Trade, investment and energy issues will dominate discussions between Prime Minister Stephen Harper and Japanese Prime Minister Shinzo Abe this week. This is the first visit by a Japanese PM for a full bilateral program since 2006 and should be seen as an important step towards strengthening Canada's relationship with the world’s third-largest economy.
Abe’s first trip to Canada comes at an opportune time and marks an important turning point in the economic relationship, which had stagnated for some time until the launch of recent trade initiatives.
Canada and Japan are entering the late stages of talks towards a Trans-Pacific Partnership, an agreement that would cover 12 countries and over 40% of the global economy. Our separate bilateral Economic Partnership Agreement is expected to boost annual two-way trade between $11-15 billion. While both countries’ trade authorities are actively engaged on these files, a leaders meeting adds a necessary impetus.
Unlike his predecessors, Abe arrives in Canada with his political house in order and a mandate for change. His government secured control of the Senate in June and has taken drastic steps to revitalize the economy. Monetary and fiscal stimulus are underway. Structural reforms are soon to follow, including in the perennially difficult agricultural sector. These reforms will make it easier for Japan to commit to full-fledged liberalization.
Trade matters aside, Abe sees Canada as a solution to Japan’s energy woes. An island nation with limited resources, Japan is the world’s largest natural gas importer. Safety concerns following Fukushima have shifted its energy mix away from nuclear towards gas even more. Canada’s abundant reserves and low prices are getting a lot attention from Japanese investors and government. With Australia and the U.S. in the picture too, however, Abe will likely take this opportunity to raise concerns about the uncertainties surrounding export infrastructure, regulations and tax take.
The potential for Canada and Japan to strengthen their economic relationship clearly exists. But it will require a firm commitment from policymakers and the business community, which is why the Canadian Chamber of Commerce is launching the Canada-Japan Business Dialogue. The Dialogue will bring together businesses from both countries to provide streamlined policy input and political support for bilateral trade talks and other official initiatives.
Abe’s official visit is a very positive step forward, and one that couldn’t have come at a better time. It’s up to the businesses who will benefit to build on this momentum, identify priorities and speak out publicly in support of closer ties with Japan.