Business

The ‘new relationship’ with Japan: some ‘relatives’ haven’t been informed

ROBERT LEWIS November 15 1976
Business

The ‘new relationship’ with Japan: some ‘relatives’ haven’t been informed

ROBERT LEWIS November 15 1976

The ‘new relationship’ with Japan: some ‘relatives’ haven’t been informed

Business

When Canada and Japan signed a vaguely worded document last month aimed at closer trade ties (Maclean’s, November 1), the leaders of the two nations were unbounded in their glowing descriptions of its significance. Prime Minister Trudeau proclaimed a “milestone” and his counterpart, Takeo Miki, toasted “one of the important events of my life.” In certain quarters at the Canadian embassy, however, the accord was known irreverently as “the Mary Poppins agreement”—as in an umbrella covering possible future developments. One reason for the uncertain forecast, as Trudeau himself acknowledged, was that any substance—in Canada’s case, more sales of finished goods and joint investment ventures—would only come through efforts by “the private sector in both countries.”

Vast differences in mentality and method separate the two industrial cultures. While the Japanese are more aggressive, they operate at home in a more sheltered, predictable economy, with close ties to the government. The outlook for a sunny relationship between the two sides seemed clouded, particularly after a highpowered mission* of Japanese industrialists concluded a 12-day visit to Canada on November 4. “Being businessminded,” observed mission leader Hisao Makita, President of Nippon Kokan, “our interest [in Canada’s economic growthjnaturally is not altogether altruistic.” In private sessions with Canadian business leaders, the Japanese were even more direct in deflating some expectations created by Trudeau’s summitry.

Two of the PM’S strongest pitches, for example, had been for the CANDU nuclear reactor system and for STOL aircraft. In Toronto, however, one mission member noted pointedly that his country currently uses a different, light-water reactor system ; he also wondered what a nation of 112 million could do, realistically, with a 50-seat short takeoff and landing aircraft, STOL, added one mission official, is “just not appropriate to our needs.”

The Japanese businessmen did acknowledge Canadian complaints that only 3% of the $2.1 billion in exports last year were in fully manufactured goods, while

*Including senior execuuives of Nippon Kokan (the world’s largest integrated steelworks), Mitsui & Co. Ltd. (one of the largest trading firms), Honshu Paper Co. Ltd., the Tokyo Electric Power Co. Inc., Toyota Motor Co. Ltd., Nippon Mining Co. Ltd. and Hitachi Ltd., with combined sales in 1975 of more than $500 billion; the senior managing director of the Bank of Tokyo and Shinichi Kondo, former ambassador to Canada and an adviser to Mitsubishi Corp.

67% of imports, worth $1.4 billion, were finished products. He hoped, Makita added, to “be of some help by giving some pointers about the marketing of manufactured goods in Japan.”

Canadian trade officials were uneasy about the vibrations emanating from the mission as it traveled from west to east (stops included Victoria, Vancouver, Calgary, Edmonton, Toronto, Montreal and Ottawa, with visits in between to Cranbrook, BC’S Crestbrook Forest Industries factory, in which the Japanese are 50% partners, and to the Syncrude tar sands project at Fort McMurray, in which the Japanese are interested as a possible investment). One Canadian official argued that the mission was not representative of a newer, younger breed of Japanese businessmen, who understand Canada’s desire to become more than a source of raw materials for energy starved Japan—although the official admitted he had not met any of the “new” leaders. Nonetheless, the Trudeau visit and the prompt arrival of the Japanese businessmen served to underline the possibilities for a more mature trade relationship. “I’m sure it makes a difference when people talk together,” noted Alan King, president of Vendking International Ltd., of Greenfield Park, Quebec, whose small company sells patented, onecup coffee-brewing devices to Japan. Adds Donald Lanskail, head of the Council of Forest Industries of BC of Trudeau’s trip: “It certainly can’t do any harm. It may do

some good—just how much, only history will tell.”

The BC forest industry has had considerable success cracking the Japanese market with dimension lumber for North American-style home building. Through diligence and patience, the industry hopes to ship 75 million board feet next year, compared to no trade in 1973. While the council’s Lanskail dutifully lauds the federal and BC governments for “maximum cooperation,” he adds that success in marketing products in Japan “depends on trading people getting together and deciding if they have anything to trade or not.”

During their visit the Japanese mission heard some candid admissions from Canadian industrialists about problems here that inhibit closer trade ties. One banker said that big Canadian moneylenders have not been doing an adequate job financing small business investments geared to a market like Japan. The visitors also got an understanding reception when they raised some old laments: provincial jurisdiction over resources, new royalty levies on coal in Alberta, tariffs on items such as rapeseed oil, and competition between cities, provinces and companies for one contract. The Japanese profess to be so puzzled by Canadian federalism, in fact, that one mission member bought a copy of the British North America Act and committed it to memory—“something,” observed a Canadian attached to the mission, “most Canadians haven’t done.”

ROBERT LEWIS