Editor: Please tell us about your background. What led you into a career of public service?
Sullivan: I was appointed Consul General of Canada in New York by Prime Minister Harper in October 2006, and very much welcomed the opportunity. Prior to my assignment as Consul General, I spent my entire career in the private sector - experience which was invaluable for taking on this responsibility in New York.
Having held the position of Deputy Chairman of Scotia Capital Inc. - the corporate and investment banking division of Scotiabank - as well as having been Chairman and Director of the Toronto Stock Exchange, and Chairman of the Investment Dealers Association of Canada, I have long been a part of Canada's important cross-border relationship with the U.S. financial sector. I have also held director positions with a number of public companies, including Allied Properties, Allstream Inc., Cadillac Fairview Corporation, Camco Inc., Monarch Development and Schneiders, and served on advisory bodies to Canada Post Corporation, Canada Deposit Insurance Corporation, the Canadian Securities Administrators and the Ontario Securities Commission.
My perspective on aspects of the Canada-U.S. relationship outside the business and financial realm was also enriched by being chairperson and sitting on boards of a regional health authority in Toronto, St. Michael's Hospital, the Advancement Board of the Rotman School of Management at the University of Toronto, and the National Ballet Company of Canada.
Editor:Your office is overseeing the states of New Jersey, Connecticut and Eastern New York, a population equivalent to that of Canada. What are the greatest challenges your office faces? How do you convey the messages from your government to this population in the U.S.?
Sullivan: The Consulate General of Canada in New York, together with our satellite business development office in Princeton, forms Canada's largest diplomatic representation in the U.S. outside Washington. The Consulate General is made up of various federal departments and agencies responsible for political and economic affairs, trade, immigration, borders, security, and finance.
With its high concentration of some of the country's most notable influencers and decision-makers in the political, financial, corporate, academic, think tank and media sectors, the tri-state area is an extremely fertile ground for advancing the Canada-U.S. relationship. While there are many competing voices and issues, the importance of our bilateral relationship to respective domestic interests means that many issues on which we are focussed are of mutual importance to counterparts here. Also, New York is a key destination for senior government officials, business and cultural leaders in Canada. This affords us constant opportunities to bring together experts and opinion leaders from both sides of the border and to showcase Canadian talent and innovation.
Editor: What are Prime Minister Harper's major goals for the Canadian economy? How successful has the program "Advantage Canada" been?
Sullivan: The Prime Minister set out three broad aims for the economy in this year's budget: to create new jobs though a second year of federal stimulus funds under the Economic Action Plan , to invest in growth by strengthening innovation and attracting business investment, and to take steps to bring federal finances back to balance over the medium term.
Advantage Canada , which is Canada's long-term economic action plan, focuses in on some key strategic advantages to promote growth and prosperity, and significant progress has been made to date. In fact, one of the key steps that the government has taken this year is to unilaterally eliminate tariffs on imported machinery and manufacturing inputs. This makes Canada the first G-20 nation to become a tariff-free zone for manufacturers.
This builds on other important changes we've made to enhance incentives for business. For instance, Canada will have an overall tax rate on new business investment that is the lowest in the G-7 this year, as well as the lowest statutory corporate income tax rate in the G-7 by 2012. Provinces and the federal government - who both levy business taxes - are reducing corporate income tax rates. The federal rate, which was at 22 percent a few years ago, will drop to 15 percent by 2012. Provincial and federal tax combined will be 25 percent.
Along with historic tax reductions, our advantages include the strengthening of Canada's investment and competition policies, and significant investments in critical infrastructure across the country. Canada is currently ranked first in the OECD in higher education achievement; the Economic Intelligence Unit has rated Canada the top place to do business in the G7 for the next five years; and the World Financial Forum has labelled Canada's banking system the soundest in the world, so we are seeing some significant indications that we are moving in the right direction.
Editor: Canada has the most successful economy within the G-7 nations. How did Canada manage to dodge the bullet that felled or damaged so many U.S. financial institutions? Describe how the bank regulatory system had the foresight to reduce risk in the banking sector.
Sullivan: No country is immune to the impact of a global financial recession. A key lesson that has been learned from the economic crisis is that sound policies matter. Canada's strong position helped it to weather the economic storm, better than most other industrialized countries.
With respect to Canada's banking system, our banks and other financial institutions are sound, well-capitalized and significantly less highly-leveraged than their international peers, all of which reflect a rigorous regulatory regime. Canadian capital requirements for financial institutions are above minimum international standards and higher than in other jurisdictions. Moreover, Canadian standards include a cap on overall leverage.
We also have well-established mechanisms to ensure collaboration between the various regulatory bodies: the Department of Finance, the Office of the Superintendent of Financial Institutions - our bank regulator - the Bank of Canada, the Canada Deposit Insurance Corporation and the Financial Consumer Agency of Canada.
It is also important to note that, because mortgage interest is not tax-deductible, Canadian households tend to have smaller mortgages relative to both the value of their homes and disposable incomes than in many other countries. Also, the Canadian housing finance market does not have a large sub-prime component. Moreover, residential mortgage default insurance and securitization in Canada is dominated by the government-owned Canada Mortgage and Housing Corporation. This has kept securitization functioning during the credit crunch. It was very much a combination of these factors that helped us to weather the financial crisis.
Editor: Please tell our readers about Canada's plans to develop its oil sands as well as its effort to develop "green energy."
Sullivan: Canada is committed to developing the oil sands - a strategic resource key to future energy security in Canada, North America, and the world. We are also committed to doing so in a sustainable and responsible way, through a sound regulatory regime and the development and implementation of new technologies. Though the oil sands currently provide 1.5 million barrels of crude oil per day and 7 billion barrels have been produced to date, this represents only a small portion of the overall resource. Oil sands crude production is expected to rise to almost 2.8 million barrels per day by 2020. Oil sands development is subject to strict environmental standards that are among the most comprehensive in the world, and encompass the reduction of greenhouse gas emissions, the protection of water sources, and the reclamation of forest land.
With regard to "green energy," Canada is a world leader in the production and use of energy from renewable sources, which currently provide approximately 16 percent of the nation's total energy supply. Canada is the second-largest producer of hydroelectricity in the world, and emerging sources such as wind and solar energy power are experiencing high growth rates. Developing both traditional and renewable energy is key to meeting Canada's overall energy and energy security needs, as well as its climate change goals; and, as the top energy supplier to the U.S., Canada's partnership on these issues will be critical going forward.
Editor: Please describe the difference NAFTA has made in increasing trade between our two countries.
Sullivan: We've spoken about economic recovery, and a key component of recovery and growth for any country is, of course, free trade. The path to prosperity is built with trade partnerships, not protectionism. There is no greater example of the prosperity it can bring than the Canada-U.S. trade relationship, the largest two-way trading relationship in the world. Canada is a larger market for U.S. goods than all 27 European countries combined and purchases four times more from the U.S. than China does. Canada is the largest export market for 35 of the 50 states.
NAFTA is the cornerstone of North American competitiveness. It is one of the most dynamic and prosperous free-trade zones in the world, with a combined GDP of US$16.5 trillion, and has been a success story for all three partners. Merchandise trade between Canada, Mexico and the U.S. has more than doubled under NAFTA, reaching US$699.2 billion in 2009.
Editor: Please describe Canada's relations with the U.S. in terms of: protecting infiltration of terrorists across the border of the U.S, i.e., the Smart Border Action Plan; issues relating to terrorist money laundering and flow of funds to terrorist organizations; support of OECD regulations prohibiting entering tax treaties with any jurisdiction that fails to share information about terrorist financing.
Sullivan: Our countries are continuing a dialogue on developing a shared vision for border security for Canada and the United States that will bolster competitiveness and job creation. This is essential if both countries are to remain resilient and competitive. We also want to work together at home, for example pursuing integrated law enforcement initiatives. We are working together to advance a shared approach that addresses threats at the earliest point possible.
The Canada Border Services Agency - or CBSA - is committed to working closely with its U.S. counterparts towards our mutual goal of safe and secure communities. Our priority remains facilitating legitimate cross-border traffic and supporting economic development while stopping people and goods that pose a potential risk to the safety and security of Canada. We have seen tremendous success since the inception of the Smart Border Action Plan, and have successfully implemented a number of initiatives with the United States.
With respect to money laundering, our Border Service Officers are the first line of defence at the border and are well positioned to combat the illicit smuggling and couriering of currency and other monetary instruments by criminal organizations. For example, CBSA is responsible for Part 2 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, respecting the importation or exportation of currency or monetary instruments of $10,000 CAD or greater. These allow for the exchange of information in certain circumstances, to domestic and international law enforcement agencies. CBSA works in concert with other government agencies.
CBSA works closely with domestic and international partners on a continual basis and is committed to improving its capacity to target high risk goods and people as early as possible in the travel and trade continuum.
Editor: Where would you expect to see Canada's GDP within the next five years? Do you expect its spectacular growth today to be continued?
Sullivan: Canada's Department of Finance regularly carries out a survey of private sector economic forecasters to inform its fiscal planning. According to the latest survey in June, the projection for growth in real GDP this year is 3.5 percent with an average projected growth between now and 2014 of 2.9 percent.
Real GDP is close to its pre-recession level supported by household spending and government policy stimulus. Indeed, the decline in real gross domestic product in Canada during the global recession was the smallest of all G-7 countries. Owing to Canada's strong economic fundamentals, both the IMF and the OECD have predicted Canada to have the strongest economic growth in the G-7 over the next two years.