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Hurdles ahead for Canada in Japanese free-trade talks

Canada and Japan should pursue a free-trade agreement that would eliminate all tariffs, remove export subsidies and reduce non-tariff barriers and boost the gross domestic product of each country, says a joint study done by the governments of the two countries.

Matjaz Boncina/iStock photo/Matjaz Boncina/iStock photo

Canada and Japan will begin their first round of free-trade talks in late November – what are expected to be difficult negotiations aimed at unlocking access to an Asian economy beset by import restrictions.

It's the fourth set of major free-trade talks the Harper government is loading on its plate – all of which have yet to bear fruit. These include trade talks with the European Union, India and the Trans-Pacific Trade Partnership.

In March, Prime Minister Stephen Harper and Japanese Prime Minister Yoshihiko Noda announced the formal launch of talks aimed at reaching a treaty to spur trade and investment between the nations. On Monday, International Trade Minister Ed Fast will announce talks are set to start Nov. 26 in Tokyo.

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Japan is the world's third-largest economy and Canada's fourth-largest foreign market for goods export. Japan is also one of the largest foreign direct investors in Canada.

Japan has yet to sign an FTA with a Group of Eight member country.

Access to Japan's market can be difficult: a complex web of non-tariff barriers pose serious hurdles for foreign companies trying to compete there. These can include regulations that appear designed to frustrate foreign manufacturers.

Canada, for its part, maintains a 6.1-per-cent tariff on Japanese autos and parts.

A recent study by the two governments said growth in Canada's economy would increase between a quarter and a half of a percentage point if a trade deal is concluded. It also predicted that a deal could lead to gains for Canadian exporters of farm products as well as aerospace and energy.

Canada now ships mainly agricultural products and natural resources to the Asian economic giant.

Members of the House of Commons standing committee on international trade are in Japan this week, meeting with Canadian companies already doing business there, to discuss the benefits of a free-trade deal.

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Trade negotiations have become a major constant in the Harper government's foreign policy: expanding foreign markets for Canadian goods and services in an effort to reduce an overwhelming economic dependence on the United States.

Since winning power in 2006, the Conservative government has signed a string of small trade liberalization deals with other countries but has yet to land a major agreement – although both Ottawa and European officials insist a significant accord with the European Union is nearly finished.

In 2011, Canadian exports to Japan totalled almost $10.7-billion. Leading merchandise exports included mineral fuels and oils and agriculture and agri-food. Japan imports almost 9 per cent of Canada's total food exports and is Canada's largest source of business investment from Asia, at more than $12-billion in 2011.

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About the Author
Parliamentary reporter

Steven Chase has covered federal politics in Ottawa for The Globe since mid-2001, arriving there a few months before 9/11. He previously worked in the paper's Vancouver and Calgary bureaus. Prior to that, he reported on Alberta politics for the Calgary Herald and the Calgary Sun, and on national issues for Alberta Report. More

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