Brian Lee Crowley: Japan is Canada’s best bet as an
Asian trading partner
April 6, 2015
OTTAWA — Geography, history, immigration and economic self-interest all suggest that Canada’s trade should be oriented toward the Asia-Pacific. Yet we need to choose our trading partners with care.
It is a mistake is to be dazzled by China’s rise and therefore assume our principal Asian relationship should be with the resurgent
dragon. Japan, in fact, is a far better fit for Canada.
dragon. Japan, in fact, is a far better fit for Canada.
On market size, it is hard to compete with China, now the world’s second-largest economy. But Japan is still the world’s third-largest economy and it is hugely attractive as a customer in its own right, as well as being a stepping stone to other faster-growing Asian markets.
Japan is rich and more technologically advanced than China. Its large multinationals are highly profitable juggernauts whose products are prized around the world for quality and sophistication. Tokyo is, along with New York and London, one of the world’s three principal financial hubs where global capital is managed with unparalleled skill and speed.
Japan moved early into the high, value-added sectors of research and development, finance and design, and into cutting-edge technologies such as nanotechnology, biopharmaceuticals and materials engineering. It is nimble, too, moving much of its manufacturing offshore when Japanese wage levels made it uneconomic at home.
With that shift, Japan’s economic might radiated throughout East and Southeast Asia, helping to spawn shipbuilding in Korea, textiles in China and electronics in Taiwan. Today, Japanese know-how, companies and investments are a cornerstone of prosperity in almost every corner of Asia, including China, Vietnam and Burma.
Japan is also a successful democratic society under the rule of law with a deep commitment to a stable world order. Since the end of the Second World War, we have both shared a deep belief in resolving international disputes by negotiation rather than force.
Japan enjoys freedom of speech, press and religion, not just in theory but in enthusiastic practice. Its legal system, allied with a culture of scrupulous respect of property and contract, stand in stark contrast to risky autocratic countries where guanxi (personal and family pull), theft of assets and palm-greasing are the common coin of business.
These shared freedoms form the basis of the deep ties that bind Canada and Japan. The third foreign embassy in Canadian history opened in Tokyo in 1929 and some of our biggest firms have been doing business there for decades, all while the Japanese have been investing in Canadian industries as diverse as forestry, autos, video gaming, food processing and oilsands production. Honda recently announced that it plans to export cars made in its Canadian plant to Europe when our free-trade agreement with the European Union becomes reality. Partnership with Japanese companies almost inevitably brings with it links to other Asian countries. Japex, for instance, is not only involved in the oilsands, but is a partner with Malaysia’s Petronas in a consortium that may be the first to liquefy Canadian natural gas and ship it to Asia.
Unlike China, Japan is under no illusion that everyone must pay it court. Rather, to Japanese eyes, Asia has become a darker place. Anti-Japanese demonstrations have rocked several countries, while China is increasingly and aggressively self-assertive. The U.S. willingness to counterbalance Chinese power is evermore equivocal, reducing the value of its security guarantee and leaving the Japanese seeking reliable allies.
Japan recognizes the complementary nature of our two economies, and prizes many Canadian products. They find Canada, however, an unfocused, parochial and diffident partner who too often fails to deliver. If we can prove them wrong, there is hope for us yet as a Pacific nation. The alternative is to be a mere spectator of Asia’s rise.
Brian Lee Crowley is managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank.
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