A strong Canada-Japan relationship
Trevor Kennedy’s remarks to the Standing Committee on International Trade (CIIT) – Canada’s Trade with Japan.
Madam Chair, committee members, thank you for the invitation to take part in your meeting on Canada’s Trade with Japan.
The Business Council of Canada is composed of 175 chief executives and entrepreneurs of Canada’s leading enterprises. Our member companies directly and indirectly support more than six million jobs across the country and hundreds of thousands of small businesses.
While it would have been an honour to speak to this committee in person, it is also fitting to participate today from the Business Council of Canada’s first regional office for the Asia-Pacific region, based in Tokyo.
Canada and Japan have shared a long and prosperous economic relationship, with significant two-way trade volumes, and with Japan serving as one of the largest investors in Canada. While the economic relationship has been strong for decades, in recent years Canada and Japan have become strategic partners, and with this change, we have seen several new areas of opportunity emerge for our business communities.
Trade
Japan is a major market for Canadian wood and lumber, canola, fertilizers, minerals, pork, seafood and other products. These areas continue to be lucrative for Canadian exporters, but there are new opportunities to grow as well.
Following decades of stable energy demand, under the 2025 Strategic Energy Plan, the Japanese government revised demand forecasts upward, due to growing needs from datacenters and reindustrialization in certain sectors. Japan is prioritizing diverse and stable suppliers. Canada is well positioned to benefit.
Canada has already demonstrated it can become a major exporter in the form of liquified petroleum gas (LPG). AltaGas is now responsible for 25% of Japan’s total LPG imports.
Following the completion of LNG Canada last year, Canada has started exporting gas to Japan, one of the largest buyers in the world. Japan is also rapidly reintroducing nuclear power to its energy mix. The resumption of activity of this sector could provide Canada with opportunities for uranium exports, engineering and in the adoption of new technology.
Services providers are an important part of the overall trade relationship as well. There were over 688,000 arrivals from Canada last year, a significant flow of travellers enabled by the growing number of flight options provided by Air Canada and WestJet. Other leading service providers with a presence in the market include Manulife and OpenText, and many large Canadian banks have a presence or are expanding in Tokyo.
Investment
While this meeting is focused on trade, it is important to acknowledge the significant role that investment plays in the overall economic relationship. Japan is a leading investor in Canada, with a long history of creating well-paying jobs in manufacturing, energy and mining, and technology sectors. This should continue as corporate Japan prioritizes overseas investment and strengthening regional supply chains.
At the same time, Japan has recently become a more attractive and lucrative destination for Canadian institutional investors. There has been a noticeable uptick in activity on the ground among pension funds and other investors.
Economic Security
The clear priority for the Japanese government and business community is economic security. In recent years, Japan has become vulnerable to supply chain shocks, caused by natural disasters, pandemics, and geopolitics.
Japan sees Canada as potential solution to many of its problems. However, in repeated cases, while there was an interest, the risk and uncertainly presented by Canada has forced Japan to prioritize other global opportunities.
For instance, following Russia’s illegal invasion of Ukraine in 2022, Japan asked Canada to help reduce its reliance on Russian oil and gas. It is true that Canada has since completed Trans Mountain pipeline expansion and LNG Canada, but these projects were already under construction. No other meaningful measures were taken at the time to expedite developments that would have led to additional energy exports.
Moving ahead to the present, disruptions caused by the conflict in the Middle East could create an even greater challenge for Japan. It is determined to solve this problem and has so far focused efforts on working more closely with the United States, Brazil, Mexico, among others. Canada should be part of the solution too.
Similarly, Japan hopes to develop a secure supply chain for critical minerals, with Canada being an ideal partner, if we can move with the pace needed.
Defence partnership
Japan is working to diversify its defence partnerships to reduce its reliance on a handful of equipment providers.
It is also increasing its defence spending, and it is opening the sector to export and partnership. Japan could be a partner as Canada works to strengthen its defence industrial base, and Canada has solutions it could provide to enhance Japanese security, including in cybersecurity.
North American trade
It may seem unusual to discuss CUSMA in a session focused on trade with Japan. However, Japanese businesses with a presence in Canada are present in part because of its proximity and connectivity to the North American economy. As Japanese Ambassador Yamanouchi has explained to Canadians, uncertainty around the future of our agreement is a growing concern for Japanese businesses. It is critical that Canada secures this framework and that it continues to provide Canada with competitive access to the United States and Mexico.
Conclusion
While there is room for improvement, it is clear that our relationship has never been stronger. This extends to the business community as well. After decades of collaboration, The Business Council of Canada and the Keidanren, Japan’s leading business association, formed a strategic partnership late last year.
We look forward to building on this partnership later this month during the upcoming Team Canada Trade Mission.
Thank you for this opportunity. I look forward to answering your questions.
