Export inflation insurance schemes
Export inflation insurance schemes: schemes operated by governments particularly in the high-inflation environment of the 1970s. They were designed to minimize or eliminate the effects of monetary inflation on the cost of export contracts. Countries not maintaining such schemes held that they conferred a competitive advantage to exporters benefiting from them. These exporters could bid more aggressively in international markets, since they were secure in the knowledge that they would not have to bear the cost of inflation alone. A panel established by the GATT in 1978 to examine whether such schemes amounted to a subsidy concluded that this would be true if the premium rates were "manifestly inadequate to cover long-term operating costs and losses". It also noted that the meaning of "long-term" still would have to be defined. In the current environment of low inflation any schemes of this nature which might still exist appear to be unused.
Source: http://ctrc.sice.oas.org/trc/WTO/Documents/Dictionary%20of%20trade%20%20policy%20terms.pdf
Web site to visit: http://ctrc.sice.oas.org
Author of the text: W. Goode
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