WTO Negotiations and Other
Agricultural Trade Issues
in Japan
by
Masayoshi Honma
New Development of
Agricultural Policy since UR
• Tariffication of rice in 1999
• Basic Law on Food, Agriculture, and Rural Area in
1999
• New WTO negotiations on agriculture since 2000
• EPA (FTA) with Singapore in 2002
• Establishing Rice Policy Reform Plan in 2002
• Negotiations for FTA with Mexico and Korea in 2003
Article 20 of AoA
Recognizing that the long-term objective
substantial progressive reduction in
support and protection…is an ongoing
process, Members agree that
negotiations for continuing the
process…, taking into account:
(c) non-trade concerns,…
General Elements of Negotiations
•
•
•
•
Elimination of tariff peaks in dirty tariffication
Reduction or elimination of export subsidies
Reexamination of domestic support criteria
S&D treatment for developing countries
From “Bringing Agriculture into the GATT” to
“Bringing Agriculture into Competition”
Some Issues for Japanese
Agriculture
• Multi-functionality of agriculture
• Food security and safety
• Tariff peaks
Multi-functionality
• Multi-functionality of agriculture, such as land
conservation, natural environment, rural
community, is now recognized.
• Need to evaluate the marginal effect of trade on
multi-functionality
• But its relationship with agricultural production is
not straightforward and make quantitative
assessment difficult.
• Direct subsidies are encouraged to achieve it.
Food Security and Safety
• Food security cannot be pursued through
self-sufficiency from domestic sources but
through relying also on imports.
• Limiting trade is not the correct measure to
achieve it at a minimum social cost.
• Stockpiling is a short time measure.
• Safety is consumers’ legitimate concern,
while too strict standard tend to impede
food trade: compliance to SPS and need for
capacity building for developing exporters.
Tariff Peaks
• Examples of tariff peaks
Japan: rice (490%), butter (330%),
konnyaku-potato (990%)
Korea: Korean carrot (754%), cassava (887%)
• Capping the maximum tariff at 100%?
New Dimensions of Negotiations
• Importance of developing countries
• Shift of major players to three cores:
(a) US, EU
(b) Developing countries
(c) Japan, Korea, other food importers.
• Weakening power of Cairns Group
• Emerging African countries: Cotton initiative
• Shift to FTA for trade liberalization
Bilateral Trade Issues
(A) Japan vs. China: Safe-guard issues against three
agricultural imports in 2001
Retaliation by China would have cost 400 billion
yen on automobile industry
(B) Japan vs. Mexico: Pork and orange juice on FTA
(C) Japan vs. Korea: FTA negotiations
How to treat agricultural sector?
Characteristics of Agriculture in Japan and Korea
Japan
Korea
Share in GDP
Small
Small
Farm size
Ratio of full-time
Family income
Small
Low
Large
Small
High
Medium
Income from farming
Small
Large
Ratio of aged farmers
High but
part-time
High and
full-time
Problems in Japan
• Regulations on entry in agriculture from nonagricultural sector
• Part-time farming dominant in rice production
• Expectation on farm land to convert to other use
Problems in Korea
• Full-time but aged farmers
• Heavy dependence on rice production
• Less job opportunity in rural area
Agricultural Trade between Japan and Korea
Japan → Korea: cigarettes, vegetable seeds,
prepared feed, candies, etc.
Korea → Japan: chestnuts, tomatoes, cucumber,
matsutake, bell peppers, etc.
Japan’s comparative advantage in: high quality of
beef and rice (?)
Korea’s comparative advantage in: horticultural
products, milk products, pork, cut flowers (?)
Effects of Japan-Korea FTA by Kawasaki(2003)
Changes in trade
balance (million
US$)
Changes in
production (%)
Grain
Japan
42
Korea
-45
Japan
-0.32
Korea
0.94
Meat
-346
883
-1.54
13.1
Other primary
products
-48
-12
-0.15
0.48
Processed food
-776
1,888
-0.22
7.50
Fishery Issues in Japan
• Quantitative restrictions of imports of:
herring, cod, yellowtail, mackerel, sardine,
horse mackerel, and saury
to protect domestic inshore fishing
• Japan is only the country in the world to
impose IQ on fishery products.
• It is not only a trade issue but also a matter
of the management of common natural
resources
<Resistance against JK-FTA>
In Japan: agriculture > fishery (?)
In Korea: agriculture < fishery (?)
<Searching Possible Solution>
•
•
•
•
Policy shift to decoupled direct payment
Promoting intra-industry trade
Cooperation for common fishery resource management
Establishing “common agricultural policy”
THANK YOU!