The Kyoto protocol was supposed to stabilize and reduce greenhouse gas emissions. The US balked at the plan because developing nations were not subject to the restrictions that developed nations were. Developing nations argued that it would impede their ability to develop and cause their economies to fall apart. Developed nations argued it wasn't fair as some of the excluded nations (such as India and China) would likely soon be the biggest emitters of greenhouse gases.
This is a classic prisoner's dilemma. Specifically, both developing and developed countries want a healthier planet - it is in everyone's best interests. However, the US won't move forward with ratification if China and India aren't on board. Meanwhile, China and India do not believe that the US will truly honor its commitments, thus they were leery to be a part of any planned greenhouse gas reductions.
China and India had concerns of detecting cheating -- in this case, detecting that the US was actually honoring its commitments. Had the protocol been structured in steps, it may have been more easily ratified by both developed and developing nations. If the developed nations could have seen the US enforcing small standards, they should have been more likely to agree to reductions themselves. Had the US been able to observe the developing countries participating, they should have been willing to take additional steps. This practice would have made the "game" more repetitive, which would have supported attainment of a better outcome for all. Further, side payments could have been introduced to attempt to induce cooperative behavior even more. Kyoto was unsuccessful with the largest countries because it failed to address the prisoner's dilemma faced by both developed and developing nations.
