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It's Time To Make Canada's Relationship With Japan A Priority

Trade between Japan and Canada has stagnated for over a decade. Exports from Canada to Japan grew only four per cent from 2006 to 2015, while Canada's imports from Japan have declined. There is good news -- foreign investment from both sides show an upwards trend -- but business will need help to capitalize on this opportunity.
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Canadian Prime Minister Justin Trudeau (L) and his Japanese counterpart Shinzo Abe attend their joint news conference at Abe's official residence in Tokyo, Japan, May 24, 2016, ahead of the Ise-Shima G7 summit meetings. REUTERS/Toru Yamanaka/Pool

On paper at least, it would appear as if deepening Canada's relationship with Japan would be as simple as ordering takeout from a sushi restaurant.

Canada exports energy, metals and agriculture and forest products, just the materials Japan's industrial economy consumes in large quantities. Canadians have a high regard for Japan manufactured goods, such as cars and electronics. The two Pacific Rim nations also have areas of mutual strength, such as scientific research and digital media, that could benefit from greater cooperation.

The commonalities go far beyond goods and services. A mature but sizable economy -- still the world's third largest -- Japan's business norms, democratic institutions and common values put Canadian at ease. Canada has a long history of Japanese immigration and a love of Japanese culture. As the popularity of Canadian artists like Celine Dion, Joni Mitchell and Neil Young in Japan can attest, the feeling is mutual.

An increasingly volatile world economy, as well as the specter of a more protectionist United States, means that neither Canada nor Japan can afford to take the other for granted.

Yet even an opportunity as obvious as increasing economic ties between Canada and Japan won't materialize without foresight and hard work by both countries.

Trade between Japan and Canada has stagnated for over a decade. Exports from Canada to Japan grew only four per cent from 2006 to 2015, while Canada's imports from Japan have declined. There is good news -- foreign investment from both sides show an upwards trend -- but business will need help to capitalize on this opportunity.

The Japan Canada Chambers Council, a group of business leaders connected to the national chambers of commerce in each nation, strongly support the Trans-Pacific Partnership as a means of promoting closer Canada-Japan ties. But the TPP is not enough. An increasingly volatile world economy, as well as the specter of a more protectionist United States, means that neither Canada nor Japan can afford to take the other for granted.

Last week the Prime Minister met with Japan's Shinzo Abe during the G7 Leader's Summit. This should only be the first of many such meetings with the goal of reigniting bilateral trade negotiations with Japan through the Economic Partnership Agreement. Successfully concluding bilateral trade negotiations between Canada and Japan would help to preserve and build upon the benefits of the TPP.

While all aspects of Canada and Japan's economic relationship are important, there is a unique urgency around the need to build liquefied natural gas export infrastructure to take advantage of a large but fleeting opportunity. Canada is the world's 3rd largest producer of natural gas, while Japan is the second largest net importer of fossil fuels in the world. There is an opportunity to expand our energy trade, but it will not take place unless the requisite export infrastructure is constructed.

There's already a mechanism to build on. Canada and Japan launched an energy dialogue in 2013 aiming to increase cooperation in natural gas, oil extraction and renewable technologies.

Unless urgent action is taken, the tremendous potential of the Canada and Japan relationship will not be realized. Better relationships with Japan should be made a priority for Canadian trade policy.

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