CELEX: 51979PC0268
Language: en
Date: 1979-05-22 00:00:00
Title: RECOMMENDATION FOR A COUNCIL DECISION ON THE COMMUNITY'S POSITION WITHIN THE O.E.C.D. REGARDING COMMUNITY PARTICIPATION IN THE UNDERSTANDING ON EXPORT CREDITS FOR SHIPS AND AMENDMENTS TO THAT ARRANGEMENT (presented by the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (79) 268
Vol. 1979/0105
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 ---pagebreak---                                                                   COM(79)268 final
     COMMISSION                                                   Brussels , 22 th May 1979
        OF THE
EUROPEAN COMMUNITIES                                              FOR OFFICIA L USE ONLY
    General Secretariat
                                  RECOMMENDATION FOR A COUNCIL DECISION
                          ON THE COMMUNITY 'S POSITION WITHIN THE O.E.C.D.
                                REGARDING COMMUNITY PARTICIPATION   IN THE .
                                UNDERSTANDING ON EXPORT CREDITS FOR SHIPS
                                   AND AMENDMENTS TO THAT  ARRANGEMENT
                              ( presented by the Commission to the Council )
         COM ( 79 ) 268 def .
 ---pagebreak---                        .EXPLANATORY MEMORANDUM
 For several months the OECD Council Working Party No 6 on Shipbuilding has
been studying t+ve desirability of adapting the OECD Understanding on
Export Credits for Ships in the light of current trends on the shipbuilding
market and the entry into force of the Arrangement on Guidelines for
Officially Supported Export Credits .    The discussions which have taken place
since July 1978 in the OEC ^ in the Working Parties of the Council of the
Communities and between the Commission and the Member States have pushed
forward the examination of this problem to a point where it is now
appropriate to move on to the negotiations proper and to seek a decision from
the Council of the Communities concerning the position to be adopted by .
the Community at the riegdEPiations which are to be held in the OECD .     These
negotiations will deal with amendments to the present Understanding .       Since
the subject matter . comes within the scope of the Community 's commercial ''
policy , these negotiations will have to be led by the Commission in consul­
tation with a special committee appointed by the Council to assist in this
task .  The fact that export credits come within the scope.of Article 113 of
the Treaty also requires the exclusive participation of the Community in the
Understanding .
The Understanding on Export Credits for Ships , the first international
understanding in the field of export credits , came into force following the
adoption of a Resolution by the OECD Council at its meeting of 30 May 1969 .
The major amendments to it were made on 16 December 1979 and 18 July 1974 .
                                                               \
Fourteen countries , including seven Community Member States ( Belgium , Denmark ,
France , Germany , Italy , the Netherlands and the United Kingdom ) participate
in the Understanding .    Other participants are Australia , Canada , Finland,
Japan, Norway , Spain and Sweden .   The major shipbuilding countries also
belong to the Understanding .    Spain, however , has just announced its decision
to withdraw from the Understanding citing its unsuitabi lity in the present
situation .  Moreover , the United States of America , which is not an important
exporter of ships but whose potential capacities must not be ignored , does
not participate in the Understanding .
 ---pagebreak--- The present Understanding specifies the credit terms which the participating
countries must not exceed and contains a number of provisions regarding
procedure .  The credit terms , namely minimum down-payment of 30%, maximum
repayment term of seven years and minimum interest rate of 8% , are less
favourable than those of the Guidelines for Officially Supported Export
Credits , which came into force in 1978 .
                                                                         e
As a result the shipbuilding sector , which is going through a serious crisis ,
is subject to even stricter conditions than other industrial sectors when
it comes to export credit .   Although it is hardly likely that the easing of
credit terms will contribute to a significant increase in orders and thereby
to an improvement in the situation of the shipbuilding industry , it is
nevertheless true that the strict arrangements applied to export credits
for ships must be considered abnormal .
The idea of applying to ships the credit terms fixed in the Guidelines for
Officially Supported Export Credits appears attractive at first sight .
However, bearing in mind the mobility of ships , it is harcily possible to
make distinctions as regards credit terms on the basis of the country of
destination . If clause 6 of the present Understanding is retained it will
be possible for more favourable conditions to be granted for genuine aid
reasons . But granting more favourable conditions of credit to certain countries ,
as provided for in the Guidelines , could result in orders being concentrated
on those countries and could entail unfavourable consequences for Community
shipowners .    Such a result could jeopardize the Community 's maritime
transport policy and could affect the availability of ship'tonnage in a
crisis . However, the negotiations could investigate ways of reducing the
gap between the present procedures in the Understanding on Ships and those
of the Arrangement on Guidelines . The final form of the Understanding on
                    I,
Export Credits for Ships , namely its maintenance as an independent
arrangement or its integration under appropriate conditions in the Arrangement
on Guidelines has still to be decided .    It will depend on the importance
which the participants in the negotiations attach to the alignment of existing
procedures and the possible winning over of new countries to a joint
discipline for ships .
 ---pagebreak--- The participants in the present. Understanding on Export Credits for Ships
are the Member States and non-member countries . Since export credits
come within the scope of the Community 's commercial policy, the Community
alone must be a party to the Understanding . The Community 's participation
in the Arrangement on Guidelines for Officially Supported Export Credits
constitutes a -precedent in this matter . The Community 's participation will
affect all the Member States including Ireland and Luxembourg , which do not
belong to the present Understanding . Recent discussions have shown that those
                                                                     r
countries are not opposed to this participation .
It goes without saying that the results of the negotiations can in no way
affect Council Directive of 4 April 1978 on aid to shipbuilding . Since the
Directive also concerns the conversion of ships , it is useful to make the
other members of the Understanding subject to the same discipline as the
countries of the Community . It is therefore proposed to "have it recognized
that the Understanding should cover not only new ships but also the conversion of
ships . The new Understanding would not have any influence on the provisions
of the Treaty concerning aids ( Articles 92 and 93 ). Therefore the Community 's
agreement to easing credit terms must in no way be considered as an abandonment
of its policy of resistance to any increase in or development of other aids
to shipbuilding .
The Commission considers it appropriate that the Council should adopt
directives on the Community 's position and to this end recommends that
it adopt the decision the draft of which is attached hereto .
 ---pagebreak--- RECOMMENDATION FOR A COUNCIL DEQISION ON THE COMMUNITY 'S POSITION
WITHIN THE OECD REGARDING COMMUNITY PARTICIPATION IN THE UNDERSTANDING
ON EXPORT CREDITS FOR SHIPS AND AMENDMENTS TO THAT ARRANGEMENT .
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community ,
and in particular Article 113 thereof ,                         r
Having regard to the Recommendation from the Commission ,
Whereas directives should be adopted on the position which the Community
is to adopt wit.t^n the OECD regarding . Community participation in the
Understanding on Export Credits for Ships and amendments to that Under­
standing ,
HAS DECIDED AS FOLLOWS :
                        Sole Article
       In the negotiations within the OECD on the Community 's participation
 in the existing Understanding on Export Credits for Ships and amendments
to that Understanding , the Commission shall express the Community 's posi­
tion in accordance with the directives annexed hereto .
                                     * •       "
       It shall proceed in consultation with the Special Committee provided
                                                     1
 for in Article 113 of the Treaty , which shall assist it in its task .
                                            For the Council ,
  Done at Brussels ,
 ---pagebreak---                     • I
                        ,¥
                         \
                  l
                                                              ANNEX
 I. SUBJECT
     A ) Unde r stand ing_ refer red_to_in_th ese_d ire ctives
         The Understanding referred to is the Understanding on Export Credits
         for ships adopted by a Resolution of the OECD Council on 30 May
         1969 and amended by the Resolutions of 16 December 1970 and 18 July
         1974 .                                                               f
     B ) Scope
         The Understanding concerns the credit terms applicable to ship
         exports in respect of which official facilities are made available .
                           ■•W  -
II . NEGOTIATING DIRECTIVES
     A ) The_ C omm un i t s_£a r t i_c i gat ion_in_theJJnder standing
         Since export credits come within the scope of the Community 's com­
         mercial policy , the present participation of seven Member States of
         the Community in the Understanding on Export Credits for Ships must
         be replaced by the participation of the Community as such .
     B) Amendment s_to_the_Unde rsta nd^ing
          1 . Credit terms
              For all contracts relating to the building of a new ship or the
              conversion of an old one , the. new Understanding will be drawn
              up on the following basis :
              - The down - payment to be made before delivery must be at least
                20 % of       the contract price ,
              - The maximum credit repayment term as from the date of delivery
                will: be eight and a half years .          Repayment will be effected
                 in equal instalments at six-monthly intervals ,
              - Retention of the minimum interest rate of 8 % as in the pre­
                 sent Understanding ,
              - These terms will be the sariife for all areas of destination .
                 The possibility of granting more favourable conditions on an
                 exceptional basis and for genuine aid reasons will be main­
                 tained ,
 ---pagebreak---             \
                 - 2 -
. Procedures
   For the amended Understanding , a way will have to be sought
   that will make it possible for procedures to be devised that
   bring those of the present Understanding on Export Credits for
 . Ships closer to those of the Arrangement on Guidelines for Offi­
   cially Supported Export Credits ( the Consensus ).
               *5» ...
   The final form of the solution to the problem of export credits
   for ships will be determined during the negotiations .  It will
   depend on the following two-fold objective : the widest possible
   rationalization of the procedures to be applied and the adherence
   of the greatest number of participants to thfs new regime.'