TPP debate boils down to clash between business, farm sectors

Farmers fear ruination if tariffs end; firms want to tap new markets

The Washington Post

In Tokyo’s upscale Ginza district where consumers shop for their handbags and smartphones, furious farmers drove their tractors down the main street last week to protest Japan joining the Trans-Pacific Partnership free-trade pact.

The stunt was an illustration of the way the country’s agricultural forces are pushing up against modern glitz. As Japan nears a self-imposed deadline to decide whether to participate in negotiations on the TPP, it must first resolve a clash between farmers who think the pact will ruin them and exporters who want to access new markets with lower tariffs.

Nine other countries, including the United States, have committed to the agreement, which would eliminate tariffs and trade barriers in all member nations within 10 years. In Japan, though, the prospect of across-the-board trade liberalization has raised fundamental questions about the nation’s shrinking economy, and whether the business or agricultural sector needs the most help.

Business leaders say the pact is a necessary counter to the surging yen that has made Japanese products more expensive overseas and forced companies to relocate production to China or countries in Southeast Asia. Japan was forced to intervene and lower the value of the yen Sunday night with a massive selloff.

The free-trade initiative also would increase Japan’s international clout, and strengthen its ties with Washington at a time when South Korea has just signed a new free-trade agreement with the United States. Prime Minister Yoshihiko Noda hopes to inform President Barack Obama at the Nov. 12-13 summit of the Asia-Pacific Economic Cooperation forum in Honolulu that Japan will join the TPP talks.

But Japan rarely makes a major move without some semblance of consensus, and for that reason, farmers — whose output accounts for only 1 percent of the nation’s gross domestic product — pose an inordinate problem.

Because of the electoral system, rural areas hold a disproportionate amount of power and the farm lobby is among the most powerful in the country. Last week, the farm lobby said 350 of the 722 lawmakers in the Diet oppose the trade deal.

For years, governments have subsidized and protected farmers from cheaper imports by imposing high tariffs, including a tariff of nearly 800 percent on rice. Once those tariffs crumble, farmers will struggle to compete.

The average age of a farmer in Japan is 65. Most work part time, on tiny parcels of land. Some farmers recognize that the agricultural sector is withering, whether or not Japan joins the TPP, and accept that reform is necessary — but they’d prefer to make changes more gradually.

The TPP, the farm lobby says, would put 3.4 million farmers out of business, many of them in the Tohoku region, which is still recovering from the March 11 earthquake and tsunami.

“This is a very politically sensitive issue,” an official in the prime minister’s office said, speaking on condition of anonymity.

“And there is sizable opposition, even within the ruling Democratic Party of Japan. It is not wise to say we have made up our mind” to join the TPP talks, the official said.

The deal began five years ago as a small free-trade agreement among Singapore, Brunei, Chile and New Zealand.

It has since widened into a regional Asia-Pacific initiative that covers five more countries, including agricultural heavyweights Australia and the United States.

Japan has been debating for more than a year about whether to join the pact. But the government remains divided.

Masahiko Yamada, a former farm minister and a DPJ member, said last week that if Japan rushes to reach a decision, some members might leave the already fractious party.

“If Noda does not make a wise decision on this, he may end up losing power,” Yamada said at a news conference.

Noda, meanwhile, said last week that “serious discussion” was still necessary and that Japan “will reach a conclusion at the earliest stage possible.”