agreed on by the member countries of the Organization for Economic Co-operation and
Development (OECD). The agreement was intended to be applied only for manufactured
goods (OECD, 1998).
It is unclear whether in the future the Dispute Settlement Body of the WTO will
apply the SMC Agreement to discipline the use of officially supported export credits for
other agricultural commodities as it did to the United States (US) cotton exports. Also,
the European Union (EU) has advocated that they are willing to reduce their direct export
subsidies if the US and other countries are willing to reduce their export credits, state
trading enterprises, and food aid. Additionally, the July Framework gives further
instruction to the WTO Committee on Agriculture that disciplines of the use of officially
supported export credits should build upon the “Harbinson Text”. With respect to
disciplining the use of officially supported export credits, the Text emphasizes in
establishing consensual agreements on terms and conditions of officially supported
export credits. They include maximum repayment terms, a minimum cash payment,
payment of interest rates, minimum interest rates, repayment of principal, premiums in
respect of coverage of risks under export insurance, reinsurance and export credit
guarantees, foreign exchange risk, and period of validity of export financing. For
instance, to reflect the duration-life of agricultural products the maximum repayment
period of an export credit for most agricultural product has been negotiated for a
maximum period not exceeding 180 days (WTO, 2003). If the agreement is finalized, the
General Service Management (GSM) programs of the US such as GSM 102 and GSM
103 will need to reduce their maximum required repayment period from 3 years to six
months for the GSM 102 and from 7 years to six months for the GSM 103.