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U.S. Department of State Background Note

Canada

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Canada

U.S.-CANADA RELATIONS

Prime Minister Harper, who entered office stating he intended to bring a new, more positive tone to bilateral relations while still defending Canadian interests, held his first meeting with President Bush at the March 30-31, 2006 Security and Prosperity Partnership of North America (SPP) meeting in Cancun, Mexico. Prime Minister Harper later met with President Bush in Washington, DC in July 2006, and the two leaders saw each other again when President Bush attended a North American leaders meeting in Montebello, Quebec in August 2007.

Trade and Investment
The United States and Canada enjoy an economic partnership unique in the world. The two nations share the world's largest and most comprehensive trading relationship, which supports millions of jobs in each country. In 2006, total trade between the two countries exceeded $500 billion. The two-way trade that crosses the Ambassador Bridge between Detroit, Michigan and Windsor, Ontario equals all U.S. exports to Japan. Canada's importance to the United States is not just a border-state phenomenon: Canada is the leading export market for 39 of the 50 U.S. States, and ranked in the top three for another 8 States. In fact, Canada is a larger market for U.S. goods than all 25 countries of the European Community combined, whose population is more than 15 times that of Canada. The comprehensive U.S.-Canada Free Trade Agreement (FTA), which went into effect in 1989, was superseded by the North American Free Trade Agreement among the United States, Canada and Mexico (NAFTA) in 1994.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 443 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 grown by 250%, creating many new challenges for the bilateral relationship. The Security and Prosperity Partnership of North America, launched by the three NAFTA countries in March 2005, represents an effort to address these challenges and others 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 58% of its agri-food exports in 2006. However, U.S. 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 early 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. Canada is the largest U.S. agricultural market, primarily importing fresh fruits and vegetables and livestock products.

The U.S. and Canada enjoy the largest energy trade relationship in the world. Canada is the single largest foreign supplier of energy to the United States--providing 17% of U.S. oil imports and 18% of U.S. natural gas demand. Recognition of the commercial viability of Canada's oil sands in Alberta has raised Canada's proven petroleum reserves to 175 billion barrels, making it the world's second-largest holder of reserves after Saudi Arabia. Canada is planning Arctic pipelines and liquefied natural gas terminals to provide more natural gas to the North American market. Canada and the U.S. operate an integrated electricity grid which meets jointly developed reliability standards and provide almost all of each other's electricity imports. Canada is a major supplier of electricity (mostly clean and renewable hydroelectric power) to New England, New York, the Upper Midwest, the Pacific Northwest, and California. Canadian uranium helps fuel U.S. nuclear power plants.

While 98% of U.S.-Canada trade flows smoothly, there are occasional trade disputes affecting the remaining 2%. Usually these issues are managed amicably through bilateral consultative forums or referral to World Trade Organization (WTO) or NAFTA dispute resolution procedures. For example, in response to WTO challenges by the United States, the U.S. and Canadian Governments negotiated an agreement on magazines providing 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 has challenged U.S. trade remedy law in NAFTA and WTO dispute settlement mechanisms. Some of these cases involved actions taken by the U.S. Government on softwood lumber imports from Canada. However, the two countries implemented a comprehensive settlement on softwood lumber in late 2006 and these cases were dropped. The U.S. is pressing Canada to strengthen its intellectual property laws and enforcement. 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.

U.S. immigration and customs inspectors provide preclearance services at eight airports in Canada, allowing air travelers direct connections in the United States. In 2005, about 16.5 million passengers flew between the U.S. and Canada on scheduled flights. Air traffic should increase further after the bilateral Open Skies agreement signed in March 2007 removed all economic restrictions on civil aviation services between Canada and the U.S. The two countries also share in operating the St. Lawrence Seaway, connecting the Great Lakes to the Atlantic Ocean.

Canada and the U.S. have one of the world's largest investment relationships. The U.S. is Canada's largest foreign investor. Statistics Canada reports that at the end of 2006, the stock of U.S. foreign direct investment in Canada was $241 billion, or about 61% 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 2005, the U.S. Commerce Department estimates that Canadian investment in the United States, including investments from Canadian holding companies in the Netherlands, was $235 billion at historical cost basis. Canadian investment in the United States is concentrated in finance and insurance, manufacturing, banking, information and retail trade and other services.

Principal U.S. Embassy Officials
Ambassador-- David H. Wilkins
Deputy Chief of Mission--Terry Breese
Minister-Counselor for Political Affairs--Scott Bellard
Minister-Counselor for Economic Affairs--Brian Mohler
Minister-Counselor for Public Affairs--Linda Cheatham
Minister-Counselor for Commercial Affairs--Stephan Wasylko
Minister-Counselor for Consular Affairs--Keith Powell
Counselor for Environment, Science, Technology, and Health--James Steele
Defense Attaché--Col. Joseph Breen

Consul General Vancouver--Lewis Lukens
Consul General Calgary--Tom Huffaker
Consul General Toronto--John Nay
Consul General Montreal--Mary Marshall
Consul General Quebec--David Fetter
Consul General Halifax--Harold Foster
Consul Winnipeg--Mary Speer

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 is a constitutional monarchy with a federal system, a parliamentary government, and strong democratic traditions. The 1982 Charter of Rights and Freedoms guarantees basic rights in many areas. Queen Elizabeth II, as Queen of Canada, serves as a symbol of the nation's unity. She appoints a governor general, who serves as her representative in Canada, on the advice of the prime minister of Canada, usually for a 5-year term. The prime minister is the leader of the political party in power and is the head of the cabinet. The cabinet remains in office as long as it retains majority support in the House of Commons on major issues.

Canada's parliament consists of an elected House of Commons and an appointed Senate. Legislative power rests with the 308-member Commons. Legislation to provide for federal elections to be held on fixed dates, every four calendar years, was passed in the spring of 2007. The first fixed election date is scheduled for 2009, but the prime minister may ask the governor general to dissolve parliament and call new elections at any time should the governing party lose the confidence of the House of Commons. 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. In an effort to bring about incremental Senate reform without a constitutional amendment, bills to place term limits upon Senators and to create a process of public consultation in the appointment of Senators have been introduced in parliament. However, the bills face substantial opposition, both from within parliament and from certain provinces, which question the constitutionality of the proposed legislation, putting the success of the legislation in doubt.

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
Head of State--Queen Elizabeth II
Governor General--Michaelle Jean
Prime Minister--Stephen Harper
Minister of Foreign Affairs--Maxime Bernier
Ambassador to the United States--Michael Wilson
Ambassador to the United Nations--John McNee

Canada maintains an embassy in the United States at 501 Pennsylvania Avenue, NW, Washington, DC 20001 (tel. 202-682-1740).

POLITICAL CONDITIONS

On February 6, 2006, Stephen Harper was sworn in as Canada's twenty-second Prime Minister, succeeding Liberal Party leader Paul Martin. An admitted "policy specialist," Harper rose from the ranks of conservative political party staffers. Prior to becoming Prime Minister, he sat as a Member of Parliament, including as Leader of the Opposition since 2002 when he became head of the western-based Canadian Alliance. He was elected the first leader of the Conservative Party of Canada when it was created in 2003 through the merger of Canadian Alliance and Peter MacKay's Progressive Conservative Party. The January 23, 2006 election victory by the Conservative Party ended 12 years of Liberal Party rule that, in the end, was tainted by corruption and ethics concerns, despite the economic progress Canada achieved while the Liberals were in power.

In the January 2006 elections, the Conservatives made unexpected gains in Quebec, winning ten seats. Many observers have noted how a reinvigorated Conservative option in Quebec represents a boost for national unity. Harper's government is in a minority position in the House of Commons, however, and has a slimmer minority than was enjoyed by the preceding Liberal government. The Conservatives now hold 125 seats and the Liberals 98. The separatist Bloc Quebecois (BQ) has a majority (49) of Quebec's 75 seats (the BQ offers candidates only in Quebec). The left-leaning New Democratic Party (NDP) increased its seat count to 29, and three independents also sit in parliament (four seats are vacant).

Prime Minister Harper's Conservatives began the 39th Parliament in the spring of 2006 with several objectives that were featured during the election campaign: accountability and ethics in government; cutting the federal value-added sales tax; measures to fight crime and urban violence; reducing wait times for medical procedures in Canada's national health system; and providing a tax credit to parents for young children's day care. Harper's Cabinet choices on February 6 included his Quebec advisor and campaign co-chair Michael Fortier, who was appointed to the Senate and given the portfolio for the Department of Public Works and Government Services, and former Liberal Industry Minister David Emerson, who crossed the floor immediately after the election to become the Conservative Government's Minister of International Trade. Former Deputy Opposition leader Peter MacKay was named Foreign Minister in 2006 and later became Defense Minister in a cabinet shuffle in August 2007. After going out of session in late 2006, parliament returned to work on January 29, 2007, with the environment, Canada's Afghanistan military mission, and budgetary concerns drawing attention during the session that continued until late June.

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 their leaders (Canada's premiers) meeting regularly in that forum to develop common positions.

Quebec, which represents 23% of the national population (and has a similar proportion of 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 Federal Government. At least until January 2006's election of Albertan Stephen Harper as Prime Minister, the western provinces had sometimes expressed concern that their interests were not fully attended to by Ottawa. Ontario, for its part, believes that it pays out significantly more to the Federal Government than it gets back in revenues; and the Atlantic Provinces seek to assert greater control over fishing and mineral rights off their shores. The Federal Government, which had been led by the Liberal Party from 1993 until February 2006, has ceded some power in a few areas of provincial jurisdiction, while seeking to strengthen the federal role in many other areas such as inter-provincial trade and the regulation of securities. Former Prime Minister Martin's minority government made 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 (approximately U.S. $37 billion) health care transfer deal to the provinces. This included a separate deal for Quebec that came to be seen as reinforcing "asymmetric federalism," a view that accepts that not all provinces must be treated the same by the Federal Government to be treated equitably. Prior to the health agreement, reduced federal support to the provinces for health care services had been a major point of contention between provincial leaders and the previous Liberal governments, as it was perceived to have contributed to sustained fiscal deficits in many provinces while the Federal Government ran sustained surpluses (the so-called "vertical fiscal imbalance").

The average life expectancy of a minority government in Canada is 18 months to 2 years. Earlier in 2007, this led to expectations of a federal election in the spring of 2007 that never materialized. Prospects for a near-term federal vote have since receded.

National Unity
Popular support for sovereignty appears to be on the wane in Quebec, although pride in that province's unique cultural and linguistic identity remains very strong. Most Quebec voters seem to appreciate the economic benefits of remaining in the Canadian confederation and aim to advance their separate francophone identity within the confederation. But support for federalism is fragile. Anger over the "sponsorship" program reignited talk of sovereignty in 2005, while Prime Minister Harper's talk of "open federalism" brought the numbers back down in 2006. In the March 2007 provincial election, the ruling provincial Liberals garnered only 33% of the vote, and Premier Jean Charest now heads a minority government. The Action Democratique du Quebec (ADQ), led by Mario Dumont, finished second, while the pro-sovereignty Parti Quebecois (PQ) finished a close third.

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Consular Information Sheets, Public Announcements, and Travel Warnings. Consular Information Sheets exist for all countries and include information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Public Announcements are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Public Announcements, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778). Customer service representatives and operators for TDD/TTY are available Monday-Friday, 7:00 a.m. to 12:00 midnight, Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled "Health Information for International Travel" (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Revised: Sep. 2007

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