CELEX: 51982PC0060
Language: en
Date: 1982-02-19 00:00:00
Title: Recommendation for a COUNCIL DECISION on the position to be taken by the Community at the international negotiations to adjust certain provisions of the OECD Understanding on Export Credits for Ships (submitted to the Council by the Commission)

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COM (82) 60
Vol. 1982/0020
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 ---pagebreak---                                                                  COM(82)60 final
     COMMISSION
                                                                 Brussels , 19 February 1982
        OF THE
                                                                 FOR OFFICIAL USE ON LY
EUROPEAN COMMUNITIES
    General Secretarial
                                        Recommendation for a
                                          COUNCIL DECISION
          on the position to be taken by the Community at the international
           negotiations to adjust certain provisions of the OECD Understanding
                                     on Export Credits for Ships
                           ( submitted to the Council by the Commission'
            COM ( 82 ) 60 final
 ---pagebreak---     EXPLANATORY MEMORANDUM
1 . The Community is a member of the OECO Understanding on Export Credits
    for Ships . The minimum interest rate under the Understanding is 8 % , a
    figure Laid down in 1974 .
2 . Until recently this rate of interest was not significantly out of line
    with the minimum rates prescribed in the Arrangement on (juidelines for
    Officially Supported Export Credits ( the Consensus ), but now that the
    successful October 1981 negotiations have raised the Consensus rates ,
    the gap between the lowest of these rates ( up from 7.75 % to 10 % ) and
    the single interest rate in the Understanding is much wider . It would
    therefore seem logical to adjust the latter rate as well .
3 . In the course of exploratory talks at the last OECD meeting, on 26
    November , it was clear that all the other participants in the Understanding
    with the exception of Japan wanted a substantial increase in the present
    figure . Japan took a more restrictive view .
4 . Although there are weighty arguments in favour of a rise in the interest
    rates , since a minimum set well below the prevailing market rates implies
    extensive subsidization , caution is advisable because of the chronic
    difficulties in the shipbuilding industry . All the participants have had
    to support their shipbuilding sector in one way or another , and the
    credit facilities allowed under the Understanding provide one means of
    doing so . A substantial rise in interest rates could further depress
    an already shaky world market , and also give an added advantage to a number
    of countries which are not party to the Understanding but which are steadily
    improving their position on the market as it is .
 ---pagebreak--- Although some increase in the minimum rate prescribed by the Understanding
seems advisable , such an adjustment must take account of interest rate
levels on various participants' domestic markets . In Japan , the main
producer, which secures over 50 % of the new orders taken by the
participants as a whole , the long-term    prime rat e    is currently
8.6 % . Japanese export prices and credit terms largely set the pace
for the world market as a whole , whether on orders from national
shipowners or export orders .
To take account both of the need for an upwards adjustment in the
minimum interest rate laid down by the Understanding and of the
position of the industry in the face of the international competition
the Commission advocates an increase in the rate within the following
margin :
           The minimum interest rate , currently 8 %, should be
           raised to a minimum of 8.5 % and a maximum of 9.5 % ,
           provided the revised rate also applies to credits with official
           financing supporteven in the case of currencies for which
           commercial interest rates are lower than this figure .
In the interests of clarity , clause 1 of the Understanding should be
amended . Although repayment terms do apply to both principal and
interest , the clause ought to be reworded to include interest
explicitly .
The Commission considers that the negotiating directives approved
by the Council in July 1979 are still valid, particularly as regards
the alignment of the procedures laid down by the Understanding on
Export Credits for Ships on those in force under the Consensus .
 ---pagebreak---               RECOMMENDATION FOR A
                COUNCIL  DECISION
on the position to be taken by the Community at the international
negotiations to adjust certain provisions of the OECD Understanding
on Export Credits for Ships .
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic
Community , and in particular Article 113 thereof.
Having regard to the Recommendation from the Commission,
 ---pagebreak---                          - 2 -
Whereas it is necessary to supplement the directives adopted under
the Council Decision of 24 July 1979 on the Community 's position
within the OECD regarding Community participation in the Understanding
on Export Credits for Ships and amendments to that Understanding ,
HAS DECIDED AS FOLLOWS :
                          Sole Article
In the international negotiations to adjust certain provisions
of the OECD Understanding on Export Credit for Ships 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 .
                                             Done at Brussels ,
                                             For the Counci I
                                             The President
 ---pagebreak---                                                              ANNEX
                     NEGOTIATING DIRECTIVES
1 . The minimum interest rate is to be increased from the present Level
    of 8 % to a minimum of 8.5 % and a maximum of 9.5     %.
2 . In the case of official financing of export credits in a currency
    for which commercial interest rates are     lower than the minimum
    rate laid down in the Understanding , the minimum interest rate
    charged on the portion of the credit with official financing
    support should conform to the minimum rate laid down in the
    Understanding .
3 . The wording of clause 1 should be amended to make it clear that
    the repayment terms apply to both principal and interest .
                                              I