Order Code RS22319
November 8, 2005
CRS Report for Congress
Received through the CRS Web
The Berne Union: An Overview
James K. Jackson
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Summary
The Berne Union, or the International Union of Credit and Investment Insurers, is
an international organization comprised of 54 public and private sector members that
represent various segments of the export credit and investment insurance industry.
Members range from highly developed economies to emerging markets, from diverse
geographical locations, and from a spectrum of viewpoints about approaches to export
credit financing and investment insurance. Within the Berne Union, the United States
is represented by the U.S. Export-Import Bank (Eximbank) and the Overseas Private
Investment Corporation (OPIC) and four private-sector firms and by one observer. The
main role of the Berne Union and its affiliated group, the Prague Club, is to: work to
facilitate cross-border trade by helping exporters mitigate risks through promoting
internationally acceptable principles of export credit financing, strengthen the global
financial structure, and facilitate foreign investments. Over the past decade, the growth
and increased importance of global trade and financing have altered the agenda of the
Berne Union from focusing primarily on concerns over country-specific political risk
to concerns about global trade, international finance, global and regional security, and
questions of business organization, civil society, transparency, and corporate
responsibility. Congress, through its oversight of Eximbank and OPIC, as well as
international trade and finance, has interests in the functioning of the Berne Union. This
report will updated as events warrant.
Background
The Berne Union represents a diverse group of public and private entities that are
directly involved in international trade and foreign investment by providing financing and
insurance to exporters and investors.1 In 2004, Berne Union members provided $788
billion in insurance coverage, representing 10% of total global trade.2 The Berne Union
was formed in 1934 when private and state export credit insurers from France, Italy, Spain
1 For additional information, see [http://www.berneunion.org.uk/]
2 The Berne Union Yearbook, 2005. The International Union of Credit and Investment Insurers,
London, 2005.
Congressional Research Service ˜ The Library of Congress

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and the United Kingdom met in Berne, Switzerland. As a result, the organization was
named after the location of the first meeting, thus the name the Berne Union, although the
organization has never been based in Berne. The Union was headquartered in Paris until
the 1970s when it was moved to London.
Associated with the Berne Union is the Prague Club3, which was established in 1993
by the Berne Union and the European Bank for Reconstruction and Development (EBRD)
to support new and maturing export credit agencies that are setting up and developing
export credit and investment insurance programs. Also named after the location where
the first meeting was held, the Prague Club established an information exchange network
for new agencies in Central and Eastern Europe that have not yet meet the entrance
requirements for Berne Union members. When the Prague Club members have grown to
the point where they can meet certain specified criteria, they can apply for full Berne
Union membership.
Berne Union Membership and Activities
Membership in the Berne Union is open to new applicants but there are requirements
that must be met to ensure that discussions among the members remain relevant and
topical for as many members as possible. Membership requirements include
! Institutions applying for membership in the Berne Union should be
underwriters actively conducting business in the areas of export credit
financing and foreign investment as their core activity.
! Institutions must have been in operation in the field of export credit
insurance or the insurance of outward investment for a period of at least
three years.
! Institutions should meet certain thresholds for premium income or for the
value of business covered.
! If the applicant is engaged in export credit insurance, its operations must
include insurance of both commercial and political risks and it must
underwrite political risks in a global and general sense.
! If the applicant is engaged in the insurance of outward investment, it
must be providing direct insurance against the normal political risks,
including expropriation and war, and issues associated with the transfer
of funds.
Applicants to the Berne Union are assigned observer status for two years, after which
the membership of the Berne Union decides collectively if the applicant can become a full
member. In the past five years, more than ten new members have joined the Berne Union
and three applicants are presently listed in the observer status. The United States is
represented within the Berne Union by two federal government agencies — the U.S.
3 [http://www.berneunion.org.uk/prague_club.htm]

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Export-Import Bank4 and the Overseas Private Investment Company5 — and four private
sector corporations and by one firm currently in observer status. The private-sector
members are: the American International Group insurance underwriters (AIG)6; the
Foreign Credit Insurance Association Management Company, Inc. (FCIA)7; the
Multilateral Investment Guarantee Agency (MIGA)8; and the Zurich Emerging Markets
Solution.9 The Chubb Corporation10 of Warren, New Jersey currently has observer status.
The Berne Union is led by a President, a Vice President, and a Management
Committee. The President is elected each year and can be re-elected for one further year.
The Vice President is elected each year and cannot be re-elected. The Management
Committee consists of the President, the Vice President, Committee Chairs, and 12
representatives of member organizations. The standing committees represent three areas
of specialization within the credit industry: short term credit insurance represented by the
Short Term (ST) Committee, medium and long term credit insurance and lending
represented by the Medium Long Term (MLT) Committee, and investment insurance
represented by the Investment (INV) Committee. Six of the members for the
Management Committee represent the two largest organizations in each of the three
committees. The remaining six members are elected on a rotating basis for a two-year
term.
To support the Berne Union leadership, the Berne Union has a staff of five people,
known as the Secretariat, located in London. These five staff members are responsible
for coordinating all Berne Union and Prague Club activities and for providing ways for
the members to participate. In particular, the Secretariat is responsible for maintaining
external relations and for promoting the Berne Union and its members within the export
credit and insurance industry as a whole by supporting opportunities for members to meet
and discuss professional matters and to exchange views and experiences. This
interchange of information is achieved through three methods, annual general meetings
and Committee meetings, annual seminars and workshops, and an intranet among the
Berne Union members. Annual general meetings are hosted by a Berne Union member
on a rotating basis and take place over four or five days. Discussions at these meetings
reflect broad aspects of international trade, international finance and developments in
specific industry sectors. In particular, member discussions focus on developing and
promoting the best available practices in the fields of international trade finance and
foreign investment insurance. Recently, however, the members have focused their
attention on such issues as business organization, civil society matters, transparency, and
social and corporate responsibility.
4 [http://www.exim.gov/]
5 [http://www.opic.gov/]
6 [http://aigglobal.aig.com/]
7 [http://www.fcia.com/]
8 [http://www.miga.org/]
9 [http://www.zurichna.com/specialties/pr/Politica.nsf/pages/home?opendocument]
10 [http://www.chubb.com/]

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The Berne Union has developed long-standing relationships with the leading
international and regional financial institutions in the credit and investment insurance
industry. For instance, the Union has developed strong ties with such groups as the
Organization for Economic Cooperation and Development (OECD), the International
Monetary Fund (IMF), and the World Bank group, and has worked closely with these
organizations to promote international financial stability and broad-based economic
growth. The Berne Union is also in regular contact with such regional development banks
as the European Bank of Reconstruction and Development (EBRD) and the Asian
Development Bank, as agencies from both regions are active members of the Prague Club.
The Berne Union has close relationships with the other major credit insurance
associations including the International Credit Insurance and Surety Association (ICISA)
and the Pan-American Surety Association (PASA).
Current Issues
According to Berne Union President Hans Janus, recent meetings of the Berne Union
members increasingly have focused on the topics of corporate governance and on the
importance of adopting practices that emphasize ethical practices in international trade.
In particular, these meetings have focused attention on corporate social responsibility,
including such issues as bribery and environmental risk. In one recent step, Denmark’s
Eksport Kredit Fonden (EKF) adopted a set of principles known as the Equator Principles
that comprise a voluntary set of guidelines associated with project finance that are based
on the environmental and social procedures developed by the World Bank’s International
Finance Corporation and that have been adopted by various international banks.
Berne Union members have also recently expressed concerns about doing business
in China. They argue that there is a lack of available information concerning the nature
and performance capability of many of the firms in China that are involved in trade or
investment transactions with Berne Union members. The rapid growth of joint ventures
with Chinese firms is also creating confusion for some of the public-sector Berne Union
members, because many of them are charged by their respective governments with
participating in transactions that support economic activity in their home countries. As
a result of this confusion, membership in the Berne Union is growing fastest among firms
from the private sector where those firms are not charged with promoting national
content. Another key issue for Berne Union members is insurance against terrorist risks
and how such risks should be defined and whether they should be included as a part of
investment insurance.
Issues for Congress
Congress plays no direct role in the Berne Union, but its presence is felt indirectly
through two U.S. government agencies that are members of the Union and over which it
has oversight responsibility — the U.S. Export-Import Bank and the Overseas Private
Investment Corporation. These agencies also provide information back to Congress and
to the Administration about developments in the areas of export credit finance and foreign
investment. U.S. private sector firms that are members of the Berne Union also often
look to Congress for support and leadership in the areas of export credit finance and
insurance, especially with the increased risks many firms now believe exist as a result of
terrorist activities. As a result of its vast international economic and security interests, the

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United States is directly affected by, and therefore plays a leading role in, developments
in the areas of international trade, international finance, and foreign investment. The vast
U.S. international presence also means that U.S. national interests are tied to the
successful operation and stability of the international trade and finance markets, which
means that Congress is often involved in resolving issues that affect important U.S.
interests that rely on stability in the international financial system and the successful
operation of global trade and investment markets.

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