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Rural Industries Research & Development Corporation
Summary of full report
Issues, Options and Strategies
for Improving
Japanese Agricultural Trade Policies
August 2000
RIRDC Publication No 00/176
Executive Summary
The ten papers collected in this publication examine the current state of Japanese agriculture and look at recent developments affecting the key issues, options and strategies for improving Japanese agricultural policies. All the papers were produced as part of a research project funded by Australia™s Rural Industries Research and Development Corporation (RIRDC) in recognition of the importance of Japanese agricultural trade to Australian exporters
The first paper was delivered on 19 June 2000 to a Tokyo symposium on East Asian Trade Policy after Seattle, and presents an overview of the research covered in the other papers. ‚A Note on Japan™s Proposal for WTO Negotiations on Agriculture™, drawing on paper six, was also presented at the symposium. The participants at the symposium included Japanese business interests, government officials and analysts
Papers two to five were presented at a workshop entitled ‚A Way Forward for Japanese Agriculture?™, held at The Australian National University on 13 July 1999. Papers six to seven were presented at a workshop entitled ‚Some Key Issues for the East Asian Food Sector™, held at The Australian National University on 2 May 2000. The two workshops drew together Australian, Japanese and New Zealand experts from industry, government and academia. The final paper, along with versions of papers one and six, was presented at a workshop on Japanese agriculture, held in Tokyo on 19 June 2000 and involving senior Australian government officials and Australian and Japanese academics
The overview paper by Ray Trewin, Malcolm Bosworth and Peter Drysdale outlines the main reasons behind Japanese agricultural protection, the effects of this protection, better ways of achieving the objec- tives of protection, and strategies for taking Japanese agriculture forward, including Australia™s policy response
The second paper, by Masayoshi Honma, is entitled ‚The New Agricultural Basic Law and Trade Policy Reform in Japan™. It assesses recent trade policy reforms in Japan, for example those that have resulted from the Uruguay Round Agreement on Agriculture, and gives an overview of Japan™s new Basic Law on Food, Agriculture and Rural Areas. It finds that although Japanese agricultural policy has become more market orientated, many problems remain and future reform depends critically on whether farmers them- selves can change from being dependent on support to competing in freer markets
The paper on ‚Issues in Japanese Agricultural Policy™, by Ray Trewin, assesses the new Basic Law, looking particularly at Japan™s aim of preserving agriculture™s multifunctional role and at Japan™s current positions on trade policy. The paper demonstrates that Japan™s objectives for farming could be fulfilled through more efficient strategies, for example by using direct support to preserve agriculture™s social benefits and introducing greater competition to encourage Japanese agriculture to be more innovative
The political economy in Japan plays a vital role in policymaking. The paper on ‚The Political Economy of Japanese Agriculture™, by Jennifer Amyx, explains that the agricultural sector is politically powerful be- cause of the relationship between the LDP and farmers, the role of the agricultural cooperatives and the interplay of bureaucratic interests. Amyx believes that liberalisation will inevitably move ahead, but be- cause domestic interests are so entrenched, the pace of change will be slow
In ‚Japan™s Livestock Sector: consumption, production, policies and trade™, Alan Rae finds that some recent policy reforms in the beef sector have resulted in increased imports, lower consumer prices and higher consumption, without bringing an end to domestic production. Rae suggests beef policy reforms indicate what might be achieved in other parts of the livestock sector, which remains one of the most highly protected in the world
These four papers formed the basis of a Policy Brief prepared for the World Trade Organisation™s Third Ministerial Conference in Seattle
The sixth paper, on ‚Political Economy and Agricultural Policy Reform in Japan™, by Masayoshi Honma, looks at agricultural policy reform in Japan from a political economy perspective, especially in respect to the implementation of the Uruguay Round Agreement and the next round of negotiations. Honma states Japan should not use non-trade concerns such as multifunctionality as an excuse to maintain border mea- sures to protect farmers. A compromise is needed between trade and non-trade concerns
In ‚East Asian Approaches to Food Security and Implications for the Next WTO Round™, Ray Trewin mainly contrasts Japan™s self-sufficiency approach with China™s more open trade and investment policies
Trewin concludes that open trade and investment approaches are more efficient than trying to achieve food security through self-sufficiency. By building on a variety of comparative advantages, regional arrange- ments can efficiently, effectively and equitably achieve food security. Trewin recommends that regional countries should not wait until the WTO round to move forward on agricultural reform
In ‚Assessing the Costs and Benefits of Japan™s SPS Measures™, Malcolm Bosworth and Leanne Holmes examine the available evidence on Japan™s use of sanitary and phytosanity (SPS) measures, which suggests Japan is a substantial user of these arrangements. While the WTO™s Agreement on Sanitary and Phytosanity Measures states that these should be based on scientific evidence, it does not require that the costs and benefits of restrictions to trade are considered. A scientifically sound policy may still impose considerable costs on an importing economy by limiting consumer access to imports. Bosworth and Holmes develop and apply a framework for assessing the economic costs and benefits of SPS measures
Randy Stringer™s paper on ‚Constraints on Structural Adjustment: the Role of Land Institutions and Regu- lation in East Asia™ looks at the constraining role of land institutions and regulations, particularly in Japan and Korea, on structural adjustment, especially in agriculture, and the costs and benefits of such institu- tions and regulations. The costs of land regulation in Japan and Korea are excessively high. Because goals for land use often conflict, land management strategies that facilitate land market operations and protect sensitive land and cultural resources are required
The final paper, ‚Problems and Policies of Japan™s Farmland Regulations and Taxation™, by Yoshihisa Godo, explains, for the first time in English, the reasons behind the persistence of small-scale farming in Japan. Regulations on farmland use and low taxes on farming have encouraged farmers to hold on to land in the expectation of large capital gains when it is sold for development. The small size of farms has constrained productivity, but because small farmers provide an important political base, little has been done to foster large-scale farming. To prevent farmers from expecting windfall benefits from land sales, the zoning system needs to be stricter and clearer and capital gains taxes on farmland need to be higher
It is expected that this collection of papers will assist Australian and Japanese agencies and businesses, and those from other countries, to develop strategies for improving Japanese agricultural policies during the upcoming WTO round
Peter Drysdale, Executive
Director, AJRC
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