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OECD Arrangement

Within the OECD, officially supported export credits are primarily managed by two Working Groups operating under the Trade and Agriculture Directorate (TAD). The Export Credits and Guarantees Working Group (ECG) discusses and coordinates the national policies of its members regarding export credits, focusing on good governance issues such as anti-bribery measures, environmental and social due diligence, and sustainable lending practices. Currently, there are three key recommendations related to good governance and officially supported export credits:

  1. OECD Recommendation on Bribery and Officially Supported Export Credits – commits parties to taking specific and coordinated actions to prevent bribery in export transactions and ensures that official export credit providers do not finance transactions tainted by corruption (more information about Eximbanka’s activities in this regard can be found here).
  2. Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence – sets out common approaches for addressing the environmental and social impacts of projects, including measures for conducting due diligence, benchmarking projects against international standards, and applying conditions to prevent, minimize, mitigate, or remedy potential adverse impacts (more information about Eximbanka’s activities in this regard can be found here).
  3. Recommendation of the Council on Sustainable Lending Practices and Export Credits – ensures that export credits for public sector borrowers in low-income countries do not contribute to unsustainable debt, aligning with the joint Debt sustainability analysis of the World Bank and the International Monetary Fund (more information: Recommendation of the Council on Sustainable Lending Practices and Officially Supported Export Credits).

The second Working Group is an independent group of Participants of the OECD Arrangement (hereafter referred to as the Participants), where the rules of the Arrangement on Officially Supported Export Credits (hereafter referred to as the OECD Arrangement) are formulated.
The OECD Arrangement is a “gentlemen’s agreement” between the EU, US, CA, JP, KR, NO, CH, AU, NZ, TR a GB which provides a framework for the orderly use of officially supported export credits and tied aid. The OECD Arrangement has indefinite duration, and although it receives the administrative support of the OECD Secretariat, it is not a legal act of the OECD. The OECD Arrangement is regularly updated to reflect market and policy developments that affect the provision of officially supported export credits. It covers all officially supported export credits with maturity of 2 years or more, excluding military equipment and agricultural commodities. The Arrangement prohibits officially supported export credits and tied aid for unabated coal power plants.

Export credits provided in line with the Arrangement benefit from a safe haven clause in the WTO’s Agreement on Subsidies and Countervailing Measures. Some rules in the OECD Arrangement are sector-specific, detailed in sectoral annexes of the Arrangement (known as “Sector Understandings“). These include:

  1. Climate Change Sector Understanding (CCSU) – provides more flexible conditions for projects aimed at adapting to and mitigating climate change impacts.
  2. Nuclear Sector Understanding (NSU) – offers more flexible conditions for officially supported export credits related to nuclear power plants.
  3. Aircraft Sector Understanding (ASU) – represents a separate agreement concerning officially supported export credits for civil aircraft.
  4. Ship Sector Understanding (SSU) – provides specific guidelines for officially supported export credits for maritime vessels, ship modifications, and hovercraft.

The OECD Arrangement has been transposed, and hence been made legally binding in the EU, by Regulation (EU) No 1233/2011 of the European Parliament and of the Council (more information on legal binding in the EU). Decisions on all amendments of the OECD Arrangement are taken by consensus.

Modernization of the OECD Arrangement
The OECD Arrangement, established in 1978, has been regularly updated to meet the needs of its Participants and market developments. In 2019, a modernization process was initiated by the Participants, culminating in the adoption of new rules in 2023. The goal of this modernization was to provide more flexible conditions for officially supported export financing, aligning with the economic and financial needs of exporters in an increasingly competitive environment while avoiding market disruptions. Modernization expanded the range of climate-positive transactions eligible for more favorable conditions. These projects include sustainable energy production, CO2 capture, storage, transportation, energy transmission, distribution, and storage, clean hydrogen and ammonia, low-emission manufacturing, zero and low-emission transport, and clean energy minerals and ores. By supporting climate-friendly transactions, export credit agencies (ECAs) contribute to the global goal of net-zero emissions.

The maximum repayment term has been extended from 18 to 22 years for climate-friendly and environmentally beneficial transactions under the Climate Change Sector Understanding (CCSU), and for most other projects, it has been extended from 8.5 and 10 years to 15 years. Additionally, the minimum premium rates for the final credit risk holder were reduced for longer repayment periods. The flexibility of rules for setting repayment schedules has also been increased to better align with the financial cash flow of the supported projects.

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