Mr. Speaker, I am very pleased to have the opportunity to speak on third reading of this very important and timely bill, an act to amend the Export Development Act. Bill C-31 is the outcome of a legislative review process that was mandated in 1993. In that year a number of amendments were made to the Export Development Act.
The purpose of the amendments was to improve the EDC's ability to serve Canadian exporters. Canada's trade was expanding rapidly and certain aspects of EDC's operations needed streamlining. If the debates that surrounded the 1993 amendments were reviewed, we would find a strong consensus that EDC is a key player in Canada's international trade.
The expansion of the corporation's powers was supported by all parties. I do not have to tell the House how important Canada's exports are to our national prosperity. Forty-three per cent of our GDP and one out of four Canadian jobs are directly tied to exports. At the present time, EDC supports nearly 10% of this trade. This is a remarkable role for a single firm and underlines the corporation's importance to Canada.
Since the 1993 amendments took effect, EDC's business has grown almost fourfold, reaching $45 billion last year. It is clear that the 1993 changes have borne fruit, but at that time they were seen as a bold step. As a result parliament also decided to monitor the corporation's future performance. It imposed a requirement for a thorough review of EDC's mandate in five years' time.
That review began in 1998 with a report by the law firm Gowling, Strathy & Henderson. This was the so-called Gowlings report which was the starting point for studies by the Standing Committee on Foreign Affairs and International Trade in the fall of 1999. That committee's report was presented to the House in December 1999 and was the subject of a government response tabled in parliament by the Minister for International Trade in May 2000. On the whole, the government endorsed the findings of the standing committee.
Before moving to the substance of this bill and how it responds to the many issues that were raised during the legislative review, I will note a few things about the conduct of the review itself.
First, the terms of reference were extremely broad, touching all aspects of EDC's operations and mandate: how were its current programs operating; what were its customers views; EDC served a large number of Canadian exporters, but what about those who did not use its services; and what did its competitors think of it? All of these viewpoints were sought.
Second, the review surveyed the dynamics of international trade itself and the challenges facing Canadian exporters. Could EDC's current services to them be improved? Was there untapped capacity in the Canadian financial system that EDC might help deliver to exporters?
Third, a lot of stress was placed on non-commercial issues like the environment and human rights. Was the corporation upholding Canadian values in its activities? What effect did Canadian trade have on economic and social development in other countries?
Finally, the review included very extensive public consultations. If we look at the list of witnesses and written submissions that were received during the review, we will see that scores of individuals, companies and organizations were heard. There were additional consultations on individuals' issues as well.
The review was conducted with great publicity. However, this did not always make for easy decisions. There was a wide range of opinion on the issues. Much of it was valid on its own terms but difficult to reconcile. We did ensure that all voices were heard and that we were well informed concerning where Canadians stood. There was strong consensus on some points. I have already noted how Canada's economic well-being depends on international trade.
The review demonstrated EDC's significant contribution to this trade. It is a well managed organization, highly valued by its clients and respected by its competitors.
I would digress from my text to note that a major exporting firm in my riding of London--Fanshawe, namely General Motors, diesel and defense, has told me repeatedly how valuable the assistance of EDC has been in helping it win very important export contracts.
EDC is innovative in its development of programs and an important contributor to multilateral dialogue on trade issues.
Whatever changes we propose, we should preserve EDC's flexibility to deliver its services and protect those programs that are operating well. At the same time, there is also consensus that EDC could do more to ensure adherence to those values that Canadians expect of an agency of government. This is particularly true with regard to environmental and human rights issues.
EDC is Canada's emissary in many important respects. In some measure, it is Canada's reputation as well. All Canadians have a stake in this.
The standing committee, in its report to the House, summarized these views. EDC should meet reasonable environmental and social standards in conducting its business. Its environmental review framework should be given a firm basis in law. To promote greater transparency and rigour in the framework, the auditor general should oversee its operation on a regular and public basis.
EDC's development of a disclosure policy is welcomed, but it should be subject to public consultations, independent review and the corporation should consider using an ombudsman to help administer the policy.
Finally, EDC should be required, by law, to pay due regard to benefits to Canada and Canada's international commitments, particularly those bearing on human rights and labour standards.
The challenge to do these things is not just for EDC or other trade finance institutions. It is a challenge that confronts any firm doing business on a certain scale. We are seeing very focused responses to it, on the part of both individual firms and multilateral bodies, like the organization for economic co-operation and development, where relevant codes of business conduct are being developed.
The OECD guidelines for multinational enterprises are a leading example of this. They outline principles and standards in areas as diverse as employment and industrial relations, human rights and the environment, disclosure and transparency and competition and tax. They are voluntary but carry great political and moral weight.
Canada is a signatory to the guidelines and we have agreed to encourage multinational enterprises to implement them.
However, there are no easy precedents to follow in taking initiatives like these. At the most practical level, we are talking about revising the due diligence that is practised by corporations on a regular, daily basis.
New systems always have an impact on costs, on client expectations and on accepted ways of doing business. Naturally, there is some resistance. The work requires time, resources and real commitment. The Government of Canada believes that our crown corporations have both the means and the duty to take a leadership role in this work.
I would like to turn now to Bill C-31 and describe how it responds to the concerns raised during the legislative review.
EDC served nearly 6,000 Canadian exporters last year. The corporation is always working to expand this customer base. To do this, Canada's small and medium-sized enterprises need easy access to EDC's services. Part of this work involves service innovations like online credit insurance, and EDC is taking steps to implement such systems. Part of it involves simple publicity, and some members will have seen EDC's recent television advertisements.
Both here and abroad, the corporation is known by the popular acronym EDC. Bill C-31 would amend the corporation's name to Export Development Canada in English and Exportation et développement Canada en français.
This would allow use of the well known brand name EDC in both of Canada's official languages. It would strengthen the corporation's identity as a Canadian institution and it would facilitate EDC's outreach marketing, especially to small exporters throughout Canada.
In a subtle way then, the amendment serves an important objective which I am sure we can all support.
Bill C-31 also contains two amendments to the powers of its board of directors. The first would permit delegation of board powers to subcommittees composed of directors with special abilities in some area of corporate concern. This is a standard modern business practice. It permits a corporate board to refer issues to those who are best qualified to deal with them. It does not absolve the board of ultimate responsibility for the final decisions taken in respect of such questions.
A related amendment would enable EDC's board to make bylaws for the administration of a recently established pension plan. The new plan took effect in April 2000. It was established with appropriate authorizations and is consistent with treasury board policy that crown corporations should establish pension plans independent of the government.
I would like to turn now to the amendments that are probably of most interest to the House. Bill C-31 would establish a legal requirement for EDC to conduct environmental reviews of the projects it is asked to support. EDC already does this but the amendment would make it a binding legal obligation. A related amendment would require the auditor general to conduct regular examinations of EDC's environmental review framework. These examinations would cover both the design of the framework and EDC's performance in applying it. The examinations would occur at least once every five years and would be reported to parliament.
A related amendment would prevent duplicate requirements arising under the Canadian Environmental Assessment Act. Certain ministerial or cabinet actions can trigger that act, for example when ministerial authorizations are required for a transaction. Bill C-31 would require environmental reviews under the Export Development Act but there would still be a risk of a duplicate obligation arising under the Canadian Environmental Assessment Act. The amendment simply would prevent such duplication from occurring.
Critics of Bill C-31 have suggested that EDC should be regulated under the Canadian Environmental Assessment Act. This view was expressed repeatedly throughout the legislative review but neither Gowlings nor the standing committee took up the suggestion. In fact Gowlings stated that legislating specific environmental requirements for EDC might not be practical. Instead they recommended an approach similar to that of the United States export credit agency Eximbank.
Eximbank has had an environmental requirement in its governing legislation for almost 10 years. Eximbank's practices are often held up as a model for other agencies. In this approach, a general mandate to conduct environmental reviews is set by law but Eximbank's board of directors is responsible for developing specific guidelines and procedures in consultation with stakeholders.
This is precisely what Bill C-31 would do, establish a general environmental mandate while leaving its implementation to EDC's board of directors.
EDC recently completed public consultations on revising its environmental review framework. It employed both the auditor general's recommendations and specific government guidance in undertaking these consultations. It has sought out and taken account of the views of industry and NGOs. It has also engaged a leading environmental consultant to assist with the consultations and prepare detailed recommendations for the framework's revision. No other export credit agency in the world has had its environmental procedures subjected to such meticulous and exhaustive review.
The possibility of regulating EDC under the Canadian Environmental Assessment Act was given careful consideration before the present course was chosen. In taking its decision, the government applied such criteria as ensuring environmentally sound projects, protecting competitiveness, respecting foreign sovereignty and preserving flexibility to operate in the fast paced international environment.
The approach we have chosen is consistent with the emerging practice in the international community and with our work on this issue in the OECD. It would provide a uniform process for EDC's projects and permit rapid adaptation to changing competitive and technical circumstances. To ensure that its procedures and standards are sound, the auditor general will continue to oversee both its design and operation.
The Standing Committee on Foreign Affairs and International Trade has also recommended that EDC's mandate should include a legal requirement to pay due regard to benefits to Canada and Canada's international commitments, particularly those that concern human rights and core labour standards.
EDC's mandate is trade promotion, to the benefit of Canadian exporters and our common prosperity. Furthermore, as an agent of the crown, EDC is already bound to adhere to Canada's international commitments. However it was recognized that a general statutory mandate of this kind could raise legal risks for the corporation without clarifying the specific requirements that must be met in a given case. Unlike the environmental mandate, there is no pre-existing framework to help ground such an obligation in concrete operational measures.
Nonetheless, the government acknowledges the serious concern that underlines the recommendation and is committed to ensuring that economic benefits in international obligations are taken account of in EDC's decision making. The government has decided to address this issue through two interconnected mechanisms.
In the first place, EDC will be required by its corporate plan to consider economic benefits to Canada and Canada's international commitments in the areas of human rights and core labour standards. Preparation of a corporate plan for crown corporations is required by the Financial Administrative Act. A corporate plan sets out and limits the range of a crown corporation's activities. It must be approved by ministers and tabled in summary form in parliament. A crown corporation cannot act outside the parameters set down in its corporate plan and must undertake to fulfill its requirements. EDC's corporate plan will now include these requirements and the House will have the ability to review its performance and assess whether the requirements have indeed been met.
However general commitments to human rights mean little unless we take concrete steps to ensure their respect in specific cases. At a practical level, the Department of Foreign Affairs and International Trade is working with EDC to refine our information sharing on human rights concerns in specific countries. This will operate at the level of general or sectoral conditions as well as individual projects. The objective is to ensure that EDC's decisions take full account of both the facts of the situation and how that may impact on Canada's international commitments. Once again, we recognize this is an issue that is important to all Canadians.
In bringing Bill C-31 to parliament, my colleague, the Minister for International Trade, took a very balanced approach to policy reform at EDC. On the one hand, the bill would leave significant responsibility in EDC's hands for the development of environmental and social policies. On the other hand, both government oversight and public accountability would be brought to these policies through regular consultations and the Office of the Auditor General.
When we last amended the Export Development Act in 1993, we hoped the changes would benefit Canada's trade and promote our common prosperity, and the intervening years have borne this out. Today we are again taking bold steps to keep the Export Development Corporation at the forefront of international trade practice.
I want to note that the legislation is very important and would make EDC more transparent and accountable, but what is most important is to have a proactive minister who will take it upon himself or herself, whoever has the position at any given time, to ensure that the full weight of the act is carried through.
I want to acknowledge the proactive efforts of the Minister for International Trade who said that he wants to see a report on the activities of EDC within two years, not the five years for which the legislation calls or even the three years which I believe the auditor general proposed. The minister took the initiative in wanting a full audit in two years time.
That is the kind of commitment the Minister for International Trade and the government has to making sure EDC performs effectively but in the most transparent way that is consistent with Canadian values.
I ask all members of the House to endorse the objectives of the bill and I look forward to their support for it.