The prime minister's recent visit to India and the
Philippines has drawn attention once again to the government's
new focus on trade and business ties with this dynamic region.
Negotiations with two main partners in Northeast Asia illustrate
both the promise and the disappointments that may await
Canada's negotiators.
On a promising note, Canada and Japan will sit down in Tokyo this
week for the opening round of talks on an Economic Partnership
Agreement (EPA). This broad type of agreement is one of several
that Japan is working on, or has completed already, arising from
its 2010 decision to move aggressively toward bilateral agreements
and away from its traditional reliance on WTO negotiations as its
preferred way of liberalizing trade with major trading
partners.
A bilateral arrangement with Japan, which we have been pursuing
on and off for a decade, makes a great deal of sense for Canada.
Japan has long been one of Canada's key economic and trade
partners, and although China has surpassed it as an Asian export
market, Japan is still our fourth largest destination by country
for merchandise exports — mainly commodities but also
industrial and high tech goods.
It is also a growing services market. And Japan has been a major
and welcome source of foreign investment in Canada, from resources
to automotive manufacturing.
With economic weaknesses at home, Japanese companies continue to
expand aggressively as major investors, manufacturers and
service-providers in China and other Asian countries. An EPA with
Japan will thus enhance access for Canadian businesses to the
region's dynamic value chains through Japanese channels.
A Canada-Japan joint study released earlier this year estimates GDP
gains of at least $3.1 billion for Canada from such an EPA, and
forecasts our exports to Japan will grow by 67 per cent. Benefits
for Japan also will be significant.
This deal should be relatively easy to do. We have many
complementary economic interests, and each nation has a long-range
positive vision of what the other means to its future. Agricultural
access to Japan will be a difficult matter, but the agriculture
lobby's stranglehold on Japanese politics is not what it once
was. In Canada, we will have to be prepared to open our market more
fully to Japanese automotive products.
Japan is a country which appreciates its friends and is ready to
make accommodations to ensure long-term benefits and dependability
of supply. It seeks stability and trust in its friendships. If
anything, recognition in Japan of its changing place in the global
economy, its internal economic and energy challenges, plus the
sobering realities of last year's earthquake and tsunami,
should have strengthened this sentiment. Given a positive Canadian
attitude, the setting should be conducive to the kinds of
"win-win" outcomes that are necessary to make any trade
negotiation successful.
Contrast this picture of optimism to the current state of our
stalled trade negotiations with Korea. Begun in 2005 amid great
expectations, what should have been a natural agreement between
largely complementary economies has become bogged down on the same
two main issues we face with Japan: Canadian access for Korean
automotive products, and Korean access for Canadian agricultural
goods going the other way.
Has the Korean government lost its interest in finishing this deal?
It is now moving on to negotiate an agreement with China, the big
prize for Seoul, with Japan joining in for a possible trilateral
arrangement. Korea has agreements now in place with the U.S. and
the EU. Who needs Canada?
Canada is still interested in an agreement, but if we do not have a
dance partner, we'll have to move on to other negotiations,
particularly with Japan. We also have just joined the Trans-Pacific
Partnership negotiations (Korea is not there). And Canada still
needs to decide whether to pick up the Chinese invitation extended
earlier this year to the prime minister to negotiate an agreement
with Beijing.
If the Korea/Canada trade and economic negotiation is not brought
to an early conclusion, it will be a major opportunity lost,
probably beyond recall. This would be unfortunate given all there
is to gain for both sides.
Failure to conclude such an agreement also will undermine prospects
for a broader strategic relationship between our two countries
extending well beyond bilateral trade and investment.
Canada and Korea have much in common — in the size of our
economies (Canada is ranked as 11th and Korea as 15th), the shape
of our democratic political systems and our outlooks on
international economic and security matters. We worked together in
hosting back-to-back G20 summits in 2010. We also share a common
interest in promoting a peaceful and stable security environment in
Asia. Even the Arctic could be a place for cooperation given
Korea's expressed interest in observer status on the Arctic
Council.
In 2013 we will be celebrating the 50th anniversary of our
diplomatic relationship. Both governments are planning events to
draw attention to what we've achieved together and look to the
future. It would be sad indeed if this anniversary year began with
a failure to put our future economic relationship on a solid
footing of mutual advantage.
In the meantime, and despite similarities with the Canada/Korea
negotiation, Japan is waiting for us to engage. Let's hope the
promise this time is rewarded with an early agreement. Given the
broad approach each side is bringing to the table, the prospects
look good.
Previously published in iPolitics
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