US embassy cable - 05OTTAWA2109

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, Ralph Goodale 
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 
-------------------- 
 
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