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Export credits are used to help finance the sale of goods or services to international markets. Both private banks and government agencies can provide export credits. Government export credit agencies are frequently willing to assume credit and country risks that private institutions cannot or will not. They often help finance exports to developing countries.
The OECD has two bodies that deal with export credit issues, and the United States is a member of both. All OECD countries, with the exception of Iceland, are Members of the Working Party on Export Credits and Credit Guarantees, known as the ECG.
The “Participants” are the group of countries that adhere to a 1978 agreement (since updated), called the “Arrangement,” that sets forth the most generous export credit terms and conditions that the Participants may support.
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| U.S. Interests |
The work of the OECD’s ECG and the Participants is critical to ensuring a level playing field for U.S. exports. It saves U.S. taxpayers an estimated $800 million per year.
- Thanks to the Arrangement, competition for export sales is based on the price and quality of the goods and/or services being exported, rather than the cost of official export credit financing.
- The Participants have set limits on the use of “tied aid,” in which an offer of concessional financing is made contingent upon the developing country recipient’s using the aid solely to purchase goods or services from the donor country. In November 2004, they also adopted rules to help ensure bilateral untied aid credits cannot be used as tied aid in disguise. The United States had sought these rules, in an effort to ensure fairer trade and level the playing field for U.S. exporters. The Treasury Department estimates that U.S. exports of capital goods are higher by at least $1 billion a year as a result of the tied aid rules.
- ECG Members agreed in May 2006 how to strengthen their joint commitment to take concrete, coordinated measures to deter bribery in the export deals they support.
The ECG advances other interests important to the United States:
- In December 2003, OECD members adopted an agreement on common approaches their export credit agencies will use to evaluate the environmental impact of the projects they may finance. This agreement is a double success, both raising the minimum standard of environmental protection in these projects and leveling the playing field for U.S. companies competing for them. The United States was the first OECD country to require that its export credit agency, the Export-Import Bank, perform environmental reviews.
- ECG Members are working together to ensure that officially supported export credits are not used for "unproductive" expenditures in Heavily Indebted Poor Countries (HIPCs). Their effort supports the Debt Initiative for Heavily Indebted Poor Countries, which seeks to provide debt relief to these countries in order to foster sustainable development.
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