The first export credit agency (ECA) was established in 1919 in the United Kingdom; since then, every developed economy and nearly every developing economy in the world has established at least one, if not multiple, ECAs. EXIM Bank is the official export credit agency of the United States. Following years of growing competition among countries, in 1978, members of Organization of Economic Cooperation and Development (OECD) agreed to a set of guidelines, commonly referred to as the “Arrangement”.
The Arrangement sets forth the terms and conditions for the orderly use of officially supported export credits. In practice, this means providing for a level playing field (whereby competition is based on the price and quality of the exported goods and not the financial terms provided) and working to eliminate subsidies and trade distortions related to officially supported export credits.
The Arrangement places limitations on the terms and conditions of officially supported export credits (e.g. minimum interest rates, risk fees and maximum repayment terms) and the provision of tied aid. It includes procedures for prior notification, consultation, information exchange and review for export credit offers that are exceptions to or derogations of the rules, as well as tied aid offers. The Arrangement stipulates that minimum interest rates shall apply to official financing support for export credits. Such minimum interest rates are the relevant Commercial Interest Reference Rates (CIRRs), which have been established for each currency of the Participants to the Arrangement and which are set on the 15th of each month.
The Participants to the Arrangement are: Australia, Canada, the European Union, Japan, Korea (Republic of), New Zealand, Norway, Switzerland and the United States.