The US and Canada are two important partners of the North American Free Trade Agreement (NAFTA). Canada, together with most industrialized countries, has ratified the Kyoto Protocol and is beginning to implement domestic policy measures aimed at meeting its legally binding Kyoto emissions target. In the meantime, the US has made it clear that it will pursue a separate climate strategy as outlined by the Bush Climate Change Initiative, and thus that it will—at least initially—not be part of the international regime. Given that no other two countries in the world trade as much between themselves as do Canada and the US, Canadian industries have much greater competitiveness (trade) concerns brought about by the non-level playing field, where Canadian industries face mandatory emissions constraints but US industry’ emissions are uncapped, than their Japanese and European counterparts. All this puts Canada in a very difficult position in meeting its Kyoto target, in comparison with Japan and the European Union (EU). Thus, focusing on the US and Canada is of much higher policy relevance than, say, focusing on the US and Japan or the EU. Against this background, this paper aims to address the following six major policy issues. |
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