(At the end of September, I was fortunate to be granted an informal interview with one of the Canadian Trade Commissioners abroad. This is Part III in a series of articles based on that talk. )
My last post dealt with Canadian export to foreign countries, but the Department of International Trade is also very much involved with Foreign investment in Canada. In the case of Japanese investment in Canada, a good and widely known example can be found in the Toyota plant in Cambridge Ontario.
Here we have the reverse of the trade route. Toyota executives made contact through a Trade Office located in Japan. The Trade Office then contacted officials in Canada as well as at many Regional Offices in Canada. Eventually an agreement was made to create Toyota’s first plant in Canada.
The inflow to the Canadian economy didn’t stop with the creation of the plant. In order to have the factory (which produces the Lexus brand) run smoothly, several executives from the Kyushu plant in Japan were relocated to Southern Ontario. The Kyushu plant produces Harriers, which is a high-end model of car. These executives and engineers moved to Ontario to provide expertise and guidance.
Considering everything, there are actually several layers of investment and participation in the Canadian economy with such a venture. Construction companies were contracted to build the plant, workers hired, materials and resources purchased, parts manufacturers contracted, and taxes paid. There is also another effect, albeit small, which is the result of all the Japanese executives and their families moving to Ontario; these 50 or so families need to rent homes, buy food and other products, and pay taxes.
Another situation of Japanese companies investing in Canada has been in the renewable energy sector. Over the past several years, Japanese companies have been investing in the Canadian solar industry, either through investment in Canadian companies, or by setting up their own solar farms and stations.
A recent rule on wind power in Ontario has caused a trade row between Japan and Canada, as the Japanese companies say that the support for wind power creates a trade barrier for them, and is especially painful because the ruling came after their large investment in the province.
The dispute is unresolved as of yet.
The next article in this series will talk about the five specific areas that the Trade Office deals with, as well as some examples within each sector. They very much overlap with my last post and this, and will hopefully give some further clarification into how deeply intertwined countries and countries are. Toyotas and Blackberries are only the suface.