The OECD Arrangement and the World Trade Organization's Agreement on Subsidies and Countervailing Measures (ASCM)establish the global legal framework for export credit provision.
The Organization of Economic Cooperation and Development (OECD) was established in 1961 to provide a forum for discussion of economic, development and trade issues between like-minded countries. The OECD currently has thirty-four member countries. The "Working Party on Export Credits and Credit Guarantees"(known as the OECD ECG), is an OECD body that was set up in 1963 to carry forward the work of the OECD in the field of export credits.
ECAs and the OECD
Until the late 1970s competition led governments, through their ECAs, to offer increasingly subsidized financing to their exporters in order to assist them in competing with exporters from other countries. This battle of export-subsidies led to complaints from the private sector that ECAs were causing distortions in markets. However no country felt able to unilaterally halt the subsidies, fearing that its own exporters would lose out. Instead, countries negotiated multilateral agreements.
In 1978, international negotiations resulted in the first regulatory instrument: the ‘Arrangement on Guidelines for Officially Supported Export Credits’ (OECD Arrangement). The OECD Arrangement is a flexible, non-legally-binding instrument. It ‘seeks to foster a level playing field for official support ... in order to encourage competition among exporters based on quality and price of goods and services exported rather than on the most favorable officially supported financial terms and conditions’ To this end, OECD rules are applicable to any official support provided by, or on behalf of, a government for exports of goods and/or services that have a repayment period of two or more years.
The OECD Arrangement and the WTO's Agreement on Subsidies and Countervailing Measures (ASCM) establish the global legal framework for export credit provision.
During the 1990s non-governmental organisations (NGOs) increasingly shone a spotlight on ECAs for financing and guaranteeing exports to large projects without performing environmental assessments or any obligation to adhere to environmental standards. These critical NGOs later formed the ECA-Watch network.
In 1999 OECD ministers reacted to NGO demands and mandated the OECD ECG to develop environmental and sustainable development standards for export credit support. Negotiations achieved a consensus resulting in a formal “OECD Recommendation on Common Approaches on Environment and Officially Supported Export Credits” in December 2003.
For more information on the OECD Common Approaches, visite the Common Approaches Issue page.