The Japan Factor

In recent years, we have become accustomed to hearing about the role of China both from the perspective of an emerging economic powerhouse to a key political player on the world stage.

The importance of China in terms of its relationship with Canada can not be underestimated. However, there is a key partner in Asia of long-standing that has not received much attention in recent years and has been taken for granted - Japan.

Japan has an economy greater than all of Asia combined including China. In terms of the present sizes of the economy - GDP, Japan's gross domestic product is three times that of China, five times that of Canada and five times that of India.

There is no question that its economy is changing rapidly both in terms of the global manufacturing sector, services and S & T sector. It is important to note, that Japanese companies have paid off 40 percent of the GDP in debt which is like paying off Canada's national debt three times over.

Japanese exports are up 20 percent since the mid-1990 and Canada's exports to Japan are down since the same time period. With economic growth continuing and political stability assured after the resounding victory of Prime Minister Koizumi last September, there are opportunities for Canada as signaled by former Prime Minister Martin's visit to Tokyo in January 2005. It was during this visit where a Canada-Japan Economic Framework agreement was signed to study ways of further promoting bi-lateral economic relations.

The announcement stated that both countries would:

"focus on forward-looking strategic priorities, including policy dialogue, facilitation and promotion of trade and investment, regulatory cooperation and the promotion of cooperation in a wide range of fields, including the following priority areas: social security, anticompetitive activities, food safety, customs, trade facilitation, transportation, investment, e-commerce, e-government, energy and natural resources, climate change, tax convention and tourism promotion."

This agreement is an important development in rekindling not only interest in the Japanese market for Canadian business but an opportunity to strengthen and showcase Canadian creative expertise.

We need to seize on this initiative and explore the prospects for new kinds of partnerships in technology, services and investment which are key areas for future growth. Canadian companies can take advantage of Japan's central place in the booming Asian economy through partnerships with Japanese firms.

There are areas where Canadian business has seized on opportunities in Japan such as in the field of research and development where Japan is a world leader. Japan is a pioneer in areas of interest to Canada such as biotechnology, nanotechnology, electronics and advanced manufacturing.

The Japanese are interested in Canadian advances in medical research, information technology, fuel cells and photonics. Canadian and Japanese firms have been working collaborately in areas such as jetliner wings (Bombardier and Mitsubishi) to fuel cells (H3 Energy Ltd with the Canadian fuel cell industry) to nutraceutical food (J.V. between Immunotec Research and Japan's Mannan Foods using technology developed at McGill University) and with nuclear reactors (AECL and Hitachi).

In spite of these success stories, Canada, the United States and others have lost market share in Japan vis-à-vis mostly developing Asian competitors but also to countries such as Australia.

Canadians need to understand the importance of the Japanese market and take advantage of the many business opportunities that Japan has to offer.

As Co-Chair of the Canada-Japan Inter-Parliamentary Group I am pleased that it plays an active role in not only promoting political and economic relations between the two countries, but also in terms of tourism and culture. The Japanese are intrigued about Canada. They love Canadian ice wine, Anne of Green Gables and the vastness of the country as well as our natural resources and technological know how.

They also respect Canadian independence in terms of our foreign policy pursuits and the nature of Canadian society.

Strategically positioning ourselves in Asia and in particular with Japan will offer unique opportunities for Canadians and for Japanese alike.

The Japan factor is something we need to strengthen and to nurture as we continue in an era of globalization.

Honourable Bryon Wilfert, P.C., M.P.
Richmond Hill
Associate Critic to Foreign Affairs
Co-Chair of the Canada-Japan Inter-Parliamentary Group