Canada-Japan Relations: Looking Ahead

Remarks by the Hon. David Kilgour,

Secretary of State for Asia-Pacific and M.P. (Edmonton Southeast)

to “Perspectives and Prospects on Canada-Japan Relations”

Carleton University, Ottawa

September 22, 2002

Mina san, konichiwa.

I’m most honoured to have the opportunity to speak to you today and to hear some of your own views on Canada’s relations with Japan. I’m particularly glad to see that we have a number of visitors from Japan, including Mr. Akashi Yasushi, who I understand gave a very engaging talk yesterday. I’ll attempt today to give you my own impressions of how Canada’s relations with Japan have been evolving over the years and what each of us can do, in our own way, to bring Canada and Japan closer together.

As you know, Canada and Japan have a long tradition of economic partnership in trade. As early as the late 1870s, Canadian companies were working hard to establish links with counterparts across the Pacific. In fact, since Japan started doing business with the West on a large scale only after the Meiji restoration in 1868, Canadian entrepreneurs were among the first to establish friendly trade relations with Japanese counterparts.

In those days, our trade patterns were quite different from what they are today. It will perhaps come as a surprise to some of you, but, at that time, Japan was mostly importing manufactured goods from Canada!

With growing economic exchanges between Canada and Japan, Canadian policy-makers and business people devoted increasing time and energy to managing our bilateral relationship. In 1929, Canada established formal relations with Japan. Soon afterwards, we opened an embassy in Tokyo, our third foreign mission in the world. Japan’s special place in Canada’s foreign affairs was already established, a point I think many of you would agree with today.

Following World War II, Japan’s economy boomed, transforming the country into an economic giant. Currently standing at more than 4 trillion dollars (U.S.), or more than four times our own, Japan’s GDP is the world’s second largest. Just as impressive, the pool of Japanese private savings is estimated at 10 trillion American dollars.

Most of you, however, will have seen all the recent headlines. The newspapers regularly remind us that Japan’s economic picture is far from rosy. With three recessions in the past ten years, the past decade has admittedly been difficult. Unemployment reached a post-war high of 5.6%, which is very low in the Canadian experience. Bankruptcies in Japan have soared. Japan’s debt burden is close to 140% of GDP, with the Japanese banks’ non-performing loans estimated at a staggering US $1.38 trillion.

Perhaps even more troubling though is the fact that few observers are seeing the light at the end of the tunnel. As The Economist noted in its recent survey of Japan, “the economy is shrinking and [...] few are optimistic about the future”.

In light of such pessimism, many policy-makers could be forgiven for thinking that Japan is a power on the decline, but probably nothing could be further from the truth. Notwithstanding the downturn of the last decade, the Japanese economy remains larger than the economies of the UK, France and Italy combined. Despite all its challenges, Japan remains Canada’s second most important economic partner and our principal ally in Asia.

A Time for Change

While we have enjoyed a strong economic relationship with Japan over the years, there is now a growing recognition, at least in Canada, that there is room to improve. In particular, our bilateral trade and investment is not what it could be. Some say we are “under-performing.” In fact, according to recent reports by academics - such as Carin Holroyd of the University of Saskatoon and the University of Toronto’s Wendy Dobson - this under-performance may be as much as 30%. In short, it is time for change.

Canada’s export mix to Japan has not changed significantly over the past twenty years and does not reflect the diversity or sophistication of the Canadian economy. In very general terms, only about a quarter of our exports to Japan are considered manufactured goods, in contrast with our exports to the rest of the world where the ratio is closer to 55-60%. And that is not all. What is particularly disturbing is that our Japanese competitors have been much better at taking advantage of new business opportunities in emerging sectors.

The diversity and quality of Canadian businesses is not at fault, so why is our economic relationship underperforming? In a nutshell, we have an image problem, which brings me to my next point - rebranding Canada.

Rebranding Canada

Our image in Japan has not kept up with the changes in Canada and our economy in the past fifteen years. For many Japanese, Canada brings to mind images of wide-open spaces and majestic mountains. Indeed, flying between Victoria and Vancouver yesterday, I found myself sitting beside a young Japanese woman, who’d just visited Banff, Victoria and Vancouver. Asked about her impressions of Canada, she said politely, “beautiful scenery ... kind people.” Our land is beautiful, but it is much more than that. It’s up to each of us here to do what we can to convince the people of Japan that we are more than the home of Anne of Green Gables.

If we want to be recognized as a leader in knowledge-based industries and a valued partner for Japan on the international scene, we need to update our image. In a word - rebranding. But it’s not just in Japan where our image is lagging. As Secretary of State for Asia-Pacific, I travel regularly to the region to promote Canadian interests. What has struck me most, especially over the last six months, is the way Canada is seen by our friends and neighbours in Asia-Pacific. We’re seen as a destination - to move to, to visit, a place to get a good education. But I don’t know how many times, when I talk to people there about Canada, I sense that they’re missing out on some of our best features.

Take innovation. Canada is a nation of innovators, but we need to let the rest of the world know. In health, Canadian researchers have made significant advancements in battling cancer, diabetes, cystic fibrosis, Alzheimers and HIV/AIDS. On the commercial side, Canada also ranks extremely well when we compare our biotech sector to those of other countries. We are first in the world in terms of R&D per biotech employee, second to the United States in the number of biotech companies, and third in biotechnology revenues, after only the United States and the United Kingdom.

Then there’s our telecommunication sector, not to mention our achievements in information and communication technologies (ICTs). Despite the global slowdown in the IT sector, our ICT sector still attracts investors from around the world. It’s not surprising. Dating back to 1876, when Alexander Graham Bell made the first successful telephone call from his Ontario lab and 1901 when Marconi received the first transatlantic wireless message on what are now Canadian shores, Canada has been a leader in the field. Yet we’re still seen as a country of Mounties and snow.

In short, our economy has been changing. Knowledge-based products and the high-tech sector are behind a good deal of Canada’s fastest-growing exports. But the shift towards a knowledge-based economy is not limited to new fields like fuel cells, photonics and nanotechnology. It is also leaving an impact on traditional industries, such as agriculture and mining, to name a few. While natural resources played an important role in our economic development over the past century, Canada’s feet are now firmly planted in the 21st century. We need to let Japan - and the rest of the world - know.

How do we do that? A number of ways. One way, of course, is to increase our people-to-people links. What better way to promote Canada than to encourage Canadians to go abroad? And it works both ways. The more we open ourselves to the Japanese, the more opportunities we have to show them what we’re really about.

Now I don’t want you to think that we’re starting from scratch or that we are facing an insurmountable task. We already have some successful initiatives in place to promote “people to people” links between Canada and Japan - student exchanges, work abroad programs, Team Canada missions, twinning programs between our cities ... These all help to create what I like to call a “human bridge,” which is the first step in rebranding Canada’s image abroad.

Student Exchanges

One excellent example is student exchanges:

· Since 1991, the Co-op Japan program has helped hundreds of Canadian students in science and engineering find internships in Japan.

· More than 1,000 Canadians are currently teaching English in Japan under the JET Program (Japan Exchange and Teaching Program)

· Every year, our Working Holiday program allows approximately 5,000 young Japanese to travel to Canada and work for a period of up to a year.

· About 10,000 more young Japanese now study in Canada every year.

· At the same time, many other Canadian students are studying at Japanese universities on various exchange programs.

Twinning

On another front, more than 70 of our cities are “twinned” with cities across Japan. In fact, Canadian cities have participated twinning arrangements with Japan for more than 40 years. On a personal note, I’m proud to say that my own hometown, Winnipeg, has been the sister city of Setagaya-ku since 1970.

Team Canada

In 1999, Prime Minister Chrétien led a Team Canada mission to Japan. The mission was not only a commercial success; it also played a useful role in rebranding Canada. It gave us an opportunity to highlight Canadian innovation in traditional sectors as well as in Information Technology, Life Sciences and Environmental Technologies, to name a few.

Think Canada

Last year, we built upon the Team Canada success through a Think Canada Festival in Japan. The four-month celebration featured an unprecedented 200 Canadian events held all across Japan. By showcasing Canadian achievements in arts, science and technology - as well as Canadian successes in other fields - the festival placed Canada in the media spotlight and went a good way towards updating Canada’s image in Japan.

Government Dialogue

Canada and Japan regularly engage one another on a variety of political, economic, and cultural issues. In fact, I’m told that our respective foreign ministries have more than 40 consultative mechanisms in place and that these mechanisms encompass all aspects of our relationship - from peace and security to social policy to overseas development assistance to sectoral consultations, not to mention ongoing cooperation in various multilateral fora such as APEC and the UN.

On that note, I’d like to touch on some other aspects of the Canada-Japan relationship. As you know, it is much broader than investment and trade.

Beyond Commerce and Trade

Peace and Security

Bilateral cooperation in areas such as international peace and security are becoming increasingly important. During the Team Canada mission to Japan in 1999, Prime Minister Chrétien and then-Prime Minister Obuchi concluded the Canada-Japan Action Agenda on Peace and Security Cooperation. It has provided us with a framework for us to work together at a number of levels:

· In peacekeeping, Japanese and Canadian soldiers serve side-by-side on the Golan Heights.

· In peacebuilding, a Canadian civilian police force is working alongside more than 600 Japanese peacekeepers to ensure peace and security in East Timor.

· JICA, Japan’s aid agency, and CIDA have carried out joint peacebuilding projects in Cambodia, Guatemala and Indonesia.

· Earlier this month, Canada concluded an agreement with Japan to use development assistance funds in a joint project to assist landmine victims in Srpska, Bosnia-Herzegovina.

In terms of security, Canada is encouraged by the recent legislative changes in Tokyo, which point to a shift in not only Japan’s thinking on security but also in the role Japan is prepared to play internationally.

Social Policy

Canada and Japan have also been working together to address challenges posed by economic and social change. Last year, for example, we exchanged ideas on health care, aging, work and family through a Canada-Japan Social Policy Research Symposium held in Osaka. Since then, there have been several exchanges between Canadian and Japanese researchers in various areas of social policy, including pensions, health and immigration. In short, we both care about these issues. Why not face them together?

Economic Development and Aid

The rising importance of the G8 as a discussion forum has given us a new opportunity to engage Japan on a number of further fronts. In the run-up to the Kananaskis Summit, Canada and Japan not only worked closely on the drafting of the G8 Africa Action Plan but have been vigorous proponents of the initiative ever since. Co-operation in this area makes perfect sense.

In Closing

As members of the G8, Canada and Japan often share similar experiences and views. As members of the global community, we’re also facing similar trends - technological change, intense international competition, new trading arrangements, transborder threats, drugs, crime and environmental problems, concern over terrorism, not to mention new sources of international conflict and the world’s yearning for peace.

Simply put, we have similar interests and goals. Despite the ocean between us, we share a common future. As a result, it is becoming increasingly important for us to work together on issues of global concern. Our relationship, in this sense, is not just economic. We have excellent opportunities to work together as partners and friends.

If you walk away from this talk with only one message, I hope that it will be the importance of continuing to engage Japan on all fronts. At the same time, we need to keep our perspective, particularly in the face of the media’s dire views. No matter how serious the challenges it faced in the past, Japan has always bounced back - and it has done so with vigour. In spite of endless stories on Japan’s “stagnant economy” or the country’s “political malaise,” Japan remains a country of global importance ... and a country vitally important to Canadians.

What we need today is not a shortsighted approach but a sustained long-term effort at bilateral engagement. And this isn’t limited to government or business. Each one of you can help by raising awareness. This conference, for example, is an excellent initiative My thanks to Professors Jacob Kovalio and Paul Davidson.

Finally, I would like to hear some of your thoughts, as you are the ones with the best feel for Japan. How do you think Canada is viewed by the Japanese? What do you think we can do to rebrand Canada in Asia? What can the Canadian government do to cement ties with Japan? How can we improve? What are we doing right?

Once again, thank you - arigatogozaimashita. I’ve gone on long enough. Now I’d like to hear from you.