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 and has established co-operation agreements with other export credit agencies.
Organisation for Economic Co-operation and Development (OECD)
OECD has developed a system of international regulation for the provision of medium and long-term export credits by member governments. There are 2 groups in the OECD that discuss and regulate issues about export credits. These are:
- participants to the OECD Arrangement on Officially Supported Export Credits
- OECD Export Credits Group (ECG)
Participants to the OECD Arrangement on Officially Supported Export Credits
In 1978 OECD members agreed on a set of rules to provide a level playing field in the provision of export credits, preventing trading distortions and minimising export subsidies. The rules are part of the OECD Arrangement on Officially Supported Export Credits (the Arrangement).
The Arrangement sets boundaries on support for export insurance and credit loans 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). CIRRs are re-set every month. There are also rules on providing aid funding in combination with export credits.
The European Commission represents EU member states in these negotiations. EU member states meet with the Commission of the European Council monthly to agree an EU position at meetings of OECD participants.
OECD Export Credits Group (ECG)
All OECD member countries in the EU represent themselves in the ECG, (unlike the Participants group). The ECG deals with wider export credit issues and has reached agreements on:
UK Export Finance officials represent the UK at ECG meetings.
The Berne Union is a non-profit organisation 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. It also organises specialist export credit workshops.
UK Export Finance was one of the founder members of the Berne Union and takes part in a members’ discussion board and twice yearly meetings of the Medium Long Term Committee.
UK Export Finance is also a member of the Investment Insurance Committee, but not the Short Term Committee.
Made up of 19 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 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.
|Country||Agencies the UK has international agreements with|
|Austria||Oesterreichische Kontrollbank AG (OeKB)|
|Belgium||Office National du Ducroire/Nationale Delcrederedienst (ONDD)|
|Canada||Export Development Canada (EDC)|
|Czech Republic||Export Guarantee and Insurance Corporation (EGAP)|
|China||China Ex-Im Bank Sinosure|
|Denmark||Eksport Kredit Fonden (EKF)|
|Netherlands||Atradius (on behalf of the Dutch state)|
|France||Coface (on behalf of the French state), Natexis|
|Germany||Euler Hermes (on behalf of the German state), KfW Bankengruppe|
|Hungary||Hungarian Export Credit Insurance Ltd (MEHIB)|
|Indonesia||PT (Persero) Asuransi Ekspor Indonesia (ASEI)|
|Italy||Sezione Speciale per l’Assicurazione del Credito all’Esportazione (SACE)|
|Japan||Nippon Export and Investment Insurance (NEXI)|
|Japan Bank for International Cooperation (JBIC)|
|Korea||Korea Trade Insurance Corporation (K-sure)|
|The Export-Import Bank of Korea (KEXIM)|
|Luxembourg||Office du Ducroire (ODD)|
|Malaysia||Export-Import Bank of Malaysia Berhad|
|Mexico||Banco Nacional de Comercio Exterior, Sociedad Nacional de Credito (Bancomext)|
|Norway||The Norwegian Guarantee Institute for Export Credits (GIEK)|
|Poland||Korporacja Ubezpieczén Kredytów Eksportowych (KUKE)|
|Russian Federation||Russian Agency for Export Credit and Investment Insurance (EXIAR)|
|Slovakia||Export-Import Bank of the Slovak Republic (Eximbank SR)|
|Spain||Cesce Credit Insurance|
|South Africa||Development Bank of Southern Africa (DBSA)|
|Industrial Development Corporation (IDC)|
|Export Credit Insurance Corporation of South Africa Limited (ECIC)|
|Turkey||Export Credit Bank of Turkey (Turk Eximbank)|
|USA||Export-Import Bank of the United States (Ex-Im Bank)|