Feb 18 (Reuters) - Following are the main issues between Canada and the United States ahead of the one-day visit by President Barack Obama to Ottawa on Thursday:
Two trade issues dominate: the "Buy American" clause in the $787 billion stimulus bill Obama signed on Tuesday, and his desire to reopen the North American Free Trade Agreement (NAFTA) to strengthen labor and environmental provisions.
Canada sends 75 percent of its exports to the United States and remains deeply concerned by the "Buy American" clause but Obama said this week Canadians should not be too concerned and said Washington did not want to resort to "beggar thy neighbor" protectionism.
Canadian Prime Minister Stephen Harper intends to press home the necessity of avoiding protectionism.
"Our intent and our resolve is to see that there is no increase of that 'Buy America' act ... that's the territory that we'll be marking out and I'm sure the prime minister will be sharing some of those things with the president," Canadian Trade Minister Stockwell Day said on Sunday.
Obama had campaigned on reopening NAFTA and reiterated this goal in an interview on Tuesday, but said he realized that it was a sensitive time because of the fall in world trade.
Harper warned last year that it would be a mistake to reopen NAFTA and said that if it were reopened, Canada would bring its own issues to the table and use its position as the main U.S. energy supplier as a lever.
Harper and Obama may agree to pursue a joint approach on energy and limiting the carbon emissions that scientists blame for global warming.
Canada is fond of reminding Americans that it is the single largest exporter of oil and natural gas to the United States at a time when other important suppliers are gripped by political uncertainty.
The challenge for Ottawa is that much of the oil comes from the Alberta oil sands and can be extracted only through an energy-intensive process that emits vast amounts of greenhouse gases.
In the runup to the presidential election, some Obama advisors were quoted as considering curbs on "dirty oil" but Obama sounded conciliatory on Tuesday, signaling the problem with oil sands could ultimately be solved by technology.
Canada said just before the U.S. election it wanted to set up a North American cap-and-trade system to regulate carbon emissions -- an approach it had until that point shunned.
Key to any North American agreement will be whether significant new costs are imposed on the oil sands or whether existing projects would be grandfathered in or exempted.
The current Conservative government took power in early 2006 and then followed the lead of former President George W. Bush by walking away from the Kyoto Protocol on climate change on the grounds it would unfairly hurt Canadian industry.
Obama says it is time for the United States to lead the fight against climate change and wants U.S. emissions in 2050 to have dropped by 80 percent from 1990 levels. Ottawa's goal is to cut 2007 emissions by up to 65 percent by 2050.
Canada has around 2,700 soldiers in the southern city of Kandahar on a combat mission due to end in mid 2011. Canada has lost 108 soldiers since first sending troops to Afghanistan in late 2002 and complains that only a handful of other NATO nations are pulling their weight in the violent south.
Although the minority Conservative government insists the mission will end in 2011, defense analysts believe up to 1,000 Canadian soldiers could stay on in a noncombat role.
Obama says he does not have a specific request he will make of Canada at this meeting but analysts will be looking for any hint he wants Canada to stay on.
Canadian-born Omar Khadr, charged with killing a U.S. soldier in a firefight in Afghanistan in 2002 when he was 15, is the only Western inmate in the Guantanamo Bay prison.
Critics say Khadr, now 22, was a child soldier and want Ottawa to press Washington for his release.
The Canadian government says it would be inappropriate to ask Obama to send Khadr home since he faces serious charges.
That said, there are bound to be developments in the near future, since Obama has ordered the prison be shut by early 2010. A Harper spokesman said if Washington changed its position on the charges it has laid against Khadr, Ottawa would react at that time. (Reporting by David Ljunggren and Randall Palmer; editing by Peter Galloway)