(The Telegraph, London, 17 September 2016) Canada is setting up an export agency office in the UK in an attempt to boost trade links with one of its biggest trading partners after the EU referendum. In the latest indication of the desire of non-EU countries to do more business with the UK, Export Development Canada (EDC) will open a London site this week. Britain is already Canada’s third-largest trading partner, with more than C$20bn (£11.5bn) of exports last year. The EDC said its decision to open a site in London showed that it takes “a long-term view on the strength of the UK economy following the Brexit vote, providing a stable source of capital”.
Canada
GE Breaks Ground On Canadian Facility
(Compressor Tech News, Waukesha, WI, 26 August 2016) GE has started constructing its multimodal manufacturing facility in Welland, Ontario, Canada. The facility, a US$165 million investment in its first phase, will manufacture GE Power’s reciprocating gas engines, as well as components for compression, mechanical drive and power generation applications. It will also craft components for GE transportation diesel engines. The facility, expected to open in early 2018, will employ 220 people and has the ability to expand for other GE global businesses, such as Power, Oil & Gas and Transportation. Since 2010, GE’s Waukesha brand formerly held its manufacturing operations in Waukesha, Wisconsin. In September 2015, however, GE Power decided to move its manufacturing jobs to Canada, citing a lapse of charter for the US export credit agency – the Export-Import Bank (Ex-Im) as a reason. With the facility in Canada, GE will be able to access support from the country’s export credit agency, Export Development Canada (EDC). GE has a long-standing relationship with EDC, the company said.
Brazilian mine spill shows how Canadian export credit risks getting tangled up in abuses.
(Above Ground, Ottawa, 11 January 2016) Thomas L. Friedman’s “The World Is Flat: A Brief History of the Twenty-First Century” suggests that a level playing field has emerged in the world of global commerce, affording competitors equal opportunity. But this analysis ignores government intrusion in the form of massive loans to favoured players and projects. Case in point: last November’s immense mine spill in the state of Minas Gerais, Brazil’s worst environmental disaster, which Brazilian President Dilma Rousseff compared to the Deepwater Horizon catastrophe in the Gulf of Mexico. Fifty million tons of toxic waste flooded the Doce River, leaving a wake of destruction for hundreds of kilometres. At least 19 are dead and thousands have lost their homes and livelihoods. Indigenous Krenak people demanding safe drinking water have blocked the local railway. The Brazilian government is suing the mine’s joint venture owners, which includes Brazilian multinational Vale [formerly INCO], for over $5 billion USD. There is a direct Canadian connection to this venture. Export Development Canada, a Crown corporation, provided Vale with hundreds of millions of dollars in financing for its global operations, most recently in 2014.
Tata Group Gets $500 Million of Canada Export Credit Financing
(Bloomberg, Ottawa, 4 November 2015) Tata Group, the Indian owner of assets including Jaguar Land Rover and the Tetley Tea brand, will receive as much as $500 million a year in financing from Canada’s government-owned export development bank. EDC will underwrite loans to the Tata Sons unit to support orders from local suppliers, the Ottawa-based agency and Mumbai-based company said in a joint statement Wednesday. Tata has invested C$1.3 billion ($1 billion) in its Canadian operations over five years for products such as steel, chemicals and consulting services. The Tata financing follows a $500 million arrangement in April 2014 for Reliance Industries Ltd., another Indian company. Canada is seeking to broaden its exports beyond the U.S., which currently buys about three quarters of its northern neighbor’s foreign shipments.
Canada’s export credit agency sets up Africa-focused Joburg office
(Creamer Media, Johannesburg, 29 October 2015) Canada’s official trade finance agency, Export Development Canada (EDC), has formally established permanent offices in Johannesburg, from where it aims to facilitate $10-billion-worth of business between sub-Saharan African and Canadian companies over the coming five years. The export credit agency has already provided $7.4-billion in financial support to African firms purchasing goods and services from Canadian companies, including participation in a R6.99-billion rand-denominated loan facility for Bombardier Transportation, which has been awarded a contract to supply 240 electric locomotives to Transnet Freight Rail.
Asian Infrastructure Investment Bank (AIIB): regional solution or global threat?
(Global Capital, London, September 2015) The stated aim of the China-backed Asian Infrastructure Investment Bank (AIIB), officially launched in June 2015, is to respond to a need for massive spending across Asia. But its creation has caused political controversy, with supporters arguing it shows up previous iniquities while opponents fear it will be a mere tool for China’s projection of power. An American campaign to boycott the AIIB collapsed in March when George Osborne, Britain’s chancellor of the Exchequer, announced that Washington’s staunchest ally would be joining the Chinese-initiated bank. Membership of the AIIB has since swelled to 57 countries, more than twice the number that half a century ago joined the Asian Development Bank (ADB), the incumbent Japanese- and American-led rival based in Manila. There will be significant support from Chinese policy banks for the One Belt, One Road strategy. State-owned banks experienced in financing overseas, such as ICBC or Bank of China, will be very well placed to provide support. There will probably be policy bank support from either Export-Import Bank of China or China Development Bank. And Sinosure will also have a role to play in terms of some of their export credit insurance. Canadian absence from the AIIB roster has largely escaped notice, although China is Canada’s second-largest trading partner after the US. Jack Austin, a former Canadian senator and influential politician who helped establish Canada’s diplomatic relations with China back in the 1970s, notes that Prime Minister Stephen Harper belongs to an evangelical Christian church that believes in the inerrancy of the Bible, and Christian fundamentalists are a core part of his support base. Austin says “The constituency sees China’s regime as totally hostile to their values”.
General Electric to shift engine plant to Canada, creating 350 jobs
(Globe & Mail, Toronto, 28 September 2015) General Electric Co. is planning to build a state-of the art $265-million (U.S.) engine plant in Canada, as it shifts more business out of the United States following the collapse of U.S. government-sponsored export financing. GE said Monday it will close down its operation that makes gas-powered engines in Wisconsin and construct a plant in Canada, creating 350 new jobs there. In mid-September GE said it would invest $26-million in an aircraft engine facility in Winnipeg, including a major upgrade to a massive wind tunnel used for testing jet engines. GE says it is making the moves because it can no longer get U.S. export credit financing and is currently bidding on $11-billion of projects that must have export financing in order to be completed. GE also recently announced an agreement with the UK export credit agency UK Export Finance to access export financing for up to $12 Billion. [It is not yet clear if such efforts are part of an effort to re-establish US export credit financing blocked by the US Republican Tea Party faction, or to stimulate competition amongst OECD ECAs to further sweeten official subsidies to exporting corporations.]
Canadan and US ECAs finance South African purchase of Bombardier and GE locomotives
(Financial Post, Johannesburg, 2 March 2015) Export Development Canada is providing South Africa’s national rail operator with a US$450-million loan to finance a major purchase of rail equipment from Quebec-based Bombardier. The rail operator, Transnet SOC Ltd., recently awarded a US$1.2-billion contract to Bombardier Transportation South Africa Ltd. for the delivery of 240 TRAXX dual-voltage locomotives. The Export-Import Bank of the U.S. will also guarantee US$500 million in loans provided by Barclays Africa Group Ltd., Standard Bank Group Ltd. and Old Mutual Plc for the manufacture of 293 locomotives by GE.
Export credit and human rights: Failure to Protect
(ECA Watch, Brussels, 18 February 2015) ECA Watch members Halifax Initiative, Both Ends and CounterCurrent, together with Brazilian organisation Forum Suape and Colombian organisation Movimiento Rios Vivos, published a new report entitled Export Credt and Human Rights: Failure to Protect. The report calls on states to fulfill their duty to protect human rights through the operations of their export credit agencies.
Export Credit Remains Strong for Satellite Industry
(Mondaq, Washington, 9 January 2015) Satellite industry becomes fastest growing of U.S. Ex-Im Bank’s credit sectors, with growth from $50m to $1b in loans per year since 2010; Export Credit Agency of Russia announces plans to actively support ILS ; and Export Development Canada provides €123m in financing to Hispasat for procurement of Hispasat 1F.
