Washington beats drum for Asian export support plan
The United States has kicked off an exhaustive campaign to set up a unique emergency aid package aimed at providing much-needed support for the exports of crisis-hit Asian economies.
US officials have contacted all the Group of Seven (G7) leading industrialised nations, and their respective export credit agencies, in a bid to build a specially designated pool of trade insurance that would help cash-strapped Asian economies buy goods from G7 countries.
Yesterday, the British Treasury confirmed it expected the issue to be discussed at next week's G7 meeting of finance ministers and central bankers, and Britain's Export Credit Guarantees Department said all the G7 export credit agencies were being approached.
The measures, if approved, are aimed at limiting the damage the crisis in Asia could have on Western economies, several of which are dependent on the region for exports.
Germany and France, which are beginning to enjoy economic recovery, are heavily export-oriented and concerns have been raised that the crisis could jeopardise their recovery.
If all the export credit agencies of the G7, which include France's Coface, the US Export-Import Bank and Germany's Hermes, were to agree to the plan, the fund could be worth US$10 billion, officials said.
Under the proposals, Asian countries would also find it easier to export, officials said.
Economists have noted in recent months that the depreciation in several regional currencies has not translated into a large upsurge in exports, because industry still needs to import key manufacturing inputs before they can sell goods abroad.
Sources familiar with the plan said the availability of export guarantees would give Asian industry the necessary support to better capitalise on the benefits resulting from depreciated currencies.
But the move would also be aimed at stemming the build-up of any protectionist pressures, particularly in those European countries which fear a flood of cheap Asian exports.
Officials familiar with the proposals said the measures would only apply to short-term credits, and was principally motivated by the increasing concern that the Indonesian Government was no longer willing to provide government guarantees for short-term business.
The plan is also not aimed at all countries in the region, but will probably only be made available to South Korea, Indonesia and Thailand - the three countries considered to have borne the brunt of the crisis.
Yesterday, British export guarantee department officials said although the proposals would apply to short-term credits of up two years, which they no longer handle, the official nature of the proposal, and the fact that the decision to join would be made by the government, meant the department would probably handle it.
All short-term credits from Britain are handled by NCM Credit Insurance, the British arm of Dutch group Nederlandsche Credietverzekering Maatschappij.