Beef, wheat may be sacrificed in talks

Former adviser says Japan may be able to protect 5% of goods in TPP discussions

Bloomberg

Prime Minister Shinzo Abe may sacrifice barriers protecting Japan’s beef and wheat farmers to join the Trans-Pacific Partnership free-trade accord, a former government adviser on farm policy said.

Still, Abe’s administration will fight to maintain tariffs on rice, sugar and dairy products, said Shinichi Shogenji, an agricultural science professor at Nagoya University who chaired the Cabinet’s food security advisory panel in 2007 during Abe’s first term as leader.

“Japan may be able to protect about 5 percent of its total goods in the TPP negotiations,” Shogenji said Tuesday. “Rice is the national staple, sugar is vital to Okinawa and milk is what our kids drink.”

Eliminating the existing 38.5 percent tariff on beef would probably see a jump of up to 40 percent in imports and help exporters in the U.S. and Australia, among other TPP member states, displace half of local produce, according to Tetsuro Shimizu, a general manager at Norinchukin Research Institute.

Meanwhile, cutting the whopping 252 percent tariff on wheat and ending the farm ministry’s control of purchases may bring 600,000 tons a year in shipments, said Japan Flour Millers Association Executive Director Masaaki Kadota.

“While we must maintain domestic production of rice and milk to ensure food security, beef may be an easier sector to concede,” Shogenji said. “Tariffs on beef are not so high compared with other items, and our ‘wagyu’ beef is a high-quality product that can compete with imports.”

At present, Japan imposes tariffs of 778 percent on rice imports, 328 percent on sugar and 218 percent on powdered milk. Brett Stuart, chief executive officer of Global AgriTrends, a Denver-based meat research company, said there was “still a big bridge to cross regarding sensitive agricultural commodities.”

The Office of the U.S. Trade Representative last year listed Japan’s restrictions on beef and rice imports in the agency’s annual report on foreign-trade barriers.

The bid to join the TPP talks drew criticism in the United States even before it was announced, with Rep. Sander Levin of Michigan joined by 46 other Democrats in a letter to U.S. President Barack Obama that stated the automobile import market in Japan was unfairly closed.

Keidanren, the nation’s biggest business lobby with members including Toyota Motor Corp. and Nippon Steel & Sumitomo Metal Corp., has urged the government to join the TPP to increase the competitiveness of exporters.

By contrast, JA Group, Japan’s largest farmers’ organization, is against the pact and members of Abe’s own ruling Liberal Democratic Party have called for special treatment for agricultural produce, including beef and wheat. While agriculture, forestry and fisheries make up less than 2 percent of the country’s economic output, JA Group’s 10 million members account for 8 percent of the population, partly thanks to a large number of part-time farmers.

In previous free-trade negotiations with countries including Thailand, India and Chile, Japan was able to exclude rice, wheat, sugar, beef and dairy products.

“The TPP talks aim for a high level of liberalization and it will be difficult for Japan to protect them all,” Satoshi Fujiwara, vice president at the equity research department of Nomura Securities Co., said Wednesday. “The nation may have to give up products excluding rice and sugar.”

Japan already depends on imports for 60 percent of its food and joining the TPP could help exporters from Nissan Motor Co. to Sony Corp. compete with rivals from South Korea and the U.S.

The Pacific Rim trade agreement would be the biggest free-trade deal for the United States, which is leading the negotiations, and the first new accord under Obama. The Asia-Pacific region generates more than half of global output and more than 40 percent of world trade, according to the USTR.

The TPP started in 2005 with Brunei, Chile, Singapore and New Zealand as a pact to open trade in goods, services and government procurement. Negotiations have extended to Australia, Canada, Malaysia, Mexico, Peru, Vietnam and the U.S., which aims to complete the talks by the end of this year.

Japan is Asia’s biggest beef importer and bought 515,108 tons of the meat worth ¥221 billion last year, data from the farm ministry show. Australia accounted for 62 percent of shipments, followed by the U.S. with 26 percent and New Zealand at 6.1 percent.

The nation is the second-largest wheat buyer in the region, with domestic producers meeting only about 10 percent of requirements, compared with almost 100 percent for rice and milk, and 40 percent for sugar, Shogenji, the former food security panel head, said.

Japan imported 5.57 million tons of food wheat in the last fiscal year, according to the farm ministry. The U.S. was the largest supplier, accounting for 58 percent, followed by Canada with 23 percent and Australia at 18 percent.