In addition, a committee of government and ECA officials will review large and otherwise riskier than normal transactions.
The Arrangement sets forth the most generous export credit terms and conditions that may be supported by its Participants.
The main purpose of Arrangement is to provide a framework 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.
A recent decision at the World Trade Organization (WTO) indicates that the use of officially supported export credits in agriculture is bound by WTO members' commitments with respect to subsidised agricultural exports (see the WTO Appellate Body decision on the Brazil-US cotton case as it relates to the General Sales Manager (GSM) 102 and 103 programs and other US agricultural export credits, summarized here).
At the EU level, the European Commission, in particular the Directorate General for Trade, plays a role in the harmonization of Export Credit Agencies and the co-ordination of policy statements and negotiation positions.
These decisions provide for prior consultations among member states on long term export credits.
Member states may ask each other if they are considering to finance a specific transaction with official export credit support.
The application of the OECD arrangement in providing export credit is mandatory in EU countries under Art.
The Berne Union and Prague Club combined have more than 70 member companies spanning the globe.
[8] Advocates of ECAs assert that export credits allow impoverished importers to purchase needed goods that would otherwise be unaffordable; export credits are components of a broader strategy of trade policies; and government involvement can achieve results that the private sector cannot, such as applying greater pressure on a recalcitrant borrower.
For a good general discussion, see Baron, David P. The Export-Import Bank: An Economic Analysis.