Canada must convince the United States it is in its best interests to become a leader in tackling the climate change issue, but shouldn’t expect it to meekly ratify a flawed accord, says the head of a Canadian manufacturing lobby group.

While some proponents have advocated a little diplomatic arm-twisting to convince the Americans to get onside the Kyoto protocol, “the U.S. reacts badly to such tactics,” Perrin Beatty, president and CEO of the Canadian Manufacturers and Exporters alliance, told a business audience in Calgary last Thursday.

“We are more likely to get them on board by engaging them in developing a North American solution to promoting economic growth while reducing greenhouse gas emissions.”

The CME has estimated the accord could cost 450,000 permanent jobs in the manufacturing sector and up to $40 billion in economic damage if approved, figures that have been attacked as grossly inflated by some critics.

The Kyoto protocol would compel Canada to reduce its greenhouse gas emissions by nearly 200 million tonnes from the projected 770 million in 2010, with Alberta expected to be responsible for about half those reductions.

Beatty called on Ottawa to produce a comprehensive climate-change plan, and then give Canadians a chance to debate its ramifications – a move that Environment Minister David Anderson has promised will happen within weeks.

Beatty added he was heartened by Prime Minister Jean Chretien’s statement last week to European leaders suggesting Canada can’t ratify the deal until it gets recognition for its role in producing and exporting clean-burning fuel.

Canada has already persuaded European countries to approve emissions credits for forests and farmland – known as “carbon sinks” for their ability to absorb carbon dioxide – but EU leaders and environmental groups are balking at granting additional credit breaks.

Beatty said the federal government can encourage industry to voluntarily invest in new technologies and energy-efficient processes by removing capital taxes and accelerating the write-off of capital equipment for new investments and old technology that must be replaced.

“Investment and innovation are the only guarantees that Canadians will be able to find the technological solutions that will enable us to sustain real reductions in greenhouse gases while creating jobs and income growth beyond 2010.”