ECAWatch Newsletter 9

Euler Hermes launches China trade insurance joint venture

Global Trade Review, London, 12 Sepptember 2016) Euler Hermes has announced a credit insurance joint venture (JV) with China Pacific Property Insurance Company (CPPIC). Headquartered in Shanghai, the venture will operate under the name CPPIC Euler Hermes and be managed by existing members of staff from both companies. CPPIC is the third-largest property and casualty insurer in China, but also one of only a few export credit insurers in the country. The two firms have worked in partnership, growing their joint trade credit portfolio, since 2011.

Russian ECA offers to finance $4bn in Cuban development schemes

(Global Construction Review, London, 29 September 2016) Russia has offered to embark on a spectacular renewal of its economic relations with Cuba, based on 55 projects with a total value of some $4bn over the next four years, and has also agreed a cooperation agreement in the nuclear power sector. The bulk of the funding would be provided by Russian banks and safeguarded by guarantees from the Agency for Export Credit and Investment Insurance products.

Angola takes out EDC loan in Canada to pay for locomotives from General Electric

(Macauhub, Macau, 29 September 2016) Canada’s export credit agency will finance the purchase by Angola of 100 locomotives from US group General Electric, according to an authorization granted by presidential order. The order authorizes the state to borrow US$429.5 million from the Canadian state agency and justifies the decision with the need to diversify sources of funding, while ensuring the purchase of the locomotives.

Canada to step up UK trade with new export hub after Brexit vote

(The Telegraph, London, 17 September 2016) Canada is setting up an export agency office in the UK in an attempt to boost trade links with one of its biggest trading partners after the EU referendum. In the latest indication of the desire of non-EU countries to do more business with the UK, Export Development Canada (EDC) will open a London site this week. Britain is already Canada’s third-largest trading partner, with more than C$20bn (£11.5bn) of exports last year. The EDC said its decision to open a site in London showed that it takes “a long-term view on the strength of the UK economy following the Brexit vote, providing a stable source of capital”.

Business Groups Ramp Up Push for Export-Import Bank to Make Larger Loans

(SDC Executive, Arizona, 15 September 2016) A growing number of business groups are urging House and Senate leaders to approve a spending bill allowing the Export-Import Bank to approve larger loans again. Fifteen groups sent a letter calling on congressional leadership to include a temporary change to the agency’s quorum requirement for its board of directors in a continuing resolution (CR) so that it may again review transactions over $10 million. Under current law, the five-member board must have three people to evaluate transactions above that level. There are only two board members now.

WTO: Airbus ruling ‘brings threat of EU-US trade war’

(The Week, London, 23 September 2016) French aircraft-maker Airbus has benefitted from as much as $22bn (£17bn) in illegal state aid from EU member states, including £3bn from the UK, the World Trade Organisation (WTO) has ruled. The judgement marks the latest chapter in what the BBC brands the world’s “largest and longest-running trade dispute”. It will not by any means be the last. On its own, the ruling has the potential to trigger a “trade war between the United States and the European Union”, says The Times. The WTO says the EU has failed to comply with as many as 34 diktats designed to prevent governments subsidising Airbus at the cost of competition – and to the ultimate detriment of its big US rival, Boeing. A UK SFO (Serious Fraud Office investigation centres on “irregularities” in the use of third-party intermediaries on export deals underwritten by the UK, France and Germany through so-called “export credits”.

Summary report on Dutch Export Credit Facility Masterclass

(Both Ends, Amsterdam, 5 September 2016) At the end of 2016, the Dutch government will present a policy review of its export credit facility – as implemented by Atradius Dutch State Business (ADSB) – to the national Parliament. In conversations with multiple staff members of parliamentarians, it was concluded that it would be helpful to organise a kind of Masterclass to enable them to better understand the role of the Dutch ECA from different perspectives. Both ENDS invited a range of stakeholders to attend and contribute to this meeting with a goal to inform Dutch parliamentarians and their staff on the functioning of the Dutch export credit facility, and the possibilities to effectively counter and mitigate negative economic, social, environmental and human rights impacts in developing countries linked to ADSB supported exports and investments. At the meeting ADSB, Boskalis, Both ENDS, the Netherlands Commission for Environmental Assessment (NCEA), MVO (CSR) platform, the Dutch Banking Association, Rabobank, Transparency International and the employers’ organisation VNO-NCW held short presentations and provided input to the discussions. The Dutch National Contact Point for the OECD-Guidelines on MNE’s (NCP) participated as an observer. All participants in the Masterclass concluded that this meeting was very helpful as a preparation for a better informed parliamentary discussion on the policy review that is on the agenda later this year.

CSO Comments on Efic Policies and Procedures for environmental and social review of transactions

(Jubilee Australia, Sydney, 9 September 2016) The Jubilee Australia Research Centre and Oxfam Australia have submitted comments on Efic Policies and Procedures for environmental and social review of transactions prior to a 2016 government review. They note that, although Efic’s approach to addressing issues around environmental and social concerns does generally match that of other OECD Export Credit Agencies (ECAs), this unfortunately does not mean that the approach may be considered ‘international best practice’. They outline areas for improvement in relation to the standards that are used, the transparency of reporting, and accountability to affected communities and Australian taxpayers who directly or indirectly support Efic’s work. They add that Australia has long opposed the attempt to curb export credit financing of coal and other fossil fuels. Pressure from Australia and South Korea resulted in the November 2015 OECD agreement being much watered down. That agreement is insufficient for two main reasons. First, it includes coal but excludes other fossil fuels such as natural gas which also contribute to global warming. Efic itself was a financier of the massive PNG LNG deal in 2009. Second, analysis reveals other loopholes in that it leaves out financing for mining, transport and related coal infrastructure. They propose that Efic’s Policy on environmental and social reviews contain a clear statement that Efic will no longer support fossil fuel projects of any type, including all fossil fuel extractive projects and pipelines, transport infrastructure, etc. They further propose that Efic advocate amongst the OECD Export Credit Group to do the same.

Efic has announced that it is considering financing the development and construction of a new Category A project, the greenfields Boikarabelo coal mine and railway in South Africa which faced market concerns in 2015.

Oman’s ORPIC to use debt to finance most of $5.2 bln plastics plant

(Reuters, SOHAR, Oman, 8 September 2015) State-owned Oman Oil Refineries and Petroleum Industries Co (ORPIC) will borrow money to finance 70 percent of its $5.2 billion plastics production complex, its chief financial officer said on Tuesday. The complex, the Liwa Plastics Project, is being built in the northern port city of Sohar and aims to further diversify the sultanate’s economy away from hydrocarbons. It is due to be completed in 2018. ORPIC has contacted 35 banks – both domestic and international – and eight export credit agencies, to fund the project.