Export promotion via official export insurance

Proponents of free trade argue that export promotion distorts competition a nd undermines the multilateral trade system. In most countries export insur ance is provided by the government and, consequently, is driven more by a b road range of policy objectives than purely insurance principles. This pape r, however, shows that export promotion does not necessarily imply trade di stortions and that most export destinations do not benefit from insurance p remium subsidies. A significant policy implication of these findings is tha t the WTO and the EU are correct not to banish completely official export i nsurance.