WTO Negotiations and Other Agricultural Trade Issues in Japan by Masayoshi Honma

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WTO Negotiations and Other Agricultural Trade
Issuesin JapanbyMasayoshi Honma
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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

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Article 20 of AoA

• Recognizing that the long-term objective
  substantial progressive reduction in support and
  protectionis an ongoing process, Members agree
  that negotiations for continuing the process,
  taking into account
  
• (c) non-trade concerns,

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General Elements of Negotiations

• Elimination of tariff peaks in dirty
  tariffication
• Reduction or elimination of export subsidies
• Reexamination of domestic support criteria
• SD treatment for developing countries
• From Bringing Agriculture into the GATT to
  Bringing Agriculture into Competition

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Some Issues for Japanese Agriculture

• Multi-functionality of agriculture
• Food security and safety
• Tariff peaks

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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.

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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.

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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?

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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

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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?

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• Characteristics of Agriculture in Japan and Korea

Japan Korea
Share in GDP Small Small
Farm size Small Small
Ratio of full-time Low High
Family income Large Medium
Income from farming Small Large
Ratio of aged farmers High but part-time High and full-time
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• 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

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• Agricultural Trade between Japan and Korea
• Japan ? Korea cigarettes, vegetable seeds,
  prepared feed, candies, etc.
• Korea ? Japan chestnuts, tomatoes, cucumber,
  matsutake, bell peppers, etc.
• Japans comparative advantage in high quality of
  beef and rice (?)
• Koreas comparative advantage in horticultural
  products, milk products, pork, cut flowers (?)

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• Effects of Japan-Korea FTA by Kawasaki(2003)

Changes in trade balance (million US) Changes in trade balance (million US) Changes in production () Changes in production ()
Japan Korea Japan Korea
Grain 42 -45 -0.32 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
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• 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

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• ltResistance against JK-FTAgt
• In Japan agriculture gt fishery (?)
• In Korea agriculture lt fishery (?)
• ltSearching Possible Solutiongt
• Policy shift to decoupled direct payment
• Promoting intra-industry trade
• Cooperation for common fishery resource
  management
• Establishing common agricultural policy

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THANK YOU!