Canada-Japan Trade in an Asia-Pacific Context

This study examines the prospects for Canadian trade with Japan in light of three major influences: trends in the Japanese market, the U.S.-Japan trade dispute, and the increasing prominence of Japanese corporations in rapidly developing Asia. While Japan's market is likely to become more open as deregulation proceeds, its changing industrial structure and demographic profile will increasingly demand goods which Canada is ill positioned to provide. U.S.-Japan trade friction provides Japan with a constant temptation to show informal preference to the United States in trade and investment decisions, but more importantly every U.S. success in obtaining formal concessions through bilateral use of threats undermines the rule-based trading regime on which medium-sized open economies such as Canada depend. Asian economic growth will present new challenges to Canadian firms event to retain their existing sales as Japanese firms shift production offshore.