passports to receive electronic identification chips?

U.S. Passports to Receive Electronic Identification Chips (WashingtonPost)

Slashdot linked to this article about the new chips in US passports, which I don’t exactly understand (I haven’t been keeping up on this) and don’t yet have a strong opinion about it one way or another as far as having one in MY passport is concerned. But this section of the article has me very very confused:

In issuing the new rules, the department is matching a requirement it is imposing on visitors from several other countries. Foreigners from countries who do not need visas to enter the United States also must have the chips by next October. Such countries will be responsible for providing their citizens with passports that comply with U.S. entry requirements.

What does this mean? What countries does this refer to? What if THEIR governments decide that having these chips are a breach of their citizens privacy rights? Aren’t we imposing on other countries personal security laws and policies by imposing our legislation on other countries?

Does this mean Canadians (for example) can’t cross the border? Does this mean that alien workers or illegal immigrants will have yet ANOTHER thing they can be busted for if they’re caught trying to make money for themselves/their familiy? Not to mention human trafficking victims…

Also, this basically requires that foreign countries should spend money developing and implimenting something that perhaps they can’t afford. is this being imposed on poorer countries where technologies are not at the same level as ours are?

Basically i want to know more about this part of the legislation. If this was only going to apply to American passports, then I might not have a problem… or at least, not this problem.

Anyway, back to studying.