Japan seeks partnership with Canada to boost energy supply

The Japanese government aims to secure a stable supply of resources such as natural gas and oil by entering negotiations Monday with Canada to conclude an economic partnership agreement (EPA).

Whether Japan can overcome differences of opinion with Canada over liberalisation of agricultural products will be a test for the government in promoting other trade negotiations, including those for the Trans-Pacific Partnership multilateral trade talks.

The talks with Canada are the first EPA negotiations for Japan with another member of the Group of Eight countries.

Canada is attractive to Japan as it is rich in natural resources.

The country is the world's sixth-largest oil producer, the second-largest uranium producer, and the third-largest producer of natural gas.

In addition to the rich natural gas resources, Canada has been proactively developing shale gas resources trapped in underground shale. In February, trading house Mitsubishi Corp. obtained a 40 per cent stake in a Canadian shale gas development project that is one of the world's largest. The conclusion of an EPA is expected to bring a more stable supply of natural resources to Japan.

Half of Japan's exports to Canada, which amounted to 709.3 billion yen (US$8.66 billion) last year, are accounted for by transportation equipment, including automobiles. As Canada imposes tariffs of up to 6.1 per cent on automobiles, lifting the tariffs would promote the export of automobiles from Japan.

Canada is a member country of the North American Free Trade Agreement, along with the United States and Mexico. Japan has already concluded an EPA with Mexico. If an EPA is concluded with Canada, Japan can make the country a distribution hub for the supply of Japanese products to the densely populated US East Coast, a situation that would boost Japanese businesses in their competition in the US market.

The most important focus in the Japan-Canada negotiations is the extent to which Japan can open up its market for agricultural products. Canadian agricultural products account for more than 30 per cent of the country's exports to Japan. Soy beans and rapeseed occupy 14 per cent and pork accounts for 9 per cent, while grains stand at 7 per cent.

The two countries previously tried to enter EPA negotiations in 2007, but gave up as they could not compromise in the agricultural field.

This time again, the Japanese government intends to carefully proceed with negotiations on agricultural products. However, if the government could come to terms with Canada on items to be exempted from the elimination of tariffs, the results could serve as the basis for the future TPP negotiations, which Canada would take part in.

Participatants at Monday's meeting included Jun Yokota, ambassador in charge of economic diplomacy, and Ian Burney, Canadian assistant deputy minister for trade policy and negotiations. Yokota said at the meeting he would like to make the talks "worthwhile for both countries." The launch of the talks was agreed upon during a meeting between Prime Minister Yoshihiko Noda and Canadian Prime Minister Stephen Harper in March.

US$1=81.90 yen

Source: http://asianewsnetwork.feedsportal.com/c/33359/f/566603/s/260908c4/l/0L0Sasianewsnet0Bnet0Chome0Cnews0Bphp0Did0F39529/story01.htm

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