03/25/2012 12:22 EDT | Updated 05/24/2012 05:12 EDT

Canada and Japan have agreed to enter negotiations on a free trade deal

TOKYO - Canada and Japan have agreed to enter free trade talks.

Prime Minister Stephen Harper and his Japanese counterpart made the announcement following a bilateral meeting in Tokyo on Sunday.

"These are important steps forward; historic steps forward," Harper said before the bilateral meeting.

Harper said a deal would strengthen the Canadian economy by generating billions of additional dollars in commerce with Japan.

He estimated Canadian exports to the island nation could increase by two-thirds.

After being shut out Trans-Pacific Partnership talks, both countries embarked on a joint study on economic co-operation, which Canadian government officials say found complimentary areas.

The Japanese are also interested in increasing investment in Canada's natural gas sector.

Prime Minister Yoshihiko Noda also announced the two countries will pursue enhanced defence and security co-operation, including the establishment of a supply base the Canadian military could use in emergencies.

Noda made a point of framing defence co-operation in the context of renewed concerns about North Korea.

The isolated Communist nation plans to a launch a satellite next month, which the U.S. has described an attempt to test ballistic missile technology — something that sets off alarm bells in Japan.

Harper, who will visit the earthquake and tsunami-ravaged region of Sendai on Monday, made a point of praising Noda for "the true and clear leadership" the Japanese prime minister showed through the crisis, and how quickly the country has rebuilt.

"I have quite great admiration for what you are doing here," he said.

The Japanese people were "deeply touched" by the expressions of support and assistance from Canada, Noda said.

Gordon Houlden, a trade expert and former government official, says negotiations will require patience because Asian states are sophisticated traders, and often have strong domestic lobbies.

One potential rough patch will be negotiating access to this country's agriculture sector.

"Agriculture in Japan is super-protected and has an almost mystical status," Houlden said.