Statement of Priorities and Accountabilities for Export Development Canada
February 4, 2021
Ms. Martine M. Irman
Chair of the Board
Export Development Canada
150 Slater Street
Ottawa ON K1A 1K3
Dear Ms. Irman:
I am pleased to provide Export Development Canada (EDC) with its 2021 Statement of Priorities and Accountabilities (SPA).
Over the past year, we have faced extraordinary challenges. Now, as we look toward an increasingly clearer horizon, we see that in order to get there, much work lies ahead. However, with every new challenge there is also an opportunity to ensure a brighter, more inclusive and sustainable future for all Canadians. This starts with ensuring our promise to create one million jobs, including by expanding on the successes of the Women’s Entrepreneurship Strategy and the Black Entrepreneurship Program. It means working with Indigenous peoples and racialized Canadians, as well as creating supports and opportunities for the young and the old, 5th generation or 1st generation Canadians, the LGBTQ2 community and the differently abled.
This brighter future means putting the fight against climate change into the core of every action we take—ensuring our decisions are in the best interest of future generations and building upon the agreements we have made to Canadians here at home and to our allies abroad. In this, it remains paramount that we support innovative Canadian businesses as they grow through exports —to lead by example and make our part of the global economy even more sustainable. This better future will be emboldened by Canada’s leadership on the international stage, and by our steadfast commitment to advancing fair, rules-based trade around the world. All of this future will be possible due to the timely and targeted investments we made into Canadians and their futures throughout the COVID-19 crisis. So as we step forward on the road to recovery, we will know that as our nation faced one of the greatest challenges of modern history, we rose to the occasion and overcame it, securing a brighter future for all Canadians. With that, let’s work together to build back better.
This begins by looking at the incredible strides EDC has made thus far and the extraordinary service you have provided to Canadians during this trying time. EDC’s rapid and robust delivery of new emergency programs, such as the Canada Emergency Business Account (CEBA) and Business Credit Availability Program (BCAP), in addition to its core offerings, is enabling thousands of businesses to weather the crisis and emerge ready to rebuild and grow.
Without EDC, this simply would not have been possible. The figures are staggering in terms of what EDC has delivered: over $41 billion in loans approved to over 823,000 businesses through CEBA, and nearly 1,000 loan guarantees unlocking access to over $1 billion in credit under the BCAP. These remarkable numbers are a testament to EDC’s capacity and commitment to serving Canadian businesses.
While these numbers are impressive, our work is not done. COVID-19 has not halted trade, but it has complicated trade from a practical and logistical point of view. We are seeing greater barriers, protectionism and in some cases, export bans on critical products. What has not changed is the fact Canada is dependent on trade for our economic prosperity and now, more than ever, our economic recovery will depend on a return to robust activity in our traditional sectors and diversified exports by companies of all sizes and sectors.
That’s why our government remains committed to the core priorities and goals of the ambitious trade agenda outlined in my December 2019 mandate letter from Prime Minister Justin Trudeau. As Minister of Small Business, Export Promotion and International Trade, my priorities will continue to include:
- export growth and diversification;
- export mobilization of Canada’s small and medium-sized enterprises (SMEs);
- implementation and maximization of Canada’s free trade agreements, including the Canada-United States-Mexico Agreement (CUSMA), the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP); and,
- maximization of Canada’s trade promotion capabilities
In support of the foregoing priorities, I am pleased to provide you with the government’s key expectations of EDC in the year ahead:
Business Economic and Trade Recovery Team (BETR)
In my mandate letter, the Prime Minister has asked me to work across my portfolio to ensure that all resources are maximizing Canada’s trade capabilities to the benefit of businesses of all sizes, and I am thankful for EDC’s leadership in chairing BETR.
Through BETR, it is my expectation that EDC will coordinate specific strategic transactions to advance business growth through international trade—in turn, driving our economic recovery. From key strategic growth sectors like clean tech, health tech, agrifood, agritech and infrastructure, to key strategic growth regions such as the countries of CPTPP and ASEAN—EDC should use BETR as a senior-level working committee to mobilize the full suite of tools available in my portfolio to support global growth and prosperity for businesses of all sizes as Team Canada. For example, Canadian exporters supported by the CCC for government to government contracting, in particular for major infrastructure projects, would benefit from a more holistic product offering from EDC.
It is also my expectation that EDC will take steps through BETR to provide Canadian companies a seamless experience when accessing federal business development and trade services to the success of Canadian exporters. This should include a strategic focus on coordinated communication and marketing activities between Crown Corporations, as well as building out digital collaboration capacities in order to ensure that the full range of services available to SMEs is presented and navigable in an efficient, user-friendly way.
Resilience and Growth
For Canadian exporters to be in the best possible position to compete globally, EDC must continue supporting Canada’s export diversification agenda, bringing trade finance programs into ever closer alignment with government priorities. Specifically, I am looking forward to EDC establishing service standards for countries where Canada has a free trade agreement (i.e. South Korea, Ukraine, Israel, etc.) or a strong presence in the market (i.e. India, etc.). Furthermore, for Canada’s core export markets—as covered by CUSMA, CETA (i.e. Europe Union), and the CPTPP (i.e. Japan, Singapore, Vietnam, etc.)—I would ask EDC to develop enhanced services and products to help Canadian companies take advantage of these important multilateral trade agreements.
EDC’s export diversification efforts should continue to focus on: 1) increasing the number of Canadian companies exporting, including SMEs, 2) growing the value of exports by Canadian companies, 3) expanding the types of products and services Canadians are exporting, in particular, those from knowledge-based and data-driven sectors, 4) increasing the number of Canadian exporters from Canada’s diverse, racialized communities that are historically under-represented in international trade, and 5) increasing the volume of exports to diverse international markets. This will help accelerate Canadian business growth and fuel an economic revival in a post-COVID environment.
Support for the Modernization of Multilateral Export Credit Agreements
Sustaining a well functioning multi-lateral trade system is a priority for Canada. Canada helped build the rules-based international trade system, and we are always working to make it better and more equitable. It establishes stability and predictability in trade relationships. It ensures balance and fairness. It generates new opportunities for businesses. And it supports and creates prosperity and well-paying jobs for Canadians.
In 2020, the Participants to the Arrangement on Officially Supported Export Credits are embarking on a process to modernize trade rules for export credit agencies. This process presents a unique opportunity to ensure that the framework for officially supported export credits is up to date and market reflective, while securing a level playing field for Canadian exporters into the future. Once completed, the new rules would become a standard operating model for OECD export credit providers, including EDC. To this end, EDC’s committed engagement is necessary to ensure that negotiated outcomes are credible and robust, compatible with EDC’s current operational practices, including its market-reflective approach, and in the interest of Canadian exporters.
I ask that EDC enhance its engagement in this important trade negotiation, including by identifying opportunities and risks in multilateral export credit practices, identifying level playing field challenges for Canadian exporters, and providing analysis of pricing proposals in relation to EDC programs, with a view to minimize subsidies and place Canadian exporters in the best possible competitive position. I expect EDC, with Global Affairs Canada and Finance Canada, to develop a strategy for engagement in these negotiations.
Foreign Direct Investment
Foreign direct investments can also contribute to Canada’s export capacity. As such, I ask that EDC collaborate with the Trade Commissioner Service and Invest in Canada to ensure that all related instruments and services to attract foreign direct investment are deployed, and coordinated where appropriate. My request to EDC, similar to Invest in Canada, focuses on foreign direct investments that strengthen our domestic supply chains and those that can play a role in growing Canada’s innovation ecosystem while ensuring they generate overall benefits to Canadians.
Climate Change & Cleantech
I want to congratulate EDC on its 2019 Climate Change Policy. Recognizing EDC’s commitment to review its Climate Change Policy, and I request that EDC update the Policy to go further in aligning investments across its portfolio with the climate goals of the Paris Agreement. EDC has taken great steps in the recent past to contribute to Canada’s commitments for the future, but a more ambitious approach to addressing the challenges of climate change is required. EDC’s commitment to reduce its exposure to the six most carbon intensive sectors by 15% by 2023 is commendable, but EDC must also seek to examine the impact of the entirety of its portfolio, not just the most carbon intensive sectors. Specifically, the updated Policy should outline a strategy that will commit EDC to Canada’s objectives of net-zero emissions by 2050, considering all sectors of support, and should further consider the merits of setting an interim 2030 emissions reduction objective. In the updated Policy, it is my expectation that EDC only provide financial support to transactions in the oil and gas sector involving Canadian companies, and that EDC fully consider and evaluate GHG emissions and climate change considerations as a key aspect of transaction due-diligence. In particular, I applaud EDC for endorsing the Task Force on Climate-Related Financial Disclosures (TCFD) standards. I encourage EDC to accelerate its work to fully implement the TCFD recommendations in 2021.
In November 2020, the Government of Canada tabled Bill C-12: An Act respecting transparency and accountability in Canada’s efforts to achieve net-zero greenhouse gas emissions by the year 2050. This legislation includes, at section 23, a requirement that the Minister of Finance must, in cooperation with the Minister of Environment and Climate Change, prepare an annual report respecting key measures that the federal public administration has taken to manage its financial risks and opportunities related to climate change. The Minister of Finance must make that report available to the public. Going forward, I ask that EDC work with the Department of Finance to feed into the Government of Canada report on managing financial risks and opportunities associated with climate change, including with respect to fully implementing the TCFD recommendations within Canadian Crown-corporations.
I also request that the updated Policy outline a framework for consultations with Canadian indigenous peoples, civil society groups, as well as the federal and provincial governments, when supporting domestic energy projects. Building on EDC’s existing CSR Advisory Body, I further request that the you review the composition of the Advisory Council to ensure it reflects a diverse range of perspectives and civil society organizations across Canada.
I am proud of the key role EDC plays in supporting the clean technologies sector, including facilitating over $2.5 billion in business in this sector. It is my expectation that EDC build on this important support, and that it will regularly report to me on progress in this important sector of the future. This reporting should continue to include total volumes of business and the total number of clients served in this sector, in addition to providing a further breakdown support to subsectors, and convey what types of projects this support is going toward. In future Corporate Plans, I expect EDC to outline specific steps it will take to increase its support to clean technologies, and explore innovative financing mechanisms to crowd in private financing for projects contributing to achieving Canada’s climate goals and commitments. The steps outlined should demonstrate EDC’s commitment to rapidly scale up support for sustainable, renewable and equitable climate change solutions, including, but not limited to: renewable energy, energy efficiency, batteries and storage, interconnectors, smart-grid technologies, the electrification of heat, and clean public transportation.
Responsible Business Conduct
EDC should uphold high standards of responsible business conduct (RBC), including by continuing to work collaboratively with RBC leaders, and continuing to use its influence to promote RBC within the business community. I would like to take this opportunity to acknowledge the efforts that EDC has taken to strengthen its RBC policies and augment its RBC reporting in the 2019 Annual Report and the 2020-2024 Corporate Plan.
Moving forward, I encourage EDC to continue to improve its accessibility of information for stakeholders and Canadians to further its accountability related to supporting RBC standards.
Excess Share Capital Dividend
In 2020, EDC has been provided almost $11 billion in additional capital to help Canadian businesses meet the challenges of the COVID-19 pandemic. As outlined in my letter of March 15, 2020, regarding the government’s purchase of additional share capital in EDC, I expect EDC to provide quarterly reporting on how it is utilizing this additional capital to support Canadian businesses. I also expect that EDC prepare a detailed plan for the return of any excess amount of capital injected that is no longer required for COVID-19 measures. This plan should take into consideration the capital required for any expanded risk EDC may continue to bear in support of ongoing COVID recovery efforts, export diversification and support for SMEs. I ask that any capital required for expanded risk for ongoing COVID support be provided in detail in this plan.
Performance and Accountability
I expect EDC to establish clear targets and track success related to export diversification, support for SMEs, and support for exporters who belong to underrepresented groups to be reflected in the next Corporate Plan and subsequent Annual Reports. I appreciate EDC’s delivery of 2019 baseline aggregate data and ongoing quarterly reporting as requested in my letter of March 26, 2020. This reporting is a great opportunity for EDC to measure and demonstrate its success in supporting Canadian exporters.
I also look forward to reporting in future Corporate Plans and Annual Reports to track EDC’s financial support to SMEs by number of employees (1 to 99 for small, 100 to 499 for medium), as is the practice for reporting on SME-oriented programming across the Government of Canada. EDC’s attention to this request will help establish a uniform approach to tracking and assessing federal support provided to SMEs.
I would like to recognize EDC for taking initial steps in tracking its support to women-owned and led businesses, as well as the industry sectors in which they do business. EDC’s recently announced increase in available support through the Women in Trade Investments Program to $100 million is an important step in the right direction. Furthermore, I welcome EDC’s new target to facilitate $2 billion in trade by women-owned and led businesses and to serve 1,000 unique customers in this demographic segment by 2023. I ask that EDC continue its work to collect similarly detailed information related to the support of Indigenous and racialized Canadian owned and led businesses.
In addition to tracking and providing specific support to underrepresented exporter segments, as mentioned above, EDC should also increase its support for (and tracking of) knowledge-based and data-driven exporters, including clean technologies, health technologies, agriculture technologies. Identifying and supporting these and other sectors of the future should be a top priority for EDC.
I expect that the requested targets and metrics will be established in a clearly measurable format in all future Corporate Plans and Annual Reports. These tracking mechanisms will assist in understanding how EDC is contributing to government priorities, and will be key to informing future action.
EDC will play a vital role in determining how Canadian exporters perform during the economic recovery and Canada’s international competitiveness in the longer-term.
I would like to thank EDC again, not only for its work in support of exporters during 2019, but also for the corporation’s extraordinary service to Canadian businesses during the COVID-19 pandemic. Canadians will continue to rely on EDC to help Canadian businesses and entrepreneurs—and the millions of Canadians they employ—survive this period and grow through the recovery phase. I know that EDC will strive to embody the highest standards of client service, good governance and responsible business conduct as it helps Canadian companies get back on track.
Thank you for your hard work and ongoing collaboration with my office and departmental officials, especially in these recent months. I look forward to continued dialogue, partnership and progress on the priorities outlined in this letter in the year ahead.
The Honourable Mary Ng, P.C., M.P.
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