Japan appears likely to continue preliminary discussions with nine Pacific-Rim countries over the Trans-Pacific Partnership (TPP) free trade agreement, including the United States and Australia, without formally joining the negotiations.
Facing strong opposition to the TPP trade deal within the ruling Democratic Party of Japan, Prime Minister Yoshihiko Noda has decided against announcing Japan’s formal participation in the negotiations during his scheduled meeting with U.S. President Barack Obama later this month.
We have been urging the government to take part in the TPP talks immediately so that it can influence the outcome to ensure the trade pact will better serve Japan’s national interests. The TPP agreement may become the basic framework for trade in the Asia-Pacific region, and the government should swiftly make a move in that direction.
During Japan’s preliminary discussions with the participants, six countries, including Singapore, unconditionally welcomed Japan’s formal participation in the negotiations.
But the United States, Australia and New Zealand didn’t express clear support for Japan’s participation.
The TPP agreement is expected to cover a wide range of items and issues. Washington is pressing Tokyo to make concessions in the three areas of insurance, autos and beef, apparently in response to opposition and concerns within the related domestic industries.
The area Japan is most concerned about, however, is farm trade.
The three countries that didn’t commit themselves to supporting Japan’s participation in the TPP talks are all major agricultural powers. They are waiting to see if Japan will show a willingness to open its farm market further to imports.
In fiscal 2010, Japan made a major policy shift toward protecting necessary agriculture at home with the introduction of an income support allowance program that provides direct cash payments to farmers while reducing the high tariffs imposed on farm imports to shield the domestic market from international competition.
As Japanese farmers’ income from agriculture keeps dwindling, abandoned farmland is increasing, causing serious erosion in the foundation for agriculture and a further decline in farmers’ revenue.
To end this vicious cycle, the government decided to use the income support program as a lever to accelerate agricultural reform.
But the government has been far too slow to take necessary steps to promote agricultural reform.
Last year, the Ministry of Agriculture, Forestry and Fisheries decided to adopt a policy of heightening the international competitiveness of Japanese agriculture by expanding the average area of farmland per farmer about tenfold from the current approximately 2 hectares.
The ministry has created a system for additional payments to farmers who have expanded the scale of their operations under the income support program. In the current fiscal year, the ministry has introduced a new program to provide subsidies to farmland owners who cooperate with the policy efforts to promote such expansion.
But only one-third of the 10 billion yen ($23 million) earmarked for the additional payments has been used.
There is little hope for expanding the scale of farming in Japan unless the income support program, which also covers small-time farmers and smacks of giveaways of taxpayer money, is overhauled fundamentally.
The DPJ has agreed with the main opposition Liberal Democratic Party and New Komeito on bipartisan talks for a revision to the program. They should start the talks immediately.
The TPP negotiations to scrap or reduce tariffs are supposed to cover all items. But all the participating countries have some items they want to protect. There is a good chance that various exceptions will be approved, as trade negotiators of the United States, which is leading the TPP talks, have indicated.
Japan needs to adopt a flexible and effective strategy in which it will join the TPP talks swiftly and take measures to ease the painful impact of the trade pact on domestic farmers while pushing through necessary agricultural reform.
--The Asahi Shimbun, April 22
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