By Ross Colvin and Jeff Mason
OTTAWA (Reuters) - Barack Obama arrived in Canada on Thursday on his first international trip as U.S. president to quell concerns about protectionism and discuss energy cooperation with the United States' biggest trading partner.
Obama and Canadian Prime Minister Stephen Harper will discuss clean energy technology, the global economic crisis and the war in Afghanistan, officials said, but the president's tight schedule on the one-day trip left little time for substantive talks.
Harper has said he will seek assurances that the "Buy American" clause in the $787 billion (549 billion pounds) U.S. economic recovery package Obama signed this week will not discriminate against companies in Canada, which sends some 75 percent of its merchandise exports to the United States.
"This is a huge risk to the world right now. If there is one thing that could turn a recession into a depression, it is protectionist measures across the world," Harper told CNN in an interview. He said he was encouraged by Obama's signals on the issue but cautioned that Canada had options of recourse under international trade law if necessary.
U.S. officials said Obama would seek to allay Canadian fears. In an interview with the Canadian Broadcasting Corporation this week, he said Canadians should not be concerned, noting that history showed that "beggar thy neighbour" protectionist policies could backfire.
The "Buy American" provision imposes a requirement that any public works project funded by the stimulus package use only iron, steel and other goods made in the United States. While Obama has stressed that the United States will comply with its international free trade obligations, Harper said last week he was still concerned about the language.
Canada is also alarmed by Obama's stated desire to renegotiate the North American Free Trade Agreement, to which Canada, the United States and Mexico are signatories, fearing that it could lead to new tariff barriers. Obama has said he wants to strengthen environmental and labour provisions.
NAFTA, CLEAN ENERGY
U.S. and Canadian labour unions called for changes in agriculture, energy, investment and other NAFTA provisions on the eve of Obama's meeting with Harper.
"We need to address the worsening economic crisis in a coordinated manner, reopen and fix the flaws with the North American Free Trade Agreement and move on a range of complementary policies dealing with energy, climate change and green jobs, industrial policy, migration and development," the AFL-CIO labour federation and the Canadian Labour Congress said in a joint letter to the two leaders.
Three-way trade between the United States, Mexico and Canada has tripled to nearly $1 trillion since NAFTA went into force in 1994, and Canada and Mexico together buy more than one-third of U.S. exports.
But critics often blame the agreement for U.S. job losses, especially in big Midwestern manufacturing states.
U.S. administration officials this week sought to play down the issue, saying that while Obama would raise it in his talks with Harper, the fragile state of the world economy meant he would not be pushing hard for NAFTA to be reviewed now.
Obama foreign policy adviser Denis McDonough said the president would underscore his commitment to boosting trade between the neighbours, which amounts to $1.5 billion a day, the largest trading partnership in the world.
Obama, who wants the United States to take the lead in the fight against climate change, will also discuss clean energy technology with Harper, U.S. officials said, while stressing the importance of Canada as a key U.S. energy supplier.
Environmentalists want Obama to press Canada to clean up its "dirty" tar sands in the western province of Alberta, from which oil is extracted in a process that spews out vast amounts of greenhouse gases.
In his CBC interview, Obama said he wanted to work with Canada on new technologies to capture greenhouse gases, a statement analysts interpreted as recognition that the United States cannot afford to adopt a tougher stance right now against its main energy supplier.
Obama said he would discuss Canada's role in Afghanistan, where it has 2,700 soldiers as part of a NATO-led force tackling a worsening insurgency. Obama ordered 17,000 more troops there this week to try to arrest the violence.
But with Canada due to withdraw its troops in 2011, and Obama saying he was not going to Ottawa with a request for them to stay beyond that date, the talks are expected to focus on other ways the Canadians can help.
U.S. officials have billed Thursday's visit, which comes a month after Obama took office, as an opportunity for Obama to deepen a personal relationship with Harper, a conservative who had a natural affinity with former President George W. Bush.
(Additional reporting by Doug Palmer; editing by Howard Goller and Mohammad Zargham)
