Thank you very much, Mr. Chairman.
As you've heard, my name is Ian Burney. I'm the assistant deputy minister for trade policy and negotiations at the Department of Foreign Affairs and International Trade.
It's certainly my pleasure to be here today to speak to you on the topic of the launch of Canada-Japan free trade agreement negotiations, or to use Japan's preferred terminology, economic partnership agreement.
As you've noticed, I have an entourage with me, to which I intend to pass all the tough questions. Let me introduce them.
Marvin Hildebrand is the director general of the trade negotiations bureau at DFAIT. Phil Calvert is the director general of the north Asia relations bureau, which covers Japan. Dany Carriere is the director of the trade policy and negotiations division. And from Agriculture and Agri-Food Canada, we have Denis Landreville, who is the lead negotiator for regional agreements in the trade negotiations division.
I will begin by giving you an overview of the context. Prime Minister Harper and Japanese Prime Minister Nova announced the launch of negotiations towards a Canada-Japan economic partnership agreement, or EPA, on March 25, 2012, in Tokyo. This initiative is an opportunity to expand Canada's trade and investment with one of the world's wealthiest and most innovative economies, and is consistent with the government's ambitious pro-trade plan.
As you know, the pursuit of trade agreements is a key element of Canada's broader economic plan. The government's goal is to create jobs, growth and long-term prosperity for Canadians and Canadian businesses by expanding trade and economic opportunities abroad, an objective recently reaffirmed in the federal budget.
Accordingly, Canada has been pursuing an impressive—and growing—number of trade initiatives with key trade and investment partners.
Since 2006 Canada has concluded free trade agreements with nine countries, the four European Free Trade Association states of Iceland, Norway, Switzerland, and Liechtenstein, followed by Peru, Colombia, Jordan, Panama, and most recently Honduras. Many more are in the works, including free trade negotiations with the EU, Canada's most significant trade initiative since the signing of the NAFTA nearly 20 years ago.
In addition to the ambitious pursuit of free trade agreements, Canada is also expanding its network of foreign investment promotion and protection agreements--FIPAs--science and technology cooperation agreements, and air services agreements. The overall objective is to solidify and expand Canadian access to global markets.
Let me now turn to Japan, which is the world's third-largest national economy, with a GDP of $5.8 trillion in 2011. It's also one of Canada's most important economic and commercial partners.
Japan was Canada's fourth-largest merchandise export market in 2011, with exports totalling $10.7 billion. It was also our fourth-largest supplier of imports for the same year, at $13.1 billion.
Beyond trade in goods, Canadian exports of services to Japan reached nearly $1.3 billion in 2011, while our service imports from Japan were valued at $1.5 billion the same year.
In 2011 Japan was Canada's single largest source of foreign direct investment from Asia, even ahead of China. At the end of 2011 Japan had a foreign direct investment stock of $12.8 billion in Canada. More than 330 Japanese subsidiaries and affiliate companies now operate in Canada, employing tens of thousands of Canadians. Not surprisingly, many Canadian companies are active in Japan as well, with the stock of Canadian direct investment in Japan totalling $8.4 billion in 2011. For example, companies such as Manulife, Magna, Linamar, Celestica, Bombardier, and Scotiabank all have a direct and active presence in the Japanese market.
A free trade agreement with Japan would build on these strengths to deepen our trade and investment ties with this influential economy. In fact, the department's chief economist projects that a Canada-Japan free trade agreement would generate billions of dollars in additional trade and commerce between our two countries.
On March 7, 2012, Canada and Japan released the Report of the Joint Study on the Possibility of a Canada-Japan Economic Partnership Agreement, which examined the potential of an economic partnership agreement between our two countries. According to the findings, there remains much untapped potential in our commercial relationship. A bilateral free trade agreement with Japan could increase Canada's GDP by US$3.8 billion, and boost exports to Japan by as much as 67%, or $7 billion over current exports.
The joint study report further concludes that an agreement would deliver improved consumer welfare, along with strengthened bilateral trade opportunities for energy, other natural resources, food products, manufactured goods, forestry products, and fish and seafood products.
But the benefits of pursuing an FTA with Japan go well beyond commercial gains, as compelling as those are. It would bolster Canada's reputation on the world stage as an FTA partner. It would also contribute to Canada's growing trade policy engagement in Asia, building on our negotiations with India, Korea, and our recently launched exploratory discussions with Thailand.
As the committee is no doubt aware, Canada and Japan have also both expressed an interest in the Trans-Pacific Partnership negotiations. A bilateral FTA with Japan and our shared interest in the TPP negotiations are mutually supportive and compatible. Bilateral negotiation would allow for both Canada and Japan to advance our respective interests with one another, while the broader TPP process could enhance greater regional economic integration, a long-term goal for the Asia-Pacific region.
The Canada-Japan FTA initiative represents a strategic opportunity that has been years in the making. In November 2010 Japan's cabinet adopted the basic policy on comprehensive economic partnerships, which seeks to reform Japan's domestic trade and agricultural policies. Japan has shown strong interest in comprehensive negotiations with Canada. The joint study found “sufficient common ground to launch the negotiation of a comprehensive and high-level economic partnership agreement”.
With that objective in mind, Canada will seek the elimination of Japan's tariffs in areas of export interest to Canada, including in the agriculture, fish and seafood, forestry, and industrial good sectors. The negotiations will also seek to address non-tariff barriers and to create a more secure regulatory regime for services, trade, and investment, including more secure market access in services sectors of export interest, such as professional services and energy-related services. We will also seek to strengthen and enhance our already large two-way investment flows by negotiating high-standard investment provisions.
In addition, Canada and Japan are considering ways in which an agreement should reflect our mutual commitment to high standards of environmental protection and labour practices. Japan is one of the world's leading innovators and one of Canada's most vital trade partners. An FTA with Japan would represent a critical piece in Canada's ambitious pro-trade plan and a valuable opportunity to strengthen our growing engagement in Asia. What's more, this is an important time to be negotiating with Japan, given the ongoing public debate in Japan on key domestic reform initiatives and the prospect that Japan will become much more active in international trade negotiations in the years ahead.
It is also important to note, Mr. Chairman, that Canada engaged in extensive consultations prior to the launch of these negotiations, including through the Canada Gazette and numerous meetings with Canadian stakeholders.
Support from the Canadian business community for this initiative has been overwhelming. Many stakeholders have publicly expressed their support for a FTA with Japan since the announcement last month, including the Canadian Manufacturers & Exporters, the Japan Automobile Manufacturers Association of Canada, Toyota Canada, the Canadian Association of Petroleum Producers, the Canadian Meat Council, the Canadian Canola Growers Association, and the Forest Products Association of Canada.
Canada has also engaged in extensive consultations with the provinces and territories, which were strongly supportive of the joint study process and the launch of negotiations. British Columbia and Quebec have been particularly vocal in their support.
In terms of next steps, both Canada and Japan will identify chief negotiators in the near future. On May 8, I will be in Tokyo and will meet with key Japanese government ministries. My principal objective is to begin discussions with Japan on some of the organizational and process issues related to preparing for the first round of negotiations.
In conclusion, Mr. Chairman, free trade negotiations are increasingly important for promoting Canadian commercial interests around the world, and hence for creating prosperity here at home. Our competitors are negotiating agreements at a pace never before seen. Canada has risen to the challenge with our own ambitious pro-trade plan, and the Canada-Japan initiative is a key element of that. Clearly, we are only just getting going with Japan, but the government is committed to pursuing an agreement that promotes Canada's wide-ranging interests in this market. In so doing, we will continue to consult closely with all interested Canadians.
We thank the committee for this opportunity. My team and I look forward to hearing your views, which will help shape our negotiating positions, and to responding to any questions you may have.