Canada and the
United States
SHARED INTERESTS AND CONCERNS
January 2009
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Contents
SETTING THE SCENE Canada–US relations: Introduction and overview............................................................... The Security and Prosperity Partnership .............................................................................. 1 3 ECONOMIC PROSPERITY AND TRADE PRIORITIES Commercial interaction: An overview of trade, investment and tourism............................................................................................. Bilateral energy trade ............................................................................................................... The global financial crisis and its impact on Canada .......................................................... Border facilitation: Products and people............................................................................... Intellectual property................................................................................................................. COOL: Mandatory country‐of‐origin labelling in the United States................................................................................................................ 5 7 9 11 13 15 SECURING NORTH AMERICA The bilateral defence relationship .......................................................................................... Joint counter‐terrorism initiatives .......................................................................................... Afghanistan ............................................................................................................................... Cooperation on immigration................................................................................................... Arctic sovereignty..................................................................................................................... 17 19 21 23 25 SHARED ENVIRONMENTAL AND ENERGY CONCERNS Regional climate change initiatives........................................................................................ Air quality issues ...................................................................................................................... Water issues: Managing the Great Lakes .............................................................................. PARLIAMENTARY INFORMATION AND RESEARCH SERVICE
PUBLICATION PRB 08-34E, JANUARY 2009
27 29 31 Canada–US relations: Introduction and overview The Security and Prosperity Partnership Setting the scene
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Canada–US relations: Introduction and overview
that, “No other pair of international neighbors can claim as successful and mutually prosperous a rela‐
tionship as has evolved between the United States and Canada over the past two hundred years. The two countries share not only a continent but also an interwoven cultural, political and economic heri‐
tage.” 4 Points of difference will inevitably emerge, even when relations are warmest. For example, Can‐
ada’s Conservative government re‐emphasized disputed Arctic sovereignty claims during the Bush presidency. Institutionally, recent Canadian governments, federally and provincially, have attempted to strengthen Canada’s voice with US decision‐makers, including with Congress, across regions and among states, as well as at the national executive level. This should help Canada to adjust to a new Obama ad‐
ministration and Democrat‐dominated Congress. Every issue raised in the following pages – from security, the border, investment and trade, natural resources, energy, the environment, and immigration to the Arctic, Afghanistan and others – will be af‐
fected. These are addressed in 16 papers prepared in December as part of Carleton University’s continuing Canada–US Project. 5 The Project’s final report was re‐
leased on 19 January 2009. 6
Bilateral relations cover a broad spectrum: those that are strictly bilateral (e.g., transboundary waters); those that now occur in a trilateral North American context (e.g., NAFTA); those that involve regional cooperation (e.g., transatlantic, notably NATO, hemi‐
spheric, Asia‐Pacific); and those that entail global considerations (e.g., climate change, Afghanistan, humanitarian intervention). Canada’s Parliament maintains regular contacts with US lawmakers through the Canada–US Interpar‐
liamentary Group. The most recent comprehensive examination of Canada–US relations, in a North American context, was the December 2002 report of the House of Commons Standing Committee on For‐
eign Affairs and International Trade, Partners in North America: Advancing Canada’s Relations with the United States and Mexico. Canada–US issues will con‐
tinue to be prominent in future parliamentary debates. IT IS WIDELY ACCEPTED THAT CANADA–US relations must be a Canadian policy priority. Relations with its superpower neighbour have been Canada’s dominant bilateral relationship for over half a century, accompanied by increasingly inte‐
grated continental arrangements. Yet not all would share Allan Gotlieb’s assessment that this relation‐
ship should have “paramountcy” in Canada’s international relations – so important as to trump other considerations, and tying Canada’s influence abroad to its influence in Washington. Surveys have repeatedly shown that while Canadians want good relations with the United States, they are uncomfort‐
able with these becoming too close or impeding Canada’s ability to act independently on the world stage. This caution is well stated by another former Cana‐
dian ambassador to the United States, Derek Burney: “In managing relations with the United States, the perennial challenge for any Canadian leader is to find the right balance between a level of trust and en‐
gagement in Washington that anchors our substantial economic and security interests and a global role that accentuates distinct Canadian aspirations.” 1
Several other underlying aspects of the relation‐
ship deserve emphasis. Characterized as one of complex interdependence, it is also “asymmetrical” due to the obvious power disparities between the two countries. The impact of US policies and events is much greater on Canada than vice versa. 2 In the United States, Canada is but one among many bilat‐
eral relations; indeed, Canada was subsumed within the State Department’s “European and Eurasian” sec‐
tion until 1998. The web of bilateral connections continues to grow more complex, dense and intertwined. This is not only evident at the national and subnational inter‐
governmental levels, 3 it is manifest daily in the im‐
mense number of cross‐border population movements, transactions and non‐governmental associations. The following collection of papers highlights the scale and scope of a relationship that is often as much do‐
mestic as international. A second key factor is the fluctuation in the rela‐
tions of “ambivalent allies,” even while it is noted 1
C ANADA –US
RELATIONS :
I NTRODUCTION
AND OVERVIEW
Mr. Burney argues that Canada should move quickly and proactively to state its case: “The Presi‐
dent‐elect will not be looking for wish lists from allies such as Canada, but there is an opportunity for crea‐
tive Canadian diplomacy rooted in our national interest and backed by the necessary material and po‐
litical resources. … We need to keep our interests front and centre and propose common sense initia‐
tives that will offer mutual benefit.” 7
2. Stéphane Roussel, “Une relation unique ou à sens unique?” Le Multilatéral : Mieux comprendre la politique internationale du Canada, September/October 2007. 3. Canada School of Public Service, Building Cross‐Border Links: A Compendium of Canada–US Government Collaboration, 2004.
4. John Herd Thompson and Stephen J. Randall, Canada and the United States: Ambivalent Allies, 4th ed., The University of Georgia Press, Athens and London, 2008.
5. Conference papers, Carleton University Canada–US Project, Blueprint for Canada–US Engagement under a New Administration, December 2008, http://www.ctpl.ca/.
Gerald Schmitz
Reference and Strategic Analysis Division
January 2009
6. Carleton University Canada–US Project, From Correct to Inspired: A Blueprint for Canada–US Engagement, 19 January 2009, http://www.carleton.ca/ctpl/conferences/documents/FINAL‐
BLUEPRINT‐ENGLISH.pdf.
7. Derek Burney, “The Obama inheritance: A former Canadian ambassador to the United States catalogues the many challenges the new president will face – and proposes a way forward for Canada–U.S. relations,” National Post [Toronto], 5 November 2008, p. A26. SOURCES
1. Derek Burney, “The Perennial Challenge: Managing Canada–US Relations,” chapter 3 in Andrew Cooper and Dane Rowlands, Canada Among Nations 2005: Split Images, McGill‐Queen’s University Press, Montreal and Kingston, 2005. ADDITIONAL READING
Gagnon, Frédéric, and Karine Prémont. Au Nord de l’Hégémon : L’impact des élections américaines de 2008. Université du Québec à Montréal, October 2008.
2
The Security and Prosperity Partnership
THE SECURITY AND PROSPERITY PARTNERSHIP OF North America (SPP) was launched in March 2005 as a trilateral effort among Canada, the United States and Mexico. The initiative is designed to strengthen the continent’s competitiveness and enhance the se‐
curity and quality of life of its people through additional cooperation and information sharing. At the time of its launch, the SPP was considered the most significant development in continental integra‐
tion since the introduction of the North American Free Trade Agreement (NAFTA). The basic premise of the SPP is that security and economic prosperity are mutually reinforcing. Ad‐
dressing security concerns invites prosperity by creating a more stable economic environment in which to undertake business; and with a prosperous economy, countries will have the capacity to address security concerns more adequately. The SPP is not a specific trilateral treaty or accord as is, for example, NAFTA. Instead, it is a non‐
binding partnership and dialogue among many dif‐
ferent government departments, agencies and business groups within the three above‐mentioned countries that attempts to address a common set of North American challenges. The SPP is a broad framework that employs a wide range of initiatives to achieve the desired secu‐
rity, prosperity and quality‐of‐life objectives. Issues covered include border security, energy and the envi‐
ronment, food and product safety, and means to enhance North American competitiveness such as the facilitation of cross‐border traffic and the reduction of regulatory differences between Canada and the United States. Priorities are established by the three political leaders at the annual North American Leaders’ Summits. The 2007 summit, which Canada hosted, set out the following five priorities: boosting North America’s global competitiveness; ensuring safe food and food products; achieving sustainable energy and a clean environment; attaining smart and secure bor‐
ders; and realizing progress in emergency management and preparedness. Owing to its trilateral nature and its broad scope, the SPP is a complex mechanism involving a fairly lengthy list of working groups. These groups are, in essence, the modern‐day version of the various trilat‐
eral working groups that were created during the NAFTA negotiations. While the SPP certainly has its proponents, it has also been the subject of criticism in both Canada and the United States. In addition to a wide range of spe‐
cific problems with the initiative, critics in both countries have in general put forward three primary concerns: apprehension regarding further economic integration within North America and the loss of sovereignty that that integration implies; the existing perception that limited progress has been achieved under the SPP initiative to remove or reduce non‐
tariff barriers to trade (e.g., regulatory differences be‐
tween countries); and the perceived secretive manner in which SPP negotiations and discussions have taken place. At present, it is unclear what the future holds for the SPP. Much will hinge on the new US Administra‐
tion’s views on this North American partnership. Peter Berg
International Affairs, Trade and Finance Division
December 2008
_____________________ ADDITIONAL READING
Government of Canada. Security and Prosperity Partnership of North America. http://www.spp‐psp.gc.ca/overview/about‐en.aspx. Anderson, Greg, and Christopher Sands. Negotiating North America: The Security and Prosperity Partnership. Hudson Institute White Paper, Summer 2007. http://hudson.org/files/pdf_upload/Hudson NegotiatingNorthAmericaadvanceproof2.pdf. 3
Commercial interaction: An overview of trade, investment and tourism Bilateral energy trade The global financial crisis and its impact on Canada Border facilitation: Products and people Intellectual property COOL: Mandatory country‐of‐origin labelling in the United States Economic prosperity and trade priorities
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Commercial interaction: An overview of
trade, investment and tourism
CANADIAN MERCHANDISE EXPORTS TO THE UNITED States totalled $356 billion (79% of total exports) in 2007. 1 Imports from the United States were valued at $220 billion. Canada had a merchandise trade sur‐
plus with the United States of $136 billion in 2007. Canada is the most important export destination for the United States, accounting for 21.7% of that country’s exports, and is the number one export des‐
tination for 35 US states. Canada is also the source of 16.1% of imports into the United States, second only to China. Canada’s largest exports to the United States are energy (25.3% of exports), motor vehicles and parts (18.4%), and machinery and equipment (7.5%). Can‐
ada’s largest imports from the United States are motor vehicles and parts (22.6% of imports), machin‐
ery and equipment (16.1%), and electrical/electronic goods (6.8%). Canada exported $36 billion of services to the United States and imported $48 billion in 2007. The United States is the largest source of foreign direct investment (FDI) in Canada, with a total in‐
vestment stock of $288.6 billion in 2007 – 57.6% of total FDI in Canada. The United States is also the largest destination for Canadian direct investment abroad (CDIA), accounting for $226.1 billion or 44.0% of Canada’s total CDIA. In 2007, Canadians made 42.6 million visits to the United States, and Americans made 25.7 million vis‐
its to Canada. 2 Canadians spent US$10.5 billion in the United States in 2007. Americans spent US$6.5 billion in Canada. US travel to Canada has fallen considerably since the late 1990s, especially same‐day automobile traffic, which is down from 25.3 million visits in 1999 to 11.2 million in 2007, a 57% decrease. Michael Holden
International Affairs, Trade and Finance Division
November 2008
Canada–US merchandise trade
Average yearly trade growth: 2002–2007 (%) 3.1
US share of Canadian trade (%)
87.1
81.8
67.6
2.6
62.6
54.2
Exports
Imports
US
Worldwide
0.6
79.0
0.2
Exports
Imports
1997
2002
2007
Source: Library of Parliament calculations using Statistics Canada data.
Canada–US investment ties
Average yearly US share of investment growth: 2002–2007 (%) Canadian investment (%)
7.0
66.4
4.5
50.6
64.9
45.9
57.6
44.0
3.4
2.5
CDIA
US
FDI
Worldwide
CDIA
FDI
1997 2002
2007
Source: Library of Parliament calculations using Statistics Canada data.
Travel between Canada and the US
90
80
70
millions of persons
US visitors to Canada
Canadian visitors to the US
60
50
40
30
20
10
0
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Source: Library of Parliament calculations using Statistics Canada data.
NOTES
5
1. All currency figures are in Canadian dollars, unless otherwise stated. 2. Data include both single‐day and overnight visits. Bilateral energy trade
An integrated electricity sector
Canada’s total electrical generating capacity from all sources was 107,209 MW in 2007. In comparison, US generating capacity in 2007 was 1,089,807 MW. In Canada, hydroelectricity accounts for 60% of overall electricity production, while coal represents almost 50% in the United States. Canada is a net exporter of electricity to the United States, with a positive trade balance of 18 million MWh (approximately 3% of to‐
tal production). Electricity production in the US, 2006
The North American electricity sector is highly inte‐
grated. Canadian provinces and US states rely on each other to maintain system reliability. Because demand for electricity in Canada generally peaks in winter while demand in the United States peaks in summer, and because of geographical and economic linkages, there are more electricity transfers along north‐south lines than east‐west lines. Electricity production in Canada, 2007
Hydro 60% Coal
49%
Nuclear
12% Gas
20%
Oil
2%
Coal 15% Oil Other renewables 3% 3% Nuclear
19% Gas 8% Hydro
7% Other Other renewables
2% 1% Source: US Energy Information Administration,
http://www.eia.doe.gov/fuelelectric.html.
Source: Centre for Energy (Calgary),
http://www.centreforenergy.com/FactsStats/statistics.asp?
template=5,0.
Energy trade balance
In considering the impact of a US economic re‐
cession on Canada’s energy sector, it is important to distinguish between the implications of a worldwide recession and those of a slowdown that is more nar‐
rowly confined to the United States. In the event of a severe and long‐lasting global recession, energy prices could remain relatively low for a significant period – a situation that would adversely affect the Canadian energy industry at large. If a recession were more narrowly confined to the United States while de‐
mand from emerging economies (China and India) remains robust, some forms of energy would likely be more affected than others. Natural gas (unless in liquid form) and electricity cannot be exported over‐
seas; thus, Canada’s producers of natural gas and electricity would likely suffer the most from a signifi‐
cant US recession. Canada’s oil producers, on the other hand, would likely be less affected by an eco‐
nomic recession that was confined primarily to the United States, as oil is easier to transport to overseas markets. The oil and gas sector is also very integrated in North America. Although the United States is a much larger producer, Canada exports south of the border a sig‐
nificant proportion of the oil and gas it produces. As shown in the table at the end of this paper, Canada has a positive trade balance with the rest of the world for the major forms of energy. The United States, by contrast, has a positive trade balance only for coal. Canada’s energy exports rely heavily on the US market. The United States consistently accounts for almost 100% of Canada’s crude oil exports: in 2007, 19% of US crude oil imports were from Canada, mak‐
ing Canada the largest source of such imports, ahead of Saudi Arabia and Mexico. In 2007, Canada ac‐
counted for 82% of US imports of natural gas. The United States’ coal exports to Canada, however, are more than 10 times the size of its coal imports from Canada. From January to June 2008, 6% of US coal imports originated from Canada, while Canada ac‐
counted for 26% of US coal exports. 7
B ILATERAL
ENERGY TRADE
Trade balance for major forms of energy: United States and Canada
Crude oil (thousand barrels) Natural gas (million m3) Coal (terajoules) Electricity (million MWh) United States Production Total exports Canada Total imports Total trade balance1 (exports minus imports) Production Total exports Total imports Total trade balance1 (exports minus imports) 1,848,450 10,006 3,661,404 ‐3,651,398 945,678 665,804 311,199 354,605 570,840 23,298 130,523 ‐107,225 167,195 109,906 12,455 97,451 25,460,307 1,087,102 793,665 293,437 1,339,754 656,986 565,243 91,743 4,065 24 43 ‐19 598 36 18 18 1. Exports, imports and trade balance data refer to trade with the rest of the world.
Note: Data for crude oil and natural gas are for 2007; data for coal and electricity are for 2006.
Source: Library of Parliament compilation using data from the US Energy Information Administration and Statistics Canada.
Jean-Luc Bourdages
Mathieu Frigon
Industry, Infrastructure and Resources Division
December 2008
8
The global financial crisis and its impact on Canada
What happened in the United States?
has recently ranked Canada’s banking system as the soundest in the world. Canadian banks are profitable, well‐capitalized and well‐positioned to withstand economic shocks. As well, with the six largest domes‐
tic banks holding more than 90% of banking industry assets, the banking industry is relatively stable. Fur‐
thermore, the regulatory framework for Canada’s financial sector is both more responsive and more prudent, in some respects, than that of the United States. Relative to their American counterparts, Cana‐
dian banks were less active in the sub‐prime lending and securitization activities that are at the centre of the current financial crisis. In 2006, sub‐prime loans accounted for less than 5% of new mortgages in Canada, compared to 22% in the United States. Fur‐
thermore, whereas more than 50% of all mortgage debts outstanding in the United States were sold to investors through securitization, more than 75% of Canadian mortgages were held by financial institu‐
tions on their balance sheet in a more traditional fashion (as of 31 December 2007). While the Canadian financial system seems to be doing relatively better than those of other countries, Canada’s economy is nonetheless feeling the global economic slowdown. The economic difficulties ex‐
perienced by our largest trading partner – the United States – are resulting in weaker Canadian exports and further problems for the manufacturing sector. Moreover, the strong Canadian energy and natural resources sector is likely to suffer as the world eco‐
nomic slowdown brings about lower demand and weaker prices for commodities. Although Canada has been relatively insulated from the worst of the fi‐
nancial crisis to date, the impact of the economic slowdown in the United States and elsewhere has af‐
fected, and will continue to affect, our nation. The current global financial crisis was triggered by difficulties in the US housing market. A large number of mortgages – so‐called sub‐prime mortgages – were granted to Americans with poor credit histories who were seeking to take advantage of historically low in‐
terest rates and relatively lax credit standards. With falling home prices and rising interest rates on their mortgages, a significant proportion of these sub‐
prime borrowers are now unable or unwilling to re‐
pay their mortgages. Most sub‐prime mortgages were bundled and sold to investors globally through a process known as securitization, which transforms mortgages and other assets into tradable financial instruments such as collateralized debt obligations (CDOs). Investors in CDOs and similar financial instruments suffered relatively heavy losses as US borrowers defaulted on their mortgages. Moreover, the complexity of these instruments, and uncertainty surrounding their value, have contributed to a “market freeze” for such products, further exacerbating the losses suffered by investors. Because of the losses related to US sub‐prime mortgages, a number of financial institutions in the United States and elsewhere either went bankrupt or received government support. Banks have become wary of lending to each other due to fear that other institutions will be unable to repay their loans, thereby raising the cost of inter‐bank loans. The higher cost of raising cash, coupled with the need to make their balance sheets look better, has resulted in banks lending less and at higher interest. This “credit crunch” is now leading to decreased consumption and investments, giving rise to fears of a worldwide recession. How is Canada being affected?
So far, Canada’s financial system has been relatively less affected by the global financial crisis than those of other industrialized countries such as the United States and Great Britain. The World Economic Forum Philippe Bergevin
International Affairs, Trade and Finance Division
December 2008
9
Border facilitation: Products and people
known risk. For example, the NEXUS program facili‐
tates the border clearance process for low‐risk, pre‐
approved travellers into Canada and the United States. It is increasingly popular, and will be an ac‐
cepted document for land‐border crossings once the United States’ Western Hemisphere Travel Initiative is fully implemented. Free and Secure Trade (FAST) is a joint initiative designed to move pre‐approved eligible goods across the shared border quickly and to verify trade compli‐
ance away from the border. To be eligible for this initiative, participants must meet the requirements of the United States’ Customs‐Trade Partnership Against Terrorism (C‐TPAT) program or of Canada’s Partners in Protection (PIP) program. Other initia‐
tives include the Advance Commercial Information program and the bilateral Container Security Initia‐
tive, among others. These, and other, initiatives and programs should be considered in the context of ongoing bilat‐
eral efforts. Following the September 2001 terrorist attacks, in December 2001 Canada and the United States concluded the Smart Border Declaration and Action Plan. The Action Plan continued and en‐
hanced the long tradition of working cooperatively to promote security as well as the movement of legiti‐
mate trade and travellers, with a focus on the secure flow of people and goods, secure infrastructure, and coordination and information sharing. Key elements of the Action Plan have been sub‐
sumed into the trilateral Security and Prosperity Partnership (SPP) concluded among the North Ameri‐
can Free Trade Agreement (NAFTA) partners. Border facilitation is one of the SPP’s 10 security goals. Of note is the April 2008 statement by the NAFTA lead‐
ers that a particular focus should be making the borders “smarter and more secure.” Their statement mentioned efforts to coordinate long‐term infrastruc‐
ture plans as well as steps to enhance services, reduce bottlenecks and lessen congestion at major border crossings. WITH ANNUAL BILATERAL TRADE CURRENTLY valued at more than C$500 billion, and an estimated 24.1 million overnight trips by Canadians to the United States and 13.3 million overnight trips by Americans to Canada in a one‐year period, both countries benefit from efforts to enable the efficient movement of known no‐ and low‐risk products and people across the shared border. Such efforts pre‐
date the terrorist attacks of 11 September 2001, but activities have had an added impetus since then and have focused on both timely, low‐cost movement and security imperatives. Canadian and US border
and security agencies
In both countries, a variety of federal departments and agencies play a role in safeguarding safety and security, and some are focused on these priorities in the context of the shared border. For example, the Royal Canadian Mounted Police seeks to ensure the safety and security of Canadians and Canadian insti‐
tutions, domestically and globally, and also looks at such issues as border integrity. Its involvement in bi‐
lateral Integrated Border Enforcement Teams (IBETs), which ensure that the shared border remains open to legitimate trade and travel while closed to criminal or terrorist forces, is important in this regard. Another example is the Canada Border Services Agency (CBSA), which administers and enforces regulations governing cross‐border trade and travel as well as in‐
ternational agreements and conventions. The CBSA is also one of the five core federal agencies (two in Can‐
ada, three in the United States) involved in the IBETs. In the US, bilateral border and security partners include the Customs and Border Protection / Office of the Border Patrol and others within the Department of Homeland Security, the US Department of State, the Coast Guard, and Immigration and Customs Enforcement. Programs and initiatives
A number of programs and initiatives help to expe‐
dite the movement of legitimate trade and travellers across the border, thereby enabling resources to be focused on goods and individuals of high or un‐
June M. Dewetering
International Affairs, Trade and Finance Division
December 2008
11
Intellectual property
What is intellectual property?
Another key difference between Canada and the United States is that Canada has yet to ratify two in‐
ternational treaties that extend copyright protection to digital works on the Internet (the World Intellec‐
tual Property Organization [WIPO] Internet Treaties). The United States was one of the first countries to ratify those treaties through enacting the Digital Mil‐
lennium Copyright Act (DMCA) in 1998. The DMCA has been controversial because of its creation of new penalties for circumventing technological protection measures (“digital locks”) on digital works. Intellectual property (IP) is the name given to the legal protection granted to intellectual creations in the industrial, scientific, literary and artistic fields, generally through exclusive, time‐limited rights granted to the creators. In Canada, a wide variety of intellectual creations are protected, including inven‐
tions (the Patent Act), new plant varieties (the Plant Breeders’ Rights Act), written expression, musical works and performances, dramatic works, broad‐
casts, computer software, photographs and databases (the Copyright Act), logos, words and short phrases used to identify goods and services (the Trade‐marks Act), the shape or design of a product (the Industrial Design Act), the three‐dimensional structure of “mi‐
crochips” (the Integrated Circuit Topography Act), and geographical indications that denote the source and quality of agricultural products, such as wine (the Trade‐marks Act). Measures to strengthen IP protection
Current methods to increase enforcement of IP rights have focused on reducing counterfeiting (the unau‐
thorized use of trademarks to identify goods not made by the trademark owner) and piracy (the sale of, or trade in, unauthorized copies of copyrighted works). In Canada, the recording of films in movie theatres became a criminal offence in June 2007, and attempts were made in the 39th Parliament (Bill C‐43, reintroduced as Bill S‐2 in the 40th Parliament) to in‐
crease the search powers of customs officials, with the intent of decreasing trafficking in counterfeit and pirated goods. At the international level, the United States, Canada and other developed countries are currently drafting the Anti‐Counterfeiting Trade Agreement (ACTA). The United States recently cre‐
ated the position of Intellectual Property Enforcement Coordinator in order to coordinate anti‐piracy meas‐
ures among the US Department of Justice, the US Trade Representative and the US Patent and Trade‐
mark Office. The United States has also tightened border controls to prevent the import and export of goods that infringe IP, as well as the unauthorized import and export of IP‐protected goods. Differences between US and
Canadian IP protection
In spite of international treaties on IP, Canada and the United States do not afford the same level of pro‐
tection to the same copyrighted works. This situation may lead to the unauthorized use of IP‐protected products and, arguably, to decreased economic value for IP creators and owners. Furthermore, the United States has characterized Canadian IP laws as weak; Canada continues to be placed on the US Trade Representative’s watch list. Two methods have been used to address unequal protection and weak enforcement: harmonization of IP laws in both countries, and increased enforcement of existing IP rights through new and existing laws. Difficulties have been encountered in harmonizing patent laws owing to divergent philosophies in the two countries. The United States is one of a limited number of countries that grant patents to individuals who are the “first to invent,” rather than to those who are the “first to file” the creation with the regis‐
trar. The United States has argued that a first‐to‐
invent regime protects small or individual inventors, although the US Congress has attempted to harmo‐
nize the system with the first‐to‐file regime that exists in Canada and most other countries. Mark Mahabir
International Affairs, Trade and Finance Division
December 2008 _____________________ REFERENCES
Canadian Intellectual Property Office: http://www.cipo.ic.gc.ca/epic/site/cipointernet‐
internetopic.nsf/en/Home. 13
I NTELLECTUAL
Industry Canada Intellectual Property Policy: http://www.ic.gc.ca/epic/site/ippd‐
dppi.nsf/en/h_ip00003e.html. PROPERTY
Piracy: House of Commons, Standing Committee on Public Safety and National Security. Counterfeit Goods in Canada: A Threat to Public Safety. 1st Session, 39th Parliament, May 2007. http://www2.parl.gc.ca/HousePublications/Publication.aspx?D
ocId=2985081&Language=E&Mode=1&Parl=39&Ses=1. House of Commons, Standing Committee on Industry, Science and Technology. Counterfeiting and Piracy Are Theft. 1st Session, 39th Parliament, June 2007. http://www2.parl.gc.ca/HousePublications/Publication.aspx?D
ocId=3060548&Language=E&Mode=1&Parl=39&Ses=1. US Trade Representative Watch List: http://www.ustr.gov/assets/Document_Library/Reports_Public
ations/2008/2008_Special_301_Report/asset_upload_file193_148
72.pdf. 14
COOL: Mandatory country-of-origin labelling
in the United States
ON 13 MAY 2002, THE FARM SECURITY AND RURAL Investment Act – or 2002 US Farm Bill – became law. It requires country‐of‐origin labelling (COOL) for beef, lamb, pork, fish, peanuts and perishable agricultural commodities. There have been a number of developments in recent years. While it is not difficult to trace the origin of some foods, this is not the case in the North American meat market, which is highly integrated. Canada exports US$1.5 billion (2007 figures) worth of live animals to the United States each year for slaughter or raising. Under COOL, an animal must be born, raised and slaughtered in the United States to be labelled “Product of the United States”; otherwise, mixed labelling – “Canada–Mexico–United States” – is required, according to the countries of origin in question. Ground beef, with mixed labelling, accounts for 50% of beef sales in the United States. Traceability hurts Canadian farmers, who see it as a technical barrier to trade, running counter to World Trade Organization agreements, a sentiment which the Canadian ambassador expressed in an official letter to USDA authorities in September 2008. On 15 January 2009, the US administration loosened the regulations, allowing animals originating in Canada and slaughtered immediately in the United States to be processed with animals born, raised and slaughtered there, rather than having to spend 15 days in the United States before processing. In these cases, the products may be labelled “Product of Canada and the United States.” For imported cuts of meat mixed with US products, mixed labelling is still required, but the order of the names is no longer critical: “United States” may appear first in the list of supplying countries. On 21 January 2009, the new Obama administration announced that the date on which the regulations would be applied, set for 16 March 2009, would be delayed 60 days. For some American consumers, COOL exemptions are more a source of confusion than information. 27 January 2004 – The US government delayed
implementation of mandatory COOL until 30 September
2006, with the exception of wild fish, farm-raised fish
and shellfish.
10 November 2005 – Implementation for the
remaining commodities was again delayed, this time to
30 September 2008.
2008 – The Food, Conservation and Energy Act of 2008 – or
2008 US Farm Bill – extended COOL to chicken, goat
meat, ginseng and macadamia nuts. A six-month transition
period, ending 30 September 2008, followed the date the
legislation came into force.
The Marketing Service of the United States Department of Agriculture (USDA), responsible for implementing and administering COOL, estimates that costs will reach US$2.5 billion in the first year. However, the American Meat Institute puts the figure at US$3.9 billion. Commodities covered by COOL include cuts of beef (including veal), lamb, pork, goat and chicken; ground beef (including veal), lamb, pork, goat and chicken; fish and shellfish (wild and farmed); perishable agricultural commodities; peanuts; ginseng; and pecans and macadamia nuts. Exemptions include processed foods, such as mixes of fresh products, and products sold by smaller businesses (11% of all beef and fish sales), those with sales of perishable commodities under US$230,000 a year. Therefore, a pork cutlet would not be identified if sold in a butcher shop, but would be if sold in a large establishment. The origin of raw peanuts must be identified, but not that of roasted, and therefore processed, peanuts. Jean-Denis Fréchette
Frédéric Forge
Industry, Infrastructure and Resources Division
January 2009
_____________________ 15
COOL: M ANDATORY
COUNTRY - OF - ORIGIN LABELLING IN THE
U NITED S TATES
ADDITIONAL INFORMATION
In the United States: ƒ Legislation: Farm Security and Rural Investment Act. http://frwebgate.access.gpo.gov/cgi‐bin/getdoc.cgi? dbname=107_cong_bills&docid=f:h2646enr.txt.pdf. In Canada: ƒ Farmers: MeatCool.Info. “Country of Origin Labeling News Stories.” http://meatcool.info/news.htm. ƒ
Federal government: Agriculture and Agri‐Food Canada. “Minister Ritz releases statement as Canada tables its official comments on U.S. mandatory country‐of‐origin labelling.” News re‐
lease. 5 September 2008. http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=2008&page=
n80905d.http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=200
8&page=n80905d. 16
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Congressional Research Service: Becker, Geoffrey S. Country of Origin Labeling for Foods. CRS Report for Congress. 25 July 2008. http://assets.opencrs.com/rpts/97‐508_20080725.pdf. ƒ
Frequently Asked Questions: United States Department of Agriculture. “Country of Ori‐
gin Labeling (COOL): Frequently Asked Questions.” 26 September 2008. http://www.ams.usda.gov/AMSv1.0/ getfile?dDocName=STELPRDC5071922. The bilateral defence relationship Joint counter‐terrorism initiatives Afghanistan Cooperation on immigration Arctic sovereignty Securing North America
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The bilateral defence relationship
proaches to enhancing continental security and defence, at the national level and bilaterally. NORAD’s Operation Noble Eagle was launched on 14 September 2001. It extended NORAD’s aero‐
space warning and control to include surveillance, warning and assessment of attacks from within do‐
mestic continental airspace. In April 2002, the United States created US Northern Command (USNORTHCOM), which is re‐
sponsible for American military operations in the continental United States, Alaska and, when author‐
ized, in Canada, Mexico, parts of the Caribbean, and continental coastal waters out to 500 nautical miles. In December 2002, the Bi‐National Planning Group (BPG) was established at NORAD headquar‐
ters and tasked with examining binational defence and security issues, and preparing contingency plans to respond to threats, attacks, and other major emer‐
gencies. It was decommissioned in May 2006 after producing two reports with recommendations for improving defence cooperation. In August 2004, the NORAD agreement was amended, making its missile defence warning and assessment function available to USNORTHCOM. In February 2005, the Government of Canada announced it would not participate in the American ballistic mis‐
sile defence program, although it did accept that NORAD would continue to provide missile warning to USNORTHCOM. In February 2006, Canada Command was estab‐
lished. This organization is responsible for Canadian military operations throughout Canada and, in coop‐
eration with American forces, throughout continental North America. In May 2006, the NORAD agreement was re‐
newed and expanded to include maritime domain awareness. In May 2008, a new USNORTHCOM/ NORAD integrated command centre was opened in Colorado Springs, Colorado; it maintains close liai‐
son with Canada Command. Both Canada Command and USNORTHCOM continue to invest in continen‐
tal defence and civil assistance, in partnership with NORAD and other key stakeholders such as Public Safety Canada and the US Department of Homeland Security. THE CANADA–US DEFENCE RELATIONSHIP IS CLOSE, extensive and long‐standing. Although the American military is a powerful deterrent to external threats to Canada, the United States also relies on Canada for its own security, particularly in its land, air and mari‐
time approaches. This paper provides an overview of continental defence arrangements in three sections: the historical context and principal institutions for co‐
operation; key developments after 11 September 2001; and future challenges. History and principal agreements
World War II and the post‐war period set the stage for much of the current architecture of the Canada–
US defence relationship. Today, there are 80 treaty‐
level agreements, more than 250 memoranda of un‐
derstanding, and 145 bilateral forums on defence issues. The principal institutions are: ƒ The Permanent Joint Board on Defence. Created in 1940, this is the highest bilateral defence fo‐
rum for senior diplomatic and military officials. ƒ
The Military Cooperation Committee, formed in 1946 to coordinate military planning. ƒ
The North American Air (later Aerospace) De‐
fence Command (NORAD), established in 1958 to address the Soviet air threat to North Amer‐
ica. NORAD operates through a single chain of command, reporting to both the Canadian prime minister and the American president. There are also several development, production and sharing arrangements that help manage the in‐
dustrial, trade, research and development components of Canada–US defence cooperation. The Canadian and American militaries hold combined and joint exercises annually to ensure ef‐
fectiveness and interoperability. The Canadian Navy is the only foreign navy that has ships operating regularly as an integral part of US carrier groups. Arrangements since 11 September 2001
The September 2001 terrorist attacks on the United States led to the development of innovative ap‐
17
T HE
BILATERAL DEFENCE RELATIONSHIP
Future challenges
The architecture of the Canada–US defence rela‐
tionship has evolved since 2001. The relationship between Canada Command and USNORTHCOM is much more focused. Both commands, as well as NORAD, are increasingly involved in complex trans‐
governmental issues, with numerous stakeholders from both the defence and security communities. The post‐9/11 continental security environment is characterized by non‐traditional threats, including terrorism, organized crime, disease epidemics and national disasters. Military forces now find them‐
selves involved in non‐military responses to some threats and faced with asymmetric attacks from oth‐
ers. Ensuring a well‐coordinated response to a terrorist attack or a natural disaster is a significant challenge at the national level; it is even more com‐
plicated if bilateral cooperation is required. Maureen Shields
International Affairs, Trade and Finance Division
December 2008
18
Joint counter-terrorism initiatives
Seaports SAFEGUARDING THE NORTH AMERICAN CONTINENT against terrorist threats, in partnership with the United States, is a common theme in successive Cana‐
dian government security and defence policies and has consistently been a Canadian priority since the attacks of 11 September 2001. The United States has invested billions of dollars to implement a robust “Homeland Security” doctrine by taking measures, in cooperation with other countries, to have threats to its national security dealt with far beyond its physical territory. The purpose is to ensure that the United States’ borders are the country’s last line of defence and not the first. These actions have affected Canada–
US relations dramatically, requiring unprecedented levels of information sharing. This paper provides an overview of key post‐9/11 Canadian and American bilateral initiatives aimed at countering the threat of international terrorism by enhancing aviation, seaport and maritime approaches security. (Security at the Canada–US land border is addressed in the “Border facilitation: Products and people” paper on page 11 of this publication.) In October 2005, Canada became one of now nearly three dozen countries participating in the US Con‐
tainer Security Initiative (CSI), established to protect global trade lanes by targeting and examining con‐
tainer cargo early in the global supply chain. The Canada–US Joint In‐Transit Container Targeting at Seaports Initiative has two goals: to identify high‐risk containers at the initial point of entry in North Amer‐
ica, and to share vital law‐enforcement information from both sides of the border. Canada Border Ser‐
vices Agency officers are stationed in the US ports of Newark and Seattle–Tacoma, while US Customs and Border Protection officers work at Vancouver, Halifax and Montréal. Maritime approaches
To help secure North American maritime ap‐
proaches, Canada has established Marine Security Operations Centres (MSOCs) in order to enhance ma‐
rine situational awareness and respond to marine security threats. Measures will include enhancing in‐
formation collection, analysis and intelligence sharing among a number of Canadian federal agencies. MSOCs are already sharing information with the US Coast Guard Operations Centres regarding vessels, crews and cargo that could pose a threat to shared waters. MSOCs are located on the east and west coasts – one at Halifax, Nova Scotia, and one at Esquimalt, British Columbia. They are led by the Department of National Defence. In 2005, an interim Great Lakes St. Lawrence Seaway Marine Security Operation Centre (GLSLS MSOC) was established, led by the RCMP and cur‐
rently based at the Niagara RCMP work site. In Budget 2008, the federal government provided fund‐
ing for the establishment of a permanent GLSLS MSOC. Canada’s RCMP and the US Coast Guard have been participating in a joint policing pilot project called “Shiprider,” a series of coordinated maritime law‐enforcement programs to combat cross‐border criminal and terrorist activities. The project, which took place in the St. Lawrence Seaway near Cornwall Aviation
Both countries have implemented initiatives to en‐
hance aviation security. US customs facilities have been established in Canadian airports, thereby allow‐
ing passengers to go through customs and immigration before landing in a US city. The first bilateral agree‐
ment was signed in 1974; it was reinforced in December 2001. Canadian international airports in Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montréal and Halifax now have US pre‐
clearance facilities. The Advance Passenger Information / Passenger Name Record (API/PNR) program enables border of‐
ficers to identify individuals who may have a connection to terrorism and other serious crimes. Under the Smart Border Declaration, Canada and the United States have agreed to share API and PNR data on a case‐by‐case basis as a means of identifying risks posed by passengers on international flights arriving in each other’s territory. Starting in November 2002, Canada instituted an air marshal program that places armed RCMP offi‐
cers on board selected flights to the United States. 19
J OINT
COUNTER - TERRORISM INITIATIVES
and in the Strait of Georgia between British Columbia and Washington State, allowed Canadian and US vessels to move without restraint in shared waters by placing a number of Canadian and American armed officers on each other’s vessels. The pilot project was deemed a success, and in March 2008 the Shiprider program was made permanent. Melissa Radford
International Affairs, Trade and Finance Division
December 2008
20
Afghanistan
THE STABILIZATION AND RECONSTRUCTION OF A post‐Taliban Afghanistan are important to Canada and the United States for many reasons, including humanitarian, economic development, and security‐
related considerations. The situation in Afghanistan also has serious implications for the Canada–US rela‐
tionship and for Canadian and US multilateral (notably NATO) alliance commitments. Those impli‐
cations are the focus of this paper. Although Canada and the United States share common goals for the future of Afghanistan and the region, they also have different capacities and some independent interests, and have organized their con‐
tributions accordingly. Canada’s efforts have included aid for educational programs and health services, a Provincial Reconstruction Team (PRT) in Kandahar, and 2,500 troops engaged against the insurgency, primarily in Kandahar. Key US activities include aid programs in agriculture and democracy and govern‐
ance, 12 PRTs (10 of which are in eastern Afghanistan), and currently about 30,000 soldiers in service. The close coordination between Canadian and US activities in Afghanistan is made possible through the long‐standing alliance between our two coun‐
tries. The Canada–US partnership has evolved over decades; it is now the most interoperable among allies, and therefore well able to integrate materiel, equipment, and personnel in missions such as the US Operation Enduring Freedom and the NATO‐led International Security Assistance Force. In another example of that partnership, an official from the US Agency for International Development is a member of Canada’s PRT in Kandahar. Despite their common purpose, Canada and the United States have di‐
verged on a number of issues relating to Afghanistan. These include differences over counter‐narcotic strategies, treatment of detainees, and the use of air strikes when civilians are endangered. In the multilateral context, Canada’s support for the United States in its response to the 11 September 2001 attacks stems from our NATO commitments and follows the unanimous invocation of Article 5 of 21
the North Atlantic Treaty. That article states that an armed attack on a NATO nation shall be interpreted as an attack on all, and that action shall be taken by all to restore and maintain security. With regard to NATO nations’ contributions in Afghanistan, both Canada and the United States have called for better coordination of aid and for the fulfillment of pledges by donor countries. They have also taken other allies to task for not bearing a more equitable burden with respect to troop location and permissible activities. At present, operations in the most unstable regions and the highest proportion of military deaths are borne by just a few contributing countries, including Canada and the United States – a situation that has become increasingly divisive and that threatens the collective principles on which NATO is based. The planned surge in US military personnel (with the deployment of more than 20,000 additional troops in the first part of 2009), and the Obama ad‐
ministration’s stated intention to make Afghanistan a priority and motivate NATO allies to increase their share of the burden, have raised expectations with regard to recapturing momentum against the insur‐
gents, particularly in the lead‐up to the 2009 Afghan presidential elections. Such a shift in momentum would have profound implications for Canada’s ef‐
forts. More stable conditions on the ground would enable sustained progress in reconstruction projects and in training the Afghan National Army and Af‐
ghan National Police. In particular, an improvement in the security situation would reduce risks to Cana‐
dian military and civilian personnel serving in Afghanistan, especially in Kandahar. By taking high risks during a mission in which at least 100 soldiers have lost their lives, Canada, it is argued, has proved itself to be a reliable ally. Canada is committed to ending its combat mission by July 2011, but its involvement will have long‐lasting consequences for its relationship with the United States. Natalie Mychajlyszyn
International Affairs, Trade and Finance Division
December 2008
Cooperation on immigration
WHILE CANADA AND THE UNITED STATES HAVE independent immigration programs and policies, the countries’ proximity and close economic relations mandate a coordinated effort in managing migration flows over the common border. This paper touches on two notable examples of existing bilateral ar‐
rangements relating to immigration: refugee status claims, and temporary migration of skilled workers. Refugee status claims
Canada and the United States have a tradition of considering claims for refugee status made by people from within the country. In 2007, 5,929 and 25,270 claimants were granted refugee status in the respective countries. Following the terrorist attacks of 11 September 2001, the countries agreed upon the Smart Border Declaration and Action Plan in December 2001. The Plan included a commitment to negotiate a “safe third country agreement” for sharing responsibility for processing refugee claims. The Canada–US Safe Third Country Agreement was signed in 2002 and came into force two years later. 1 It embodies the general principle that claim‐
ants should have their claims examined by the first of the two countries in which they are physically pre‐
sent. The Agreement pertains only to refugee status claims made at land‐border points of entry. It does not cover claims made inland, overseas, or at air or sea points of entry. Refugee claimants in certain situations are ex‐
empt from the safe third country provisions, and will have their claims considered in the receiving country even if made at a land‐border point of entry. These include individuals with a family member living le‐
gally in the receiving country, unaccompanied minors, individuals with the appropriate visa or who do not require a visa to enter the receiving country, and public interest exceptions. 2
The Agreement has been credited with decreas‐
ing the number of refugee claims made at the Canadian land border by approximately 55% in its first year of operation (from 8,896 claims made in 23
2004 to 4,033 made in 2005). 3 In addition, 303 refugee claimants were returned from the Canadian border to the United States under the terms of the Agreement in 2005. 4
The Safe Third Country Agreement is not with‐
out its critics. In 2007, refugee advocates in Canada successfully challenged the Agreement’s operation. The Federal Court quashed the designation of the United States as a safe third country and declared the Agreement to be of no force and effect. However, the Federal Court of Appeal overturned the Federal Court decision in 2008. Accordingly, the Agreement remains in operation. Migration of skilled workers
Observers claim that “the US and Canada are well‐
integrated at the high end of the skill spectrum.” 5 With similar training requirements, regulatory re‐
gimes, and working environments, skilled workers can adapt relatively easily to working on the other side of the border. The United States has been the top source of temporary foreign workers to Canada for at least the last 10 years. Canadians account for a much smaller percentage of temporary workers admitted to the United States: in 2007 they comprised 8.5% (164,836 out of a total of 1,932,075). 6
Citizens of the United States or Canada may also migrate temporarily to the other country as a result of labour market provisions established first in the Canada–United States Free Trade Agreement and then in the North American Free Trade Agreement (NAFTA). These provisions facilitate temporary entry on a re‐
ciprocal basis by waiving certain requirements for hiring professionals in specific occupations. They also facilitate entry for business visitors, intra‐company transferees, traders and investors. For Canadians, the trade (TN) visa has been the most popular means of entering the United States. In 2007, 69,843 Canadian citizens were admitted under the TN admissions class, and another 14,631 were admitted as spouses and children of NAFTA profes‐
sionals. 7 In 2007, 12,436 Americans entered Canada C OOPERATION
ON IMMIGRATION
through NAFTA provisions, while 18,659 entered through general provisions for temporary foreign workers. 8
Penny Becklumb
Industry, Infrastructure and Resources Division
Sandra Elgersma
Social Affairs Division
D
ecember 2008
2. Safe Third Country Agreement, Article 4. 3. Citizenship and Immigration Canada, “A Partnership for Protection – One Year Review,” November 2006. 4. Ibid.
5. Deborah W. Meyers and Kevin O’Neil, “Immigration: Mapping the New North American Reality,” Policy Options, June–July 2004. 6. US Department of Homeland Security, Office of Immigration Statistics, 2007 Yearbook of Immigration Statistics, Table 32, p. 84, http://www.dhs.gov/xlibrary/assets/statistics/yearbook/2007/
ois_2007_yearbook.pdf. 7. US Department of Homeland Security, Immigration Statistics, “Data on Nonimmigrant Admissions,” Supplemental Table 1, 2007, http://www.dhs.gov/ximgtn/statistics/publications/ YrBk07NI.shtm. 8. Data provided by Citizenship and Immigration Canada. SOURCES
1. The full name of the Safe Third Country Agreement is “Agreement Between the Government of Canada and the Government of the United States of America for Cooperation in the Examination of Refugee Status Claims from Nationals of Third Countries.” See http://www.cic.gc.ca/english/department/laws‐policy/safe‐
third.asp. 24
Arctic sovereignty
THIS PAPER SUMMARIZES THE MAIN ARCTIC sovereignty issues, both territorial and maritime, in Canada–US relations. There is no disagreement between Canada and the United States on territorial sovereignty. The United States is clearly sovereign over Alaska; Can‐
ada is likewise over the land masses of the Arctic Archipelago. Moreover, the territorial border that di‐
vides Alaska from Yukon and British Columbia is clearly delimited, most of it following the 141st merid‐
ian under the terms of a 19th‐century treaty. With respect to maritime zones contiguous to each nation’s Arctic territorial possessions, there are essentially two disputed issues between Canada and the United States. Beaufort Sea
Canada and the United States agree neither on the specific location of the maritime boundary in the Beaufort Sea, nor on the delimitation method. Can‐
ada claims that the maritime boundary runs along the 141st meridian as an extension of the territorial boundary with the United States set by treaty. How‐
ever, the United States considers that the treaty does not determine the maritime boundary. It argues that the boundary must preferably be determined by us‐
ing the equidistance principle – i.e., the tracing of a line at equal distance from the closest land point of each state, which reflects more closely the direction of the respective coastlines. Alternatively, the United States has argued for the use of a perpendicular line to the coast, at the point where the land boundary meets the sea. It can be stressed in that regard that the contested region of the Beaufort Sea is known to be resource‐rich. Resolution of this dispute is still pending. Northwest Passage
Canada and the United States disagree on the legal status of the Northwest Passage, a maritime path connecting the Davis Strait and Baffin Bay in the east to the Bering Strait in the west. Canada considers that the waters of the Northwest Passage are internal wa‐
ters; the United States claims that the Passage is an international strait. Which qualification prevails has implications for the rights and powers of Canada as a coastal state. States are fully sovereign in internal wa‐
ters: they can regulate activities and enforce their laws therein, and foreign states and ships enjoy no maritime rights under international law. By contrast, foreign states and ships enjoy a right of transit through international straits, meaning that they would not have to request Canada’s permission to navigate the Passage if it were considered to be an in‐
ternational strait. Canada invokes two alternative legal bases in support of its position: the waters are internal (1) by virtue of historic title, and/or (2) by virtue of their be‐
ing on the landward side of straight baselines drawn around the entire Arctic Archipelago in 1985. For the most part, the former basis is considered by experts to be weak, whereas the latter is regarded as compel‐
ling in international law. Moreover, it has been suggested that the increased US concern for continen‐
tal security might lead the United States to regard Canadian sovereignty over the Passage as more pal‐
atable, especially if accompanied by proper policing by Canada. The United States has not, however, al‐
tered its formal view on this matter. The US argument that the Passage is an “interna‐
tional strait” entails that the Passage meets geographical and functional requirements, i.e., that it is a water corridor linking two bodies of the high seas or other waters, and used for international maritime traffic. Some observers consider the US argument to be weak, given that the Passage has seldom been used for international traffic. However, an increase in maritime traffic through the Passage, which climate change could facilitate, could raise the possibility of its gradual internationalization. A third option would be to consider the North‐
west Passage part of Canada’s territorial waters, rather than an international strait or internal waters enclosed within Canada’s straight baselines. This would give foreign states the right of innocent passage. The dispute between Canada and the United States on the status of the Passage is ongoing. Robert Dufresne
International Affairs, Trade and Finance Division
December 2008
25
Regional climate change initiatives Air quality issues Water issues: Managing the Great Lakes Shared environmental and energy concerns
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Regional climate change initiatives
CANADA AND THE UNITED STATES, ALONG WITH the other G8 nations, share a common long‐term vi‐
sion of reducing global greenhouse gas (GHG) emissions by 50% by 2050. Separately, Canada has a mid‐term target of reducing emissions, through a va‐
riety of programs, by 20% from 2006 levels by 2020. The United States government has resisted setting any firm target and has relied on supporting techno‐
logical progress toward low‐carbon energy sources. President‐elect Barack Obama has stated that he would implement a mandate of reducing emissions to 1990 levels by 2020. In the meantime, individual states and regions have initiated their own approaches, including their own targets, to reducing GHG emissions, many of which incorporate cross‐border cooperation. Stated targets include some that are binding and others that are more aspirational in nature. Binding and aspira‐
tional targets and state/provincial and regional targets are not always consistent or easy to relate to each other. The plethora of conflicting regional, state and provincial plans has prompted business organi‐
zations to call for a more coherent, organized approach to reducing GHG emissions. New England Governors and
Eastern Canadian Premiers –
Climate Change Action Plan 2001
In 2001 the Conference of New England Governors and Eastern Canadian Premiers (NEG/ECP: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, Quebec, and the four Atlan‐
tic provinces) signed the Climate Change Action Plan (CCAP), which has the following non‐binding emis‐
sion reduction goals: ƒ 1990 levels by 2010 ƒ
10% below 1990 levels by 2020 ƒ
reductions sufficient “to eliminate any dangerous threat to the climate,” estimated by the signatories to be 75%–85% below 2001 levels. The CCAP includes a commitment from each state and provincial jurisdiction to carry on its own planning for emission reductions. In addition, it con‐
tains a process for disclosing progress and sharing information. It also includes a commitment to de‐
velop a plan for the adaptation of the region to climate change impacts. Regional Greenhouse Gas Initiative
The six states of the NEG and Delaware, New Jersey, New York and Maryland have signed the Regional Greenhouse Gas Initiative (RGGI). The members will be required to cap emissions from electricity genera‐
tion and then reduce them by 10% by 2018. The emissions cap will be roughly 6.5% greater than emissions averaged during 2004–2006, and the tar‐
geted reductions therefore about 4% below that averaged level. Through their respective laws and/or rules, each member is to limit emissions of carbon dioxide (CO2) from electric power plants, create CO2 allowances and establish the state’s participation in CO2 allowance auctions. A “Model Rule,” drafted jointly by the states, provides a framework for each member to im‐
plement the RGGI. The cap and trade system began with an auction for credits in September 2008. Midwestern Regional Greenhouse
Gas Reduction Accord
In November 2007, Illinois, Iowa, Kansas, Manitoba, Michigan, Minnesota and Wisconsin signed the Midwestern Regional Greenhouse Gas Reduction Accord. Under the Accord, the signatories resolved to establish GHG reduction targets and time frames consistent with those of member states and prov‐
inces, and to develop a multi‐sector cap and trade mechanism. The Accord is perhaps the least well de‐
veloped of the regional initiatives. Western Climate Initiative
The Western Climate Initiative (WCI), initiated in 2007, has now been signed by seven US governors and the premiers of British Columbia, Manitoba, Ontario and Quebec. The WCI goal is an aggregate reduction in emissions of 15% below 2005 levels by 2020. The Initiative is in some respects the most am‐
bitious in scope of the regional initiatives, as it covers all GHGs and includes a broader spectrum of emit‐
ters, including those in the industrial, residential (above a certain threshold) and transportation sectors. The latter two categories will be covered in an “up‐
stream” manner (i.e., the WCI will apply to emissions related to fuel or energy suppliers). Tim Williams
Industry, Infrastructure and Resources Division
December 2008
27
Air quality issues
HISTORICALLY, THE ATMOSPHERE HAS BEEN USED AS a free disposal site for waste products of human ac‐
tivity. The resulting air pollution does not remain solely in the country or region of origin but moves with atmospheric circulation and other climatic factors. Emissions of sulphur dioxide and nitrogen ox‐
ides cause acid rain (more accurately referred to as acid precipitation), which has caused significant damage to ecosystems and infrastructure. Smog is a combination of ground‐level ozone (itself the product of volatile organic compounds and nitrogen oxides reacting with light) and fine particulate matter. Smog can impair visibility, damage ecosystems, and cause respiratory illness, which may lead to death in vul‐
nerable people. While air masses move in both directions across the long Canada–US border, the size of the US econ‐
omy and the direction of prevailing winds mean that there is a net movement of pollution into Canada. In some border towns such as Windsor, most of the air pollution comes from the United States. In the late 1980s, acid precipitation in eastern North America, largely the result of emissions from coal‐fired elec‐
tricity generation and metal smelting, became a significant political issue and resulted in the signing of the 1991 Canada–United States Air Quality Agreement (CUSAQA). The general aim of the Agreement is to control transboundary air pollution between the two coun‐
tries. The Agreement establishes objectives, as set forth in its annexes, for each country with regard to emissions limits or reductions of air pollutants. It re‐
quires each country to adopt the necessary programs and other measures to implement those objectives. Measures to address both stationary and mobile sources have included a cap and trade system for sulphur dioxide and nitrous oxides among electricity generators in the United States, under the Clean Air Act; the regulation of sulphur content in fuels in Can‐
ada under the Canadian Environmental Protection Act, 1999; and various memoranda of understanding with industry. The US cap and trade system is generally 29
seen as a great success and has been used as a model for other such programs internationally, in particular for carbon dioxide. The current objectives for each party are de‐
scribed in three annexes. Two were drafted for the 1991 Agreement. Annex 1 addressed acid precipita‐
tion and contained specific objectives concerning sulphur dioxide and nitrogen oxides. Annex 2 was more general and related to scientific and technical activities and economic research. A third annex was added in 2000 to reduce ground‐level ozone. In 2007 the two countries announced negotiations toward a fourth annex regarding fine particulate matter. The Agreement gave the International Joint Commission (IJC, created under Article IX of the 1909 Boundary Waters Treaty, which allows referral to the IJC of “any other questions or matters of difference arising between [Canada and the United States]”) an important role in assessing public reaction to pro‐
gress reports published under the CUSAQA. The IJC also created its International Air Quality Advisory Board following a 1966 request for the IJC to observe air quality along the entire Canada–US border. The Board’s latest report coincided with public com‐
ments on the 2006 progress report on the CUSAQA. Those comments acknowledged the success of the Agreement. It is also clear from the public comments that transboundary air quality issues along the western part of the border need more attention. The Board recommended that the powers in the CUSAQA be used to address emerging western transboundary air quality issues. Some action has been taken in this re‐
gion. One of three pilot projects under the 2003 Canada–United States Border Air Quality Strategy led to the Georgia Basin–Puget Sound International Airshed Strategy in the transboundary airshed of British Columbia and Washington State. Tim Williams
Industry, Infrastructure and Resources Division
December 2008
Water issues: Managing the Great Lakes
Freshwater management initiatives have also been undertaken at the state and provincial level. For example, the Great Lakes Charter is a “good faith” agreement signed by the Council of Great Lakes Governors (which includes Quebec and Ontario as associate members) that addresses concerns regard‐
ing the potential for adverse effects from diversions and consumptive use of Great Lakes water on the environment, economy and welfare of the region. In 2001, an Annex was signed that led to a binding sys‐
tem of permits to regulate withdrawals of water from the Basin. In response to pressures in the United States to supply water to expanding urban areas just outside of the Great Lakes Basin, the eight Great Lakes gov‐
ernors and the premiers of Quebec and Ontario signed, in 2005, the Great Lakes–St. Lawrence River Basin Sustainable Water Resources Agreement and the Great Lakes–St. Lawrence River Basin Water Resources Compact (the Annex 2001 Implementing Agreements). The two documents detail how the states and prov‐
inces will manage and protect the Basin, and provide a framework for each state and province to enact laws to this end. Despite the re‐drafting of the origi‐
nal proposed agreements, there remain some concerns that loopholes could permit inter‐basin transfers to communities close to the Basin, poten‐
tially leading to large‐scale transfers to the southwestern United States. Following the passage of legislation in all eight Great Lakes states to imple‐
ment the Compact, it was approved by the US Congress and signed by the president in the fall of 2008. In Canada, the text of the Agreement, which mirrors the Compact, was implemented in Ontario by the adoption of Bill 198 in 2007. In Quebec, legisla‐
tion had been introduced prior to the recent provincial election. The federal government approves of all efforts to manage the Great Lakes as long as the BWT is respected. NORTH AMERICA HAS AN APPARENT ABUNDANCE OF fresh water; however, the water is not evenly distrib‐
uted and faces many threats to its quality and quantity. Many watersheds are shared between Can‐
ada and the United States, as lakes and rivers lie along the border or flow in both directions across it. Transboundary water issues have therefore been in‐
evitable. Of particular interest with respect to Canada–US relations is the increasing demand for fresh water from the dry southwestern United States, which could create pressure for water exports from the Great Lakes–St. Lawrence River Basin. Canada and the United States have long been ac‐
tive in cooperatively managing transboundary waters. The Boundary Waters Treaty (BWT) was signed in 1909, and remains the instrument by which the Great Lakes are managed cooperatively by both countries. It provides the principles and mechanisms to help re‐
solve and prevent water‐related disputes, primarily those concerning quantity and quality. In Canada, the International Boundary Waters Treaty Act imple‐
ments the BWT. The Act was last amended in 2001 to prohibit bulk removal of water from Canada. A key aspect of the BWT is its provision for the creation of the International Joint Commission (IJC). As an advisory body to the two governments, the IJC helps to prevent and resolve disputes over the use and quality of boundary water resources. The Great Lakes Water Quality Agreement (GLWQA) is another Canada–US agreement pertain‐
ing to water. The GLWQA was signed in 1972 and was last revised in 1987. It expresses the commitment of each country to restore and maintain the chemical, physical and biological integrity of the Great Lakes Basin ecosystem. The Agreement identifies 43 Areas of Concern, which are targeted for remediation. In Canada, it is largely implemented through the Canada‐Ontario Agreement Respecting the Great Lakes Basin Ecosystem. The GLWQA provides for periodic, comprehensive reviews of its operation and effec‐
tiveness; a report on the most recent review was submitted to the governments in the fall of 2007. In 2006, the IJC had recommended a new, more action‐
oriented agreement. François Côté
Tim Williams
Industry, Infrastructure and Resources Division
October 2008
31
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