Export Credits at the OECD

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Export Credits at the OECD

• OECD Secretariat

12 September 2007, Prague
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Objectives of the OECD work on export credits

• Responding to Members policy priorities
• Setting efficient disciplines
• Monitoring, Reviewing and Building Experience

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Todays Focus Whats 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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Whats 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 Gentlemens 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 Whats 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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Whats 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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Whats 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_at_oecd.org
• www.oecd.org/tad/xcred