By Ross Colvin and Jeff Mason
OTTAWA (Reuters) - U.S. President Barack Obama and Canadian Prime Minister Stephen Harper will agree on Thursday to work together on environmentally friendly energy technology as both leaders move forward to tackle climate change.
Obama arrived in Canada on his first international trip as U.S. president to quell Canadian concerns about U.S. protectionism and discuss energy cooperation with the United States' biggest trading partner.
Obama and Harper will also discuss 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.
A White House official said the two countries would announce an agreement on Thursday to work together on "clean energy" technology that Obama said this week would allow both countries to extract fossil fuels, such as oil and coal, while generating less pollution.
"It will include elements like carbon capture and sequestration and the smart grid," the White House official said of the agreement.
Carbon dioxide is the main greenhouse gas blamed by scientists for warming the Earth. Carbon sequestration involves capturing the gas and storing it underground before it enters the atmosphere.
Trade will dominate talks between the two leaders, and Harper has said he will seek assurances the "Buy American" clause in the $787 billion (549 billion pounds) economic recovery package Obama signed this week will not discriminate against companies in Canada, which sends 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.
(Additional reporting by Doug Palmer; editing by Howard Goller, Mohammad Zargham and David Wiessler)
