No Abe visit is complete without a military review (Kantei)

By Alex Calvo

SNA (Tokyo) — Canada is one of those countries whose relations with Japan seldom prompt front page news. However, in addition to sharing some key interests, certain developments may help the relationship grow tighter over the coming years. These include energy, a field where Ottawa is a major player and Tokyo is in the midst of a major overhaul. The two countries are also taking steps in security and defense cooperation. Prime Minister Abe’s trip to Canada on September 23 and 24 illustrated the significance of the bilateral relationship and provided some hints about its major aspects.

The trip was a preliminary to Abe’s voyage to New York to attend the UN General Assembly. According to Stratfor, the agreements reached with his counterpart Stephen Harper “revealed the core interests at stake: securing energy supplies (liquefied natural gas), rebuilding alliances (through logistical cooperation and dialogue) and freeing up trade (via the Trans-Pacific Partnership).”

Sources close to the Japanese prime minister stress that the meeting with Prime Minister Harper lasted longer than is the norm in these kind of contacts, roughly two hours, and that this proved the “amicable” nature of the ties. Furthermore, they mentioned that Canada’s prime minister is, among world leaders, the figure that Shinzo Abe has “known the longest.” They also pointed out that, despite the unmistakable importance of shale gas and oil, a decision had been taken to conclude an “ACSA agreement,” that is, an Acquisition and Cross-Servicing Agreement providing for mutual military logistical support. As a result, we could talk about the “quintessential Abe” — his preferred blend of economic and strategic affairs in his international engagements.

As for the ACSA agreement, Canadian Prime Minister Stephen Harper explained that he and Abe had agreed in principle to sign a treaty providing “a framework for logistics support between the Canadian Armed Forces and Japan’s Self-Defense Forces anywhere in the world.” The name of the treaty will be the “Canada-Japan Acquisition and Cross-Servicing Agreement” and it will provide a stepping stone towards deeper bilateral defense cooperation in the future. The idea is to make it possible for Canada’s Armed Forces and Japan’s Self-Defense Forces to exchange some basic goods and services. Among them, water, fuel, and certain facilities wherever both militaries may be operating. This includes joint drills, peacekeeping missions, and humanitarian operations.

Harper called the envisioned treaty “an important step towards strengthening bilateral defense relations,” adding that “Canada and Japan enjoy excellent bilateral relations, underpinned by strong cooperation in the areas of commerce and security.” The text, however, “does not involve the stationing of troops in either country,” as a Canadian official release made clear.

Existing bilateral security and defense cooperation includes joint training and capacity-building initiatives in Africa.

At the joint press conference, Shinzo Abe explained that the two leaders had also committed themselves to negotiations on a Canada-Japan Economic Partnership Agreement and on continued work on the Trans-Pacific Partnership (TPP) initiative. Concerning the former, a fourth round of talks is scheduled to take place next month in Ottawa.

Japan and Canada are important trade and investment partners, as some statistics make clear. For Canada, Japan is the fourth-largest export market. In 2012, two-way merchandise trade amounted to more than 25 billion Canadian Dollars. Japan is the top recipient of Canadian Foreign Direct Investment in Asia, amounting to a cumulative 6.4 billion Canadian Dollars at the end of 2012.

Within these important economic and trade relations, energy is among the most significant of the topics. Since Fukushima forced a major rethink of Japanese energy policy, the country’s utilities have been importing growing amounts of oil, coal, and natural gas. Tokyo needs to diversify its sources of supply, while striving to keep prices reasonable. On both of these accounts, Canada may be a major player.

Reuters reported that Shinzo Abe explained that he and Stephen Harper had agreed to closer cooperation on LNG shipments to Japan. At the joint press conference with his Canadian counterpart, Abe said that Canada was a “stable source of energy” and could supply LNG at competitive prices. He added that Tokyo and Ottawa would be holding “ministerial level consultations” on this issue. Abe acknowledged that, “The importation volume of natural gas is increasing and the prices remain high.”

This stress on energy prices was confirmed by Keisuke Tsujimoto, Japan Oil, Gas and Metals National Corporation (JOGMEC) general manager for Canada. Commenting on bilateral trade in energy, he explained that “Tokyo’s main concern will be price.” The completion of new transportation infrastructure may be a way for Japan to receive better prices, but some important obstacles remain.

A report by Calgary-based investment bank Peters & Co. Limited referred to some of these obstacles. While explaining that a number of LNG projects had been put forward in British Columbia, it explained that none had yet secured all necessary permits. Therefore, “Canada will probably only see one terminal built by 2020 and another two by 2025.” In addition to permits, other obstacles to be overcome include “labor shortages, the significant capital required, [and] gas reserves needed to support the projects.” The bank also pointed out that the projects had to maintain “positive relationships with Native communities in the area.”

Canada and Japan are already significant economic partners, and Tokyo’s thirst for energy following the Fukushima disaster can only push this forward. In the political and security spheres they also share key interests.

Both aspects are strongly linked, with, for example, the Arctic another area of mutual concern. While Canada is one of the five coastal states of the Arctic Ocean, Japan is entering this region as part of its energy diversification drive. This also includes Norway and Russia, countries that are beginning to make use of the Northern Sea Route linking Europe to the Pacific through the Arctic.

However, the successful conclusion to the different joint energy projects being discussed will require complex negotiations. This applies both to the Canada-Japan Economic Partnership Agreement and TPP, where overcoming domestic opponents remains an uncertain prospect.

Nevertheless, the low-profile relationship between Japan and Canada is one to watch in the years ahead.

Alex Calvo is a Professor of International Relations and International Law, European University in Barcelona, and Guest Professor at Nagoya University.