Recent Developments in Japan-Canada Relations

MR. DERRY:

Distinguished head table guests, members and friends of The Empire Club of Canada: It is evidence of the importance of Japan to Canada that we are to be addressed for the fourth time - first in 1955, then in 1971, again in 1979, and today - by an Ambassador of Japan to Canada. Britain and the United States are the only countries whose official representatives have addressed our members on more occasions.

When, in 1955, the Japanese Ambassador to Canada addressed us, the combined level of trade with Japan was some $120 million. It is now in the region of $9 billion and Japan is, by a considerable margin, our second-most important trading partner after the United States. Every aspect of our lives is affected by the people of Japan. We need only look around us to see ready evidence in our day-today lives. However, Canadians have a major impact upon the Japanese as well, since our exports of raw materials in particular are vital to the survival of a resource-poor country such as Japan.

In spite of this high degree of interdependency, we really do not know each other very well. It is with good reason that soon after his arrival in Canada almost two years ago, His Excellency set a goal for himself of promoting mutual understanding between our two nations. We have evidence today of his carrying through with his goal. His Excellency was born in 1921 and after graduating from the Faculty of Law, Tokyo University in 1943, he entered the Ministry of Foreign Affairs. Since that time, he has served in a variety of increasingly senior posts in Japan and abroad. His postings in Japan included a number of senior positions in the Economic Co-operation Bureau of the Ministry of Foreign Affairs, while his foreign postings include Australia, England, Indonesia, and Ambassador to the Philippines. This prior experience qualified him well for appointment as Ambassador of Japan to Canada in December, 1981.

I am pleased to welcome His Excellency the Honourable Kiyohisa Mikanagi, Ambassador Extraordinary and Plenipotentiary of Japan to Canada, to address us now on "Recent Developments in Japan-Canada Relations."

HIS EXCELLENCY MR. MIKANAGI:

Mr. President, members of The Empire Club, ladies and gentlemen: I am very honoured and pleased to be given such an excellent chance to speak to this highly esteemed Empire Club. I was indeed very flattered in the early part of this year when I was told by my friend, Mr. Yuzo Hatano, Consul General of Japan in Toronto, that I was going to be given this opportunity. Since then, thoughts about speaking here today have lingered in my mind as I have considered what topic I should present to you. I finally decided to talk on my usual and ever-important theme, "Recent Developments in Japan-Canada Relations," because, as the Japanese Ambassador here, this is my primary, daily concern, and, therefore, perhaps the best topic I could present to you today.

When we talk about recent relations between our two countries, I am very happy to report that we do not have any thorny problems in our relations on the political side. Canada and Japan have a history of relations dating back more than one hundred years. It was in 1977 that we celebrated the onehundredth anniversary of the landing of Manzo Nagano, the first Japanese immigrant, at New Westminster, British Columbia. Since the Second World War, Canada has played an important part as Japan was reactivating its international relations. The Japanese still remember the excellent books and actual services of the late Dr. Herbert E. Norman, who served in Tokyo from July 1946 as the first Canadian representative accredited to the Supreme Command of the Allied Forces occupying Japan. After the San Francisco Peace Treaty came into effect in 1957, Canada played a major role in reintroducing Japan to the community of nations, helping Canada join the Columbo Plan, the United Nations and its various specialized agencies, the GATT and the OECD. Japan has not forgotten these efforts and is committed to strengthening its close and warm friendship with Canada. Between the two countries, a number of channels for close dialogue and communication are maintained from the ministerial level through to the official level, from governmental to private, which cover sectors as varied as atomic energy and fisheries. We both send representatives to many international organizations and conferences where, on most occasions, we share common views and collaborate closely with each other. We work together in the international arena toward such long-term goals as peace and security, disarmament, free trade, and development aid.

Recently, Prime Minister Pierre Trudeau made an important personal effort to consult world leaders on the key issue of peace and disarmament, particularly nuclear disarmament, by first travelling in the early part of November on a whirlwind trip to the western European capitals during the one-week recess of the Canadian Parliament. Then, on the way to his visit to Dhaka, and New Delhi, where he attended the Commonwealth Conference, he stopped at Tokyo and consulted Prime Minister Yasuhiro Nakasone of Japan on this issue on the nineteenth of November. It was an excellent gesture on his part to talk directly and personally with the Japanese prime minister, although, for me personally, it was arranged so suddenly that I could not go along with him to Tokyo as I had done last January. For Japan, the nuclear arms problem is always a vital question of national concern and we have been keenly interested in the development of East-West talks on the issue. It was, therefore, only natural that Mr. Trudeau received full support for his current peace initiative from Mr. Nakasone.

During the talks in Tokyo, Mr. Nakasone stressed the importance of promoting the preparations of a new round of multilateral trade negotiations in order to consolidate the free-trading system and inject renewed confidence in the world economy and I understand that Prime Minister Trudeau showed a positive reaction to this.

The present cordial relations between Japan and Canada allow us to expand our relations beyond the political and economic exchanges to further our mutual cultural and academic exchanges. The Exhibition of Contemporary Japanese Ceramics, which opened on the eleventh of January this year at the Koffler Gallery in Toronto, is now making its final appearance in Canada at the Kamloops Art Gallery in Kamloops, British Columbia, after visiting six Canadian cities successfully. The exhibition, which has been seen by many Canadian art-lovers in various cities, was an excellent chance to show Canadians how contemporary Japanese artists are approaching art with modern ideas while keeping their traditional techniques, which have been refined and perfected over generations. This is one excellent example of cultural exchange, but, I believe, there are still many things to be done in order to expand our people-to-people friendly relationship and to broaden our mutual understanding.

For this purpose, there exists between Canada and Japan an agreement for mutual co-operation to promote cultural and academic exchanges, which was signed in October 1976 when Prime Minister Trudeau visited Japan. The Agreement stipulates many ways of promoting cultural exchange between our two nations, and, in Article 12, it provides that both governments will meet from time to time for an examination of past performance and for consultation about future promotion of these exchanges. Just recently, on the twenty-ninth of November, there was the third meeting of this kind in Tokyo and high-ranking government officials from both sides, responsible for this important aspect of our relationship, met and had a very fruitful discussion.

Japan is situated on the western side of the Pacific Ocean, just opposite Canada. The Japanese have always thought of themselves as a Pacific nation and they feel amity with other nations on the Pacific Rim. They believe that an era will come when the international theatre will pivot around the Pacific Ocean, just as the centre of the world's civilization has been moving from the Mediterranean to the Atlantic in the past. I am not telling you this in a short-sighted manner. This will eventually come, say, in the next century, and at this time, I feel that we need to start preparing for that time when we come face to face with such an era. We should discuss this question from as many viewpoints and perspectives as possible while we are actually expanding our fields of co-operation as friends and partners in the Pacific. It was the late Prime Minister Masayoshi Ohira who directed the closer study of the problems related to the co-operation among the countries in the Pacific. Through his initiative, even after his unfortunate and sudden passing, a series of seminars are being held at various places and many people from the countries in the Pacific are actively participating in these to make an extensive study of this question. From the twenty-first to the twenty-third of November, there was such a seminar on Bali in Indonesia, and business, academic, and government representatives from both Canada and Japan participated, together with other participants, and engaged in active discussion.

The meeting resulted in a decision to hold another conference at Seoul in the Republic of Korea in April, 1985 and to establish five different task forces to study further the problems of co-operation. Dr. Saburo Okita, who represented Japan at the Bali seminar, stated that co-operation among the countries in the Pacific is steadily proceeding on the line commenced at the first meeting in Canberra, Australia, in 1980.

Canada, like Japan, has taken an active part in this study since its beginning and earlier this year established the CanadaPacific Co-operation Committee. Mr. Eric Trigg, Senior Vice-President of Alcan Limited, is the Chairman of this committee and I am always happy to hear from him about the latest developments of Canadian activities in this regard. There is another important initiative which Canada is now taking in regard to its relation with the Pacific, that is, the efforts to create Canada's Asia Pacific Foundation.

About two years ago, the Honourable Mark MacGuigan, then Secretary of State for External Affairs, directed that a study be undertaken on the possibility of establishing an Asia Pacific Foundation of Canada. Mr. John Bruk, Chairman of that Study Committee, and now Chairman of the newly organized Founding Committee of the Foundation, is currently working very hard, together with other members of the Committee, on the final report on the detailed proposals of the Foundation, which is expected to be filed by July of next year. I have been following with keen interest the developments relating to this Foundation and was very glad to learn that Mr. Bruk joined the other members from Canada to attend the Bali seminar, which I mentioned earlier. Japan welcomes wholeheartedly Canada's efforts to broaden her involvement in the Pacific. I sincerely hope that Canada will succeed as soon as possible in establishing this Foundation, which would provide a good many Canadians with the chance to learn more about the Pacific. Japan has its own Japan Foundation and I hope eventually that these two Foundations will co-operate closely with each other in their activities.

Some of you may recall that there was a meeting between the foreign ministers of Japan and Canada in Ottawa in October 1982. It has been the idea of both governments to hold meetings between our two foreign ministers as regularly as possible, alternately in each country for close consultation. We hoped that we could have a meeting scheduled for this year before the end of the year, but it has had to be postponed until at least some time in the early part of next year, because of the heavy schedule of the Honourable Allan MacEachen, Deputy Prime Minister and Secretary of State for External Affairs of Canada, due to his visits overseas and duties in the absence of

Prime Minister Trudeau, who was in Europe and other parts of the world last month. After the expected return of Prime Minister Trudeau from the Commonwealth Conference in New Delhi and the pursuant visits to the countries of the Persian Gulf, the Honourable Allan MacEachen is planning to go to Europe again on December fifth. At the last meeting of the two foreign ministers, they discussed, among other things, our mutual concern for development aid to the less-developed countries and agreed that the two countries will start as soon as possible a regular official-level dialogue on this issue. There was a follow-up in June this year, when both governments had representatives at another occasion that provided the opportunity for an exchange of views. This was the Paris Meeting of the Consultative Groups for India and Sri Lanka. From Japan, Mr. Yanagi, Director General of the Economic Co-operation Bureau of the Ministry of Foreign Affairs and from Canada, Mr. Wright, Vice-President of the Canadian International Development Agency in charge of the Asian Branch, were in attendance, and on that occasion, they met at the Japanese Embassy in Paris to start the first session of the dialogue. Now, I wish to come to the most important topic of today's talk - the question of trade and investment between Japan and Canada. Our economies and industries are for the most part complementary and our economic relations have greatly expanded in recent years and are continuing to grow. Since 1969, the first year when Japan-Canada trade totalled more than one billion dollars, our trade volume has expanded with truly remarkable speed. By 1977, the total of our trade volume had leaped to $4.3 billion and just five years later, in 1982, it reached $8.13 billion. Canada's exports to Japan last year were $4.6 billion (Cdn.) and imports from Japan to Canada were $3.5 billion, giving Canada a trade surplus of $1 billion. The structural trend of the Canadian surplus in our bilateral trade is expected not only to continue but also to increase. I might add here that among the industrialized countries in the world only three countries are steadily maintaining a trade surplus with Japan, and they are Australia, Canada, South Africa, and sometimes Switzerland and Italy.

Japan is aware that Canada is not entirely satisfied with the present status of its trade with Japan in spite of this large surplus and that Canada is also very much interested in "upgrading" the composition of her exports to Japan. Here, I would like to point out that, thanks to strenuous efforts on both sides, the total volume of manufactured goods exported from Canada to Japan is showing steady growth, although, I must admit, it is still at a comparatively low level. In 1980, the amount was $106 million; in 1981, $112 million, a 5.7 per cent increase; and in 1982, $167 million, a 49.1 per cent increase; and, to take the first half of this year (January - June), $128 million, a 97.5 per cent increase over the same period of the previous year. There is no reason that this increase should not continue. There seems to be great potential in the Japanese market for Canadian manufactured goods.

Mr. Seiki Tozaki, Chairman of C. Itoh and Company of Japan, who spoke in Toronto at the seventh Canada-Japan Dialogue, sponsored by The Globe and Mail on the twentyseventh of October, mentioned that such Canadian high-technology products as various types of telecommunication equipment, including the Telidon interactive TV system and automatic PBX system, aircraft and aircraft components, including the VTOL and STOL crafts and corporate jets, and aerospace equipment including the Space Arm and Sarsat satellite rescue systems, are showing particular promise for introduction and growth in the Japanese market. According to him, Telidon imports to the Japanese market started last spring and are expanding smoothly, and Northern Telecom and Mitel are now marketing their products in Japan. "Although the volume of these exports is still relatively small," he said, "all indications are that Canadian high-technology products are well on their way to making a considerable appearance in the Japanese market within the next few years."

Japan, of course, is a huge market with 118 million consumers. Despite persistent myths to the contrary, it is one of the most open markets in the world. Furthermore, a number of deliberate efforts on the part of the Japanese government have been made to make it even more open. Since Prime Minister Nakasone came to power in November last year, the Japanese government has undertaken wide-ranging and, in some cases, unprecedented measures to make it easier for foreign products to come into Japan. These measures include methods to make standards and certification procedures more transparent, paving the way for the acceptance of foreign test data, and a number of direct tariff reductions. The comprehensive economic measures announced by the Japanese government on the twenty-first of October are expected to go further in satisfying demands of easier access to the market. Japan also has a number of organizations to help promote the marketing of Canadian manufactured goods in Japan, including JETRO. The Japan External Trade Organization has offices in Toronto, Edmonton, Vancouver, and Montreal and is vigorously helping Canadians who are interested in exporting to Japan. Japanese trading firms, which have world-wide networks of branches and offices and hence an abundant knowledge of the markets both inside and outside of Japan, are also helpful in exporting Canadian goods abroad.

Today, I am not going into depth on the problems related to automobiles. I would just like to comment on the report of the task force of May of this year. I do not want to state in detail anything which might prejudice the Canadian government's decision in this regard. However, I can mention here that such a request as local content control would not only serve as a negative factor in Canada-Japan relations, but also would not serve the true interests of Canada itself. Mr. d'Aquino, President of the Business Council on National Issues, stated in his speech on November second that "protectionism has a sirenlike appeal, but at best it offers false and temporary security against hard economic realities." I trust that the Canadians who derive one in every three dollars of their GNP from trade will have undaunted courage to row their boat without indulging themselves by heeding the sweet siren-voice that beckons.

The report of the task force also includes the problem of investment in Canada. While investment is purely a problem for the private entrepreneurs who seek economic benefit from it, I must point out that the present status of both Japanese investment in Canada and Canadian investment in Japan is not quite sufficient. Cumulative Japanese direct investment as of March 1983 totalled $1,260 million (us). This represents only 2.4 per cent of all Japanese direct investment overseas. On the other hand, from Canada, as of March 1982, only $79 million (us) was invested in Japan.

Both governments are already aware of this problem. Perhaps you will recall that in March/April, 1982, the Japanese government sent a large investment mission to Canada which made an extensive survey of the Canadian investment climate and evaluated the possibility of increasing Japanese investment in Canada. They visited a number of places in Canada, including Toronto. The conclusion of this mission was that in the medium- and long-term perspectives, Canada is a "promising" venue for Japanese investment. From Canada, in the middle of October, a mission headed by the Honourable Gerald Regan, Minister of State for International Trade, was sent to Japan to encourage more Japanese investment in Canada.

Mr. Tozaki stated in his speech at the Toronto Dialogue that between Canada and Japan, direct investment represents an area where significant expansion can be expected. He stated that, although concrete moves continue to be delayed by the lingering aftermath of the recent global recession, he has every confidence that the increasing pace of economic recovery will lead to specific steps toward increasing Japanese investment in Canada. I share his view and hope that Japanese and Canadian entrepreneurs will continue to endeavour even harder so that the investment in each other's country will enjoy greater scope.

By the twentieth of this month, I will have spent two full years in Canada. It has been a busy, interesting, challenging, and rewarding period for me, personally and professionally. I must say there is still much to be done to improve the knowledge and understanding of Japan in Canada. I would like to reiterate that I greatly appreciate being invited here today to speak to this prestigious audience, and I am looking forward to many more opportunities to speak to Canadians in as many parts of this big country as I can possibly reach. I do not only want to speak to you, but also to try very hard to introduce Japan to you from every possible angle. Understanding between our two peoples will become more and more important as Canada and Japan grow and change. It will be on this solid foundation of understanding that the future growth of our co-operation will depend. We can be friends across the Pacific, joining in advocacy of peace, rationality, and mutually beneficial trade.

Thank you.

The appreciation of the audience was expressed by Bruce Rankin, a Director of The Empire Club of Canada.