TREASURY SECRETARY SNOW VISIT TO CANADA

C O N F I D E N T I A L SECTION 01 OF 03 OTTAWA 002109 SIPDIS DEPARTMENT FOR EB/IFD, EB/OMA, WHA/EPSC, AF, AND WHA/CAN STATE PASS FEDERAL RESERVE BANK FOR CHUGH STATE PASS SEC FOR TAFARA TREASURY FOR DAVID NAGOSKI E.O. 12958: DECL: 07/07/2015 TAGS: EFIN ENRG EAID ETRD KTFN ECON CA JA NI SUBJECT: TREASURY SECRETARY SNOW VISIT TO CANADA DEMONSTRATES OUR STRONG POSITIVE RELATIONS WITH CANADA REF: A. OTTAWA 2108 ¶B. OTTAWA 3434 (SINGLE REGULATOR) ¶C. (OTTAWA 3433 (BANK MERGERS) ¶D. OTTAWA 1968 (FATF) Classified By: Classified by Ambassador Wilkins. Reason: 1.4(b) and ( d). 1.1. (SBU) Treasury Secretary John Snow met with Canadian Minister of Finance Ralph Goodale in Calgary on July 9 to discuss a range of bilateral and international economic issues. Ref A provides more details of the July 7-9 visit and reports on the points that were made during press conferences July 8 and July 9. This message reports points of interest to other agencies that were not made public. The list of participants is at the end. IFI Strategic Review and G-8 follow up -------------- ¶2. (C) Secretary Snow opened the meeting by asking Minister Goodale about GOC views on how to advance strategic reform at the IMF and World Bank. The U.S. and Canada share similar objectives and should work together to advance the process, which has been languishing for 18 months. It was agreed that it would make sense to work closely with Japan. ¶3. (SBU) They also touched on follow-up to the Gleaneagles G-8 summit and future meetings of the G-7 finance ministers and referred to their discussions the previous day on bilateral trade disputes and the financial sector elements of the Security and Prosperity Partnership (SPP). Tax Treaty -------------- ¶4. (SBU) In his opening statement to the press on July 8 and 9, Minister Goodale announced that Treasury and Finance are committed to finalizing revision of the bilateral tax treaty by the end of the year, probably by fall. Note: The tax treaty has not, to our knowledge, been reported by any media but the embassy did notify the American Chamber of Commerce in Toronto and individuals who have approached us about the treaty of the announcement. End note. During the July 9 bilateral meeting, Minister Goodale explained that the GOC has a domestic technical issues with some non-arms-length transactions, but he does not expect that to derail a possible signing this fall. Corporate Governance �A; -------------- ¶5. (SBU) Secretary Snow asked if the GOC has had complaints about the extra-territorial elements of the Sarbanes-Oxley Act (SOX). The GOC pointed out that large Canadian firms that list on U.S. exchanges are the equivalent of small and medium firms in the U.S. context and the SOX requirements can add significant cost. Secretary Snow described steps the SEC is taking to review the differential burden on SMEs and invited the GOC to participate in the SEC comment process, which Goodale said they would do. Commission for Africa and development assistance -------------- -------------- ¶6. (SBU) In response to a question from Secretary Snow, Minister Goodale said the Commission for Africa had not looked beyond Gleneagles, as future activity will be driven by decisions that were made at the Summit. (Note: Minister Goodale is a member of the Commission. End note.) ¶7. (SBU) ADM Paul Boothe noted that the Millennium Development Goals define widely accepted development outcomes, and it might be helpful if we frame discussions on development assistance levels in terms of how our efforts are advancing the MDG. The GOC also favors broadening the definition of assistance, noting the Canada and the US spend significant amounts on activities such as peacekeeping that are critical to development but are not counted as development assistance. Nigeria/GOPAC -------------- ¶8. (C) The Canadian side asked about ways in which we could support Nigerian reformers and show that there are benefits to the risks they are taking to fight corruption and improve corporate governance. The Canadian side is looking a barriers that make it more difficult for their private sector firms to invest in Nigeria. They described plans by GOPAC (the Group of Parliamentarians Against Corruption) to find a credible sponsor in Africa that would let them work more closely with and show more support for African counterparts, especially in Nigeria. They agreed that it would be helpful for US and Canadian legislators to cooperate in this effort. Summit of the Americas draft text -------------- ¶9. (C) Secretary Snow asked Minister Goodale to involve Finance Canada officials more closely in the Summit of the Americas preparation, noting that the draft text seems to have lost a focus on good economic policy and be drifting towards unacceptable language on income inequality. Finance Canada will follow up with Foreign Affairs Canada. Single National Securities Regulator and Bank Mergers -------------- -------------- ¶10. (SBU) Minister Goodale and his top officials have brought new commitment to the quest for a single national securities regulator in Canada (Ref B). (Currently there are 13 -- one in each province and territory -- and Canada has no single voice internationally.) He spoke strongly about the need for a single regulator and mused about the possiblity of recruiting provinces other than Ontario to the cause. ¶11. (C) Goodale did not raise bank mergers, but his chief of staff said later ("for this room only") that we could expect action, although not necessarily approval, by the end of the year. Canada's six national banks have been anticipating authority to merge for years but have been cautioned that they would not receive approval from the Minister of Finance (Ref C). Goodale was expected to take quick action when he took office , but a firm decision has been delayed by the political brinksmanship of minority government. FATF -------------- ¶12. (SBU) In closing, Minister Goodale asked if there are activities the U.S. would like the Financial Action Task Force (FATF) to be more active in promoting. Snow responded that we would like further multilateralization and stronger designation regimes. Canada assumes the chairmanship of FATF next summer (Ref D). Comment -------------- ¶13. (C) This meeting was the first of what is intended to be an annual bilateral consultation and both Secretary Snow and Minister Goodale repeatedly described the strong and positive relationship between the U.S. and Canada. There was great appreciation for the fact that Secretary Snow is the first U.S. cabinet-level official to visit the oilsands. The success of this visit, coinciding with the positive press surrounding the Ambassador's arrival in Canada, has changed the tone of the relationship and helped kill the pervasive view, fueled by the media, that there is a chill over the bilateral relationship. Our two financial systems are deeply integrated and almost completely conflict free and it is good to showcase the positive aspects of the U.S-Canada relationship and to show that we share many of the same goals bilaterally and internationally. Participants -------------- US: Secretary Snow Ambassador David Wilkins Randy Quarles, Acting Under Secretary for International Affairs Chris Smith, Chief of Staff Lucy Abbott, Notetaker GOC: Minister Goodale, Paul Boothe, Associate Deputy Minister Patrick Tobin, Chief of Staff Ron McMorran, Financial Attache, Washington Sheila MacDonald, Chief, International Policy Analysis Visit Canada's Classified Web Site at http://www.state.sgov.gov/p/wha/ottawa DICKSON