Japanese Ambassador Calls CUSMA Vital for Auto Industry Growth

As the Canadian government prepares for a summer review of the Canada-U.S.-Mexico Agreement (CUSMA), Japanese Ambassador to Canada, Kanji Yamanouchi, has emphasized the critical importance of this trade deal for Japan’s automotive investments in Canada. In a recent interview on CTV’s Question Period, Yamanouchi stressed that maintaining access to the U.S. market under CUSMA is essential for current and potential Japanese auto manufacturing in Canada.

Yamanouchi stated, “That is the critical condition,” highlighting the disparity between Canada’s economy and the U.S. market. With Canada’s GDP at approximately $2.5 trillion and the U.S. market valued at around $30 trillion, the stakes are significant. He added, “All those cars made in Canada, of course sold in Canada, but at the same time, exported to the U.S. market.” This reliance on exports underscores the necessity for favorable trade terms to ensure profitability for Japanese manufacturers operating in Canada.

The ambassador pointed out that Japanese automakers, such as Honda and Toyota, have been crucial players in Ontario’s automotive sector for decades. Despite an overall decline in Canadian auto production over the past ten years, these companies are outperforming their American counterparts. According to a recent report from the Trillium Network for Advanced Manufacturing, in 2024 and 2025, both Honda and Toyota are projected to assemble more vehicles in Canada than the combined total of Ford, General Motors, and Stellantis.

Employment trends mirror production statistics, with Japanese automakers employing over 60 percent of all automotive assembly workers in Ontario in 2024. By contrast, American companies account for only 38 percent of employment in this sector. This shift highlights the growing influence of Japanese manufacturers in the Canadian automotive landscape.

Japan’s Interest in Canadian LNG Expansion

In addition to automotive manufacturing, Yamanouchi expressed Japan’s increasing interest in Canadian liquefied natural gas (LNG). Prime Minister Mark Carney is scheduled to visit Japan this week as part of a broader tour of the Indo-Pacific aimed at fostering trade and investment opportunities. The ambassador noted that energy security, particularly access to LNG, is of paramount importance for Japan.

Yamanouchi described the opening of the LNG Canada export terminal last year as a “very, very important historical event,” enabling access to Asian markets. He indicated that Japan is eager for more Canadian LNG, particularly referencing the proposed Phase 2 expansion of the LNG Canada facility, which would double its export capacity. “That expansion would make the LNG Canada facility the second largest in the world,” he said, emphasizing the project’s significance for Japan.

The expansion is seen as a priority for Japan, given the favorable 10-day shipping time and the relative geopolitical safety of the marine route. The federal government referred LNG Canada Phase 2 to its Major Projects Office for consideration in September 2022. If designated as a project in the national interest, the MPO is required to expedite regulatory approval.

Despite the enthusiasm surrounding the potential expansion, the consortium behind LNG Canada has yet to make a final investment decision regarding Phase 2. The outcomes of these discussions will have significant implications for both Canadian energy exports and Japan’s energy security strategy.

Ambassador Yamanouchi’s comments underscore the interconnectedness of trade relations between Japan and Canada, particularly in the automotive and energy sectors. As both countries navigate the complexities of international trade, the future of CUSMA remains a pivotal concern for Japanese investments in Canada.