 mi ll i o n or less) notice
                  b)          8.90      Go ve rnm en t 10 year bond                 Contract         Cat X (over SDR           Until further
                                        yield + va riable margin                                     A0 million)               notice
SFR                a) i)      6.25      Bank Cash Certificates                      Disbursement      8 yrs. or l e s s (2) Monthly
                                        ♦ fixed ma r gi n                                             Hay never be
                                                                                                      offere d from\tender
                     ID                 Dis bu rs e m e nt rate +                   Contract                     "             Monthly
                                         IX per a nn um ont the
                                        un d r a wn balan ce
                  b) I)       6.50      Bank Cash Certificates                      Disbursement     over   8-10 y e a r s (2) Monthly
                                        ♦ fixed marglTT
                     ID                 Dis bu rs e m e nt rate +                   Contract                                   Monthly
                                        IX per annum on the
                                        un dr aw n balan ce
U)-          See Part II of Section             I I of T D / C O N S E N S U S / 8 3 .28 fo r a detailed descript ion of each
             reference r             a             i            e        ^            I
(2)          Ca lcu la t ed   from d i s b u r s e m e n t .
 ---pagebreak--- Currency              "CIRR"      Construction             Fixed from     Re str ic tio ns
                   % per annum                                                               Rate notifies
$us                   i) 11.73    Gov't 5 yr bond yield    Disbursement                      Monthly
                                  ♦ fixed spread ♦ fixed
                                  margin
                     li) 11.53    Disbursement rate ♦
                                  fixed margin             Contract                          Monthly
Sc a n                11.41(1)    Gov't 5 yr bond rate     Contract                          Monthly
                                  + fixed Spread + fixed
                                  margin
Pound                  12.75.     Gov't 5 yr bond “par     Contract                          Monthly
Sterling                          yield" ♦ fixed spread
                                  + fixed margin                                               /
 FMK              a)   11.35      Held above commercial    Contract       5 years or less    Until further
                                  bank lending rates and                                     notice
                                  gov't bond rates              •
     -  t . * .
                * h)   11.60                               Contract       over 5 to 8 1/2    Until furth er
                                                                          years              notice
 Schilling        a)    5.35      Hell above commercial    Contract       2 to 5 yrs         Quarterly
                                  bank lending rates and     •
                                                              •
                                  gov't bond rates
                  b)    8.55                               Contract       over 5 yrs        <Quarterly
 Yen              a)    8.3       Long term prime rate     Contract                          Until further
                                  less 10 basis points                                       notice
 ( 1   )          Based on the average yield (10.41%) in March 1583 of a Canadian governmentP bond of 15
                  March 1588, at 10 1/2 %; Bank of Canada Monthly Review.