CELEX: 51986PC0108
Language: en
Date: 1986-02-28
Title: Proposal for a COUNCIL DECISION on the application of the Understanding on Guidelines for Officially Supported Export Credits for Civil Aircraft (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (86) 108
Vol. 1986/0036
 ---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---                                                                                                            C0MC86) 108 f i n a l
       COMMISSION
                                                                                                           Brussels, 28 F e b r u a r y 1986
            OF THE
EUROPEAN COMMUNITIES
                                                                                                           FOR OFFICIAL USE ONLY
    G e n e r a l S e c r e t a r ia t
                                                                        Proposal f o r a
                                                                      COUNCIL DECISION
                             on t h e a p p l i c a t i o n o f t h e U n d e r s t a n d i n g on G u i d e l i n e s f o r
                                   O f f i c i a l l y S u p p o r te d Exp or t C r e d i t s f o r C i v i l A i r c r a f t
                                             ( s u b m i t t e d t o t h e C o u n ci l by t h e Commission)
    C0MC86) 108 f i n a l
 ---pagebreak---                                   EXPLANATORY MEMORANDUM
INTRODUCTION
On 10 December 1984 , t h e C o u n c i l e s t a b l i s h e d n e g o t i a t i n g d i r e c t i v e s
f o r 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 e x p o r t c r e d i t s f o r a i r c r a f t .
These d i r e c t i v e s a r e d i v i d e d i n t o two p a r t s             (A : " l a r g e a i r c r a f t " -
 B : " o t h e r a i r c r a f t " ) and a r e aimed a t a g l o b a l a g r e e m e n t c o v e r i n g
all      c a t e g o r i e s of a i r c r a f t .
S i n c e t h e n , n e g o t i a t i o n s on e ac h p a r t have been o p e n e d . On l a r g e
aircraft             (" w id e b o d i e d j e t a i r c r a f t " )     which a r e p r o d u c e d o n l y i n
t h e US and t h e EC, t h e Community n e g o t i a t e d b i l a t e r a l l y w i t h t h e US
and an a g r e e m e n t was c o n c l u d e d by a D e c i s i o n o f t h e C o u n c i l                with
e f f e c t from 1 s t J u l y 1985.
T h i s a g r e e m e n t was s u b s e q u e n t l y e n d o r s e d by t h e       OECD. The US a l s o
a g r e e d t h a t t h e U n d e r s t a n d i n g on l a r g e a i r c r a f t s h o u l d be i n c o r p o r a t e d
in    a g l o b a l OECD a g re e m e n t on e x p o r t c r e d i t s f o r a l l t y p e s o f a i r c r a f t
when t h e o n g o in g n e g o t i a t i o n s         on a ir c r a f t other than wide-bodied j e t a ir c ra ft
in the      OECD had been concluded, which was the case on January 24th 1986 ad referendum.
With t h e p r e s e n t c om m uni ca tion t h e C o u n c i l i s r e q u e s t e d t o a p p r o v e
a ) The a d d i t i o n o f two a i r c r a f t t o t h e a p p e n d i x t o t h e C o u n c i l
      D e c i s i o n o f 1 s t J u l y 1985 on t h e a p p l i c a t i o n o f a s e c t o r
      u n d e r s t a n d i n g on e x p o r t c r e d i t s f o r a i r c r a f t    (BAE 146 and F 1 0 0 ) .
b) The S e c t o r U n d e r s t a n d i n g on e x p o r t c r e d i t s f o r c i v i l a i r c r a f t ( o t h e r
      t h a n l a r g e com m erc ial a i r c r a f t         ) c o n c l u d e d ad r e f e r e n d u m i n t h e
      framework o f t h e OECD on J a n u a r y 2 4 t h .
 APPRECIATION OF THE                     PROPOSAL
  a) Addition of aircraft to the list contained in the appendix to
        the Understanding on large commercial aircraft
        The a p p e n d i x t o t h e U n d e r s t a n d i n g on l a r g e c o m m e rc ial a i r c r a f t
        a l l o w s f o r t h e a d d i t i o n o f s i m i l a r a i r c r a f t by a g r e e m e n t b e tw ee n
        t h e P a r t i c i p a n t s . On a c c o u n t o f t h e c o m p e t i t i v e market situation an addition
        o f t h e BAE 146 and F 100 i s c o n s i d e r e d j u s t i f i e d .
 ---pagebreak---                                      - 2  -
b) U n d e r s t a n d i n g on o t h e r a i r c r a f t
     The Commission i s o f t h e o p i n i o n t h a t t h e U n d e r s t a n d i n g
     n e g o t i a t e d i n t h e framework of t h e OECD i s i n c o n f o r m i t y
     with th e n e g o t i a t i n g d i r e c t i v e s .     In p a r t i c u l a r :
     i.    The U n d e r s t a n d i n g c o v e r s e x p o r t s o f s m a l l and medium s i z e
          a i r c r a f t to a l l m arkets.
   ii.     A ircraft          are c la s s if ie d     in to th r e e c a t e g o r i e s to tak e account
          o f b o t h t h e i r t e c h n i c a l c h a r a c t e r i s t i c s and t h e c o m p e t i t i v e
          s i t u a t i o n of t h e m a r k e t .
  iii.     I n t e r e s t r a t e c o n d i t i o n s and maximum rep ay m ent t e r m s a r e in
           c o n f o r m i t y w i t h g e n e r a l C on sen su s c o n d i t i o n s w i t h a g e n e r a l
          e x t e n s i o n o f maximum rep ay m ent t e r m s t o t e n y e a r s f o r C a t e g o r y
          A aircraft.
  iv .    T h e re i s a         p rovision p ro h ib itin g t i e d aid fin an cin g ,
          p a r t i a l l y u n t i e d a i d f i n a n c i n g o r any o t h e r k i n d o f
          f i n a n c i n g on c r e d i t c o n d i t i o n s t h a t a r e more f a v o u r a b l e
          t h a n t h o s e s e t o u t in t h e S e c t o r U n d e r s t a n d i n g .
     v. A i r c r a f t       com p etin g w i t h t h o s e from a n o t h e r C a t e g o r y
          w i 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 .
   v i . The U n d e r s t a n d i n g p r o v i d e s f o r re v ie w a n n u a l l y i n t e r a l i a
          of :
          - o f f i c i a l s u p p o r t f o r e x p o r t o f u s ed a i r c r a f t
          - c o n d i t i o n s f o r m a i n t e n a n c e , s p a r e p a r t s and s e r v i c e
               contracts
           - wider p a r t i c i p a t i o n in th e U nderstanding
  v i i . Terms n o t c o v e r e d s p e c i f i c a l l y        in th e Understanding
           on o t h e r a i r c r a f t     s h a l l be g o v e r n e d by t h e a p p r o p r i a t e
           p r o v i s i o n s o f t h e A rra n g e m e n t on G u i d e l i n e s f o r O f f i c i a l l y
           Supported Export C r e d its                 (th e Consensus).
 ---pagebreak---                                             - 3 -
3.  CONCLUSIONS
   The L i s t s o f a i r c r a f t c o n t a i n e d i n t h e a p p e n d i c e s t o t h e U n d e r s t a n d i n g
   b o th f o r Large          Commercial A i r c r a f t and O t h e r A i r c r a f t w i l l
   need t o be amended from t i m e t o ti m e t o t a k e a c c o u n t o f t h e
   m a rk e t s i t u a t i o n and d e v e l o p m e n t s ; i t      i s , th e re fo re appropriate
   t o make t h e a d d i t i o n s t o t h e a p p e n d i x t o t h e U n d e r s t a n d i n g
   f o r Lar ge A i r c r a f t a s p r o p o s e d .
   With r e g a r d t o t h e U n d e r s t a n d i n g on O t h e r A i r c r a f t , g i v e n t h a t
   t h e o b j e c t i v e s s e t o u t by t h e C o u n c i l i n December 1984 have been
   achieved, i t           i s i n t h e i n t e r e s t s o f t h e Community t o co n clu d e
   t h e S e c t o r U n d e r s t a n d i n g a s n e g o t i a t e d . The U n d e r s t a n d i n g
   s h o u l d become e f f e c t i v e a s f o r e s e e n on March 1 0 th 1986.
 ---pagebreak---                                   COUNCIL DECISION
                                 OF
  on t h e a p p l i c a t i o n o f t h e U n d e r s t a n d i n g on G u i d e l i n e s
          f o r O f f i c i a l l y Supported Export C re d its
                               for C ivil 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 p r o p o s a l from t h e Commission,
 ---pagebreak---                                                     - 2 -
  Whereas it is necessary to establish international discipline in
  sectors not covered by the Arrangement on Guidelines for Officially
  Supported Export Credits in order to minimize self-defeating
  and counter-productive credit competition between suppliers in
  these areas;
Whereas n e g o t i a t i o n s f o r an U n d e r s t a n d i n g f o r l a r g e a i r c r a f t were
n e g o t i a t e d and by d e c i s i o n o f t h e C o u n c i l came i n t o e f f e c t
from 1 s t J u l y 1985;
Whereas i t            i s a p p r o p r i a t e t o amend t h e     l i s t of a i r c r a f t    contained
in th e appendix to th e U nderstanding f o r la rg e a i r c r a f t ;
Whereas n e g o t i a t i o n s were c o n c l u d e d on a i r c r a f t o t h e r t h a n l a r g e
ai r c r a f t ;
Whereas t h e r e s u l t s o f t h e s e n e g o t i a t i o n s meet t h e i n t e r e s t s o f
t h e Community;
W her eas , i n t h e i n t e r e s t s o f t h e Community and i n o r d e r t o g i v e
e f f e c t t o t h e p r i n c i p l e of i n t e r n a t i o n a l c o - o p e r a t i o n ,   it  is
n e c e s s a r y t o a p p l y t h i s U n d e r s t a n d i n g on o t h e r a i r c r a f t    i n t h e Community; ;
Whereas b o t h t h e L a rg e A i r c r a f t S e c t o r U n d e r s t a n d i n g and t h e
U n d e r s t a n d i n g on o t h e r a i r c r a f t a r e i n t e n d e d a s a c o m p r e h e n s i v e
c i v i l a i r c r a f t a g r e e m e n t t o be c o n c l u d e d e x p e d i t i o u s l y ,
 ---pagebreak--- HAS ADOPTED THIS DECISION
                                      A rticle 1
From 1 0 t h March 1986 t h e a p p e n d i x t o t h e La rge A i r c r a f t
U n d e r s t a n d i n g s h a l l be amended t o i n c l u d e t h e f o l l o w i n g
aircraft           :
                                     B r i t i s h Aerospace          146
                                     Fokker 100
                                      A rticle 2
From 1 0 t h March 1986 , t h e U n d e r s t a n d i n g on G u i d e l i n e s f o r
O f f i c i a l l y S u p p o r t e d E x p or t C r e d i t s f o r O t h e r A i r c r a f t
s h a l l be a p p l i e d i n t h e Community.
The text of the Understanding is annexed to this Decision.
                                     A rticle 3
This Decision is addressed to the Member States.
Done at
                                                                             For the Council
 ---pagebreak---                                                                         ANNEX
     SECTOR UNDERSTANDING ON EXPORT CREDITS FOR CIVIL AIRCRAFT
Large Commercial Aircraft.
 (See   C o u n c i l D e c i s i o n o f 24 Ju ne 1985)
All Aircraft Except Large Commercial Aircraft-
Form and Scope
This Sector Understanding complements the Arrangement on Guidelines for
Officially Supported Export Credits· It sets out the particular
complementing Guidelines which are applicable to officially supported
export credits financing contracts for the international sale or lease
of new (not used) aircraft and, if ordered concurrently with the
aircraft or if ordered for manufacturing or assembly into such
aircraft, engines, sub-assemblies and spare parts of aircraft not
covered by part I of this Sector Understanding- It does not apply to
hovercraft. (1)
Participation
The rules on participation of the Arrangement shall apply (2).
Best Endeavours
The provisions of this Sector Understanding represent the most generous
terms which Participants are allowed to offer when giving official
support. Participants will however continue to respect customary
market terms for different types of aircraft and will do everything in
their power to prevent these terms from being eroded. (3)
Categories of Aircraft
The following categories have been agreed upon in view of the
competitive situation:
A. —   Turbine-powered aircraft -- including helicopters -- (e.g. turbo
       jet, turbo-prop, and turbo-fan aircraft), with generally between
       30 to 70 seats.                In case a new large turbine-powered aircraft
       with over 70 seats is being developed, immediate consultations
       shall be held upon request with a view to agree on the
       classification of such an aircraft in this category or in
       chapter I of this Understanding in view of the competitive
       situation.
B. -- Other turbine-powered aircraft, including helicopters
C. -- Other aircraft, including helicopters.
An illustrative list of aircraft in categories A and B is appended to
this document.
 ---pagebreak---                                         2
5.   Credit Terms and Conditions
     Participants undertake not to support credit terms more favourable than
     those set out in this article.
                                    * ■*‘
     Category A.    10 years at matrix rates or respective CIRRs. Credit
                    terms longer than 8 years are subject to prior
                    notification in accordance with paragraph 9(b) of the
                    Arrangement. (4)
     Category B.    7 years at matrix rates or respective CIRRs.          ,
                                                                          I
                                                                          i
     Category C.    5 years at matrix rates or respective CIRRs.
 6.   Sales or Leases to Third Countries (relay countries)
      In cases where the aircraft are to be on-sold or on-leased to an
      end-buyer or end-user in a third country, the interest rate shall be
      that applicable to the country of final destination.
                                                t
 7.  Matching Provisions
      In the event of officially supported competition, aircraft competing
      with those from another category or chapter shall for a specific sale
      be able to benefit from matching of the same export credit terms and
      conditions. Before making the matching offer, the matching authority
      shall make reasonable efforts to determine the export credit terms and
      conditions the competing aircraft benefits from. The matching
      autnority will be considered to have made such reasonable efforts if it
      has informed by telex the authority assumed to offer the terms it
       intends to match of its intention to do so but has not been informed
      within three working days that the terms it intends to match will not
      be used to support the transaction in question.
  8.   Tied Aid Credits Prohibition
       Participants shall not provide tied aid financing, partially untied aid
       financing, or any other kind of financing on credit conditions that are
       more favourable than those set out in this Understanding.
  9.   Consultation and Notification Procedures
       The procedures of the Arrangement shall apply to officially supported
       export credits not in conformity with the terms of this Sector
       Understanding. In addition, should any Participant believe that
       another Participant may be offering an officially supported export
       credit not in conformity with this Sector Understanding without giving
       advance notice, consultations shall be held within ten days upon
       request.
 ---pagebreak---                                       3
10. Review
    The provisions of this Sector Understanding are subject to review
    annually, normally during the spring meeting of Participants of the
    Arrangement. In the review, Participants will examine possible
    modifications of the provisions notably in order to bring them closer
    to market conditions. In particular, Participants will examine, at the
    first review session, the questions of:
    -- the prior notification requirements and procedures of paragraph 5
         (Category A);
    -- insurance premiums and guarantee fees;
    —    official support for export of used aircraft; (5)
     -- conditions for maintenance, spare parts and service contracts; (5)
     -- wider participation, including follow-up of contacts with Brazil and
         Indonesia.
    Tn addition if market conditions or customary financing practices
     change considerably, any Participant is entitled to ask for a special
     review of the provisions.
                             NOTES AND REFERENCES
     A list of non-conforming commitments outstanding on 1st Decejnber 1.9.85.
     their conditions and expiry date shall be notified to the iecrecariat
     no later than 15th Mar.ch_J.986 and circulated in a separate document.
     Upon their expiiy , these commitments shall be brought into conformity
     with this Sector Understanding.
 2.   Israel, "having accepted the invitation of the Participants of the
     Arrangement to become a Participant of this Sector Understanding, has
     declared its willingness to apply this Sector Understanding including,
     where relevant, the Arrangement on Guidelines for Officially Supported
      Export Credits.
 3.   Best endeavours shall be made inter alia with respect to the
     willingness to respond favourably to the invitation by another
      Participant to consult on possibilities of achieving conditions as
      close to the market as possible, for example in matching.
 4.   The minimum interest rate applicable for repayment terms of over 8.5
      and up to 10 years being the same as for repayment terms of over 5 and
      up to 8.5 years.
 5.   Pending the review on these matters, these goods and services shall be
      covered by the Arrangement on Guidelines for Officially Supported
      Export Credits. The tied aid credits prohibition in paragraph 8 of
      this Sector Understanding shall apply.
 ---pagebreak---                                         4
                         Illustrative List of Aircraft
       This list is not exhaustive and serves only to indicate the type of
aircraft to be included in the different categories where doubts could arise.
                                       ~+ '
Manufacturer                                Designation
CATEGORY A
       Aeritalia                             G 222
       Aeritalia/Aerospatiale               AIR 42
       Aérospatiale/MBB                      C160 Transall
       Avitech                               CN 235
       Brit Aerospace                        HS 748 series 2A
       Canadair                              a 215
       De Havilland Cy                       Dash 5
       De Havilland Cy                      Dash 7
       De Havilland Cy                       Dash 8
       Embraer ,                             BIB 120 Brasilia
       Fokker                                F 27'
       Fokker                                F 28
       Fokker                                F 50
       Gulfstream America                    Gulfstream 1-4
       Saab                                  SF 340
       Short                                 SD 3-30
       Short.                                SD 3-60
       etc.
CATEGORY B
       Aeritalia                             G180
       Ahrens                                404
       Beech                                 1900
       Beech                                 B-200 Super King Air
       Beech                                 Model 200 Starship 1
       Beech                                 300 Super King Air
       British Aerospace                     BAe Jetstream 31
       British Aerospace                     BAe 125
       Casa                                  C 212-200
       Cessna                                441 Conquest II
       Dassault Breguet                      Falcon
       De Havilland Cy                       Dash 6
       Domier                                Do 128-6
       Dornier                               Do 228-200
       Embraer                               EMB H O P2
       Fairchild                            Merlin/300
       Fairchild                             Metro III A
       IAI                                   Arava 101 B
       Mitsubishi                            Mu2 Marquise
       Hiatus Britten-Norman                 BN2A Islander
       Piper                                 T 1 020
       Hper                                  T 1 040
       Reims                                 Cessna-Caravan II
       Short                                 Skyvan SC-7 Series 3
       SIAI-Marchetti                        SF 600 Canguro
       etc.