Since the 2016 Brexit Referendum, the strategic importance of increasing UK exports to outside of the EU has been heightened in the pursuit of new sources of future national growth. With this aim, the UK Government has put renewed priority on developing the UK’s export credit agency (UKEF) as a vital component of its new export strategy. Yet securing new export opportunities to support is increasingly challenging in the current trading environment of global export stagnation. Furthermore, although export credit support is seen as the fuel that powers the international trading system, in competing for overseas contracts there is a potential for governments to use public resources to provide unfair subsidies to exporting firms in the form of export financing.

This Briefing Paper examines the export credit support options open to UKEF, with specific reference to its international legal obligations under the OECD and the WTO. Leaving the EU will not change the UK’s obligations under either, but the UK Government will make and defend its position towards official export credit support as a single country, rather than within a bloc. The paper examines the rationale for official export credit support, and the rationale for regulating any such public support, then focuses on the UK ECA – the UKEF – from within the current international market for official export credit support.

The paper concludes that in a changing financial and regulatory environment, there is a two-fold challenge for the UK government. First, it needs to identify new ways to promote economic efficiency and competitiveness while avoiding corporate welfare. This is necessary to secure UK export markets for UKEF to support, whilst respecting international rules on subsidies, ethical standards, and environmental, social, and human rights. Second, there is a need for collective action to regulate export subsidies effectively, which requires the UK to work with renewed effort internationally to develop more comprehensive rules for regulating official export credit support and promote competition in the international trading global system.

Read Briefing Paper 36 – HAPPY CENTENNIAL BIRTHDAY UKEF: FIT FOR THE FUTURE?