Index for February 2012

Volume 11, Issue 2

  • (Government Accountability Office, Washington, 7 February 2012) The GAO EX-Im report notes that actions  are needed to promote competitiveness and international cooperation, pointing out that other OECD ECAs supplement but do not compete with the private market. The right wing Club for Growth and CATO Institute want Congress to block Ex-Im reauthorization, while the "non-partisan" Council on Foreign Relations says Ex-Im played a significant role in propping up U.S. exports during the global financial crisis. President Obama called on Congress to extend the Export-Import Bank's authorization as it will reach its lending limit at the end of March, while the GOP accused Obama of overspending that will set the country up for a financial implosion like the one in Greece. American manufacturers applauded President Barack Obama’s plan to compensate them with credit to offset the unfair financing given to competitors by their governments while one critic labeled it “corporate welfare.” Meanwhile, U.S. airlines have filed a lawsuit to block a recent Ex-Im Bank-financed Air India deal.
  • (Reuters, Washington, 14 Februrary 2012) The US and China have agreed to open talks on setting guidelines for export-credit financing, an area where Beijing's aggressive practices have raised US concerns. The White House said the US and China would establish an international working group that included other major providers of government-backed loan guarantees "with the goal of concluding an agreement by 2014." China is still not a participant in the OECD led “Arrangement on Guidelines for Officially Supported Export Credits”.
  • (Americas Quarterly, North Hollywood, 16 February 2012) Lending by the Chinese Development Bank (CDB) and Export-Import Bank of China (China Ex-Im) to Latin America is larger, newer, and growing faster than its Western counterparts... In 2010, Chinese funding exceeded the region’s combined financing from the World Bank, Inter-American Development Bank, and U.S. Export-Import Bank.
  • (Flight Global, London, 21 February 2012) Noting how the French Coface agency and US Ex-Im bank guarantee loans and provide financing for deals to benefit the space industries in those nations, the UK Government has beefed up its own export credit agency which has now been renamed UK Export Finance...Operators accept that having such an organization back their commercial loans had made financing much easier to the point where it may have distorted and weakened the market.
  • (Reuters, New Delhi, 24 February 2012) - India' export guarantee agency has not stopped giving insurance cover to shipments to Iran and has only tightened criteria as part of a more cautious approach, official sources said on Friday, as western sanctions make trade with Tehran tougher. New Delhi has come up with elaborate trade and barter arrangements to pay for oil supplies and India's ECGC will be reviewing its underwriting policy on Iran. India is Iran's second largest oil customer after China and has announced plans to strengthen economic and trade cooperation with Tehran by sending a very big delegation of businessmen and exporters to Iran in March.
  • (Deutsche Welle, Berlin, 3 February 2012) German companies want to emulate their Chinese competitors and become more active in Africa. But doing business in developing markets is risky. Export credit guarantees are a useful safety net... The past decade has seen China intensify commercial activities in Africa to become the continent's major trading partner. Not surprisingly, German companies want a piece of the action as African economies are expected to grow significantly in the future.
  • (Calgary Herald, Montreal, 24 February 2012) Boeing got a boost last week in its competition against Bombardier and others for a major aircraft order expected this year from United Continental Airlines. The US it appears has placed its financial might at the disposal of Boeing to favour its homegrown aircraft-maker for that and possibly other orders from U.S. carriers... An export credit agency funding a domestic airline to buy from a domestic manufacturer may be unusual, but it’s not unheard of. In fact, EDC financed one such transaction when Porter Airlines acquired Q400 turboprops from Bombardier... This violates a home-market agreement reached by the US, Europe and Brazil, which Canada refused to sign. Under the standstill agreement, which is not a law or treaty, the three participants agreed that their domestic credit agencies would not fund their domestic airlines’ aircraft purchases.
  • (FTSE Global Markets, Brussels, 9 February 2012) Always a good bellwether of the changing political risk profile in OECD nations, export credit agencies have been reviewing their premia charges to reflect the changing political environment. The latest to announce selected country premia changes is Belgium's Office National du Ducroire (ONDD).
  • (ColomboPage.com, Colombo, 10 February 2012) Sri Lanka will enter into a loan agreement with Pakistan to receive a US$ 200 million Export Credit Facility through the State Bank of Pakistan. An amount of US$ 150 million of this credit, is to be utilized for the construction of housing units for shanty dwellers in Colombo and suburbs and the balance US$ 50 million for the importation of livestock, plant and machinery from Pakistan.
  • (Trade Finance, Paris, 24 February 2012) The OECD Participants to the Arrangement on Officially Supported Export Credits, the OECD's Council Working Party on Shipbuilding (WP6), and the OECD Participants to the Ship Sector Understanding (SSU) are in discussion about potentially launching new rules which will modernise how export credit agencies offer ship financing. Shipbuilding was also on the agenda of the 10 February 2012 meeting of the European Council's Export Credit Group.