Helping U.S. Exports
U.S. participation in OECD Export Credits agreement saves taxpayers an estimated $800 million per year and helps ensure a level playing field for U.S. exports.
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.
How the Export Credit Arrangement Advances U.S. Interests
Keeping export credits from distorting prices of goods and services: 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.
Limiting “tied aid”: 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 using the aid solely to purchase goods or services from the donor country. 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.
Fighting bribery: The official OECD Recommendation on Bribery and Officially Supported Export Credits adopted by the OECD Council recommends that all Members take appropriate measures to deter bribery in international transactions benefiting from official export credit support.
Protecting the environment: As an important contribution to climate negotiations in Paris (COP21), the participants to an arrangement on officially supported export credits agreed on 17 November 2015 on a sector understanding that will limit the official public financing of coal-fired power plants. Aimed at encouraging the use of high efficiency, low emission technologies, participants agreed that this was an important step towards reducing the use of less efficient coal-fired power plants. This supports U.S. efforts to raise the minimum standard of environmental protection in these projects and level the playing field for U.S. companies competing for them. The United States was also the first OECD country to require that its export credit agency, the Export-Import Bank, perform environmental reviews.