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As the world economy rapidly decarbonises to meet global climate goals, the export credit sector must keep pace. Countries representing over two-thirds of global GDP have now set net zero targets, as have hundreds of private financial institutions. Public and private initiatives are now working to develop new standards and methodologies for shifting investment portfolios to decarbonisation pathways based on science.
However, export credit agencies (ECAs) are only at the beginning stages of this seismic transformation. On the one hand, the net zero transition creates risks to existing business models and clients for the many ECAs, while on the other, it creates a significant opportunity for ECAs to refocus their support to help countries and trade partners meet their climate targets. ECAs can best take advantage of this transition, and minimise its risks, by setting net zero targets and adopting credible plans to decarbonise their portfolios. Collaboration across the sector can be a powerful tool for advancing this goal.
Public export credits and trade insurance require a global framework of institutions, rules and regulations to avoid subsidies and a race to the bottom. The extensive modernisation of the Arrangement on Officially Supported Export Credits (Arrangement) of the Organisation for Economic Co-operation and Development intends to re-level the playing field. This Practitioner Commentary describes the demand for adequate government interventions, considers the need for the reform and discusses key aspects of the new Arrangement. We argue that there is a breakthrough in several important areas such as tenors, repayment terms and green finance. However, we also find that the modernisation falls short in areas such as the interplay between different rulebooks, pre-shipment instruments' regulations and climate action.
Provides a state-of-the-art overview of international trade policy research
The Handbook of Global Trade Policy offers readers a comprehensive resource for the study of international trade policy, governance, and financing. This timely and authoritative work presents contributions from a team of prominent experts that assess the policy implications of recent academic research on the subject. Discussions of contemporary research in fields such as economics, international business, international relations, law, and global politics help readers develop an expansive, interdisciplinary knowledge of 21st century foreign trade.
Accessible for students, yet relevant for practitioners and researchers, this book expertly guides readers through essential literature in the field while highlighting new connections between social science research and global policy-making. Authoritative chapters address new realities of the global trade environment, global governance and international institutions, multilateral trade agreements, regional trade in developing countries, value chains in the Pacific Rim, and more. Designed to provide a well-rounded survey of the subject, this book covers financing trade such as export credit arrangements in developing economies, export insurance markets, climate finance, and recent initiatives of the World Trade Organization (WTO). This state-of-the-art overview:
• Integrates new data and up-to-date research in the field
• Offers an interdisciplinary approach to examining global trade policy
• Introduces fundamental concepts of global trade in an understandable style
• Combines contemporary economic, legal, financial, and policy topics
• Presents a wide range of perspectives on current issues surrounding trade practices and policies
The Handbook of Global Trade Policy is a valuable resource for students, professionals, academics, researchers, and policy-makers in all areas of international trade, economics, business, and finance.
The coronavirus affects the strongly export-oriented Swiss economy in a situation where political and economic developments are already making the cross-border exchange of goods and services difficult. For this reason, the question arises of how Switzerland can maintain or strengthen its position in global competition in the export business during an unprecedented period of crisis such as the current one.
In order to find an answer to this question, this paper critically examines the existing government support measures for Swiss exporters in times of COVID-19. The fact that Switzerland has so far not taken any specific support measures for exporters raises the actual research question of whether there is a specific necessity and demand for a special export promotion. To answer this research question, various expert opinions are compared and overall conclusions are drawn. By rapidly introducing and adapting the already existing instruments – liquidity assistance and an expansion of short-time work benefits – the federal government was able to ensure the survival of many companies. According to the authors of this paper, this focus of government support in times of crisis is just right for a small national economy in the short term and therefore preferable to a specific support of exporters. Nevertheless, given the high relative importance of foreign trade for Switzerland’s overall economic performance, there can be no recovery of national economy without a recovery of foreign trade.
This report examines exporters’ challenges and possible solutions for public intervention to promote foreign trade. Based on fieldwork conducted in Georgia, we explore which policy approaches can help to stimulate Georgian exports further. Our outcomes show that exporters face substantial barriers such as navigating complex trade regulations, lack of knowledge about target markets, trade finance gaps, as well as new export promotion programs (EPPs) in competitor countries. Other upper-middle-income countries can learn from our results that exporters can significantly benefit from a comprehensive export promotion strategy combined with an ecosystem-based “team” approach. EPPs related to awareness and capacity building in Georgia should be part of this strategy, focusing on challenges such as a lack of knowledge about trade practices and international business skills. Other EPPs must help to mitigate related market failures, as information gathering is costly, and firms have no incentive to share this information with competitors. Furthermore, targeted marketing support and customer matchmaking can answer Georgian exporters’ challenges, such as lack of market access and low sector visibility. Our results also show that public intervention through financial support and risk mitigation is essential for firms with an international orientation. The high-quality, rich outcomes provide significant value for other upper-middle-income countries by exploring the example of Georgia’s contemporary circumstances in an in-depth manner based on extensive interviews and document analysis. Limitations include that our work primarily relies on qualitative data and further research could involve a quantitative study with a diverse range of sectors.
Germany was considered the world's export champion for a long time, until it was overtaken by China in 2009. Both nations provide officially supported export credits to national exporting organizations, but the two systems operate differently. German export credit guarantees serve as a substitute when the private market is unable to assume the risks of exporting companies. The German Export Credit Agency Euler Hermes is responsible for processing applications on behalf of the Federal Government. China belongs to the largest providers of export finance with the institutions China EXIM and Sinosure. While Germany is bound by the OECD consensus, which defines the level playing field, Chinese export credit agencies have greater flexibility not being bound by international rules or agreements.
Staatliche Exportkreditagenturen und Export-Import-Banken finanzieren, versichern und garantieren jährlich fast 1 Bio. US-Dollar – mehr als 3 % der globalen Güterexporte. Ihre Interventionen sind an internationale Rahmenbedingungen gebunden, insbesondere an das WTO-Subventionsübereinkommen (ASCM) und den OECD-Konsensus. Das komplexe Zusammenspiel beider Rechtsrahmen sorgt seit langem für Herausforderungen, vor allem hinsichtlich des Anwendungsbereichs des “safe haven” des ASCM und des “Matching”-Mechanismus der OECD. In den vergangenen Jahren hinzugekommen ist die Problematik neuer Instrumente der Exportvor- sowie der Klimafinanzierung. Der folgende Beitrag erörtert Herausforderungen und Lösungsansätze. Er zeigt auf, dass der neue OECD-Konsensus trotz zahlreicher Verbesserungen zentrale rechtliche Probleme nicht behebt.
International trade requires sufficient, reliable, and affordable sources of financing. Export credit agencies (ECAs) fill trade finance gaps by offering financing, insurance and guarantees to provide liquidity or mitigate risks. They help to create or secure jobs in the domestic economy. However, comprehensive government support is required to create significant impact. This includes ‘full faith and credit’ of the state. In the context of public foreign trade promotion, full faith and credit is defined as an explicit, direct or indirect, irrevocable, legal commitment to accept all liabilities of an ECA as unconditional obligations of the respective government. Our policy recommendations for countries with relatively young ECAs, for example in Ukraine, Armenia, and Malawi, are to establish a full guarantee in addition to an efficient legal set-up, sufficient capital, and sound risk management of the respective agency. Without full faith and credit, policy goals of fostering economic growth through foreign trade fall short.
This paper aims to draw attention to an urgent need for reform of the regulatory framework of the broader export credit system to ensure a new and comprehensive "safe haven" for officially supported export credits. The purpose is to analyse the complex debate on disciplines of the World Trade Organization (WTO) and the Organisation for Economic Co-operation and Development (OECD), creating a point of reference for future analysis of and debates around the "carve-out clause" of the Agreement on Subsidies and Countervailing Measures (ASCM) and a "safe haven" in a broader sense.