“Japan in Transition” – Talk given by the Canadian Ambassador to Japan, Joseph Caron

On June 4, 2008 Canadian Ambassador to Japan, His Excellency Joseph Caron, gave a talk at a luncheon held at the offices of McMillan LLP (formerly of McMillan Binch Medelsohn). Japan Society hosted the event with JETRO, Shokokai, Shinki-Kai and JCCC as co-sponsors. It was a well attended event with close to 90 people.

After a networking lunch, Ambassador Caron gave a talk titled “Japan in Transition: An Update on Political and Economic Developments”.

The Ambassador first talked about the sectors in which Japan is very active – Environment, Petroleum/Energy, Aerospace, Nanotechnology and ICT. He also noted that many Canadian companies are actively involved in the sectors, including companies that are exporting to Japan (e.g. about 50 Canadian companies in the Aerospace sector.)

Japan is also the second largest producer of videogames, holding eight of the flagships in the world - Nintendo Wii being one of them. It was noteworthy to learn that Canadian companies are the suppliers of software to many of them.

The Ambassador outlined some challenges Japan is facing even though it is the second largest economy in the world. One of the challenges Japan has to deal with is the demographic issue of declining fertility rate when a large part of the population is aging.

Fertility/birthrate in Japan is currently at 1.3, with Tokyo at 1.0. At the same time, there are 128 million people in Japan with 25% older than 65 years.

Among other challenges, taxes in Japan are also an issue. Corporate taxes are 11% higher than those of other OECD countries.

In explaining what will aid Japan in responding to challenges to move on from the transitional stage, Ambassador Caron outlined four factors:

• Creativity. Japan has a highly esthetic culture that spurs creativity and is reflected in various areas and forms and it has been the strength in economic growth – e.g. industrial design, “anime”.
• Politics. Government’s ability to coalesce partisan differences in choosing a prime minister, who is more a national leader than simply a leader of the LDP. Also, “Yoshida Doctrine” of placing highest national priority on economic development is still in evidence.
• Response to the evolving international situation. Capitalize on the trends of international politics and situations to increase Japanese influence and standing. US-Japan relations are solid.
• History. Throughout its history, Japan has been highly responsive to changes - Japan can “turn the dime” if it has to.

Written by Grethe Liverud and Eiko Shaul