State aid: Commission amends Short-term export-credit insurance Communication in light of economic impact of coronavirus outbreak

BRUSSELS, 27 March 2020 /PRNewswire Policy/ -- The European Commission has decided to temporarily remove all countries from the list of “marketable risk" countries under the Short-term export-credit insurance Communication. This will make public short-term export credit insurance more widely available in light of the current crisis linked to the coronavirus outbreak. The amendment further expands on the flexibility introduced by the Commission's State aid Temporary Framework with respect to the possibility by State insurers to provide insurance for short-term export-credit.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: "Managing the economic impact of the coronavirus outbreak requires us to act fast. Today, we adopted a comprehensive solution for short-term export-credit insurance. With this amendment, companies affected by the coronavirus outbreak will be able to obtain short-term export-credit insurance from public insurers. We are working with Member States to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

Export-credits enable foreign buyers of goods and/or services to defer payment. Deferred payment implies credit risk for the seller/exporter, against which they insure themselves, typically with the private insurers (so-called export credit insurance).

The Short-term export-credit insurance Communication, which is in force since 2013, provides that trade within 27 EU Member States and nine OECD countries listed in its Annex, with a maximum risk period of up to two years, entails marketable risks and should, in principle, not be insured by the State or State supported insurers.

On 23 March 2020, following the indication by some Member States that they expect a global contraction of the private insurance market for exports to all countries due to the coronavirus outbreak, the Commission launched an urgent public consultation.

The public consultation aimed at assessing the availability of private short-term export-credit insurance capacity for exports to all countries listed as “marketable risk countries” in the Short-term export-credit Communication, with a view to possibly amend the list of “marketable risk countries” as a temporary measure.

The public consultation pointed to an imminent insufficiency of private insurance capacity for exports to all countries. At the same time, demand for insurance is expected to significantly rise as a result of the current crisis.

Based on the result of the public consultation and on the relevant economic indicators, the Commission has decided to consider all countries listed in the Annex as temporarily non-marketable and to remove all countries from the list of “marketable" countries until 31 December 2020. Before that date to give legal certainty, the Commission will re-assess the situation and give clarity on “marketable risk countries” beyond 31 December 2020.

The State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted on 19 March 2020 had already introduced additional flexibility on how to demonstrate that certain countries were not-marketable, thereby enabling short-term export credit insurance to be provided by the State where needed. The amendment to the Annex to the Short-term export-credit insurance Communication further expands this flexibility.

Following the amendment, State insurers will in principle be able to step in and provide insurance for short-term export-credit risk for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non marketable.”

Background

The amendment of the Communication will be published in the Official Journal of the European Union and on the Commission's competition website in the section on specific aid instruments. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Copyright European Union, 1995-2020

SOURCE European Commission