Canada: Abe’s Bold Economic Moves Are Good For Japan And Good For Canada

Last Updated: April 25 2013
Article by Len Edwards

Over the past two months, some unusual news reports have been coming out of Japan. In a country renowned for its measured, cautious decision-making, something revolutionary seems to be happening.

The country’s new Prime Minister, Shinzo Abe and his LDP government have taken some remarkably bold measures in an attempt to free the country from two decades of economic stagnation. While Japan is still the world’s 3rd largest economy, its standing as a global player in influence along with its self-confidence have been in decline for many years, a matter of concern to Canada and many other long-standing friends.

Canada needs to make it clear to Tokyo that we are pleased with these significant new moves to re-vitalize the Japanese economy. This is not just a case of congratulating for congratulations sake, although a little of that is always good in international affairs, especially in dealing with the Japanese who normally appreciate and remember such gestures.

It is because Canada stands to gain significantly from a re-bounding Japanese economy, not only through enhanced bilateral trade and investment, but because a stronger Japan lifts all boats in the Asia Pacific region where Canadians will be making an increasing share of their living in the coming decades.

A stronger performance from Japan will also give the global economy the kind of boost it badly needs as Europe continues to falter and the US and Chinese economies face their own headwinds.

Finally, a revitalized Japan is good for the geo-strategic evolution occurring in the Asia Pacific region. Japan’s new strength will better complement a rising China, and should help preserve the stable security environment in the Asia Pacific which since the end of the 1970’s has served as the essential underpinning for the region’s robust economic growth and rising standards of living.

Canada’s support of Japan’s efforts, joined with that of other friends and partners, particularly the United States (and including China), are also important for another reason: this long-awaited economic initiative by a Japanese government is not guaranteed of success.  Encouragement is needed.

Some sceptics have cautioned over the past weeks that Japan may have left it too late to pull off a reversal of fortune. They suggest that the culture of deflation is so embedded, and the economy so deeply flawed structurally, that even these strong steps, while enjoying some early traction, will ultimately fail to achieve the intended results.  The government’s debt load of about 220% of GDP is increasing as a result of the fiscal stimulus. Some see this as a ticking time bomb.

The Prime Minister’s ambitious set of initiatives – predictably given the moniker of “Abenomics” – has three policy dimensions: monetary, fiscal, and structural adjustment.

The monetary moves unveiled on April 4 by the new Governor of the Bank of Japan, Haruhiko Kuroda, have been especially bold.  Through some radical steps (for Japan) in monetary easing, he and Abe hope to rekindle inflation in the Japanese economy by essentially doubling the money supply, shooting for a 2% inflation target in 2 years. Investors and consumers will be motivated to spend by knowing that prices are going to be higher the longer one waits, not lower as under today’s deflationary scenario.

Judging from extent of the sea change in the Bank’s policies, and the fanfare it has generated, Kuroda understands the importance of exceeding expectations when it comes to affecting market behaviour. The announcement has further driven down the value of the Yen, which will stimulate exports and production, increasing wages and domestic spending.

More conventionally, the government’s 10.3 trillion yen (about $104 US billion) fiscal stimulus package in January is centered on infrastructure projects (the usual practice in Japan) and promoting private investment. It is hoped this will have a short-term effect of boosting GDP growth by 2%, although how efficiently it is spent will be crucial.  This will be a challenge, since such spending in Japan has more often catered to domestic political requirements than responded to national economic objectives.

While Kuroda’s moves have been the “headliners”, complemented by Abe’s solid fiscal stimulus, the greatest challenge for the Government lies in the area of structural reform.

This is where the most complexities lie, where deeply embedded business and economic practices have to be changed, and where vested interests will generate strong resistance, just as they have in the past. Yet this is where Japan’s success in revitalizing its economy will ultimately be determined.  Monetary and fiscal policy will bring short-term progress, but only structural change will ensure that a resurgent Japan becomes a longer-term reality.

And this is where Canadian interests come into play again.

Prime Minister Abe has embraced trade negotiations as one means of driving internal structural change.  Since the Meiji period, governments have used foreign pressures to force change at home --- the Japanese expression is “gaiatsu”. Abe seems to be reaching once again for this tried and true formula.

Abe’s trade policy agenda includes pushing ahead with talks launched by his predecessor, including one with Canada and an ambitious negotiation with the EU.  But in mid-March he decided to take Japan into the tougher Trans Pacific Partnership (TPP) talks as well.  This will increase pressures for substantial change, de-regulation and opening in many areas of Japan’s economy, especially in agriculture. Polls show that 60% of Japanese approve of the move.

As of this writing, the USA has just concluded an agreement with Japan that paves the way for US approval of Japanese entry into the TPP negotiations. Canada, New Zealand and Australia have still to give their formal approval, which they will now that Washington has signed on.

On the surface, this should all be good news for Canada.  We can now negotiate with Japan bilaterally and regionally, using both negotiations to get the best outcomes.  We will also be negotiating with Japan in a third venue: the soon-to-be-launched Plurilateral International Services talks in Geneva. The opportunities for improving conditions for Canadian business in Japan (and making Japan a closer partner in our own economy) have never been greater.

But there is one major challenge. Our bilateral negotiations are not the only game in town for the Japanese.  The Japan-EU negotiation, and the now the TPP, will make it harder to get and hold Japan’s attention.

This suggests we must seek to complete our bilateral deal quickly. Canada will need to keep the momentum up on these negotiations.  This is also in Japan’s interest: to put this agreement to bed quickly so they can move on to the big stakes elsewhere. If the months pass with little progress our bilateral negotiation could recede in importance for both sides.  This would be a pity.

Canada’s political and business leadership, starting with Prime Minister Harper and his senior ministers, must be active with their Japanese counterparts, pressing for an early bilateral agreement, and for success at all our negotiating tables. The role of Canadian business is especially important given the support that Japan’s business leaders have given to Abe’s trade initiatives.

And on the broader plane Canadians should encourage Prime Minister Abe and his Japanese allies, in both public and private sectors, to make the tough but critical decisions needed to re-vitalize their economy so that Japan can resume its place as a dynamic and positive force in the regional and global economies.

Canada’s own economic future will depend in some part on it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions