Canadian PM Harper acknowledges that some sectors of the economy are apprehensive about potential trade deal with Japan, assures that negotiators will work to get nation the most favorable agreement possible

OTTAWA , March 26, 2012 () – Prime Minister Stephen Harper acknowledged the potential difficulties in securing a trade deal with Japan, and admitted some sectors of the economy will be viewing the launch of trade
talks with some hesitation.

But the prime minister also said Canadian negotiators will work to get the best deal possible, and the potential benefits for the economy as a whole are significant.

Harper and Japanese Prime Minister Yoshihiko Noda announced the formal launch of free trade negotiations on Sunday following a meeting during the second leg of Harper's three-country tour through Asia, a month after his visit to China.

The two also discussed ways to strengthen military ties, and to negotiate an agreement to let the Canadian military establish a logistical hub in Japan so it can have a springboard into the
broader Asia-Pacific region.

A trade deal isn't a foregone conclusion as Japan has taken a long time finalizing agreements with a number of countries, including Australia. It is also highly protective of its agricultural
industry, which Canadian companies are keen to break into.

At the same time, Canadian negotiators are already working on several other large agreements, notably with the European Union and India, and the negotiators' resources are limited.

"(The Japanese) certainly have been reluctant to engage in the kind of negotiations we've now committed to engage in," Harper said. "So getting an agreement to move forward on free trade
discussions is a major step forward."

To ensure an adequate level of ambition from the Japanese side, the government has requested that Japan put a number of sectors on the table, including its highly protected agricultural, fish and seafood, forestry and industrial goods sectors.

Like the Japanese, some segments of Canadian industry, such as automotive and electronics, will also be wary of a deal that could see an influx of Japanese goods into the Canadian market.

"There will be areas (of the economy) where we have defensive interests, as is always the case in trade negotiations," Harper told reporters.

"But look, Japan is the world's third-largest economy and the potential for increased trade between us that will create jobs and growth and long-term prosperity is really enormous."

The government has been pushing hard to engage countries in the booming Asia-Pacific region as they believe it is critical to Canada's future economic prosperity.

Japan is already Canada's fifth-largest trading partner, with goods worth $23.7 billion flowing between the two countries last year.


Canada imported about $2.3 billion more than it exported, however, and a great deal of the Canadian products sold to Japan were energy and resources like lumber and minerals.

In contrast, Japan exported high-value goods like motor vehicles, machinery and electronics.

A recent study on behalf of the two governments concluded that a trade agreement could increase Canadian exports to Japan by 67 per cent and add up to $3.8 billion a year to Canada's economy.

The government is hoping to increase the amount of resources Canada exports to Japan, particularly liquefied natural gas, which is being seen as a potential alternative to nuclear power as Japan considers alternatives in the aftermath of last year's partial meltdowns at the Fukushima Daiichi Nuclear Power Station. The two countries will also work together to research liquefied natural gas.

Meanwhile, Canada has been trying to secure military logistical hubs around the world to facilitate the rapid deployment of forces wherever they are necessary.

An agreement with Japan, which is a staunch ally of the West, could be significant given the geo-political importance of the Asia-Pacific region. Canada already has similar agreements with Kuwait, Jamaica and Germany.

On Monday, Harper will fly to the city of Sendai which was struck by last year's earthquake.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.