CELEX: 51979PC0647
Language: en
Date: 1979-11-06
Title: Proposal for a COUNCIL DECISION concluding the OECD Understanding on export credits for ships and establishing arrangements for its implementation (presented by the Commission to the Council)

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DOCUMENTS "COM"
COM (79) 647
Vol. 1979/0219
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 ---pagebreak---                                                                  COM ( 79 ) 647 Final
      COMMISSION                                                 Brussels , 16 november 1979 .
        OF THE
EUROPEAN COMMUNITIES                                             FOR OFFICIAL USE ONLY
    General Secretariat
                                                                                               t
                                       Proposal for a
                                     COUNCIL DECISION
                   concluding the OECD Understanding on export credits for
                   ships and establishing arrangements for its implementation
                        ( presented by the Commission to the Council )
      C0M(79 ) 647 final
 ---pagebreak---  EXPLANATORY MEMORANDUM
  ■■                                              ... ... : v.
 Since it was felt to be necessary to minimize counter-productive
 competition in the field of officially sujJfported export credits for
 ships and to reinforce international cooperation in order to avoid
a worsening of the terms of such credits , the OECO Council adopted
on 30 May 1969 a resolution introducing an Understanding on export
credits for ships .  Fourteen countries , including seven Community
Member States ( Germany , Belgium , Denmark , France , Italy , Netherlands
and the United Kingdom ), are parties to the Understanding , which
was amended on 16 December 1970, 18 July 1974 and 5 November 1975 .
In the light of current trends on the shipbuilding market and the
entry into force of the Understanding on guidelines in the field of
officially supported export credits ( Consensus), the OECD Working
Party on Shipbuilding considered that the present text needed to be
updated .  It advocated that at this stage changes should not be made to the
Undertaking as a whole but primarily to the provisions on credit terms .
As export credits come within the scope of Community commercial policy,
this opportunity was taken to secure participation by the Community
as such in the Member States' stead .
On 24 July the Council adopted directives authorizing the Commission
to represent the Community in the OECD negotiations .- These negotiating
directives provided for Community participation in the Understanding
and amendments to the substance of the text .
 ---pagebreak---                                  - 2 -
The Commission conducted these negotiations in conjunction with the
Committee specified in Article 113 of the Treaty .        They were concluded
on 26 October^ and" the results, can be„consi dejed ,sai:_1 sf^iLlpry^ as 't he_a irns
set by the Directives of the Council have been achieved .          In particular ,
the Community is now a party to the Understanding , the national protocols
annexed to the existing text are to disappear , the provisions have been
extended to include ship conversions already covered by the EEC Directive
( 78/ 338 ) on aid to shipbuilding , and the new interest rate takes_account
of the Member States * current practices .
    »
The Commission considers these innovations to be of major importance .
For the first time the Community is to participate as such in an OECD
sectoral agreement on export credits .     The Council is therefore asked ,
pursuant to Article 113 of the EEC Treaty , to conclude this
Understanding and establish arrangements for its implementation by
adopting the attached decision .
 ---pagebreak---                                      PROPOSAL
                           FOR A COUNCIL DECISION
                 concluding the OECD Understanding on export
                 credits for ships and establishing arrangements
                 for its implementation
 THE - COUNCIL OF THE EUROPEAN COMMUNITIES ,
 Having regard to the Treaty establishing the European Economic Community ,
and in particular to Article 113 thereof ,
Having regard to the proposal from the Commission ,
Whereas counter-productive competition in the field
 of officially Supported export credits should be minimized and
          >  international cooperation to prevent a worsening of the terms
of such credits reinforced ,
Whereas most Member States of the Community are parties to the Understanding
on export credits for ships/ approved by the OECD Council Resolution of
30 May 1969 and amended by that Council 's Resolution of 18 July 1974 ,
                                                                               1
Whereas Council Directi«®»Jii/ 338/ EEC of 4 April 1978 on aid to shipbuilding stipulates •
that the aid and intervention for which it provides must comply with
the OECD Council Resolution of 18 July 1974 or any agreements that may
supersede it ;
Whereas it is important that the Community as such should be          party to
the said Undertaking in the Member States * stead ,
   0J No L 98 , 11.4.1978 , p. 19 .
 ---pagebreak---   Whereas the Council accordingly issued directives in accordance with which
  the Commission was to state the Community 's position in international
 negotiations concer,rM«g~ Community participation
  in the Understanding on export credits for ships and the amendment of that
 Understanding ,
 Whereas the revised Understanding resulting from those negotiations
  is in conformity with the said directives ,            ,
 Whereas most of the shipbuilding and credit-giving third countries which are
members of OECD . intend to adopt" the measures necessary to apply the revised
  Understanding ,
 Whereas , in the interests of the Community , and in order to give effect to
 the principle of international cooperation , the provisions- of the  ■>
  Understanding on export credits for ships should be applied Jn the. Community ,
 Whereas it is desirable that the revised provisions should be applied in
 the Community for a limited period only , thus enabling the Community to
participate in any updating of the Understanding and to review the
 situation in the light of its experience of such application ,
 HAS DECIDED AS FOLLOWS :
                             Article 1
The Understanding on export credits for ships negotiated at the OECD on
26 October 1979 is hereby concluded on behalf of the European Economic
Community .
                                                      ,1   ' ► .
The text of the Understanding is annexed hereto .
                            Article 2
The Commission shall give the notification provided for in Clause 11 of
the Understanding , immediately this Decision enters into force .
                            Article 3
                                                                   €
The Community shall apply the provisions of the Understanding as from a
date to be determined in accordance with Clause 11 thereof .
 ---pagebreak---                               - 3 -
                            Article 4
     t
Where . a third country which is party to the Understanding informs its
partners of its intention to invoke Clause 12 thereof , a consultation
meeting shall be convened by the Policy Coordination Group for Credit
Insurance , Credit Guarantees and Financial Credits of the Council of
the Community .  The Commission shall , if necessary , submit' an; appropriate
proposal to the Council .
Should a Member State of the Community or the Commission consider that
the interests of the Community would justify invoking
Clause 12 of the Understanding , the following procedure shall apply :
- the Member State concerned shall notify all other Member States and
  the Commission accordingly, if the initiative emanates from the
  Commission , the Commission shall notify all Member States accordingly;
- a meeting of the Policy Coordination Group for Credit Insurance ,
  Credit Guarantees and Financial Credits shall be convened within three
  working days of receipt of the said notification ;
- the Commission shall , within five working days of the end of the meeting of
  the Group , submit an appropriate proposal to the Council , which
  shall act without delay .
Should the Council decide to seek a review of the Understanding or decide on the
withdrawal of the Community from the Understanding , the Commission shall
notify the Secretary-General of the OECD forthwith .
                          Article 5
This Decision shall apply until 31 May 1980 .
                                                  Done at
                                                  For the Council
                                                  The President
 ---pagebreak---                       RESOLUTION OF THE OECO COUNCIL
              CONCERNING AN AMENDMENT OF THE UNDERSTANDING
                        ON EXPORT CREDITS FOR SHIPS
The Council ,
Having regard to the Resolutions of the Council of 30 May 1969 ,
16 December 1970 , 18 July 1974 and 5 November 1975 on an Understanding
on Export Credits for Ships , and in particular Clause 12 of that
Understanding / C(69 ) 60 final ;    C(70 ) 204 final ; C(74).88 final ;
C(75 ) 162 final ; C/M(77) 4- final_7,
Having regard to the Note by Working Party No 6 on Shipbuilding
concerning a revision of the Understanding on export credits for ships ,
On the proposal of its Working Party No 6,
NOTES that participants in the Understanding referred to above on
                            1
Export Credits for Ships      have agreed to revise , with effect from
                     the Understanding , of which the new text is reproduced
in the attached Annex ,
NOTES paragraph 5 of the Note of the Working Party No 6 to the Council^.
1
  Participants in the Understanding as revised in the present Resolution
  of the Council are : Australia , Canada , European Economic Community ,
  Finland , Japan , Norway and Sweden .
2
   Participants agreed to a modification of the minimum down payment and
  of the maximum duration of the credit which were until now in force in
  the Understanding . As regards the minimum interest rate , participants
  consider that the interest rate of 8% , net of all charges , which was in
  force in the Understanding should remain as a rule ; some flexibility
  being however necessary for some countries . As far as the European
  Economic Community is concerned , and taking into account the existing
  practices , this interest rate means a minimum interest rate of 8% , which
  may include some charges , and in any case a minimum interest rate of
  7.5% net of all charges . This does not imply any changes in. the existing
  policies or practices with the Community".
 ---pagebreak---                  UNDERSTANDING ON EXPORT CREDITS FOR SHIPS
                                    I
1.         For any contract relating to any new ship or ship-conversion
to be negotiated from                    onwards , governments participating
in this Understanding agree to abolish existing official facilities**
and to introduce no new official facilities for export credits on terms
providing :
    < i ) a maximum duration exceeding 8 and a half years from delivery
          and repayment other than by equal instalments at regular intervals
          of normally 6 months and a maximum of 12 months ;
  ( ii ) payment by delivery of less than 20% of contract price ;
                                                                 **
( iii ) an interest rate of less than 8% net      of all charges
  By ship-conversion is meant any conversion of a seagoing vessel on
condition that conversion operations entail radical alterations to the
cargo plan , the hull or the propulsion system .
*0fficial facilities are those which enable credits to be insured,
guaranteed or financed by governments , by governmental institutions , or
with any form of direct or indirect governmental participation .
**
 By interest rate , net of all charges , is meant that part of the credit
costs ( excluding any credit insurance premia and/ or any banking charges )
which is paid at regular intervals throughout the credit period and
which is directly related to the amount of credit .
 ---pagebreak---   2.   , This minimum interest rate of 8% will apply to the credit
 granted with official support by the?shipbui Ider to the buyer ( in a
  supplier credit transaction ) or by a bank or any other party in the
 shipbuilder 's country to the buyer or any other party in the buyer 's
 country ( in a buyer credit transaction ), whether the official support
 is given for the whole amount of the credit or only part of it .
 3.      The minimum interest rate will also apply to the credit granted
 with support by governments participating in the ^Understanding , in the
 shipbuilder 's country to the shipbuilder or to any other party , to
 ena'ble credit to be given to the shipowner or to any other party in the
 shipowner 's country , whether this official support is given for the
 whole amount of the credit or only part of it .
 4.      Insofar as other public bodies participate in measures to
promote exports , participating governments agree to use all possible
 influence to prevent the financing of exports on terms which contravene
the above principles .
5.       Participating governments , recognizing that is is highly desirable
to set a limit to terms for export credits also agree to make their
best endeavours to ensure that no more favourable terms than set out
above will be offered to buyers by any other means .
6.       Any Government participating in the Understanding which wishes ,
for genuine aid reasons , to concede more favourable terms in a part­
icular case is not precluded from doing so , provided that adequate
notice of this decision is given to all the parties to the Understanding
in accordance with the procedure established for this purpose .    For
these cases 'adequate notice' shall be interpreted as requiring that
notification be made to all participating Governments if possible at
least six weeks before a promise is given , at any stage of the
negotiations , to commit the use of funds for that purpose , and in any
case at least six weeks before authorization is given so to commit them .
 ---pagebreak---  7.       Adequate notice shall also be given of any decision , taken for
 exceptional reasons other than those specified in Clause 6 , to support
 terms more favourable in any way than those of the Understanding .         In
 this case , 'adequate notice' shall be interpreted as requiring that
 notification of such a decision be made to all other participating
governments before an order has been finally placed             and in time
 for them to ba able to compete effectively on these terms .         In cases where
tenders are invited , notice must be given at least seven days before
the closing date for tenders .     Support ( including - the provision of aid )
wilt be refused for any order finally placed **** on more favourable
terms before all other governments participating in the Understanding
have been given notice as provided in this Clause and; in case of aid ,
as provided in the above Clause 6 .
8.       Any government participating in the Understanding may , provided
that the maximum possible notice of its decision is given to all other
participating governments , support more favourable terms in a particular
substantiated case to match terms of officially supported transactions
or contravention of the above terms by other participating governments ,
or competition from non-participating countries .
                                               t
                                II
9.       Any government participating in the Understanding may obtain
information from any other participating government on the terms of
any official support for an export contract in order to ascertain
whether the terms contravene this Understanding .        Participating
governments undertake to supply all possible information requested with
all possible speed .    According to the rules and practices of the OECD ,
any participating government may ask the Secretary-General to act on
its behalf in the aforementioned matter and to circulate the information
obtained to all participants in the Understanding .
  An order shall be deemed to have been finally placed as        soon as the
  buyer has committed himself irrevocably under a written       and signed
  agreement to buy from the exporter and to pay according        to specified
  terms , even if the agreement is subject to reservations      which can be
  withdrawn only by the exporter .
 ---pagebreak---  10 .    Each participating government undertakes to notify the Secretary-
 General its system for the provision of official support and the means
of implementation of the Understanding .          *'
                                ' III
 11 .    This Understanding becomes effective as soon as all Members of
Working Party No 6 have notified the Secretary-General of their
adherence to it or , as soon as governments having so notified the
Secretary-General , decide that they constitute a representative majority
of Members of Working Party No 6;     any government which disagrees as to
what constitues a representative majority would not be bound by the
others' decision .   The Understanding is open to other Member countries of
the OECD .
12 .     This Understanding shall be subject to review as often as
requested by participating governments , and 1n any case at intervals not
exceeding one year .   Any participating government may withdraw from
this Understanding upon giving to its partners three calender months *
notice of its intention to do so .    Within this period , at the request
of any of these partners , there shall be a meeting of Working Party No 6
to review this   Understanding , and any other participating government ,
on notification to its partners , may withdraw from this Understanding
at the same effective date as the government which first gave notice .