Japan must be realistic on high agriculture tarrifs

Takashi Shimomiya, The Daily Yomiuri, Asia News Network, Tokyo

As the World Trade Organization convened a new round of multilateral trade talks in Geneva Wednesday, Japan and the European Union protested strongly against the overhasty liberalization of the international market in agricultural produce.

The United States and Australia, the world's biggest exporters of farm produce, have made increasingly strident calls for the market to be opened up, while Japan and the EU have sought to protect their domestic farming industries. Differences are especially pronounced over the question of tariffs, with any agreement still a long way off.

Aside from tariffs, few countries support Japan's proposal to reduce its "minimum-access" volume of rice, and some experts say Japan could find itself isolated in the new trade round. The minimum-access clause requires countries to import up to a certain level of high-tariff products at a lower tariff rate. Countries use the minimum access clause to protect the domestic market in certain "strategic" products -- in Japan's case, rice. A key issue in the current round of trade talks, which is scheduled to end Jan. 1, 2005, is tariff reduction.

In the previous Uruguay Round, WTO members agreed to reduce tariffs on all agricultural items by an average of 36 percent, with the minimum mandatory reduction rate being 15 percent. Under the agreement, members were to reduce tariffs successively for six years beginning in 1995, by the same rate every year.

In the current round, the United States and the Cairns group, which includes agricultural exporting countries such as Australia and Argentina, have called for large and rapid reductions in tariffs, reducing all agricultural tariffs to 25 percent within five years. The EU, in contrast, has argued for the so-called Uruguay Round formula, in which reduction rates are set flexibly, item by item. The EU has also proposed that rates be reduced by the same amount and at the same rate as required by Uruguay Round.

Japan supports the EU and has also opted for the Uruguay Round formula, but has yet to make specific proposals concerning tariff reduction. Japan is particularly concerned with rice, the most important item on its trade agenda. The government currently sets a 490 percent tariff on rice imports. The EU proposal would make it 420 percent. Under the U.S. proposal, however, the tariff would be reduced to less than 25 percent.

Agriculture, Forestry and Fisheries Minister Tadamori Oshima has strongly opposed the U.S. proposal, claiming the farming industries of Japan and other Asian countries would be "utterly destroyed" if such a plan were implemented.

Another sore spot for Japan, and a major issue for rice exporting countries, is what to do with the minimum access clause.

The government insists that countries be allowed to review import quotas according to fluctuations in domestic consumption, on the pretext of maintaining food safety standards. Japan also claims that the current system is unfair in that while exporting countries have the freedom to decide how much of any good to export -- they may even export none at all -- importing countries do not have that kind of choice. Faced with falling domestic consumption, Japan wants to reduce rice imports, but rice- exporting countries have made increasingly strident calls for Japan to open its market.

The United States is calling for an import quota increase of 20 percent over the next five years, and the Cairns group is demanding that a hefty 20 percent of domestic consumption be added to current import quotas.

The government has calculated that a minimum-access level of 490,000 tons would be acceptable to the country, significantly less than the current level of 760,000 tons.

The government's figure stands in stark contrast to the proposals made by the United States and the Cairns group, which involve raising quotas to 920,000 tons and 2.74 million tons, respectively. For now at least, the EU shares Japan's position on tariff reductions, even if it does not support Japan on minimum access. The Japanese preference for industry protection is seen as going against the tide of liberalization in the farming sector.

The government must bear in mind its bitter experience fighting a solitary and ultimately losing battle in the Uruguay Round, when officials impetuously announced that Japan would not allow "even a grain of imported rice" into the country. Japan is unwise to give special treatment to the rice market. The government should also realize the importance of communicating with the EU and developing countries.