Japan and Canada have a longstanding friendly relationship and share universal values such as freedom, democracy, human rights and the rule of law. We are confident that Japan could be the best bridge-builder between Canada and the Indo-Pacific region. Last year, Japan and Canada celebrated the 90th anniversary of diplomatic relations between our two countries. As ambassador of Japan in Canada, I have the luxury of doing my utmost to further develop the already excellent relations as we move towards the centennial anniversary.
For the past several months, our joint efforts to combat the COVID-19 pandemic have been our first priority. While we forged ahead with the largest stimulus packages and took rigorous measures to mitigate its economic and social impacts, Japan and Canada must co-operate in order to ensure the flow of vital medical supplies and work together to minimize disruptions to trade and global supply chains. It is encouraging that as G7 and G20 partners, we are leading the discussion on these issues.
Two-way trade and investment has increased over the past decade. Between 2010 and 2019, Japan’s exports to Canada increased from approximately $10.6 billion to $12.58 billion, while Canada’s exports to Japan increased from an estimated $12.45 billion to $16.75 billion. Over the similar period, the FDI stock from Japan to Canada increased from $12.7 billion in 2010 to $28.9 billion in 2018. In addition, there are some notable interdependent relationships with respect to specific products. For instance, canola, lumber and coal make up a large share of Canada’s exports to Japan. Conversely, about half of the automobiles manufactured in Canada are Japanese brands.
Despite these encouraging highlights, overall exports and investment shares continue to be unremarkable. Japan’s share of total exports to Canada amounted to two per cent in 2018, while Canada’s share of total exports to Japan was one per cent that year. FDI stock tends to follow the same trend.
Given that there is still so much potential, I strongly believe we can further develop our bilateral relations. We are now partners in the CPTPP, which establishes high standards in trade and investment in the Asia-Pacific. If we take advantage of these commonalities, they can form a foundation for the next phase of our economic relationship.
The question is, how can we capitalize on this huge potential and successfully navigate our bilateral relationship to the next chapter? The answer to this lies in identifying the priority areas for bilateral co-operation and committing to them. For instance, the two countries could co-operate towards the realization of a free and open Indo-Pacific. Furthermore, as free-trading nations, it is of utmost importance for us to promote and protect a rules-based trading environment from the rising tide of protectionism. To this end, Japan and Canada could enhance co-operation in support of WTO reform, and in ensuring that the rules implemented under the CPTPP are properly maintained and expanded.
We could further co-operate in the energy sector, with a focus on LNG and the development and export of clean energy. LNG Canada, a $40-billion project that is expected to start exporting LNG in the mid 2020s, represents Canada’s largest and most promising investment project, and Japan has made substantial investment in it. In the field of innovation, Canada has human resources and hubs for the world’s most advanced artificial intelligence, including deep-learning. Increased co-operation could also be possible through the promotion of a better business environment and enhanced exchange of trade missions and networking among businesses, including small- and medium-sized enterprises.
The CPTPP is a model of what we can achieve when Japan and Canada work together. Under the CPTPP, exports of Canadian beef and pork to Japan and exports of Japanese steel products and automobile parts to Canada have increased. However, many areas remain unexploited, including the export of Japan’s agricultural products, such as wagyu beef, sake, whisky, fishery products and green tea to member countries, including Canada.
The CPTPP is a high-level, 21st-Century agreement that makes global trade and investment freer, fairer and more transparent. Japan and Canada, as the two largest economies among the original members, continue to collaborate with one another to promote the utilization of this multilateral economic framework to increase trade and investment in the Indo-Pacific region.
Yasuhisa Kawamura is Japan’s ambassador to Canada. Reach him at infocul@ot.mofa.go.jp or (613) 241-8541.
