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Canada is a constitutional monarchy with a federal system, a parliamentary government, and strong democratic traditions. Many of the country's legal practices are based on unwritten custom, but the federal structure resembles the U.S. system. The 1982 Charter of Rights 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 301-member Commons, which is elected for a period not to exceed 5 years. The prime minister may ask the governor general to dissolve parliament and call new elections at any time during that period. Federal elections were last held in November 2000. Vacancies in the 104-member Senate, whose members serve until the age of 75, are filled by the governor general on the advice of the prime minister. Recent constitutional initiatives have sought unsuccessfully to strengthen the Senate by making it elective and assigning it a greater regional representational role.

Criminal law, based largely on British law, is uniform throughout the nation and is under federal jurisdiction. Civil law is also based on the common law of England, except in Quebec, which has retained its own civil code patterned after that of France. Justice is administered by federal, provincial, and municipal courts.

Each province is governed by a premier and a single, elected legislative chamber. A lieutenant-governor appointed by the governor general represents the Crown in each province.

Principal Government Officials
Head of State--Queen Elizabeth II
Governor General--Adrienne Clarkson
Prime Minister--Jean Chretien
Minister of Foreign Affairs--William Graham
Ambassador to the United States--Michael Kergin
Ambassador to the United Nations--Paul Heinbecker

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

U.S.-CANADA RELATIONS
The bilateral relationship between the United States and Canada is perhaps the closest and most extensive in the world. It is reflected in the staggering volume of trade--the equivalent of $1.4 billion a day in goods, services, and investment income--and people, more than 200 million a year crossing the U.S.-Canadian border. In fields ranging from law enforcement cooperation to environmental cooperation to free trade, the two countries have set the standard by which many other countries measure their own progress. In addition to their close bilateral ties, Canada and the U.S. also work closely through multilateral fora.

Canada--a charter signatory to the United Nations and the North Atlantic Treaty Organization (NATO)--has continued to take an active role in the United Nations, including peacekeeping operations. Canada also is an active participant in discussions stemming from the Organization for Security and Cooperation in Europe (OSCE). Canada joined the Organization of American States (OAS) in 1990 and has been an active member, hosting the OAS General Assembly in Windsor in June 2000. In April 2001, Canada hosted the third Summit of the Americas in Quebec City. Canada serves as the 2002 G-8 chair and will host the G-8 summit in Kananaskis, Alberta, in June 2002. Canada also seeks to expand its ties to Pacific Rim economies through membership in the Asia-Pacific Economic Cooperation forum (APEC)--of which the U.S. also is a member.

Although Canada views its relationship with the U.S. as crucial to a wide range of interests, it also occasionally pursues policies at odds with the United States. Two significant examples of these differing policies involve UN treaties. Canada strongly supports the UN-created International Criminal Court (ICC) for war crimes, chairing the negotiations which led to its creation. The U.S. opposes the creation of the ICC due to fundamental flaws in the treaty that leave the ICC vulnerable to exploitation and politically motivated prosecutions. The United States and Canada also differed on the issue of landmines. Canada is a strong proponent of the Mine Ban Treaty, also known as the Ottawa Convention, which bans the use of anti-personnel mines. The United States, while supporting demining initiatives, declined to sign the treaty due to unmet concerns regarding the protection of its forces and allies, particularly those serving on the Korean Peninsula, as well as the lack of exemptions for mixed munitions.

U.S. defense arrangements with Canada are more extensive than with any other country. The Permanent Joint Board on Defense, established in 1940, provides policy-level consultation on bilateral defense matters. The United States and Canada share NATO mutual security commitments. In addition, U.S. and Canadian military forces have cooperated since 1958 on continental air defense within the framework of the North American Aerospace Defense Command (NORAD). The military response to the terrorist attacks of September 11, 2001 both tested and strengthened military cooperation between the United States and Canada. Canada's participation in the military action in Afghanistan raised public debate about the role of the Canadian military and the limits of Canada's military capabilities.

The two countries also work closely to resolve transboundary environmental issues, an area of increasing importance in the bilateral relationship. A principal instrument of this cooperation is the International Joint Commission (IJC), established as part of the Boundary Waters Treaty of 1909 to resolve differences and promote international cooperation on boundary waters. The Great Lakes Water Quality Agreement of 1972 is another historic example of joint cooperation in controlling transboundary water pollution. The two governments also consult semiannually on transboundary air pollution. Under the Air Quality Agreement of 1991, both countries have made substantial progress in coordinating and implementing their acid rain control programs and signed an annex on ground level ozone in 2000.

While law enforcement cooperation and coordination were excellent prior to the terrorist attacks on the United States of September 11, they have since become even closer. Canada, like the United States, has strengthened its laws and realigned resources to fight terrorism. U.S.-Canada bilateral and multilateral cooperation in the fight is unequaled.

Trade and Investment
The United States and Canada have the world's largest bilateral trading relationship. In 2001, the equivalent of $1.4 billion a day in goods, services, and investment income crossed the U.S.-Canada border. In fact, total two-way trade in goods between the United States and Canada is larger than total U.S. goods trade with the entire 15-country European Union. Indeed, the two-way trade that crosses the Ambassador Bridge between Michigan and 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 35 of 50 U.S. States.

In 1989, the U.S.-Canada Free Trade Agreement (FTA) went into effect and was superceded by the North American Free Trade Agreement (NAFTA) in 1994. Between 1989 and 1994, bilateral trade increased by about 50%. Since the implementation of NAFTA in 1994, total two-way merchandise trade between the United States and Canada has grown by 125 %. When services are added, the growth has been 142%. This is because the NAFTA continues the FTA's moves toward reducing trade barriers and establishing agreed upon trade rules. It also resolves some long-standing bilateral irritants and liberalizes rules in several areas, including agriculture, services, energy, financial services, investment, and government procurement. NAFTA forms the largest trading area in the world, embracing the 406 million people of the three North American countries.

Canada has evolved from a rural, commodity-based economy to an urban services-dependent economy with a large manufacturing base. Since Canada is the largest export market for 35 to 50 States, the U.S.-Canada border is extremely important to the well-being and livelihood of millions of Americans.

The U.S. is Canada's leading agricultural market, taking nearly one-third of all food exports. Conversely, Canada is the second-largest U.S. agricultural market (after Japan), primarily importing fresh fruits and vegetables and livestock products. Of Canada's $27 billion in exports of wood, pulp, and paper in 2001, 80% went to the United States.

At $38 billion in 2001, U.S.-Canada trade in energy is the largest U.S. energy trading relationship in the world. The primary components of U.S. energy trade with Canada are oil, natural gas, and electricity. Canada is the United States' largest oil supplier and the fifth-largest energy producing country in the world. Canada provides about 16% of U.S. oil imports and 14% of total U.S. consumption of natural gas. The United States and Canada's national electricity grids are linked and both countries share hydropower facilities on the Western borders.

While 98% of U.S.-Canada trade flows smoothly, there are occasionally bilateral trade disputes over the remaining 2%, particularly in the agricultural and cultural fields. Usually, however, these issues are resolved through bilateral consultative forums or referral to WTO or NAFTA dispute resolution. For example, in response to World Trade Organization (WTO) challenges by the United States, the U.S. and Canadian Governments negotiated an agreement on magazines that will provide increased access for the U.S. publishing industry to the Canadian market, and Canada amended its patent laws to extend patent protection to 20 years. Canada currently has several disputes with the United States pending in the WTO, all of them related to actions taken by the U.S. Government on softwood lumber. 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 which demarcated the territorial sea boundary.

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 United States and Canada reached agreement on Yukon salmon, implementing a new abundance-based resource management regime for West Coast salmon.

In 1995, the United States and Canada signed a liberalized aviation agreement, and air traffic between the two countries has increased dramatically as a result. U.S. immigration and customs inspectors provide preclearance services at seven airports in Canada, allowing air travelers direct connections in the United States. The two countries also share in operation of the St. Lawrence Seaway, connecting the Great Lakes to the Atlantic Ocean.

The U.S. is Canada's largest foreign investor. Statistics Canada reports that at the end of 2001, the stock of U.S. foreign direct investment in Canada was $138.8 billion, or about 72% 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 third-largest foreign investor in the United States. At the end of 2001, the stock of Canadian direct investment in the United States was estimated at $90.4 billion. Canadian investment in the United States, including investments from Canadian holding companies in the Netherlands, was $128.1. Canadian investment in the United States is concentrated in manufacturing, wholesale trade, real estate, petroleum, finance, and insurance and other services.

Principal U.S. Embassy Officials
Ambassador--Paul Cellucci
Deputy Chief of Mission--Stephen Kelly
Minister-Counselor for Political Affairs--Patrick L. Del Vecchio (until August 2002, then Brian Flora)
Minister-Counselor for Economic Affairs--Robert Smolik (until July 2002, then Michael Gallagher)
Minister-Counselor for Public Affairs--Mary Ellen Gilroy (until August 2002, then James Williams)
Minister-Counselor for Commercial Affairs--Delores Harrod
Minister-Counselor for Consular Affairs--Leslie Gerson

The U.S. embassy in Canada is located at 490 Sussex Drive, Ottawa, Ontario, K1N 1G8 (tel. 613-238-5335).