Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 5 - Evidence for February 10, 2000

OTTAWA, Thursday, February 10, 2000

The Standing Senate Committee on Banking, Trade and Commerce met this day at 11:00 a.m. to examine the present state of the domestic and international financial system (Export Development Corporation).

Senator Leo E. Kolber (Chair) in the Chair.


The Chairman: I welcome EDC here this morning. You probably know that we had a session with banks yesterday that seemed, on the face of it, to contradict some of the things that you have been telling us. You will be questioned on that. If there is anything you would like to say about it in your opening remarks, I think it would be a good idea to do so.

I should like to welcome Mr. Gillespie, Mr. Siegel, Mr. Ross and Ms Landry. Please proceed.


Mr. A. Ian Gillespie, President and Chief Executive Officer, Export Development Corporation: Mr. Chairman, thank you for inviting me again to this committee.


I provided detailed comments during my appearance before the committee in December and would like to begin by reiterating three key points from those remarks. First, EDC provides services that the private financial services sector is unwilling to provide in the absence of guarantees or indemnification. Second, EDC provides tremendous value to taxpayers. We are profitable, self-sustaining, and over our history have leveraged $300 billion in export support from less than $1 billion in shareholder paid-in equity, and that $1 billion keeps on working. EDC's return on equity exceeds the government's cost of capital; therefore, there is no opportunity cost on the investment in EDC. Last year, we supported $40 billion, and that is all taxable revenue in the hands of exporters. Third, EDC works, as confirmed by the review. We believe we have achieved a good balance between commercial values and a public policy mandate. Our complex governance structure, including the review itself, holds us fully accountable.

Let me briefly expand on why EDC matters. You know the statistics as well as I do. Trade now comprises more than 40 per cent of Canada's GDP, yet the MacKay task force never discussed the critical link between Canada's financial services and trade capacity. EDC matters because banks are driven to maximize shareholder value. Trade finance, because of the volatility of returns and required capital, is not seen to maximize shareholder value. Trade finance has not been a prime focus of Canadian banks. Banks do not have the same degree of risk appetite as export credit agencies, indeed, EDC.

A trade finance focus requires global operations and global commitment. Canadian exporters, then, have fewer trade finance options than their foreign competition. Add to this that Canadian exporters are small in global terms, therefore, competing with smaller balance sheets than their foreign competition with which to sustain their trade activity.

Even a company like Nortel, the largest Canadian company by a wide margin -- and as John Roth noted in his appearance before the Standing Committee on Foreign Affairs and International Trade -- has constant challenges in finding the financing it needs to pursue international business opportunities. They value highly the investment EDC has made in its people. More broadly, as the Alliance of Manufacturers and Exporters of Canada has commented on many occasions, EDC matters because we play a pivotal role in building the trade capacity that Canadians need to compete.


Allow me, moreover, to point out that because of its public mandate, the EDC is different from other financial institutions. At one and the same time, we apply both the best government policies and the best commercial practices. The objective of the EDC is to maximize exports and investments, and not profits.


Witness Canada's smaller exporters, who account for almost 90 per cent of EDC's customer base and who consider EDC's specialized services critical to their ability to compete. These services are often unavailable to SMEs from the private sector. Last year, we did close to $6.1 billion in SMEs.

Witness EDC's risk appetite, which is critical if Canada is to maintain and increase its market share outside of the United States or other OECD markets. EDC puts long-term assets on its balance sheet while others move assets off their balance sheet as quickly as possible. EDC takes risk in 200 markets, more than twice as many as the private sector.

Given the appearance yesterday by a number of trade finance bankers, I would like next to address how EDC works with the financial services industry to create more financial capacity for exporters and investors.


As the review of the law showed, if exporters and Canadian investors are to benefit from a greater funding capacity, the most effective means is for the EDC to cooperate with commercial financial institutions.


Because EDC alone cannot provide the financial capacity for all of Canada's exporters and investors, it maximizes its leverage by creating business partnerships with every sector of the Canadian financial services industry -- banks, non-banks, insurers, factors, brokers, credit unions, pension funds, institutional investors, and combinations thereof.

Our dynamic and growing relationship with Canadian banks is particularly noteworthy. Last year, EDC's business with Canadian Schedule I and Schedule II banks totalled $15 billion in support of Canadian exporters and investors. This business is related to our core insurance and financing operations, and that activity encompassed our short-term insurance, direct financing, project financing, and letter-of-credit activity with the banks.

In addition to working closely with the banks on trade finance, project finance, working capital support, and other financing, EDC also has extensive treasury relationships with the banks. This treasury relationship is related to our management of our commercial paper, foreign exchange obligations, money market investments, medium- and long-term debt and derivatives. EDC's treasury business is fundamental to helping it execute its public policy mandate and simultaneously generates substantial fees and commissions for the banks. Overall, EDC bank-business relations exceeded $100 billion in 1999 based on our assessment of the market.

You heard from a number of trade finance representatives of the banks yesterday. While each Canadian bank has its own business strategy, I expect that the traditional argument in favour of a blanket guarantee for the banks based on the lender-of-last-resort model in the U.S. and Europe was put forward. As the review has demonstrated, Canadian exporters do not want a bank guarantee program. They know it would not create additional capacity for Canadian exporters and investors. Additional costs and longer response times would result -- not a recipe for greater competitiveness.

Canadian banks already have access to a 100 per cent guarantee program from U.S. ExIm Bank. They likely advocated that model, as they have for more than 15 to 20 years. However, the total business of Canadian Schedule I banks with U.S. ExIm Bank in 1999 was $250 million compared to the $15 billion in core business with EDC -- and some of that $250 million was for Boeing Aircraft. Clearly, guarantees are not the panacea to Canadian banks engaging in trade finance. Their rhetoric is a little hollow on this score.

I might also add that U.S. banks are totally unenamoured with U.S. ExIm Bank, as are U.S. exporters. In addition, guarantees have resulted in taxpayers in other OECD countries carrying billions of dollars in losses and appropriation. I believe I mentioned last December that U.S. ExIm Bank gets an annual appropriation of more than the total paid in capital of EDC to support less business.

Our counterpart in the U.K. is under the spotlight in its mandate review for this same reason. We believe the Canadian model is the right model for Canada. As I have discussed with the CEOs of the banks, we need to concentrate our energy on building an even bigger relationship, one that creates additional capacity for our exporters. The issue is not "we versus them;" the issue is "we and them together for the benefit of exporters."

Before closing, allow me to make some brief comments about the report from the Standing Committee on Foreign Affairs and International Trade. Both the SCFAIT and Gowlings reports provide a strong endorsement of EDC's commercial principles and strategic direction. EDC welcomes the vast majority of the recommendations made by SCFAIT. However, a small number of SCFAIT suggestions would limit EDC's flexibility and, ultimately, its ability to do more.

Specifically, SCFAIT has raised the profile of civil society issues. This is appropriate, but addressing civil society concerns via more regulation and legislation is not. A stronger corporate governance structure based on evolving commercial practices, in our view, is the better solution. The central issue is how to best ensure that EDC gets the balance right between civil society and the commercial and competitive needs of Canadian exporters. Specific legislative amendments around civil society concerns would complicate and compromise the interpretation of our act. It would open EDC and its customers to litigation that could cause paralysis and render Canadian exporters non-competitive.

We believe that a strengthened corporate governance structure can and should provide the appropriate policy guidance for EDC's operations. EDC's corporate governance structures include a strong and accountable board of directors, a forward-looking corporate plan approved annually by the government, annual audits by the Auditor General reporting directly to Parliament, and a comprehensive special examination by the Auditor General every five years. The review itself, an open, transparent and inclusive process, is a key element of corporate governance, accountability and transparency.

Confirmation of EDC as a commercial Crown under the FAA as recommended by the review would be an additional step in strengthening corporate governance.

We are committed to continually strengthening our governance and accountability practices. Since 1997, EDC has taken concrete action on numerous fronts to ensure that we understand our accountabilities. We have developed and implemented an environmental review framework that is being emulated by other export credit agencies. We have taken a leadership role in international environmental negotiations. We have adopted a code of ethics and a code of conduct that demonstrate our commitment to ethical business practices. We are now developing an enhanced disclosure framework that will make EDC more transparent while recognizing the importance of commercial confidentiality to our customers.

EDC is arguably more important to its Canadian customers than any other export credit agency in the industrial world. Exporters have asked and the review has confirmed that EDC's abilities to create export finance capacity not be restricted. Our Canadian companies rely on EDC's efficiency and expertise, and Canada's economy relies on the global success of our exporters and investors. EDC's key success factors not only include its skilled staff but our flexibility, our responsiveness and our capacity to leverage financing from other institutions. It is critical that we maintain and build this competitive advantage.

To conclude, EDC and the Canadian financial services sector have made great strides to date in creating additional capacity for Canadian exporters and investors, but we cannot be satisfied with the status quo. EDC has grown tenfold in the past decade and passed the $40 billion mark in business volume in 1999. We now have more than 5,000 customers, but we can, need to and will do more. Our corporate plan sets a target of 10,000 customers in 2004. We have committed ourselves to better serve the needs of SMEs, to meet customer needs more efficiently through increased investment in technology and to increase our penetration of emerging industry sectors like cultural and environmental exports.

Above all, we need to create more capacity with private-sector partners, capacity that our Canadian exporters and investors need to compete in the global marketplace. Let us harness the potential that partnerships offer, for our mutual benefit but, most important, for the benefit of Canada's exporters and investors who are out there in an increasingly competitive global marketplace.

Senator Kroft: Mr. Gillespie, let me begin by saying that I am a great admirer of the EDC; however, that does not mean that there are not legitimate questions to be asked. You have probably followed closely our discussions yesterday, and you have been involved in this give-and-take with the banks for a long time. One way or another, several of us have expressed some confusion in trying to come to grips with the issue.

I will say right off, as I did yesterday, that my preoccupation as a legislator is less who gets what piece of the pie as between the banks and EDC than what public policy success is achieved in terms of policies that we must address.

Two aspects of that particularly interest me. First, I should like to explore your client base further. What can you tell me about that alliance of exporters? I know that you do not speak for them, but their support is a substantial part of your position. Are they in the same group as the broad-based Canadian Exporters Association, are they blended with the manufacturers, or is this a different group?

Mr. Gillespie: The Alliance of Manufacturers and Exporters Canada is the amalgam of the former Canadian Exporters Association, CEA, and the CMA, the Canadian Manufacturers' Association. They joined forces some years ago. I do not have the numbers handy, but I believe, in their submission, their membership represents something like 85 to 90 per cent of total Canadian export activity.

Senator Kroft: The question is whether their membership, or the active membership that leads that organization, reflects the broad base of the large, small and medium-sized exporters, or is it a voice of a more limited group of large exporters. Neither one of those situations would be wrong, but it is important to understand who they represent when pursuing any line of questioning. For instance, does the board of directors, or the executive committee of that group, tend to be selected from the very large companies or do they have an opportunity to interrelate with smaller companies in developing policy?

Mr. Gillespie: It is perhaps best for them to comment, but it is fair to say that they are fairly broadly based and representative of the Canadian landscape. It is a mix of the largest Canadian market names, the smaller exporters, as well as the banks themselves.

Senator Kroft: How would you describe your portfolio of business as a reflection of the full range of company size in Canada? There must be a weighting process here because one Bombardier deal or one airline deal will swamp 50 other customers. I am looking for some comfort that, in fact, you are serving the whole range. I will not touch on the insurance side now. I am trying focus on the financial side.

Mr. Gillespie: Senator, the basic numbers indicate that last year we served something in excess of 5,100 customers. Ninety per cent of those customers were small and medium-sized exporters. Half of the number were exporters which we describe as emerging exporters, those that have export sales of less than $1 million. Out of the business volume of that $40 billion, 15 per cent was in respect of small and medium-sized exporter activity. Eighty-five per cent was in respect of the larger customers to which you alluded such as Nortel and Bombardier.

Mr. Siegel just mentioned to me that that would actually compare more favourably than the actual exporter base in the marketplace. It has grown quite dramatically in terms of the number of customers served over the last five to ten years, both by number of customers and by dollar value. I believe we previously provided charts on this.

Senator Kroft: That is interesting and, indeed, comforting. Another aspect that struck me yesterday as an essential part of the case of the banks is that the result of the present situation is that transactions are simply being done in other jurisdictions. It seems that, because there is no potential for bank participation here, exporters do their deals elsewhere -- in the U.S. or in the U.K. Do you have any comment on that?

Mr. Gillespie: Yes, indeed. Perhaps I could ask Mr. Siegel to speak to some of the issues that were raised yesterday. I think there are some inaccuracies, if I could just leave it in those terms, that we would like to address directly and give you more of a broad-based view of what the landscape is all about.

Mr. Eric Siegel; Executive Vice-President, Medium and Long-Term Financial Services, Export Development Corporation: Senator, I had the opportunity to hear the testimony of the banks yesterday. Obviously, a lot of opinions were expressed. I will not deal with the specific opinions, because I think those will be dealt with in questions. However, some statements were misleading or inaccurate, and I think it would be useful to correct or clarify those for the committee so that you may properly assess the view of the banks.

One statement was that EDC is a unique organization in that it has direct lending capacity. That is not true. EDC is not alone in its lending capacity. Other export credit agencies have the same lending capacities. Indeed, the U.S. ExIm Bank has the same lending capacity. They prefer to use the guarantee route, but historically they have been a direct lender, and they still have that capability. Epic from Australia was cited as well as being an insurer, not a guarantor. They have direct lending capacity. Indeed, KFW, of which some of you may be aware, a German organization that is actually the biggest supporter of German exports abroad, is a direct lending institution. It is not an insurer or guarantor.

Another statement was that EDC's activities were limited by what they call "the consensus". Honourable senators are familiar with the fact that OECD countries have an agreement that governs rates and terms for official trade support through export credit agencies. The suggestion was that EDC could not go beyond the terms that were extended there. Indeed, it was said that we could not do more than 85 per cent. That is not true. There are provisions under the consensus that allow one to do up to 100 per cent financing. There is also the ability for any export credit agency to step outside of those terms provided that they are offering terms that are truly market based, what they refer to as the "market window". EDC, as well as other agencies, has the capacity to do that and, indeed, does that.

In our testimony in December, we indicated that we provide aircraft support. That is done in market terms, terms that would go beyond what the specific consensus arrangements would provide.

I mention that because there was also a statement by one of the banks that EDC was then using its market window capability, and indeed its so-called "lower cost of funds", to provide lower interest rates. I think the expression was "undercut the banks". I must say that that is not true. EDC's deployment of the market window -- and the WTO has recently reviewed EDC in that regard -- is based on the fact that EDC is providing rates and terms that are entirely consistent with what commercial institutions are providing in the market.

The best example I can give you is aircraft sales into the United States. We are by no means the 100 per cent lenders for Bombardier when they sell a plane to a regional airline in the United States. They constantly and regularly rely on the commercial markets to step up and provide that financing. The terms under which EDC supports it are exactly the same as the terms under which the banks provide funds.

There have been some situations where we have been concerned that the return associated with that financing was not commensurate with the risk, and we have stepped away while the bank has gone on and dealt with financing.

Senator Kroft: I would like to interrupt because you touched on another question that I was going to ask. The advantage of cost of capital is obviously one of the major factors that looms here. The absence of taxation and the low cost of capital are the two most obvious advantages that were put forward.

Could you expand a bit on the point that you are making now? It would be very helpful for me to understand just what sort of oversight there is from WTO, or any other international trade authority, to discipline those rates.

As you pointed out, superficially there is the suggestion that you could use these economic advantages. Could you tell us more about the process? Are your rates constantly monitored? Is there a schedule of spreads that WTO allows? What is the discipline that keeps you in a competitive role?

Mr. Gilles Ross, Senior Vice-President, Legal Services and Secretary, Export Development Corporation: Senator, as you know, last year EDC's financing for the regional aircraft sector was challenged before the WTO, and EDC had to satisfy the panel that its financing is made on the basis of commercial terms; in other words, that it does not provide a benefit to the recipient of the financing that is not available in the marketplace. The panel found in favour of EDC. It found that there were no subsidies under the corporation's corporate account. That decision was appealed and the appellate body confirmed the decision of the panel. In order to achieve those results, the corporation had to demonstrate to the panel and to the appellate body that it operates on the basis of commercial principles.

The WTO itself does not put forward a grid of interest rates or returns. However, it will only be satisfied if one can demonstrate that, indeed, market principles are applied.

Senator Angus: We have been discussing the ongoing analysis of the Gowlings report. Some of you were present yesterday when representatives of the major banks were here.

Recommendation 14 in the Gowlings report is:

The government should make a program available to the banks on Canada Account which would provide guarantees for Consensus loans. The cost of establishing and operating this program would be charged to the banks in the form of risk-based Consensus-compliant guarantee fees. The program would only be established if a sufficient number of banks were prepared to subscribe to it.

After hearing relevant testimony and examining all the material facts and documents, the House of Commons Standing Committee on Foreign Affairs and International Trade concluded, with respect to recommendation 14:

The Committee recommends that the Government give careful study to the question of setting up a new medium-term Consensus loan guarantee program that would have the backing of the banks, in order to reach a decision based on the best interests of Canadian exporters and the country as a whole.

The Gowlings study was part of the statutory review. The House of Commons standing committee supported it. Every one of Canada's major chartered banks, with the exception of the National Bank of Canada, which was not represented here yesterday, appeared before this committee of Parliament and told us that they wholeheartedly support those recommendations and urged us to recommend that they be implemented. Considering that, I have a problem with the fairly strong resistance by EDC to this.

What are your objections to this? What harm will it cause? I appreciate that comparing Canada and the U.S. is like comparing apples and oranges, and we might discuss that further. The fact is that Canada does stand alone in the way our regime works. You pointed out that that is because Canada's circumstances are totally different and so forth, and that may or may not be relevant.

I am interested in recommendation 14. The spirit of the legislation that called for the review is known to us all. The review took place and the unanimous recommendation is recommendation 14.

You still resisted. I know that you are serious people. I, like Senator Kroft, have much respect for what you have been able to accomplish. I am grateful in many cases that you do exist. However, I should like to see more activity by private sector institutions in foreign trade financing.

The banks themselves acknowledged that they are unable to develop an expertise in their officers in international trade finance because there simply is not enough activity available for them under this regime. That bothers me a lot. Frankly, I have been troubled, in going to banks on behalf of clients, to learn how ignorant they are on international trade financing. They want to get better, as I am sure you want them to. You do not want to hive off all the gravy. There must be some other reason why you resist recommendation 14.

Mr. Gillespie: Thank you for the question. That is central to the whole discussion. In our view, it would add no additional capacity, it would increase the cost to the taxpayer, and it would increase the cost to the exporter. It does nothing for Canadian competitiveness. That is the short of it.

As I mentioned, this issue has been around since at least the early 1980s. It was central to a very acrimonious debate in 1986 when we were doing approximately $3.5 billion in total. At that time, the Department of Finance, among others, accepted the argument that this made no sense, it was too expensive, and it would cost the treasury money to support what the banks were advocating.

Since 1986, we have supported something like $250 billion. We have generated net income of hundreds of millions --

Senator Angus: You have done very well. No one is arguing with that.

Mr. Gillespie: This issue came up again in 1994. The banks again made the pitch to the government that they needed the guarantees. At that time the government said that we will have a guarantee framework and we will have three principles. I will remind you of those principles.

First, the interests of Canadian exporters are paramount and, as such, participation of financial institutions should result in more financing being made available to exporters at more competitive terms and conditions. The banks today have not been able to show how they would bring more capacity and be more competitive. Second, there should be no additional cost to the treasury. Third, there should be greater risk sharing between financial institutions and EDC which should reflect market realities.

That is the guarantee framework that the banks subscribed to in 1994 and it remains in place to this date. As the representative from the Bank of Nova Scotia said in his testimony yesterday:

At the end of the day, if the bank guarantee scheme has nothing to offer exporters, they will not use it. This is not a replacement for EDC's direct financing, just an alternative. If exporters do not use it, it will go away...

The banks have not used it. They are not interested in the risk-sharing model and the parameters that were established in 1994.

Further, as I mentioned, the U.S. ExIm Bank keeps coming up on the table. Among the Canadian banks, only one used it to the extent of more than $50 million last year: only one bank. This is the great panacea for Canadian exporters -- the U.S. ExIm Bank. There was a total of $250 million amongst all the Canadian banks to support a few Boeing aircraft and a few other things.

As I mentioned, we did over $100 billion one way or another involving Canadian financial institutions.

You are hearing from the trade finance side of the banks, you are not hearing from the project finance side. You are not hearing from the commercial bankers, you are not hearing from treasury types, you are not hearing from those who are providing working capital loans that rely extensively on EDC programs.

A few years ago we developed a program called MARG, Master Accounts Receivable Guarantee, which we thought would specifically address the banks' need to increase the amount of working capital being made available to small and medium-sized exporters. It was not an insurance product because the banks have always said they have great difficulty with insurance products. You may be able to deny liability. We put in place the Master Accounts Receivable Guarantee. Unfortunately, for a variety of reasons, that has not been used to the extent we had anticipated. One of the reasons is that the banks could not wire their network branch to branch, and coast to coast in order to build it in behind the screen, so to speak. We wanted to use technology to deliver the product, but the banks could not accommodate that.

The second major problem was that the branch managers are competing with many different products, and the EDC guarantee framework was just one of 20 or 30. The banks would rather, where they can, take the risk and take the return, as opposed to taking the risk and giving much of it back to EDC by way of a guarantee fee. That has been a big disappointment to us. That was the guarantee program. There is no question that the banks are back on this subject. The Gowlings report opened up the door to allow them to come in.

I would also point out that the banks did not make a submission to Gowlings.The banks did not make a submission, to the best of my knowledge, to SCFAIT.

Senator Angus: I am sorry to interrupt, sir, but this is very relevant. Would that not suggest to you that Gowlings, on their own, came up with this? Did they not need the banks lobbying and making a big bid?

Mr. Gillespie: Gowlings has been very confused about why it is that Canadian banks are not in this game.

Senator Angus: Did you not submit to them?

Sorry, carry on, I have touched a nerve here.

Mr. Gillespie: The interesting thing is that in 1996 we were doing $3.5 billion, and last year we did $40 billion. The level of cooperation with the Canadian banks is far higher than it has ever been. The relationship is far stronger than it has ever been. That comes out in the Gowlings report. There is no question, if there is a free lunch, they want the free lunch. We are just saying that the free lunch must cost someone something.

Senator Angus: Will it cost you something?

Mr. Gillespie: It will cost Canadian taxpayers something.

Senator Angus: Will it cost EDC something?

Mr. Gillespie: It will not add capacity.

Senator Angus: We are, in good faith, trying to make something of the Gowlings report in order to participate in this statutory review which, in the wisdom of earlier legislators, was incorporated in the legislation. We find that you have not been able to convince the Standing Committee on Foreign Affairs and International Trade, or the Gowlings people that recommendation 14 should not be made. This recommendation is now before us and it comes before us cloaked, as it were, in a kind of envelope of expert evidence. It is very persuasive, and I believe I speak for all of my colleagues, unless rebutted. The only rebutting that statement are yourselves. I must say that, until I get a better handle on this, or perhaps I am disabused of this view, I believe you have come as an interested party. That is why I ask: What skin off your nose is it?

Let us say we are persuaded to recommend that recommendation 14 be implemented, life will go on, and we will see what happens. You are suggesting that it will not be used, and this and that. However, EDC will still be in business. The banks will be stripped of an argument that is bugging you, I gather, and they will either be able to benefit from it -- as they said eloquently yesterday, although I gather you do not agree with most of their evidence -- and then forever hold their peace. That is where I have a problem with the EDC position.

Mr. Gillespie: The EDC position is simply that our mandate is to support Canadian exporters and investors going around the world. Their interests are paramount. Yes, we would object to any decision that we think would impair the competitiveness of Canadian exporters. We think that would add to the amount of time it would take to conclude transactions. We think it would add to the cost to the exporter, therefore, less business would be done.

Senator Angus: I hear that. Those are your two main points and I wrote them down.

Mr. Gillespie: The taxpayer would be footing the bill. The CBA had taken a view that EDC would be best fulfilling its mandate if it were to lose money. I do not share that view.

Senator Angus: I believe, as you have just acknowledged a moment ago if only by your body language, and certainly I sense all four of you agreed, that you are not totally objective on the issue. You are an interested party.

Mr. Gillespie: We are interested in growing the capacity of Canadian exporters and that is why we have gone from $3.5 billion to $40 billion.

Senator Angus: You are the only game in town.

Mr. Siegel: Senator, I wonder if I could just help you perhaps frame your questions, factually speaking.

Senator Angus, you mentioned the fact of banks referring to consensus-related business. Just to size that for you, that has been 25 per cent of EDC's lending business, which last year was $6.1 billion. It is not 25 per cent of $40 billion, it is 25 per cent of $6.1 billion. That is what is being done under consensus terms. The balance is being done under market terms.

In order to understand the size of this issue, to begin with, contrast that with when we are dealing with the project finance business in which we are involved and our level of cooperation with the banks. In fact, the banks are turning to us not for a guarantee, they want us to fund the deal. As the TD banker referred to yesterday, the business is syndication and distribution. It is not about holding this for their own account. They want the guarantee so that they can sell it into the market. That is what they do with the U.S. ExIm Bank guarantee.

Senator Angus: It is also because of the Ball rules and the fact that they do not need to put up all that capital reserve.

Mr. Siegel: They want a Government of Canada guarantee. They can syndicate that piece of paper, sell it off into the market.

To contrast that with project financing, since 1997, EDC, just working with the Canadian banks and leaving aside all of our other project finance activity, has been involved in restructuring just short of $13 billion worth of project finance where Canadian banks -- one of the top six or the banks collectively -- have been in the business of arranging or co-arranging that business. Our funding participation in that is $1.2 billion alone. They have turned to us to fund and hold that, and not as a guarantor, because we are part of the syndication placement of that debt.

Senator Angus: I hear you, and it is a wonderful record up to now, but I cannot believe that these six serious individuals representing the private-sector on a large scale would come to a committee of Parliament, where they only come with great trepidation these days at the best of times, and tell us that they want in on this thing for no good reason.

Another point troubles me on this issue of credit insurance. There was an analysis in the Gowlings report, during the process of the study, about whether or not perhaps EDC should vacate the field. They concluded that, no, you perform a useful role, that there is a mature enough private-sector alternative and so forth. Yet, in recent days, it has come to my innocent ears that perhaps EDC, on its own, has decided to try a half-way measure. I do not know whether it is true or not, but I have heard the name of the London Guarantee Insurance Company as, perhaps, being chosen by EDC either to participate with it in the credit insurance business or, perhaps, be delegated. Is that true? If it is, what process was followed to select London Guarantee as opposed to Kelleher and Angus, for example, or someone else?

Mr. Gillespie: We were not aware that another insurance company by that name was interested in the market.

Senator Angus: You know what I mean.

Mr. Gillespie: I know what you mean. The issue that we had identified with regard to short-term insurance involves Canadian exporters who are not receiving the kind of capacity they need for domestic receivables. EDC is governed by certain regulations right now, and that will not be a good long-term solution for exporters. We wanted to build some capacity in the domestic marketplace.

We made an assessment of all the Canadian insurance companies that would have an interest and established some criteria for deciding who would be a good fit and who had previously expressed an interest in domestic credits insurance. Clearly, London Guarantee went to the top of that list. We have been working with them over the last number of months to see how we can put together some kind of partnership where they would come into the market and build some domestic capacity.

You may have heard from another Canadian company called Guarantee Company of North America which is a surety company which, from time to time, has talked about getting into the domestic insurance business. Mr. Quenneville, who appeared before the Standing Committee on Foreign Affairs and International Trade, said very clearly in his testimony that he had absolutely no interest in working with EDC. I think that would have been another possible candidate, but it was very clear, and it has been very clear over the last several years, that that is not where their interest lay either in terms of the domestic insurance and/or working with EDC.

Senator Angus: That is very helpful. I appreciate your response. I consider it a good response to the outside rumblings about competing with the private sector. It is in that same spirit that I hope you might reconsider recommendation 14.

Senator Oliver: I was interested in your response to Senator Angus on the pivotal question concerning recommendation 14. Like Senator Angus, I am not persuaded by the two arguments you make about additional cost and longer response time as reasons why it should not go ahead. I still have concerns about what I call monopoly power, that is, a protected Crown competing in the free market with an advantage. However, I will save that for the second round of questions, if we get there.

I have a question which is of concern to me. It was raised in the House of Commons committee, in the Gowlings report, and it is something to which you have responded today on page 8 of your brief. What I want you to do is give us more details of precisely what you are doing. I am referring to the whole concept of corporate governance, disclosure, human rights, the environment and trade. On page 8 of your presentation you state:

And we are now developing an enhanced disclosure framework that will make EDC more transparent, while recognizing the importance of commercial confidentiality to our customers.

Will you consult and, if so, who will you consult in preparing those guidelines?

In terms of the environmental assessment you have said that you have already developed and implemented an environmental review framework. That was not the criticism made in the other place. It was said in the other place that your environmental assessment guidelines are not specific enough and that there are no objective criteria or benchmarks. To use their language, they said that it "lacks substantive and methodological clarity". They suggest writing into the Expert Development Act a general affirmation to the effect that EDC "shall" endeavour to promote better business standards wherever possible.

Perhaps in talking about your business ethics and business standards you could give us an example of what you do when, for example, you go into trade finance in China or in a regime where there are human rights concerns. Tell us what your ethical principles are there.

Mr. Gillespie: I will turn to Ms Landry with regard to the disclosure framework and to Mr. Siegel with regard to the environmental aspects.

However, I would say as a preface to the disclosure framework that that is something we are developing internally right now. It is something which will be discussed with the board at one of its upcoming meetings before we take it further.

Senator Oliver: As I understand it, you are looking to revise your code of ethics in 2000; is that right?

Mr. Gillespie: We look at the code of business ethics on an annual basis. The code of business ethics was developed two years ago after consultation with various individuals at the Clarkson School in Toronto. We put together a framework that we thought was both rigorous and comprehensive. It is a framework that all employees, as well as directors, have to sign every year. We review the continued appropriateness of that code every year. I believe that is what is being referred to there.

I would ask Ms Landry to speak more fully on the disclosure aspects and Mr. Siegel on the environment.

Ms Louise Landry, Vice-President, Corporate Performance and Communications, Export Development Corporation: Senators, I would like to give you a sense of what it is we have in terms of the current accountability process at EDC. I will then talk about the disclosure framework enhancements that we have in mind.

As you know from the reading you have done, EDC has quite an extensive accountability process in place. First, it has a board of directors that is mainly private-sector focused and which is very involved in setting the strategy of the organization. On that board are representatives from the government as well. Thus, we certainly take into account some of the directions in which the government is going in order to build our own plans of action.

We also submit to Parliament and to government our annual corporate plan. What we plan to do is actually reviewed and approved. There is no secrecy behind the plans of the organization in terms of its direction, its business and its responsibility in life.

We also have an annual report which has a very extensive program of accountability in terms of the dimensions of the report. That is also tabled and it is out there for the public to review the activities of the firm.

The Auditor General reviews the activities of the firm on an annual basis. It does so very comprehensively on a five-year basis through a special examination.

This process of reviewing the mandate has been one of looking at EDC in many ways through many lenses and by many parties. A significant amount of information has come out about what we do, how we do things, and who receives the benefit.

A significant amount of information about the company is available normally through its process of doing business and accountability, as well as through this review mandate which has just taken place.

In the context of this review, we created a greater appetite to share information with the public, with the shareholder and with interested parties about some of the business that we are in.

We heard the call for that. We also heard our customers who visited with the other committee saying that they want us to be cautious and find the right balance between the need or the desire to know, and their need to have competitive positions internationally. Therefore, we took a step back. This is information that is not foreign to us. We are familiar with the balance between the need for information and commercial confidentiality. We already disclose a fair amount of information. What more can we do in the context of finding the balance between the need and desire for more and a commercial position? We took that back and we will now be discussing with the board a number of additional avenues of disclosure that will look at transaction information.

I will give you some of the areas that we are discussing. Which program can we disclose, in terms of individual transactions, in terms of exporter support? We have an extensive insurance program, but we do not feel our customers would want us to attach their name to the fact that they come to EDC to protect against default from their customer. We must preserve that confidentiality. About 70 per cent of our business is around that program. We must look at it on a program-by-program basis.

As to the size of transaction, I would point out that we deal with thousands of transactions. Do we report on all of them? Do we aggregate information such that it is still relevant but it does not require pages and pages of information? When should we make the information available? Should it be done when the transaction is brought to us for review, while we are negotiating, or after we have signed it? These are important considerations where the commercial confidentiality value must be taken into account. How much information do we provide? How much detail do we provide on any given transaction? We are trying to find the right package around these issues that we can recommend to our board of directors and come up with a plan of action.

Senator Oliver: Your president told us today that you are now developing an enhanced disclosure framework. You seem to be saying that you have identified some areas that you are looking at, you have nothing drafted, and later on you will go to your board. When do you think you might have something concrete, in terms of this framework?

Ms Landry: At the end of the first quarter, we will have information for a press release, which is aggregate information that we feel comfortable submitting. That is the first step, and it will happen in April. We have reviewed a number of cuts around these four areas. There has been a lot of activity around that at EDC. However, we also have in place proper systems so that customers know what we are about to do with the information and decide whether it is confidential or not. It is not as if we can decide on our own to change the practice of EDC. The players must be involved in making the right decision. It will take a bit of time for us to get it right, and I would assume probably the next board meeting is when we will have a comprehensive review with the board of directors.

Mr. Gillespie: This is clearly an issue that will continue to evolve in the future. This is not big bang theory. We will be enhancing our disclosure, just like the code of conduct which is improved every year. I think you will see the same thing on the disclosure side, as you will on the environmental side. Perhaps Mr. Siegel can speak to that.

Mr. Siegel: We tabled certain information with the committee back in December, and I will try not to repeat all of it but try to highlight the essential elements.

I should like to outline the framework that we have developed. Historically, we had always done environmental assessments. The framework just allowed us to be entirely clear and articulate with the public as to how we would approach environmental assessment in respect of projects.

Senator Oliver: And the methodology?

Mr. Siegel: And the methodology. The framework was developed not just by EDC internally. We had the assistance of an outside consultant who had been involved in developing similar frameworks for the World Bank, for banks and other financial institutions. We also consulted with entities to determine whether our framework would be compatible with the philosophy of environmental assessment as it is done under the CEAA. We had an extensive consultation process with interest groups across the country before we articulated the framework and then rolled that framework out.

As Mr. Gillespie says, we do not stop there; it will be evolutionary. The framework is clear. It sets out what we do to screen a project, and it also highlights the types of sectors to which this framework would apply, so that exporters know in advance what sorts of projects and industries will be captured by the framework. It sets out EDC's right to ask for more detailed information, through third parties as well as through its own sources. It sets out the responsibilities, and highlights to exporters their responsibilities in developing this information and submitting it. Obviously, we want it to be done in the most efficient fashion and not create additional costs if it is not necessary.

The framework is also clear in the sense that it says that EDC reserves the right to turn down projects where, in our view, the benefits of the project and the mitigants against environmental risk do not exceed the environmental costs that we can identify with respect to the project.

Senator Oliver: Is the same true of human rights?

Mr. Siegel: This is an environmental framework. It is intended to deal with environmental concerns. The issue of human rights is one on which EDC is in close consultation with the Government of Canada, through the Department of Foreign Affairs and International Trade. We cannot be involved in a transaction for which the government is not prepared to issue an export permit.

In terms of the environmental framework, social issues are included in the environmental assessment, including issues of relocation and economic and social impact. That is part of the overall assessment that is conducted.

The issue that has come up from time to time -- and I referred to this in December -- is whether or not EDC's framework should have specific standards in it. Some NGOs have suggested that the EDC framework should meet, say, World Bank standards. We disagree with that for a number of reasons. First, EDC has been a leader in its environmental framework and has been encouraging other export credit agencies to adopt similar types of instruments. To impose restrictions on EDC that go beyond that which the rest of the market is expected to achieve would potentially put Canada at a competitive disadvantage. More important, World Bank standards are standards that were developed for the World Bank. It is a developmental institution. EDC comes into a transaction not at the inception of the transaction through discussion with the host country, but after the host country and the buyer have made a decision to proceed with the project and are now asking for commercial financing to enhance their ability to purchase.

It is not that we ignore the environmental side, indeed we do an environmental assessment, but we adopt the approach of using whatever standards are appropriate, whether they be Canadian standards, World Bank standards, or others. We expect that, at a bare minimum -- and the framework specifies this clearly -- it must meet the host country's standards. However, that is only a minimum, and we reserve the right to apply any standards that we believe are appropriate to that project. In the majority of cases, I would say EDC project involvement is in respect of projects that do meet World Bank standards. Very often, we are involved with World Bank entities. We are applying the highest standards that we can, respecting the fact that we are in a commercial situation for which the buyer has made a determination of its willingness to proceed or not to proceed.

Finally, on the issue of disclosure, we encourage the exporters, the sponsors of these projects, to disclose as much information as possible about the environmental impact. We encourage consultation with local NGOs to ensure that affected parties are fully engaged and are in agreement with the project, and that is bound up in the environmental assessment. Obviously, we must respect commercial confidentially. There is information submitted to EDC which we are not at liberty to release unless we have a concurrence from the parties. Indeed, if we were required to do that strictly by a revision to the act, the danger is that EDC would not be sought out for consideration for financing because the company cannot be assured that the information provided would be maintained in a commercially confidential manner.

That is not to say that we will do something that is reckless or which ignores environmental standards, but it would then impose a limitation on EDC that would go beyond what other credit agencies must face. That would make it disadvantageous, if not impossible, for EDC to be sought out as a financing source.

Senator Grafstein: I, too, want to commend you on your outstanding commercial success. It is a model to government-subsidized corporations that should be emulated.

You have monopoly power. Because you have monopoly power in a free and open marketplace, we must be concerned that the public interest is well served by that monopoly power. We have all been through historic cycles of regulation and non-regulation. Most members of this committee would feel that the lighter the hand of regulation and the greater the market forces, the better.

You operate contrary to normal market forces in the sense that you have this government-supported monopoly. My interest is to see whether the choices available to Canadian supporters are wide, effective and timely, and that they do not impede in any way, shape or form, the growth of exports to essentially risk-averse countries.

Give me a comparison between the percentage of insurance loans in these risk-averse countries compared to the United States. You have talked about ExIm being unsuccessful. Give us some statistics to compare your participation, as a percentage of Canadian exports, to ExIm Bank with the private banks as a percentage. Can you give us that number? I use the test roughly that Canada is 10 per cent of the U.S. marketplace normally. That may not always apply, but it is a good rule of thumb.

Mr. Gillespie: EDC supported Can. $40 billion last year of which roughly two-thirds is short-term insurance. The balance is medium-term financial services, whether they be insurance, guarantees, surety, political risk and/or financing. U.S. ExIm Bank last year supported, to my recollection, approximately US $17 billion. EDC is significantly bigger in activity than U.S. ExIm Bank. That is where I said in my remarks that they have an annual appropriation of US $750 million to support that. We are obviously living on the paid-in capital and retained earnings and the set-asides we have for risk provisions.

We have also looked at our activities relative to other support/export credit agencies in the world. EDC is, roughly speaking, the third largest export credit agency after the Japanese and the French. That is so for a couple of reasons. First, as we have been trying to say, there are other opportunities, other global banks in the world which are available to other exporters.

We have the largest pool of talent under one roof in this country which we are trying to deploy. It is a situation which we also take very seriously, namely, your concern about monopoly power. We like to think of EDC -- as you already pointed out and with which I would agree -- as a model for Crown corporations, one that is the best of public policy and the best of private-sector methods.

We look closely at whether we are perceived to be and, indeed, whether we are, undercutting the private sector or precluding private sector participation. We have had evidence with regard to the insurance, not only from the Insurance Bureau of Canada itself but from the largest independent broker, that EDC is not undercutting the market. EDC is not using its privileged position, so to speak, to gain market share. Rather, we are competing, we believe, on the basis of the talent, on the flexibility and the people that we can bring to bear. That is what has caused the very rapid growth in activity of EDC in partnership and cooperation with other private sector institutions.

The best illustration of that comes not just from the Environics study by Gowlings which polled a number of exporters -- and not just our customers -- who made favourable remarks about EDC; but it also comes from our annual customer satisfaction survey. Last year it was the highest ever at 80.4 per cent. We are not competing because of the monopoly power you talk about but, rather, we are trying to leverage our skills and capacity for the benefit of exporters.

Senator Grafstein: Let me move to a criticism that I have heard from so-called small and medium-sized enterprises. We are talking about small loans here, loans of $1 million or less, certainly no more than $2 million. We have discovered that category represents 15 per cent, a very small portion, of your total activities, though the effects may be large in the individual applications.

I have heard arguments from time to time that dealing with your enterprise is both costly and time-consuming as a percentage of the money that will be obtained. In other words, as a percentage of a loan, for example, of $1 million, a small company which is hard-pressed for resources can be hindered by the time, effort and energy required to apply.

What do you make of that argument? Is it fair? Is it isolated? Can you give us some statistics about the cost as a percentage of the loan in terms of guarantee cost, time, energy, legal expenses? What does it cost, as a percentage, for someone to enter into a $1 million credit line with you for export abroad?

Mr. Gillespie: I will try to clarify that. First, most of the activity we do with regard to small and medium-sized exporters is under our short-term insurance program.

Second, there is no question that this is a challenging constituency in terms of meeting their needs. I was quite pleased to see that the Gowlings report -- and I draw your attention to pages 87 and 88 -- talked about EDC's SME customer satisfaction. EDC has, as I mentioned, done its own annual survey and our approval rating was 79 per cent in 1998. The Environics survey actually puts the customer satisfaction rate by SMEs higher than that.

There is an interesting and telling statistic at the top of page 88. The survey also asked respondents to identify how EDC could better support the activities of small and medium-sized businesses who want to enter the export market. Interestingly, 74 per cent indicated they did not know how EDC could improve in its delivery in this regard. The only ideas that generated more than marginal support were: reduced costs; easier and more access to financing, 7 per cent; provide more information on EDC; conduct more advertising and seminars, 6 per cent; and provide more support information on such issues as risk management, 6 per cent.

Clearly, we still have a job to do to meet the needs of small and medium-sized enterprises. We have a differentiated delivery system for the emerging exporters, those that have export sales of less than $1 million, to ensure that we are doing that as efficiently as possible. We have performance measures on such things as turnaround times and credit approvals. I talked about this back in early December. In about 1988, our average turnaround time was 11 days. With the technology that we are piloting now, credit approvals will be done in two minutes, which is rather interesting. As I mentioned in my report, our customer base will grow dramatically from the 5,000 that we have now to 10,000 in 2004.

With regard to the costs, it is important in respect of financing to understand that it is the foreign buyer/borrower that is paying the cost of financing, not the small and medium-sized enterprise in Canada. If it is an insurance product where we are covering the potential losses due to commercial or political reasons, then, yes, those premiums are paid by the Canadian company, but in the case of medium-term financing, it is the foreign borrower who pays.

There is no question that, given the nature of small and medium-sized contracts and activities, it can be quite time-consuming to put some of these transactions together, in part because Canadian companies perhaps do not fully recognize the difficulty of dealing in foreign jurisdictions. There are legal issues. There may be creditworthiness issues with regard to the foreign borrower that we need to assess. There may or may not be issues with regard to security and how you take security in different jurisdictions. It is a challenging end of the market. We think we have improved quite substantially, but we have more work to do there.

Senator Grafstein: If things are so great, why do we not make it even greater by asking the government to double your capital base so that instead of doing $40 billion you could do $80 billion? Therefore, in the end result, we could increase the access to small SMEs from 15 per cent and double the amount of resources available for SMEs.

Mr. Gillespie: That is an excellent question. Right now, there is no constraint on EDC's ability to support our customer base. No one is being denied services because we do not have the financial capacity.

Having said that, there is no question that EDC is very small in the world scheme of things: a paid-in capital of $983 million and with retained earnings that push that up to about $1.8 billion, with provisions for potential future credit losses of another $2.5 billion or so. That is not a whole lot of capital relative to the kind of giants that you see on the world stage.

Clearly, I would be in favour of seeing EDC's capital increased -- not because we need it to do business today but because of what competitiveness is all about and how, in future, we will need to find more and more risk capacity. I think such a recommendation, if it were to come from this committee, would be an extremely positive one.

Senator Grafstein: I only mention that because today in the newspapers we read that Nortel has now become a "larger cap" company than Lucent, its competitor. It is now one of the largest in the world. Its market capital is in excess of $180 billion, which is about 20 per cent of your total activity. Nortel is leading the world, and your enterprise would not be able to provide, assuming it were 100 per cent dedicated to just Nortel, even 25 per cent of its market capital, let alone its sales. I use that as an example.

The Chairman: What does the market capital have to do with what they can do?

Senator Grafstein: I mentioned it in terms of total size. Their total activity on a yearly basis is $40 billion.

Mr. Gillespie: Where it comes into play is that obviously Nortel is an extremely important customer of ours and extremely important in this country in terms of its R&D spending, which I think is something like one-quarter of total non-government spending. I direct you to John Roth's statements to the Standing Committee on Foreign Affairs and International Trade. Not only because of their success is their revenue base growing very dramatically, but the percentage of that, which must be vendor financed or financed by someone in the world, is also growing very dramatically. He made some comments with regard to how challenging it is to find the capacity. That is why he needs EDC, which must be the equivalent of some of the best global banks in terms of the talent -- not only the capacity but the people -- in order to make the investment and meet their needs. That is something on which we must keep a sharp focus.

Senator Grafstein: Sometimes government must catch up to business.

The Chairman: Senator Angus asked a question which we will need to discuss here, but I did not quite understand the answer. Could you take less than five minutes to elucidate your answer? If recommendation 14 is enacted, what do you loose by it? Your answer basically says it will cost the customer more money and so on.

Senator Oliver: As well as a longer response time.

The Chairman: I am not persuaded yet that that is right or wrong. Frankly, I just do not know, and we will discuss that later. Could you explain to me how it will cost them more money? Should it not end up costing them less?

Mr. Gillespie: Someone has to build in the price of the guarantee fee. The banks said in their own submissions that they cannot quantify what opportunities are being lost. They say that they could not necessarily do the same business that EDC is doing on the same terms and conditions offered by EDC, and yet they feel that somehow EDC is not competitive for exporters. Someone must pay the cost to the bank, and the guarantee fee must be charged somewhere.

The Chairman: I do not understand. Do we not want to create a level playing field some day?

Mr. Gillespie: It will not create a more level playing field.

Senator Tkachuk: Could they not go to you if they felt that was too high?

Mr. Siegel: It is not a case that they cannot get that.

The Chairman: Give us a good argument to say that recommendation 14 is ridiculous.

Mr. Gillespie: It does not add new capacity. It does not add more business.

The Chairman: You say that it does not add more capacity.

Senator Oliver: The banks say it does.

Mr. Gillespie: But they have not demonstrated that.

The Chairman: You will not know until you try it, I suppose.

Mr. Gillespie: We have the existing guarantee framework that I mentioned and which they have not used. They have the ExIm Bank model, which they are not using.

Senator Oliver: They want the guarantee.

Mr. Siegel: The banks have argued that they would like the guarantee so that they can cross-subsidize, taking the revenue off of one side, and using it to cross-subsidize potential direct lending on the other side. They are not prepared to do the lending on the full transaction themselves. They want the full benefit of the guarantee.

Senator Tkachuk: I am still puzzled. The chairman asked about the down side. If a customer goes to the bank and is told that it will cost more money, then he will go directly to you. You would still have the ability to deal with that. I do not understand how it would cost the customer or the Canadian taxpayer more money, which is the other claim that you mentioned. Could you give us some detail on this?

Mr. Gillespie: You are asking the banks and the customer to have the return and EDC to take all the risk. You cannot operate that way.

Senator Tkachuk: You just said you charge a fee for that risk. Hopefully, those fees are part of that.

Mr. Gillespie: Those fees are part of the revenue base, but in every single instance in the world with other export credit agencies, the track record is very clear. Their losses are in the billions.

They have not used the ExIm Bank model that they are advocating. There has been not anything like the level of activity with EDC. ExIm Bank continues to get an appropriation every year that is more than EDC's paid-in capital support less business. You cannot turn EDC off and on with a guarantee framework. The banks are saying, "We need to make so much money on the EDC guarantee, that that will allow us to put 15 per cent additional capacity on the table."

Senator Tkachuk: Are you are telling us how good you are? You are not compelled to sign the guarantee. If the bank makes an arrangement, you must volunteer to participate in that arrangement. They do not have a gun to your head. You make the decision. You, along with the bank, make the decision on whether it is a good deal.

Mr. Siegel: However, sooner or later the banks say that it is not worth it to even pursue potential financing on a guaranteed structure if EDC can respond directly to the exporter with direct financing. There was a suggestion yesterday that EDC makes the decision as to whether a guarantee or a financing gives the route that is extended.

It is the exporter, you are absolutely right, who will make that decision, and the exporters have decided that they would like to go directly to EDC because they find that it is the most expeditious, comprehensive means of getting financing. It does not represent additional costs to them.

Senator Tkachuk: They still can go to EDC, though. This is what I do not understand. Recommendation 14 does not say that that ability will be taken away, that you will not be in the business, does it?

Senator Oliver: No, it does not.

Mr. Siegel: No.

The Chairman: Please understand that we are obviously not here to try to make your life difficult. We admire you for all your achievements and accomplishments. To reiterate what Senator Kroft said, as legislators, our prime concern is what is best for Canada -- for the exporter, for the taxpayer.

In that spirit of camaraderie, thank you for your submission.

I would ask committee to remain, however.

The committee continued in camera.

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