Canada and Japan agree to start free trade talks

TOKYO — Stephen Harper hailed the opening of free trade talks with Japan on Sunday as a “historic opportunity” while economic experts warned of the perils of opening borders to the world’s third largest economy.

Canadian Prime Minister Stephen Harper

TOKYO — Stephen Harper hailed the opening of free trade talks with Japan on Sunday as a “historic opportunity” while economic experts warned of the perils of opening borders to the world’s third largest economy.

The prime minister’s long-anticipated announcement was made with his Japanese counterpart following a bilateral meeting here and came with pledges that an economic partnership would bring a bonanza of economic opportunity.

“The potential for increased trade between us that will create jobs and growth and long-term prosperity is really enormous,” Harper said at a media availability following one-on-one talks with Prime Minister Yoshihiko Noda.

He estimated Canadian exports to the island nation could increase by two-thirds and pledged to do what he could to protect sectors that might be in danger.

“We will make sure when we sit around the table, as we do in all these negotiations, that we will try and get a deal that’s not just good for the Canadian economy as a whole, but protects all of our various sectors. That’s our ambition, but we have to do what’s best for the entire Canadian economy.”

To do that, trade experts say Canada will have to up its game because the Japanese are tough, skilled negotiators, and probably the most formidable the Harper government has faced since it launched its ambitious series of bilateral negotiations.

“We are dealing in East Asia with sophisticated states with strong negotiating teams, and often with strong domestic lobbies,” said Gordon Houlden, a trade expert and former government official.

Ron MacIntosh, a research associate at China Institute and former trade negotiator who served in Japan, South Korea and Taiwan, said the Harper government will endure a learning curve in “Asian realities.”

In order to be successful, MacIntosh said Canadians will have to remind themselves that free trade in this part of the world is about more than just lowering tariffs and distorting subsidies.

He said it also includes investment rules, intellectual property, competition policy and currency management, among other things.

If an accord is eventually reached, it would be Japan’s first with a country from the Group of Eight major economies.

But Houlden warned not to expect a quick agreement and predicted that one of Canada’s main objectives — gaining greater access to the Japanese agriculture market — will face stiff opposition.

“Agriculture in Japan is super-protected and has an almost mystical status,” said Houlden, who noted how Australia struggled with similar issues in its negotiations with Tokyo.

After being shut out of Trans-Pacific Partnership talks, known as the TPP, Canada and Japan embarked on a joint study on economic co-operation, which found a lot of common ground.

Houlden suggested Japan was motivated to open trade talks because it has endured a decade of little or no growth while at the same time watching China’s economy boom.

Noda told a joint news conference that Japan was interested in increasing investment in Canada’s natural gas sector.

He also announced the two countries will pursue enhanced defence and security co-operation, including the establishment of a small supply base the Canadian military could use in emergencies.

Noda made a point of framing defence co-operation in the context of renewed regional concerns with the new regime in Pyongyang.

“We reaffirmed the importance to tackle outstanding global issues, particularly the issues surrounding North Korea and others in the Asia-Pacific region, as we co-operate as partners,” Noda said.

North Korea says it will launch an observation satellite on a long-range rocket next month.

Japan shares U.S. and South Korean fears that Pyongyang wants to test long-range missiles that could eventually deliver nuclear warheads.

The Japanese and Canadian leaders will be heading to Seoul to attend this week’s Nuclear Security Summit.

Harper, who will visit the earthquake and tsunami-ravaged region of Sendai on Monday, made a point of praising Noda for “the true and clear leadership” he showed through the crisis, and how quickly Japan has rebuilt.

“I have quite great admiration for what you are doing here,” he said.

The Japanese people were “deeply touched” by the expressions of support and assistance from Canada, Noda said.

In a meeting with some of the heavy-hitters of Japan’s business community late Sunday, Harper talked up the advantages of investment in Canada and underscored economic stability.

“It’s a challenging time in the global economy, but Canada is a country that has the soundest banking system in the world, that has a fiscal position that is strong, and we are going to eliminate our deficit much more rapidly than most other Western countries,” he said.

Among those in attendance was Yorihiko Kojima, chairman of Mitsubishi Corp., as well as the managing directors of the Toyota Motor Corp. and the Japan Petroleum Exploration Co., Ltd..

Travis Toews, represented the Canadian Cattlemen’s Association at the meeting and said he’s confident the country, including the agriculture sector, will make gains in the talks.

It had been anticipated that Harper’s trip would see Japan relax some of the restrictions it imposed on Canadian beef following the mad cow scare a year ago, but Toews says the issue is still being studied.

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