Export Credit Agencies: OECD Arrangement for Officially Supported Export Credits

This paper compares and contrasts the OECD Arrangement for Officially Supported Export Credits from its inception in 1978 until the beginning of 2006. Changes to the OECD Arrangement have been made in the area of mixed credits to include a broad array of loan assistance known as tied aid, interest rate determination, the inclusion of new sectors (principally commercial aircraft, nuclear power plants, trial sectors for renewable energy and water projects), the extension of local cost support and slight changes to standard maximum repayment times. Issues to further extend the Arrangement relate principally to the incorporation of OECD environmental impact guidelines, the inclusion of additional product categories and the need to extend project finance and repayment terms to closely match the cashflow requirements of medium-term-to-long-term projects thus improving their flexibility. With the WTO now enjoying observer status in the Arrangement, Participants can now negotiate with the WTO to seek amendments and clarifications within its ASCM particularly in the areas of breakeven status, safe-haven status and Market Windows (MW). Of further concern is the rise of non- OECD ECAs into the global trade area. The OECD has understandings with such ECAs but agreement needs to be reached with them on more concrete export credit disciplines. Failing to do so may cause the OECD Arrangement to come under serious attack and export subsidies will predominate in a more competitive world.