Japan and Canada Trade Agreements

The North American Free Trade Agreement between Canada, the United States and Mexico entered into force on January 1, 1994, creating the world`s largest free trade region by GDP. In 2014, NAFTA`s combined GDP was estimated at more than $20 trillion with a market of 474 million people. [5] [6] Building on this success, Canada continues to negotiate free trade agreements with more than 40 countries, most recently with South Korea, which is Canada`s first free trade agreement with a partner in the Asia-Pacific region. Since 2018, Canada has also concluded two other important multilateral trade agreements: the Comprehensive Economic and Trade Agreement (CETA) with the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with ten other Pacific Rim countries. [7] On the 21st. In September 2017, CETA was provisionally applied, immediately eliminating 98% of EU tariff lines for Canadian products. [8] Canada is currently the only G7 country where free trade agreements with all other G7 countries are in force. Free trade with the last G7 country, Japan, began with the entry into force of the CPTPP on December 30, 2018. For more than a century, and even before formal diplomatic relations between Canada and Japan were established, the Canadian and Japanese private sectors have been at the forefront of building mutually beneficial trade relations.

The nature of these interactions has covered the full range of activities, with many groups forming large members of the Canadian and Japanese private sectors, while others remain sector-focused. Regardless of the composition of these business associations, the Canadian and Japanese private sectors have been responsible for creating many bilateral trade and investment relationships and promoting innovative initiatives that have made significant contributions to overall economic relations. While some formal operational mechanisms, such as the Canada-Japan Business Council, expired in the second half of the 1990s, other mechanisms remained strong, and these led the pressure for renewed bilateral trade relations. To examine the adaptation trajectories of the Canadian and Japanese economies to trade liberalization, a “fully” dynamic model developed by the Canadian Department of Foreign Affairs and International Trade (DFAIT) was used. In this model, the saving and investment behaviour of households and firms responds to changes in economic incentives brought about by trade liberalization. The model directly includes time, as responses to saving and investing are derived from an intertemporal decision-making process that assumes that economically efficient actors are rational and take into account past and future variables in savings and investment decisions. Footnote 22 The Forum produced reports in 1992, 1995, 2000 and 2006. On the economic front, the Forum`s reports make recommendations on bilateral trade and investment between Canada and Japan, the impact of NAFTA on Canada-Japan trade, the value of open bilateral economic cooperation (including the promotion of joint investment and cooperation in APEC), improved access to the Japanese market, on a possible free trade agreement between Canada and Japan and the creation of a multilateral trade organization. which was eventually implemented at the WTO. Various stakeholders called on Canada and Japan to update their current double taxation avoidance agreement (double taxation agreement or DTA).

The Commission`s objective was to avoid double taxation and to provide a degree of certainty as to the tax rules that would apply to certain cross-border transactions. Relief from double taxation is desirable because of the negative effects that double taxation can have on the expansion of trade and on the movement of capital and labour between countries. Canada and Japan agreed in 1999 on a protocol amending the 1986 Canada-Japan Commission. However, the Canadian and Japanese business communities expressed the need to renegotiate the existing DTA to take into account new DTAs negotiated between major trading partners, as well as the need to take into account current trade and investment trends. A Japanese company in Canada insisted on amending the Canada-Japan tax treaty so that Canadian subsidiaries of Japanese companies as well as U.S. companies could be exempted. Founded in 1976, the CCCE is dedicated to strengthening the Canadian economy and society by developing sound public policy in Canada, North America and around the world. .