Prospects for the new round of trade talks

The Asahi Shimbun, Tokyo

The leaders of the Group of Eight major countries have issued a statement calling for the acceleration of a new round of multilateral trade talks within the framework of the World Trade Organization (WTO).

The focal point in the trade talks is agriculture. The leaders agreed to determine ways to reduce tariffs by the end of July with a view to forging ahead with the liberalization of trade.

Developed and developing countries have long been at loggerheads over freeing up agricultural markets. Developing countries want to export more farm products to build their nations. But increases in such exports have been prevented by subsidies that the U.S. and European Union countries give to their farmers. The U.S. and European countries are about to agree, however, on reducing subsidies to respond to the discontent of the developing countries.

Negotiations in the WTO, in which nearly 150 countries and regions participate, are indispensable for the balanced development of the world economy. If incomes in poor countries are increased, it will also help to prevent armed conflicts and terrorism.

The trade expansion strategies of the major countries, which have tended to focus on bilateral talks for signing free trade agreements, are being put on the right track thanks to the concessions made by the U.S. and European countries. Bilateral free trade agreements should be considered only supplementary to the multilateral trade agreement.

Japan, a powerhouse in international trade, derives especially great benefits from trade liberalization. But the Japanese delegation for trade talks appears to be in a straitjacket over rice. That has been the case ever since the trade negotiation in the previous round-the Uruguay Round within the framework of the General Agreement on Tariffs and Trade.

In the Uruguay Round of trade talks, Japan was obliged to accept the "minimum access" of foreign rice as a price for maintaining its high tariff on imported rice.

Now the Japanese government is engrossed in rejecting the imposition of a ceiling on the tariff, which will mean Japan would have to reduce its current tariff of 490 percent on imported rice.

Because Japan is solely on the defensive and does not have any bargaining chips, it has eventually been forced to give way in the end at every trade negotiation. The Japanese government makes up for its failure in trade talks by making huge budget allocations to domestic forces affected by the outcome of the negotiations. We have had enough of such actions.

We must make fundamental changes in the way assistance is being given to farmers-especially to rice farmers and full-time farmers-and swim with the latest current of world trade. Unless we undertake such a task in this country, we will have to resort to the same ineffective practice indefinitely.

Let the ambitious and capable farmers produce high-quality products at lower costs. If the prices of farm products go down because of the opening of the domestic market, the government should compensate for the farmers' lost income. But the government should stop giving subsidies to farmers for the production of any particular crop.

An advisory panel for the agricultural ministry has been groping for such a re-orientation in the government's policy. Reportedly, it plans to put together an interim report at the end of next month. It is hoped that the panel will come out with concrete plans sooner rather than later.

It is important not to hand out subsidies to every farmer but nurture farmers who have high productivity instead. In that way, we can create a rice production system that can withstand the lowered tariff on imported rice. The incredibly high tariff should not, and cannot, be maintained.

The new round of multilateral trade negotiations includes many other fields that are very important to Japan, such as trade liberalization in financial services, transport and telecommunications, and the creation of ground rules on anti- dumping measures.

If Japan is simply on the defensive and preoccupied with avoiding the pain caused by the trade talks, we will be left behind by the rest of the world.