The agreement is a gentlemen`s agreement between its participants: Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, Turkey and the United States. The agreement was established in 1978 and was based on the ”consensus” on export credits agreed in 1976 among a smaller number of OECD countries. Since then, it has been regularly developed and updated to reflect the needs of the participants and the evolution of the market. The decision to amend local content rules under the OECD Agreement on Officially Supported Export Credits was hailed as an ”important step” in modernising the agreement, although industry representatives expressed concerns about the lack of progress in other important areas of discussion. Some of the rules set out in the Convention are sector-specific and listed in the Sectoral Annexes to the Convention (hereinafter referred to as ”Sectoral Agreements”). There are currently six sectoral agreements covering export credits in the areas of (I) ships, (II) nuclear power plants, (III) civil aircraft, (IV) renewable energy, climate change mitigation and adaptation and water-related projects, (V) railway infrastructure and (VI) coal-fired power plants. The agreement on the ships sector and the understanding of the aircraft sector are special because their participants are different from those of the general agreement, which is not the case for other sectoral agreements. The Nuclear Sector Agreement (NSU) (see Annex II to the Arrangement) was first included as an annex to the Arrangement in 1984 and was last updated in July 2009. It provides for more flexible conditions for the granting of officially supported export credits for nuclear power plants. Following the EU`s call to action, OECD countries agreed today in principle to end export credit support for unwinded coal-fired power plants in the run-up to COP26. This agreement will come into effect once all participants have completed their internal agreement processes, which they intend to achieve by the end of October 2021.
It shall not be granted on more favourable/less restrictive terms than those agreed for related exports. The Sectoral Agreement on Railway Infrastructure (RSU) (see Annex V of the Agreement) was implemented in January 2014. This Annex establishes more flexible conditions for the granting of officially supported export credits in the context of new railway infrastructure projects in order to meet the different needs of governments and exporters and to promote the use of rail as a viable alternative to road and air transport in the context of energy shortages, fuel prices and climate change. In recent years, however, concerns have grown about diminishing the power of the arrangement, and in its 2019 paper with the ICC and EBF, BIAC called the agreement ”more fit for purpose.” A senior official in the export credit sector, aware of the discussions on the arrangement, told GTR that participating members had initially reached an agreement in November to amend local content regulations. Environmental protection: As an important contribution to the climate negotiations in Paris (COP21), participants in an agreement on officially supported export credits agreed on 17 November 2015 on an understanding of the industry that will limit public funding of coal-fired power plants. With the aim of promoting the use of highly efficient and low-emission technologies, participants agreed that this was an important step towards reducing the use of less efficient coal-fired power plants. This supports U.S. efforts to raise the minimum standard of environmental protection in these projects and create a level playing field for U.S. companies competing with them.
The United States was also the first OECD country to require its export credit agency, the Export-Import Bank, to conduct environmental assessments. China`s use of export credits has been criticized in particular by the U.S. Export-Import Bank (US Exim), which in its latest competitiveness report criticized the fact that China`s medium- and long-term export credit activity from 2015 to 2019 accounted for at least 90 percent of the activity provided by all G7 countries combined. Background The Arrangement (referred to on the OECD website as the ”Gentleman`s Agreement”1) first entered into force in 1978. Although the agreement is voluntary and has no legal value, it is generally credited with achieving its objectives (i) establishing a framework for the orderly use of officially supported export credits and (ii) creating a level playing field for official support in order to promote competition among exporters on the basis of the quality and price of the goods and services exported and not on the basis of conditions. of support. of that export credit agency. The Arrangement achieves these objectives by restricting the applicable financing conditions. Established in 1978, the OECD Arrangement – or Consensus as it was formerly called – sets limits on the financing terms and conditions that a participating ECA can offer for officially supported export credits and any related support. [2] With the exception of exports of military equipment or agricultural raw materials. The Agreement on the Coal-Fired Power Generation (CFSU) sector (see Annex VI of the Agreement) was implemented in February 2016.
This Annex lays down stricter conditions for the granting of officially supported export credits in the context of coal-fired power plants. The purpose of this Annex is to encourage exporters and buyers of coal-fired power plants to move away from highly efficient technologies by limiting export credit support for coal-fired power plants. The OECD has two agencies dealing with export credit issues, and the United States is a member of both. All OECD countries, with the exception of Iceland, are members of the Working Party on Export Credits and Credit Guarantees, known as ecg. ”Participants” are the group of countries that adhere to a 1978 (now updated) agreement called the ”Arrangement” that establishes the most generous terms for export credits that participants can support. Buck told GTR that exporters from the arrangement`s member countries in sectors where construction or labor costs are high, such as those engaged in road, rail, hospital, water and power distribution projects, as well as those in the extractive industries, will benefit greatly. This agreement in principle within the OECD is a significant step forward in aligning export credit with the objectives of the Paris Agreement and a concrete contribution to climate ambitions, including in the context of the next/next COP26. Fight against bribery: The Official OECD Recommendation on Bribery and Officially Supported Export Credits, adopted by the OECD Council, recommends that all Members take appropriate measures to deter bribery in international transactions receiving official export credit support. Export credits are an important element of international trade promotion. As a participant in the OECD Agreement on Officially Supported Export Credits, the EU plays an important role in efforts to ensure a level playing field and the coherence of the common objective of tackling climate change. .
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