Doing Business in Japan

Trade and economic relations between Canada and Japan have been steadily expanding. With a gross domestic product of $5.7 trillion (2023), Japan is the world’s fourth-largest national economy and one of Canada’s most important economic and commercial partners. The foreign direct investment (FDI) stock from Japan into Canada is valued at $49.3 billion (2023), making Japan Canada’s largest source of FDI from the Indo-Pacific and third largest overall. Japanese subsidiaries and affiliate companies operating in Canada employ thousands of Canadians and support numerous communities.

The presence of Canadian business in Japan is significant and diverse, notably in the automotive, information and communications technologies (ICT), financial services, and forestry sectors. The stock of Canadian direct investment in Japan was valued at $4.1 billion in 2023. Japan is Canada’s fourth largest trade partner in terms of bilateral merchandise trade (2023).

Canada’s exports of merchandise to Japan totaled $15.8 billion in 2023, while imports from Japan were $20.7 billion. Mineral fuels and oils (notably, coal and liquefied propane gas), minerals (copper, iron ores and nickel), agricultural products (notably, canola seed, wheat, pork, beef and soybeans), pharmaceutical and forest products were among Canada’s largest exports to Japan, while vehicles, machinery and equipment, and scientific and precision instruments (mainly for medical use) were Canada’s largest imports from Japan in 2023.

Canada and Japan collaborate closely in the implementation and expansion of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP eliminates or reduces tariffs on most key Canadian exports to Japan, including for agriculture and agri-food, seafood, forestry, and metals and mineral products. Both countries also work closely together at the WTO to defend and promote an effective, open, inclusive, and rules-based trading system. 

• Advanced manufacturing: Japan’s growing composite materials sector and focus on smart manufacturing create opportunities in chemicals, plastics, industrial machinery, and robotics.
• Aerospace: As the 6th largest aerospace market, Japan offers opportunities for Canadian companies as suppliers, technology partners, and investment collaborators.
• Agriculture and agri-food: Japan, the world’s largest net food importer and Canada’s 3rd largest agri-food export market ($5.5 billion in 2022), presents opportunities in beef, pork, grains, oilseeds, and functional foods, especially under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
• Automotive: With a shift toward electric vehicles and autonomous technologies, Canadian companies can collaborate with Japanese original equipment manufacturers (OEMs) and suppliers adapting to the Canada-United States-Mexico Agreement (CUSMA) requirements.
• Cleantech: Japan’s push for renewable energy opens doors in batteries, smart grids, and related technologies.
• Consumer products: Canada exports $200M in consumer goods to Japan annually, leveraging Japan’s positive perception of Canadian products.
• Energy: Japan’s reliance on imports (85% of energy needs) and interest in liquefied natural gas (LNG), and liquefied petroleum gas (LPG), hydrogen, and ammonia projects in Canada create collaboration opportunities.
• Forestry wood products: Strong demand exists for multi-storey buildings, engineered wood, wood pellets, and green-building technologies.
• ICT: As the 3rd largest ICT market, Japan offers opportunities in artificial intelligence (AI), Internet of Things (IoT), connected vehicles, digital media, and next-generation networks.
• Investment: Japanese companies, with significant cash reserves, actively seek FDI opportunities in:
  • aerospace
  • agri-food
  • cleantech
  • energy
  • ICT
  • life sciences
  • mining
• Mining and critical minerals: Japan imports Canadian metals and invests in critical minerals like nickel, copper, lithium, and graphite.
• Life sciences: Japan, the 2nd largest healthcare market, offers opportunities in pharmaceuticals, medical devices, and research collaborations, especially in stem cell and oncology.

Canada and Japan are part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Find out how your business can benefit from opportunities through this free trade agreement:

• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
• Search for all types of trade and investment agreements involving Canada and Japan
• Read an overview of Canada’s diplomatic, economic and cultural relationship with Japan