International co-operation for export credit financing, how UK Export Finance works with the OECD, the EU, the Paris Club and the Berne Union.
UK Export Finance works with a number of international organisations that discuss and regulate Export Credits. UK Export Finance has also established co-operation agreements with many other export credit agencies (ECAs).
Organisation for Economic Co-operation and Development (OECD)
The OECD has developed a system of international regulation for the provision of medium and long-term export credits by member governments. This work is supported by the Export Credits Division in the Trade and Agriculture Directorate of the OECD Secretariat.
There are two groups in the OECD that discuss and regulate export credits. These are:
- The Participants to the Arrangement on Officially Supported Export Credits (The Participants Group)
- The Working Party on Export Credits and Credit Guarantee (The ECG)
The Participants to the Arrangement
In 1978 OECD members agreed on a set of rules to provide a level playing field in the provision of export credits to with the aim to minimise trade distortions and export subsidies. The rules form part of the OECD Arrangement on Officially Supported Export Credits (The Arrangement) which is kept under constant review by its Participants.
The Arrangement sets boundaries on support for export credits provided by national export credit agencies. It includes minimum down payments, maximum repayment terms, minimum risk premiums and minimum fixed interest rates, known as Commercial Interest Reference Rate (CIRRs). There are also rules on providing concessional funding in combination with export credits (Tied Aid).
The current Participants are:
- the European Union
- New Zealand
- United Kingdom
- United States
The European Commission represents EU member states in these negotiations.
There are two subgroups:
- The Technical Experts that undertake technical work relating to the Arrangement
- The Country Risk Experts that review and agree changes to the OECD country risk classifications
Working Party on Export Credits and Credit Guarantee
The ECG is an OECD committee established in 1963. All OECD countries (with the exception of Chile and Iceland) are members of the ECG. Unlike the Participants Group, EU member states represent themselves in the ECG.
The general objectives of the ECG are to evaluate export credit policies and resolve or mitigate any challenges through multilateral discussions. This is achieved through establishing common guiding principles and setting out procedures to improve co-operation between ECG members.
In particular, the ECG is responsible for discussing and progressing work on good governance issues, such as anti-bribery measures, environmental and social due diligence, and sustainable lending. In addition, the ECG reviews Members’ export credits systems, including the types of support and products offered, and any notified changes to Members’ institutional arrangements, as well as Members’ financial results in the form of both activity reports and cash flow reviews.
The ECG has also mandated experts from Members’ Export Credit Agencies to progress technical work on environmental and social due diligence issues. These experts, known as the Practitioners, meet separately as an informal sub-group of the ECG.
The Berne Union (BU) is a non-profit organisation of both official ECAs and private credit insurers dedicated to facilitating worldwide cross-border trade and investments.
It does this by promoting international acceptance of sound principles in export credits and investment insurance. It also provides a forum for professional exchanges among its members.
UK Export Finance was one of the founder members of the Berne Union and takes part in a members’ discussion board and the twice yearly Plenary meetings. The BU also regularly holds specialist meetings.
UK Export Finance is a member of the Medium Long-Term Committee and the ECA Committee, but not the Short-Term Committee.
Made up of 22 countries, the Paris Club is an informal group of official creditors. It was set up in 1956 when debts owed by Argentina had to be renegotiated for the first time.
The Paris Club works closely with the International Monetary Fund (IMF) and the World Bank to find a way of helping countries who can’t meet their debt repayment obligations – including repayment of export credit loans guaranteed by member countries.
The Paris Club holds internal negotiations on principles for handling debt and also negotiates with individual countries on payment postponements or debt reduction.
Heavily indebted poor countries (HIPC) initiative
The UK government has supported debt reduction initiatives over a number of years and was influential in achieving the G7 multilateral agreement to enhance the HIPC initiative.
The HIPCs are about 40 of the world’s poorest countries with gross domestic product per capita of less than US$765, which are eligible only for the World Bank’s most concessional (low interest) loans.
All G7 industrialised nations have agreed to provide debt relief to the world’s poorest and most indebted nations. Debt relief means that a country’s debt can be partially or totally forgiven, or the growth of the debt can be slowed or stopped.
The Treasury leads the UK government’s policy on international debt. It sets policy after consulting with government departments, including the Department for International Development (DfID), the Foreign and Commonwealth Office (FCO) as well as UK Export Finance.
UK Export Finance has agreed co-operation arrangements with several other national export credit agencies and related organisations.
Some of the agreements allow UK Export Finance and the other export credit agency to reinsure each other where exporters from both countries are supplying goods and services to the same buyer.
In this case, the export credit agency of the exporter with the largest share of the contract will usually provide support for the whole of that contract and, behind the scenes, be reinsured by the export credit agency of each other exporter.
|Agencies the UK has international agreements with
|Oesterreichische Kontrollbank AG (OeKB)
|Brazilian Development Bank (BNDES)
|Export Development Canada (EDC)
|China Export & Credit Insurance Corporation (Sinosure)
|Export Import Bank of China
|Export Guarantee and Insurance Corporation (EGAP)
|Eksport Kredit Fonden (EKF)
|BPIfrance Assurance Export
|Euler Hermes (on behalf of the German state)
|Hungarian Export Credit Insurance Ltd (MEHIB)
|ECGC Limited (ECGC)
|PT (Persero) Asuransi Ekspor Indonesia (ASEI)
|Export Guarantee Fund of Iran (EGFI)
|Ministry of Energy
|Sezione Speciale per l’Assicurazione del Credito all’Esportazione (SACE)
|Nippon Export and Investment Insurance (NEXI)
|Japan Bank for International Cooperation (JBIC)
|JSC National Managing Holding (Baiterek)
|Korea Trade Insurance Corporation (K-sure)
|The Export-Import Bank of Korea (KEXIM)
|Office du Ducroire (ODL)
|Export-Import Bank of Malaysia Berhad
|Banco Nacional de Comercio Exterior
|Sociedad Nacional de Credito (Bancomext)
|Atradius (on behalf of the Dutch state)
|Nigerian Export-Import Bank (NEXIM)
|The Norwegian Guarantee Institute for Export Credits (GIEK)
|Korporacja Ubezpieczén Kredytów Eksportowych (KUKE)
|Slovene Export Corporation (SEC)
|Development Bank of Southern Africa (DBSA)
|Industrial Development Corporation (IDC)
|Export Credit Insurance Corporation of South Africa Limited (ECIC)
|Cesce Credit Insurance
|Schweizerische Exportrisikoversicerung (SERV)
|Export Credit Bank of Turkey (Turk Eximbank)
|United Arab Emirates
|Etihad Export Credit Insurance (ECI)
|Export-Import Bank of the United States (Ex-Im Bank)
|Uzbekinvest National Export-Import Insurance Company (Uzbekinvest)