The Arrangement is a "Gentlemen's Agreement" amongst its Participants who represent most OECD Member Governments. The Arrangement sets forth the most generous export credit terms and conditions that may be supported by its Participants.
The main purpose of Arrangement is to provide a framework for the orderly use of officially supported export credits. In practice, this means providing for a level playing field (whereby competition is based on the price and quality of the exported goods and not the financial terms provided) and working to eliminate subsidies and trade distortions related to officially supported export credits.
The Arrangement came into existence in 1978, building on the export credit "Consensus" agreed among a number of OECD countries in 1976. Prior to this time, the lack of rules set the stage for competition amongst governments to provide the most attractive financial terms in support of exporters competing for overseas sales; the end result being financial subsidies and potential trade distortions.
The Arrangement places limitations on the terms and conditions of officially supported export credits (e.g. minimum interest rates, risk fees and maximum repayment terms) and the provision of tied aid. It includes procedures for prior notification, consultation, information exchange and review for export credit offers that are exceptions to or derogations of the rules as well as tied aid offers.
The Participants to the Arrangement are: Australia, Canada, the European Union, Japan, Korea (Republic of), New Zealand, Norway, Switzerland, Turkey and the United States.