The Dynamics of International Trade Finance Regulation: The Arrangement on Officially Supported Export Credits
Associate Professor of Law, University of Tulsa College of Law; Assistant General Counsel and Counsel, Office of General Counsel, The Export-Import Bank of the United States, 1998–2000; J.D., Yale Law School, 1994; M.A., Yale University, 1994; A.B., Princeton University, 1990.
Volume 45, Issue 1 (Winter 2004)
We are living through a defining moment in international law. The pace of globalization makes cooperation through international law and institutions vital. The recent SARS scare, exponentially magnified by the ease of international travel, poignantly illuminates the proactive, standard-setting role that international rules, such as World Health Organization regulations, can and should play. Yet public impatience with international law is mounting. Paradoxically, this unease may be the product of international law’s maturity and success. For the first time since World War II, states have consistently embraced international institutions to assist in the management of prominent international issues. From the International Criminal Tribunal for the former Yugoslavia to the World Trade Organization (“WTO”) to the U.S. engagement of the United Nations Security Council prior to the Iraqi conflict, states have turned to, or at least paused to reflect upon, international law, catapulting it prominently into public view. Admittedly, international law’s record in these cases is mixed at best. But precisely because of widespread reliance on international law in these high-profile roles, its failures have become a focal point for public skepticism and criticism.
This public unease may also be a product of the type of international law that gains media and high-level policymaker attention, namely formal treaties and security agreements marked by choreographed signing ceremonies and diplomatic photo opportunities. Yet these headline treaties and agreements mask a universe of international rules that does not technically fall into the International Law 101 categories of formal international treaty or customary international law but nevertheless performs its job and engenders sustained compliance. This Article will examine one example, an informal “Gentlemen’s Agreement” named the Arrangement on Guidelines for Officially Supported Export Credits (the “Arrangement”) as a window into this important, but under-appreciated world of international legal regulation.
The Arrangement is a highly technical international agreement that effectively regulates export credit agencies (“ECAs”), such as the Export-Import Bank of the United States (“Ex-Im Bank”). ECAs are officially supported governmental institutions that provide financing in support of nationals’ exports. In the 1960s and 1970s, many ECAs offered subsidized financing at below-market interest rates. In an unregulated world, the natural tendency is for ECAs to offer increasingly higher subsidies to promote nationals’ exports, triggering a costly, market-distorting war in export subsidies.
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