Empirically Analyzing the Impacts of U.S. Export Credit Programs on U.S. Agricultural Export Competitiveness

Abstract

This paper looked at the on the ongoing debate on the use of public export credit
programs and their impact on US exports. Our results indicate that cost saving is
significant beneficial to the importing countries as a result of the export credit programs.
There is also an increase in US exports as a result of the US export credit programs.
However, there is a reduction in cost savings to the importing countries when the length
of repayment of export credit is 180 days. Thus, the more restrictive terms and
conditions of officially supported export credits which the WTO is trying to discipline
based on their implicitly subsidized components will have some adverse impact on the
importing countries.

Introduction

Ever since Article 10.2 of the Agreement on Agriculture was agreed upon at the
Uruguay Round, the use of officially supported export credits for financing and
stimulating export sales of agricultural products has been an on-going negotiation at the
World Trade Organization (WTO). The Article states that, “The WTO member countries
undertake the development of internationally agreed upon disciplines to govern the
provision of export credits, export credit guarantees, or insurance programmes and, after
agreement on such disciplines, to provide export credits, export credit guarantees, or
insurance programmes only in conformity therewith”, (WTO, 1995). Its implementation
has not yet been finalized as the WTO disciplinary rulings even after the conclusion of
the sixth WTO Ministerial Conference in Hong Kong, China, in December 2005. Prior to
the sixth Conference, on August 1, 2004, the WTO General Council reached a decision

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