Evidence of meeting #35 for International Trade in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was beef.
A recording is available from Parliament.
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
As we move forward on this, if Canada does fail to act on this file, who stands to benefit from that, and how quickly could we lose market share? Also, just to get into the mix on the changing relationship with China, can you comment on how the Japanese feel about that?
President and Chief Executive Officer, Forest Products Association of Canada
China's about three times the size of that market for us right now. We've lost a lot of market share in China because they're now buying Russian wood.
Japan's different in that it's committed to high value, and that's where our opportunity is.
Bloc
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
Mr. Chair, I know you and the members know that I am a member of Parliament from Mississauga, and I'm going to make an unbiased yet bold statement here.
Mississauga is Canada's number one hub for Japanese investment. Of the 250 largest Japanese companies right across Canada, over 100 are located in Mississauga. These are companies like Canon, Panasonic, Fujitsu, Ricoh and Mitsubishi Logistics, so there are many companies.
How did this all start? I'll take you back 40-plus years. If you recall, our great mayor Hurricane Hazel McCallion went to Japan and started a relationship. Mississauga is a sister city to Kariya, Japan. That relationship grew into bringing in many of these companies, including some anchor companies, like Canon, and others followed. That deep relationship continued with people-to-people ties, and, through Invest Mississauga, there were a number of trade missions.
Now we have CPTPP. We just had the Prime Minister's visit to Japan and the strategic partnership that was mentioned. We have Minister Sidhu and Minister McGuinty going to Japan on a trade mission.
I want you to paint a picture for us, Mr. Nankivell. What does that mean, and what could that bring in terms of foreign direct investment?
I'll also let you know that we have a very ambitious goal of $1 trillion of foreign direct investment over the next five years. How can this trade mission help in achieving that goal?
President and Chief Executive Officer, Asia Pacific Foundation of Canada
Canada-Japan is a great story to tell in the last half-century. I think the potential for the next half-century is even brighter if you look at how our respective geopolitical situations have evolved.
As I mentioned, these kinds of visits are quite important. The next one with Minister Sidhu and Minister McGuinty is a mission that will be focusing on these areas of high technology and potential defence industry collaboration, and these are the right things to be doing. The challenge will be to do that in a sustained way and then do the work at home as we go often and consistently to Japan at a high level and invite high-level visitors from Japan to Canada.
Let's keep in mind the 100th anniversary of the bilateral diplomatic relationship is in 2028. On the Japanese side, they're already focused on this. I think we could be looking at some high-level visitors from Japan.
On the Canadian side, we should make the most of that and continue to build, but, at the same time, we have to do that work at home on the investment climate and get a good outcome from the North American market negotiations and continue to build the facts on the ground to support the case for Canada as the preferred destination.
I'm gratified to see after the last year that there is a realization among Canadians of the role that the Japanese auto companies, two in particular, have played as the largest assemblers of vehicles in Canada by far. That was not so much in the public consciousness, say, two years ago, the way it is today. They're good corporate citizens, and we definitely would do well to get more of that.
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
Thank you for that. I agree.
I'll go now to my friend Derek Nighbor. We've known each other for many years.
I didn't know about your history and your family's history in the forestry sector, but thank you for sharing that.
In terms of driving more Japanese demand for our products, where is the value added we could bring and then take into the market? How do you do that? Do you work with local construction companies that are able to use our products and see the value in them?
President and Chief Executive Officer, Forest Products Association of Canada
Yes, exactly. We're working with the governments on MOUs where building codes are arranged, working with architects and engineers on the ground, working with them to teach staff and employees how to work with wood and how to build and use these new systems.
In terms of the market opportunity, as I said, we have a 100-year relationship in Japan. There's an opportunity to do more. Japan has an aging population. That presents opportunities in terms of retirement homes built with wood and non-residential warehouses. In North America we're already seeing Amazon, Microsoft and Walmart turning to mass timber engineered wood to build non-residential commercial properties. We see those same opportunities in Japan. Of course, we think of the earthquake risks in Japan, and we have a lot of experience in Canada in that kind of design and engineering. That's a big added value and a big way that we can bring some Canadian know-how to support building in their market.
Bloc
The Vice-Chair Bloc Simon-Pierre Savard-Tremblay
Thank you, Mr. Fonseca.
I have two and a half minutes.
I'd like to ask a question directed at both Mr. Nankivell and Mr. Holmes.
Why does trade in services seem so underdeveloped between these two countries in particular?
President and Chief Executive Officer, Asia Pacific Foundation of Canada
I appreciate the opportunity to mention trade in services, because this is precisely an area where there are now opportunities.
We aren't constrained by geography or by the state of our physical infrastructure. When we talk about doubling or achieving major growth in our exports, we must also focus on services. We see a lot of opportunity there.
In Japan, although it's not a small country or population, there is already demand for talent in certain IT sectors. Canada is currently a source of this expertise on a global scale. There are therefore opportunities, and this is exactly part of the Canada‑Japan comprehensive strategic road map agreed to by Prime Minister Carney during his visit to Tokyo. In addition, co-operation in areas such as artificial intelligence, such as quantum technologies—
Bloc
President and Chief Executive Officer, Asia Pacific Foundation of Canada
Yes, that's right.
That's trade in services.
Bloc
The Vice-Chair Bloc Simon-Pierre Savard-Tremblay
Mr. Holmes, if you can answer my question in 10 seconds, that would be great.
Executive Vice President, International and Chief of Public Policy, Canadian Chamber of Commerce
Okay, I'll skip the history of the yen shock in the market, which encouraged a very controlled approach by the government to financial services. The demographics of Japan have necessitated that they invest in foreign markets and bring capital back. That has also had a factor.
To Mr. Nankivell's point, on AI and quantum in particular, there's a real Canadian opportunity there, and in cybersecurity as well.
Bloc
Conservative
Fred Davies Conservative Niagara South, ON
Thank you, Mr. Chair.
My question is to Mr. Holmes. I'm going to pick up on what my colleague Mr. McKenzie was talking about at the end of his question. Japan is a massive importer of crude petroleum, having taken about $80.4 billion in 2023. Of its imports, 94% came from four Persian Gulf states: Saudi Arabia, Qatar, Kuwait and the UAE. For obvious reasons there is a gap in these imports, which I think could be filled by Canada.
What do you think a new pipeline would mean to Canada's GDP if we opened up more capacity to the Pacific Rim?
Executive Vice President, International and Chief of Public Policy, Canadian Chamber of Commerce
I think you've heard from previous witnesses as well that there is a business case to be made here. We've seen that play out in real time with the LNG developments—not crude, I'll come back to that—on the west coast, in the Kitimat area in particular. Also, of course, Trans Mountain is coming online. Ms. Young from the Vancouver port spoke compellingly of even seeing higher efficiency in the current export egress that we have for crude.
I will say that the export of Brent crude from Canada to Japan would likely require, in some cases, some refinery adjustments on their side. That's a long-term adjustment and commitment they would need to make. There is a conversation to be had there around how the processing of our crude exports might be received by Japan, but the market potential is huge. They have been an ally at the G7 table. They stuck with us. They are surrounded by neighbours who are not necessarily looking after their interests or are quite volatile, and so there is a case for eventual security.
Conservative
Fred Davies Conservative Niagara South, ON
Do have any analysis or projections on what impact that would have on our GDP?
Executive Vice President, International and Chief of Public Policy, Canadian Chamber of Commerce
Specifically to the GDP, I am a bit ahead of my skis here, but I would argue that the gold commodity price that Canada has enjoyed over the last year to year and half, and our current exports of energy are the two reasons why we are currently in the black.
Conservative
Fred Davies Conservative Niagara South, ON
Why do you think the traditional energy sector was excluded from Canada-Japan Comprehensive Strategic Partnership? This is despite the fact that Japan is heavily reliant on other sources of energy.
Executive Vice President, International and Chief of Public Policy, Canadian Chamber of Commerce
I'll speak quickly, and I believe Mr. Nankivell would like to respond as well.
Right now, there is a real focus in Japan around clean technology and clean-tech opportunities, including hydrogen. There's a lot of interest domestically within that space. However, that does not preclude or exclude other energy options for Canada. We have a more mature industry there in Japan that could be developed. What the two governments are trying to do with this new agreement is foster and encourage some of the emerging industries they would like to see. The attention has been put there for those reasons.
Conservative
Fred Davies Conservative Niagara South, ON
Please be brief because I have another question for you, Mr. Nankivell.
President and Chief Executive Officer, Asia Pacific Foundation of Canada
I would just add that among the major economies, with the possible exception of China, Japan is really the most aggressive in trying to diversify its energy sources. It's not all in one direction; it's everything at once. Their current situation is only leading them to see it as even more urgent that they reduce their demand for oil and move on to other things. It's the whole panoply, including nuclear in the future and various forms of renewables. They are probably the ones who are most interested in hydrogen in its variations.
Conservative
Fred Davies Conservative Niagara South, ON
I only have a few seconds left.
Mr. Nankivell, Asahi Kasei is building a $1.7-billion EV battery ion separator plant in my riding. The project is now delayed because the market has softened and the project won't open on time.
I'm interested in the relationship between Canada and Japan. It seems to me that Japanese investments are looking for a supply chain anchoring strategy. What do you think the implications of that on the longer term are for CUSMA 3.0, if we actually get to CUSMA 3.0?