NEWS RELEASES
PETTIGREW ANNOUNCES GOVERNMENT'S RESPONSE TO EXPORT DEVELOPMENT ACT REVIEW
May 18, 2000 (10:15 a.m. EDT) No. 107
PETTIGREW ANNOUNCES GOVERNMENT'S RESPONSE TO EXPORT
DEVELOPMENT ACT REVIEW
International Trade Minister Pierre Pettigrew today announced the Government of
Canada's response to the recommendations made by the House of Commons Standing
Committee on Foreign Affairs and International Trade (SCFAIT) on the operations and
mandate of Export Development Corporation (EDC).
"The Committee made a number of important recommendations in the areas of
information disclosure, human rights, and the environment. We are announcing steps
today to clarify EDC's role in these important areas, and to reinforce EDC's
responsibility to secure benefits for Canada while abiding by our international
agreements," said Mr. Pettigrew. "The way the Corporation addresses these issues will
be made more transparent to ensure ongoing public confidence in its operations."
To achieve these goals, a number of initiatives will be undertaken:
• The need for an EDC ombudsman will be studied.
• EDC will conduct public consultations beginning later this month on its Information
Disclosure Framework.
• The Auditor General will examine the adequacy of EDC's environmental framework
this year. The government will design a statutory authority within 12 months for an
ongoing environmental audit of EDC by the Auditor General.
• EDC will conduct public consultations on its environmental review framework on a
regular basis.
• The Department of Foreign Affairs and International Trade will ensure that EDC is fully
apprised of human rights issues in specific countries, and able to assess the human
rights impacts of specific activities.
• The government will review its existing debt forgiveness policy so that EDC shares in
the cost of official debt rescheduling. This will ensure the Corporation is accountable for
the consequences of its lending in these countries.
• Options will be assessed to ensure that EDC gives due regard to Canadian benefits
and to Canadian obligations under international agreements.
"During the review, exporters made it clear that they consider EDC an invaluable ally in
the battle for global market share," said Minister Pettigrew. "We are, therefore, also
taking steps today to ensure that the Corporation is able to continue to evolve as an
effective agency dedicated to supporting exporters, particularly small and medium-sized
enterprises (SMEs), with a clearer focus on working to support Canadian values in the
areas of human rights and the environment."
To give EDC room to grow, the current contingent liability limit will be replaced with one
that will expand with EDC's financial capacity, as is the case with EDC's borrowing limit.
As well, EDC will be given greater flexibility to participate as a sponsor in foreign
projects. Specific initiatives to enhance support to SMEs will also be considered, and
steps taken to increase co-operation between EDC and other players in the financial
services sector as a means of increasing Canada's overall capacity to support
exporters.
"EDC has demonstrated its effectiveness in bringing economic benefits to Canadians
and plays an equally vital role in promoting Canadian values globally," said Minister
Pettigrew. "The steps we are taking will help the Corporation do both these jobs even
better."
SCFAIT made recommendations as part of the mandated five-year review of the Export
Development Act, the legislation governing the activities of EDC. These
recommendations addressed views expressed by EDC's clients, public interest groups,
and other stakeholders, during a comprehensive process of consultation.
The government response to SCFAIT's recommendations is available on the
Department of Foreign Affairs and International Trade Web site:
http://www.dfait-maeci.gc.ca/english/news/public.htm.
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A backgrounder is attached.
For further information, media representatives may contact:
Sylvie Bussières
Office of the Minister for International Trade
(613) 992-7332
Media Relations Office
Department of Foreign Affairs and International Trade
(613) 995-1874
Backgrounder
EXPORT DEVELOPMENT CORPORATION
Mandate
EDC is a government-owned financial institution whose mandate is to support and
develop Canada's export trade and Canada's capacity to engage in that trade and to
respond to international business opportunities. EDC helps Canadian exporters
compete in world markets by providing a wide range of financial and risk management
services, including export credit insurance, financing and guarantees.
Organization and Governance
EDC is a financially self-sustaining Crown Corporation that operates on commercial
principles. It must balance its commercial disciplines and its public policy mandate. EDC
continually reinvests its profits into its retained earnings to strengthen its financial
capacity for taking on higher-risk business worldwide.
EDC is accountable to Parliament through the Minister for International Trade and is
governed by the Export Development Act and the Financial Administration Act. EDC's
Annual Report and Corporate Plan Summary are tabled annually in Parliament, and the
Auditor General of Canada is the auditor of the Corporation. In addition, EDC is subject
to regular mandate reviews by Parliament and a special examination by the Auditor
General every five years.
Operating Results
In 1999, EDC supported more than $40 billion in Canadian exports and foreign
investments. This support was primarily in the form of short-term credit insurance ($27.6
billion), medium- and long-term loans to buyers ($6.1 billion), medium- and long-term
insurance and guarantees ($4 billion) and political risk insurance ($2.4 billion). Growth in
EDC activities has been very dramatic in recent years, particularly in Organization for
Economic Co-operation and Development (OECD) markets. About 70 percent of EDC's
lending business is now commercial, as opposed to more traditional sovereign-lending
in non-OECD markets. EDC has received share capital from the government of $983
million. It receives no annual appropriations at this time, but is able to finance its growth
through annual profits from operations.
The Review Process
Section 25 of the Export Development Act (ED Act) stipulates that the Minister for
International Trade, in consultation with the Minister of Finance, shall undertake a
review of the ED Act. It also requires that the Minister submit a report to Parliament, and
that it be reviewed by designated committees of the House of Commons and the Senate
or by a joint committee. The report was prepared by Gowling Strathy and Henderson
(Gowlings) and submitted to Parliament in 1999. The Standing Committee on Foreign
Affairs and International Trade (SCFAIT) completed its analysis and issued the report
with recommendations in December 1999. SCFAIT requested a comprehensive
government response to its report.
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