Canada is the world's third-largest country, stretching north to Cape Columbia on Ellesmere Island, south to Lake Erie, and across six time zones from Newfoundland to the Pacific seaboard. The interior lowlands around Hudson Bay make up 80% of Canada's land area and include the vast Canadian Shield, with the plains of Saskatchewan and Manitoba and the Rocky Mountains to the west. The St. Lawrence, Yukon, Mackenzie, and Fraser Rivers are among the world's 40 largest. The St. Lawrence river and Great Lakes lowlands are the most populous areas. An Inuit homeland, Nunavut, formerly the eastern part of Northwest Territories, was created in 1999, covering nearly a quarter of Canada's land area. French-speaking Québec's relationship with the rest of the country causes recurring constitutional arguments.

Relations between French-speaking Québécois and the English-speaking majority in Canada have been the dominant ethnic issue of the past 40 years. Support for separatist parties increased mainly because of the failure of Canada's other provinces to deal with Québec's demand to be recognized as a "distinct society," with powers to preserve its culture and language from further anglicization. Québec's still controversial 1974 language law made French the province's official language.

Two-thirds of Canada's population live in the 5% of its land area taken up by the Great Lakes–St. Lawrence lowlands. However, Canada's ethnic mix has changed significantlysince the 1970s, due to a move from a restrictive immigration policy to one which welcomes those with money or skills. Significant numbers of Asians have moved to Canada. The government promotes a policy which encourages each group to maintain its own culture. Canada is now officially a "community of communities."

The largest element of the indigenous population is the 800,000 people of native Amerindian descent, known in Canada as First Nations. There are also 213,000 Métis (French–Amerindians) and an Inuit population of some 50,000 in the north. In 1992 the Inuit successfully settled their long-standing land claim, and in 1999 the Nunavut area, with only 25,000 mainly Inuit inhabitants, gained the status of a territory, the first part of Canada to be governed by indigenous Canadians in modern history. A Supreme Court land rights ruling in 1997, establishing the principle of "aboriginal title," opened the way for the return of ancestral lands claimed by native Amerindian nations, and in 1998 the federal government formally apologized for their past mistreatment.

Canada has a long tradition of state welfare more akin to Scandinavia than the USA. Unemployment provision and health care, supported by high taxes, are still generous, despite recent cutbacks. The government has sought to end inequalities. Measures include the "pay-equity" laws, which aim to specify pay rates for jobs done mainly by women – such as receptionists – equivalent to similar skill jobs for men. Women are well represented at most levels of business and government.

Strengths

A broad and rich resource base. Provides exports, raw materials for manufacturing sector, and massive cheap energy, notably HEP; also large oil and gas reserves. Agriculture and forestry contribute 3% of GDP, mining 4%. Successful manufacturing sector, contributes 17% of GDP, especially forestry products, transportation equipment, and chemicals. Strong recovery and growth from mid-1990s to 2001. Access to huge US and Mexican markets through NAFTA. Low inflation.

Weaknesses

Problems of competitiveness; higher taxes, more regulations, lower productivity relative to NAFTA; other threats from globalization. Vulnerable to world price fluctuations for raw material exports. Federal and provincial budget deficits still high.

Profile

Canada has an enormous resource base, and the UN rates it as having one of the highest standards of living in the world. Since the mid-1980s, however, its manufactured exports have faced increasing competition, while prices for its primary exports fluctuate. Real growth averaged 3.5% a year for most of the 1980s, but then stagnated for five years, while budget deficits rose, forcing restructuring at both federal and provincial levels. Many welfare programs were cut back, while the defense budget was sharply reduced. Growth resumed after 1993 and strengthened before the global economic downturn in 2001. Within NAFTA, Canadian firms have had to become more competitive to maintain exports. Most have been successful, with better productivity and a shift to high tech. Unemployment, at almost 10% in the mid-1990s, was down to just over 6% by 2000. It was back to 8% by December 2001 but then fell again.

Canada is a federal multiparty democracy.

Profile

Canadian politics was traditionally dominated by two main parties, the PCP and LP, which had few major ideological differences. The third party, the NDP (which has never held federal power), advocated greater government intervention than the other two.

The 1990s brought a major political shift – the eclipse of the PCP, three successive victories for Jean Chrétien and the LP (1993, 1997, and 2000), and an eventual realignment on the right, based on the emergence of the populist Reform Party (RP) in the western provinces. The trend away from Canada-wide politics, toward parties representing strong regional interests, left the LP with few seats outside its strongholds in the east. The Bloc Québécois (BQ), espousing the separatist cause at federal level, was the second-largest party in the federal parliament between 1994 and 1997. Since then the role of official opposition has been held by the RP and then by its successor, the conservative Canadian Alliance, which was riven in 2001–2002 by a fractious leadership dispute.

Main Political Issues

The unity of the state

Opposition to federal government is not confined to Québec – the 1997 and 2000 federal elections confirmed support for greater autonomy for Canada's western provinces – but Canada has agonized over separatist tendencies in francophone Québec almost since the foundation of the state. Québec did not take part in the 1997 Calgary conference, where a Canadian unity framework was agreed by the other provinces, together with recognition of Québec's "unique character." A series of earlier proposals, to recognize Québec as a distinct society and strengthen the powers of all the federal provinces, had failed to gain ratification or been rejected by the electorate. The Parti Québécois (PQ), back in power at provincial level since 1994, advocates another referendum on separatism, despite losing those held in 1980 and 1995. The Supreme Court has ruled, however, that secession would require federal approval and the agreement of at least seven of the ten provinces. The April 2000 Clarity Act set strict criteria for any pro-secession referendum result to be valid.

North American integration

The North American Free Trade Agreement (NAFTA), a hotly debated issue in Canada when it was being negotiated in the early 1990s, has produced a trade boom, especially for Ontario. However, Canadians have problems competing for foreign investment with Mexico, where labor costs, social welfare, and environmental standards are lower. Most Canadians oppose such ideas as a currency union and ever closer integration with the USA.

Canada is a country of enormous natural resources. It is the world's largest exporter of forest products and a top exporter of fish, furs, and wheat. Minerals have played a key role in Canada's transformation into an urban–industrial economy. Alberta, British Columbia, Québec, and Saskatchewan are the principal mining regions. Ontario and the Northwest (NWT) and Yukon Territories are also significant producers. Canada is the world's largest producer of zinc and uranium, the second-largest of nickel, asbestos, potash, and gypsum. Oil and gas are exploited in Alberta, off the Atlantic coast, and in the northwest – huge additional reserves are thought to exist in the high Arctic. Most exports go to the USA. Canada is also one of the world's top hydroelectricity producers.

The comprehensive state health service is funded from national insurance.

Rising costs are the result of an aging population and the spread of more sophisticated and expensive treatments. Health care was the main issue of the 2000 election campaign. Popular backing for retaining the present publicly funded system has encouraged the LP government to restore spending to earlier levels, after a period of cuts made in an effort to reduce the budget deficit. About 25% of Canadians use private health facilities.

Education is a responsibility of the provinces and is accorded high priority. The period of free compulsory school attendance varies, but is a minimum of nine years. The prime medium of instruction is English in all provinces except francophone Québec. In several other provinces, French-speaking students are entitled to be taught in French. Multicultural education also helps maintain the cultural identity of immigrant groups.

Canada has 76 universities and some 200 other higher education institutions. Nearly all school leavers go on to some form of higher education – the highest proportion in the industrialized world. The emphasis placed on education is also reflected in the fact that Canada's total education expenditure as a percentage of GDP is among the highest in the world.

Despite strains caused by recession during the early 1990s – including a rise in unemployment to over 10% – life for most Canadians remains very good.

The UN ranks Canada as one of the best countries in the world in which to live. In its overall assessment of human development indicators such as income, education, and life expectancy, Canada consistently comes out near the top, and ahead of the USA.

However, disadvantaged groups do exist, in particular among indigenous Canadians. Unemployment, poor housing, and mortality rates for Amerindians and Inuits are well above those for other Canadians; the Inuit suicide rate is three times higher. Those who live on reserves are the poorest group.

Peopled for centuries by indigenous Inuits and Amerindians, Canada began to experience extensive European settlement following the landing of the English expedition led by John Cabot in 1497 and the French landing of Jacques Cartier in 1534.

• 1754 British fight French and Indian War. France forced to relinquish St. Lawrence and Québec settlements to Britain.
• 1774 Act of Québec recognizes Roman Catholicism, French language, culture, and traditions.
• 1775–1783 American War of Independence. Canada becomes refuge for loyalists to British Crown.
• 1867 Federation of Canada created under British North America Act.
• 1885 Transcontinental railroad completed.
• 1897 Klondike gold rush begins.
• 1914–1918, 1939–1945 Canada supports Allies in both world wars.
• 1931 Autonomy within Commonwealth.
• 1949 Founder member of NATO. Newfoundland joins Federation.
• 1968 Liberal Party under Pierre Trudeau in power. Separatist Parti Québécois (PQ) formed.
• 1970s Québec secessionist movement grows, accompanied by terrorist attacks.
• 1976 In Québec, PQ wins elections and French made official language.
• 1980 Separation of Québec rejected at referendum. Trudeau prime minister again.
• 1982 UK transfers all powers relating to Canada in British law.
• 1984 Trudeau resigns. Elections won by PCP. Brian Mulroney prime minister until 1993.
• 1987 Meech Lake Accord.
• 1989 Canadian–USA Free Trade Agreement.
• 1992 Charlottetown Agreement on provincial–federal issues rejected at referendum. Canada, Mexico, and USA finalize terms for NAFTA.
• 1993 Crushing election defeat of PCP, rise of regional parties.
• 1994 PQ regains power in Québec. NAFTA takes effect.
• 1995 Narrow "no" vote in second Québec sovereignty referendum.
• 1995 Fishing dispute with EU.
• 1997 Regionalism dominates federal election; Liberals retain power based on support in Ontario.
• 1998 PQ only narrowly holds power in Québec.
• 2000 November, early elections. Liberals retain power.
• 2001 December, Smart Border Declaration and antiterrorist legislation.