Commission Delegated Regulation (EU) 2018/179Show full title

PART 1 GENERAL PROVISIONS

1. PURPOSE

(a)

The purpose of this Sector Understanding is to provide a framework for the predictable, consistent and transparent use of officially supported export credits for the sale or lease of aircraft and other goods and services specified in Article 4(a) below. This Sector Understanding seeks to foster a level playing field for such export credits, in order to encourage competition among exporters based on quality and price of goods and services exported rather than on the most favourable officially supported financial terms and conditions.

(b)

This Sector Understanding sets out the most favourable terms and conditions on which officially supported export credits may be provided.

(c)

To this aim, this Sector Understanding seeks to establish a balanced equilibrium that, on all markets:

(1)

Equalises competitive financial conditions between the Participants,

(2)

Neutralises official support among the Participants as a factor in the choice among competing goods and services specified in Article 4(a) below, and

(3)

Avoids distortion of competition among the Participants to this Sector Understanding and any other sources of financing.

(d)

The Participants to this Sector Understanding (the Participants) acknowledge that the provisions included in this Sector Understanding have been developed for the sole purpose of this Sector Understanding and such provisions do not prejudice the other parts of the Arrangement on Officially Supported Export Credits (the Arrangement) and their evolution.

2. STATUS

This Sector Understanding is a Gentlemen's Agreement among its Participants and is Annex III to the Arrangement; it forms an integral part of the Arrangement and it succeeds the Sector Understanding which came into effect in July 2007.

3. PARTICIPATION

The Participants currently are: Australia, Brazil, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland and the United States. Any non-Participant may become a Participant in accordance with the procedures set out in Appendix I.

4. SCOPE OF APPLICATION

(a)

This Sector Understanding shall apply to all official support provided by or on behalf of a government, and which has a repayment term of two years or more, for the export of:

(1)

New civil aircraft and engines installed thereon, including buyer furnished equipment.

(2)

Used, converted, and refurbished civil aircraft and engines installed thereon, including, in each case, buyer furnished equipment.

(3)

Spare engines.

(4)

Spare parts for civil aircraft and engines.

(5)

Maintenance and service contracts for civil aircraft and engines.

(6)

Conversion, major modifications and refurbishment of civil aircraft.

(7)

Engine kits.

(b)

Official support may be provided in different forms:

(1)

Export credit guarantee or insurance (pure cover).

(2)

Official financing support:

• direct credit/financing and refinancing, or

• interest rate support.

Any combination of the above.

(c)

This Sector Understanding shall not apply to official support for:

(1)

The exports of new or used military aircraft and related goods and services listed in paragraph (a) above, including when used for military purposes.

(2)

New or used flight simulators.

5. INFORMATION AVAILABLE TO NON-PARTICIPANTS

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.

6. AID SUPPORT

The Participants shall not provide aid support, except for humanitarian purposes, through a Common Line procedure.

7. ACTIONS TO AVOID OR MINIMISE LOSSES

This Sector Understanding does not prevent its Participants from agreeing to less restrictive financial terms and conditions than those provided for by this Sector Understanding, if such action is taken after the export credit agreement and ancillary documents have already become effective and is intended solely to avoid or minimise losses from events which could give rise to non-payment or claims. A Participant shall notify all other Participants and the OECD Secretariat (the Secretariat), within 20 working days following the Participant's agreement with the buyer/borrower, of the modified financial terms and conditions. The notification shall contain information, including the motivation, on the new financial terms and conditions, using the reporting form set out in Appendix IV.