South Korea deal gives Japan trade talks new momentum

With a trade deal with South Korea just concluded, Canadian negotiators are turning their attention to another big Asian prize — Japan.

Trade Minister Ed Fast announced Tuesday that the fifth round of talks with the world's third-largest economy will begin Monday and continue all next week.

The timing may be coincidental, but Fast joined the two events in a news release, saying last week's conclusion of talks with South Korea had provided added momentum.

Some analysts believe Japan may now be more eager to deal with Canada because it competes with Korea in the auto sector and will also be looking for a way to eliminate the 6.1 per cent duty Ottawa imposes on auto imports.

The Japanese Automobile Manufacturers Association of Canada unexpectedly came out in favour of the Korea deal while making the point that Japan will need equitable treatment. About one-third of Japanese vehicles sold in Canada are subject to the tariff.

Japan is already Canada's fourth-largest export market, with total shipments hitting $10.7 billion in 2013. Japan is also the biggest Asian investor in Canada.

The government says a joint study concluded a free trade deal with Japan could boost Canada's economy by $3.8 billion annually and increase exports by 67 per cent.