April 9, 2009
Tokyo, Japan
2009/26

Address by the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, at a Luncheon in Japan

Based on a Transcript

Thank you, Ambassador [Jonathan Fried]. Ladies and gentlemen:

It is a real joy for me to be here in Japan. I believe this is my third or fourth visit over a number of years. My regret is always that I don’t have enough time to stay and enjoy the country more. But being here is truly a delight.

This is a beautiful time of year. One of the main exports of the district that I represent in British Columbia is cherries. Seeing the cherry blossoms here makes me feel at home and want to stay longer.

I’m honoured to be able to draw on the insights of the people at this table. You have diverse experience and backgrounds. That can be so valuable when we work together.

Here I have the opportunity to talk with experts on automobiles and manufacturing, as well as representatives from the banking industry and the Canadian Chamber of Commerce—even to talk with an astronaut, [Mamoru Mohri]. It is a pleasure to chat with you, sir. I believe another Japanese astronaut will soon be going to the International Space Station and will there meet one of Canada’s astronauts. An important part of the space station is the Canadarm—a versatile robotic mechanism that will be used in installing Japanese-made components to the space station.

This shows once again that when Canada and Japan work together, our partnership is literally out of this world. We have a strong ongoing relationship. We have much in common. And we have proven to our own people and the rest of the world that when entrepreneurs and investors from Canada and Japan get together, amazing things happen.

Our bilateral trade in goods and services totalled $27.5 billion in 2008, and I believe we can do even better. Some of the people travelling with me represent what Canada calls the Asia-Pacific Gateway, including the ports of Vancouver and Prince Rupert in British Columbia. Over the last few years, the federal and other levels of government in Canada have invested more than $2.5 billion in infrastructure to make sure that these ports have the most modern and efficient facilities available. The aim is especially to reach out to companies and businesses shipping from Asia.

Part of the Asia-Pacific Gateway is an integrated line of shipping capabilities in Vancouver and Prince Rupert, which is the deepest port on the West Coast and also one of the most modern. Using these ports automatically gives you a two-day advantage because of the shorter distance from Japan. And with our investments to integrate road and rail transportation, your product gets to Chicago and Memphis—the key distribution centres for the North American market—more quickly than if you ship to another port.

In addition, the dwell times at the Gateway ports are shorter than at other ports on the West Coast. Overall, you can gain from three to seven days on shipping times. This is a great advantage.

Last year, over 17 million metric tons of goods were shipped from the Port of Vancouver to Japan. From Japan to the Port of Vancouver, the volume was just under 1 million metric tons.

It is a genuine gateway for those of you who are shipping to or from North America. And it will continue to be improved in the years ahead.

At G8 meetings, I have seen how Canada and Japan often set the tone. In many ways we see eye to eye. And I believe we have discovered that working together can help our own countries, business and workers, as well as other countries.

A few minutes before this luncheon, an economist who is here said to me that the world should follow Japan’s principles of finance more closely. I can tell you that in many ways those principles are close to Canada’s. I’d like to touch on some of Canada’s advantages. I hope you will keep these in mind when you are considering investment and production decisions.

Canada is the only location outside Japan for certain types of Japanese production facilities. For example, Mitsubishi has heavy aerospace capabilities in Toronto. Canada is the only country outside Japan where the Lexus is produced. And of course, Honda is a made-in-Canada brand, with about 390,000 vehicles produced annually. Honda’s investments in Canadian operations over the last 40 years exceeds $2.6 billion. Canadians appreciate that, and we show our appreciation in our choice of cars. Virtually all the Japanese brands are popular.

Canada has benefited from the Japanese presence. At the same time, it has advantages to offer Japan. According to the IMF [International Monetary Fund], the World Bank, the OECD [Organisation for Economic Co-operation and Development] and the Davos [World Economic] Forum, Canada’s banking system has been the most stable in the world in this time of economic downturn. We are not bailing out our banks. Our legislation has forced Canadian banks to have a certain amount of capitalization before they can issue large amounts of loans. The margins are much tighter by law. As a result, we have not incurred the same type of risk seen in the United States, for example.

Canada has one of the most competitive tax regimes of OECD countries. We are on track to achieve that goal and in most cases we are ahead of where we expected to be. Like Japan, we have a highly educated, highly motivated workforce. We have agreements on research and development and on science and technology to match anything in the world. And Canada and Japan have worked together to share knowledge.

Unlike the United States, we do not have a problem with mortgage foreclosures. We did not allow our banks to get heavily involved in high-risk mortgages. We did not allow our financial institutions to get involved in some of the derivatives and credit swap instruments that have caused so much difficulty elsewhere.

Canada and Japan share a concern about the rise of protectionism. Historically we know that when industries feel threatened or challenged, the response may be protectionism. And we know the danger of that response. Eighty years ago, the Great Depression started in part because the United States introduced the Smoot-Hawley Tariff Act. This protectionist legislation triggered retaliatory measures around the world. It turned a bad recession into a depression.

Amusement parks in Canada have what is called a gopher game. The player faces a board with holes in it. Whenever a toy gopher’s head pops out of one of the holes, the player tries to hit it down with a rubber hammer. But as soon as the player hits the gopher, another head pops up and then another.

The same thing happens when a country puts up a protectionist wall. Another will do the same and then another. This tactic becomes energy-draining and hurts all our economies. The business community in Japan clearly recognizes the dangers.

Elected officials everywhere want to make voters happy. Suppose a business approaches an elected official and demands protectionist measures because it feels threatened by trade from another country. The official might respond by promoting a protectionist law. I encourage you to work with your counterparts in Canada’s business community: make sure elected officials are warned that protectionism is dangerous, and that we need to guard against it.

Even during the current downturn, Canada is aggressively pursuing free trade agreements and economic partnerships. Our House of Commons has just passed a free trade agreement with the European Free Trade Association, which consists of Norway, Iceland, Switzerland and Liechtenstein. The House is about to consider similar agreements with Colombia and Peru. And we are pursuing more agreements because they are good for our country.

Japan also needs free trade agreements because if other countries have them and it does not, its business will be less competitive.

Certainly we continue to work for multilateral reductions in trade barriers through the WTO [World Trade Organization]. But while it is a very valuable organization, sometimes the WTO moves slowly. For this reason we also pursue bilateral agreements.

Canada and Japan are discussing economic partnership agreements. Last night, Foreign Affairs Minister [Yasuhiro] Nakasone and I talked about areas where we can move forward. One area is the environment. Chairman [Satoshi Aoki] of Honda today suggested to me that it would be helpful if regulations on emissions standards were the same in every Canadian province. I was able to tell him that Canada has just announced a cross-country harmonization of emissions standards applying to all. This is a great step forward for the environment and also for business. And we are looking at harmonizing Canadian and U.S. regulations.

I am also pleased to announce that Canada and Japan have signed an agreement for an expanded “open skies” arrangement between airlines of our two countries. This will allow for many more flights between Canada and Japan to many more destinations, and it also expands airport and air cargo services. The agreement is the result of the work of a lot of people who believe that we can forge relationships to benefit both our countries.

As the Chairman of Honda mentioned, Canada is a secure source of energy, agricultural products and many other items. We are the world’s leading producer of uranium and potash. We rank second in nickel production and in our oil reserves. With good trading arrangements between Canada and Japan, the security of supply means prosperity for people in both countries.

Despite the present global fiscal challenges, I am optimistic about the future. Business people here in Japan understand that what goes down must eventually come up.

The sun will rise again, and our stock indexes will rise too. It may not be tomorrow, but they will move upward. And they will rise more rapidly if business people present to their governments requests for economic arrangements with other countries, and if they remind officials about the dangers of protectionism.

This year is the 80th anniversary of the establishment of diplomatic relations between Canada and Japan. Our relationship is profound and has existed for generations. Canadians are looking forward to the approaching visit of the Emperor and Empress. And we look forward to carrying on the bilateral relationship for the benefit of business and workers in both countries, and for our shared prosperity.

Thank you.