French short-term export-credit insurance scheme approved by the EC
The European Commission has authorised, under EC Treaty state aid rules, a French measure aimed at limiting the adverse impact of the current financial crisis on export firms.
The Commission found the measure to be in line with its Temporary Framework for state aid measures to support access to finance in the current financial and economic crisis (see IP/08/1993 ). In particular, the measure tackles the problem of the current unavailability of short-term export credit insurance cover in the private market. The Commission authorised the measure until 31 December 2010.
Competition Commissioner Neelie Kroes said: “The French short-term export credit insurance scheme provides the appropriate balance between supporting exporters in areas where the market is temporarily not functioning properly and limiting distortions of competition. Ensuring effective export credit insurance is vital for building the basis for a strong economic recovery. ”
Under the notified measure, called “CAP Export”, France, via the intermediary of its public export credit agency Coface, would provide short-term export-credit insurance to companies established in France, where such cover is unavailable in the private market. Only financially sound export transactions would be eligible for support under the measure.
The Commission concluded that the measure complied with the conditions laid down in its Temporary Framework for State aid measure to support access to finance in the current financial and economic crisis (see IP/08/1993 ). In particular, the measure meets the following criteria:
* the necessary cover has become unavailable on the private insurance market as a consequence of the financial crisis. The unavailability of cover for the risk in the private insurance market has been duly demonstrated, in line with the Temporary Framework and the Commission’s Communication on short-term export-credit insurance.
* the premiums charged under the public scheme are aligned on those of the private market, as stipulated by the safeguard clause in the Commission’s Communication on short-term export-credit insurance. The premiums are set at a level that provides an incentive for exporters to have recourse to private insurers as soon as sufficient cover will be available on the private market.
Moreover, the measure includes safeguards so that financially unsound transactions and counterparties that would not obtain cover even under normal market conditions do not unduly benefit from the measure.
Topics: credit insurance, economic recovery, financial crisis, insurance, state aid
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