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Canada (12/05)For the most current version of this Note, see Background Notes A-Z.
PROFILE OFFICIAL NAME: Geography People Government Economy U.S.-CANADA RELATIONS Canada--a charter signatory to the United Nations and the North Atlantic Treaty Organization (NATO)--has continued to take an active role in the United Nations, including peacekeeping operations, and is an active participant in the Organization for Security and Cooperation in Europe (OSCE). Canada joined the Organization of American States (OAS) in 1990 and has been an active member, hosting the OAS General Assembly in Windsor in June 2000, and the third Summit of the Americas in Quebec City in April 2001. Canada also seeks to expand its ties to Pacific Rim economies through membership in the Asia-Pacific Economic Cooperation forum (APEC), and will host the winter Olympic Games in Vancouver-Whistler, British Columbia in 2010. Although Canada views good relations with the U.S. as crucial to a wide range of interests, it occasionally pursues independent policies at odds with the United States. In 2003, Canada did not participate in the U.S.-led military coalition that liberated Iraq (although it has contributed financially to Iraq’s reconstruction). Other examples are Canada’s leadership in the creation of and on-going support for the UN-created International Criminal Court (ICC) for war crimes, which the U.S. opposes due to fundamental flaws in the treaty that leave the ICC vulnerable to exploitation and politically motivated prosecutions and Canada’s decision in early 2005 not to participate directly in the U.S. missile defense program. The United States and Canada also differ on the issue of landmines. Canada is a strong proponent of the Ottawa Convention, which bans the use of anti-personnel mines. The United States, while the world’s leading supporter of demining initiatives, declined to sign the treaty due to unmet concerns regarding the protection of its forces and allies, particularly those serving on the Korean Peninsula, as well as the lack of exemptions for mixed munitions. U.S. defense arrangements with Canada are more extensive than with any other country. The Permanent Joint Board on Defense, established in 1940, provides policy-level consultation on bilateral defense matters and the United States and Canada share NATO mutual security commitments. In addition, U.S. and Canadian military forces have cooperated since 1958 on continental air defense within the framework of the North American Aerospace Defense Command (NORAD). The military response to the terrorist attacks of September 11, 2001 both tested and strengthened military cooperation between the United States and Canada. In December 2002, the two countries established a Binational Planning Group to develop joint plans for maritime and land defense and for military support to civil authorities in times of emergency. Since 2002, Canada has participated in joint military actions in Afghanistan. Canadian Forces led the NATO International Stabilization Force (ISAF V) there for half of 2004, and in the summer of 2005, Canada deployed a 250-member Provincial Reconstruction Team in Kandahar. It is planning for the deployment of a 1000-person battle group in early 2006. Canada has also contributed to stabilization efforts in Haiti, including by deploying over 500 Canadian troops. The U.S. and Canada also work closely to resolve transboundary environmental issues, an area of increasing importance in the bilateral relationship. A principal instrument of this cooperation is the International Joint Commission (IJC), established as part of the Boundary Waters Treaty of 1909 to resolve differences and promote international cooperation on boundary waters. The Great Lakes Water Quality Agreement of 1972 is another historic example of joint cooperation in controlling transboundary water pollution. The two governments also consult semiannually on transboundary air pollution. Under the Air Quality Agreement of 1991, both countries have made substantial progress in coordinating and implementing their acid rain control programs and signed an annex on ground level ozone in 2000. In June 2003, Canada and the U.S. announced a new border air quality initiative designed to increase cooperation in combating cross-border air pollution, including particulate matter. Three regional projects have been selected for initial joint action. Canada ratified the Kyoto Accord at the end of 2002, despite concern among business groups and others that compliance would place Canada’s economy at a lasting competitive disadvantage vis-à-vis the United States. Canada’s federal government has committed about U.S. $8 billion over seven years to achieving greenhouse gas emission reductions, plus modest additional funds for research and long-term technology development. Canada participates in the U.S.-led International Carbon Sequestration Leadership Forum, which researches effective ways to capture and store carbon dioxide. Canada is also a founding member of the International Partnership for the Hydrogen Economy and the Global Earth Observation System of Systems, both of which are designed to address climate change and are supported by the U.S. In early 2005, Canada joined the U.S.-led Methane to Markets initiative, which focuses on transferring technology to developing countries for the capture and use of methane from pipelines, landfills and other sources. While law enforcement cooperation and coordination were excellent prior to the terrorist attacks on the United States of September 11, they have since become even closer through such mechanisms as the Cross Border Crime Forum. Canada, like the United States, has strengthened its laws and realigned resources to fight terrorism. U.S.-Canada bilateral and multilateral cooperation in the fight is exemplary. Canada is a significant source for the United States of marijuana, as well as precursor chemicals and over-the-counter drugs that are used to produce illicit synthetic drugs. Implementation and strengthening of 2003 regulations in Canada and increased U.S.-Canadian law enforcement cooperation have had a substantial impact in reducing trafficking of precursor chemicals and synthetic drugs, but cannabis cultivation, because of its profitability and relatively low risk of penalty, remains a thriving industry. Trade and Investment The comprehensive U.S.-Canada Free Trade Agreement (FTA), which went into effect in 1989, was superseded by the North American Free Trade Agreement among the United States, Canada and Mexico (NAFTA) in 1994. NAFTA, which embraces the 406 million people of the three North American countries, expanded upon FTA commitments to move toward reducing trade barriers and establishing agreed upon trade rules. It has also resolved long-standing bilateral irritants and liberalized rules in several areas, including agriculture, services, energy, financial services, investment, and government procurement. Since the implementation of NAFTA in 1994, total two-way merchandise trade between the United States and Canada has more than doubled, creating many new challenges for the bilateral relationship. The Security and Prosperity Partnership, launched by all three NAFTA countries in 2005, represents an effort to address these challenges on a continental basis. Canada is an urban services-dependent economy with a large manufacturing base. Since Canada is the largest export market for most states, the U.S.-Canada border is extremely important to the well-being and livelihood of millions of Americans. The U.S. is Canada's leading agricultural market, taking nearly one-third of all food exports. However, imports of Canadian livestock products, particularly ruminants, fell drastically after the discovery of a single case of bovine spongiform encephalopathy (BSE, mad cow disease) in spring 2003. Shipments of most Canadian beef to the U.S. were resumed in late 2003 and trade in live cattle under 30 months resumed in July 2005. Conversely, Canada is the second-largest U.S. agricultural market (after Japan), primarily importing fresh fruits and vegetables and livestock products. The U.S. and Canada enjoy the largest energy trade relationship in the world, with Canada being the single largest foreign supplier of energy to the United States--providing some 17% of U.S. oil imports and 18% of U.S. natural gas demand. Recognition of the commercial viability of Canada’s oil sands has raised Canada’s proven petroleum reserves to 180 billion barrels, making it the world’s second-largest holder of reserves after Saudi Arabia. The electricity grids of the United States and Canada are closely linked and meet jointly developed reliability standards. Quebec is a major source of electricity for New England. While 98% of U.S.-Canada trade flows smoothly, there are frequent bilateral trade disputes over the remaining 2%. Usually, however, these issues are managed through bilateral consultative forums or referral to World Trade Organization (WTO) or NAFTA dispute resolution. For example, in response to WTO challenges by the United States, the U.S. and Canadian Governments negotiated an agreement on magazines that will provide increased access for the U.S. publishing industry to the Canadian market, and Canada amended its patent laws to extend patent protection to 20 years. Canada currently has a number of challenges pending in NAFTA and WTO dispute settlement mechanisms related to U.S. trade remedy law, including actions taken by the U.S. Government on softwood lumber. The U.S. and Canada resolved a WTO dispute over dairy products in 2003. The United States and Canada also have resolved several major issues involving fisheries. By common agreement, the two countries submitted a Gulf of Maine boundary dispute to the International Court of Justice in 1981; both accepted the Court's October 12, 1984 ruling that delineated much of the boundary between the two countries’ Exclusive Economic Zones (EEZs). The United States and Canada signed a Pacific Salmon Agreement in June 1999 that settled differences over implementation of the 1985 Pacific Salmon Treaty. In 2001, the two countries reached agreement on Yukon River Salmon, implementing a new abundance-based resource management regime and effectively realizing coordinated management over all West Coast salmon fisheries. The United States and Canada recently reached agreement on sharing another transboundary marine resource, Pacific Hake. The two countries also have a treaty on the joint management of Albacore Tuna in the Pacific, and closely cooperate on a range of bilateral fisheries issues and international high seas governance initiatives. In 1995, the United States and Canada signed a liberalized aviation agreement, and air traffic between the two countries has increased dramatically as a result. U.S. immigration and customs inspectors provide preclearance services at seven airports in Canada, allowing air travelers direct connections in the United States, and preclearance operations are expected to begin in Halifax soon. The two countries also share in operation of the St. Lawrence Seaway, connecting the Great Lakes to the Atlantic Ocean. The U.S. is Canada's largest foreign investor. Statistics Canada reports that at the end of 2002, the stock of U.S. foreign direct investment in Canada was $183 billion, or about 65% of total foreign direct investment in Canada. U.S. investment is primarily in Canada's mining and smelting industries, petroleum, chemicals, the manufacture of machinery and transportation equipment, and finance. Canada is the sixth-largest foreign investor in the United States. At the end of 2004, Canadian investment in the United States, including investments from Canadian holding companies in the Netherlands, was $134 billion at historical cost basis. Canadian investment in the United States is concentrated in manufacturing, wholesale trade, real estate, petroleum, finance, and insurance and other services. Principal U.S. Embassy Officials The U.S. Embassy in Canada is located at 490 Sussex Drive, Ottawa, Ontario. The mailing address is P.O. Box 866, Station B, Ottawa, Ontario, K1P 5T1 (tel. 613-238-5335). GOVERNMENT Canada's parliament consists of an elected House of Commons and an appointed Senate. Legislative power rests with the 308-member (as of the June 28, 2004 elections) Commons, which is elected for a period not to exceed 5 years. The prime minister may ask the governor general to dissolve parliament and call new elections at any time during that period. Vacancies in the 105-member Senate, whose members serve until the age of 75, are filled by the governor general on the advice of the prime minister. Recent constitutional initiatives have sought unsuccessfully to strengthen the Senate by making it elective and assigning it a greater regional representational role. Criminal law, based largely on British law, is uniform throughout the nation and is under federal jurisdiction. Civil law is also based on the common law of England, except in Quebec, which has retained its own civil code patterned after that of France. Justice is administered by federal, provincial, and municipal courts. Each province is governed by a premier and a single, elected legislative chamber. A lieutenant-governor appointed by the governor general represents the Crown in each province. Principal Government Officials Canada maintains an embassy in the United States at 501 Pennsylvania Avenue, NW, Washington, DC 20001 (tel. 202-682-1740). POLITICAL CONDITIONS Prime Minister Martin’s Liberals began the 38th parliament in the fall of 2004 with a modest agenda and hopes for relative stability, but the public inquiry into the "sponsorship scandal" undermined support for the Liberal Party, particularly in Quebec, and the Conservatives saw a chance in the spring of 2005 to topple the government through a no-confidence vote. That vote was narrowly defeated but a late November no-confidence motion succeeded and parliamentary elections to pick a new government will take place on January 23, 2006. In Canada’s political system, a key challenge for any federal government is balancing the conflicting interests of Canada’s 10 provinces and 3 territories. Recognizing the advantages of a coordinated approach in dealing with the federal government, the provinces and territories created a Council of the Federation in 2003, with Canada’s premiers meeting regularly in that forum to develop common positions. Quebec, which represents 23% of the national population (and has 75 seats in the House of Commons), seeks to preserve its distinctive francophone nature, and is perceived by the less-populous western provinces as wielding undue influence on the country. The western provinces don't believe their interests are given enough attention in Ottawa; industrialized central Canada believes it effectively subsidizes the rest of the country through tax transfers; and the Atlantic provinces seek to assert greater provincial control over fishing and mineral rights off their shores. The government, which has been under Liberal control since 1993, has ceded some spending power in areas of provincial jurisdiction, while strengthening the federal role in areas such as inter-provincial trade and the regulation of securities. Prime Minister Martin’s minority government status and the resulting prospect of early elections led him to make significant concessions to the provinces, including a revenue sharing agreement with the Atlantic provinces over offshore energy earnings, and a revenue transfer agreement with Ontario. In the September 2004 First Minister’s conference, Martin made a CN$41 billion health care transfer deal to the provinces, including, notably, a separate deal for Quebec that has come to be referred to as "asymmetric federalism," the concept that not all provinces must be treated equally by the federal government. Decreased federal support to the provinces for health care services had been a major point of contention between provincial leaders and the Chretien and Martin governments. National Unity |
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