CELEX: 51984PC0311
Language: en
Date: 1984-06-08 00:00:00
Title: Recommendation for a COUNCIL DECISION on the position to be adopted by the Community in the international negotiations on conditions governing officially-supported export credits for aircraft (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (84) 311
Vol. 1984/0142
 ---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---                                                                             CO M(84) 311 final
     COMMISSION                                                             Brussels, 8 June 1984
        OF THE
EUROPEAN COMMUNITIES                                                         FOR OFFICIAL USE ONLY
    General Secretariat
                                        R e c o mmendatio n for a
                                           COUNCIL DECISION
            on the position to be a d opted b y the Community in the international
              n e gotiations on conditions g o v e r n i n g offici a l l y - s u p p o r t e d export
                                        credits for aircraft
                            (submitted to the Council by the Commission)
     COM( 8 4 ) 311 f i n a l
 ---pagebreak---                            EXPLANATORY MEMORANDUM
 I. REMINDER OF THE SITUATION
    1. In December 1982/ the Commission submitted comprehensive proposals
       to the Council (C0M(82)829 final) aimed at establishing a Community
       position in the international negotiations on the conditions for
       granting officially supported export credits. These proposals were
       not subjected to an in-depth examination by the relevant Council
       bodies due initially to the lengthy negotiations which'took place
       on revising the OECD export credits Consensus in 1983 and subsequently
       to other pressing business related to the Arrangement and to other
       sectors. In the meantime new developments in the field of aircraft
       financing have occured which have rendered certain aspects of the
       Commission's original proposals in need of revision. With this in mind
       and with the objective of opening negotiations with our trade
       partners as soon as possible, the Commission hereby submits
       to the Council revised proposals for negotiating directives.
II. THE NEED TO OPEN NEGOTIATIONS
    2. There are several reasons why it is important to make progress in the
       field of export credits for aircraft. First and foremost efforts
       must be made to honour the commitment made by Consensus Participants
       in 1982 to open negotiations with a view to concluding a sectoral
       agreement covering all aircraft. It will be recalled in this
       context that this commitment was entered into the light of the
       manifest shortcomings of existing discipline in the sector (OECD
       Standstill) and in recognition of the fact that many new aircraft
       w o u l d be coming onto the world market in the middle to late 1980's
       in order to take advan t a g e of new sales opportunities.
    3. Aside from these general considerations which apply to all aircraft,
       it is important that in the specific       field of wide-bodied jet
       aircraft            Community  competence is enforced in a matter falling
       w ithin the framework of the Community's common commercial policy
       as defined under Article 113 of the Treaty. This is all the more
       essential in view of the pressure being e x erted by the US to arrive
       at new financing conditions for such aircraft, some of which have
       a direct bearing on the interests of other m e m b e r s t a t e s .
 ---pagebreak---                                                 - 2 -
III. STRATEGY UNDERLYING THE COMMISSION'S REVISED PROPOSALS
     4 . Whereas i n t h e C o m m is s i o n 's p r e v i o u s p r o p o s a l s a l l a i r c r a f t
         were i n c l u d e u n d e r a s e t o f c h a p t e r h e a d i n g s c o v e r i n g t h e
         p r i n c i p a l elem ents of th e n e g o t i a t i o n , in i t s               rev ised proposals
         t h e Commission c o n s i d e r s i t e x p e d i e n t t o make a c l e a r d i f f e r e n t i a t i o n
         be tw ee n l a r g e ( w i d e - b o d i e d ) a i r c r a f t and o t h e r a i r c r a f t .
         The d i s t i n c t i o n     is necessary p rim a rily because d i f f e r e n t fin a n c in g
         p r a c t i c e s p r e v a i l i n t h e two s u b s e c t o r s . I f         is also     in r e c o g n itio n
         o f t h e f a c t t h a t w i d e - b o d i e d j e t a i r c r a f t a r e p r o d u c e d o n l y by t h e
         US and t h e Community and t h a t                     i n c o n s e q u e n c e t h e most a p p r o p r i a t e
         method o f p r o c e e d i n g would be t o e n v i s a g e EC-US n e g o t i a t i o n s .
         On t h e o t h e r h a n d , s m a l l e r        aircraft,          f o r which t h e number o f
         p r o d u c e r s i s much l a r g e r , c o u l d be n e g o t i a t e d w i t h i n t h e framewok
         o f t h e OECD. At a l a t e r s t a g e t h e two " c o m p o n e n ts " c o u l d be
         s l o t t e d t o g e t h e r t o form a c o m p r e h e n s iv e s e c t o r a l a c c o r d .
     5 . The d i v i s i o n o f t h e C o m m is s i o n 's p r o p o s a l s i n t o two p a r t s does
         not s i g n i f y of course a ranking of th e a i r c r a f t c a t e g o r i e s                     in o r d e r
         o f i m p o r t a n c e o f r e a c h i n g an a g r e e m e n t . I t must be r e c o g n i s e d , h o w e v e r ,
         that       i n an i n i t i a l    s t a g e p r o g r e s s may be s w i f t e r i n t h e f i e l d
         of w ide-bodied a i r c r a f t             i n view o f t h e a d v a n c e d s t a t e o f d i s c u s s i o n s
         which have b e en t a k i n g p l a c e o v e r a number o f y e a r s b etw een
         th e four producing c o u n t r i e s .                In d e e d a f a i l u r e o f t h e Community
         t o come f o r w a r d         w i t h p r o p o s a l s q u i c k l y in t h i s a r e a c o u l d have
         a number o f u n f a v o u r a b l e c o n s e q u e n c e s f o r a l l Member S t a t e s , s uch
         a s t h e w i t h d r a w a l o f t h e US from t h e OECD S t a n d s t i l l and t h e
         un ilateral           im position of s t r i c t           conditions for financing a i r c r a f t
          s a l e s on t h e US m a r k e t . C o n s e q u e n t l y t h e Commission b e l i e v e s t h a t
          it    i s i n t h e Community's i n t e r e s t t o come f o r w a r d w i t h r e a l i s t i c
         p r o p o s a l s i n t h i s s e c t o r a s soon a s p o s s i b l e .              C oncurrently
         n e g o t i a t i o n s should begin             on s m a l l e r a i r c r a f t .
 ---pagebreak---                                                  - 3 -
IV. THE COMMISSION'S REVISED PROPOSALS
 A. L arge a i r c r a f t
 6 . The C o m m is si o n 's new p r o p o s a l s on w i d e - b o d i e d j e t a i r c r a f t c o n t a i n
     some i m p o r t a n t amendments compared w i t h t h e p r o p o s a l s made i n
     1 9 8 2 . Most i m p o r t a n t l y no d i s t i n c t i o n        i s now made b e tw e e n t h e
     m a r k e t s o f p r o d u c e r and n o n - p r o d u c e r m a r k e t s w i t h t h e        consequence
     t h a t th e scope of th e agreement i s extended to a l l t h i r d m a r k e t s .
     L i k e w i s e , f o r US s a l e s t o t h e Community, no d i s t i n c t i o n s h o u l d be
     made b etw een t h e minimum c o n d i t i o n s a p p l i c a b l e t o d i f f e r e n t member
     states.
 7 . I d e a l l y t h e same minimum t e r m s and c o n d i t i o n s s h o u l d a p p l y t o a l l
     t h i r d m a r k e t s . However i t          i s c l e a r from p r e l i m i n a r y d i s c u s s i o n s
     t h a t t h e US w i l l a d o p t a v e r y to u g h n e g o t i a t i n g s t a n c e w it h
     r e s p e c t t o t h e minimum c o n d i t i o n s t o be a p p l i e d f o r t h e s a l e s o f
     A i r b u s on t h e US m a r k e t . I n d e e d i t has ev en been s u g g e s t e d i n
     some q u a r t e r s t h a t       Loans s u p p o r t e d by e x p o r t c r e d i t g u a r a n t e e s
     and i n s u r a n c e would n o t be a c c e p t a b l e s i n c e t h e s e a r e a l l e g e d
     t o i n c o r p o r a t e de f a c t o s u b s i d y e l e m e n t s .
 8 . In t h e view o f t h e Commission i t                     is v i t a l fo r the fu tu re of
     A i r b u s I n d u s t r i e t h a t a c c e s s t o t h e US m a r k e t on r e a s o n a b l e
     t e r m s i s o b t a i n e d . The c o n d i t i o n s o f such a c c e s s s h o u l d t a k e
     in to account the f i n a n c i a l r e a l i t i e s              f a c i n g A ir b u s I n d u s t r i e
     on w o r ld m a r k e t s and t h e n e c e s s i t y f o r e x p o r t c r e d i t g u a r a n t e e s
     t o f a c i l i t a t e sales       t o o v e r s e a s c u s t o m e r s . At t h e same ti m e t h e
     c o n d i t i o n s s h o u l d n o t p l a c e US c o m p e t i t o r s a t a c o m p e t i t i v e
     d i s a d v a n t a g e on t h e i r own m a r k e t . F i n a l l y , o f c o u r s e , t h e
     c o n d i t i o n s s h o u l d be c o m p a t i b l e w ith i n t e r n a t i o n a l    law (GATT
     S u b s i d i e s Code) t o which t h e US has s u b s c r i b e d .
 9.  It     f o l l o w s from t h e abov e c o n s i d e r a t i o n s t h a t i t may be n e c e s s a r y
     t o e n v i s a g e s p e c i a l f i n a n c i n g c o n d i t i o n s f o r s a l e s t o t h e US and
     p e r h a p s t o o t h e r m a r k e t s a s w e l l . For t h e p r e s e n t , h o w e v e r,
     it     i s p r o p o s e d t h a t t h e C o u n c i l a u t h o r i s e s t h e Commission t o
     negotiate             minimum t e r m s a p p l i c a b l e t o a l l m a r k e t s , i t b e i n g
     u n d e r s t o o d t h a t i t may be n e c e s s a r y -to s e e k s u p p l e m e n t a r y . . d i r e c t i v e s
      at a la te r stage.
 ---pagebreak---                                                     - 4 -
 1 0 . T u r n i n g t o o t h e r e l e m e n t s o f t h e C om mission ’s p r o p o s a l , i t                       should
       be n o t e d t h a t 10 and 12 y e a r f i n a n c i n g o p t i o n s a r e e n v i s a g e d
       w i t h minimum i n t e r e s t             ra te s for o f f i c i a l l y financed c r e d its                  in
       d ollars         ( t h e c u r r e n c y u s ed f o r most f i n a n c i n g )             l i n k e d t o US
       T r e a s u r y Bonds. The c o n d i t i o n s f o r f i n a n c i n g o f f e r s made i n a
       c o c k t a i l o f Europ ean c u r r e n c i e s             ( F F , DM t s t e r l i n g )       s h o u l d be
       e s t a b l i s h e d so a s t o be f u l l y c o m p e t i t i v e w i t h do l i a r - d e n o m i n a t e d
       c r e d i t s . The same p r i n c i p l e s h o u l d be a d o p t e d a t a l a t e r s t a g e
       when i t may be p o s s i b l e t o e n v i s a g e g r a n t i n g e x p o r t c r e d i t s
       d e n o m i n a t e d i n ECU.
11.     A new e l e m e n t s h o u l d be t h e i n t r o d u c t i o n o f an a u t o m a t i c sy ste m
       f o r a d j u s t i n g minimum i n t e r e s t             r a t e s in d o l l a r s in l in e with
      movements i n a p p r o p r i a t e US T r e a s u r y B o nd s. The t e c h n i c a l p r o v i s i o n s
      o f such a sy ste m s h o u l d be e l a b o r a t e d d u r i n g t h e c o u r s e o f t h e
      n e g o tia tio n s (including                l i m i t i n g p r i o r commitments t o t h r e e m o n t h s )
       so a s t o e n s u r e t h a t E ur ope an o f f e r s a r e n o t u n d e r c u t by movements
       in market i n t e r e s t            r a t e s . Before the f u l l im plem entation of the
      a u t o m a t i c s y s te m and d e p e n d i n g on t h e e v o l u t i o n o f i n t e r e s t r a t e s i t
      may a l s o be w orth e n v i s a g i n g a t r a n s i t i o n a l p e r i o d d u r i n g which
       lower r a t e s may a p p l y .
 12.     F i n a l l y , t h e Commission would p o i n t t o t h e m a i n t e n a n c e o f i t s
      p r o p o s a l t o t h e e f f e c t t h a t t h e maximum amount o f o f f i c i a l f i n a n c i n g
      s u p p o r t a t minimum i n t e r e s t r a t e s s h o u l d be l i m i t e d t o                       le s s than
      85 % o f c o n t r a c t v a l u e . T h i s p r o p o s a l , which r e f l e c t s a c t u a l
      p r a c t i c e s of s e l l i n g w ide-bodied j e t a i r c r a f t -                   has       th e advantage of
      l i m i t i n g p o t e n t i a l s u b s i d y e l e m e n t s . As r e g a r d s t h e r e m a i n d e r o f
      the c r e d i t ,        it  i s proposed t h a t o f f i c i a l             f i n a n c i n g s u p p o r t may
      be p r o v i d e d b u t t h a t t h i s s h o u l d b e a t              r a t e s c lo s e t o market r a t e s .
      In t h e n e g o t i a t i o n s , a r r a n g e m e n t s have t o be worked o u t which a l l o w
      Member S t a t e s          to      fu lly      compete w i t h US o f f e r s .
 ---pagebreak---                                                     - 5 -
 B. OTHER AIRCRAFT
13.     With r e s p e c t t o s m a l l e r a i r c r a f t and h e l i c o p t e r s , t h e Commission
      p roposes t o m a in ta in in broad term s th e t h r u s t of i t s p r o p o s a ls
      o f December 19 8 2 . Thus f o r t h e c a t e g o r i s a t i o n o f                         aircraft           two
      s u b g r o u p s s h o u l d be m a i n t a i n e d in a d d i t i o n t o t h a t o f l a r g e a i r c r a f t .
      In t h i s       context i t         c o u l d be a p p r o p r i a t e t o        l i s t a l l current a ir c r a f t
      f a l l i n g w i t h i n each c a t e g o r y . P a r t i c u l a r a t t e n t i o n s h o u l d be
      p a i d t o t h e c l a s s i f i c a t i o n o f t h e BAc 146 and F 28 and F 100 which
      so m et im e s compete w i t h l a r g e a i r c r a f t and so met ime s w it h s m a l l e r
      c om m e rc ia l t r a n s p o r t a i r c r a f t ;         h o w e v er , w h i c h e v e r c a t e g o r y i s
      e v e n t u a l l y a d o p t e d , i n t h e c a s e o f c o m p e t i t i o n w i t h an a i r c r a f t
      classified             i n a n o t h e r c a t e g o r y s i m i l a r t e r m s s h o u l d be p e r m i t t e d
      (C om petition Reference P o i n t ) .
 1 4 . The most i m p o r t a n t amendment o f t h e C o m m is s i o n 's f o r m e r p r o p o s a l
      c o n c e r n s t h e minimum i n t e r e s t              r a t e s t o be a p p l i e d . On f u r t h e r
      r e f l e c t i o n a u n i q u e r a t e o f i n t e r e s t w i t h o u t d i f f e r e n t i a t i o n by
      p u r c h a s i n g c o u n t r y f o r b o t h c a t e g o r i e s o f a i r c r a f t may be more
      a p p r o p r i a t e i n view o f t h e n a t u r e of t h e e q u ip m e n t b e i n g s o l d .
      In t h i s       c o n t e x t i t w i l l be r e c a l l e d t h a t " m o b i l i t y " was t h e main
      re a so n f o r e s t a b l i s h i n g a unique r a t e of i n t e r e s t                     i n t h e OECD
      Ships a g re em e n t. A f o r t i o r i              t h e same p r i n c i p l e s h o u l d be a d o p t e d
      with r e s p e c t t o a i r c r a f t .
 1 5 . As r e g a r d s t h e Minimum i n t e r e s t                  r a t e s t h a t s h o u l d be a p p l i e d ,
      t h e Commission c o n s i d e r s t h a t t h e s e s h o u l d be i n t h e o r d e r
      o f t h e minimum i n t e r e s t             r a t e s o f t h e C on sen su s f o r r e l a t i v e l y
      rich       countries.          Such a benchmark would a p p e a r t o be j u s t i f i e d
      i n view o f t h e p r e p o n d e r a n c e o f s a l e s t o such m a r k e t s .
 1 6 . As r e g a r d s t h e o t h e r c o n d i t i o n s o f an a g r e e m e n t , t h e s e s h o u l d
      be b a s e d where a p p r o p r i a t e on t h e p r e v a i l i n g d i s p o s i t i o n s o f t h e
      C o n s e n s u s . One        n o t a b l e d i f f e r e n c e , h o w e v e r , s h o u l d be t h e
      e x c lu sio n of t i e d a id c r e d i t s              in th e a i r c r a f t s e c t o r .         Such a
      p r o v i s i o n r e f l e c t s no more t h a n t h e c u r r e n t p r a c t i c e o f most
      OECD c o u n t r i e s n o t t o g r a n t t i e d a i d c r e d i t s                  in t h i s s e c t o r .
 ---pagebreak---                                   RECOMMENDATION                FOR A
                                         COUNCIL DECISION
              on t h e p o s i t i o n      t o be a d o p t e d by t h e Community
              i n t h e i n t e r n a t i o n a l n e g o t i a t i o n s on c o n d i t i o n s
                     governing o f f i c i a l l y - s u p p o r t e d e x p o rt
                            credits for a irc ra ft
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having r e g a r d t o t h e T r e a t y e s t a b l i s h i n g t h e E ur ope an Economic
Community, and i n p a r t i c u l a r A r t i c l e 113 t h e r e o f ,
Having r e g a r d t o t h e Recommendation                          from t h e Commission,
Whereas by i t s D e c i s i o n o f 28 J u l y 1 9 8 2 t h e Counci l a p p r o v e d on b e h a l f o f
t h e Community t h e r e s u l t s o f t h e n e g o t i a t i o n s on t h e modif i c a t i o n s o f t h e
A rr a n g e m e n t on G u i d e l i n e s f o r O ff i c i a l l y - S u p p o r t e d E x p o r t C r e d i t s and a g r e e d i n
Annex I I t o t h a t D e c i s i o n t o open n e g o t i a t i o n s f o r a g r e e m e n t s
on e x p o r t c r e d i t t e r m s f o r a i r c r a f t and n u c l e a r power s t a t i o n s ;
Whereas in view o f t h e s i t u a t i o n o f t h e w o r l d economy i t                             re m a in s
n e c e s s a r y t o keep w a s t e f u l c o m p e t i t i o n on o f f i c i a l l y s u p p o r t e d
e x p o r t c r e d i t s t o a minimum and improve i n t e r n a t i o n a l c o o p e r a t i o n
in o rd e r t o prev en t a d e t e r i o r a t i o n of c r e d i t te rm s ,
Whereas i t i s n e c e s s a r y t o r e v i s e and u p d a t e t h e C o m m is si o n' s
p r o p o s a l s o f December 1982 (C0M(82)829 f i n a l ) ;
 ---pagebreak---                          -  2 -
HAS DECIDED AS FOLLOWS:
                           Sole Article
 In the international negotiations on the conditions governing
 officially-supported export credits for aircraft, the
 Commission shall express the Community's position in accordance
 with the directives annexed hereto.
 It shall proceed in consultation with the Special Committee provided
 for in Article 113 of the Treaty, which shall assist it in its task.
                                                  For the Council
  Done at Brussels,
                                                   The President
 ---pagebreak---                                                                                                            ANNEX
                         NEGOTIATING DIRECTIVES
. LARGE AIRCRAFT
  1 . SCOPE OF AN AGREEMENT
      E x p o r t s o f Large and m e d i u m - s i z e d c o m m e rc ial t r a n s p o r t t u r b o f a n
      a irc ra ft.
  2 . DURATION
      The maximum rep ay m en t te r m f o r s a l e s and l e a s e s s h a l l be t w e l v e
      years.
  3 . INTEREST RATES
     (i)      N o tw ithstanding th e p ro v is io n s of paragraph 4 below, th e
              minimum i n t e r e s t          r a t e f o r e x p o r t c r e d i t s b e n e f i t i n g from
              o f f i c i a l f i n a n c i n g s u p p o r t s h a l l be d e t e r m i n e d f o r each
              currency as follow s :
              - f o r t h e US d o l l a r , rep ay m ent t e r m s up t o 10 y e a r s s h a l l
                  be b a s e d on US T r e a s u r y Bonds p l u s an a p p r o p r a i t e                 m argin.
                  An a d d i t i o n a l m a rk -u p t o t h i s minimum r a t e s h a l l be a p p l i e d
                  i f t h e re p a ym en t te rm i s e x t e n d e d t o 12 y e a r s .
              - minimum i n t e r e s t r a t e s             i n o t h e r c u r r e n c i e s s h a l l be d e t e r m i n e d
                  so a s t o e n s u r e t h a t          financing o f f e r s are fu lly com petitive
                  w i t h t h o s e d e n o m i n a t e d i n US d o l l a r s .
     (ii)     The minimum i n t e r e s t             r a t e s s h a l l be a d j u s t e d a u t o m a t i c a l l y
              i n a c c o r d a n c e w i t h a p p r o p r i a t e i n d i c a t o r s o f c h an g e s i n
              market i n t e r e s t         rates.       For t h e US d o l l a r , t h e i n d i c a t o r
              s h a l l be US T r e a s u r y Bonds.
     Ci i i ) The i m p l e m e n t a t i o n o f t h e p r o v i s i o n s f o r e s e e n u n d e r ( i )        and
             (ii)     above may be p r e c e d e d by a t r a n s i t i o n a l p e r i o d d u r i n g
              which lower r a t e s may a p p l y .
 ---pagebreak---                                                           -   2 -
   4 . OFFICIAL SUPPORT
       The maximum amount o f o f f i c i a l f i n a n c i n g                   s u p p o r t a t minimum
       r a t e s of i n t e r e s t      ( p a r a g r a p h 3 above) may be l e s s t h a n 85 %
       o f t h e c o n t r a c t v a l u e . S p e c i a l c o n d i t i o n s s h a l l a p p l y when
       t h e p o r t i o n o f t h e c r e d i t n o t c o v e r e d by minimum r a t e s i s s u b j e c t
       to o f f i c i a l financing su p p o rt.
   5.  COMPETITION REFERENCE POINT
       In t h e e v e n t o f o f f i c i a l l y s u p p o r t e d c o m p e t i t i o n , a i r c r a f t o t h e r
       t h a n t h o s e s p e c i f i e d i n p a r a g r a p h (1) abov e s h a l l be a b l e t o
       b e n e f i t from t h e same e x p o r t c r e d i t t e r m s and c o n d i t i o n s .
   6 . OTHER CONDITIONS
        (i)     Cash pa ym en ts b e f o r e d e l i v e r y s h a l l be a t                l e a s t 15 % o f c o n t r a c t
               value.
      (ii)     Commitments            f o r o f f i c i a l l y f i n a n c e d c r e d i t s s h a l l be v a l i d
               f o r t h r e e m o n th s .
     (iii)     The g e n e r a l p r o v i s i o n s o f t h e A rr a n g e m e n t s h a l l a p p l y , n o t a b l y
               t h e n o n - d e r o g a t i o n c l a u s e , m a tc h in g and n o t i f i c a t i o n p r o c e d u r e s ,
               and p e r i o d i c a l r e v i e w s .
      (iv)     Export c r e d i t c o n d i t i o n s f o r s a l e s of s p a r e - p a r t s , in c lu d in g
               e n g i n e s , and s e c o n d - h a n d a i r c r a f t      s h a l l be s t u d i e d .
B. OTHER AIRCRAFT
   1 . SCOPE OF AN AGREEMENT
       E x p o r t s o f s m a l l and m e d i u m - s i z e d a i r c r a f t .
       Thes e a i r c r a f t s h o u l d be c l a s s i f i e d i n t o two c a t e g o r i e s a l o n g t h e
       follow ing          lines :
       (i)     CATEGORY I I          : - Commercial t r a n s p o r t a i r c r a f t n o t s p e c i f i e d i n
                                             s e c tio n A above.
                                        - O t h e r m u l t i - e n g i n e d t u r b i n e powered a i r c r a f t
                                              ( b u s i n e s s and m u l t i - e n g i n e d t u r b o p r o p c o m m e rc ial
                                             tran sp o rt a irc ra ft)
                                        - M u l t i - e n g i n e d t u r b i n e powered             helicopters.
 ---pagebreak---                                                            - 3 -
       ( i i ) CATEGORY I I I              :   A l l o t h e r a i r c r a f t and h e l i c o p t e r s
2.    DURATION
      The maximum rep ay m ent t e r m s f o r s a l e s and l e a s e s s h a l l be :
       ( i ) 7-8 y e a r s f o r a i r c r a f t         classified            in Category I I ;
     ( i i ) 5 y e a r s f o r a i r c r a f t c l a s s i f i e d in Category I I I ;
3 . INTEREST RATES
     (i) In te re s t           rates for a ir c r a f t c la s s ifie d               in C ateg o ries I I      and I I I       s h a l l be
              i n t h e o r d e r o f t h e minimum i n t e r e s t              ra te s for r e la tiv e ly rich
             c o u n t r i e s a s s p e c i f i e d i n p a r a g r a p h 3(A) o f t h e A r r a n g e m e n t .
    ( i i ) In c a s e s where t h e c o m m e rc ial l e n d i n g r a t e s o f i n t e r e s t f o r t h e
             n a t i o n a l c u r r e n c y o f a P a r t i c i p a n t f a l l below t h e l o w e s t minimum
             lev el of (i)             above, the i n t e r e s t          r a t e on e x p o r t c r e d i t s f i n a n c e d
             i n whole o r i n p a r t w i t h o f f i c i a l f i n a n c i n g s u p p o r t s h a l l be
             d e te rm in e d in a cc o rd a n c e w ith th e p r o v i s i o n s of p a ra g ra p h 3(b)
             o f th e Arrangement.
4 . OFFICIAL SUPPORT
    The maximum amount o f o f f i c i a l                     fin an cin g support s h a l l correspond to
    t h a t p e rm itte d under               t h e A rra n g e m e n t (85 %).
5.   COMPETITION REFERENCE POINT
    I n t h e e v e n t o f o f f i c i a l l y s u p p o r t e d c o m p e t i t i o n , a i r c r a f t c o m p e tin g
    w i t h o t h e r s from a h i g h e r c a t e g o r y s h a l l be a b l e t o b e n e f i t from t h e
    same e x p o r t c r e d i t t e r m s and c o n d i t i o n s .
6 . OTHER CONDITIONS
    (i)      The minimum c a s h payment s h a l l be a t                          l e a s t 15 % o f t h e c o n t r a c t v a l u e ,
   (ii)      The g r a n t i n g o f t i e d a i d c r e d i t s s h a l l be p r o h i b i t e d .
  (iii)      The g e n e r a l p r o v i s i o n s o f t h e          A rr a n g e m e n t s h a l l a p p l y , n o t a b l y t h e
             n o n - d e r o g a t i o n c l a u s e , m a t c h i n g and n o t i f i c a t i o n p r o c e d u r e s , t h e
             maximum d u r a t i o n of p r i o r commitments and t h e a n n u a l r e v i e w .
  (iv)       Export c r e d i t c o n d itio n s fo r s a l e s o f s p a r e - p a r t s in c lu d in g e n g in e s ,
             and        s e c o n d -h a n d    aircraft       s h a l l be s t u d i e d .