Remarks by: Todd Winterhalt
Vice-President, International Business Development Group
To the: Senate Committee on Foreign Affairs & International Trade
Ottawa - December 10, 2010
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Thank you Mr. Chair and Honourable Senators for inviting EDC to appear before this Committee. We appreciate your interest in EDC’s activities in support of Canada’s trade agenda.
When EDC started building a presence in foreign markets, Brazil was one of the first places we chose to locate. That was 10 years ago.
We only suspected it then, but Brazil was already starting to become what some experts have recently called the “key driver of emerging market power.”
Today, I want to take a few minutes to highlight:
- How our two countries have a unique opportunity to expand our mutual trade and investment relationships; and How EDC is working closely with Canadian companies, other financial institutions and our government to help make this happen.
The ongoing volatility in the U.S. and Europe reinforce the need for Canadians to do business in emerging markets—not only to reach new export customers, but also to invest in global supply chains for their long-term survival.
Brazil and Canada have many affinities that can help us accelerate our trade relationship.
I speak from EDC’s long experience in the region. Aside from posting a representative in Sao Paulo in 2000 and another in Rio de Janeiro in 2004, we have been working with companies doing business in Brazil for more than 40 years.
Today, the most exciting development in Canada-Brazil trade is in investment:
- Since 2000, Canadian direct investment in Brazil jumped 70 per cent, to more than $11 billion in 2009.
- From Brazil to Canada, investments exploded—from the millions to nearly $15 billion.
- Canada is now among the top 10 investors in Brazil and Brazil is 7th in Canada.
The greatest opportunities for Canadians are in the infrastructure and extractive sectors:
- Brazil’s infrastructure, in its existing state, is a bottleneck to economic growth.
- As such, Brazil’s infrastructure industry could grow nearly 7 per cent annually between now and 2014; this translates to more than USD 500 billion in planned government spending.
- In Canada, some 4,300 Canadian firms are involved in infrastructure exports & investments.
Brazil’s oil and gas sector tells a similar story:
- Brazil’s national oil and gas company Petrobras—one of the 10 largest corporations in the world-- expects to invest nearly USD 200 billion in its industry over the next five years.
- Here too, EDC has played an important role, side by side with Canada’s trade commissioners, in helping connect Canadian companies to Petrobras.
- From fewer than 10 companies in 2000, more than 60 Canadian firms are doing business with Petrobras today.
EDC also understands the challenges confronting Canadian companies in Brazil:
- To be respected in the market, Canadian companies need to have a local presence and to show they are committed to stay for the long-term.
- The continued uncertainty in the global economy means that credit markets may remain sluggish – new sources of financing are more important than ever.
Partnerships are key to overcoming these risks and challenges:
- Partnerships between business and financial players—public and private, foreign and domestic— increase chances of a project or transaction’s success.
- Development banks, multilaterals and export credit agencies like EDC will continue to play an expanded role to ensure greater financial capacity.
Canada and EDC are strong and trusted partners in Brazil: Let me touch on two interesting transactions this year, where EDC is helping Canadian companies gain a stronger foothold in Brazil:
- In 2010, EDC financed a windpower project in Brazil, an area where Canadian companies have well-known expertise.
- Also this year, EDC provided a comprehensive loan of up to USD 1 billion to Brazil’s mining giant, Vale; this supports capital expenditures for both its Canadian projects and for the purchase of Canadian equipment and services by Vale in Brazil.
- Altogether, EDC expects to facilitate more than $2 billion in Canadian exports and investments in Brazil this year, at least 30 per cent more than in 2009.
- Last year, our customers in Brazil grew to some 280 Canadian companies; that’s 160 per cent more than five years ago.
To accelerate Canadian trade in Brazil, we are focused on the following strategies:
- Develop and deepen relationships with reputable buyers and borrowers in Brazil.
- Deploy and strengthen our financial partnerships in the region.
- Help match Canadian capabilities to Brazilian market opportunities, especially for mid-sized and smaller companies that don’t have the size and influence to do it alone.
- Deliver services that promote more Canadian direct investment in key Brazilian sectors.
In conclusion, I would like to underscore three points:
1. Canada and Brazil have an exceptional opportunity to work together as never before, from unique positions of strength and affinity in many industrial sectors.
2. Exports are not enough; we need to help Canadian companies invest directly in Brazilian operations or participate in the global supply chains of major companies in Brazil.
3. Market presence and long-term relationships are key; our International Trade Services and EDC are helping make those all-important connections and facilitating concrete deals.
EDC is optimistic that Canada can play a bigger role than ever in Brazil—just as Brazil prepares to host the world at the 2014 World Cup and 2016 Olympics.
Thank you for this opportunity.