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Still exporting destruction: A civil society assessment of Export Credit Agencies’ compliance with EU Regulation (PE-CONS 46/11)

November 14, 2013

ECA Watch has prepared this ‘shadow report’ — with the support of other civil society groups — in order to assess current ECA practice in relation to issues such as transparency, public accountability and more generally, their compliance with the EU’s objectives on external action. It is based on ECAs’ own annual public reports, questionnaires sent to Export Credit Agencies (ECA), and freedom of information requests. The report starts by giving some background information regarding ECAs and how they are regulated. It analyses ECAs’ answers to ECA Watch’s questionnaires, and highlights a couple of case studies to illustrate our concerns. It analyses the annualreports that Member States sent to the EC and highlights points that should be investigated further by the EC. It concludes by indicating options for the European Commission, Council and Parliament to improve the regulatory framework for EU ECAs.

Hold the applause on UK no-coal finance announcement

(Guardian, 20 November 2013, Warsaw) British taxpayers' money will no longer be used to build coal-fired power stations in developing countries, the energy secretary Ed Davey pledged November 20th, as the fortnight-long United Nations climate talks in Poland entered their final phase. The UK has provided about $500m (£300m) for such projects in the past seven years, mostly through its funding for development banks, according to research by the US Natural Resources Defence Council. Ending that is meant to encourage countries to move to low-carbon energy. However critics have said 'hold the applause", noting that, contrary to Ed Davey's announcement, British taxpayer's money can still be used to fund coal power stations because the new policy explicitly excludes UK Export Finance, the main part of the UK government which backs loans to other countries. It is like pledging not to eat sugary food, but exempting chocolate.

Do Swedish ECAs support exports at the expense of human rights?

Through its export credit agencies (ECAs) EKN and SEK, the Swedish state insures and finances Swedish companies' export. These operations are extensive. The Swedish ECAs have in their portfolios the responsibility for hundreds of billions of Swedish kronor, and in 2012 alone EKN guaranteed transactions of a value of 49 billion SEK in 123 countries. In two previous reports, Amnesty International and Diakonia examined and followed up the extent to which EKN and SEK take account of human rights in their credit assessments. Although the follow-up report from 2012 showed that steps had been taken in the right direction such as greater transparency, new procedures and new policy documents, we can note in our third report that large gaps still exist.

Read the report here.

US Caterpillar jobs bouyed by Australian Roy Hill iron mine and US Ex-Im

(Herald Review, 15 November 2013, Decatur) After a year as gloomy as the bottom of a mineshaft, Caterpillar Inc. woke up to a bright ray of sunshine Thursday. The U.S. Export-Import Bank wants to say “yes” to making a $694 million loan that will help support more than 3,000 jobs, including hundreds in Decatur. The Washington, D.C.-based bank is the official export credit agency of the nation and steps in to aid American businesses hunting big overseas orders. The $694 million in financing will enable the controversial Roy Hill iron ore mine in Australia to buy boatloads of Caterpillar mining equipment, especially the giant off-road trucks, the world’s biggest, built at its Decatur factory.

Aircraft orders focus attention on export credit

(Wall Street Journal, 19 November 2013, Dubai) The $200 billion aircraft order bonanza at the Dubai Airshow has focused attention on the little-known system of government export credit agencies, which are used to help fund planes and other big-ticket equipment such as power generators. Proponents such as Boeing - a big winner at the show - maintain that ECAs are a crucial part of doing business, and competing with overseas rivals such as Airbus. Critics insist they distort industries, since not all airlines can access the support, while proponents of small government in the U.S. reckon they should be closed down.

Australian ECA EFIC annual report shows rising loans

(Sydney Morning Herald, 25 November 2013, Sydney) Australia's export credit agency wrote more loans in the 2013 financial year than the year before, despite almost halving the total amount of taxpayers' funds it provided. The mining sector comprised almost half of its financial assistance, with EFIC's single biggest commitment being a $US150 million loan for the Ichthys LNG project in Darwin. EFIC was among eight export credit agencies and 24 commercial banks to participate in the $US20 billion financing of the project, the world's biggest. EFIC has been criticised in recent times for loaning to large corporations such as Exxon Mobil and Leighton Holdings, and it was urged by a Productivity Commission report in 2012 to ''substantially reorientate'' its focus towards small exporters, rather than big companies that can easily source money elsewhere at low interest rates.

Human rights Institutes concerned about OECD Common Approaches

In their submission to the OECD ECWG consultation with CSOs on 19 November 2013, the Danish, French and German national human rights Institutes identified the following main issues of concern regarding the consistency of actions of the OECD Working Party and national export credit agencies with the requirements of the UN Guiding Principles on Business and Human Rights3:

• Integration of human rights: How is respect for human rights being effectively integrated as an evaluative criterion for ECA-sponsored activities at national level, in line with the state duty to protect human rights, as set out in Pillar I of the UN Guiding Principles on Business and Human Rights, and the corporate responsibility to respect, under Pillar II?
• Improving transparency: Transparency is prerequisite to accountability of state and private sector duty bearers to human rights standards, but is currently lacking in relation to export-credit supported activities. What role will the Common Approaches, and the Working Party, play in resolving this?
• Grievance mechanisms: What steps are the Working Party and national authorities taking to meet the requirement for effective mechanisms to provide a remedy for any complaints relating to ECA-sponsored activities, in line with the requirements of Pillar III of the UN Guiding Principles on Business and Human Rights?

Sri Lanka foreign export credits led by China

(Lanka Business Online, 28 November 2013, Colombo) Sri Lanka has US$1.9 billion of new bilateral and multilateral commitments up to September 2013 led by China with export credit from other countries also showing increases, a finance ministry report showed. China has committed US$517.9 million up to September, Japan US$421.5 million, Asian Development Bank US$371.2 million, the World Bank US$196.4 million, the United Kingdom US$103.7 millionand USA US$64.9 million. While Japan, the ADB and World Bank give long term loans at low interest China gives export credits at semi-commercial terms. Sri Lanka has been using large volumes of export credits and supplier finance for infrastructure from the Exim Bank of China, but other countries are now also giving larger volumes of export credits.

UK Export Finance and Korea

UK Export Finance has signed Memoranda of Understanding (MOU) on reinsurance with the Korean export credit agency, Korea Trade Insurance Corporation and with Korea Eximbank on mutual support.
The agreement sets out how UK Export Finance (UKEF) and the Korea Trade Insurance Corporation (K-Sure) will cooperate in the field of export credits, facilitate collaboration, and better co-ordinate efforts on projects in other markets where there are export opportunities for both the UK and Korea. The signing was witnessed by Business Secretary, Vince Cable, and the Korean Minister of Trade, Industry and Energy, Yoon Sang-jick.

This MOU follows the signing yesterday of a separate MOU on Mutual Support between UK Export Finance and Korea Eximbank, the Export-Import Bank of Korea.