Western governments suspend talks on new export credit rules

  • Economy
  • Friday, 20 Nov 2020

Vice-ministers from China, India, Russia, South Africa, Indonesia, Israel and Malaysia did not sign on to the statement, highlighting the rift between members.

WASHINGTON: Eleven of 18 governments trying to negotiate new export credit rules said on Thursday they were suspending technical talks because of widely divergent positions among members and troubles with transparency.

But in a joint statement, the 11 Western governments including the United States, European Union and Japan said that they remain open to a high-level meeting in a year and to discussing proposals at the vice-ministerial level.

The action halts eight years of talks launched in 2012 from a joint U.S.-China initiative to try to craft new international rules on the use of official export credit agencies, that would be followed by OECD countries as well as large emerging market countries including China, India and Brazil.

These agencies provide loans, insurance and other guarantees to facilitate exports to developing countries where private sector financing is unavailable or too expensive. A massive increase in Chinese export financing in recent years has upset past understandings among G7 wealthy economies.

U.S. Export-Import Bank President Kimberly Reed has criticized China's export financing activities, which totaled at least $76 billion in 2019, dwarfing the $8.2 billion in U.S. loans, loan guarantees, and export credit insurance authorized in fiscal 2019.

World Bank president David Malpass has also called for more transparency surrounding China's Belt and Road infrastructure loans to poor countries.

In the statement, vice ministers from Australia, Brazil, Canada, the European Union, Japan, South Korea, New Zealand, Norway, Switzerland, Turkey and the United States said the members of the international working group remain "significantly divergent" on core issues, particularly transparency.

"Therefore, we cannot justify continued participation in technical IWG negotiations unless and until members make the necessary high-level commitments that will allow the resumption of technical negotiations," the vice-ministers said.

Vice-ministers from China, India, Russia, South Africa, Indonesia, Israel and Malaysia did not sign on to the statement, highlighting the rift between members.

The statement comes just days ahead of a G20 leaders summit this weekend that is expected to focus heavily on the need for more debt restructuring due the coronavirus pandemic.

- Reuters
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