Prime Minister Shinzo Abe sees participation in the Trans-Pacific Partnership as a way to bolster Japan-U.S. relations but the requirement to scrap tariffs across the board alarms farmers, who want assurances of a safety net to make up for, according to the latest government estimates, a loss in production value of ¥3.2 trillion.
Among the hardest hit will be rice farmers. According to the same government report, the value of rice production will be cut by ¥1.1 trillion, or more than 40 percent of the current output, if the 778 percent tariff is dropped. Wheat production value will be cut by more than 96 percent, if its 252 percent tariff is scrapped.
“The loss for the farming sector will be much more devastating,” said Koji Futada, president of the National Chamber of Agriculture. “It will destroy the community around it,” said Futada, who argues that farming is vital not only for the harvests but also for maintaining the ecosystem.
Japan hopes to join the TPP negotiations in July after the U.S. Congress authorizes its entry. The 11 countries participating in the free-trade agreement gave the green light last month.
Amid persistent pressure from the agricultural sector, Abe has repeatedly stressed that the government will not unconditionally scrap tariffs, notably on rice, dairy items, sugar, wheat and beef and pork. The ruling Liberal Democratic Party will add this pledge to its campaign platform for the Upper House election in July to appeal to farmers, a significant constituency for the party.
But the pledge comes without clear strategies. While the U.S. will keep its tariffs on Japanese cars for as long as allowed by the agreement, nothing similar yet applies to American agricultural products.
It is also unclear if Japan can leave the talks once it joins. With an agreement expected by the end of the year, Japan has little time to negotiate terms.
“Japan missed the biggest benefit of the TPP, which is the liberalization of the auto industry, because it struck a deal with the U.S. even before joining the formal negotiation table,” said Yuichiro Tamaki, a Lower House lawmaker of the Democratic Party of Japan. “The best Japan could do is to seek an exception for the rice tariff, which would be very hard.”
In fact, New Zealand trade minister Tim Groser last month insisted that all trade, including farm products, should be liberalized under the TPP without exception to avoid the risk of opening the floodgates to further demands.
Although the LDP recently proposed doubling the income of farmers in 10 years, few are reassured in the absence of concrete measures.
Futada of the National Chamber of Agriculture backs a direct payment system to subsidize farmers regardless of production size or market price, which are volatile.
Rice has long been protected, and production limited, to maintain a high price, even as consumption has declined by half per capita over the last 40 years.
The direct payment system would shield farmers from falling prices, but at the cost of creating a fiscal burden.
Under a quasi-direct payment system introduced in 2010 by the DPJ, which was in power at the time, rice growers receive ¥15,000 per 10 are, or a tenth of a hectare. The LDP plans to extend the program to owners of grasslands, orchards and other fields, but no details of the system have been set.
The government also aims to increase Japan’s exports of agricultural and fisheries products from the current ¥450 billion to ¥1 trillion by 2020. Some proponents of the TPP say that rice farmers could also benefit from such a strategy.
But Japanese rice exports only totaled a mere ¥726 million in 2012, a fraction of the value of all exports.
Futada said it would be hard for Japanese rice to make inroads overseas, as the short-grained variety common here is mainly used in Japanese food. In order to make Japanese rice more competitive, Japanese cuisine would have to be promoted more aggressively, Futada said.
“I have tried to market Japanese rice overseas before, but it cannot compete with cheap locally grown rice,” said Futada. “Rice exports will only be sustainable if the government introduces subsidies to close the price gap and forges an environment in which more people eat Japanese rice.”