National Export Strategy 2002 - International Trade Administration ...

Unlocking America’s Potential
Market Windows
Market windows (along with tied and untied aid) were one of the foreign
competitor practices most frequently raised by US businesses A “market
window” is a government-owned or directed institution that claims to operate on a
commercial basis while benefitting either directly or indirectly from some level of
government support Because countries that use market windows profess that they
operate on a commercial basis (ie, not supported by annual appropriations and
providing financing at commercial or market rates), they have not had to follow
the OECD disciplines which apply to “official” (versus “market”) trade financing
However, market windows have come under scrutiny over the years with
allegations that they provide non-market financing terms that skirt the disciplines
of the OECD Arrangement
Foreign Competition
The two primary market window institutions in the world today are Canada’s EDC
and Germany’s KfW While neither EDC nor KfW receives an annual
appropriation, both are able to borrow with the full faith and credit of their
governments and do not pay dividends or taxes As pointed out by Mendelowitz, 13
these benefits give EDC and KfW significant leeway to operate profitably while
still offering financing on more attractive terms than could the private sector
However, because parties to the market windows of EDC and KfW are bound by
confidentiality covenants, there is little transparency in the details of these
activities
Perspectives of U.S. Industry
U.S. businesses assert that market windows are having a major impact on their
competitiveness and ultimately on their decisions about sourcing and production.
Canada’s and Germany’s market windows are very flexible because they are not
constrained by OECD rules on terms and tenures, specific content requirements, or
nonfinancial policy considerations. U.S. companies also view these institutions as
having attractive customer service orientations given that they are, in effect, free to
compete with their own private sectors. Combined with aggressive marketing
campaigns on the part of the Germans and Canadians and the possibility that these
windows offer financing on preferential non-market terms, many U.S. companies
have found doing business with them appealing so as to maintain their global
competitiveness.
13. Allan Mendelowitz, “The New World of Government-Supported International Finance” in The Ex-Im Bank in the 21st
Century : A New Approach?, eds. Gary Clyde Hufbauer and Rita M. Rodriquez (Washington, D.C.: Institute for
International Economics, January 2001).
13