Agricultural Reform (Final)

Promotion of FTA

I have already talked about it a lot, so I skip it. Please read “the background of FTA and the promotion of it in Japan” if you are interested in.

Impact of the reform

According to Ministry of Agriculture, Forestry, and Fishes, the amount of agricultural products increased by 6.1% and increased by 14.9% in 2007, meaning that we can see the increasing agricultural products on large farms, while the amount of agricultural products decreased by 1.6% and decreased by 12.3%, meaning that we can see the decreasing agricultural products on small farms.

Backlash after Koizumi

After the loss at the 2007 House of Councilors election, the LDP government reversed its course on agricultural policy.  In the fall of 2007, the Fukuda government announced that they earmark ¥85 billion for the protection of farmers.  The government fund was used to (1) purchase 3.4 million tons of rice to prop up rice prices, (2) subsidize production of rice for flour and animal feeding, and (3) expand the subsidized furlough of rice fields.

The primary reason why these subsidies would have disproportionally aided small farmers was to get the farm votes, which was the scattering battle in which they lost moderation. (At every election, the provision object of the subsidies and contents were changed considerably.)

 16 successive Prime Ministers in Japan

The stated goal of the agricultural policy was changed from promotion of large scale farming to improvement of self sufficiency.  Instead of focusing government support on large scale farmers, the governments after Koizumi spread the subsidies to all the farmers.   It did not matter if the government was led by the LDP or the DPJ.

The FTA policy also changed after Koizumi.  Some new FTAs were continued to be signed during the LDP governments, but negotiations of FTAs with large trading partners (such as Korea and Australia) stalled.  Talks with larger trading partners, such as China, the U.S., and the EU, have not even started. 

Sources 

Goudo, Yoshihisa., (2010), Sayonara Nipppon Nougyou, 128 -159.

ISBN978-4-14-088321-1

Ministry of Foreing Affairs of Japan

http://www.mofa.go.jp/mofaj/gaiko/fta/

Ministryh of Agriculture, Forestry, and Fishies

http://www.maff.go.jp/j/export/pdf/taisaku.pdf

Sekizawa, Yoichi.,

http://project.iss.u-tokyo.ac.jp/crep/pdf/rj/r13.pdf

Agricultural Reform (1)

Before I talk about TPP (Trans Pacific Partnership), let me explain Japanese policy briefly in terms of Japanese agriculture.

Target and plan

The Liberal Democratic Party (LDP) traditionally relied on the support of industries such as construction, agriculture, and postal services. These industries were also among the most heavily regulated and protected in the economy. Prime Minister Koizumi as outsider owed no debts to these industries. Thus, by pursuing reforms that opened these industries to competition to advance his economic goal of “reform without sanctuary”, Koizumi also weakened the base of rival politicians in the traditional wing of the LDP.

The agricultural reform was tied to another important initiative of the Koizumi government: promotion of Free Trade Agreements (FTAs) with various trading partners. The most serious hurdle for negotiating FTAs was domestic opposition from the agricultural sector that believed (rightly) that the high production cost makes the domestic products uncompetitive against the cheap foreign products. To prepare the Japanese agriculture for global competition, Koizumi tried to promote large-scale farming.

Promotion of large scale farming

Table A4-1 summarizes the major agricultural policies of the Japanese government from 2001 to 2010, including both the Koizumi government reforms discussed in this section and those of the subsequent governments that are described later.

Historically, Japan’s average farm size was remarkably low. The LDP protected the small farmers’ interests in exchange for their political support. While convenient for the farmers and the LDP, the result was an inefficient production system that led to higher food prices, especially for rice which was the most common crop.

The Koizumi government implemented several measures to promote large scale farmers. The government hoped that by removing the historical bias against large scale farming, productivity could increase and food prices could be reduced. In some cases, such as high quality rice and luxury fruits, there was hope that Japanese agriculture could become internationally competitive.

Government		Primary goal	Target of support	Implementation date	Policy (Political event)
LDP	Koizumi (Apr.2001-Sep.2006)	Respond to globalization	Large scale farmers	Apr. 2004	Major reform of rice production adjustment system
				Mar. 2005	Basic Plan for food, agriculture, and farm village
				Apr. 2005	Basic Strategy of agriculture and forestry marine products export promotion
				Jun. 2006	New subsidies to large scale farmers announced
				Apr. 2007	New subsidies to large scale farmers introduced
	Abe (Sep.2006-Sep2007)			Jul. 2007	(DPJ wins big in the House of Councilors Election)
	Fukuda (Sep.2007-Sep.2008)	Increase the food self sufficiency ratio	All farmers	Fall 2007	Purchase of rice to support rice price Expanded subsidies for furlough
	Aso (Sep.2008-Sep.2009)			Apr. 2009	Subsidies to production of rice for rice flour or feeding
DPJ	Hatoyama (Sep.2009-Jun.2010)			Apr. 2010	Direct payment income support system

Note: LDP stands for the Liberal Democratic Party of Japan.  DPJ stands for the Democratic Party of Japan. 




Sources 

Goudo, Yoshihisa., (2010), Sayonara Nipppon Nougyou, 128 -159.

ISBN978-4-14-088321-1

Ministry of Foreing Affairs of Japan

http://www.mofa.go.jp/mofaj/gaiko/fta/

Ministryh of Agriculture, Forestry, and Fishies

http://www.maff.go.jp/j/export/pdf/taisaku.pdf

Sekizawa, Yoichi.,

http://project.iss.u-tokyo.ac.jp/crep/pdf/rj/r13.pdf

the background of FTA and the promotion of it in Japan (Final)

So far, I have talked about the background of FTA, so now I’m going to explain how the negative attitude changed to the promotion of the FTA, what the power that led Japan to the FTA promotion was, and how the obstacle to the FTA promotion was removed.

 People who concern with agriculture and the farmer's complaint against the FTA promotion.

In a flow of global FTA promotion, while China moved to FTA promotion, a voice that “Don’t fall behind FTA competition” extended to a bureaucrat, a scholar, mass communication, and the financier widely in Japan. Since the voice came to be taken up in Japanese politics, in spite of fact in which the industries did not promote FTA positively, a flow of the FTA promotion was completed. People who concerned with agriculture were negative attitude against FTA promotion at first, but for fear of leading to the agriculture reform that the prime minister and ruling party executives lead, which rouses the public opinion, people who concerned with agriculture accepted the FTA promotion while securing a condition to be able to link the FTA in which the bad influence does not extend to the sensitive item such as Japanese rice. However, it follows that the condition torments FTA ratification.

Stages of economic integration around the World:
(each country colored according to the most advanced agreement that it participates into.)

  Economic and Monetary Union (CSME/EC$, EU/€)

  Economic union (CSME, EU)

  Customs and monetary union (CEMAC/franc, UEMOA/franc)

  Common market (EEA, EFTA)

  Customs union (CAN, CUBKR, EAC, EUCU, MERCOSUR, SACU)

  Multilateral Free Trade Area (AFTA, CEFTA, COMESA, GAFTA, GCC, NAFTA, SAFTA, SICA, TPP)

Before the end of this topic, I would like to mention the characteristic of current Japanese FTA promotion. The current Japanese FTA promotion route is hard to be called the complete promotion of FTA. The reason is just because of the agriculture circumstances to secure a condition to be able to link the FTA with a little bad influence to the agriculture. For this reason, at the this report writing point in time,  Japanese government does not advance from the meeting for the study stage in the relations with Australia, and It is not clear whether Japan reach FTA negotiations with the large country such as China and U.S.A, so now TPP (Trans-Pacific Partnership) is pretty hot topic in Japan. I will explain TPP later.

Sources 

http://www.mofa.go.jp/index.html

http://en.wikipedia.org/wiki/Free_trade_agreement

http://www.nouminren.ne.jp/newspaper.php?fname=dat/201006/2010062103.htm

the background of FTA and the promotion of it in Japan (3)

   The reasons for Japan having taken a negative attitude toward FTA were (a)geographical circumstances, (b)a Japan-U.S. trade dispute, and (c)the difficulty of the liberalization of the agriculture in particular.

Kanrin Maru, Japan's first screw-driven steam warship, transported 1860s delegation to San Francisco.

c.                                             A Japan-U.S. Trade Dispute

Since the assumption of office of President Clinton in 1993, U.S.A. comes to insist on managed trade theory in relations with Japan, in discussion between 2 countries; in addition, by taking the unilateral sanction step, an attitude to solve a commerce item between Japan and the U.S.A. was outstanding. This attitude reached a peak at the time of Japan-U.S. car discussion in 1995. For such an American attitude, the Japanese M.I.T.I. particularly concerned proposes attitude to be going to solve things in WTO established in January, 1995, and was going to plan solution by bringing a dispute between U.S.A. into WTO. The Japan-U.S. car discussion was settled in June, 1995. Afterwards, by the review of the Japan-U.S. semiconductor discussion in 1996, the trade disputes between Japan and the U.S.A. decreased. However, the lingering sound of intense negotiations with U.S.A. was big, and thus, once the attitude of pro-WTO built, it was not easily faded away.

A concept vehicle by Lexus

If an own country cannot promote FTA, in consideration for standing on the character of the discrimination of the FTA in which a member country is in an advantageous situation in export side in comparison with the other countries, all it could do was to check the FTA promotion of other countries more or less by advocating WTO serious consideration. We can understand the behavior pattern of Japanese 90's over the FTA in context such as above.
  

Status of WTO negotiations:

  members (including dual-representation with the European Union)

  Draft Working Party Report or Factual Summary adopted

  Goods and/or Services offers submitted

  Memorandum on Foreign Trade Regime submitted

  observer, negotiations to start later or no Memorandum on FTR submitted

  frozen procedures or no negotiations in the last 3 years

  no official interaction with the WTO

According to ministries and government offices, perhaps, until the time when it was almost November, 1998, in the M.I.T.I. which experienced a Japan-U.S. trade dispute, negative attitude for the FTA was strong. For this reason, in Ministry of Foreign Affairs and Ministry of Agriculture, Forestry and Fisheries, although it was negative in FTA potentially, it seemed that they did not need to make obvious decision about FTA in that situation.  

Sources

http://www.mofa.go.jp/index.html

http://en.wikipedia.org/wiki/Japan_%E2%80%93_United_States_relations

http://en.wikipedia.org/wiki/Automotive_industry_in_Japan

http://en.wikipedia.org/wiki/World_Trade_Organization

the background of FTA and the promotion of it in Japan (2)

The reasons for Japan having taken a negative attitude toward FTA were (a)geographical circumstances, (b)a Japan-U.S. trade dispute, and (c)the difficulty of the liberalization of the agriculture in particular.

Association of Southeast Asian Nations (orthographic projection)

a.                       Geographical Circumstances

   In each area except East Asia, there was a flow to promote a local trade agreement from　1950's to 1970's, and there was a model on promoting a local trade agreement in 1990's. In contrast, in East Asia, there was not a local trade agreement except AFTA (ASEAN Free Trade Area) where ASEAN nations agreed in 1992, and East Asia was under a state in which there was not an imminent model. In addition, East Asia economy except Japan where a bubble collapsed had an economic growth invited to "a miracle" continues to a currency crisis of 1997, and the Japan was not able to find a positive reason to change a past way. Furthermore, China was in the middle of WTO participation negotiations and did not yet become the stage to meddle with FTA. By the above-mentioned circumstances, there was not the model of the FTA for Japan, and the pressure to conclude FTA with Japan was hard to happen.

Long-grain rice plants

2. The difficulty of the Liberalization of the Agriculture

   According to GATT Article 24 that is grounds method of the FTA, as a formation condition of the FTA, it needed to remove a wall about substantially all trades. Although the interpretation of GATT Article 24 was not clarity, it was expected that it must take some kind of liberalization steps in agricultural products. Thus, based on Japanese traditional rejection for the agricultural products liberalization, it was not a realistic thing. In particular, not being passiveness, what Japan starts to say the FTA conclusion for other countries means to commit the liberalization of the agricultural products by oneself, which was the choice that it was hard to take for the person concerned with government. 

Rice broker in 1820s Japan. "36 Views of Mount Fuji" Hokusai

Old-fashioned method of polishing rice in Japan."36 Views of Mount Fuji" Hokusai

   I will talk about (c) by next Tuesday.

Sources

http://www.mofa.go.jp/index.html

http://en.wikipedia.org/wiki/ASEAN

http://en.wikipedia.org/wiki/Rice

the background of FTA and the promotion of it in Japan (1)

World Trade: An Aspect of Trade

Through this blog, I would like to talk about FTA(Free Trade Agreement), EPA(Economic Partnership Agreement), and TPP(Trans-Pacific Partnership) which are deeply related to Japanese Agricultural policy. This topic is one of the most important things in Japanese economy and politics, so that thinking about it carefully is very meaningful for Japan in future. Thus, I will explore it in depth step by step, and as it moves toward the end, I will focus on TPP that is one of the most remarkable things in Japan now. 

Free Trade Area

Before the beginning, let me introduce to myself briefly. Hey forks!! I'm k who is international student in UCSD and econ major. I have worked as a research assistant for few months under Prof. Takeo Hoshi, working at IRPS in UCSD, and my research is about the main topic of this blog: FTA & Japanese Agricultural Policy. As I mentioned the above, I will explore this topic deeply with changing the world situation. OK, are you guys ready? Let's get started!!

At first, let me talk about the background of FTA and the promotion of it in Japan for better understanding in following topics.

In 1990’s, Japan took a negative attitude toward FTA under principle to attach great importance to WTO. In January 2002, Koizumi administration concluded the FTA with Singapore in the beginning. From then on, he concluded the FTA with Mexico and Malaysia, reached a signature with Philippine, and came to wait for a signature and ratification with Thailand. Furthermore, the FTA negotiations with Indonesia, Brunei, the whole ASEAN, Chile, Korea, the Persian Gulf countries (Saudi Arabia, etc) were performed. So far, Japan has done more on January 18^th, 2011.

Here is the list of FTA, EPA in terms of Japan.

ASEAN-Japan Comprehensive Economic Partnership Agreement

Japan-Brunei Economic Partnership Agreement

Japan-Indonesia Economic Partnership Agreement

Japan-Malaysia Economic Partnership Agreement

Japan-Philippines Economic Partnership Agreement

Japan-Singapore Economic Partnership Agreement

Japan-Thailand Economic Partnership Agreement

Japan-Viet Nam Economic Partnership Agreement

Japan-Australia Economic Partnership Agreement

Japan-Chile Economic Partnership Agreement

Japan-India Economic Partnership Agreement

Japan-Mexico Economic Partnership Agreement

Japan-Republic of Korea Economic Partnership Agreement

Japan-Switzerland Economic Partnership Agreement

Now, back to the main topic; why did Japan take a negative attitude toward FTA until 1990’s? How did the negative attitude change to the promotion of the FTA? What was the power that led Japan to the FTA promotion be? How did the obstacle to the FTA promotion to be removed?

The reasons for Japan having taken a negative attitude toward FTA were (a)geographical circumstances, (b)a Japan-U.S. trade dispute, and (c)the difficulty of the liberalization of the agriculture in particular.

 　

　　　I will talk about (a), (b), and (c) more in depth by next Tuesday.




Sources


http://www.mofa.go.jp/policy/economy/fta/index.html

http://en.wikipedia.org/wiki/Free_trade_area

http://ja.wikipedia.org/wiki/%E8%87%AA%E7%94%B1%E8%B2%BF%E6%98%93%E5%8D%94%E5%AE%9A