The Aircraft Sector Understanding (ASU), which is a "gentlemen’s agreement", applies to officially supported export credits relating to civil aircraft. Although integrated as a sectoral annex into the Arrangement, it is a self-contained agreement, that operates with no recourse to any of the provisions of the Arrangement. The Participants to the ASU are slightly different from the Participants to the Arrangement. They are: Australia, Brazil, Canada, the European Union, Japan, Korea, New-Zealand, Norway, Switzerland and the United States.
The prevailing ASU text can be found in Annex III of the current Arrangement on Officially Supported Export Credits. Compared to the previous version (January 2019), the following changes were made:
- Changes relating to the main body of the ASU:
- The exemption from prior notification applicable to Article 13-1) was extended to Article 13 2);
- The Article 39 transitional arrangements (grandfathering provision) was modified to include a sunset clause of 31 December 2020, after which the arrangements are no longer permitted.
- Changes relating to Appendix II (Minimum Premium Rates - MPR): Article 32 was slightly amended to clarify that the MPRs are floored to 100% of the Risk Based Rates (RBRs) and capped at 200% of the RBRs.
- Changes relating to Appendix III (Minimum Interest Rates): Article 3 was slightly amended in order to limit the routine publication of the CIRRs to the four currencies highlighted in the ASU text (namely, the euro, the Japanese yen, the UK pound and the US dollar) without changing the currency eligibility requirements of the CIRR.
For more information: please consult the Evolution of the Arrangement document: it provides a history of the evolution of the Arrangement, including an overview of the milestones since its adoption in 1978, a history of the changes made both to the main body of the Arrangement and to its sectoral annexes since 1992 (with a special focus regarding the ASU) and the links to the previous versions of the Arrangement.
Minimum Premium Rates (MPR)
The ASU stipulates that ASU Participants shall charge no less than the applicable MPR to account for the credit risk when providing an officially supported export credit. Premium is charged in addition to the interest rate, as it is meant to cover the risk of non-repayment of the export credits.
The standard 2011 ASU MPRs are updated on a quarterly basis and take effect respectively on the 15th of January, April, July and October of each year.
Cape Town Convention
The ASU stipulates (Appendix II) that members of the Cape Town List may benefit from a reduction of the MPRs
Minimum Interest Rates
The ASU stipulates that minimum interest rates shall apply for officially supported export credits relating to civil aircraft.
Minimum Fixed Interest Rate – the ASU Commercial Interest Reference Rates (CIRR)
The CIRR rates for aircraft are updated on a monthly basis and take effect on the 15th of each month.
Minimum Floating Interest Rate
The Margin Benchmark used to compute the minimum floating interest rate is updated on a monthly basis and takes effect on the 15th of each month.