2019 MEETING WITH THE TRADE COMMISSIONER SERVICE (TCS) AND EXPORT DEVELOPMENT CANADA (EDC)

  • March 18, 2020

May 10, 2019, Ottawa

Overview of EDC Programs to Support Canadian Companies Entering New Markets

EDC Panel Members:

  • David Stevenson, Vice-President of Knowledge Service
  • Gorana Filipovic, Strategic Alliances Manager

EDC Mission

Established in 1969, Export Development Canada (EDC) is a self-sustaining Crown Corporation. Its mandate is to support and develop trade between Canada and other countries, and help Canada's competitiveness in the international marketplace.

EDC offers solutions to mitigate risk and add capacity through financing, insurance, equity, knowledge and connections and supports traditional direct exports, as well as service-based exports and companies selling into global supply chains (indirect exports), mainly in the automobile, mining and oil industries. For example, 50% of Bombardier’s plants abroad were financed by EDC. 

EDC has offices in Canada’s main cities and its first overseas office was opened in 2017 in Singapore. In other countries, EDC co-locates with the TCS in Canadian Embassies, High Commissions and Consulates.

EDC forms an ecosystem aimed at promoting Canadian businesses abroad with partners, such as the Business Development Bank of Canada (BDC), Forum for International Trade Training (FITT), Farm Credit Canada (FCC), Chartered Professional Accountants (CPA), Canadian Banks and Credit Unions, Canadian Shipping Company (eShipper) and the TCS.

EDC helps Canadian exporters to:

  • gain knowledge on everything from how to export, to how to export into a specific market, to understanding foreign government regulations;
  • develop networking with potential suppliers and distributors to reach new customers or business partners;
  • obtain professional advice on matters such as local representation, identifying competition and mentorship through the process of growing an export business; 
  • access to capital, financing the purchase of equipment, maintaining sufficient cash flow, etc.; and
  • protect against payment risks, contract cancellations and claims on non-performance.

In order to get involved with EDC, a Canadian company must have some kind of international trade connection. EDC is open to all companies, including small and medium-sized businesses (SMEs), and its main involvement factor is the viability of the project abroad.

Its acceptance rate is 10%. Very often, if a project is not accepted by the EDC, it can qualify for assistance from the Business Development Bank of Canada (BDC).

Furthermore, EDC does not compete with traditional banks, but gets involved when traditional banking considers projects too risky. 

EDC is constantly looking for new partners and companies to help promote Canadian businesses abroad.

Overview of TCS Programs to Support Canadian Companies Entering New Markets

TCS Panel Members:

  • Ping Kitnikone, Executive Director, Regional Network and Intergovernmental Relations Division
  • Taraneh Bayat-Mokhtari, Senior Officer for CanExport

TCS Mission

Part of Global Affairs Canada (GAC), the TCS was created in 1894 and has more than 120 years of experience helping Canadian companies succeed in foreign markets.

The TCS is a network of more than 1000 trade professionals working in Canada and abroad to promote Canadian trade in foreign markets and has trade offices across Canada and in 161 offices around the world.

The TCS provides Canadian businesses with on-the-ground intelligence, qualified contacts, partnership opportunities and practical advice on foreign markets. It also assists foreign companies to invest in Canada.

Mainly the TCS helps businesses to:

  • export;
  • establish companies abroad;
  • tackle market access issues;
  • pursue a joint-venture or strategic alliance;
  • participate in global value chains; and
  • seek technology and R&D partnerships.

As part of Canada’s Embassies, High Commissions and Consulates, the TCS has privileged access to foreign governments, key business leaders and decision-makers. Its longstanding business contacts include potential customers, distributors, sources of finance or investment, technology partners and intermediaries.

The TCS does not provide access to capital, financing the purchase of equipment, maintaining sufficient cash flow, etc. The TCS does not protect against payment risks, contract cancellations and claims on non-performance. This role is assumed by the EDC, whose overseas services are almost entirely co-located within TCS offices abroad.

The sensitivity of business information and client confidentiality is a key part of the core values of the TCS. It collects and uses relevant information to better serve companies, or to refer them to an appropriate resource.

CanExport

Launched in 2016, CanExport is a program providing direct financial assistance to SMEs registered in Canada to help them develop new export opportunities and markets, especially high-growth emerging markets.

CanExport is delivered by the TCS, in partnership with the National Research Council of Canada’s Industrial Research Assistance Program (NRC-IRAP).

To be considered for possible CanExport funding, a company must have no less than $100,000 and no more than $100 million in annual revenue declared in Canada during its last complete fiscal year.

To be eligible to share up to a maximum of 50% between the CanExport program and the applicant, activities must aim to promote international business development and must go beyond the applicant’s core activities, represent new initiatives and provide an opportunity to yield incremental results. They also should happen entirely within the timeframe of the project. For example, the following activities are eligible:

  • business travel;
  • participation at trade fairs;
  • market research;
  • adaptation of marketing tools for a new market; and
  • legal fees associated with a distribution/representation agreement.

Q&A Session

Following the presentations of both organizations, the following questions were discussed:

Are the activities of EDC and the TCS in accordance with subsidies and countervailing measures under World Trade Organization (WTO) rules to neutralize the negative effects of state subsidies?

Before implementing their programs, EDC and the TCS, in accordance with their mandates, go through a detailed consultation and compliance process in order to assure their compliance with WTO rules and other international agreements.

Ms. Kitnikone pointed out that implementing programs involves lots of consultations in order to assess risk and compliance with Canada’s international agreements. However, the TCS follows strict guidelines to make sure that the risk is tolerable and that they help Canadian companies access foreign markets.

According to Ms. Filipovic, EDC pays lots of attention not only to the WTO rules, but also to the Arrangement on Officially Supported Export Credits, a "gentlemen's agreement" amongst the followings participants of the Organization for Economic Cooperation and Development (OECD): Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, Turkey and the United States. Thanks to this conservative approach, EDC projects are compliant with international agreements.

Do the EDC and the TCS in any particular way support women-run businesses?

According to Mr. Stevenson, the EDC has a fund of $100M CAD for programs supporting women-run businesses. However, as pointed out by Jessica Horwitz there will be always be challenges with defining a “women-run business”.

Why are there so few Canadian companies in Africa?

According to Ms. Kitnikone, Canadian companies are not very risk tolerant. There is also a problem of political instability. GAC spent a lot of effort with its African Trade Commissioner’s network to figure it out, but they did not come up with any substantial changes to get Canadian companies to invest in Africa.

According to Mr. Stevenson, positive steps can be undertaken, but EDC cannot force Canadian businesses to invest in Africa. Canada’s relatively small presence there reflects the reality of the market.

Can the fact that Canada is a multicultural country help in promoting Canadian businesses overseas?

According to Ms. Kitnikone, the question whether diaspora can help promote Canadian business is very complex. It presents obvious advantages, but it does not automatically guarantee success in local markets.         

Note: in preparing this article materials provided by the EDC and TCS representatives have been used

Prepared by Ewa Gosal