Commission Delegated Regulation (EU) 2023/262 of 7 September 2022 amending Annex II to Regulation (EU) No 1233/2011 of the European Parliament and of the Council on the application of certain guidelines in the field of officially supported export credits

The Participants undertake to share information with non-Participants on notifications related to official support as set out in Article 5 a).

A Participant shall, on the basis of reciprocity, reply to a request from a non-Participant in a competitive situation on the financial terms and conditions offered for its official support, as it would reply to a request from a Participant.

Official support may be provided in different forms:

The Arrangement shall apply to tied aid; the procedures set out in Chapter IV shall also apply to trade-related untied aid.

The Arrangement does not apply to exports of military equipment and agricultural commodities.

Official support shall not be provided if there is clear evidence that the contract has been structured with a purchaser in a country which is not the final destination of the goods, primarily with the aim of obtaining more favourable repayment terms.

The export of new coal-fired electricity generation plants or parts thereof, comprising all components, equipment, materials and services (including the training of personnel) directly required for the construction and commissioning of such power stations. The addition of a new coal-fired electricity generation unit to an existing plant is deemed to be a new coal-fired electricity generation plant.

The export supply of equipment to existing coal-fired electricity generation plants, unless all the following conditions are met:

The prohibitions set out in paragraphs a) and b) above do not apply to coal-fired electricity generation plants that operate with effective carbon capture utilisation and storage (CCUS) facilities or the retrofitting of existing coal-fired electricity generation plants to install CCUS, as provided for under Project Class A of Appendix II to Annex IV.

Participants agree to undertake a review, upon request by a Participant, of non-CCUS CO2 emission abatement technologies which may be developed in the future, for purposes of exceptions from paragraphs a) and b) above. The inclusion of any future exception shall be based on a consensus decision by the Participants.

This Article shall be reviewed no later than 31 December 2022, in order to contribute to the common goal of addressing climate change, taking into account:

The following Sector Understandings are part of the Arrangement:

A Participant to either Annex I, II, IV or V may apply the respective provisions for official support for export of goods and/or services covered by the relevant Sector Understandings. Where a Sector Understanding does not include a corresponding provision to that of the Arrangement, a Participant to that Sector Understanding shall apply the provision of the Arrangement.

For the export of goods and/or services covered by Annex III, the Participants that are also Participants to that Sector Understanding shall apply the provisions of that Sector Understanding.

The Participants may apply the terms and conditions set out in Annex VI to the export of goods and/or services for transactions that meet the criteria set out in Appendix 1 of Annex VI.

Paragraph a) above applies to the export of goods and services covered by the Sector Understanding on Export Credits for Nuclear Power Plants, the Sector Understanding on Export Credits for Renewable Energy, Climate Change Mitigation and Adaptation, and Water Projects, and the Sector Understanding on Export Credits for Rail Infrastructure.

Paragraph a) above does not apply to the export of goods and services covered by the Sector Understanding on Export Credits for Civil Aircraft or the Sector Understanding on Export Credits for Ships.

Category I countries are High Income (²) OECD countries. All other countries are in Category II.

The following operational criteria and procedures apply when classifying countries:

A country will change category only after its World Bank category has remained unchanged for two consecutive years.

The Participants shall require purchasers of goods and services, which are the subject of official support, to make down payments of a minimum of 15 % of the export contract value at or before the starting point of credit as defined in Annex XIV. For the assessment of down payments, the export contract value may be reduced proportionally if the transaction includes goods and services from a third country which are not officially supported. Financing/insurance of 100 % of the premium is permissible. Premium may or may not be included in the export contract value. Retention payments made after the starting point of credit are not regarded as down payment in this context.

Official support for such down payments shall only take the form of insurance or guarantee against the usual pre-credit risks.

Except as provided for in paragraphs b) and d), the Participants shall not provide official support in excess of 85 % of the export contract value, including third country supply but excluding local costs.

The Participants may provide official support for local costs, under the following conditions:

For Category I countries, the maximum repayment term is eight-and-a-half years.

For Category II countries, the maximum repayment term is 10 years.

In the event of a contract involving more than one country of destination the Participants should seek to establish a Common Line in accordance with the procedures in Articles 56 to 61 to reach agreement on appropriate terms.

For non-nuclear power plants, the maximum repayment term shall be 12 years. If a Participant intends to support a repayment term longer than that provided for in Article 13, the Participant shall give prior notification in accordance with the procedure in Article 46.

Non-nuclear power plants are complete power stations, or parts thereof, not fuelled by nuclear power; they include all components, equipment, materials and services (including the training of personnel) directly required for the construction and commissioning of such non-nuclear power stations. This does not include items for which the buyer is usually responsible, in particular costs associated with land development, roads, construction villages, power lines, and switchyard and water supply located outside the power plant site boundary, as well as costs arising in the buyer’s country from official approval procedures (e.g. site permits, construction permit, fuel loading permits), except:

The principal sum of an export credit shall normally be repaid in equal instalments or, when appropriate (e.g. when support is provided for lease transactions or for the export of stand-alone machinery or equipment), equal repayments of principal and interest combined.

Principal shall be repaid and interest shall be paid no less frequently than every six months and the first instalment of principal and interest shall be made no later than six months after the starting point of credit.

On an exceptional and duly justified basis, export credits may be provided on terms other than those set out in paragraphs a) and b) above. The provision of such support shall be explained by an imbalance in the timing of the funds available to the obligor and the debt service profile available under an equal, semi-annual repayment schedule, and shall comply with the following criteria:

Interest due after the starting point of credit shall not be capitalised.

Interest excludes:

Where official support is provided by means of direct credits/financing or refinancing, the premium either may be added to the face value of the interest rate or may be a separate charge; both components are to be specified separately to the Participants.

The Participants providing official financing support for fixed rate loans shall apply the relevant CIRRs as minimum interest rates. CIRRs are interest rates established according to the following principles:

The provision of official financing support shall not offset or compensate, in part or in full, for the appropriate credit risk premium to be charged for the risk of non-repayment pursuant to the provisions of Article 22.

The applicable MPR is determined according to the following factors:

MPRs are expressed in percentages of the principal value of the credit as if premium were collected in full at the date of the first drawdown of the credit. An explanation of how to calculate the MPRs, including the mathematical formula, is provided in Annex VIII.

Irrespective of the destination country, the premium rates charged by Participants for Market Benchmark Transactions, i.e. transactions involving ultimate obligors/guarantors (i.e. credit risk entities) in Category 0 Countries, High Income OECD Countries and High Income Euro Area Countries (³), or involving a multilateral or regional institution that the Participants agree is generally exempt from the monetary control and transfer regulations of the country in which it is located (⁴) shall be determined on a case-by-case basis. In order to ensure that the premium rates charged for transactions involving obligors, and where appropriate guarantors, in such countries do not undercut private market pricing, the Participants shall adhere to the following procedures, using agreed conventions to translate the relevant benchmark pricing into premium rates:

The “highest risk” countries in Category 7 shall, in principle, be subject to premium rates in excess of the MPRs established for that Category; these premium rates shall be determined by the Participant providing official support.

In calculating the MPR for a transaction, the applicable country risk classification shall be the classification of the obligor’s country and the applicable buyer risk classification shall be the classification of the obligor (¹¹), unless security in the form of an irrevocable, unconditional, on-demand, legally valid and enforceable guarantee of the total debt repayment obligation for the entire duration of the credit is provided by a third party that is creditworthy in relation to the size of the guaranteed debt. In the case of a third party guarantee, a Participant may choose to apply the country risk classification of the country in which the guarantor is located and the buyer risk category of the guarantor (¹²).

The criteria and conditions relating to the application of a third party guarantee according to the situations described in the first and second tirets of paragraph e) above are set out in Annex X.

The HOR convention used in the calculation of an MPR is one-half of the disbursement period plus the entire repayment period and assumes a regular export credit repayment profile, i.e. repayment in equal semi-annual instalments of principal plus accrued interest beginning six months after the starting point of credit. For export credits with non-standard repayment profiles, the equivalent repayment period (expressed in terms of equal, semi-annual instalments) is calculated using the following formula: equivalent repayment period = (average weighted life of the repayment period ‒ 0,25)/0,5.

The Participant choosing to apply an MPR associated with a third party guarantor located in a country other than that of the obligor shall give prior notification according to Article 45.

The five elements of country credit risk are:

Countries are classified into one of eight Country Risk Categories (0–7). MPRs have been established for Categories 1 through 7, but not for Category 0, as the level of country risk is considered to be negligible for countries in this Category. The credit risk associated with transactions in Category 0 countries is predominantly related to the risk of the obligor/guarantor.

The classification of countries (¹³) is achieved through the Country Risk Classification Methodology, which is comprised of:

Country Risk Classifications shall be monitored on an ongoing basis and reviewed at least annually and changes resulting from the Country Risk Classification Methodology shall be immediately communicated by the Secretariat. When a country is re-classified in a lower or higher Country Risk Category, the Participants shall, no later than five working days after the re classification has been communicated by the Secretariat, charge premium rates at or above the MPRs associated with the new Country Risk Category.

The country risk classifications shall be made public by the Secretariat.

For all countries classified through the Country Risk Classification Methodology according to Article 24 d), the risk of the sovereign shall be assessed in order to identify, on an exceptional basis, those sovereigns:

The identification of sovereigns meeting the criteria listed in paragraph a) above shall be undertaken according to the Sovereign Risk Assessment Methodology that has been developed and agreed by the Participants.

The list of sovereigns identified as meeting the criteria listed in paragraph a) above shall be monitored on an ongoing basis and reviewed at least annually and changes resulting from the Sovereign Risk Assessment Methodology shall be immediately communicated by the Secretariat.

The list of sovereigns identified under paragraph b) above shall be made public by the Secretariat.

Buyer-risk classifications shall be based on the senior unsecured credit rating of the obligor/guarantor as determined by the Participant.

Notwithstanding paragraph a) above, transactions supported according to the terms and conditions of Annex VI and transactions having a credit value of SDR 5 million or less may be classified on a transaction basis, i.e. after the application of any buyer risk credit enhancements; however, such transactions, regardless of how they are classified, are not eligible for any discounts for the application of buyer risk credit enhancements.

Sovereign obligors and guarantors are classified in buyer risk category SOV/CC0.

On an exceptional basis, non-sovereign obligors and guarantors may be classified in the “Better than Sovereign” (SOV+) buyer risk category if (¹⁵):

The Participants shall give prior notification according to Article 46 for transactions:

In the event of competition for a specific transaction, whereby the obligor/guarantor has been classified by competing Participants in different buyer risk categories, the competing Participants shall seek to arrive at a common buyer risk classification. If agreement on a common classification is not reached, the Participant(s) having classified the obligor/guarantor in a higher buyer risk classification are not prohibited from applying the lower buyer risk classification.

The quality of an export credit product is a function of whether the product is insurance, guarantee or direct credit/financing, and for insurance products whether cover of interest during the claims waiting period (i.e. the period between the due date of payment by the obligor and the date that the insurer is liable to reimburse the exporter/financial institution) is provided without a surcharge.

All existing export credit products offered by the Participants shall be classified into one of the three product categories which are:

The Participants may apply the following country risk mitigation techniques, the specific application of which is set out in Annex XII:

The Participant applying an MPR reflecting the use of country risk mitigation shall give prior notification according to Article 45.

No country risk mitigation shall be applied to Market Benchmark transactions.

The Participants may apply the following buyer risk credit enhancements (BRCE) which allow for the application of a Credit Enhancement Factor (CEF) greater than 0:

Definitions of the BRCE and maximum CEF values for both Category 1–7 obligors as well as Market Benchmark obligors are set out in Annex XII.

BRCEs may be used alone or in combination with the following restrictions:

The Participants shall give prior notification according to Article 45 for transactions with a non-sovereign obligor/guarantor where BRCEs result in the application of a CEF of greater than 0, or whenever BRCEs are used in a Market Benchmark transaction that result in pricing below the corresponding TCMB MPR.

To assess the adequacy of MPRs and to allow, if necessary, for adjustments, either upwards or downwards, Premium Feedback Tools (PFTs), shall be used in parallel to monitor and adjust the MPRs on a regular basis.

The PFTs shall assess the adequacy of the MPRs in terms of both the actual experience of institutions providing official export credits as well as private market information on the pricing of credit risk.

A comprehensive review of all aspects of the premium rules of the Arrangement, with a special emphasis on the Market Benchmark Pricing Rules, shall take place no later than 31 December 2019 (¹⁷).

The Participants have agreed to have complementary policies for export credits and tied aid. Export credit policies should be based on open competition and the free play of market forces. Tied aid policies should provide needed external resources to countries, sectors or projects with little or no access to market financing. Tied aid policies should ensure best value for money, minimise trade distortion, and contribute to developmentally effective use of these resources.

The tied aid provisions of the Arrangement do not apply to the aid programmes of multilateral or regional institutions.

These principles do not prejudge the views of the Development Assistance Committee (DAC) on the quality of tied and untied aid.

A Participant may request additional information relevant to the tying status of any form of aid. If there is uncertainty as to whether a certain financing practice falls within the scope of the definition of tied aid set out in Annex XIV, the donor country shall furnish evidence in support of any claim to the effect that the aid is in fact “untied” in accordance with the definition in Annex XIV.

Official Development Assistance (ODA) loans as defined in the “DAC Guiding Principles for Associated Financing and Tied and Partially Untied Official Development Assistance (1987)”;

ODA grants as defined in the “DAC Guiding Principles for Associated Financing and Tied and Partially Untied Official Development Assistance (1987)”; and

Other Official Flows (OOF), which includes grants and loans but excludes officially supported export credits that are in conformity with the Arrangement; or

Any association, e.g. mixture, in law or in fact, within the control of the donor, the lender or the borrower involving two or more of the preceding, and/or the following financing components:

Associated financing may take various forms including mixed credits, mixed financing, joint financing, parallel financing or single integrated transactions. The main characteristics are that they all feature:

Association or linkage “in fact” is determined by such factors as:

The following practices shall not prevent the determination of an association or linkage “in fact”:

There shall be no tied aid to countries whose per capita GNI, according to the World Bank data, is above the upper limit for lower middle income countries. The World Bank recalculates this threshold on an annual basis (¹⁸). A country will be reclassified only after its World Bank category has been unchanged for two consecutive years.

The following operational criteria and procedures apply when classifying countries:

Tied aid shall not be extended to public or private projects that normally should be commercially viable if financed on market or Arrangement terms.

The key tests for such aid eligibility are:

The key tests under paragraph b) above are intended to describe how a project should be evaluated to determine whether it should be financed with such aid or with export credits on market or Arrangement terms. Through the consultation process described in Articles 49 to 51, a body of experience is expected to develop over time that will more precisely define, for both export credit and aid agencies, ex ante guidance as to the line between the two categories of projects.

Technical assistance: tied aid where the official development aid component consists solely of technical cooperation that is less than either 3 % of the total value of the transaction or SDR 1 million, whichever is lower; and

Small projects: capital projects of less than SDR 1 million that are funded entirely by development assistance grants.

The provisions of Articles 34 and 35 do not apply to tied aid where the concessionality level is 80 % or more except for tied aid that forms part of an associated financing package, described in Article 33.

The provisions of Article 35 do not apply to tied aid with a value of less than SDR 2 million except for tied aid that forms part of an associated financing package, described in Article 33.

Tied aid for LDCs as defined by the United Nations is not subject to the provisions of Articles 34 and 35.

The Participants shall give favourable consideration to an acceleration of tied aid procedures in line with the specific circumstances:

Notwithstanding Articles 34 and 35, a Participant may, exceptionally, provide support by one of the following means:

The discount rate used to calculate the concessionality level of a loan in a given currency, i.e. the Differentiated Discount Rate (DDR), is subject to annual change on 15 January and is calculated as follows:

The base date for the calculation of the concessionality level is the starting point of credit as set out in Annex XIV.

For the purpose of calculating the overall concessionality level of an associated financing package, the concessionality levels of the following credits, funds and payments are considered to be zero:

The discount rate in matching: in matching aid, identical matching means matching with an identical concessionality level that is recalculated with the discount rate in force at the time of matching.

Local costs and third country procurement shall be included in the calculation of concessionality level only if they are financed by the donor country.

The overall concessionality level of a package is determined by multiplying the nominal value of each component of the package by the respective concessionality level of each component, adding the results, and dividing this total by the aggregate nominal value of the components.

The discount rate for a given aid loan is the rate in effect at the time of notification. However, in cases of prompt notification, the discount rate is the one in effect at the time when the terms and conditions of the aid loan were fixed. A change in the discount rate during the life of a loan does not change its concessionality level.

If a change of currency is made before the contract is concluded, the notification shall be revised. The discount rate used to calculate the concessionality level will be the one applicable at the date of revision. A revision is not necessary if the alternative currency and all the necessary information for calculation of the concessionality level are indicated in the original notification.

Notwithstanding paragraph g) above, the discount rate used to calculate the concessionality level of individual transactions initiated under an aid credit line shall be the rate that was originally notified for the credit line.

The Participants shall not fix terms and conditions for tied aid, whether this relates to the financing of individual transactions or to an aid protocol, an aid credit line or to a similar agreement, for more than two years. In the case of an aid protocol, an aid credit line or similar agreement, the validity period shall commence at the date of its signature, to be notified in accordance with Article 48; the extension of a credit line shall be notified as if it were a new transaction with a note explaining that it is an extension and that it is renewed at terms allowed at the time of the notification of the extension. In the case of individual transactions, including those notified under an aid protocol, an aid credit line or similar agreement, the validity period shall commence at the date of notification of the commitment in accordance with Article 47 or 48, as appropriate.

When a country has become ineligible for 17-year World Bank Loans for the first time, the validity period of existing and new tied aid protocols and credit lines notified shall be restricted to one year after the date of the potential reclassification in accordance with procedures in Article 34 b).

Renewal of such protocols and credit lines is possible only on terms which are in accordance with the provisions of Articles 34 and 35 of the Arrangement following:

As soon as a Participant commits the official support which it has notified in accordance with the procedures in Articles 45 to 48, it shall inform all other Participants accordingly by including the notification reference number on the relevant reporting form.

In an exchange of information in accordance with Articles 53 to 55, a Participant shall inform the other Participants of the credit terms and conditions that it envisages supporting for a particular transaction and may request similar information from the other Participants.

Before matching financial terms and conditions assumed to be offered by a Participant or a non-Participant pursuant to Articles 17 and 40, a Participant shall make every reasonable effort, including as appropriate by use of the face-to-face consultations described in Article 55, to verify that these terms and conditions are officially supported and shall comply with the following:

A Participant intending to offer identical financial terms and conditions to those notified according to Articles 45 and 46 may do so once the waiting period stipulated therein has expired. This Participant shall give notification of its intention as early as possible.

A Participant that has reasonable grounds to believe that financial terms and conditions offered by another Participant (the initiating Participant) are more generous than those provided for in the Arrangement shall inform the Secretariat; the Secretariat shall immediately make available such information.

The initiating Participant shall clarify the financial terms and conditions of its offer within two working days following the issue of the information from the Secretariat.

Following clarification by the initiating Participant, any Participant may request that a special consultation meeting of the Participants be organised by the Secretariat within five working days to discuss the issue.

Pending the outcome of the special consultation meeting of the Participants, financial terms and conditions benefiting from official support shall not become effective.

A Participant shall notify all other Participants at least ten calendar days before issuing any commitment with a credit value of greater than SDR 2 million in accordance with Annex VII if:

If any other Participant requests a discussion during this period, the initiating Participant shall wait an additional ten calendar days.

A Participant shall inform all other Participants of its final decision following a discussion to facilitate the review of the body of experience in accordance with Article 64. The Participants shall maintain records of their experience with regard to premium rates notified in accordance with paragraph a) above.

A Participant shall, in accordance with Annex VII, notify all other Participants at least ten calendar days before issuing any commitment with a credit value of greater than SDR 2 million if it intends to:

If the initiating Participant moderates or withdraws its intention to provide support for such transaction, it shall immediately inform all other Participants.

A Participant shall give prior notification in accordance with Annex VII if it intends to provide official support for:

Prior notification shall be made at the latest 30 working days before the bid closing or commitment date, whichever is the earlier.

If the initiating Participant moderates or withdraws its intention to support the notified terms and conditions, it shall immediately inform all other Participants accordingly.

The provision of this Article shall apply to tied aid that forms part of an associated financing package, as described in Article 33.

A Participant shall promptly notify all other Participants, i.e. within two working days of the commitment, in accordance with Annex VII, if it provides official support for tied aid with a value of either:

A Participant shall also promptly notify all other Participants when an aid protocol, credit line or similar agreement is signed.

Prior notification need not be given if a Participant intends to match financial terms and conditions that were subject to a prompt notification.

A Participant seeking clarification about possible trade motivation for tied aid may request that a full Aid Quality Assessment (detailed in Annex XIII) be supplied.

Furthermore, a Participant may request consultations with other Participants, in accordance with Article 50. These include face-to-face consultations as outlined in Article 55 in order to discuss:

During consultations, a Participant may request, among other items, the following information:

The consultation shall be completed and the findings on both questions in Article 48 notified by the Secretariat to all Participants at least ten working days before the bid closing date or commitment date, whichever comes first. If there is disagreement among the consulting parties, the Secretariat shall invite other Participants to express their views within five working days. It shall report these views to the notifying Participant, which should reconsider going forward if there appears to be no substantial support for an aid offer.

A donor that wishes to proceed with a project despite the lack of substantial support shall provide prior notification of its intentions to other Participants, no later than 60 calendar days after the completion of the Consultation, i.e. acceptance of the Chairman’s conclusion. The donor shall also write a letter to the Secretary-General of the OECD outlining the results of the consultations and explaining the overriding non-trade related national interest that forces this action. The Participants expect that such an occurrence will be unusual and infrequent.

The donor shall immediately notify the Participants that it has sent a letter to the Secretary-General of the OECD, a copy of which shall be included with the notification. Neither the donor nor any other Participant shall make a tied aid commitment until ten working days after this notification to Participants has been issued. For projects for which competing commercial offers were identified during the consultation process, the aforementioned ten working-day period shall be extended to 15 days.

The Secretariat shall monitor the progress and results of consultations.

A Participant may ask another Participant about the attitude it takes with respect to a third country, an institution in a third country or a particular method of doing business.

A Participant that has received an application for official support may address an enquiry to another Participant, giving the most favourable credit terms and conditions that the enquiring Participant would be willing to support.

If an enquiry is made to more than one Participant, it shall contain a list of addressees.

A copy of all enquiries shall be sent to the Secretariat.

The Participant to which an enquiry is addressed shall respond within seven calendar days and provide as much information as possible. The reply shall include the best indication that the Participant can give of the decision it is likely to take. If necessary, the full reply shall follow as soon as possible. Copies shall be sent to the other addressees of the enquiry and to the Secretariat.

If an answer to an enquiry subsequently becomes invalid for any reason, because for example:

A Participant shall agree within ten working days to requests for face-to-face consultations.

A request for face-to-face consultations shall be made available to Participants and non-Participants. The consultations shall take place as soon as possible after the expiry of the ten working-day period.

The Chairman of the Participants shall coordinate with the Secretariat on any necessary follow-up action, e.g. a Common Line. The Secretariat shall promptly make available the outcome of the consultation.

Common Line proposals are addressed only to the Secretariat. A proposal for a Common Line shall be sent to all Participants and, where tied aid is involved, all DAC contact points by the Secretariat. The identity of the initiator is not revealed on the Common Line Register on the electronic Bulletin Board maintained by the Secretariat on the OECD Network Environment. However, the Secretariat may orally reveal the identity of the initiator to a Participant or DAC member on demand. The Secretariat shall keep a record of such requests.

The Common Line proposal shall be dated and shall be in the following format:

A Common Line proposal put forward in accordance with Article 34 b) 4) shall be addressed to the Secretariat and copied to other Participants. The Participant making the Common Line proposal shall provide a full explanation of the reasons why it considers that the classification of a country should differ from the procedure set out in Article 34 b).

The Secretariat shall make publicly available the agreed Common Lines.

Responses shall be made within 20 calendar days, although the Participants are encouraged to respond to a Common Line proposal as quickly as possible.

A response may be a request for additional information, acceptance, and rejection, a proposal for modification of the Common Line or an alternative Common Line proposal.

A Participant that advises that it has no position because it has not been approached by an exporter, or by the authorities in the recipient country in case of aid for the project, shall be deemed to have accepted the Common Line proposal.

After a period of 20 calendar days, the Secretariat shall inform all Participants of the status of the Common Line proposal. If not all Participants have accepted the Common Line, but no Participant has rejected it, the proposal shall be left open for a further period of eight calendar days.

After this further period, a Participant that has not explicitly rejected the Common Line proposal shall be deemed to have accepted the Common Line. Nevertheless, a Participant, including the initiating Participant, may make its acceptance of the Common Line conditional on the explicit acceptance by one or more Participants.

If a Participant does not accept one or more elements of a Common Line it implicitly accepts all other elements of the Common Line. It is understood that such a partial acceptance may lead other Participants to change their attitude towards a proposed Common Line. All Participants are free to offer or match terms and conditions not covered by a Common Line.

A Common Line that has not been accepted may be reconsidered using the procedures in Articles 56 and 57. In these circumstances, the Participants are not bound by their original decision.

A Common Line, once agreed, shall be valid for a period of two years from its effective date, unless the Secretariat is informed that it is no longer of interest, and that this is accepted by all Participants. A Common Line shall remain valid for a further two-year period if a Participant seeks an extension within 14 calendar days of the original date of expiry. Subsequent extensions may be agreed through the same procedure. A Common Line agreed in accordance with Article 34 b) 4) shall be valid until World Bank data for the following year is available.

The Secretariat shall monitor the status of Common Lines and shall keep the Participants informed accordingly, through the maintenance of the listing “The Status of Valid Common Lines” on the electronic bulletin board. Accordingly, the Secretariat, inter alia, shall:

The Participants shall review regularly the functioning of the Arrangement. In the review, the Participants shall examine, inter alia, notification procedures, implementation and operation of the DDR system, rules and procedures on tied aid, questions of matching, prior commitments and possibilities of wider participation in the Arrangement.

This review shall be based on information of the Participants’ experience and on their suggestions for improving the operation and efficacy of the Arrangement. The Participants shall take into account the objectives of the Arrangement and the prevailing economic and monetary situation. The information and suggestions that Participants wish to put forward for this review shall reach the Secretariat no later than 45 calendar days before the date of review.

The Participants shall periodically review the system for setting CIRRs in order to ensure that the notified rates reflect current market conditions and meet the aims underlying the establishment of the rates in operation. Such reviews shall also cover the margin to be added when these rates are applied.

A Participant may submit to the Chairman of the Participants a substantiated request for an extraordinary review in case this Participant considers that the CIRR for one or more than one currency no longer reflect current market conditions.

The Country Risk Classification and Sovereign Risk Assessment Methodologies to review their validity in the light of experience;

The level of the MPRs to ensure that they remain an accurate measure of credit risk, taking into account both the actual experience of institutions providing official export credits as well as private market information on the pricing of credit risk;

The differentiations in the MPRs which take account of the differing quality of export credit products and percentage of cover provided; and

The body of experience related to the use of country risk mitigation and buyer risk credit enhancements and the continued validity and appropriateness of their specific impact on the MPRs.

Any new sea-going vessel of 100 gt and above used for the transportation of goods or persons, or for the performance of a specialised service (for example, fishing vessels, fish factory ships, ice breakers and as dredgers, that present in a permanent way by their means of propulsion and direction (steering) all the characteristics of self-navigability in the high sea), tugs of 365 kw and over and to unfinished shells of ships that are afloat and mobile. The Sector Understanding does not cover military vessels. Floating docks and mobile offshore units are not covered by the Sector Understanding, but should problems arise in connection with export credits for such structures, the Participants to the Sector Understanding (hereinafter the “Participants”), after consideration of substantiated requests by any Participant, may decide that they shall be covered.

Any conversion of a ship. Ship conversion means any conversion of sea-going vessels of more than 1 000  gt on condition that conversion operations entail radical alterations to the cargo plan, the hull or the propulsion system.

The principal sum of an export credit shall be repaid in equal instalments at regular intervals of normally six months and a maximum of 12 months.

Interest shall be paid no less frequently than every six months and the first payment of interest shall be made no later than six months after the starting point of credit.

For export credits provided in support of lease transactions, equal repayments of principal and interest combined may be applied in lieu of equal repayments of principal as set out in paragraph a).

Interest due after the starting point of credit shall not be capitalised.