2007: November 5 - 10th Informal Consultation Meeting between the Participants to the Arrangement on Export Credits, the Working Party on Export Credits and Credit Guarantees (ECG) and Civil Society Organisations (CSOs)

CIVIL SOCIETY ORGANISATIONS (CSO)

1. Representatives from Civil Society Organisations (CSOs) met in Paris on 5 November 2007 with the OECD’s Working Party on Export Credits and Credit Guarantees (ECG) and the Participants to the Arrangement on Officially Supported Export Credit to exchange views on export credit issues; the meeting was chaired by Mr. Brendan BERNE (Australia, a Vice-Chairman of the two committees). This was the tenth annual CSO consultation meeting.
2. The CSOs included representatives from the Business and Industry Advisory Committee to the OECD (BIAC), the Trade Union Advisory Committee to the OECD (TUAC), the European Banking Federation (EBF) and representatives of ten Non-Governmental Organisations (NGOs) under the umbrella of ECA Watch. Also attending were the UNEP, the Union of Credit and Investment Insurers (Berne Union), the IMF and the World Bank.
3. The following recent developments in export credits at the OECD were presented by the OECD Secretariat:
   • The new OECD Recommendation on Bribery and Officially Supported Export Credits, which was adopted by the OECD Council in December 2006. A survey on Members’ procedures and practices on anti-bribery measures to reflect the provisions of this new Recommendation was recently agreed and completed by them: as in the past, the responses will be made public via the OECD website.
   • The revised OECD Recommendation on Common Approaches on the Environment and Officially Supported Export Credits, which was adopted by the OECD Council in June 2007. Currently, Members are finalising a survey on their processes and procedures to reflect the provisions of the Recommendation, the responses to which, as usual, will be made public via the OECD website, and their Environmental Practitioners have started to build a body of experience on the application of the Recommendation with the aim of improving common practices and promoting a level playing field. ECA Watch expressed concern that the 2007 Recommendation allows Members to support projects, in exceptional cases, that did not meet the international standards against which they had been benchmarked and also questioned the peer review and sanctions mechanisms for such derogations.
   • The revised Sector Understanding on Export Credits for Civil Aircraft. The Participants to the Understanding, which came into effect on 1 July 2007, include not only OECD countries but also Brazil.
   • The Sector Understanding on Renewable Energies and Water Projects, agreed in April 2005 and which came into force on 1 July 2005 (December 2005 for hydro-power projects) for a two-year trial period and extended until the end of June 2009. ECA Watch requested information on the number and volume of projects that had been notified and committed under the Sector Understanding: the Participants are to consider this request.
   • Unproductive Expenditure to Heavily Indebted Poor Countries - Statement of Principles, which was agreed in 2001, was extended to all IDA-only countries in April 2007. To complement the HIPC Initiative, discussions are under way on sustainable lending in the context of the IMF and the World Bank’s Debt Sustainability Framework (DSF) and how Members could collectively support it.
4. The following issues were raised by CSOs:
   • Whilst welcoming the recent adoption of two OECD Recommendations on export credits, BIAC called for a period of stability to allow exporters to become accustomed to the new requirements. They also expressed the hope that the new requirements would be applied evenly by Members and with as little extra bureaucracy as possible.
   • BIAC  also called on Members to encourage non-member economies to apply the same financial terms and conditions and the same environmental and social standards as those applied by OECD countries when providing export credit support: the Secretariat advised of work under way within the OECD on the issue of accession and enhanced engagement with some non-member economies.
   • BIAC called for a relaxation of the disciplines in the Arrangement on local costs, given market developments and the growth of manufacturing capability in host countries. BIAC presented a paper on the subject and recommended a substantial relaxation in the percentage of local costs that export credit agencies were allowed to support (currently limited to the value of the contractual down payment).  TUAC considered that this might be counter to export credit agencies’ primary mandate to support national exports. [The issue of local costs was considered at the 101st Meeting of the Participants to the Arrangement.]
   • ECA Watch maintained that there was a lack of policy coherence between the ECG and other OECD bodies and a lack of transparency in peer review processes. The Secretariat noted that other committees and Directorates of the OECD were involved in export credit work and that the OECD Recommendations were adopted by Member Governments as a whole; as to peer review, the responses to the export credit surveys, which were publicly available via the OECD website, were also available to inform reviews undertaken by other OECD committees.
   • ECA Watch complained that their proposals had not been taken sufficiently into account during the recent negotiations of the two export credit Recommendations. Members recalled that when negotiating OECD instruments, they had to balance the differing views of all stakeholders as well as the policy objectives of their governments.
   • TUAC drew attention to the OECD Guidelines on Multinational Enterprise (MNEs) in the context of export credits: Members agreed to liaise further in capitals with their MNE National Contact Points. BIAC supported the idea that export credit agencies inform applicants/exporters about the MNE Guidelines but considered that official support should not be made conditional upon adherence to or full implementation of these.
5. The Chairman noted that this was the most interactive and constructive dialogue between CSOs and the export credit committees for many years, witnessed by the overrun of the consultation by nearly one hour. The ECA Watch expressed frustration with an absence in the past of meaningful dialogue with Members and they were not satisfied either with the Members’ responses during this consultation. ECA Watch explained that they had their own benchmarks regarding progress and that these were not being met by Members. ECA Watch questioned the effectiveness of a peer review process when the information was not shared with CSOs and whether the reporting accurately reflected the practices of export credit agencies. ECA Watch  then decided to leave the meeting ten minutes before the end and rejected a request from the Chairman to stay for his conclusions; the NGOs shortly thereafter advised, via a letter, that they would not continue to engage with the ECG on the current basis.
6. The Chairman concluded by summarising the main issues addressed in relation to recent OECD developments in export credits and to the issues raised by the CSOs. He also expressed his disappointment and his regret that, in spite of the good faith of attendees and the constructive and participatory nature of the consultation, the NGOs had decided to leave the meeting before its end. The Chairman noted that he would make a report of the consultation to the ECG and that he would propose that Members should, inter alia, continue to engage with CSOs and consider further modalities for peer reviews within the ECG and future CSOs consultations. [The issue of future engagement with CSOs was considered at the 112th Meeting of the ECG.]

XCRED Secretariat
November 2007

ROOM DOCUMENTS

• Room Document 2/REV of the 10th Informal Consultation with Civil Society Organisations (CSO): Issues proposed by ECA-Watch
• Room Document 3 of the 10th Informal Consultation with Civil Society Organisations (CSO): Removal of restrictions on support for local costs - BIAC