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2014年4月 8日 (火)


April 08, 2014
EDITORIAL: Japan-Australia trade deal could lead to TPP breakthrough

Japan and Australia reached a basic agreement on a trade accord on April 7 after seven years of negotiations that began during Shinzo Abe’s first tenure as prime minister.

Under the economic partnership agreement (EPA), the Japanese import tariff on Australian beef, the focus of the negotiations, will be lowered to around 20 percent from the current 38.5 percent. The tariff reduction will be implemented in stages to cushion the impact on domestic livestock farmers.

Australia is a major exporter of a broad array of farm products, including beef, and a key participant in negotiations for the Trans-Pacific Partnership trade liberalization accord.

The TPP talks, which involve a dozen Pacific Rim countries, have bogged down with Japan and the United States in deep disagreement over whether some exceptions to the principle of tariff elimination should be allowed. Although Tokyo wants to make five items, including beef, a “sanctuary” exempted from the principle, Washington is adamantly insisting on the elimination of all tariffs without exceptions.

Australia and the United States are rivals in beef exports to Japan. The Americans probably want to avoid allowing the EPA between Tokyo and Canberra to put American beef exporters at a disadvantage in the Japanese market. The bilateral deal is likely to affect the U.S. strategy for the TPP talks.

The Japanese government should use the agreement with Australia to make a breakthrough for rapid progress in its TPP negotiations with the U.S. government. Since the TPP initiative calls for a high level of trade liberalization, its negotiations are inevitably more grueling than those for the Japan-Australia EPA. But negotiators should pay attention to the global trend in trade talks toward allowing the governments involved to take necessary policy measures while cutting tariffs.

In fact, the history of Japan’s farm trade policy since it lifted quota restrictions on beef imports in 1991 shows that policy challenges facing the Japanese government have not been simple either-or issues like whether to maintain or lower tariffs and whether to protect domestic farmers or allow them to be forced out of business.

Production of domestic beef, which accounts for 40 percent of Japan's beef consumption, has been stable, unaffected by events like the discovery of cases of mad cow disease in the United States. Japanese beef, typically “kuroge wagyu” beef from breeds of cattle with black hair, which constitutes nearly half of domestically produced beef, has successfully differentiated itself from imported beef in market positioning.

Meanwhile, the number of farmers raising beef cattle in Japan has declined to slightly less than 30 percent of the figure before the liberalization of the market. On the other hand, the number of beef cows per farmer has more than tripled during the same period. As the Japanese tariff on beef imports has fallen gradually to 38.5 percent from 70 percent at the time of liberalization, the scale of beef cattle farming in Japan has grown steadily.

This is a good example of how farmers can survive sharp cuts in tariffs, which lower import prices, by enhancing the competitiveness of their products, although it should be noted that generous government subsidies have also played an important role.

Japanese exports of wagyu, although still small in amount, are slowly increasing.

One serious problem for the future of Japanese cattle farming, however, is the high and rising average age of farmers, combined with a lack of successors. There are concerns that production of Japanese beef will decline gradually in the coming years.

The government should pursue two main goals in negotiating EPAs. First, the government should make sure that Japanese consumers will have more diverse options by slashing tariffs. At the same time, it should take measures, including the effective use of subsidies, to support domestic farmers so the industry will be able to depend more on exports of its products.

--The Asahi Shimbun, April 8


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