Aggressive competition in the official export credit support market has resulted in an increase in activity that lies outside of the main instruments regulating competition and sustainable development in export finance terms – the OECD Arrangement on Officially Supported Export Credits, (OECD Arrangement on Official Export Credits. TAD/PG(2019)1) and the OECD Common Approaches(OECD Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (The ‘Common Approaches’). TAD/ECG(2016)3). By default, the World Trade Organization’s Agreement on Subsidies and Countervailing Duties (SCM) is becoming the main legal deterrent, despite its weakness in not covering trade in services or the sustainable development dimensions of official export credit support. Yet the playing field is also unruly because of the apparent reluctance on the part of WTO Members to challenge these measures.
The current economic slowdown in export growth, coupled with the rise of unruly export credit support programmes, presents a strategic dilemma for the Participants to the OECD Arrangement. They are faced with the difficult choice between taking a strong pro-competition position domestically, or by fighting fire with fire and developing their own non-Arrangement type export credit support programmes. The former option is the more preferable for economic efficiency considerations and long-term competitiveness, although it may result in a controversial reduced role for their ECAs.
There is a collective interest in preventing publicly-funded, yet opaque, subsidy wars in export credit terms and conditions, with negative economic, political, social and environmental repercussions. This calls for heightened cooperation among ECA governments within international bodies such as the WTO, OECD and the International Working Group (IWG) on Export Credit Support.Journal of World Trade