The Arrangement is a "gentlemen's agreement" amongst its Participants: Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, Turkey, the United Kingdom and the United States. The Arrangement first came into existence in 1978, building on the export credit “Consensus” agreed among a smaller number of OECD countries in 1976. Since then, it has been regularly developed and updated to reflect Participants’ needs and market developments.
The main purpose of the Arrangement is to provide a framework for the orderly use of officially supported export credits by fostering a level playing field in order to encourage competition among exporters based on quality and prices of goods and services exported rather than on the most favourable officially supported export credits.
To this end, the Arrangement places limitations on the financing terms and conditions (repayment terms, minimum premium rate, minimum interest rates) to be applied when providing officially supported export credits as well as on the use of tied aid by the Participants. The Arrangement contains various transparency provisions among Participant to ensure that these limitations are effectively applied.
The Arrangement applies to all officially supported export credits with a repayment term of two years or more. It does not, however, apply to military equipment or to agricultural commodities.
Some of the rules laid out in the Arrangement are sector-specific and are detailed in the sectoral annexes of the Arrangement (called “Sector Understandings”). There are currently five Sector Understandings that cover export credits in the area of (I) ships, (II) nuclear power plants, (III) civil aircraft, (IV) renewable energy, climate change mitigation and adaptation, and water projects, and (V) rail infrastructure. The Ship Sector Understanding and the Aircraft Sector Understandings are special, as their Participants are different from those of the general Arrangement, which is not the case for the other sector understandings.