OTTAWA — Canada is taking the first step toward negotiating a free trade deal with Japan, the world’s third-largest economy and one of the most reluctant to enter formal trading arrangements.
Trade Minister Peter Van Loan announced Wednesday that the two countries have agreed to launch a joint study on the feasibility of establishing an economic partnership.
“It’s a very major development, in that Japan has traditionally been very closed to the idea of free trade agreements,” he said in an interview.
“We are (already) a good trading partner, a very compatible economy, we are the source of many of the inputs into the Japanese economy.”
Van Loan said the breakthrough occurred last fall when Japan adopted a new policy more amenable to trade agreements, which created an opening for Canada. Agricultural protectionism will likely be a key stumbling block, “but that being said, we don’t grow a lot of rice in Canada,” he added.
Last year, Canada’s exports to Japan totalled about $9.2 billion.
Van Loan said it was too early to say what mutual benefits would be derived from a formal deal, but listed agriculture, natural resources and manufacturing products as three sectors that could gain from reduced barriers. He also noted that Japan is a major investor in the Canadian economy in the auto sector, manufacturing vehicles, many of which are exported into the U.S.
Canada is also currently involved in trade talks with both the European Union and India.