POSITION | EXTERNAL ECONOMIC POLICY | EXTERNAL TRADE PROMOTION
Modernizing the OECD Consensus – For a more flexible and market-reflective approach Position and proposals of the Federation of German Industries (BDI) for OECD Agreement modernization talks on payment and credit terms
Key Messages
4 November 2021
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The ongoing debate and negotiations within the OECD on the modernization of its “Arrangement on Officially Supported Export Credits” (OECD Consensus) are necessary and urgent. A common understanding and acceptance is needed among the Participants group and the users of the Arrangement (i.e. exporters, commercial banks as well as global clients) that complexity needs to be reduced and that clear and simple rules are applied.
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BDI aims to contribute to this debate and make the OECD Consensus again fit for purpose for exporters in a changed global economic landscape and for new products and business models – thereby re-establishing a global level playing field that ensures that competition amongst exporters is based on the quality and price of goods and services rather than on the favorability of public financial support.
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Besides the increased competition outside of OECD rules with already more fit for purpose (flexible) financing conditions and the increasing importance of global value chains there is product and business model related evidence from the day-to-day business of exporters that forms a strong case for the adaptation of the OECD Consensus towards a more flexible set of rules.
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Firstly, there are the (repayment) limitations of the Consensus that do not reflect longer life cycles of products and goods missing realistic scenarios regarding their revenues. Secondly, the repayment terms permitted by the Consensus are outdated compared to what is common market practice today. Thirdly, pay-per-use business models and new types of products, e.g. cloudbased and software solutions or service-based product offerings cannot be covered by the current Consensus.
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The efforts to fight climate change should also be reflected in a new OECD Consensus. While the current Consensus lacks a clear bottom line for applicable standards BDI advocates that the OECD common approaches and related standards (IFC Performance Standards, World Bank EHS Guidelines) could be guiding principles and serve as base line definition.
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BDI proposes concrete updates regarding the Consensus‘ financing terms and conditions as concerns (1) down payment, (2) starting point of credit, (3) maximum credit terms, (4) marketreflective repayment profiles, (5) scope of Consensus and (6) minimum premium for credit risks.
Autor | Abteilung | T: +49 30 2028-0 | m.mustermann@bdi.eu | www.bdi.eu