1. Guided by mandates from the OECD Ministers' Meeting in 2001, the Members of the OECD's Working Party on Export Credits and Credit Guarantees (the Export Credit Group - ECG) and the Participants to the Arrangement on Guidelines for Officially Supported Export Credits (the Participants) pursued the conclusion of several agreements and endeavoured to progress other priority issues, all related to officially supported export credits.
a) The ECG
2. Last year, once again, Ministers urged the ECG to conclude an agreement by the end of 2001 on common approaches on the environment and export credits. Such common approaches would determine the extent and depth of environmental review given to individual projects in respect of which official support is sought and, inter alia, benchmark the environmental standards to be applied against those of host countries and the international financial institutions. At their Meeting held in November 2001, all ECG Members except two accepted the proposed draft agreement in the form of an OECD Recommendation as an important first step. The ECG Members reaffirm their intention to continue to work towards an OECD Recommendation on Common Approaches on Environment and Officially Supported Export Credits for adoption by the OECD Council.
3. In 2001, Ministers also recognised the importance of fighting bribery and of limiting the debt burden of the Heavily Indebted Poor Countries (HIPCs) and welcomed the work of the ECG on both these issues. The ECG is refining its mapping survey on anti-bribery measures adopted in export credit systems, consistent with the ECG's Action Statement, which should contribute positively to the ongoing review of the implementation of the OECD Convention on Bribery by the Committee on International Investment and Multinational Enterprises (CIME). In June 2001, the ECG also finalised the Statement of Principles on Unproductive Expenditure to the HIPCs. In this latter connection, whilst the HIPCs are not major export credit markets, the Principles respond to calls from OECD Ministers to strengthen measures towards ensuring that export credit support to the HIPCs is not provided for unproductive purposes. Thus, transactions which do not contribute to the social and/or economic development of the poorest nations should not benefit from OECD governments' support. The Principles are consistent with both the efforts in OECD countries to ensure that trade and sustainable developmental policies are complementary and with the World Bank-led HIPC Initiative which attempts to lower the debts of poor countries to sustainable levels. The ECG also agreed last November to a transparency exercise based on annual reporting and public dissemination of information on officially supported export transactions to the HIPCs.
b) The Participants
4. The Participants regret that they were unable to respond to Ministers' call for the conclusion of an Export Credit Understanding on Agriculture. Despite efforts throughout 2001, unanimity on a draft Understanding was not reached: all Participants except one are willing to accept the current draft agreement. The good offices of the OECD Secretariat and the Chairman of the Participants remain at the disposal of the Participants in the event that further work is called for under the auspices of the OECD.
5. OECD Ministers encouraged further work on the Export Credit Arrangement, inter alia, in the light of recent WTO developments. Consequently, the Participants are considering the impact of the most recent WTO Dispute Panel reports on the Arrangement's disciplines, as well as of the Doha Development Agenda. Furthermore, the Participants will publish an updated Arrangement to include all recent decisions and interpretations. The Participants will also continue to implement, monitor, review and, where appropriate, refine the extant disciplines of the Arrangement. These disciplines include risk premia, tied aid and flexibility in repayment terms for project finance transactions. Such flexibility for project finance transactions is applicable for a trial period until August 2002 during which the Participants will consider whether to incorporate this into the Arrangement.
6. OECD Ministers also urged the continuation of work on the export credit provisions of the 1994 Understanding on Shipbuilding with a view to implementing these before the end of 2001. The OECD Council Working Party on Shipbuilding, at its December 2001 meeting, approved the terms of an Understanding on Export Credits for Ships and, in March 2002, the Participants adopted this as an Annex to the Arrangement.
7. Finally, the tied aid disciplines of the Arrangement have been successful in reducing trade distortions. In consultation with the DAC Working Party on Financial Aspects, the Participants are discussing proposals for developing disciplines for project-related untied aid.
c) Looking Forward
8. Building on achievements in export credit disciplines (e.g. interest rates, tied aid and risk premium fees) and conscious of new challenges, inter alia in the context of WTO developments, ECG Members and the Participants continue to seek, in the forums of the OECD, to eliminate trade distortions and to work towards a level playing field on which exporters can compete fairly. This will continue to be complemented by the more qualitative elements of governments' activity in the field of export credits (e.g. environment, bribery and the unproductive expenditure) in the wider context of good governance and sustainable development.