The Harper government is looking for a good news trade story and is hoping to find it in Japan.
As talks with Europe near an end-game or stalemate, Trade Minister Ed Fast says Canada is making good progress in its dealings with Japan, the world's third-largest economy.
Fast says in a news release that progress was made in a number of areas in the third round of negotiations that ended Friday in Tokyo.
A joint study of potential benefits of a Canada-Japan economic partnership agreement, called ETA, suggests the right deal could boost Canadian output by $3.8 billion a year.
That's about a third of what a trade deal with Europe is expected to net in gross domestic product stimulus, but would still constitute the largest agreement Ottawa has negotiated since NAFTA.
Officials say a Japan-Canada deal may be less problematic to negotiate than one with the European Union because there is more compatibility in sectors and fewer sensitive industries that might product conflicts.
For example, a key Canadian objective is to boost beef exports to the country of about 126 million — as it is in the European talks — but Ottawa may get less resistance from the tiny cattle industry in Japan.
Japan, already the third-largest export market for Canadian beef, this year removed some of the restrictions put in place after the mad cow disease scare of a decade ago.
As well, Japan's goal to eliminate the 6.1 per cent duty on auto exports is aided by the fact that Toyota and Honda manufacture vehicles in Ontario.
Meanwhile, the Canada-EU trade negotiations may be getting sidelined by the start of European talks with the United States.
While officials insist the two can proceed simultaneously, there have been suggestions that a round was postponed this week in Canada while European negotiators got to work south of the border.