Organisation for Economic Cooperation & Development

Export Credits at the OECD

OECD Secretariat

12 September 2007, Prague12 September 2007, Prague

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Objectives of the OECD work on export creditsObjectives of the OECD work on export credits

Responding to Members’ policy priorities

Setting efficient disciplines

Monitoring, Reviewing and Building Experience

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Today’s Focus : What’s New in 2007Today’s Focus : What’s New in 2007

1. New Aircraft Sector Understanding

2. New OECD Recommendation on Anti-Bribery

Measures

3. Revised OECD Recommendation on Environment

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What’s New in 2007What’s New in 2007

1. New Aircraft Sector Understanding

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2007 Aircraft Sector Understanding

Background and Objectives

• Modernise the 1986 disciplines

• Involve all major players

• Create predictability in a highly competitive market

• Follow up to WTO disputes and find solutions to establish a workable common ground for post-dispute settlement

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2007 Aircraft Sector Understanding: Status

• Status

– A Gentlemen’s agreement – soft law

– An Annex to the Arrangement on Officially Supported Export Credits

– Successor agreement to the 1986 Understanding

• Who may apply its provisions

– All Participants to the Understanding

– Voluntary implementation possible by any non-Participant – transparency provisions can also be used to solve competitive issues

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2007 Aircraft Sector Understanding: What’s new

• A complete set of disciplines with necessary definitions

• A robust risk assessment of buyers/borrowers

• A risk-pricing system bifurcated by aircraft category (large/regional)

• Efficient consultation and dispute-resolution procedures

• Provisions to include more players when appropriate

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What’s New in 2007What’s New in 2007

2. New OECD Recommendation on Anti-Bribery Measures

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Anti-Bribery Recommendation: Background

• 1997 OECD Convention on bribery in international business transactions

• Since 2000, Members of the OECD Export Credits Group have implemented an Action Statement on anti-bribery measures

• This Statement was enhanced and transformed into an OECD Recommendation at the end of 2006

• Recommendation reflects Members’ experience in implementing the 2000 Action Statement, input from CSOs and feedback from the reviews of OCED Governments’ anti-bribery measures more generally under the OECD Anti-Bribery Convention.

• Governments and their ECAs are now implementing the new undertakings in their export credit systems

• Revised survey in place to monitor application of the Recommendation; first results expected before end 2007

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Anti-Bribery Recommendation: Highlights

• “No bribery” undertaking is now a prerequisite for obtaining official export credit support

• Verification of whether the exporter/applicant is listed on the publicly available debarment lists of the major international financial institutions (e.g. World Bank Group)

• Exporters/applicants required to:

– Provide, upon demand, details about the amounts and purpose of commissions/fees paid

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Anti-Bribery Recommendation: Highlights (cont.)

ECAs must, under specific circumstances:

– Scrutinise more closely applications

– Verify that internal corrective and preventative measures have been taken for exporters that have been convicted of bribery in the past before new cover could be provided again

– Develop and implement disclosure procedures to disclose to law enforcement authorities instances of evidence of bribery

– Promptly inform law enforcement authorities if there was evidence that bribery was involved in the award of the export contract

– Not provide support for a transaction if there is evidence of bribery or if the enhanced due diligence process concludes that bribery was involved in the award of the export contract

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What’s New in 2007What’s New in 2007

3. A Revised OECD Recommendation on Environment

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Environment Recommendation: Background

• There had been various agreements on environmental issues in the ECG since 1998

These culminated in 2003 in the adoption by the OECD Council of a Recommendation on export credits and the environment

Members reviewed the 2003 Recommendation in 2006, in light of experience and with input from IFIs and CSOs (including business, trade unions, banking associations and NGOs), and agreed a revised text in April 2007

OECD Council adopted the revised Recommendation in June 2007

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Environment Recommendation: Enhancements

• SCOPE: exports to both new projects and existing operations should be reviewed before providing official export credit support

• STANDARDS: the international standards against which projects should be benchmarked have been extended to include all ten World Bank Safeguard Policies or, where appropriate, all eight International Finance Corporation Performance Standards.

• TRANSPARENCY: stronger disclosure provisions for the projects with the highest potential environmental impacts, to provide for (i) Members to publicly disclose project information and (ii)environmental impact information to be made publicly available, as early as possible in the review process and at least 30 days before a final commitment.

• OUTREACH: to increase awareness in non-OECD countries who provide official export credit support of the benefits of reviewing the environmental  impacts of projects they intend to support. 

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Environment Recommendation: Sensitive Projects

Information available ex post on the OECD website- Category A projects: generally big projects in the mining,

energy and transportation sectors- Category B projects : generally manufacturing projects- For the projects reported for 2006:

– International Standards were applied to 92% of CategoryA projects and 80% of Category B projects;

– 97% of Category A projects benchmarked against international standards applied those of the World Bank Group;

– Environmental Impact Assessments were required for all but three Category A projects;

– Ex ante disclosure of environmental impact information was achieved for 100% of Category A projects.

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Challenges

• Increased competition from OECD Non-Member Economies who provider official medium- and long- term export credits

– Need to ensure a level playing field between all major players

• OECD export credit rule-making:

– Need to maintain efficiency of decision-making process

– Rules that fit the needs of a more varied group of countries

• Current state of play

– Participation of several Non-Member Economies as ad hoc observers since 2005/2006 in OECD export credit meetings

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Thank you very much. Merci beaucoup.

Xcred.Secretariat@oecd.org

www.oecd.org/tad/xcred