Weekly Comment

Time for Japan to act on agriculture

Related tags International trade Japan

Strong rhetoric at last weekend's Apec summit on the abolition of
agricultural subsidies could not drown out the scraping sound of
Japanese heels.

The 23-member Asia-Pacific economic forum, representing 50 per cent of global trade and nearly 60 per cent of the world economy, called for a "comprehensive package" on Saturday to liberalise farm trade and set 2010 as the date by when all agricultural export subsidies should be abolished.

This declaration follows growing acceptance that the current round of WTO agricultural trade talks are "in dire straits", in the words of South Korean trade minister Kim Hyun-chong.

And it is now clear to everyone that major concessions are vital if next month's ministerial meeting in Hong Kong is to stand any chance of success in providing better market access to the billion people living without sufficient food.

That is making the Japanese nervous.

While subsidies account for over 30 per cent of all OECD agricultural spending, in Japan this figure is a whopping 58 per cent.

The country has an extensive range of trade barriers, designed to protect local agriculture.

Japan continues to protect sensitive areas such as rice, where tariffs are over 700 per cent, as well as sugar, starch and dairy.

Japan, more than anyone, believes it stands to lose and as a result looks increasingly like becoming the biggest barrier to achieving a meaningful agreement on dropping agricultural tariffs.

The EU's recent offer to partially meet US demands to cut domestic farm subsidies by 60 percent within a five-year timeframe is inadequate, but at least it's a start.

Because nothing as brave has been forthcoming from Japan.

Recent events do not bode well.

Speaking at the WTO earlier this month, the Group of 10 (G10) large food-importing countries, which is dominated by Japan, reiterated their demand to continue using steep tariffs to protect what they claim are key domestic farm sectors.

Under the G10 plan, "important farm products" would be isolated from any new liberalised agricultural trade regime.

By remaining firmly opposed to caps on tariffs, Japan, by far the largest economy in the G10, stands opposed to efforts from nations - including those in the 'rich' world to throw open global markets.

The issue is therefore no longer between rich and poor - it is between those who accept that change is needed and those that do not.

The decisions take by prime minister Koizumi and agriculture minister Nakagawa from now to December could therefore effectively decide whether the Hong Kong talks succeed or fail.

Is there hope for a breakthrough?

Junichiro Koizumi's decision to move Shoichi Nakagawa from his position as trade minister to head the agriculture ministry might seem largely irrelevant - both institutions are stoically conservative - but the move could act in the interests of free trade.

The agriculture ministry has traditionally undermined trade ministry efforts to loosen up trade barriers, seeing its mission as protecting Japanese farmers and national food companies.

But the country has a history of obfuscation.

Analysts point to the country's behaviour in the previous Uruguay round of talks, when attempts to liberalise the rice market were impacted by Japan's determination to protect the domestic rice market at all costs.

Instead, Japan should be concentrating on improving the domestic agricultural productivity of Japanese rice so that it is internationally competitive.

It should stop seeing the WTO talks as a means of protecting Japanese farmers and national food companies.

In essence, it should practice what it preaches.

The country's belief that it can be a pacifist beacon in the world would be strengthened immeasurably if it accepted that market access to the rich north for the poorest nations on earth is the best means of ensuring global peace and prosperity.

For only when such subsidies are abolished will poorer countries be allowed to compete fairly, and the $380bn currently wasted every year on subsidies in the rich world can be put to better use.

The sooner Japan, and everyone else for that matter, stops dragging their heels on this issue, the better.

Anthony Fletcher is the editor of FoodNavigator.com and is a specialist writer on food industry issues.

With an international focus, he has lived and worked in the UK, France and Japan.

If you would like to comment on this article please e-mail anthony.fletcher@novisgroup.com.

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