June 6, 2000
The President & CEO of the Alliance of Manufacturers & Exporters Canada defends the EDC.
Please see the original article The secret of EDC’s ‘success’.
Patricia Adams’ statement that taxpayers’ money has been part of the Export Development Corp.’s success is correct. In this case, taxpayers’ money has been used to make an equity base investment in EDC. All international export credit agencies receive support from their governments in one way or another. The major difference between EDC and its counterparts in other countries is that it operates on commercial principles and funds its lending activities in the public debt market (which also means it does not require annual injections of tax money to keep it viable). Taxpayers are not at risk that they will lose their equity interest in EDC, and to suggest otherwise is inaccurate and misleading.
Which brings me to the other secret to EDC’s success. According to members of the Alliance of Manufacturers & Exporters, EDC’s success is based on its professionalism and its flexibility to quickly respond to the changing needs of Canadian exporters. EDC has been at the leading edge in the development of new products and services to respond to the ever-changing environment for international trade. EDC professionals understand international finance and have an in-depth understanding of international political and economic environments. It is EDC’s professionalism that gives a competitive advantage to Canadian exporters.
Auditor-General Denis Desautel’s assessment that EDC assumes higher risks than would normally be assumed by the private sector is very likely correct. That means that Canadian exporters are being well served, and that the EDC is fulfilling the important export promotion role for which it was designed many years ago. Similarly, the fact that EDC’s provisions for losses are many times those of commercial financial institutions is a simple reflection of the higher risks associated with its portfolio and good management principles.
Exporters drive Canadian jobs and prosperity, and a high percentage of Canadian exports to higher-risk markets is supported by our export credit agency, EDC. Simply put, EDC is doing its job.
Finally, I would like to comment on the reference to 600 large companies receiving 85% of EDC support. This simply reflects the fact that 60% of Canada’s exports are from the top 100 companies. Remember, also, that many small and medium-sized enterprises (SMEs) are suppliers to these larger companies. EDC can and should be encouraged to do more for smaller businesses, but it is important to at least judge their performance fairly.
As Canada’s leading business network, the Alliance of Manufacturers & Exporters Canada represents about 75% of Canada’s manufacturing output and 90% of the country’s merchandise exports.
Perrin Beatty, president & CEO, Alliance of Manufacturers & Exporters Canada.