CELEX: 51973PC0674
Language: en
Date: 1973-05-15
Title: PROPOSAL FOR A REGULATION (EEC) OF THE COUNCIL instituting a common policy and an administrative procedure concerning the duration of guarantees and credits in respect of exports to certain third countries.

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (73) 674
Vol. 1973/0135
 ---pagebreak--- Disclaimer
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                           COM(73) 674 final
                                                    Brussels , 15 May 1973
                                     PROPOSAL FOR A
                          REGULATIONQ?r (EEC) OF IE? COUNCIL
                instituting a common policy and an administrative
                procedure concerning the duration of guarantees
                and credits in respect of exports to certain third
                countries .
                 ( submitted to the Council "by the Commission)
  CÛK(73) 674 final
 ---pagebreak--- EXPLANATORY MEMORANDUM
For some years past there has teen growing competition between the
industrialized countries in granting export credits , for these play a cardinal
role in trade relations "both between the industrialized countries themselves
and between them and developing or state-trading countries .       The practical
consequences of this competition are a considerable increase in the scale of
the credits given, a strong trend towards an increase in their duration and
a more or less marked tendency of public authorities and public or semi-
public agencies to influence other factors , such as interest rates , amounts
of payments on account , procedure for settling local portions , etc . ...
                                     1
The endeavours of the Berne Union        in the 1950' s   restrict the maximum
duration of commercial credits to five years calculated from a clearly
defined starting point were adopted and followed within the European Economic
Community .   This is why , one of the . first actions of the Policy Coordination
                                                                         2
Group for Credit Insurance , Credit Guarantees and Financial Credits         was to
institute a procedure for consulation concerning credits of more than five
years' duration ( Council Decision of 15 May 1962 ), as amended and extended in
January 1965 (Decision No 65/53 of 26 January 196p ) and reinforced in
July 19673 .
                                                                        • • •/ • • •
  "Union of international credit insurers ", known as "Berne Union", set up in
  1934 - Most Western countries are members of it . The Union makes no binding
  rules but , at various meetings , recommendations establishing certain policy
  guide–lines have been approved .
2
  Set up by the Council Decision of 27 September 1960 , OJ of 27 October 1960,
  pp . 1339-1340 .
30J of 30 June 1962, pp. 1561-1562, and OJ of 5 February 1 9^5* PP« 255 to
  258 respectively .
 ---pagebreak--- It should be emphasized that this procedure was until recently the only ...
procedure for regular consultation "between exporting countries . There are
two variants of the procedure :
           - consultations on private credits "being the responsibility of
             the Coordination Group ; .
           - consultations on public credits , being the responsibility of
             the Committee of Permanent Representatives .
This procedure under which information is exohanged regularly and in advance ,
makes it possible to determine whether there is any Community coherence in the
export credit policies of Member States ; the Member States consult each other
and the Commission whenever they propose to grant or to guarantee credits
linked to exports for a duration exceeding five years calculated from the
starting points defined by the Berne Union or departing from any rule . or
norms adopted by common agreement between the Member States of the Community .
Although it had been hoped that the institution of the consultation
procedure would, through frequent discussion of actual ca3es , bring about
the adoption of a common attitude to export credits ^ the procedure has in
fact brought to light the difficulties in achieving some real discipline
among the Member States , and yet its effectiveness ultimately depends on the
willingness of each Member States to collaborate with its partners and on the
extent to which each Member State is prepared, when consulting the others , to
accept their advice .                                                             '
The only binding rule is to be found in the obligation to hold verbal
consultations where all but one of the Member States consulted have given
an unfavourable opinion on the relevant transaction, and in such a case the
                                                                   . • • •/ • • •
 Adoption by the OECD Council , on 18 April 1972, of an exchange of information
 system for export credits exceeding a duration of 5 years and a prior
 consultation procedure for credits exceeding a duration of five years •;
 for exports to industrialized countries .
 ---pagebreak--- relevant Member State must , except in case of urgency, suspend its decision
on the operation until a decision is taken under the consultation procedure .
Detailed discussions on this subject in the Committee of Permanent
Representatives and in the Coordination Group have brought to light two
major causes of the difficulties encountered in adopting a common credit
policy, firstly the fact that Member States all too readily invoke competition
from non-Community industrialized countries and secondly the limited value
of rules established by reference to country of destination (Eastern countries ,
GDR) or to goods supplied ( sales of shops ).
It therefore seems that a uniform policy on credit insurance , credit
guarantees and financial credits ( in particular as regards duration) must be
developed at Community level , if two objectives are to be attained, namely :
             – the slowing down of the increasing competition between Member
                Str.tes provoked by considerations of credit on the external
               market •     '
             – the strengthening of the position of Community undertakings
               vis-a-vis third country competitors .
Moreover, in view of the substantial capital requirements of developing
countries and of the limited extent to which they can contract debts , gifts
and aid credits should normally be regarded as the most suitable method of
financing those of their imports which they cannot pay for from export
income .
"L olci-rr distinction smst therefore bo draim "b t-'.in credits for financing
export 3 to industrieliB .& and strtu-tmding oo-intri      credits for 'inducing
 rrforts to developing countries and aid , a* definvd by tho Development Jlid
Co3Kitt-wG ( D.A.S)."                                                    .   . ... .
 ---pagebreak---                                       – 4 –
For these reasons it is necessary to establish, at Community level , a .
harmonized, policy whereby the increasing competition "between Member States
provoked by considerations of credit on the external market can be slowed
down and to lay down the basic principles for a common policy on credits to.
third countries .
The Commission therefore proposes that the Council fix credit limits with a
distinction according to type of country ( industrialized countries , . including
state–trading countries ), according to the goods or services supplied ( by •
reference to the amortization period and profitability ), and taking account
of third country competition .
The establishment of such limits requires also an information and consultation
procedure based on a system for the exchange of information and prior
consultation, backed up where necessary by binding measures when a final
decision is talcen, so that real discipline and solidarity will be achieved
as regards both export credit policy and the Community 's attitude in
international organizations , in particular in the OECD . •
In order to reflect commitments already undertaken within international
bodies , in particular in the , OECD, the Commission 's proposals embody previous
agreements limiting the duration of credits and credit guarantees ,
concerning the information and consultation procedure for export . credits , .
and concerning individual sectors ( e.g. OECD shipping agreement ).
                           '                                           *« ♦/ • • •
 This is why the Coordination Group, at its meeting of 25 and 26 April 1972 ,
 felt that the arrangements concluded by credit insurers in the Berne Union
 would , as regards consultation, be regarded as the Member States' norms .
 ---pagebreak---                                  - 5 -
The Commission 's proposals for the establishment of a common policy
cover :
- firstly , determination of the operations to which the proposed
  measures will apply , namely the grant or total or partial guarantee
  cf export credits , linked to national exports of goods or services ,
  proposed by a Member State or by any credit insurance or finance
  institution dependent on the State ;
- secondly , the duration of credit    granted in respect of such
  operations j
- thirdly , the information and consultation procedure , as regards both
  the context in which it is to be followed and its implications with
  respect to the final decision on the proposed transaction .
                                   *
                               *      *
 ---pagebreak---                              Propo sa 1 jfor a
                '   REGULATION (EEC ) OF THE COUNCIL
            instituting a common policy and an administrative
           procedure concerning the duration of guarantees
           and credits in respect of exports to certain
           third countries
THE COUNCIL OF THE EUROPEAN C0IIMU1TITIES ,
Having regard to the Treaty establishing the European Economic Community ,
and in particular Article 113 thereof ;
Having regard to the proposal from the Commission ;
Whereas the common commercial policy must be based on uniform principles ,
 in particular as regards export policy ;
IJhereas export credits play a cardinal role in international trade and
are an important instrument of commercial policy ;
Whereas disparate export guarantee and credit terms are apt to produce
distortions in competition between Community undertakings , which may
 seriously harm the interests of the relevant economic sectors of the
Community , and must therefore be eliminated ;
Whereas , as regards the duration of export credits , it is necessary
 initially to lay down certain common principles for exports to .
 industrialized countries , including the state-trading countries , and
 institute a procedure to facilitate the application and development of
"these principles ;
 ---pagebreak---                                  - 2 -
Whereas it is also necessary to allow for certain departures from the
adopted norms and to make adequate provision accordingly ;
HAS ADOPTED THIS REGULATION :
                     < ■
                              Article 1
This Regulation applies to the grant or total or partial guarantee of
export credits , in whatever form , by public authorities or by any credit
insurance or financing organization acting for their account or with
their support , where the credits are directly or indirectly linked to
exports of goods or services to a third countiy listed in Annex I ;
                              Article 2
Export credits shall not be granted or guaranteed on terms departing
from the norms set out in Annex II unless it is necessary so to dos
(a ) as a protective measure , to enable Community undertakings to compete
     with offers made by third country undertakings ;
(b ) to remedy serious difficulties in the relevant economic sector.
                              Article 3 1
1 . Where it is proposed to grant or to guarantee an export credit or to
promise to grant or guarantee such credit on terms departing from the
norms set out in Annex II , the Member State concerned shall in advance
notify the other Member States and the Commission simultaneously thereof,
informing them of all the factors which would justify the proposed
measure , and giving especially the particulars listed in Annex III .
 ---pagebreak--- The Member State concerned shall make this notification as soon as it
commences consideration of the proposed guarantees or credits or of any
other measure preparatory to such consideration .
2 . Within five working days following receipt of such notification ,
additional information concerning the particulars referred to in
paragraph 1 may be requested by the Commission or by any other Member
State , which shall send a copy of its request to the Commission .
                               Article 4
Where a global credit arrangement is concluded , the procedures laid down
in this Regulation shall apply not only to the credits relating to
individual contracts charged to that arrangement but also to the granting
of the global arrangement , even where the arrangement does not specify '
the nature of the transactions , the duration or the other credit terms
listed in Annex II .
" Global credit arrangement " means any understanding or statement , in
whatever form , whereby the intention to guarantee supplier qr financial J
credits or to open financial credits , up to a specified or ascertainable
ceiling , and in respect of a connected series of transactions , is made
known to a third country or to exporters or to financial institutions .
                               Article 5
1 . The other Member States may , within five working days following ;
receipt of the notification made under Article 3(1 )» communicate to the
consultor Member State and to the Commission their unfavourable opinion
or other views on the proposed measure , or request verbal consultation
on the measure viithin the Committee specified in Article 14 or the
adoption of a decision in accordance with the procedure laid down in
Article 7 .                                                .  •  .
 ---pagebreak---   2 . Where additional information is requested in accordance with
  Article 3(2 ), the time-limit for the purposes of paragraph 1 of this
  Article shall be three working days following receipt of such
  additional information .
                                     Article 6
  1 . Where the Commission , having regard to the views of the other Member
  States , considers that the proposed measure does not comply with
  Article 2 , or where at least three Member States so request , it shall
  initiate the procedure laid down in Article 7 and shall so inform the
  consult or Member State within five working days following expiration
  of the time-limits specified in Article 5(0 and (2 ).         In such case
  the Member State shall not adopt the measure until the procedure has
  led to a final decision .        ;
  2 . The consultor Member State may take the proposed measure if , within
  the time-limit specified in paragraph 1 , it has not been informed that
  the procedure laid down in Article 7 is being initiated or if it is
• informed by the Commission that the procedure is not being initiated.
                                     Article 7
  1 . Where the procedure laid down in this Article is to be followed , the
  representative of the Commission shall submit to the Committee a draft
  of the provisions to be adopted .        The Committee shall deliver its
  Opinion on the draft within a time-limit which the Chairman may set in
  accordance with the urgency of the matter but which shall not exceed
  three working days .      Opinions shall be adopted by a majority of 41
  votes .  .  !                      I *
                                                                      , -  »
 ,2 . The Commission.; shall adopt provisions which shall be immediately
  applicable .     However , where the proposed measures are not in accordance
  with the Opinion of the Committee , they shall forthwith be communicated
 by the Commission to the Council , and shall be suspended for ten working
  days .     During this period the Council , acting by a qualified majority ,
  may take a different decision .
 ---pagebreak---                                 - 5 -
                              Article 8
1 . In case of urgency the Commission may authorize the consultor Member
State to adopt the proposed measure before the procedure set out in
Article 3 to 7 -has been completed , provided that the conditions set out
in Article 2(a) are met and that offers from other Community undertakings
are not made in respect of the same export transaction .
2 . The consultor Member State shall communicate its request to the
Commission and to the other Member States in accordance with Article 3(1 ).
3 . The Commission , after consulting the Member States within the
Committee , shall decide by Decision addressed to the consultor Member
State within five working days following receipt of the request .    It
shall communicate its decision to the other Member States .
The Member States shall inform the other - Member States and the Commission
of decisions taken on measures which have been the subject of consultations
under Articles 3 to 8 .
                              Article 10
Any Member State may consult the other Member States and the Commission
on an export credit which it is proposed to grant or to guarantee in
accordance with the norms set out in Annex II .
Such optional consultation may be followed , upon request from the
consultor Member State , by verbal consultation within the Committee .
 ---pagebreak---                                 - 6 .-
                              Article 11
1 . Any Member State may ask any other Member State whether it has
knowledge of an export operation , and in particular of the guarantee
and credit terms alleged by exporters or by the credit or credit
insurance organizations concerned , to have been granted in respect of
offers from undertakings in the Member State of which enquiry is made .
2 . Should no reply be forthcoming within five working days , the alleged
terms shall be deemed to be established where the enquirer Member State
invokes them expressly , in connection with the procedures laid down in
Articles 3 to 7t to justify measures ; which it proposes to take in
respect of the same export transaction .
                              Article 12
1 . Where a third country requests the information referred to in
Article 3(1 ) from a Member State , and the Ilember State has reason to
believe that the relevant export transaction is also of interest to
undertakings in other Member. States , that Member State shall inform
the other Member States and the Commission of the request and of its
reply thereto .   Where possible , the Ilember State concerned shall
consult the other Member States and the Commission before making its
reply .
2.. Where the request from the third country is made to all the Member
States , the reply thereto shall be made by the Commission after
consultation with the Member States within the Committee .
                                                                 I
                                                 V
                              Article 13
The Commission shall every six months lay before the Council a report
on the application of this Regulation , and , whenever the nature and
importance of the problems dealt with so demand , additional reports .
 ---pagebreak---                                  - 7 -
                                Article *4
1 . The Committee referred to in this Regulation is the "Advisory
Committee for Export Credit Insurance" set up by the Council Directive .
of 27 October 1 9701 .
2 . For the purposes of the procedure laid down in Article 7 » the votes
of the Member States shall be weighted in accordance with Article 143(2 )
of the Treaty ,    The Chairman shall not vote .
                                Article 15
The Committee may examine any other question raised by the Chairman ,
either on his own initiative or at the request of the representative
of a Member State .
                                Article 16
                            ;
This Regulation shall enter into force on
This Regulation shall be binding in its entirety and directly applicable
in all Member States .
1
  Council Directive of 27 October 1970 on the adoption of a common credit
  insurance policy for medium- and long-term transactions with public
  buyers ( OJ No L 254 » 23 November 1970 ) •
 ---pagebreak---                                                            ANNEX I
                            LIST OF COUNTRIES
                               (Article 1 )
Australia , Canada , Japan , New Zealand , North Korea , North Vietnam ,
People 's Republic of China , People 's Republic of Mongolia , Republic
of South Africa , USSR , United States of America ,
All European third countries except the following :      Cyprus , Greece ,
Iceland , Malta , Portugal , Spain , Turkey and Yugoslavia .
 ---pagebreak---                                                             AMEX II
                               LIST OF IIORIK
                                 ( Article 2 )
A , Duration of cradits and guarantees
1 . The duration of credits and guarantees shall not exceed five years
    calculated from the starting points specified in paragraph 3 .
    However , for exports of ships , the duration shall be that specified
    in the Understanding on Export Credits for Ships embodied in the
    OECD Council Resolution of 16 December 1970 .
2 . The duration of the credit or guarantee shall include any period of
    grace proposed in conjunction therewith ,
3 . The starting points are the following :
    ( a ) In the case of capital goods consisting of individual items
          usable in themselves :
          the mean date , or actual dates , when the buyer is to take physical
          possession of goods in his own country ;
    (b ) In the case of capital equipment for complete plants or factories :
          the date when the buyer is to take physical possession of the
          entire equipment ( excluding spare parts ) supplied under the
          contract ;
    ( c ) In the case of construction or installation contracts :
          the earlier of the following :
          - either the date when the seller will have respectively
            constructed or installed the plant ;   or
 ---pagebreak---          - 12 months after the date when the entire equipment ( excluding
           spare parts ) to be supplied under the contract will have been
           delivered on site ;
    ( d) In the case of loans and financial credits :
         the date on which the first drawing is made .
B. Percentage of local costs
In the case of guaranteed private credits , the balance of the local
portion payable on credit must not exceed jfo of the contract price ,
unless payment of the local portion is to be made not later than three
months after final completion of the works or deliveries .
For the purposes of this rules
- "balance payable on credit'1 means the balance outstanding after
  charging against the local portion all payments made on account in
  connection with the contract ;
- " local portion" means that portion of the contract price representing
  the expenditure the exporter expects to incur on the spot in the way
  of payments to employees and others and payments for goods and materials
- "contract" means any type of contract ( for the supply of goods and
  materials ;, for^the cariying out of work ; mixed ( i.e. , supply and
  works ) contracts );
- "payment on account" means all the sums payable between the placing of
      ï                                           •             i
  the order and final completion of the works or deliveries .
    Leasing contracts       _         ■
For the purposes of the above rules , leasing contracts are to be treated
as credits .    Unless they contain express provision restricting their
total duration , that duration is to be regarded , for the purposes of
Article 2 of this Regulation , as in excess of the periods set out in
section A hereof .
 ---pagebreak---                                                             ANTTEX III
                             LIST OF PARTIGULARS
                                 (Article 3 )
                                  Article 1
A. In the case of an individual contract , the Member State concerned
shall communicate tho following particulars :
( a ) country of destination ;
(b ) location of the proposed transaction or transactions , or failing
      that , address of head office of the contracting party in the country
      of destination ;
( c ) characteristics of the transaction and principal technical details
      of items to be supplied :
      - nature of transaction ;
      - if contract is for a number of items of capital goods , approximate
         number thereof ;
      -- value rating according to scale of values ;
      - if transaction comprises a number of individual contracts , minimum
         price set for such contracts , if any ;
      - if transaction is to be put for international tender , closing date
         for submission of tenders ;
( d) principal credit terms applied for by proposed recipient ;
( e ) credit terms the authorities in the exporting country propose to
      offer , in particular :
      - percentage payable on credit ;
      - duration of credit and starting-point therefor ( e.g. , each
         delivery , last delivery , taking over of works ) and credit drawing
         period , if any ) ;
 ---pagebreak---                                     - 2 -
     1 - amount s of payments on account |
       - proportion guaranteed ;
       - terms of payment }
       - period of grace , if any ;
       - where repayment is not to "be effected "by equal instalments at
         regular intervals between the starting-point and termination of
         the credit , exact details of how it is to be effected (percentage
         of each instalment and date of payment );
       - minimum interest chargeable to the exporter or foreign recipient
         by the Member State or export financing institution ;
       - amount of effective interest subsidy ;
       - credit insurance charges , where these differ from those normally
         payable under the general law ;                     '
( f ) precise grounds relied on for not applying, or for departing from ,
       the norms set out in Article 1 .
Where the following obtain , they must be mentioned : competition from a
third country (with indication whether or not supported ); operation to
be charged to a global credit arrangement which has been the subject of
previous consultation ;     importance of contract in view of the state
either of the industry concerned or of the area where the exporting
undertaking is located .
                                 Article 2
B. In the case of global credit arrangements , the Member State concerned
shall communicate the following particulars :
(a ) country of destination ;
(b ) ceiling of global credit arrangement;'
( c ) purpose of credit :
       - if known , place where transaction is to be carried out ; '
       - nature of goods and materials to be supplied ;
 ---pagebreak---                                    - 3 -
      - whether expected borrowers and guarantors are public or private ;
( d ) credit terms as under Article 1(e ) and eligibility requirements for
      individual contracts ( e.g. , closing dates for charging to global
      credit arrangement , minimum contract prices to be set , if any);
( e ) precise grounds cited for not applying, or for departing from, the
      norms set out in Annex II .    Where the following obtains , it must
      be mentioned ; competition from a third country (with indication
      whether or not supported ).
 ---pagebreak---              Declaration to be inserted in the Council Minutes
X.   The Council and the Commission agreed that as a general rule the
     procedure laid down in Articles 6(1 ) and 7 should not be applied
     to transactions covered "by Article 1 of the Regulation for exports
     to European State-trading countries , where the duration of the
     credit or guarantee does not exceed 7 years calculated from the
     starting-points set out in Annex II ,
II . The Council and the Commission agreed on the following rules for
     applying Article 12 of the Regulation ;
     1 . ( a ) where the authorities in the Member State enquired of are
               entirely certain that the duration of the transaction in
               question will not exceed five years calculated from the
               starting-points indicated in Annex II , the enquirer country
               may safely be so informed .   Naturally , depending on the
               type of equipment to which the enquiry relates , a shorter
               duration nay be indicated ;
         (b ) otherwise , the reply shall be that the matter is not known ,
               and that , except in case of matching , the duration of the
               credit will not exceed five years calculated from the        ,
               starting-points indicated in Annex II ;
         ( c ) should it appear that the transaction to which the third
               countiy 's enquiry relates is definitely , so far as the Member
               State is concerned , eligible for assistance under an outline
               agreement , the Member State shall mention this in its reply .
     2 . Where the enquiry is addressed :
         - to a single^ Member State of the Community : it shall be for
            that Member State to decide whether it ought to consult the
            other Member States by telex before giving a reply ;
 ---pagebreak---                          - 2 -
- -to several Member States of the Coirmmnity t it shall "be for
  those States to decide whether they ought to consult the other
  Member States by telex before giving their reply ;
- to all the Member States of the Conrnmitj ;   they shall send to
  the Commission by telex the replies they propose to make , and
  the Commission shall propose a draft reply to the Committee
  and itself afterwards dispatch the joint reply thus formulated .
                                                               /