Calls for the reform or even elimination of ECAs come in the broader policy context of government commitments to meet Millennium Development Goals that set targets for poverty alleviation, health, education, and environmental protection.
Export credit agencies (ECAs) are bilateral public institutions that facilitate financing for home country exporters and investors doing business overseas, particularly in developing countries and emerging market economies. Over the last decade, critics have scrutinized ECA financing decisions from political-economic and sustainable development perspectives, with some questioning the need for ECAs’ continued existence.
Calls for the reform or even elimination of ECAs come in the broader policy context of government commitments to meet Millennium Development Goals (MDGs) that set targets for poverty alleviation, health, education, and environmental protection. A key concern in development circles is how to secure the resources, including financing, needed to achieve these internationally recognized development priorities. To date, public resources directed via ECAs to support export promotion have contributed very little to sustainable development or the MDGs more broadly. Questions thus arise as to whether ECA reform can increase those agencies’ contribution to sustainable development,and whether reform is preferable to the elimination of official export credit supports. This report proposes that reform continues to be referable to the abolition of ECAs, suggests structural and governance reforms that can enable ECAs to make modest but significant contributions to sustainable development outcomes, and identifies national and international opportunities for stakeholders to work toward these changes.
Two key international disciplines governing export credits are analyzed in the report, and will require renegotiation to enable the adoption of some of the reforms proposed here. The first is the Arrangement on officially Supported Export Credits (“the Arrangement”), which is a voluntary agreement negotiated within the Organisation for Economic ooperation and Development (OECD). The second is the Agreement on Subsidies and Countervailing Measures (ASCM), managed by the World Trade Organization (WTO). These two disciplines and their corresponding governance processes establish a legal framework for export credit provision and limit the reforms that ECAs can undertake autonomously.
A proposed reform agenda for ECAs that would support sustainable development includes two sets of recommendations. Reforms in the first set of recommendations would minimize the negative development impacts of current ECA activities. These “do no harm” measures include:
The second set of recommendations consists of reforms that would maximize the positive development benefits to be gained from ECA support. This set of “do good” reforms include:
Short-, medium-, and long-term opportunities for the pursuit of broad reform efforts are identified with specific targets and timetables that must be met to achieve the proposed recommendations. A potential future for ECAs begins with the adoption of reforms that allow ECAs to remain relevant in the global marketplace and lead ECAs to shift a share of their support to projects and exports that contribute significantly to sustainable development. If reform is to remain preferable to elimination of ECAs, however, it will be necessary for national governments to take meaningful and timely steps in that direction.