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Export credits

Container data - Illustration credit: brianjmatis

An "export credit" is in principle a financing arrangement which allows a foreign buyer of exported goods and/or services to defer payment over a period of time

An export credit arises whenever a foreign buyer of exported goods or services is allowed to defer payment. Export credits generally enjoy government backed support which raises potential concerns about free and fair competition, therefore they have been subject to agreements and understandings within the framework of the OECD (subsequently integrated into EU law) as well as to an EU Directive on harmonisation of export credit insurance for transactions with medium and long-term cover.

An "export credit" is in principle a financing arrangement which allows a foreign buyer of exported goods and/or services to defer payment over a period of time, but the expression is often used also for an insurance or guarantee.

Export credits are generally divided into short-term (usually under two years), medium-term (usually two to five years) and long-term (usually over five years).

Export credits can be backed by official support meaning that government backed support is involved. Official support can take the form of direct credits/financing, refinancing, interest-rate support (where the government supports a fixed interest-rate for the life of the credit), aid financing (credits and grants), export credit insurance and guarantees.

Institutions dealing with export credits are called Export Credit Agencies (ECAs). In case of official support an ECA can be a government department or a commercial institution administering an account for or on behalf of government, separate of the commercial business of the institution. The activities of ECAs include giving insurance or guarantees for the repayment of a loan by a financial institution to a buyer in a third country (buyer credit), giving insurance or guarantees against non-repayment of a credit extended by an exporter to a buyer in a third country (supplier credit) and providing direct loans or credits to third country buyers.

Most of the EU legislation in the field of export credits consists of texts which have been elaborated within the framework of the OECD. In the OECD's Export Credit Division, rules are discussed in two fora with a different legal status:

  • "Participants" is the formal negotiating forum for rules that are considered binding. The European Community as such is a Participant, other Participants are Australia, Canada, Japan, Korea, New Zealand, Norway, Switzerland and the United States. Also Brazil is a Participant when negotiating rules for civil aircraft. In Participants, it is the Commission Services that negotiate on behalf of the Member States. Participants have as secretariat a specialised unit in the OECD Trade Directorate without legally being a working party of the OECD. Participants administer and further develop the "Arrangement on Officially Supported Export Credits" . The main purpose of the 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 exporters compete on the basis of the price and quality of their products rather than the financial terms provided) and working to eliminate trade distortions related to officially supported export credits. There are also restrictions on the provision of tied aid. Whilst the Arrangement is a "Gentlemen's Agreement" the rules agreed upon are normally incorporated into European Union Regulations by way of co-legislative procedure of Council and the European Parliament.

  • The "Working Party on Export Credits and Credit Guarantees (ECG)" is a sub-group under the OECD Trade Committee and works as a normal working group. Member States can present their own view but the Commission Services can also speak. This group deals inter alia with issues such as Bribery, Environment and Sustainable lending (see below).

At EC level, already in 1960 the Council created a special working group to discuss export credits; this group has as of today more than 500 meetings.

The most important internal legislation on export credits in the EU is the Directive on medium and long term export credit insurance. It is based on Treaty Articles 132 and 133 and deals with common principles for insurance and guarantee arrangements, premia and cover policies in order to harmonise the rules within the Community. In the field of short term export credit insurance, a communication with a number of modifications has been issued. These documents under the responsibility of DG Competition can be found under the "short term credit insurance legislation".

Supporting information

Legislation

Short term credit insurance legislation
  1. 2011/C 6/05 - Communication of the Commission – Temporary Union framework for State aid measures to support access to finance in the current financial and economic crisis. Text with EEA relevance
    • Abstract: Official Journal C 006, 11/01/2011 P. 0005 - 0015
      Period of application of the temporary measures extended.
    • 11 January 2011
    • Format: PDF
  2. 2010/C 329/06 - Communication of the Commission amending the period of application of Communication of the Commission to the Member States pursuant to Article 93(1) of the EC Treaty applying Articles 92 and 93 of the Treaty to short-term export credit insurance. Text with EEA relevance
    • Abstract: Official Journal C 329, 07/12/2010 P. 0006 - 0006
      Period of application of communication extended.
    • 07 December 2010
    • Format: PDF
  3. 2009/C 16/01 - Communication from the Commission – Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis
    • Abstract: Official Journal C 016, 22/01/2009 P. 0001 - 0009
      Temporary simplification measures for the use of escape clause introduced.
    • 01 January 2009
    • Format: PDF
  4. 2005/C 325/11 - Communication of the Commission to Member States amending the communication pursuant to Article 93(1) of the EC Treaty applying Articles 92 and 93 of the Treaty to short-term export credit insurance
    • Abstract: Official Journal C 325, 22/12/2005 P. 0022 - 0023
      Use of escape clause for SMEs defined.
    • 22 December 2005
    • Format: PDF
  5. 2004/C 307/04 - Commission communication concerning the prolongation of the Communication of the Commission to the Member States pursuant to Article 93(1) of the EC Treaty applying Articles 92 and 93 of the Treaty to short-term export credit insurance. Text with EEA relevance
    • Abstract: Official Journal C 307, 11/12/2004 P. 0012 - 0012
      Period of application of communication extended.
    • 11 December 2004
    • Format: PDF
  6. 2001/C 217/02 - Communication of the Commission to Member States amending the communication pursuant to Article 93(1) of the EC Treaty applying Articles 92 and 93 of the Treaty to short-term export-credit insurance. Text with EEA relevance
    • Abstract: Official Journal C 217, 02/08/2001 P. 0002 - 0003
      Definition of marketable risks modified, period of application of the communication extended.
    • 02 August 2001
    • Format: PDF
  7. 97/C 281/03 - Communication of the Commission to the Member States pursuant to Article 93 (1) of the EC Treaty applying Articles 92 and 93 of the Treaty to short-term export credit insurance. Text with EEA relevance
    • Abstract: Official Journal C 281, 17/09/1997 P. 0004 - 0010
      The original short term export credit insurance communication.
    • 17 September 1997
Arrangement on Officially Supported Export Credits

This Arrangement provides the framework for the orderly use of officially supported export credits.

In practice, this means providing for a level playing field (whereby exporters compete on the basis of the price and quality of their products rather than the financial terms provided) and working to eliminate trade distortions related to officially supported export credits.

More information can be found on the OECD website:

  1. 98/29/EC – Council Directive of 7 May 1998 on harmonisation of the main provisions concerning export credit insurance for transactions with medium and long term cover
    • Abstract: "Medium and long term directive" for export credit guarantees deals with common principles for insurance and guarantee arrangements, premia and cover policies in order to harmonise the rules within the European Union.
    • 09 February 2005
    • Format: PDF
  2. 84/568/EEC – Council directive of 27 November 1984 concerning the reciprocal obligations of export credit insurance organizations of the Member States acting on behalf of the State or with its support or of public departments acting in place of such organizations, in the case of joint guarantees for a contract involving one or more subcontracts in one or more Member States of the European Communities
    • Abstract: Joint guarantees for contracts implying deliveries from more than one Member State - regulation of reciprocal obligations of export credit insurers.
    • 09 February 2005
    • Format: PDF
  3. 82/854/EEC – Council Decision of 10 December 1982 on the rules applicable, in the fields of export guarantees and finance for export, to certain subcontracts with parties in other member States of the European Communities or in non-member countries
    • Abstract: Inclusion of sub-contracts: Obligation of Member States to automatically include subcontracts for goods and services from other Member States up to 40 % in the cover provided to a main contractor (30 % for large contracts).
    • 09 February 2005
    • Format: PDF
  4. 76/641/EEC – Council Decision of 27 July 1976 amending Decision 73/391/EEC on consultation and information procedures in matters of credit insurance, credit guarantees and financial credits
    • Abstract: EU Consultation: In addition to OECD rules for consultation, Member States have, under certain circumstances, to notify other EU members and the Commission of terms and conditions of a particular transaction that they intend to support, before entering into any commitments. This notification is mandatory, inter alia, if the lending period is to exceed five years.
    • 09 February 2005
    • Format: PDF
  5. 73/391/EEC – Council Decision of 3 December 1973 on consultation and information procedures in matters of credit insurance, credit guarantees and financial credits
    • 09 February 2005
    • Format: PDF
Bribery, Environment and Sustainable Lending
Export credits and bribery

The OECD Recommendation on Bribery and Officially Supported Export Credits elaborates the commitments for anti-bribery action. It deals with concrete, co-ordinated measures to deter bribery in the export deals that Export Credit Agencies support.

The OECD Recommendation and other related information such as responses to the survey on measures taken to combat bribery in officially supported export credits can be found on the OECD website:

Export credits and environment

In support of common environment-related requirements for officially supported export credits, the OECD countries have agreed to review projects for their potential environmental impacts and to benchmark them against international environmental standards, including those of the World Bank Group.

The OECD Recommendation and other supporting information such as responses to the survey regarding procedures and practices concerning environment and export credits as well as information in respect of Category A and Category B projects - projects with high and medium potential environmental impacts - are available on the OECD website:

Export credits and sustainable lending

Official export credits represent official credit flows that can potentially contribute to a country's external debt burden.

The OECD Working Party on Export Credits and Credit Guarantees has agreed to principles and guidelines to promote sustainable lending practices in the provision of officially supported export credits to low income countries.

The aim is to support a borrowing country's economic and social progress without endangering its financial future and long-term development prospects.

Principles and guidelines and other supporting information including a list of low-income countries currently subject to concessional lending requirements from the IMF and/or IDA and statistics on official export credit commitments to IDA-only countries can be found on the OECD website:

Minimum interest rates

Commercial Interest Reference Rates (CIRRs) are the minimum interest rates applied under the OECD Arrangement on Guidelines for Officially Supported Export Credits.