What's New March 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

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  • EU G20 and OECD Member Countries Announce Trillion$ in subsidies, including ECA $$
  • EU approves emergency state-aid ECA measures
  • UK proposes UKEF loan fund to spur defence & post-Brexit exports
  • Global Banks Funneled $2.7 Trillion into Fossil Fuels Since Paris Climate Agreement
  • ECAs Backing Coal as Some of the World's Biggest Banks Get Out
  • UK Export Finance accused of failing to consider climate risks
  • EU unveils industrial strategy to help meet climate goals
  • India Seeks to Win Investment Amid Ongoing China-US Trade War, Coronavirus Outbreak
  • Canada challenged to ensure EDC COVID-19 aid won't bail out 'high-polluting industries'
  • Canada: Stop EDC investing in environmental and human rights harm
  • Airbus, Boeing Make Production Decisions Amid COVID-19 Pandemic
  • Uganda rallies regional states to rethink expensive ECA debt
  • Why a Brazilian builder wants UKEF money for work in Africa

EU G20 and OECD Member Countries Announce Trillion$ in subsidies, including ECA $$

(ECA Watch, Ottawa, 30 March 2020) Our "export credit" online alerts this month are flooded with news of coronavirus pandemic generated government subsidies for business (and some for workers), including special export credit increases. Here are but a few links by country: Canada, China, Finland, Germany, India, Ireland, Japan, Luxembourg, New Zealand, Norway, Spain, Sweden, Trinidad, Turkey, UKEF, USA. The measures notified by EU Member States and the UK that have been approved by the EC are outlined at this link.

EU approves emergency state-aid ECA measures

(National Law Review, Western Springs IL, 26 March 2020) On 19 March 2020, the European Commission adopted a temporary framework for State aid to support the economy amidst the consequences of the Coronavirus (COVID-19) outbreak. The temporary framework provides for five types of aid, including aid in the form of short-term export credit insurance, as a temporary EU Treaty measure allowing for state aid “to remedy a serious disturbance in the economy of a Member State.” [This move highlights a possible tension within the European community wherein the European Commission is promoting a European Green Deal while the European Council Export Credits Group works with the OECD Export Credit Working Group to promote and protect European corporations, including support for substantial fossil fuel projects. Will short-term export credits for the energy sector be allocated on the basis of a green Europe or the existing fossil fuel dependency? Or will they be used just to shore-up national businesses distressed by the COVID-19 pandemic?]


UK proposes UKEF loan fund to spur defence & post-Brexit exports

(Jane's, London, 11 March 2020) The UK government is proposing to create a GBP1 billion (USD1.3 billion) fund to support British defence and security exports. The “facility” would be overseen by UK Export Finance, the country’s export credit agency, which gives loans to help foreign countries, especially those with developing economies, buy British goods and services. The proposed fund is included in the 2020 budget that Chancellor of the Exchequer Rishi Sunak presented to Parliament on 11 March. The budget also proposes a GBP100 million (USD128 million) increase for defence research and development to “develop capabilities in response to threats facing the UK, including funding for cutting-edge technology in aviation and space propulsion.” In addition, The Chancellor is preparing to boost post-Brexit exports for UK businesses by making £5 billion of loans available to UKEF in his forthcoming Budget. The Treasury said the money would help UK exporters to increase their global sales as Britain prepares for life outside the European Union, with the Chancellor helping to top up the purchasing power of those abroad by providing a competitive loan rate through UKEF.


Global Banks Funneled $2.7 Trillion into Fossil Fuels Since Paris Climate Agreement

(Bank Track, Nijemgen, 20 March 2020) The latest version of the most comprehensive report on global banks' fossil fuel financing, Banking on Climate Change 2020, was released today, revealing that 35 global banks have not only been sustaining but expanding the fossil fuel sector with more than $2.7 trillion in the four years since the Paris Climate Agreement. The report finds that financial support for the fossil fuel industry has increased every year since the Paris Agreement was adopted in December 2015.


ECAs Backing Coal as Some of the World's Biggest Banks Get Out

(Bloomberg, 8 March 2020) Moves by some of the world’s biggest banks to end coal financing for the sake of the planet was supposed to create major headaches for companies like Whitehaven Coal Ltd. Yet there was the Australian miner on a conference call last month announcing the refinancing and extension of a A$1 billion ($650 million) credit line, backed mostly by Chinese and Japanese lenders. The Export-Import Bank of China and the Japan Bank for International Cooperation lead firms that have committed $29 billion for new coal power projects in Vietnam and Indonesia alone.


UK Export Finance accused of failing to consider climate risks

(Business Green, London, 17 March 2020) The UK's export credit agency was today accused of breaching OECD guidelines governing multinational organisations, with campaigners accusing the government of "rank hypocrisy". NGO Global Witness has lodged a complaint with the Paris-based OECD, which provides guidelines for how industrialised economies should respond to the climate crisis. The complaint alleges that UKEF has breached guidelines for multinational enterprises by failing to adequately consider climate-related risks and report on its greenhouse gas emissions. It also alleges that the agency has no targets to reduce emissions. The OECD cannot compel enterprises to develop a climate risk strategy, but it can publicly state that its guidelines have been broken. The complaint, which is the first of its kind to be levelled against an export credit agency, will see UKEF enter into an arbitration process mediated by the OECD.


EU unveils industrial strategy to help meet climate goals

(ReNews, Winchester, 10 March 2020) The European Commission has presented a new Industrial Strategy to help Europe achieve its goal of climate neutrality by 2050, while maintaining European industry's global competitiveness. These include comprehensive measures to modernise and decarbonise energy-intensive industries, support sustainable and smart mobility, promote energy efficiency, strengthen current carbon leakage tools and secure a “sufficient and constant” supply of low-carbon energy at competitive prices. “This includes developing a European export strategy for renewables that looks not only at third country market access but also at how national export credit agencies can support the European industry in the face of State-financed Chinese competition.


India Seeks to Win Investment Amid Ongoing China-US Trade War, Coronavirus Outbreak

(Sputnik, Moscow/New Delhi 3 March 2020) The US and China are still engaged in a trade dispute, and the spread of the coronavirus makes a deal less likely, at least in the short-term. The Indian Finance Ministry has revealed that amid the US-China trade war, its exports to the two countries have not only increased but it is also looking forward to enlarging its China Plus-One Strategy. Claiming that trade tensions between China and the US contributed to the decline of world output and trade, the ministry said that India recorded $44.8 million in exports to the USA and $14.6 million to China in 2019. The US-China trade war began in 2018 after US President Donald Trump accused China of unfair trade practices and imposed tariffs on more than $360 billion of imports. China accused the US of trying to stop it from emerging as a global power and retaliated with tariffs of $110 billion on US products. Amid the tensions, the Indian government has granted relief measures to exporters including lower duties and taxes on exported products, a special scheme for higher export credit disbursement and a fast clearance window to boost trade. India has recorded an increase in exports with the US despite higher tariffs and the end to the Generalised System of Preferences, an import subsidy facility, which assisted Indian exports to the tune of $5.6 billion.


Canada challenged to ensure EDC COVID-19 aid won't bail out 'high-polluting industries'

(National Observer, Ottawa, 25 March 2020) Environmental groups praised political parties for coming together to help Canadians battle the effects of the coronavirus. They also argued that the new law’s broadening of Export Development Canada (EDC)’s mandate will make it easier to direct more public money to oil and gas companies without sufficient oversight.


Canada: Stop EDC investing in environmental and human rights harm

(Amnesty International, Ottawa, 14 March 2020) In 2016, Export Development Canada - a crown corporation that claims its transactions are “environmentally and socially responsible” - approved millions of dollars in loans to Empresas Públicas de Medellin, the company building the HidroItuango dam. The Hidroituango dam cuts across the Cauca River in a region of Colombia hard hit by decades of armed conflict and grave human rights violations. The financing was approved despite warnings by experts, human rights organizations and local communities. Ríos Vivos, a grassroots movement of families dependent on the Cauca River for their food and livelihoods, has courageously denounced social and environmental impacts of the dam. They’ve also reported forced evictions, increased militarization and worsening violence, including the killing of six of their leaders.


Airbus, Boeing Make Production Decisions Amid COVID-19 Pandemic

(Aviation Today, Rockville MD, 24 March 2020) Airbus partially resumed assembly and production work in France and Spain on March 23, while Boeing will temporarily suspend the majority of its U.S.-based airplane production activity beginning March 25 as the two commercial aerospace giants continue working to keep their businesses running amid the COVID-19 coronavirus outbreak. “We’re advocating support of governments for the complete ecosystem across the industry, for our suppliers and customers, for example, through the use of export credit." Airbus CEO Guillaume Faury noted. [One wonders how the global spread of COVID-19 via many of their aircraft may affect their plans!]


Uganda rallies regional states to rethink expensive ECA debt

(Daily Monitor, Kampala, 24 February 2020) Maris Wanyera, the Ministry of Finance acting director for debt and cash policy management, said on Friday the conference, to be attended by delegates from 16 countries, under the theme “sustainable public debt management and a strengthened economic growth” is long overdue in light of the ongoing borrowing frenzy by African countries to finance their development agenda. Some of the conditions, she says, are high insurance premiums tied to especially loans by export credit agencies, tying of loans to particular suppliers usually from the source countries which constrain local capacity, and in others waiving sovereign immunity over all assets of the borrowing states.


Why a Brazilian builder wants UKEF money for work in Africa

(Construction News, London, 3 March 2020) UK financing of foreign projects designed to boost British supply chain involvement is booming. Ghana’s Kejetia open-air market is the largest in West Africa and is also a health and safety nightmare. Ghana decided to create a more modern facility and approached a Brazilian builder established in the region to design and build a multi-storey covered market to replace Kejetia. The second phase of the programme – a 160,000 m2 building – is guaranteed to feature work from British subcontractors. It could, for example, include Scottish steel and be illuminated by lights created in London. Why? Because UK Export Finance, the government’s export credit agency, has provided a £70m loan to help the Ghanaian government finance the project, costing up to $700m (£543m). UKEF funding decisions are not without criticism. Their financing of projects led by companies with minimal presence in the UK has raised questions about whether British businesses are benefiting as much as they are supposed to and last year a select committee of MPs began scrutinising some of the deals by UKEF as part of an inquiry into the organisation’s financing of fossil-fuel projects.