Brussels, 18th June 1997
The Commission adopts a Communication aiming at ending public support for short-term export credit insurance
The European Commission today adopted a Communication to the Member States about short-term export credit insurance with the aim to remove distortions of competition due to state aid to the export credit insurance business in which there is competition between public or publicly supported export credit insurers and private export credit insurers.
The Communication requests Member States to end, within one year of the publication of the Communication, the granting of state aid to public or publicly supported export credit insurers in respect of export credit insurance for which there is a commercial market. However, in certain countries insurance cover for such export credit risks may be temporarily unavailable on the commercial market.
In such circumstances these risks may, following notification to the Commission, be taken by public or publicly supported export credit insurers operating for the account of or with the guarantee of the state. Also existing complementary state reinsurance arrangements remain permissible for an interim period.
The commercial sector of export credit insurance relates to the insurance of "marketable" risks that is commercial risks with a maximum risk period of less than two years on trade within the Community and with the majority of OECD countries listed in an annex to the Communication. All other risks are considered not yet to be marketable. However, as the capacity of the private reinsurance market varies, the definition of marketable risks varies and it will therefore be reviewed regularly.
For the purposes of complying with the Communication public or publicly supported export credit insurers will have to keep a separate administration and accounts for their insurance of marketable risks and non-marketable risks, demonstrating that they do not enjoy state aid in their insurance of marketable risks. Furthermore, any Member State providing reinsurance cover to an export credit insurer by way of participation or involvement in private sector reinsurance treaties covering both marketable and non-marketable risks will have to demonstrate that its arrangements do not involve state aid within the meaning of the Communication.
The communication does not deal with the insurance of medium and long-term export credit risks, which are largely non-marketable at the present time. In this area, efforts are being made to present a directive to harmonizse the terms of export credit insurance, premiums and country cover policy, taking due account of the programmes in non-EU countries so as not to undermine the competitiveness of Community exporters.
The Commission will in co-operation with the Member States and interested parties, regularly review the functioning of the Communication, which will enter into force on 1 January 1998.
Background for the Communication
Member States maintain their active policy in supporting their export industry largely in the form of favourable terms on export credits and export credit insurance. Export subsidies may directly affect competition in the market place between rival potential suppliers of goods and services. zThe Commission has always strictly condemned export aid in intra-Community trade. However, although Member States' support for their exports outside the EU can also affect competition within the Community, the Commission has not systematically intervened in this activity under the state aid rules of the EC Treaty, Articles 92-94.
There have been several reasons for this. First, one of the provisions of the EC Treaty relating to external trade, Article 112, provides for harmonizsation of export aid. Secondly, it is not only competition within the Community that is affected by aid for extra-EUCommunity exports, but the competitiveness of Community exporters vis-a-vis those of the Community's trading partners, which give similar aid. However, work by the Council's Export Credits Group and litigation before the Court of Justice of the European Communities have shown that in the area of short-term export credit insurance, the actual or potential distortions of competition in the Community may justify action by the Commission under the state aid rules without waiting for progress on other fronts. In this area the distortions of competition can occur not only between exporters in different Member States in their trade within and outside the EU, but also between export credit insurers offering their services in the Community. While Member States have made considerable efforts to eliminate aid from the commercial sector of export credit insurance in anticipation of action by the EU, the Single Market requires safeguards to ensure a level playing field in all circumstances.
Forms of aid which are to be ended
Member States are requested to end within one year the granting of aid in the following forms to public or publicly supported export credit:
- state guarantees of borrowing or losses;
- relief or exemption from taxes or other charges normally payable;
However, existing complementary state reinsurance arrangements remain permissible for an interim period, provided:
The definition of "marketable" risks currently comprises only so-called "commercial risks", which for the purpose of the Communication are defined as:
- insolvency of the non-public debtor or his guarantor;