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WTO Negotiations and Other Agricultural Trade Issuesin JapanbyMasayoshi 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?
Problems in Japan • Regulations on entry in agriculture from non-agricultural 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 (?)
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”