There are two political areas that govern state guarantees within the European Union (EU). The first is the trade policy focusing on global competitive neutrality and the second is the competition policy focusing on competitive neutrality within the EU and non-subsidies.
Harmonised export policy
The EU member states coordinate their positions and prepare EU proposals and initiatives for negotiations in the OECD with respect to the Export Credit Arrangement. The EU member countries also coordinate with one another in negotiations with the WTO and the IWG.
This collaboration within the EU takes place in the Council Working Group on Export Credits. This working group also deliberates on harmonisation of officially supported export credits within the EU, which has resulted in the "Harmonisation Directive” – Council Directive 98/29/EC on harmonisation of the main provisions concerning export credit insurance for transactions with medium and long-term cover.
The Directive stipulates how export credit guarantees with a total risk period of at least two years are to be structured and how information is to be shared between EU countries. The aim is to create a level playing field for exporters in the EU.
Joint decisions by the Council of Ministers and the European Parliament incorporate the OECD's Export Credit Arrangement into EU legislation. This is specified by Regulation no 1233/2011 on the application of certain guidelines in the field of officially supported export credits and in the delegated regulations of the Commission based on the Regulation. The Regulation also stipulates annual reporting to the European Parliament on the operations of the export credit agencies.
Competition policy regulations
The EU has a general prohibition on official support which distorts or threatens to distort the competition to the extent that it impacts trade within the EU (Article 107 of the TFEU). This also applies to officially supported export credits. The European Commission has adopted regulations for this purpose.
Government agencies are not permitted to be active in the area covered by private insurance companies. This applies to transactions with a total risk period of less than two years in the EU and most OECD countries.
This is specified in the Communication from the Commission to the Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance (2012/C 392/01). The aim is to create a level playing field between private insurance companies and government export credit agencies.
Government guarantees that are not export credit guarantees
The European Commission seeks to eliminate prohibited state aid in the form of guarantees. This is specified in the Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees 2008/C 155/02 and Correction 2008/c 2004/11. Export credit guarantees are not subject to these regulations, but the regulations are applicable to guarantees such as working capital credit guarantees.