NEW YORK (Reuters) - The U.S. ban on its banks doing proprietary trading of Canadian debt likely violates an international agreement between the nations, Canadian Finance Minister Joe Oliver said on Wednesday, urging American lawmakers to adjust the so-called Volcker Rule.
The rule, meant to curb risky Wall Street trading seen to have worsened the 2007-2009 financial crisis, would stop U.S. banks from trading non-U.S. government bonds with their own money unless exemptions are met.
“I believe, with strong legal basis, that this rule violates the terms of the NAFTA agreement,” Oliver said of the North American Free Trade Agreement between Canada, the United States and Mexico.
“I hope the United States administration sees that changing the Volcker Rule is in its own best interests and that of its biggest trading partner,” he added in a speech at a Canada-U.S. conference in New York.
Oliver later told reporters he had raised the issue with U.S. Treasury Secretary Jack Lew, and that he was seeking a Canadian exemption based on the country’s top credit standing and its close ties with the United States.
He would not elaborate on how the trading ban violated NAFTA, which was signed in 1994.
The Volcker rule, named after former Federal Reserve Chairman Paul Volcker, was adopted in 2010. But earlier this year the Republican-controlled U.S. Congress delayed implementation of parts of the rule, giving banks more time to comply.
Oliver noted that Canadian government debt is rated as safer than that of the United States, meaning it is a sound market for U.S. banks. He also said the government remains open to issuing ultra-long bonds this year or next.
Addressing investors and policymakers, the minister also reiterated Canada’s frustration that the proposed Keystone oil pipeline, which would run Canadian crude to U.S. refineries, awaits approval from the White House.
“Canada finds it frustrating that it is still awaiting presidential approval,” he said. “We hope it will be approved soon.”
Reporting by Jonathan Spicer; Editing by Meredith Mazzilli