Japan our best bet as an Asian trading partner

It is rich, technologically advanced, democratic and abides by the rule of law

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OTTAWA, ON, Apr 2, 2015/ Troy Media/ – 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.

On market size, it is hard to compete with China, now the world’s second largest economy.

Japan hugely attractive as a trading partner

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.

Shared values make Japan the best choice as a trading partner

Japan moved early into the high, value-added sectors of R&D, 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 companies 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 oil sands production. Honda recently announced that it plans to export cars made in its Canadian plant to Europe when our free-trade agreement with the EU 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 oil sands, 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.

Japan seeking reliable trading partner allies

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. America’s willingness to counterbalance Chinese power is ever more 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 (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

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