CELEX: 51981PC0134
Language: en
Date: 1981-03-26 00:00:00
Title: RECOMMENDATION FOR A COUNCIL DECISION on the stand to be adopted by the Community at the international negotiations on the amendment of provisions of the Arran- gement on Guidelines for Officially Supported Export Credits (Communication of the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
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DOCUMENTS "COM"
COM (81) 134
Vol. 1981/9007
 ---pagebreak--- Disclaimer
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 ---pagebreak---                                                             COM(81 ) 134 final
                                                             Bruxelles, le ^ 6th March 1981
      COMMISSION
            DES
COMMUNAUTES EUROPEENNES
      Secrétariat général
                             RECOMMENDATION FOR A COUNCIL DECISION^
                   on the stand to be adopted by the Community at the international
                   negotiations on the amendment of          provisions of the Arran-
                   gement on Guidelines for Officially Supported Export Credits
                          (Communication of the Commission to the Council )
           C0M(81 ) 134 final
 ---pagebreak--- Introduction
1.           As happens every year> the    Arrangement on guidelines for
   officially supported export credits" ( usually called " Consensus")
    is to be reviewed by the countries which adhere to itC'Participants ").
                                                                            X
   The next such review is scheduled to take place on 11 May 1981 .
2.           The discussion which will take place will naturally be^
   influenced by the outcome of the negotiations of last year which
   ended 19 December with a set of " conclusions " which in fact reflected
   diverging views.                                        <\^
   a ) On the one hand, certain Participants ( US , C^feda, Sweden, etc.)
       sought a change in the system of interest H^fes, referring to
       the conclusions of the OECD Ministerial Council and to the
       Communique of the Venice Western Summit ; these Delegations advocated
       a system which would1 bring the irrtS^est rate matrix of the Consensus
                                         cS2
       nearer to the general level o-^yrarket interest rates . In that
       context they advocated a " (liferent i ated Rate System" ( i.e. with
       differentiated rates for each currency ).    Other Participants
       suggested a " Uniform Moving Matrix " ( i.e. a system of uniform
       interest rates which would be adjusted automatically according to
       an average ^.
       In addition^j^ large number of Participants regretted the absence
       of " transparency" concerning tied aid credits .
   b ) The Community for its part proposed , in accordance with the
       ^liberations of the Council on 17 November and 15 December
         an immediate increase of the minimum rates of the Consensus by
         1 % for categories I and II , and by 0.8 % for category 3JIJ , as
         well as a review, in mid"19&,1 and before the end of 1981 at the
          latest , of the advisability of a new adaptation of the minimum
         interest rates in the light of the then prevailing economic and
         monetary situation ;
       ~ as regards tied aid credits , to submit those where the grant
         element is less than 15 X to the prior notification and discussion
         procedure ( para 9 ( a ) 1 of the Arrangement .
 ---pagebreak---                                                   CD
      c ) Not only were the Community proposals considered insufficient
          but the discussions highlighted an additional difficulty relating
          to the situation of Japan : given that the Japanese commercial
          market interest rate would allegedly fall below the Consensus^
          minima if the latter were to be increased according to the 5^
          proposals, this country wanted the Export~Import Bank of i^an ,
          although an official financing agency , to be allowed to apply
          the commercial market interest rate , and even to maintain the
          same differentials as now exist in favour of ca^^&ry II and
          III countries .
          This position was not acceptable , in full^^ in part, to certain
          Participants , including the Community .   In effect the Consensus
          does not foresee the possibility for an official financing insti "
          tut ion to provide finance at a r^e lower than the Consensus. In
          that context , at the time of      discussion on 15 December , the
          Council had indicated the        for all pertinent information to be
          supplied about commercias^nterest rates and stressed the need to
          clarify the possibility for other countries * exporters to have
          access to financing in the currency concerned , in the present case
          Ye".
3.              It t^fcgainst this background that the " Conclusions adopted
      by the Participants" on 19 December 1980 limit themselves to mention
      the idea of an annual review of the interest rates grill of the
       Cor^sensus without introducing any modification of the present matrix
     Xxj)* of any other provisions of the Consensus .
ft.             The present Communication of the Commission will therefore
       start from the positions reached last December , and, taking into
       account the elements of the Directives already approved by the Council
       as well as of the clarifications obtained on the functioning of public
      export credit Agencies and of the financial market in Japan , it seeks
       to propose to the Council the elements of a Community position such as
       to uphold and to improve the Consensus * and which could open the door
       to a compromise next May .   The absence of a compromise in May wculj
       risk putting the operation of the Consensus in danger which would
     . be damaging" for all the industrialized countries and for the Community
       itself .                                                               ,
 C1 ) See footnote on page 3
 ---pagebreak---    Proposals for a Community position
   5.              One should recall that , following the Directives approved
        by the Council on 6 May 1980 , the Community has already proposed
                                                      (1)
        a number of improvements to the Consensus         . These proposals have
        in no way lost their value and the Commission will continue to defen^
        them .                         \
    6.             Given that the preoccupations of third countries were mainly
         concentrated on :
        - the " system " of interest rates in the Consensus ,
        - the practice of tied aid tredits ,
        - the problem of the countries where commercial ^§fket interest rates
            are or will be below Consensus levels,          ^
        the Commission proposes to the Council the following elements for a
        Community position .
    7.             The most important- objective ^jfceountries like the US , Canada,
        Sweden and Switzerland is to changj^rhe system of interest rates in
        the Consensus, with a view to "^l^iging Consensus rates closer to
        market interest rates" as welf^s to " reducing or eliminating interest
         rate subsidies".
                   The Commissi q^,has already submitted its views to the Council
         ( C0M(80)330 final <^^16 June 1980) and does not propose to justify them
         again .
                         CN
                   However , in the Light of the discussions of the Council in
          1980 and under present economic circumstances , characterised , inter
                 by violent swings in exchange rates , an oscillating evolution of
        ^&erest rates (mainly short term but also medium and long term ), the
        ^                                                                 4
         difficulty of achieving concerted monetary policies amongst t,he main
                                                                           ■••/■■
  ( 1 ) These proposals were : to raise the minimum down payment from 15 % to
         20 % for Category I , to limit official support for local costs to insu-
^        ranee and guarantees for Category II , to limit the length of credit for
         Category I to 5 years , to include nuclear power plants in the scope of
         the Consensus with a uniform maximum length of credit of 10 years for
         these as well as for conventional power plants , to include disciplines
         concerning the sale of agricultural products , and to . include liquid
        natural gas carriers with a maximum length of credit of 10 years and
        the same minimum interest rate as provided for in the Sectoral Arrange"
         ment on Ships .
 ---pagebreak---          industrialised countries# : the persistence Of trade and/ of balance
         Of payments deficitsat1 least for Europe; these circumstances seem
     . to indicate * prQgres$itfeafi<fpragmatieapproach father than making
                                       ^                            1 * * î[            \     *v               *            ^         j-      '                     •
         animmedUt* choice of #' radically pew, fcysttar.                                                                                   "# \ •»
                                                    *          " - *      r v         - *        «* *    v*      1         jI   ¥     i*         '
      * - I,                       It Is thereforeproposedto theCouncU -s
                    ,1 ·-· ;■■,■               ,; '   ; ■■·■■. -Λ ,;--,.           .    -          * ■      Λ                                            : Λ^' .· ■
      a ) as aft* immediate measure, an Increase pf< the minimum rates of the
                  Consensus by-\T X foi* categories I                                                                                           D.f * for
                  category                   - with . effect' 'We^\1;/iuiy
                , ■' : ■ - ν^ ■ V                                      · '·: ■ ' :.· ^                                                                '
      b)> to confirm the not ion **• already introduced irf^he last "Conclusions
            .*'} ofiythf Participants"                                 of > ;rtarta#d syst<pm In which Participants
       . ' : would discuss and decidt \adjustwent s at each annual review ;
                                                                                                       :v :         ■■■>■.        < -    ■
                                                                        >                  .. v t - " A ■
       c> to take into consideratiorv^ at easSyannual review , the various
                  elementsof the then existing jsSBhomic 'and monetary situation ; among
                  these elements to beconsidfi^d-'theaverage of the medium 'term
                                  -M.v : .               .. '                  -05?                                     '■ .
                  interest rates in the five currencies of the revised " basket " of
                  the SDR. <US Dollar, DM^ Sterling^ FF ^ Yen) calculated on the last
         v.' ;,, six months before the date of th^ annual; review^ would serve as a
          , | by"flashing                light'^^e* Annex ) : if that average has itself increased
                           more than JBl&r percentage point there would be a presumption for
                                                                              . 1.'  -                      ■'
               < ^ .               . . _ • (\V                   a      , »     . .      , ^
                  the need otNsrt upward adjustments                                                    : * ,t, <
      d) finally# that , as -the situation exists both in_ law and
               ' in^fact inside the Community by virtue of Article 92 of the Treaty,
                <fc?ie Participants commit themselves ftof to subsidise interest rates
  ■                              ν\.             ■·   ..              .            ( 2)                            .
    ,«^ on sales amongst themselves                                                        af froffl 1 January 1982 . This would
                 at the same time eliminate the existing discrimination which works
                 agalnst flember States . !"
' ..·                             V ν.                                      , : νΛ            '· ■ \                         .·     ■ ·.. ·        ,. ■
 ( 1 ) In order to avoid the administrative comfTTfcations $nd the bureaur
  1            cratic burden of ratifying "prior commitments", another possibility
      ^ 1s to propose that such an increase be implemented on 1 Septer-ber ,
               i.e. 3 ninths after the date at which Participants have taken the
               decision, and that no prior commitments would be accepted after
       .       t September .                                                                                                               :
 < 2) Katurally, the limitation of credit length to 5 years as well as thee
              Increase in minimum down payments to 20 X# which have already been
 > approved; by the Council in ftay 19$0> would also apply.
 ---pagebreak---  8.          Regarding the practice of tied aid credits , the Council has
     already approved in December 1980 the proposal to submit those with
     a grant element below 15 % to the prior notification and discussion
     procedure foreseen in Article 9 ( a ) 1 of the Arrangement .
             Since then , several countries ( and the most recent casaSFs
             Since then, several countries (and the most recent cas^S>s
     Japan ) have either decided to introduce or are studying the intro­
     duction of mixed credit facilities .     It seems therefore in the
     interest of the Community itself and useful to the ^jpctioning of
     the Consensus to improve transparency regarding ^ftree practices ,
     and the Commission therefore suggests to compare this discipline
     in terms of procedure by proposing to submi «^*
     a ) tied aid credits with a grant element above 15 % and less than 25 %
         to the prior notification without di scussion procedure foreseen in
         Article 9 ( b) 1 of the Arranc^jpnt ( these come at the present time
         under the prompt notificatiJ$^ procedure of Article 9 ( c ) J );
     b ) tied aid credits with a grant element of 25 % and above to the
         prompt notification procedure of Article 9 ( c ) 1 of the Arrangement
         (at      present^hese credits are not subject to any notification
         under the Are^&ement ) .
 9.          In DSrember last , one of the difficulties on which the discussions
     had broken down was that relating to the position of countries or
     rather currencies for which the commercial market interest rate is
     q^Would fall below Consensus minima. This problem is particularly
  ^S^cute in the case of Japan.
*
            In this context , it is necessary to define " official support ".
    Work on this element is in progress but it is not possible at this
    stage to offer a clear definition which would take into account , inter
    alia , the realities of the market and the mechanisms of intervention
    by all the Participants .
 ---pagebreak---        That is why the Commission proposes that , in the case
of Japan , and In conformity with the provisions of the Consensus ,
the Japanese Government undertakes , when the long~term commercial
rates of interest are below the levels of the Consensus
- either , to allow Eximbank - an official organisation creat ^
  to aid exports - to finance export credits only in such a manner
  that the ratesof interest on export credits conform to those of
  the Consensus;                                    0^
~ or, to allow Japanese exporters to finance tt^^elves on the
  commercial market without the intervention^^ Eximbank.
 ---pagebreak--- Conclusion
                                                                                " .\
10 .        Taken together / all these elements , i.e. those already approvecf-
     by the Council in May and in December 1980, combined with those proposed
     to the Council set out abqve, could in the view of the Commissi^§orm
     the basis of a consensus within the Council and V/ ould consti^j^
     a Community position such as
     - to reduce the burden ( budgetary or otherwise ) which results for
        the respective national economies from the variou^Techniques
                                                         xSJ*
                                                                        of
        interest rate subsidisation ;
     ** to improve the " transparency" of various nqvional practices in the
        field of tied aid credits ;
     - to deal with the problem of low interest rate countries and
        especially of Japan /
     - and finally to strengthen thQ^C-onsensus.
y
 ---pagebreak--- A.  INTEREST RATES               TAUX D' INTERET                                                                                                       ANNEX
                                             Nur.ber of years in maximum repayments term
               %
     Classif icatvdk,
                                             Délais maximum de remboursement en nombre d' anné es
       of country ^                       2 to 5                                   over 5 to 8.5                              over 8.5 to 10
        du pays
                               1 / 4/ 78     1 / 7/ 80   1 / 7/ 81 *      1 / 4 / 78       1 / 7/ 80    1 / 7/ 81   1 / 4/ 78    1 / 7/ 80 1 / 7/ 81 *
     CAT . 1    .
                              %75              8.50        9.50      -      8.00             8.75         9.75             Not applicable
     CAT . II
                                   V
                                 7.25 r        8.00        9.00             7.75             8.50         9.50             Not applicable
                                                                            7.50             7.75         8. 75       7.50         7.75    8.55
     CAT . Ilt                   7.25
                                               7'5Q%       8.50
 * According to the present proposal
 * Selon la proposition actuelle
                                                              **
B. BASIC MINIMUM RATES WEIGHTED BY NEW SDR-WEIGHTS                 -    TAUX MINIMA. DE BASE PONDERES SELON LA PONDERATION DU DTS
                                                                        __                                        ;               ^
   June 1977      8.25  Oct . 1977       8.0     Nov. 1977        7.875                Rates of interest of secondary market bonds for each
   June 1978      8.125 Oct . 1978       8.25'
                                         8.2     Nov. 1978        _ ___           ^pf the 5 currencies in the new SDR averaged over
                                                                                     ^KnmonthS/
                                                                                      «oPmon         or market rate of last month of period
   June 1979      8. 75 Oct . 1979       9.5     Nov . 1979       9.375                wrajfehever is the lower , weighted by new SDR weights .
   June 1980   10.125   Oct . 1980     10.5
                                         0.5     Nov . 1980      10 . 750
                                                                                  ** Taux d' intérêt des marchés secondaires pour les obligations
                                                                                       dans chacune de ces 5 devises dans le nouveau DTS ; moyenne
                                                                                       de 6 mois ou, taux de marché pour le dernier mois , en pre~
                                                                                       nant le chiftyte le plus bas des deux, pondéré selon la
                                                                                       pondération di^^uveau DTS.
                                                                                                             %'
                                                                                                                            \%
 ---pagebreak---                       COUNCIL DECISION
on the stand to be adopted by the Community at the international
negotiations on the amendment of certain provisions of tf^»
Arrangement on Guidelines for Officially Supported        Credits
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,^
Having regard to the Treaty establis&Sng the European Economic Community ,
and in particular Article 113 thaJ&of ,
Having regard to the Recommendation from the Commission ,
 ---pagebreak--- Whereas it is necessary to amend and augment the directives adopted by
the Council Decisions of 6 May 1980 / 25 November 1980 and 16 December 1980
on the stand to be adopted by the Community at the international
negotiations on the amendment of the Arrangement on Guidelines for
Officially Supported Export Credits ,                               .cS^*
                                                                  <#N
HAS DECIDED AS  FOLLOWS
                          Sole Article
   At the international negotiations on the amendm|^ of the
Arrangement on Guidelines for Officially Support ^ Export Credits/
the Commission shall express the Community position in accordance
with the attached directives .
                                       A#
   It shall act in consultation witfrowe special Committee provided
for in Article 113 of the Treaty^which shall assist it in its task .
                                    Done at Brussels / .
                    v#                      For the Council
                ^                              The President
       *
 ---pagebreak---           . I
1
                Negotiating directive® concerning tht amendment
   of tht Arrangement on Guidelines for Officially Supported
                              €*port Credits
  Confirmation of the Council negotiating directives adopted by the               '
  Decisions of 6 May 1980, of 25 November 198Q and of 16 December 1$§b
  Regarding the level of the minimum interest rates in the Arrangement
 the Commission will propose to the other Participants :         a
                                                                <#
  an immediate increase of 1 X for Categories I and II ,          of 0,8 X
  for Category lit with effect from 1 July 1981 *^
 Additional Council negotiating directives
         Regarding tht system of Interest rate^tht Commission *111 propose
         to tht other Participants t          '
      ' •• that the notion will bt con^^ed of • "managed systen" 1n which .
              Participants would discus a and dtddt adjustments at each annual
              Rtvltw.
        •» to consider, at eact^annual review, the various elements of the then
            existing econom^bnd monetary situation, Including the average of
            the medium te^Nnterest rates 1n the five currencies of the revised
    !       "basket" of tW SDR < US Dollar, DM , Sterling, FF, Yen ) calculated on
            tht last 6*months before the date of the annual review serving as a
            "flashing light"/ and If that average has Itself Increased by more
      , t^one percentage point there would bt a presumption for the need
                 an upward adjustment
                    ***" – -
                                                     I
      -V'
                                                A "
      f ** that Participants will commit themselves not to subsidise
      '       Interest rates on sales amongst themselves ss from 1 January 1982;
                                                                          •••/ • •
         CI) Or »t somt ©thtr appropflatt d*tt this ytar
 ---pagebreak---   2. Regarding tied aid credits the Commission vltl propose to the
       other Participants to submit :
       • those credits with'a grant element above 15 X and less than 2S X
            to the prior notification without discussion procedure under   ^
           paragraph 9 ( b ) 1 of th^ Arrangement ;
    • m those credits with a grant element of 25 X and above to th«£?
   )       prompt notification procedure under paragraphe 9 ( c ) 1 of tht
          Arrangement .
 •                       Regarding Japan, the Commlssloq^U propose to
     the other Participants, when the long-term co^berdal rates of
     Interest are below the levels of the Consensu* that the Japanese
     Government undertakes, in conformity ^ith the provisions of the
    Consensu* that the Eximbank of Jap<^^will. only finance exports
     1n such • manner that the inter^j^rate on Export Credits 1 * ,
     1n conformity with the level*£^ the Consensus.
        i •
ν                 • • «          '  .  •      t
        #
^            .