7

Export credit support

7.1 Definition
International trade transactions bear risks and require financing.
Between 80 and 90 per cent of these transactions, therefore, rely on
some sort of credit, guarantee, or insurance which provide finance or
risk cover.1 Hence trade finance – an umbrella term covering all sorts of
financial instruments or services enabling or facilitating export and
import transactions2 – is considered ‘the lifeblood of trade’ and export
credits take an important share thereof.3
However, neither the WTO agreements nor the OECD Arrangement
defines export credits, which seem to bear somewhat ‘different meanings in
different contexts’.4 In the context of the SCM Agreement, the panel in
Korea – Commercial Vessels defined them as credits provided to foreign
buyers.5 Parallel to this, an instrument will only constitute an export credit
guarantee (or insurance) under the SCM Agreement if it guarantees (or
insures) an export credit and thus covers default by a foreign buyer in
respect of an export credit provided to that foreign buyer.6 In contrast,
loans provided to the exporter, rather than to the foreign buyer, are not
considered export credits under the SCM Agreement.7,8
1
Auboin, above Part II introduction n. 1, at 1.
2
For an overview of trade finance instruments, see M. Auboin and M. Meier-Ewert,
Improving the Availability of Trade Finance during Financial Crises (Geneva: WTO
Publications, 2003), at 2–3.
3
Auboin, above Part II introduction n. 1, at 1; M. Auboin, ‘Restoring Trade Finance
During a Period of Financial Crisis: Stock-Taking of Recent Initiatives’, WTO Staff
Working Paper, December 2009, at 4.
4
J.-Y. Wang, M. Mansilla, Y. Kikuchi, and S. Choudhury, Officially Supported Export Credits in
a Changing World (Washington, DC: International Monetary Fund, 2005), at 44.
5
Panel Report, Korea – Commercial Vessels, paras. 7.316–7.323. 6 Ibid., para. 7.213.
7
Yet they might be considered as support for export credits if they effectively support the
loan to the foreign borrower (see below). Ibid., para. 7.324.
8
The so-called pre-shipment credits, which are credits to the exporter to purchase raw materials
and other inputs, were thus not considered export credits in the meaning of the SCM
Agreement. Ibid., paras. 7.324–7.329.

337

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 338 case study: disciplines on export credit support

Accordingly, export credits are credits provided to the foreign buyer.

Depending on who provides such credit, it can take two forms. First, the
credit can be extended directly by an exporter to a foreign buyer in the
form of deferral of payment (supplier credit).9 The exporter might
(re)finance this export credit by a loan from its bank or export credit
agency. Second, export credits might be provided by an exporter’s bank
or other financial institutions (or export credit agency) as loans to the
buyer (or his bank) by which the buyer can pay the exporter (buyer
credit). Export credits thus enable a foreign buyer to defer payment to
the exporter or financial institution.10 Based on their maturity, export
credits are categorized as short-term (maximum one year), medium-
term (between one and five years), and long-term credits (more than five
years).11 The short-term credits are usually extended for consumer
goods, spare parts, and raw materials, whereas the other maturities are
in place for capital goods and large projects.12 Obviously, the terms of a
loan agreement that a foreign buyer can obtain forms an important
factor in its choice among different exporters.
This is where an export credit agency (ECA) comes into play, by
providing support to its exporters in the export credits that the latter can
arrange for foreign buyers. As illuminated by the scope of the OECD
Arrangement, such ‘official support’ for export credits might take two
forms.
First, under ‘pure cover support’, which is the most common type
of support, ECAs offer insurance or guarantees for export credits
extended by the exporter or a financial institution to a foreign buyer
(or its bank).13 Because under pure cover support ECAs only guarantee
or insure export credits that are offered by exporters or financial
institutions, ECAs themselves are not extending the export credit.14
Second, some ECAs also offer ‘official financing support’ in the form
of export credits (direct credit) by directly extending loans to foreign
buyers to purchase specific products or services originating from the
ECA’s country. Other types of ‘official financing support’ consist of

9
The panel in Korea – Commercial Vessels decided that ‘deferral’ should be understood as
post-shipment deferral of payment. Ibid., para. 7.326.
10
See Wang et al., above n. 4, at 5. 11 Ibid., at 5. 12 Ibid., at 5.
13
Article 5 of the OECD Arrangement; ‘Annex XI – List of definitions’ of the OECD
Arrangement.
14
Panel Report, Korea – Commercial Vessels, paras. 7.213–7.215.

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 export credit support 339

interest rate support for export credits and refinancing of export credits
extended by exporters or financial institutions.15,16
Export credit support for agricultural goods usually takes the form of
pure cover support for short-term export credits, whereas such official
support for non-agricultural products is mostly medium- or long-term
in nature. Some ECAs offer only medium- and long-term pure cover
support, whereas others provide all types of export credit support (e.g.,
direct financing support) and cover all types of maturity.17 In the
medium- and long-term segment, pure cover support has clearly been
dominant over the last decade.18

7.2 Rationales for and provision of export credit

support to non-agricultural products
By providing these forms of support, ECAs aim at improving the financ-
ing package which exporters can offer to a potential foreign buyer and
thereby improve their chances of securing the contract. The effect of an
export credit on an importer’s decision is determined on the basis of the
subsidy rate of this credit, capturing its cost-reducing effect.19 Hence a
common objective of ECAs is the promotion of national exports.20 For
example, the mission of the US Export-Import Bank (Ex-Im Bank) is
‘turning export opportunities into actual sales that help US companies of
all sizes to create and maintain jobs in the US’.21 The trade-distorting
potential of such support is thus apparent. As the panel in Canada –
Aircraft (Article 21.5 – Brazil) observed, ‘among the various forms of

15
Interest rate support broadly relates to ‘official support for . . . the interest rate to be paid in
connection with export credits’. Panel Report, Brazil – Aircraft (Article 21.5 – Canada II),
para. 5.132; see also ‘Annex XI – List of definitions’ of the OECD Arrangement.
16
In the case of refinancing, the ECA refinances the export credits offered by their
exporters or financial institutions.
17
See Export-Import Bank of the United States, Report to the US Congress on Export
Credit Competition and the Export-Import Bank of the United States (June 2009), 93.
18
It accounted for over 80 per cent of G-7 ECAs’ medium- and long-term activity. Since
the outbreak of the financial and economic crisis, the call for direct credit has again
increased. Export-Import Bank of the United States, above n. 17, at 94–5.
19
Formally, the subsidy rate is the percentage by which the export credit reduces the
present value of the trade commodity.
20
Moser et al. have demonstrated that ECAs indeed have an export-promoting effect.
C. Moser, T. Nestmann, and M. Wedow, ‘Political Risk and Export Promotion: Evidence
from Germany’, 31:6 World Economy (2008), 781–803.
21
Export-Import Bank of the US, ‘Annual Report 2007 – Mission Statement’.

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 340 case study: disciplines on export credit support

export subsidies, subsidized export credits arguably have the most

immediate and thus greatest potential to distort trade flows’.22 In the
absence of market failures, export credit support on subsidized terms in
principle could not be justified, as it distorts trade and therefore
depresses world welfare.
Still, promotion of national exports by export credit support is gen-
erally legitimized by ECAs on two grounds.23 First, it is deemed essential
to counter export credit support by other governments and thus to allow
national exporters to compete on an equal footing with foreign exporters
(self-defence instrument).24 This explains, for instance, why the US
Ex-Im Bank annually presents the US Congress with a report on the
competitiveness of its support vis-à-vis other ECAs of G-7 countries.25
Obviously, this rationale in itself would suggest that countries would do
better to co-operate to impede such export support competition. Second,
it is legitimized by reference to market failures in the private trade
finance sector.26 Many ECAs, such as the US Ex-Im Bank, are for that
matter explicitly prohibited from competing with the private sector.27
As a result, ECAs offer support for export transactions that would not,
or not at affordable prices, be offered by the private sector, because
the private capital market lacks sufficient information properly to
assess the risks of the transaction (asymmetry of information).28 By
relying, for example, on official bilateral channels, governments would
be better placed to gather information needed to assess transaction risks

22
Panel Report, Canada – Aircraft (Article 21.5 – Brazil), para. 5.137.
23
J. E. Ray, Managing Official Export Credits – The Quest for a Global Approach
(Washington, DC: Institute for International Economics, 1995), at 8; D. C. Zehner,
‘An Assessment of Two Economic Rationales for Export Credit Agencies’, Chazen
Web Journal of International Business (Spring 2003), 1–11; Wang et al., above n. 4, at 20.
24
Pursuant to the US Ex-Im Bank’s Mission Statement, ‘Ex-Im Bank also helps US
exporters remain competitive by countering the export financing provided by foreign
governments’.
25
See, e.g., Export-Import Bank of the United States, above n. 17, at 13–14.
26
According to the US Ex-Im Bank’s Mission Statement, it ‘assumes the credit and country
risks that the private sector is unable or unwilling to accept’. See, e.g., Dam, above
Chapter 4 n. 60, at 139.
27
See, e.g., Export-Import Bank of the United States, above n. 17, at 13–14.
28
Among the potential risks are those linked to the importer (i.e., buyer risk). More often,
risks linked to the country of importation form obstacles to private sector involvement
(i.e., country risk). See M. Stephens, The Changing Role of Export Credit Agencies
(Washington, DC: International Monetary Fund, 1999), at 14; Auboin and Meier-
Ewert, above n. 2, at 3; Wang et al., above n. 4, at 5.

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 export credit support 341

(in particular country risk).29 The large size of the transaction might also
hamper private-sector trade finance.30 This information or capacity
market failure argument assumes that private financial institutions
only lack sufficient information and capacity to offer trade finance with-
out government support. The trade finance conditions set by ECAs could
be considered commercially sound, but the private finance market fails
to seize this opportunity.31 If an ECA operates purely on the basis of this
rationale, its functioning should not entail any cost to the government.
This can partly be ensured by the requirement to be self-sustaining
imposed on many ECAs.32
This information or capacity market failure argument situated in the
capital market should be distinguished from other, often implicit, ration-
ales for official export credits, which correspond to general arguments in
favour of export-promoting instruments. First, an ECA might offer
support because of positive spillovers deemed to be attached to exports
(e.g., technology spillovers, or reputation in foreign markets), or such
support might be used as a carrot-and-stick instrument.33 Second,
because export credit support ensures financing to importers, ECAs in
developed countries also find legitimacy in financing trade to developing
countries and enhancing trade in general. Obviously, foreign buyers
benefit from export credits at terms not available on the commercial
market. These rationales outside the capital market might, from the

29
Wang et al., above n. 4, at 21 and 22. Several economists question the validity of this
argument in practice. See Ray, above n. 23, at 12–13; WTO Secretariat, above Chapter 1
n. 4, at 74; Zehner, above n. 23, at 5–8.
30
ECAs might also be better placed to pursue claims. Wanget al., above n. 4, at 5; Zehner,
above n. 23, at 7–8.
31
There is a risk that ECAs’ functioning inhibits the private sector from further developing.
32
As ECAs do not have to pay taxes and make a profit, their risk-absorbing capacity is
higher than private actors, even when they have to operate at break-even. Hence a more
developed financial system would not necessarily finance the same trade transactions as
those supported by ECAs operating at break-even.
33
In oligopolistic markets, in which firms behave as Cournot competitors and governments act
first, subsidized export credits could also be used as profit-shifting instruments (from foreign
to domestic firms). According to Carmichael, however, it is more realistic to assume that
firms compete on price (i.e., are Bertrand competitors) and act first in the field of export
credit support. In this case, the inflated subsidy level is merely a response to a firm’s rent-
seeking behaviour reacting to an inflated stated price. See C. M. Carmichael, ‘The Control of
Export Credit Subsidies and Its Welfare Consequences’, 23:1/2 Journal of International
Economics (1987), 1–19.

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 342 case study: disciplines on export credit support

export-promoting country’s perspective, justify official support even if it

would not be commercially sound.34
In addition to simple political-economy reasons (i.e., responding to
lobbying efforts of exporters), these different rationales explain why today
virtually all developed countries and many developing countries have
government support programmes for export credits in place. By 1970,
most major OECD countries had created an ECA. Developing countries
have also started creating ECAs over the past thirty years.35 Nonetheless, the
private sector is increasingly occupying aspects of the trade finance market,
certainly in the short-term credit segment.36,37 Still, government support for
trade finance is deemed justified in two broad areas.38
First, ECAs could fill gaps where the private capital market is still
unwilling or unable to provide financing. These gaps are still present in
medium- and long-term markets, predominantly in developing coun-
tries because of the underdevelopment of their capital markets.
Discussions under the Aid-for-Trade programme have also revealed
that there is still a lack of trade finance to low-income countries, hinder-
ing their integration into world trade.39 WTO members and interna-
tional institutions were called on to spur trade finance support and to
help in developing efficient trade finance institutions in these countries.
In response to the financial crisis, several developing countries have
requested such assistance in setting up ECAs.40 Further, international

34
A fully informed/developed private sector would be unwilling to cover the risk of (or
finance) this trade transaction at the same premium rate (interest rate). It correctly
assesses the risks but does not internalize the alleged positive external effects of the trade
transaction. Of course, the question should be addressed whether the government is
indeed driven (instead of captured by interest groups) and able to internalize these
effects. Its support might also be cancelled out by similar support given by other
countries to their exporters.
35
M. Stephens and D. Smallridge, ‘A Study on the Activities of IFIs in the Area of Export
Credit Insurance and Export Finance’, Inter-American Development Bank, Occasional
Paper No. 16 (2002), at 5; Wang et al., above n. 4, at 5.
36
Wang et al., above n. 4, at 10, 11, 16. ECAs have again increased their short-term export
credit support in response to the financial crisis.
37
Several ECAs and private providers of export credits and investment insurance are
members of the Berne Union (founded in 1934, currently with fifty-one members),
which functions as a forum to discuss and formulate good practices in the sector.
38
Wang et al., above n. 4, at 21–2.
39
Technological innovations in handling trade finance in developed markets even bear the
risk of further marginalization. Auboin, above Part II introduction n. 1, at 2; Auboin,
above n. 3, at 22–3; WT/WGTDF/W/38, 14 July 2008; WT/WGTDF/M/16, 17 July 2008.
40
Auboin, above n. 3, at 22. Because the conditions for creating an effective ECA are
demanding (e.g., institutional design, governance), a 2010 World Bank study warned

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 export credit support 343

and regional financial institutions have developed specific instruments

in this field to help bridge the gap in trade financing in emerging
markets. The International Finance Corporation (IFC), which is part
of the World Bank group, as well as three regional development banks41
have created Trade Finance Facilitating Programmes (TFFPs). Under
these programmes, they provide guarantees to international or regional
banks (so-called ‘confirming banks’) covering both the commercial and
political risk of international trade-related credit transactions emanating
from local banks (so-called ‘issuing banks’).42 By absorbing the risk on
non-payment of the local banks (i.e., the issuing bank), the global TFFP
set up by the IFC facilitates import and export transactions to or from all
emerging markets. Likewise, the three regional TFFPs support trade
transactions to or from emerging countries within their particular
region. Another example of a multilateral institution active in the trade
finance field is the African Trade Insurance Agency (ATI). Created in
2001 by a number of African countries with the support of the World
Bank, the ATI offers inter alia export credit insurance covering both
commercial and political risks.43
Second, official export credit support might be particularly justified in
times of financial crisis. The Asian financial crisis at end of the 1990s had
already demonstrated that ECAs could be important at times when
private banks collectively cut trade credit lines to emerging market
economies and this regardless of the risks involved (so-called ‘herd
behaviour’).44 The fact that even companies with good credit ratings
could not get access to financing indicated the presence of a capital
market failure which justified the intervention of ECAs.45 In general,

that setting up ECAs in developing countries should be approached with caution. They
might benefit more from receiving trade finance support from international and regional
finance institutions. See J.-P. Chauffour and C. Saborowski, ‘Export Credit Agencies to
the Rescue of Trade Finance’, VOX, 23 January 2010; J.-P. Chauffour, C. Saborowski,
and A. I. Soylemezoglu, ‘Trade Finance in Crisis: Should Developing Countries Establish
Export Credit Agencies?’, World Bank Policy Research Paper 5166, January 2010.
41
These banks are the European Bank for Reconstruction and Development (EBRD), the
Inter-American Development Bank (IDB), and the Asian Development Bank (ADB).
42
The issuing bank bears the risk related to the local producer.
43
See www.ati-aca.org.
44
Wang et al., above n. 4, at 22 and 25; WT/WGTDF/W/23, 25 March 2004, paras. 20–28;
Auboin, above n. 3, at 8.
45
WT/WGTDF/W/23, 25 March 2004, paras. 18 and 20–28. ECAs in non-crisis countries
could play a signalling role by providing sufficient trade finance to countries in crisis.
Wang et al., above n. 4, at 22 and 25; Auboin and Meier-Ewert, above n. 2, at 10.

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 344 case study: disciplines on export credit support

such capital market failure could result, inter alia, from overshooting
(irrational component), a lack of information during a financial crisis to
distinguish between risks, and/or a lack of capacity to finance all cred-
itworthy transactions. The global financial crisis that hit the world in
2008 caused a sharp deterioration in trade financing, especially to
emerging and low-income market economies, which resulted from a
shortage of liquidity as well as from a crisis of confidence (leading to
reassessments of risks).46
The capital market failure might thus legitimize the promise of the
G-20 in April 2009 to increase government support for trade financing.
In implementing this pledge, the IFC and all regional development banks
doubled their capacity under their trade facilitation programmes, and
ECAs also ‘stepped in essentially with programmes for short-term lend-
ing of working capital and credit guarantees aimed at SMEs [small and
medium enterprises]’.47 Nonetheless, in spring 2010 Lamy warned
before a meeting of the IMF’s International Monetary and Financial
Committee that any recovery of the trade finance market might not
benefit low-income countries.48 Therefore he urged that this risk be
addressed ‘if we want low-income countries not to be overly constrained
in benefiting from the global recovery’.49 This again demonstrates that
the former WTO Director-General was one of the driving forces pushing
for government intervention to close the gap in short-term trade financ-
ing. For ECAs, the fact that they were among those assigned to fulfil this
task came as a surprise, as illustrated in the 2009 US Ex-Im Bank report

46
A 2009 World Bank study explains that a justification for government intervention would be
present if a real trade finance ‘gap’ would be caused by the insufficient supply of trade finance
(i.e., missing markets) or where it is supplied at prices that are temporarily too high to meet
demand (i.e., overshooting markets). This study explains why trade finance would be more
prone to such market and/or government failures than other forms of credit, and thus why
interventions targeting trade finance would be justified. At the same time, the authors
caution against an overestimation of a real trade finance gap after the crisis. See J.-P.
Chauffour and T. Farole, ‘Trade Finance in Crisis: Market Adjustment or Market
Failure?’, World Bank Policy Research Working Paper 5003, July 2009.
47
See Auboin, above n. 3, at 16–19; see also G-20, Progress Report on the Actions of the
London and Washington G-20 Summits, 5 September 2009; G-20, Progress Report on
the Economic and Financial Actions of the London, Washington and Pittsburgh G-20
Summits, 7 November 2009. On the important role played by ECAs, see Chauffour and
Saborowski, above n. 40.
48
WTO, News, ‘Lamy at IMF/World Bank Underlines Trade’s Role in Anchoring
Economic Recovery’, 24–25 April 2010.
49
Ibid.

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 export credit support 345

to US Congress: ‘The WTO, contrary to its otherwise negative stance

regarding the use of export credit subsidies, supported the notion that
ECAs had a clear role to play, particularly in the area of trade (short-
term) finance’.50 To be sure, it was the WTO Secretariat, and the former
Director-General in particular, who supported the complementary role
of ECAs in tackling the financial crisis.51 As our discussion will illustrate,
existing WTO disciplines seem far less supportive of this role.

7.3 Rationales for and provision of export credit

support to agricultural products
Trade finance for agricultural products is mostly short-term in nature.
Hence export credit support is less evidently justified on the basis of capital
market failures, given that these occur primarily in medium- and long-
term markets. Instead, such support is generally considered justified by its
proponents on the basis of the positive impact on net food-importing
countries. Yet even though such support could be welfare-improving for
net food-importing countries (static perspective), it might likewise inhibit
the development of local production (dynamic perspective). Moreover,
from the perspective of world welfare, the beneficial impact of export
credit support on developing importing countries cannot justify subsi-
dized export credit support from a normative perspective, given that its
welfare effect on the world as a whole is negative: in welfare terms, the
subsidizing exporting country and foreign competitors lose. Indeed,
export subsidies are welfare-depressing from a world welfare perspective
in the absence of market failures.52
Nonetheless, according to an OECD study, official support for agri-
cultural products could be legitimate in the presence of serious liquidity
constraints in the importer’s market.53,54 If a country faces systematic

50
Export-Import Bank of the United States, above n. 17, at 88; see also Auboin, above Part
II introduction n. 1, at 16 (n. 34).
51
See also J. Pauwelyn and A. Berman, ‘Emergency Action by the WTO Director-General:
Global Administrative Law and the WTO’s Initial Response to the 2008–09 Financial
Crisis’, 6:2 International Organizations Law Review (2009), 499–512.
52
See above Chapter 1, section 1.1.
53
OECD, An Analysis of Officially Supported Export Credits in Agriculture (COM/AGR/
TD/WP(2000)91/FINAL, January 2001).
54
Liquidity constraints occur ‘when an importer lacks sufficient foreign exchange to
import desired foodstuffs and has difficulties in obtaining credit’, and are mostly
explained on the basis of incomplete markets. J. Rude and J.-P. Gervais, ‘An Analysis

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 346 case study: disciplines on export credit support

liquidity constraints and agricultural imports are a high priority, export

credit support could create additional global demand that otherwise
would not have existed. The resulting higher exports would not come
at the expense of other exporters or local production in terms of their
existing sales.55 This argument could justify agricultural export credit
support to importers in LDCs or net food-importing countries, as it
allows them to purchase vital amounts of foods which they otherwise
would have been unable to import.56 Rude and Gervais also formally
demonstrate that rules disciplining interest rate subsidies may not be
appropriate in case of liquidity constraints because of this potential for
additionality and benefits for all exporting countries.57
The same OECD study also gives insights regarding the amount of
agricultural export support offered in the second half of the 1990s by
countries participating in the OECD Arrangement.58 Even though the EU
is by far the largest provider of export subsidies for agriculture, most
agricultural export credit support was extended by the United States,
followed by Australia, the EU, and Canada.59 The amount of the subsidy
element of the support offered by the United States, Canada, and Australia
exceeded their level of export subsidy notifications in the WTO.60 On the
other hand, few emerging developing countries offered export credit

of a Rules-Based Approach to Disciplining Export Credits in Agriculture’, 21:3

International Economic Journal (2007), 441–63, at 445.
55
‘Additionality’ is restrictively defined as export credit policies causing an increase in
demand at any price. But, even in that case, the results are considered ambiguous
because the development of future domestic production/imports or private trade financ-
ing might be hampered. OECD, above n. 53, at 22 and 25.
56
Ibid., at 22.
57
An export credit at subsidized rates can relax the liquidity constraints of importers and
thus increase their demand. If this demand-inducing effect (putting upward pressure on
the price) outweighs exporters’ supply-inducing effect (putting downward pressure on
the price), the price increases even if more of the good is traded. On the other hand, in
their model, rules on minimum premium rates are always appropriate, as insurance
subsidies unambiguously have the potential to distort markets. However, this outcome
results from the model’s (implausible) assumption that premiums at subsidized rates
only affect the exporter’s cost and are not passed through in any way in a discounted
interest rate. As a result, minimum premium rates only affect the supply side and not
import demand. Yet, as Rude and Gervais also acknowledge, ‘a credit guarantee allows
the home country exporters to charge a lower interest rate because the risk associated
with the transaction is lower’. This indirect effect on the interest rate seems not to be
reflected in their model. Rude and Gervais, above n. 54, at 441–63.
58
See also G/AG/NG/S/12/Rev.1, 12 March 2001, at 44.
59
These four countries accounted for virtually all export credit support.
60
OECD, above n. 53, at 31.

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 export credit support 347

support for agricultural products.61 For reasons of food security and fiscal
policies, agricultural exports are more often taxed than subsidized in devel-
oping countries. Remarkably, not only is agricultural export support pri-
marily extended by OECD countries, but these countries were also the main
recipients thereof.62 The very limited share of support channelled to net
food-importing countries and LDCs reveals that the above-mentioned
justification for export credit support often might not hold in practice.63
Overall, the subsidy rate as well as the importance of export credit support
in total trade of agricultural products was reported to be not very large.
Nevertheless, the OECD study called for strengthening disciplines on
agricultural export credit support, because such support could be trade-
distortive in individual cases and its current levels might increase in the
future. Interestingly, the OECD study assumed that no such international
disciplines were in place but, as the US – Upland Cotton case has revealed,
this turned out to be incorrect.64
A more recent follow-up empirical study is unfortunately lacking, but
some insights might be drawn from the operation of the WTO’s dispute
settlement system and the Trade Policy Review (TPR) mechanism. First,
the United States substantially altered its export credit support for
agricultural products in response to the US – Upland Cotton rulings
discussed below. Under the 2008 Farm Bill, only one export credit
guarantee programme for agricultural products is still in force, namely
the ‘General Sales Manager 102’ (GSM 102), which guarantees the
repayment of credit not exceeding three years.65,66 In order to conform
to the US – Upland Cotton compliance rulings, the 1 per cent (of the
value of the guaranteed transaction) statutory cap on the premium has
been removed.67 Second, in Canada’s 2007 TPR, questions were raised
about its export credit programmes for agricultural products, operated
through Canada’s official ECA (Export Development Canada, or EDC)

61
OECD, Agricultural Policies in Emerging and Transition Economies – 2000 (COM/
AGR/APM/TD/WP(2000)43/FINAL, June 2000), at 44.
62
Ibid., at 49. 63 OECD, above n. 53, at 24–5. 64 Ibid., at 8.
65
Farm Bill 2008 (H.R. 6124), at 470–3; C. E. Hanrahan, ‘Agricultural Export Provisions of
the 2008 Farm Bill’, CRS Report for Congress, June 2008, at 2–3.
66
In 2006, the United States suspended the operation of the ‘Supplier Credit Guarantee
Programme’ (SCGP), offering very short-term guarantees (up to 180 days), and ‘General
Sales Manager 103’ (GSM 103), offering long-term guarantees (three–ten years), and
statutory authority for these programmes was repealed in the 2008 Farm Bill. See also
WT/TPR/M/200/Add.1, 9 September 2008, at 277.
67
Hanrahan, above n. 65, at 3; WT/TPR/M/200/Add.1, 9 September 2008, at 276.

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 348 case study: disciplines on export credit support

and through the Canadian Wheat Board (CWB).68 Third and finally,
some large emerging developing countries such as India and China also
started to set up export credit support facilities for agricultural products
in line with the general trend of reducing the anti-export bias of their
agricultural policy.69

68
See Canadian Wheat Board, ‘Position on Trade’ (available at www.cwb.ca/public/en/
hot/trade/position/); WT/TPR/S/179/Rev.1, 4 June 2007, at 97–8; WTO, Trade Policy
Review Body, Trade Policy Review – Canada – Minutes of Meeting – Addendum (WT/
TPR/M/179/Add.1, 22 June 2007), at 255; CWB, ‘Annual Report CWB – Annual
Report – 2008/2009’, at 63, 73, 83.
69
Regarding China, see I. Massa, ‘Export Finance Activities by the Chinese Government’,
Briefing Paper by the Directorate-General for External Policies of the European Union,
September 2011, at 5–6.

https://doi.org/10.1017/CBO9781139046589.012 Published online by Cambridge University Press