CPTPP partner: Japan
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trading block that represents 495 million people with a combined gross domestic product of CAD $13.5 trillion – a full 13.5% of global GDP. Through the CPTPP, Canada will soon have preferential access to half a billion consumers in the world’s most dynamic and fast-growing market – a move that will strengthen Canadian businesses, grow the economy, and create more well-paying jobs for middle class Canadians.
Why Japan matters
- Japan is the world’s third largest economy, with a significant consumer market and is a key participant in global value chains.
- Canada and Japan share common science, technology and innovation objectives. These include facilitating commercialization of new technologies, fostering public‑private‑academic collaboration, and supporting small- and medium-sized enterprises.
- Japan is Canada’s fourth largest trading partner with $29.3 billion in bilateral merchandise trade (in 2017).
- Japan is also Canada’s largest source of foreign direct investment ($29.1 billion, 2016) from Asia and sixth largest globally.
- Japan is Canada’s second largest global market for wheat ($598.6 million) and second largest market for canola seeds and pork (2016).
Canada-Japan trade snapshot
Top Canadian Exports to Japan (2015-2017 average, $CAD)
Canada's Top Exports to Japan (2015-2017 average, $CAD)
- Total value of exports to Japan: $10,600,000,000
- Agricultural products (including canola seed, pork cuts and wheat): $3,900,000,000
- Metals and minerals: $3,300,000,000
- Forest products and value-added wood products: $1,500,000,000
- Medical devices and pharmaceuticals: $454,000,000
- Fish and seafood products: $307,000,000
Key facts and figures
- Canadian merchandise exports: $10.6 billion (2015-2017 average)
- Canadian merchandise imports: $16.0 billion (2015-2017 average)
- Canadian service exports (2016): $1.9 billion
- Canadian service imports (2016): $2.3 billion
- In 2016, Canada welcomed more than 322,000 visitors from Japan, who spent $581 million.
- Through the International Experience Canada program, 6,000 Japanese youth visit Canada annually.
Canada’s top merchandise imports from Japan (2015-2017 average)
- Autos: $6.1 billion
- Industrial machinery: $3.7 billion
- Electronic and electrical machinery and equipment: $2.0 billion
- Metals and minerals: $1.3 billion
- Miscellaneous industrial products: $1.1 billion
Canada’s top service imports from Japan (2016)
- Commercial: $1.3 billion
- Transportation: $765 million
- Travel: $180 million
Canada’s top merchandise exports to Japan (2015-2017 average)
- Agricultural products (including canola seed, pork cuts and wheat): $3.9 billion
- Metals and minerals: $3.3 billion
- Forest products and value-added wood products: $1.5 billion
- Medical devices and pharmaceuticals: $454 million
- Fish and seafood products: $307 million
Canada’s top service exports to Japan (2016)
- Commercial: $784 million
- Transportation: $573 million
- Travel: $547 million
How the CPTPP helps Canada-Japan trade and investment
- The CPTPP will provide strengthen the rules-based trading environment and provide enhanced market access for exporters and investors in Japan.
- The CPTPP agreement on autos between Canada and Japan addresses a number of non-tariff barriers in the auto sector, and will be legally binding and fully enforceable under international law. Its key features include:
- commitments on automotive standards and regulations
- a specialised and accelerated dispute settlement mechanism
- a special transitional safeguard that can be applied to protect Canadian vehicle manufacturers if there is a surge of imports from Japan
- the establishment of a bilateral committee to discuss issues affecting motor vehicle trade and investment.
- The CPTPP will establish duty-free access for trade in goods between Canada and Japan, eliminating tariffs for key Canadian exports including:
- agricultural goods, such as:
- canola oil (tariffs of up to 13.20 yen/kilogram will be eliminated within five years) and
- frozen blueberries (tariffs of up to 9.6% will be eliminated upon entry into force)
- fish and seafood products:
- snow crab (tariff of 4% will be eliminated upon entry into force)
- lobster (tariff of 5% will be eliminated upon entry into force) and
- salmon (tariffs of up to 3.5% will be eliminated within 10 years)
- forest products and value-added wood products, such as:
- lumber (tariffs of 6% will be eliminated within 15 years)
- plywood and veneer panels (tariffs of up to 10% will be eliminated within 15 years) and
- worked coniferous and non-coniferous wood (tariffs of up to 7.5% will be eliminated upon entry into force)
- industrial products:
- aluminum products (tariffs of up to 7.5% will be eliminated upon entry into force)
- plastic tubes (tariffs of up to 4.8% will be eliminated upon entry into force) and
- iron and steel products (tariffs of up to 6.3% will be eliminated within 10 years).
- agricultural goods, such as:
- The CPTPP will also reduce or eliminate tariffs on beef and pork, allowing Canadian exporters to benefit from access to the Japanese market on par with key competitors.
- On beef, tariffs of 38.5% on fresh, chilled, and frozen beef, as well as tariffs of up to 50% on certain offal, will be reduced to 9% within 15 years.
- The CPTPP will level the playing field for Canadian exporters relative to countries like Australia that already enjoy preferential access to the Japanese market, and will also give Canada an advantage compared to lead U.S. competitors.
- On investment, the CPTPP will allow Canadian companies to invest with greater confidence in Japan, offering them protections from unfair and discriminatory treatment, as well as greater predictability and transparency.
- Through the CPTPP, service providers will also benefit from improved access commitments in key sectors such as:
- professional services (e.g. urban planning, landscape architectural services)
- research and development services
- environmental services
- transportation services and
- other business services (e.g. services related to manufacturing and technical testing and analysis services).
- New commitments on the temporary entry of business people will make it easier for certain categories of Canadian business people to temporarily work in Japan, including high-skilled Canadian professionals and technicians as well as their spouses.
- The CPTPP also provides robust and enforceable provisions on labour and environment.
Sectoral opportunities in Japan
- CPTPP investment rules will provide greater certainty and protection for investors, while preserving the rights of federal and provincial governments to legislate and regulate in the public interest.
- In areas such as energy, mining, manufacturing, financial services and professional services, Canadian investors will enjoy transparent and predictable access to CPTPP markets, including Japan.
- Strong rules will help to ensure that Canadian investors are treated in a fair, equitable and non-discriminatory manner, allowing them to compete on an equal footing with other investors in CPTPP countries.
- Canadian investors will also have access to an investor-state dispute settlement mechanism that is independent and transparent.
- Agriculture and agri-food
- Japan is the world’s largest net importer of food and Canada’s third largest market for agri-food and seafood products, with exports totaling $4.2 billion (average 2015-17).
- The CPTPP will create significant opportunities to increase Canada’s market share in products like beef, pork, grains and oil seeds, and functional foods and nutraceuticals. For example, with regard to pork products, which are subject to tariffs of up to 20% and the gate price systemFootnote 1, Japan will eliminate its tariffs on Canadian imports within 10 years. On beef, the tariffs of 38.5% on fresh/chilled and frozen beef, as well as tariffs of up to 50% on certain offal, will be reduced to 9% within 15 years.
- Similarly, for wheat, Canada will have access to a Canada-specific annual quota for food wheat which starts at 40,000 tonnes and grows to 53,000 tonnes within six years.
- Mark-ups within this country-specific quota will be reduced by 45% or 50%.
- Seafood products
- Canadian exporters of seafood products will benefit from the elimination - either upon entry-into-force or phased out - of all fish and seafood tariffs. This includes tariffs ranging from 3.5% to 15%, including fresh, chilled or frozen salmon (including fillets), snow crabs, herring roe, and live, fresh or chilled sea urchin and roe.
- Forest products and value-added wood products
- Japan is one of Canada’s most successful markets for forest products and value-added wood products.
- CPTPP gains in this sector include the elimination of all Japanese tariffs on forest products and value-added wood products. This will provide significant opportunities for Canadian wood exporters in the Japanese market. Products include lumber, plywood and veneer panels, oriented strand board, worked coniferous and non-coniferous wood, and sheets for veneering.
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