UK Export Finance
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Foreign content rules simplified
ECGD ACTS ON EXPORTERS' CONCERNS, LEVELS PLAYING FIELD FOR UK BUSINESS
ECGD, the UK's official export credit agency, has announced simplified and more flexible rules for UK exporters looking for support for contracts involving non-UK firms.
Changes to ECGD's rules are set out in the Government's Response to a public consultation on foreign content, which was published today.
The main points of the new rules are:
* For all contracts (credit or cash) the maximum level of support for foreign content will be 80% of the contract value, where ECGD risk capacity is available.
* The distinction between contracts valued at £10m and below will be removed.
* The distinction between goods originating from the EU, Japan and other countries will be removed.
* Software and related services originating in the UK and exported electronically will be treated as UK content.
Trade Minister Ian McCartney said:
"These new rules will bring ECGD's policy on support for foreign content into line with the direction most ECAs are now taking. They are a positive response to the needs of ECGD's customers and recognise the changes in the complexion of UK manufacturing and the globalisation of the world economy since ECGD's foreign content rules were first devised."
ECGD's foreign content rules were set over 20 years ago and a number of respondents to the consultation made the point that, compared to ECGD's international counterparts, its policy was outdated, complex and inflexible.
Mr McCartney added:
"Business told us the rules needed change, and ECGD has listened and acted. These changes are consistent with the role the Government has set for itself of doing all it can to enable UK business to achieve all the benefits of international opportunities and to attract and retain high value-added, internationally active businesses for the UK.
"The new rules are also in line with the Government's commitment to make regulation simpler to operate and more effective."
The new foreign content rules will apply to applications submitted to ECGD from today.
Notes to editors
1. The Government Response, with all the representations made during the consultation, is available on ECGD's website (http://www.ecgd.gov.uk).
2. ECGD, the Export Credits Guarantee Department, is the UK's official export credit agency. A Government Department reporting to the Secretary of State for Trade and Industry, it has nearly 90 years' experience of working closely with exporters, project sponsors, banks and buyers to help UK exporters of capital equipment and project-related goods and services. ECGD does this by providing:
* insurance against non-payment risks to UK exporters;
* guarantees for bank loans to facilitate the arranging of finance to buyers of UK goods; and
* insurance against political risks to UK investors in overseas markets.
3. The changes to ECGD's rules relate to support for foreign content but not to local costs incurred in the project country. Support for local costs is subject to OECD rules.
4. Where risk capacity is constrained, priority will be given to UK content, followed by EU-sourced foreign content (in accordance with ECGD's obligations under an EU reciprocal agreement) and then by other third-country goods and local content.