Thank you very much, Mr. Chair. It's a pleasure to join the committee.
First of all, I would like to commend the committee for undertaking this task of looking at the Canada-Japan EPA, or free trade agreement. In my experience, it's somewhat unusual to do it before the agreement is actually in place. I think that's a very good thing.
I should probably sketch out more of my background to help you know where I'm coming from. I am currently, as the chairman has indicated, the senior strategy advisor with Davis LLP, a national Canadian law firm and the only Canadian law firm with a branch in Tokyo, Japan, so you'll see my interest from there.
On the trade front, I was the senior assistant deputy minister for U.S. affairs during the negotiation and implementation of the Canada-U.S. Free Trade Agreement. I was also the deputy minister of international trade, supervising the NAFTA negotiations. My trade background goes back a fairly long way.
As you've indicated, I spent five years in Japan as the Canadian ambassador, following which I was the Canadian deputy foreign minister from 1997 to 2000. I then graduated from government and went to the private sector with CAE in Montreal as group president. It is one of Canada's great treasures. It is a company that has had over 90% of its business for the last 40 years internationally, including a significant role in Japan. I was there for seven years.
I also chaired for Canada, the Canada-Japan Forum 2000 from 2003 to 2006 which reported to Prime Minister Harper and to then Prime Minister Koizumi. Included in the recommendations, as previous advisory forums had done, was a recommendation that Canada and Japan enter into a free trade agreement.
I should also say that I am currently the international co-chairman of the Pacific Economic Cooperation Council, which is an advisory group to 25 governments, most of whom are members of APEC, on economic and trade issues.
In the interests of full disclosure, although I do not purport for a moment to represent either of them, I am on the board of directors of Toyota Canada Inc. and of Canfor Pulp Products Inc., which has a very significant market in Japan.
Those are my confessions to you. It will be no surprise to you that I am a strong advocate of the negotiation of an economic partnership agreement with Japan. It's been a long time coming, as Wendy Dobson, I think, indicated to you previously. She was working on this as far back as 1986. Some of us were proposing this in the 1990s and then you had the 2005 economic framework, the 2007 report, the 2011 report, and finally the March 2012 report on what's been called the complementarity study.
There's been a lot of work and a lot of angst in terms of getting there for a whole array of reasons, but at least we've got to this stage. I may be your last witness, I'm not sure, but as one of your later witnesses, I've had the benefit of reading the testimony that's been presented to he committee. I don't intend to repeat in any way shape or form a lot of the basic information which you already have. I'm also aware of some of the particular issues that you are interested in, or concerned about.
I'll just make three points and then I'll certainly engage in a dialogue with you.
As you all know, Japan has been a major partner. We had a trade commission in 1904 in Yokohama. Trade was very much in William Lyon Mackenzie's mind in 1929 when we established diplomatic relations with Japan. The economic part of the relationship has been the dominant one throughout.
However, it's true to say that both sides have become rather complacent in the relationship. In Tokyo, Perrin Beatty described the two countries as two old guys sitting on a park bench. There's a certain truth to that. Certainly, I think the relationship needs revitalization. It needs a sense of momentum and there's no better place to do that than in the trade relationship. I'm not just talking about intergovernmental relations; I'm talking about the private sector as well, which I think needs some new momentum.
When I was in Japan in the mid-1990s, the two-way trade looked almost exactly as it does today. We haven't gone anywhere since then. If you take 2000 to 2010, the increase in Australian exports in that 10-year period is about double our total two-way trade. That's a country that by and large is competing with us in the majority of the products we provide. Australia is a country that has put great focus on Asia, a great focus on Japan, and they have reaped some significant rewards. I think there is a message for us there.
We need to look at this within an Asian context. I am also a strong advocate for our participation in the trans-Pacific partnership, but I don't think it is a substitute for a Canada-Japan free trade agreement. The Japanese for many years were opposed to regional or bilateral trade agreements, and put all of their faith in the World Trade Organization and the successive rounds. I think we recognize that it would be the best of all possible worlds if the Doha round could be completed, but the real world is not there. People are furiously engaged in negotiations to try to get comparative advantage or discriminatory advantage, and we need to be in that game. The current government is engaged in going down that path. However, when you look at the agreements, you see that Japan, in volume of trade and value of prospects, sits very much by itself.
We need to think big and have as comprehensive an agreement as possible. It should cover the whole array of trade in goods and services, intellectual property, procurement, and dispute settlement. I appreciate that in any trade agreement there are sensitivities. The paragraph on the sensitivities in the March report is very skilfully and diplomatically drafted, but I don't think that means the negotiators should shy away from the tough issues. We need to make this agreement as broad as possible.
As we found out with both the Canada-United States Free Trade Agreement and the NAFTA, these agreements engender increased awareness and respect within countries and business communities. Specifics in the agreement, such as tariff reductions, don't always have a big effect, but we experienced what the economists call the gravity effect, which is a psychological change in the relationship between the two countries. That's what these agreements, if properly crafted, provide.
Finally, as the report indicates, there is a lot of complementarity in the trading relationship. There are areas that I think both countries would benefit from exploring further rather than just continuing on the traditional lines that we have had. We can discuss those as well.
Thank you.