Jayne Watson, EDC and Lawrence Solomon
February 8, 2001
Lawrence Solomon’s column Free Trade for Dummies (Feb. 6) contains errors regarding Export Development Corporation (EDC).
EDC does not finance forest products to the United States. The services we provide for forest products exports are under our accounts receivable insurance program, which protects Canadian companies against the risks of non- payment from buyers. These firms pay premiums for this coverage (based on a risk profile) and these premiums are comparable to what the private sector charges.
His statement about taxpayers subsidizing the forestry industry through EDC is also incorrect. EDC is financially self-sustaining, operates on commercial principles and taxpayers do not fund its operations.
Mr. Solomon should do his homework the next time he yells “timber.”
Jayne Watson, Director, Corporate Communications, Export Development Corporation, Ottawa
Lawrence Solomon responds to the EDC
EDC borrows using the federal government’s guarantee. It receives government bailouts. It pays no taxes. Jayne Watson may call that “self-sustaining” and operating on “commercial principles.” Most Canadians would call her claim bureaucratic double-speak.
Ms. Watson disputes my description of EDC’s role in financing exports. I wrote: “EDC finances almost four times as much in forestry exports — most of which are destined for the United States — as in aerospace exports.” She describes its support for forestry companies more narrowly, as insuring the companies’ receivables. But her distinction is more double-speak. In one case, EDC finances a U.S. importer’s purchase of a Canadian forestry company’s sales; in the other, EDC insures the forestry company’s receivables from that U.S. importer, allowing the forestry company to obtain the financing it needs for its exports. To compound the disingenuousness of Ms. Watson’s complaint, EDC sells its account-receivable insurance to exporters on the very basis that it will help them borrow against their receivables to finance their exports.