Canada sought to reassure Japan in TPP letter

February 19, 2016

By: Embassy News

The creation of a forestry committee and reassurance for Japanese companies were the reasons behind Canada’s side letter with Japan in the Trans-Pacific Partnership trade agreement, says Canada’s lead negotiator.

Parts of the letter, which is not a legally binding part of the TPP text, caused confusion in the forestry trade among some companies and lobby groups in Japan and Canada, Embassy reported in November 2015.

The bottom half of the letter appears to commit Canada to issuing permits for log exports in exactly the same way it already does at the federal level, but Japanese industry newsletters and Japan’s forestry department seemed to have interpreted it differently.

After the TPP talks were concluded, Japan’s Ministry of Agriculture, Forestry and Fisheries wrote in an online summary of the TPP that an “improvement” to Canada’s log export regulations would create higher prices for logs in Canada. Japanese industry newsletters wrote last fall that the agreement signalled Canada would relax its restrictions on the export of raw logs to Japan, which primarily come from British Columbia.

That was not the case, the Canadian government maintains.

The bottom of the side letter was instead intended to show Japanese companies that Canada would remain a “predictable supplier” in the log trade, said Kirsten Hillman, Canada’s lead negotiator for the TPP.

“Japan has an interest in a predictable supply of logs from Canada,” she said. “What they wanted to be able to say to their importers is, that we won’t behave in…an untransparent way. So when we have programs and policies in place, those will be applied; we will respect them. As long as they’re respected, the trade will flow,” she said.

Canada’s government made it clear that BC’s restrictions on the export of logs were not on the table in trade negotiations. Under those rules, exporters must prove their logs are surplus to the needs of BC sawmills.

The side letter instead outlines Canada’s federal process for permitting log exports, and was intended to let Japan’s government assure its private sector that the Canadian government wouldn’t make trading any more difficult in the future, said Ms. Hillman.

Canada’s “main purpose” in drafting the letter with Japan was to create a committee to review the trade of forest products, she said.

The two countries laid out that commitment in the top part of the letter, agreeing to begin to review the forest products trade and whether or not “safeguard mechanisms” were needed to rein in that trade. The committee would begin to meet annually five years after the TPP comes into force.

“We were both quite keen on having a committee on lumber trade, because we have had some concerns with regulatory measures on Japan [and] they have always had questions about it,” said Ms. Hillman, citing the different provincial restrictions on lumber trade across Canada.

“They want a forum in which to ask questions, for us to talk about it.”

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