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Press release6 December 2021Representation in Cyprus

State aid: Commission adopts revised Short-term export-credit insurance Communication

The European Commission has adopted a revised Communication on Short-term export credit insurance (‘STEC Communication').

Press conference by Margrethe Vestager, Executive Vice-President of the European Commission, on the review of the competition policy

The STEC Communication lays down rules to (i) ensure that State support to export credits does not distort competition among private and public (or publicly supported) export credit insurers, and (ii) create a level playing field among exporters in different Member States. The revised STEC Communication will apply from 1 January 2022.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The revised Communication on Short-term export credit insurance includes targeted adjustments to enable Member States to provide public insurance to European exporters, when the market alone does not deliver. This comes after a thorough analysis of how our rules work in practice.

Export credits enable foreign buyers of goods and services to defer payment. The payment deferral implies credit risk for the sellers, against which they insure themselves (export credit insurance).

According to the 2012 STEC Communication, trade within the 27 EU Member States and the nine OECD countries listed in its Annex, with a maximum risk period of up to two years, entails marketable risks. This means that there should be sufficient capacity provided by private insurers and, in principle, such risks should not be insured by the State or by State supported insurers. In other words, as private insurers offer that type of insurance, there is no need for the State to step in and offer a similar product.

In 2019, the Commission launched an evaluation of the 2012 STEC Communication, as part of the State aid Fitness Check. The results of the evaluation showed that, in principle, the rules work well and they require only minor adjustments to reflect market developments.

Taking into account the positive feedback from stakeholders in the public consultation on the proposed revised text of the STEC Communication, the revised STEC Communication therefore includes a number of targeted adjustments. For example, the Communication modifiesthe eligibility criteria for small and medium-sized enterprises (SMEs), which in certain circumstances may benefit from State insurance. While under the previous rules, this possibility existed with regard to SMEs with an annual export turnover up to €2 million, in the new STEC Communication the threshold has been increased to €2.5 million.

The revised STEC Communication will enter into force on 1 January 2022, with no expiry date.

Phasing out of the adjusted list of non-marketable risk countries

In March 2020, as a consequence of the coronavirus outbreak, the Commission found that there was a lack of sufficient private insurance capacity for short-term export credits in general and considered all commercial and political risks associated with exports to the countries listed in the STEC Annex as temporarily “non-marketable”. Therefore, the Commission amended the Annex to make short-term export credit insurance more widely available by temporarily allowing public insurers to step in and provide insurance for exports to all countries. The amendment further expanded the flexibility introduced by the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted on 19 March 2020.

The temporarily adjusted list of non-marketable risk countries has been prolonged with subsequent amendments of the Temporary Framework, until the latest amendment of 18 November 2021.

Following strong feedback from the private sector towards a return to normalcy of the market, in this amended version of the Temporary Framework, the Commission found that there would be no need for a long-term prolongation of the temporary removal. Therefore, the amended Temporary Framework envisages a prolongation of 3 months (from 31 December 2021 to 31 March 2022), in order to allow for sufficient phase out time.

The revised STEC 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 Competition Weekly e-News.

More information on the State aid Temporary Framework and other action the Commission has taken to address the economic impact of the Coronavirus pandemic can be found here.

Details

Publication date
6 December 2021
Author
Representation in Cyprus